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 to guide national banking and insurance supervisors on incorporating ESG risks into supervisory stress tests. The Guidelines set common EU standards for embedding ESG risks into stress testing methodologies, covering both the integration of ESG factors into established stress testing frameworks and complementary assessments of ESG risk impacts. They address the design of ESG-inclusive stress tests and the organisational and governance arrangements needed to support a consistent, long-term approach, while allowing flexibility for methodological developments and improved data availability. The package also clarifies that it does not introduce new requirements for competent authorities to carry out ESG-focused supervisory stress tests. National competent authorities will apply the Guidelines under a comply or explain process, and translations into all official EU languages are due in the first quarter of 2026. The accompanying final report provides the final text and an assessment of consultation feedback, and is intended to meet publication requirements under the Capital Requirements Directive and Solvency II.
European Banking Authority 2026-01-08
European Supervisory Authorities publish joint Guidelines on integrating ESG risks into supervisory stress tests
The European Supervisory Authorities, including the European Banking Authority, issued Joint Guidelines on environmental, social, and governance (ESG) stress testing to standardize the integration of ESG risks into supervisory stress tests across the EU. These Guidelines, which do not impose new requirements for ESG-focused tests, will be applied by national authorities under a comply or explain process, with translations expected in early 2026.