+5. Minimum standards and reference methodology for the management and monitoring of ESG risks
---+5.1 ESG risk management principles
------+43. For the purposes of integrating ESG risks into the institution-wide risk management frame-work …
------+44. Institutions should embed ESG risks within their regular risk management systems and pro-cesses …
------+45. Institutions should develop a robust and sound approach to managing and mitigating ESG risks …
------+46. Institutions should determine which combination of risk management and mitigation tools would …
---+5.2 Strategies and business models
------+47. Institutions should account for ESG risks when developing and implementing their overall …
------+48. For the purposes of paragraph 47 and with a view to ensuring sufficiently informed strategies …
------+49. Institutions should have a comprehensive understanding of their business model, strategic …
---+5.3 Risk appetite
------+50. Institutions should ensure that their risk appetite clearly defines and addresses ESG risks …
------+51. The risk appetite should be implemented with the support of ESG-related KRIs, including e.g. …
------+52. Institutions should ensure that all relevant group entities and business lines and units …
------+53. The institution’s risk appetite and associated KRIs should be subject to monitoring and …
---+5.4 Internal culture, capabilities and controls
------+54. Institutions should develop on an ongoing basis their capabilities to identify, assess …
------+55. The sound and consistent risk culture that accounts for ESG risks implemented within the …
------+56. For the purposes of Title V of the EBA Guidelines on internal governance , institutions should …
------+57. The first line of defence should be responsible for undertaking assessments of ESG risks …
------+58. As part of the activities of the second line of defence: a) the risk management function should …
------+59. As third line of defence, the internal audit function (IAF) should provide an independent …
---+5.5 Internal capital adequacy assessment process and internal liquidity adequacy assessment process
------+60. Institutions should incorporate material ESG risks and their impacts on financial risk …
------+61. When institutions take into account longer time horizons for the coverage of ESG risks, these …
------+62. Institutions should use insights gained from their risk assessment methodologies, including …
------+63. With regard to environmental risks, institutions should include in their ICAAP a …
------+64. Institutions should incorporate material environmental risks and their impacts on liquidity in …
------+65. Institutions should include in their ICAAP and ILAAP frameworks a description of the risk …
------+66. When integrating ESG risks into their ICAAP and environmental risks in their ILAAP, the …
---+5.6 Policies and procedures for financial risk categories
------+67. Institutions should understand and manage the current and potential future impact of ESG risks …
------+68. For the purposes of integrating ESG risks into credit risk policies and procedures as set out …
------+69. With regard to environmental risks, institutions should include in their policies and …
------+70. With respect to market risk, institutions should consider how ESG risks could affect the value …
------+71. With respect to liquidity and funding risk, institutions should at least consider how ESG risks …
------+72. In addition, with regard to environmental risks, institutions should consider how these risks …
------+73. With respect to operational risk, institutions should consider how ESG risks could affect the …
------+74. With regard to environmental risks, institutions should: a) identify and label losses related …
------+75. With respect to reputational risks, institutions should consider and manage the impact of ESG …
------+76. As part of their management of conduct, litigation and reputational risks, institutions should …
------+77. With respect to concentration risk, institutions should consider and manage the risks posed by …
---+5.7 Monitoring
------+78. Institutions should monitor ESG risks through effective internal reporting frameworks that …
------+79. Institutions should monitor ESG risks on a continuous basis and ensure that they maintain an …
------+80. Institutions should set early warning indicators and thresholds and should have in place …
------+81. Institutions should monitor a range of backward- and forward-looking ESG risk metrics and …
------+82. SNCIs and other non-large institutions should monitor a range of indicators included under …
------+83. Institutions should have clear and well-documented methodologies pertaining to their …
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5. Minimum standards and reference methodology for the management and monitoring of ESG risks
5. Minimum standards and reference methodology for the management and monitoring of ESG risks
1. Overview
1.1 References
1.2 Identified Requirements
1.3 Related Standards
2. Identified Requirements
Requirements
| Source |
Requirement |
3. Related Standards
Standards
| Source |
Requirement |
- EBA - Published by the European Banking Authority at https://www.eba.europa.eu/
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