EBA Targets Climate Risks in New ESG Guidelines
The European Banking Authority (EBA) initiated a public consultation on proposed Guidelines concerning the handling of Environmental, Social, and Governance (ESG) risks.
These Guidelines outline the expectations for institutions in identifying, measuring, managing, and monitoring ESG risks.
They also touch upon strategies for mitigating risks associated with the transition towards an EU climate-neutral economy. The consultation period extends until April 18, 2024.
Challenges posed by climate change, environmental issues, social concerns, and various governance factors have a huge impact on the financial sector. ESG risks, particularly those related to the environmental aspects of transition and physical risk drivers, can influence the risk profile and business model of institutions.
To safeguard the stability and viability of institutions in the short, medium, and long term, the Guidelines establish requirements for internal processes and the management of ESG risks.
These guidelines outline principles for formulating and detailing institutions' plans in alignment with the Capital Requirement Directive (CRD6).
The aim is to effectively monitor and address financial risks arising from ESG factors, including those associated with the ongoing adjustment process towards the EU's goal of achieving climate neutrality by 2050.
The EBA is hosting an online public meeting about the consultation paper on February 28, 2024, from 2:00 PM to 4:00 PM CET. If you are interested, just sign up by clicking the link before 4:00 PM CET on February 21, 2024.