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Green financing in Poland, edition 4
Introduction
The European Union is working intensively to address key economic challenges such as declining competitiveness, high energy prices, regulatory burdens, ageing populations, the gap in the financing of large infrastructure projects and barriers to capital market development. One of the important directions is a reduction of the scope of reporting and the number of entities obliged to prepare ESG reporting, based on in-depth analyses presented, for example, in the reports of Mario Draghi and Enrico Letta. The changes proposed by the European Commission, referred to as the Omnibus package, include, among others, a reduction of the scope of reporting and the number of entities obliged to prepare ESG reporting and the scope of reported information, simplifying the materiality analysis and assessment criteria contained in the Taxonomy, as well as waiving some reporting obligations resulting from the Taxonomy. In addition to regulatory uncertainty, a significant challenge is the adjustment of global climate policies and targets (e.g. the US approach to reducing CO₂ emissions and withdrawing from the Paris Agreement), which affects the international context of European banks' activities. The observed changes encourage some institutions to take a more pragmatic approach, combining the requirements in the field of sustainable development with the search for a competitive advantage in the adopted ESG strategies.
Approximately 80% of the surveyed banks declare that they will continue their existing ESG activities, which confirms their determination to achieve sustainable development goals.
The impact of international sentiment on banks' ESG strategies
Despite the challenges posed by changing international priorities and the U.S. withdrawal from Paris Agreement and the changes in the UN Agenda, most banks in Poland (79%) doesn’t slowdown in the implementation of ESG strategy. They see it as a strategic foundation for long-term growth, with only a small percentage (14%) expecting a slights slowdown in ESG strategy, suggesting that institutions remain determined to pursue their sustainability programs. Only one institution has declared its intention to intensify its ESG activities.
On the other hand, more and more banks on European continent are strengthening their commitment to the green transition, responding to growing regulatory requirements and social changes. The Polish market, although still cautious, is starting to move in the same direction, recognizing the strategic importance of ESG for competitiveness on the European market, but also pragmatically assessing the real possibilities of implementing ambitious regulatory requirements in the area of ESG.
In the long term, banks' ability to adapt and innovate, including as part of their ESG strategy, could become one of the success factors in a rapidly changing and uncertain environment of international regulations and social expectations.
Chart 1: Will the observed changes in the international arena (e.g. the withdrawal of the US from the Paris Agreement and the UN Sustainable Development Goals Agenda), as well as the need to improve the competitiveness of the EU economy, influence your institution’s ESG plans and strategies in 2025?
ESG-Compliant Credit Exposures
Most respondents (65%) estimate that the share of their ESG-eligible exposures in the portfolio does not exceed 29%, with almost half of them indicating a level below 5%.
At the same time, almost one third of banks (29%) classified their exposures to the "other" category, indicating that in the adopted strategy they do not specify the value of exposures meeting ESG criteria using the green asset ratio (GAR). This structure of responses indicates a persistent lack of a uniform approach to the classification of sustainable loans. Although the use of the EU Taxonomy criteria in financing allows to mitigate the risk of greenwashing, it does not allow to achieve a sufficiently large scale due to the numerous methodological challenges and the limited supply of such projects. As a result, most banks do not use taxonomic data for strategic purposes, including the design of financial products, among others due to the low level of exposures classified as compliant with the Taxonomy, methodological challenges in assessing compliance with the criteria (changes in the interpretation of the rules, availability and quality of data, supply of projects eligible and meeting the criteria of the Taxonomy) and high dependence on the business model.
Chart 2: What part of the loan portfolio (in terms of value) are exposures that meet the ESG criteria (objectives) set out in the strategy adopted by your institution?
Data for ESG risk identification and assessment
In identifying and assessing ESG risks, banks rely on a variety of information sources. Directly obtained counter party data is the most widely used (100% of respondents), followed by public sources (79%) and internal estimates, for example those based on sectoral characteristics (79%).
The use of data provided by specialized public sector entities (used by 64% of respondents) and commercial entities (57% of respondents) has also increased, which may be the result of greater trust in such sources and their growing availability on the market.
The growing amount of ESG data and the diversification of sources of its origin are increasingly associated with the need to adapt IT systems and internal processes to ensure an appropriate ESG data quality management process. As a result, the importance of automating ESG data collection and processing, as well as implementing data quality control mechanisms, is increasing.
These initiatives aim not only to enhance data quality but also to improve organizational efficiency and accelerate internal processes, including those related to financing decisions.
Chart 3: What data does your institution use to identifyand estimate the ESG risk of contractors (borrowers,suppliers, investments) to the greatest extent?
The use of technology in ESG data management and analysis
In this year's edition of the report, we examined the technologies that financial institutions plan to use in the process of ESG data analysis and reporting for the first time. The results indicate the widespread use of classic tools such as spreadsheets and Business Intelligence (BI) solutions, which are used by as many as 86% of respondents. These tools remain a popular choice due to their versatility and ease of integration with existing analytics systems.
Solutions for storing large amounts of data, such as data lakes and data warehouses, are of significant interest, which were indicated by 79% of institutions. Using AI to automate collection and data analysis are indicated by 29% of banks, which highlights the growing interest in modern technologies that can support operational efficiency and accelerate decision-making processes.
Along with this, reporting solutions financial and non-financial institutions, such as Workiva, have also found their place, with 29% of banks indicating them.
Integrated ESG data management platforms, such as Microsoft Sustainability Manager or SAP Sustainability Control Tower, are slightly less popular, which are used by 7% of respondents. Nevertheless, these indications may increase as cloud technology continues to develop and the market opens up to more comprehensive approaches to ESG data management.
Chart 4: What technologies do you plan to use in the process of acquiring and analysing data related to the ESG risk assessment of contractors and ESG reporting?
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