On 16 January 2025, the European Banking Authority (EBA) issued a consultation paper on draft guidelines on environmental, social and governance (ESG) scenario analysis.
The draft guidelines are addressed to Member State competent authorities and to financial institutions as defined in Article 4(1) of Regulation No 1093/2010 which are also institutions in accordance with Article 4(1) point 3 of the Capital Requirements Regulation.
The draft guidelines complement the EBA guidelines on the management of ESG risks, published on 9 January this year. The draft guidelines specify the criteria for setting the scenarios that institutions should use to test their resilience to the negative impacts of ESG factors, starting with climate factors, in accordance with Article 87a(5) of the Capital Requirements Directive IV. The draft guidelines also complement the EBA guidelines on institutions’ stress tests by specifying the way in which ESG factors, and in particular climate, should, over time, be integrated into stress testing programmes. In addition, the draft guidelines assist institutions resorting to the internal ratings-based approach in the use of scenarios that include ESG risks.
Next steps
The deadline for comments on the consultation is 16 April 2025.
The EBA will hold a virtual public hearing on the consultation paper on 17 March 2025 from 14:30 to 16:00 CET. The EBA invites interested stakeholders to register using this link by 13 March 2025 at 16:00. The dial-in details will be communicated to those who have registered for the meeting.
It is planned that the guidelines will be finalised by the second half of 2025 and apply from 11 January 2026 to institutions other than small and non-complex institutions (SNCI) and, at the latest, from 11 January 2027 for SNCI.