The European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) have published their joint guidelines on ESG stress testing.
The guidelines provide national insurance and banking supervisors with clear guidance on how to integrate ESG risks into supervisory stress tests, both when using established frameworks and when conducting complementary assessments of ESG risk impacts.
Furthermore, the guidelines are designed to support a consistent, long-term approach to ESG stress testing while allowing flexibility to accommodate future methodological advances and improvements in data availability.
Importantly, they do not introduce new requirements for competent authorities to carry out ESG-focused supervisory stress tests.