Response to consultation on draft Guidelines on the management of ESG risks

Question 1: Do you have comments on the EBA’s understanding of the plans required by Article 76(2) of the CRD, including the definition provided in paragraph 17 and the articulation of these plans with other EU requirements in particular under CSRD and the draft CSDDD?

NA

Question 2: Do you have comments on the proportionality approach taken by the EBA for these guidelines?

NA

Question 3: Do you have comments on the approach taken by the EBA regarding the consideration of, respectively, climate, environmental, and social and governance risks? Based on your experience, do you see a need for further guidance on how to handle interactions between various types of risks (e.g. climate versus biodiversity, or E versus S and/or G) from a risk management perspective? If yes, please elaborate and provide suggestions.

NA

Question 4: Do you have comments on the materiality assessment to be performed by institutions?

NA

Question 5: Do you agree with the specification of a minimum set of exposures to be considered as materially exposed to environmental transition risk as per paragraphs 16 and 17, and with the reference to the EU taxonomy as a proxy for supporting justification of non-materiality? Do you think the guidelines should provide similar requirements for the materiality assessment of physical risks, social risks and governance risks? If yes, please elaborate and provide suggestions.

NA

Question 6: Do you have comments on the data processes that institutions should have in place with regard to ESG risks?

NA

Question 7: Do you have comments on the measurement and assessment principles?

NA

Question 8: Do you have comments on the exposure-based methodology?

NA

Question 9: Do you have comments on the portfolio alignment methodologies, including the reference to the IEA net zero scenario? Should the guidelines provide further details on the specific scenarios and/or climate portfolio alignment methodologies that institutions should use? If yes, please elaborate and provide suggestions.

NA

Question 10: Do you have comments on the ESG risks management principles?

NA

Question 11: Do you have comments on section 5.2 – consideration of ESG risks in strategies and business models?

NA

Question 12: Do you have comments on section 5.3 – consideration of ESG risks in risk appetite?

NA

Question 13: Do you have comments on section 5.4 – consideration of ESG risks in internal culture, capabilities and controls?

NA

Question 14: Do you have comments on section 5.5 – consideration of ESG risks in ICAAP and ILAAP?

NA

Question 15: Do you have comments on section 5.6 – consideration of ESG risks in credit risk policies and procedures?

NA

Question 16: Do you have comments on section 5.7 – consideration of ESG risks in policies and procedures for market, liquidity and funding, operational, reputational and concentration risks?

Section 5.7 point 66:

Is the mapping correct:  1) internal fraud - G; 2) external fraud - G; 3) employment practices and workplace safety - S; 4) clients, products, and business practice - E/T, G; 5) damage to physical assets E/P, G; 6) business disruption and systems failures - G; 7) execution, delivery, and process management - E/T, G?

Question 17: Do you have comments on section 5.8 – monitoring of ESG risks?

NA

Question 18: Do you have comments on the key principles set by the guidelines for plans in accordance with Article 76(2) of the CRD?

NA

Question 19: Do you have comments on section 6.2 – governance of plans required by the CRD?

NA

Question 20: Do you have comments on the metrics and targets to be used by institutions as part of the plans required by the CRD? Do you have suggestions for other alternative or additional metrics?

NA

Question 21: Do you have comments on the climate and environmental scenarios and pathways that institutions should define and select as part of the plans required by the CRD?

NA

Question 22: Do you have comments on section 6.5 – transition planning?

NA

Question 23: Do you think the guidelines have the right level of granularity for the plans required by the CRD? In particular, do you think the guidelines should provide more detailed requirements?

NA

Question 24: Do you think the guidelines should provide a common format for the plans required by the CRD? What structure and tool, e.g. template, outline, or other, should be considered for such common format? What key aspects should be considered to ensure interoperability with other (e.g. CSRD) requirements?

NA

Question 25: Where applicable and if not covered in your previous answers, please describe the main challenges you identify for the implementation of these guidelines, and what changes or clarifications would help you to implement them.

NA

Question 26: Do you have other comments on the draft guidelines?

NA

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