The European Banking Authority has published final Guidelines on environmental scenario analysis, setting supervisory expectations for how institutions should run environmental scenario analysis and complementing its Guidelines on the management of Environmental, Social and Governance risks. The framework is intended to strengthen banks’ forward-looking assessment and management of environmental risks. The Guidelines are structured around two elements: integrating environmental risks into existing stress-testing frameworks to assess short-term financial impacts and ensure capital and liquidity remain adequate, and a longer-horizon resilience analysis to evaluate medium- to long-term implications of environmental risks and opportunities for business models, strategies and risk profiles. They are positioned as a common reference to support more consistent, forward-looking environmental risk management across the EU banking sector and are based on Article 87(a)5 of the Capital Requirements Directive (CRD6) and fulfil Article 177(2a) of the Capital Requirements Regulation (CRR3). The Guidelines will apply from 1 January 2027 and are final pending translation into the EU official languages.
European Banking Authority 2025-11-05
European Banking Authority publishes final Guidelines on environmental scenario analysis applying from 1 January 2027
The European Banking Authority issued final Guidelines on environmental scenario analysis, detailing supervisory expectations for integrating environmental risks into stress-testing frameworks and resilience analysis. These Guidelines aim to enhance banks' forward-looking assessment and management of environmental risks, supporting consistent risk management across the EU banking sector. They are based on Article 87(a)5 of the Capital Requirements Directive and Article 177(2a) of the Capital Requirements Regulation.