The European Supervisory Authorities, comprising the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority, published Joint Guidelines on environmental, social, and governance (ESG) stress testing, setting out how national banking and insurance supervisors should integrate ESG risks into supervisory stress tests. The guidance covers both the use of established stress testing frameworks and complementary assessments of ESG risk impacts. The Guidelines aim to embed common standards for ESG risk integration in stress testing methodologies across the European Union financial system, including expectations for stress test design as well as related organisational and governance arrangements. They are intended to support a consistent, long-term approach while allowing flexibility for future methodological advances and improved data availability, and they explicitly do not introduce new requirements for competent authorities to conduct ESG-focused supervisory stress tests. National competent authorities will apply the Guidelines under a comply or explain process, and translations into all official European Union languages are planned for the first quarter of 2026.
European Insurance and Occupational Pensions Authority 2026-01-08
European Insurance and Occupational Pensions Authority and other European Supervisory Authorities publish joint guidelines on ESG stress testing
The European Supervisory Authorities issued Joint Guidelines on integrating environmental, social, and governance (ESG) risks into supervisory stress tests for national banking and insurance supervisors, aiming to standardize ESG risk integration across the EU financial system without imposing new requirements for ESG-focused tests. The Guidelines, to be translated into all EU languages by Q1 2026, allow flexibility for future methodological advances and improved data availability.