Are you ready for the EBA Guidelines regarding the management of ESG risks?
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The European Banking Authority (EBA) published new guidelines for the management of ESG risks on 9 January 2025. This is a step towards strengthening the resilience of Europe’s financial system and is regulated by the EU's new banking packages CRD6 and CRR3.
The guidelines aim to ensure that banks and other financial actors have robust processes to identify, measure, manage, and monitor ESG risks (Environmental, Social, Governance), as these risks affect traditional financial risk categories such as credit, market, liquidity, operational, and reputational risks. The purpose is to strengthen the resilience of the business model and risk profile in the short, medium, and long term.
The Swedish Financial Supervisory Authority has also announced that it intends to follow the guidelines, with the reservation that the implementation process in Sweden concerning the underlying directive provisions is not yet completed.
Who is affected and when? The guidelines come into effect on 11 January 2026 for larger institutions and on 11 January 2027 for smaller and non-complex actors.
What is required of your company?
Identification of ESG risks: Actors must continuously and thoroughly perform materiality assessments of ESG risks and use reliable processes and various methods (e.g., sector, portfolio, and scenario-based methods) to identify and measure the risks. The materiality assessment is similar to the requirements in the Corporate Sustainability Reporting Directive (CSRD), but a difference is that these guidelines require only an analysis of the financial impact.
Integration into risk management: ESG risks should be integrated into the ordinary risk management framework and considered as potential drivers for all traditional risk types. The ESG perspective should be ingrained in risk appetite, internal controls, and internal capital adequacy assessment processes (ICAAP).
Plans and strategies: Financial institutions must establish specific plans to manage and follow up on risks related to transition and adaptation. The plans should be long-term (at least 10 years) and include forward-looking ESG risk assessments and activities. They should take into account regulations such as CSRD and the Corporate Sustainability Due Diligence Directive (CSDDD) and be consistently designed so that all external reporting, such as sustainability reporting, aligns with internal plans.
Monitoring and reporting: Internal reporting and follow-up of ESG risks should include both backward-looking and forward-looking indicators and metrics. CRD-based plans should be subject to supervision but are not subject to public disclosure requirements beyond what is otherwise applicable.
Holistic perspective and coordination: ESG risk management should not occur in a silo but should be part of a comprehensive strategic planning where requirements from various regulations (such as CRD, CSRD, CSDDD) are woven together, both from a business, risk, and reporting perspective. The aim is not to force companies to leave emission-intensive sectors but to contribute to the transition by understanding, managing, and supporting change processes.
The principle of proportionality: The EBA's proportionality principle allows for flexibility in how different institutions manage ESG risks. Depending on the scope of their operations, structure, and business model, the requirements can be tailored. This means that less complex institutions do not need to apply as advanced methods as larger actors but can focus on core aspects such as strengthening internal knowledge and utilising cost-effective digital tools.
Why are these guidelines important for your company?
- Strengthened resilience – By taking proactive measures, risks related to climate, social, and governance factors are reduced, and penalties are avoided.
- Increased transparency and trust – A clear and transparent management of ESG risks fosters trust among investors, customers, and regulators.
- Business opportunities and competitive advantages – Enables differentiation and thus future business in a market characterised by change.
Do you need support with implementation and compliance?
We support you throughout the process - from gap analyses and project management to building internal structures and methods to ensure regulatory compliance. With our expertise in risk, sustainability, and finance, we contribute to ensuring that your company not only complies with the authority’s guidelines but also strengthens its business in a sustainable direction. We have experience working with the implementation of these guidelines, CRR and CRD, broad sustainability efforts, and managing ESG risks.
Feel free to contact us to discuss your specific needs and how we can best support your work in managing ESG-related risks.
Contact helena.hahne@omeo.se or elin.lager@omeo.se for more information
EBA's guidelines on the management of environmental, social and governance (ESG) risks