EBA and the management of ESG risks

The European Banking Authority (EBA) has initiated a public consultation on draft Guidelines for managing Environmental, Social, and Governance (ESG) risks.

The Guidelines outline requirements for institutions to identify, measure, manage, and monitor ESG risks, including those related to the transition towards an EU climate-neutral economy.

The consultation period extends until April 18, 2024. The Guidelines aim to ensure the safety and soundness of institutions by establishing internal processes and risk management arrangements. They also provide principles for institutions’ plans to address financial risks arising from ESG factors, aligned with the objective of achieving climate neutrality by 2050.

Stakeholders can submit comments through the EBA’s consultation page, and a virtual public hearing will be held on February 28, 2024.

The Guidelines were developed as part of the EBA’s sustainable finance roadmap and its implementation of the EU banking package. They fulfill the mandate specified in Article 87(a)5 of the Capital Requirement Directive (CRD).