FCMC defines expected position and action of market participants in the area of sustainability

24.05.2022
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The Financial and Capital Market Commission (FCMC) has developed a roadmap for a sustainable financial sector in Latvia to clarify the financial sector supervisor’s expectations of the financial and capital market participants’ position and action in the area of identification and management of sustainability risks. 

“The FCMC carries out supervision of financial and capital markets applying a risk-based approach to ensure stability of financial and capital markets and their sustainable development. Consequently, sustainability risks have become an important aspect of the FCMC supervisory activities. Many market participants have already started work on the assessment and implementation of sustainability risks within the framework of risk management; however, there is still a lot of homework for everyone to be done to move closer to European and global sustainability goals,” emphasises Kristīne Černaja-Mežmale, Member of the FCMC Board.

At the beginning of 2021, the FCMC presented its sustainability strategy, in which one of strategic directions was the supervision of sustainability of the financial sector. In 2021, the FCMC actively participated in dialogues with market participants on sustainability in Latvia’s financial and capital markets, encouraging market participants to implement sustainability principles in their business models and in their daily activities.

The preparation of roadmap is the next step to promote common understanding among the FCMC and market participants on the certain steps to be taken that the FCMC expects in the short and long terms from all financial and capital markets participants by market participants in identification and management of sustainability risks.

The FCMC will use the roadmap as a basis for assessing the current situation in Latvia’s financial and capital markets, as well as explaining the general direction of sustainability and sustainable finance. The steps covered by the roadmap will facilitate the development of regulatory framework for sustainability and contribute to the ongoing work on the inclusion of sustainability risks in the annual risk assessment processes by financial market participants.

In carrying out supervision of financial and capital market participants, the FCMC looks at sustainability in its broadest sense, which covers all three sustainability factors: environmental, social and governance (ESG). Consequently, the FCMC attributes environmental, social and governance events or circumstances to sustainability risks, which, if any, have or may have a significant adverse effect on the company’s assets, financial and profit situation, or reputation.

The roadmap for a sustainable financial sector in Latvia is available at: https://www.fktk.lv/wp-content/uploads/2022/05/esg2_en.pdf.

 

For further information:
Dace Jansone
Head of Communications Division
Financial and Capital Market Commission
Phone: +37167774808
E-mail: dace.jansone@fktk.lv

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