The EBA consults on Guidelines on ESG scenario analysis

The European Banking Authority (EBA) today launched a public consultation on its draft Guidelines on Environmental, Social and Governance (ESG) scenario analysis. The draft Guidelines set out expectations for institutions when adopting forward-looking approaches and incorporating the use of scenario analysis as part of their management framework to test institutions' financial and business model resilience to the negative impacts of ESG factors. They complement the EBA Guidelines on the management of ESG risks, published on 9 January this year. The consultation runs until 16 April 2025.

Climate change, environmental degradation, social issues and other environmental, social and governance factors are posing considerable challenges for the economy that impact the financial sector. The risk profile and business model of institutions may be affected by ESG risks, in particular environmental risks through transition and physical risk drivers.

To ensure the safety and soundness of institutions in the short, medium and long term, the Guidelines set out expectations for developing a framework and using scenarios to support thinking and decision-making in a changing economic and physical environment. As part of this, the Guidelines set out principles for testing the financial resilience, capital and liquidity, of an institution to ESG-related shocks, starting with climate, and the resilience of its business model to different plausible scenarios, including the achievement of climate neutrality in the EU by 2050.

Consultation process

Comments to the consultation paper can be sent by clicking on the "send your comments" on the EBA's consultation page. The deadline for the submission of comments is 16 April 2025. The EBA will consider the feedback received to this consultation when finalising the Guidelines.

All contributions received will be published following the end of the consultation, unless requested otherwise.

The EBA will hold a virtual public hearing on the consultation paper on 17 March 2025 from 14:30 to 16:00 CET. The EBA invites interested stakeholders to register using this link by 13 March 2025 at 16:00. The dial-in details will be communicated to those who have registered for the meeting.

Legal basis and background

The draft Guidelines were developed in line with the EBA Roadmap on Sustainable Finance and as part of the planned EBA's actions for the implementation of the EU banking package. Together with the Guidelines on the management of ESG risks, they deliver on the mandate laid down in Article 87(a)5 of the Capital Requirements Directive (CRD6), (Directive 2013/36/EU).