EBA publishes final guidelines on environmental scenario analysis under CRD VI

The European Banking Authority (EBA) has published a final report on guidelines for environmental scenario analysis under the Capital Requirements Directive (CRD), as amended by CRD VI (Directive (EU) 2024/1619). These guidelines complement the EBA's January 2025 environmental, social and governance (ESG) risk management framework by clarifying supervisory expectations for how institutions should conduct environmental scenario analysis, including for institutions using the internal ratings-based approach for calculating the own funds requirements for credit risk. The EBA consulted on the guidelines in January. In response to feedback, the EBA has amended the guidelines with a focus on enhancing clarity and simplifying expectations in line with operational realities. The scope has been streamlined to focus on environmental risks, with climate as the priority.

Institutions may use simplified or qualitative approaches where quantitative modelling would be disproportionate. Scenario analysis on social and governance factors will not be required at this stage, as the approaches are not yet sufficiently mature. However, they may be considered in future updates of the guidelines. They will be translated into all official EU languages and published on the EBA website. Competent authorities must report compliance within two months after publication of the translations. These guidelines will apply from 1 January 2027, even though the EBA guidelines on the management of ESG risks apply from 11 January 2026. This difference in application dates is to allow institutions to adequately prepare and align internal methodologies, data and governance processes with the new requirements.

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