European Banking Authority finalizes guidelines on management of ESG risks

The European Banking Authority has published its final guidelines on the management of ESG risks. The guidelines set out requirements for institutions for the identification, measurement, management, and monitoring of ESG risks, including through plans aimed at ensuring their resilience in the short, medium, and long term. The guidelines will apply from January 11, 2026, except for small and non-complex institutions for which the guidelines will apply at the latest from January 11, 2027.

The guidelines specify requirements regarding the internal processes and ESG risk management arrangements that institutions should have in place in accordance with the CRD VI. They also specify the content of plans to be prepared by institutions with a view to monitoring and addressing the financial risks stemming from ESG factors, including those arising from the adjustment process towards the objective of achieving climate neutrality in the EU by 2050. The EBA explains that these plans will support the preparedness of institutions for the transition and should be consistent with transition plans prepared or disclosed by institutions under other pieces of EU legislation.

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