The EBA Seeks Inputs From Credit Institutions On The Classification Methodologies For Exposures To ESG Risks

The European Banking Authority (EBA) today launched an industry survey to receive input from credit institutions on their methodologies to classify exposures to environmental, social and governance (ESG) risks, as well as on the accessibility and availability of ESG data for this purpose. The objective of the survey is to collect qualitative information on credit institutions’ current practices to inform the EBA’s work on the feasibility of introducing a standardised methodology to identify and qualify exposures to ESG risks. The deadline to respond to the industry survey is 29 March 2024.

Survey process

Institutions willing to take part in the survey should contact the EBA and express their interest via the address eba-esg-risks-classification@eba.europa.eu. These institutions will be granted access to the survey accordingly. While the file containing all questions is available on the EBA website for convenience, replies to the survey should be submitted directly to the EBA via the dedicated survey tool.

Participation in the survey is voluntary. However, the EBA strongly encourages credit institutions to take part in this important exercise. No confidential information will be disclosed and the findings will be presented anonymously at an aggregated level. The EBA reserves the right to follow-up bilaterally with institutions participating in the survey.

Background and next steps

As part of the revised banking package, the EBA will receive new mandates under Article 501c of amended Regulation (EU) No 575/2013 (see provisional agreement).

This survey is launched with a purpose to respond to points (a) and (b) of that article, which request the EBA to assess the following:

• availability and accessibility of relatable and consistent ESG data;
• feasibility of introducing a standardised methodology to identify and qualify exposures [subject to ESG risks], based on a common set of principles for ESG risk classification, using:
  • information on transition and physical risk indicators made available by sustainability disclosures reporting frameworks (EU and internationally);
  • guidance and conclusions coming from the supervisory stress-testing or scenario analysis of climate-related financial risks conducted by the EBA or the competent authorities;
  • relevant ESG score of the ECAI credit risks rating by a nominated ECAI, if appropriately reflecting the ESG risks.

The mandate complements the initial discussion and findings presented in the EBA Report on the role of environmental and social risks in the prudential framework published on 12 October 2023.

The EBA may organise an industry workshop with institutions participating in the survey for further dialogue on this topic and to exchange on the findings.