46. Institutions should determine which combination of risk management and mitigation tools would …

Institutions should determine which combination of risk management and mitigation tools would best contribute to this, by considering a range of tools, including the following:

• a) engagement with counterparties aiming at better understanding the risk profile of the counterparty and at ensuring consistency with the institution’s risk appetite and stra-tegic objectives, in particular by:
• i. determining the scope of counterparties with whom to engage, taking into account the outcomes of the materiality assessment and of the risk measure-ment process;
• ii. establishing a dialogue with those counterparties to review their resilience towards ESG risks, taking into account the sectoral legislation that affects those counterparties and any transition plan they have developed;
• iii. where relevant and possible, providing relevant information and advice to clients on the assessment or mitigation of ESG risks they are exposed to; and

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• iv. considering a range of counterparty-specific actions, such as adjustment to product offering, agreement on a plan and remedial actions to support tran-sition efforts and an enhanced resilience of the counterparty, or as a last re-sort cessation of the relationship when continuation is considered incompat-ible with the institution’s planning and risk appetite .
• b) adjusting financial terms (e.g. including contractually-agreed safeguards and correc-tive measures), conditions (e.g. tenor) and/or pricing based on ESG risk-relevant cri-teria and the institution’s risk strategy and internal capital policy;
• c) considering ESG risks when developing sectoral policies and when setting global, re-gional and sectoral risk limits, exposure limits and deleveraging strategies;
• d) diversification of lending and investment portfolios based on ESG risk-relevant crite-ria, e.g. in terms of economic sectors or geographical areas;
• e) other risk management tools deemed appropriate in line with the institution’s risk appetite, such as a possible reallocation of financing between and within sectors to-wards exposures more resilient to ESG risks.

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

• EBA -

  EN: Guidelines and other publications of the European Banking Authority (EBA), https://www.eba.europa.eu/. © European Banking Authority. Reproduction is authorised provided the source is acknowledged (EBA legal notice). Divided into sections and converted into the GRCA format, the wording unchanged. Only the versions published by the EBA are authoritative.

  DE: Leitlinien und weitere Veröffentlichungen der Europäischen Bankenaufsichtsbehörde (EBA), https://www.eba.europa.eu/. © European Banking Authority. Wiedergabe mit Quellenangabe gestattet (Rechtlicher Hinweis der EBA). In Abschnitte aufgeteilt und in das GRCA-Format umgewandelt, der Wortlaut unverändert. Maßgeblich sind allein die von der EBA veröffentlichten Fassungen.