2.1. Subject matter and scope of application

These Guidelines specify the criteria for setting the scenarios that institutions should use to test their resilience to long-term negative impacts of environmental factors, in particular, climate-related factors, in accordance with Article 87a(3) and 87a(5), point (d) of Directive 2013/36/EU²³ .

²³ 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, ELI: http://data.europa.eu/eli/dir/2013/36/oj).

These Guidelines also specify how climate-related risk factors should be integrated into a stress test exercise and set out criteria for scenario analysis that can be used to test the institution’s resilience to short-term negative impacts of environmental factors.

These Guidelines complement the EBA Guidelines on the management of ESG risks (the EBA/GL/2025/01)²⁴ with regard to scenario analysis. These Guidelines also complement the EBA Guidelines on institutions’ stress testing (the EBA/GL/2018/4)²⁵ .

²⁴ The EBA Guidelines on the management of ESG risks specify the minimum standards and reference methodologies for the identification, measurement, management and monitoring of ESG risks. In particular, they specify the content of plans to be prepared in accordance with Article 76(2) of the CRD. the EBA Guidelines on the management of environmental, social and governance (ESG) risks (the EBA/GL/2025/01).

²⁵ The the EBA Guidelines on institutions’ stress testing (the EBA/GL/2018/04) provide common organisational expectations, methodologies and processes for the performance of stress testing by institutions, specifying how they should be taken into account for capital adequacy and risk management purposes.

In addition, these Guidelines further specify how institutions, which have received the permission of their competent authority to use the Internal Ratings Based Approach (IRB Approach) to calculate own funds requirements for a part or all of their credit risk exposures, should define and use stress test scenarios that include environmental risk drivers, in particular physical risk and transition risk drivers arising from climate change, as part of their stress testing programmes on credit risk in order to fulfil the requirements set out in Article 177(2a) of Regulation (EU) No 575/2013²⁶ .

²⁶ Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012, (OJ L 176, 27.6.2013, p. 1, ELI: http://data.europa.eu/eli/reg/2013/575/oj).

The scope of the Guidelines is focused on environmental risks with priority given to climate as specified in the mandate. Future revision of these Guidelines may incorporate social and governance factors provided that methodologies in these areas allow for this. FINAL REPORT ON GUIDELINES ON ENVIRONMENTAL SCENARIO ANALYSIS

Institutions and competent authorities should apply these Guidelines in accordance with the level of application set out in Article 109 of Directive 2013/36/EU.