EU Sustainable Finance: ESG Risk Management Guidelines Consultation
The European Banking Authority (EBA) is publicly consulting on the draft guidelines concerning the management of ESG risks.
Guidelines expects to be finalised by end-2024.
Guidelines are aimed at enhancing the identification, measurement, management and monitoring of ESG risks by institutions.
Minimum reference methodologies are to be developed and used by institutions to measure ESG risks.
Environmental risks linked to transition and physical drivers pose potential threats to institutions' risk profiles and business models. The Guidelines mandate the implementation of internal processes and ESG risk management arrangements to ensure institutions' safety and stability across short, medium, and long-term horizons.
Additionally, the Guidelines provide principles for crafting institutions' plans in alignment with the Capital Requirement Directive (CRD6).
The overarching goal is to monitor and address financial risks related to ESG factors, encompassing those stemming from the transition towards attaining climate neutrality in the EU by 2050.
