42. In accordance with Article 177(2) and (2a) of Regulation (EU) No 575/2013, institutions using …

In accordance with Article 177(2) and (2a) of Regulation (EU) No 575/2013, institutions using the IRB Approach are required to regularly perform credit risk stress tests which shall consider the effects of severe, but plausible, recession scenarios’ and which shall include ‘ESG risk drivers, in particular physical risk and transition risk drivers stemming from climate change’ . The methodology for performing stress tests in accordance with this Article should be consistent, to the extent appropriate, with the methods set out in Section 4.7.1 of the EBA Guidelines on institutions’ stress testing, and in this section.

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/