The Bank of Italy published a research note analysing ESG information disclosed in 2024 by a sample of Italian and European banks through Pillar 3 disclosures and non-financial statements, including a first deep dive on the Green Asset Ratio (GAR), which intermediaries have published for the first time. The analysis finds that most banks struggle to obtain ESG information on their counterparties, often due to difficulties accessing databases containing energy-consumption data for firms and households. For Italian banks, the evidence points to gradual improvement in sourcing and processing sufficiently high-quality data, alongside a stronger ability than the previous year to measure transition risk for the portion linked to real estate collateral. Exposures to non-financial corporates operating in sectors that contribute significantly to climate change remain high for most banks, while exposures subject to physical risk are also sizeable; initial GAR values are very low and raise questions about how the indicator is constructed, an issue also under discussion at European level.
Bank of Italy 2025-03-28
Bank of Italy review highlights gaps in banks’ ESG disclosures and very low Green Asset Ratios
The Bank of Italy released a research note analyzing 2024 ESG disclosures by Italian and European banks, focusing on Pillar 3 disclosures and non-financial statements, including the inaugural Green Asset Ratio (GAR). The study highlights banks' challenges in obtaining ESG data, particularly from counterparties, and notes gradual improvements in Italian banks' data quality and transition risk measurement. Despite these advancements, high exposures to climate-impacting sectors and low initial GAR values raise concerns about the indicator's construction.