PORTUGAL Law and Practice Contributed by: Pedro Cassiano Santos, Francisca César Machado, Chen Chen and Natalia Fedorova, VdA
expectations (which are normally adopted by Banco de Portugal) on how banks should effec - tively manage climate risks within the existing prudential framework. The European Banking Authority issued manda - tory standards on Pillar 3 ESG risk disclosures, particularly the Green Asset Ratio (GAR), on 1 March 2021. The GAR measures the percentage of environmentally sustainable assets in relation to total assets. The numerator shows the propor - tion of assets invested in sustainable economic activities, while the denominator encompasses the institution’s total assets, loans, bonds and equities, collateral, and other balance sheet items. In this context, Commission Implement - ing Regulation (EU) 2022/2453 of 30 November 2022, which amended Commission Implement - ing Regulation (EU) 2021/637 of 15 March 2021, establishes important guidelines on how banks are required to disclose ESG-related information. Credit institutions must also comply with the Taxonomy Regulation (Regulation (EU) 2020/852 of the European Parliament and of the Coun - cil of 18 June 2020 on the establishment of a framework to facilitate sustainable investment) and its delegated acts. This Regulation estab - lishes, among others, the criteria for determin - ing whether an economic activity qualifies as environmentally sustainable for the purposes of establishing the degree to which an investment is environmentally sustainable. Consequently, it has been observed in the Portuguese market that some Portuguese banks now provide eco- friendly loan options through their sustainable finance programmes, with favourable terms for borrowers, but which also include specific restrictions on how the funds can be used and certain requirements applicable to the borrow - ers’ activities.
The Sustainable Finance Disclosure Regula - tion (SFDR – Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclo - sures in the financial services sector) is applica - ble to credit institutions providing portfolio man - agement services (not to all credit institutions), establishing ESG-related disclosure obligations. In contrast to the Taxonomy Regulation, which focuses solely on environmental issues, the SFDR also covers social aspects. The Corporate Sustainability Reporting Direc - tive (CSRD – Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022), which replaced the Non-Finan - cial Reporting Directive, imposes mandatory reporting obligations on around 50,000 compa - nies, including both EU and non-EU companies that meet the specified employee and annual turnover thresholds. The first reporting period will commence in 2025, covering information from the 2024 financial year. Its implementation in Portugal is still pending. Finally, the authors highlight again the Corporate Governance Code of the Portuguese Institute of Corporate Governance and its incorporation and adaptation to the CSRD, which includes an arti - cle dedicated to stakeholders and sustainabil - ity. This emphasises the growing importance of sustainability matters, aligning with frameworks such as the 2023 G20/OECD Principles of Cor - porate Governance.
10. DORA 10.1 DORA Requirements
The Digital Operational Resilience Act (DORA – Regulation (EU) 2022/2554 of the European Par - liament and of the Council of 14 December 2022
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