Subject matter and scope of application

These guidelines specify robust governance arrangements institutions need to have in place in accordance with Articles 87a(1) and 74 of Directive 2013/36/EU¹² , and cover:

• (a) minimum standards and reference methodologies for the identification, measurement, management and monitoring of environmental, social and governance (ESG) risks, in accordance with Article 87a(5)a) of that Directive;
• (b) qualitative and quantitative criteria for the assessment of the impact of ESG risks on the risk profile and solvency of institutions in the short, medium and long term, in accordance with Article 87a(5)c) of that Directive;
• (c) the content of plans to be prepared in accordance with Article 76(2) of that Directive by the management body, which shall include specific timelines and intermediate quantifiable targets and milestones, in order to monitor and address the financial risks stemming from ESG factors, including those arising from the process of adjustment and transition trends towards the relevant Member States and Union regulatory objectives in relation to ESG factors, in particular the objective to achieve climate neutrality by 2050 as set out in Regulation (EU) 2021/1119, as well as, where relevant for international active institutions, third country legal and regulatory objectives, in accordance with Article 87a(5)b) of that Directive.

These guidelines address the ESG risk management processes of institutions as part of their broader risk management framework. They apply in relation to the robust strategies, policies, processes and systems for the identification, measurement, management and monitoring of ESG risks over the short, medium and long term that institutions subject to Directive 2013/36/EU shall have as part of their robust governance arrangements including risk management framework required under Article 74(1) of Directive 2013/36/EU. These guidelines also complement and further specify EBA Guidelines on internal governance³ and EBA Guidelines on loan origination and monitoring⁴ in relation to the management of ESG risks.

Competent authorities and institutions should apply these guidelines in accordance with the level of application set out in Article 109 of Directive 2013/36/EU.

1 2 Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338). 3 EBA Guidelines on internal governance under Directive 2013/36/EU (EBA/GL/2021/05) 4 EBA Guidelines on loan origination and monitoring (EBA/GL/2020/06) 16