31. At an exposure-based level, in line with the provisions in paragraphs 126 and 146 of the EBA …

At an exposure-based level, in line with the provisions in paragraphs 126 and 146 of the EBA Guidelines on loan origination and monitoring, institutions should have internal procedures in place to assess the exposure of their counterparties’ activities and key assets to ESG factors, in particular environmental factors and the impact of climate change, and the appropriateness of the mitigating actions. To this end, institutions should ensure that ESG factors, in particular environmental factors, are properly reflected in their internal risk classification procedures, are taken into account in the overall assessment of default risk of a borrower and, where justified by their materiality, are embedded into the risk indicators, internal credit scoring or rating models, as well as into the valuation of collateral.

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

• EBA - Published by the European Banking Authority at https://www.eba.europa.eu/