FINANCED EMISSIONS REPORTING LIABILITY IN SPAIN AND THE EUROPEAN UNION: REGULATORY FRAMEWORK, CORPORATE ACCOUNTABILITY AND JUDICIAL INTERPRETATION

1. INTRODUCTION

Financed emissions reporting liability refers to the legal and regulatory responsibility of banks, investment firms, insurance companies, pension funds and other financial institutions for accurately measuring, disclosing and managing greenhouse gas emissions associated with their lending, investment and financing activities.

These emissions are generally classified as Scope 3, Category 15 emissions under the Greenhouse Gas Protocol. They include emissions attributable to corporate loans, project finance, equity investments, bonds and other financial exposures.

In Spain, financed emissions reporting is primarily influenced by European Union sustainability legislation, Spanish corporate reporting requirements, financial supervision and climate-related disclosure standards. Incorrect reporting, misleading sustainability claims, omission of material climate risks and inadequate disclosure systems can expose financial institutions to regulatory sanctions, civil liability and reputational consequences.

2. EUROPEAN UNION REGULATORY FRAMEWORK

A. CORPORATE SUSTAINABILITY REPORTING DIRECTIVE (CSRD)

Directive (EU) 2022/2464 establishes expanded sustainability reporting obligations for companies within its scope. It requires relevant undertakings to report material sustainability information under applicable European Sustainability Reporting Standards (ESRS).

ESRS E1 addresses climate change and includes disclosures concerning gross Scope 1, Scope 2 and Scope 3 greenhouse gas emissions. Financial institutions must assess applicable reporting requirements, materiality and relevant value-chain emissions.

B. EUROPEAN SUSTAINABILITY REPORTING STANDARDS (ESRS)

Commission Delegated Regulation (EU) 2023/2772 introduced the initial ESRS framework. ESRS E1 provides requirements concerning climate-related policies, transition plans, targets, energy consumption and greenhouse gas emissions.

Financed emissions are particularly relevant to financial institutions because their lending and investment portfolios can represent significant indirect emissions.

C. SUSTAINABLE FINANCE DISCLOSURE REGULATION (SFDR)

Regulation (EU) 2019/2088 imposes sustainability-related disclosure obligations on financial market participants and financial advisers.

Articles 4, 6, 8 and 9 are particularly relevant. Article 4 addresses principal adverse impacts on sustainability factors, including applicable greenhouse gas emission indicators. Articles 8 and 9 concern financial products promoting environmental or social characteristics and sustainable investment objectives.

D. EU TAXONOMY REGULATION

Regulation (EU) 2020/852 establishes a classification system for environmentally sustainable economic activities. Financial institutions subject to applicable disclosure requirements must provide information concerning the environmental sustainability of relevant investments and financing activities.

E. CORPORATE SUSTAINABILITY DUE DILIGENCE DIRECTIVE

Directive (EU) 2024/1760 establishes a framework for corporate sustainability due diligence, subject to its scope, implementation and subsequent amendments. Its relevance to financed emissions requires careful assessment because ordinary financial exposure does not automatically establish responsibility for every financed company's emissions.

3. SPANISH LEGAL AND REGULATORY FRAMEWORK

Spain implements European sustainability reporting requirements through its national legal framework, including Law 11/2018 on non-financial information and diversity reporting, which amended the Commercial Code, Companies Act and Audit Law.

The Spanish financial regulatory framework also involves:

Banco de España: Supervisory expectations concerning climate-related financial risks within its regulatory responsibilities.

CNMV: Oversight of applicable financial market disclosure and sustainability information.

Dirección General de Seguros y Fondos de Pensiones: Relevant insurance and pension-sector supervision.

Law 7/2021 on Climate Change and Energy Transition: Establishes national climate policy obligations and transparency-related requirements, including relevant financial-sector provisions.

The precise reporting obligation depends on the institution's legal form, size, activities, regulatory status and applicable transitional arrangements.