EU-based banks need to develop a single, comprehensive planning process that incorporates regulatory requirements outlined in the bloc’s sustainable finance framework, according to the European Banking Authority (EBA). The guidelines set out requirements for European banks to identify, monitor and manage the financial impact of ESG-related risks. This includes regular ESG materiality assessments, the implementation of ESG-focused tools and methodologies assessing short-, medium-, and long-term potential impacts, and information management systems that identify, collect and analyse ESG risk data. “The final guidelines on ESG risks from the European Banking Authority provide a much-needed clarification that banks will need to develop a single, comprehensive strategic planning process that covers all regulatory requirements,” said Chiara Pass, Sustainable Finance Policy Officer at World Wide Fund for Nature EU. “This can ensure consistency and simplicity, and drive synergies. In addition, EBA added a useful concrete tool for banks to develop their ESG risk plan, and nature is better integrated in the proposal.” The new guidelines were developed in line with the regulator’s 2022 roadmap on sustainable finance. The new requirements will apply for large institutions from January 2026, and smaller institutions from January 2027.
