AUSTRIA Law and Practice Contributed by: Markus Fellner, Stefan Sallat and Florian Henöckl, Fellner Wratzfeld & Partner Rechtsanwälte GmbH
able Financing Action Plan and further expands on and defines the concept of “sustainability”. The Taxonomy Regulation identifies, among others: • climate change mitigation; • adaptation to climate change; • sustainable use and protection of water and marine resources; • transition to a circular economy waste prevention and recycling; • pollution prevention and control; and • protection of healthy ecosystems as environmental objectives. In order to be considered a sustainable company in the sense of the Taxonomy Regulation, at least one of these environmental objectives must be achieved and no other must be substantially violated (“do not substantially harm”). With regard to disclosure obligations in Austria, the Sustainability and Diversity Improvement Act is of par- ticular relevance. It obliges large companies that are of public interest and have more than 500 employees to report (in the management report or in a separate report) on environmental, social and labour issues as well as on measures to respect human rights and to fight corruption and bribery (ie, the ESG factors). In addition, it is necessary to describe the concepts pur- sued and to indicate the results, the risks as well as the most important non-financial indicators. Although this would appear to cover only a very small number of companies, the “level down” effect – according to which a company can only fulfil its disclosure obligations itself if, among other things, it can rely on corresponding reliable information from its suppliers – means that many smaller companies will also be affected. According to EBA Guidelines on Loan Origination and Monitoring, banks are also required to integrate ESG factors into lending processes. Hence, sustain- ability considerations should be taken into account in the credit risk appetite, credit risk strategy, credit assessment, credit monitoring, collateral assessment and stress tests.
There are also sustainability-linked (alternative) financ- ing instruments which help companies realise their projects while demonstrating their commitment to sustainability. These green forms of financing encour- age the financing of environmentally friendly initiatives, such as renewable energy, energy efficiency projects or sustainable agriculture. The sustainability-linked financing instruments are, for example, crowdfund- ing, impact investing, green bonds or public funding. Green bonds are used specifically for funding environ- mentally friendly projects and are purchased by inves- tors who are interested in sustainable investments. 2. Authorisation 2.1 Providing Financing to a Company There are three basic routes for banks to be author- ised to provide loan financing on a commercial basis to companies domiciled in Austria: • application for an Austrian banking licence pursu- ant to Austrian Banking Act BWG (granted by the Austrian Regulator FMA) or application for a CRR- credit institution’s licence (granted by the ECB – a CRR-credit institution fulfils the criteria of Article 4, paragraph 1, CRR) – this option is certainly not viable for one-off transactions and obtaining an Austrian banking licence or a CRR-credit institu- tion’s licence typically involves meticulous and in- depth preparation over an extended period, in par- ticular in preparation of fulfilling legal requirements for credit institutions and preparing an appropriate business plan (which is subject to review by the competent regulator); • establishment of a branch ( Zweigstelle ) by a CRR- credit institution from another EU member state (by way of so-called passporting; ie, having the competent regulator from the home member state notifying the requisite banking licence to the Aus- trian regulator); or • direct rendering of services under the EU freedom of services, the most common approach for non- Austrian CRR-banks who wish to commercially engage in the lending business in Austria without establishing a permanent presence.
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