A common framework from the ESAs to integrate ESG risks into banks’ stress tests.

The new ESAs Guidelines provide national banking and insurance supervisory authorities with clear guidance on how to incorporate ESG risks into supervisory stress tests, both within existing frameworks and through complementary assessments specifically addressing the impacts of ESG risks.

The objective is to define common standards at European level to structurally integrate these risks into stress testing methodologies applied across the EU financial system. The Guidelines provide operational guidance on:

• the design of stress tests that include ESG risks;
• the integration of environmental, social and governance variables into adverse scenarios;
• the organisational and governance arrangements necessary to ensure consistency and quality of assessments.

A consistent yet flexible approach

The ESAs underline that the document aims to promote a consistent, long-term approach to the assessment of ESG risks, while maintaining room for flexibility. Methodologies may evolve over time, reflecting methodological advancements and improvements in data availability and quality.

It is also important to clarify that the Guidelines do not introduce new requirements for competent authorities to conduct additional ESG-focused stress tests beyond those already in place. The focus is on harmonising existing practices, not on expanding supervisory obligations.

Next steps

The document will now be subject to the “comply or explain” procedure by National Competent Authorities. The Guidelines will also be translated into all official EU languages by the first quarter of 2026.