77. With respect to concentration risk, institutions should consider and manage the risks posed by …

With respect to concentration risk, institutions should consider and manage the risks posed by concentrations of exposures or collateral in single counterparties, interdependent coun-terparties or in certain industries, economic sectors, or geographic regions which may present a higher degree of vulnerability to ESG risks. To identify ESG-related concentration risks, insti-tutions should consider the size and/or shares of their exposures that may be affected by ESG risks relative to total exposures and as a proportion of Tier 1 capital. Institutions should take into account several ESG factors amongst which GHG emissions, sectoral characteristics, vul-nerability of geographical areas to physical risks, and social or governance deficiencies or con-troversies identified in jurisdictions where exposures or collateral are located, as well as the availability of risk mitigating factors. Institutions should assess if and how ESG-related con-centration risk aggravates the prior financial vulnerability of exposures.

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

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