ESAs final joint guidelines for ESG stress testing published in all official EU languages

official translations of the European Supervisory Authorities (ESAs comprising the European Banking Authority, European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority) joint final guidelines on integrating environmental, social and governance (ESG) risks into financial stress tests for banks and insurers under the Capital Requirements Directive and the Solvency II Directive were published. First published in January 2025, the guidelines aim to harmonise how competent authorities across the EU consistently incorporate ESG risks into their supervisory frameworks. They set expectations on long term considerations and common standards for ESG stress testing methodologies, including undertaking risk based materiality assessments across both short term (up to five years) and long term (at least ten years) horizons. The joint guidelines will apply from 1 January 2027. Competent authorities must now notify the respective ESA by 31 May on whether they comply or intend to comply with the guidelines, or where relevant, provide their reasons for non-compliance.

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