Book contents
- The Cambridge Handbook of EU Sustainable Finance
- The Cambridge Handbook of EU Sustainable Finance
- Copyright page
- Contents
- Figures
- Tables
- Contributors
- Preface
- Acknowledgements
- Part I Introduction
- Part II Ethics and Sustainability in Corporate Law, Corporate Governance and Conduct
- Part III Integrating Sustainability in Financial Markets Regulation
- Part IV Ensuring Financial Stability and Sustainability
- 18 Macroprudential Policies and Climate Risks
- 19 Integrating Climate Risk in Banking Regulation
- 20 Prudential Requirements Framework and Sustainability
- 21 Sustainable Finance under EU Law
- 22 Sustainability and Fit and Proper Testing in the Boards of Banks, Insurers and Investment Companies
- 23 Integration of Sustainability Risks and Sustainability Factors in Insurance Regulation
- 24 Sustainability Enforcement through Multilevel Financial Tools
- Part V Financial Innovation and Sustainability
- Index
- References
22 - Sustainability and Fit and Proper Testing in the Boards of Banks, Insurers and Investment Companies
from Part IV - Ensuring Financial Stability and Sustainability
Published online by Cambridge University Press: 30 January 2025
Book contents
- The Cambridge Handbook of EU Sustainable Finance
- The Cambridge Handbook of EU Sustainable Finance
- Copyright page
- Contents
- Figures
- Tables
- Contributors
- Preface
- Acknowledgements
- Part I Introduction
- Part II Ethics and Sustainability in Corporate Law, Corporate Governance and Conduct
- Part III Integrating Sustainability in Financial Markets Regulation
- Part IV Ensuring Financial Stability and Sustainability
- 18 Macroprudential Policies and Climate Risks
- 19 Integrating Climate Risk in Banking Regulation
- 20 Prudential Requirements Framework and Sustainability
- 21 Sustainable Finance under EU Law
- 22 Sustainability and Fit and Proper Testing in the Boards of Banks, Insurers and Investment Companies
- 23 Integration of Sustainability Risks and Sustainability Factors in Insurance Regulation
- 24 Sustainability Enforcement through Multilevel Financial Tools
- Part V Financial Innovation and Sustainability
- Index
- References
Summary
Chapter 22 analyzes whether and to what extent sustainability can be integrated into EU fit and proper testing for members of the management body of banks, insurers and investment companies. It concludes that (prospective) members should indeed have sufficient knowledge, skills and expertise in sustainability, both as a collective and individually. The extent to which this knowledge is required depends on the institution and the specific role and responsibilities of the director. However, every director must have basic sustainability knowledge and expertise to adequately perform his or her role. It is argued that EU supervisors, including the ECB, should use the fit and proper test, or at least engage in serious dialogue with financial institutions, to ensure that there is sufficient ESG expertise in the management body. This is well within their mandate since core prudential values such as the solidity of the institution and stability of the financial sector may be at stake. To ensure a level playing field within the EU, it is recommended that EU regulators set out more specific requirements regarding ESG expertise in Level 1 or 2 legislation. This would also provide greater legal certainty for financial institutions and (proposed) members of the management body.
Keywords
- Type
- Chapter
- Information
- The Cambridge Handbook of EU Sustainable FinanceRegulation, Supervision and Governance, pp. 573 - 595Publisher: Cambridge University PressPrint publication year: 2025
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