This Discussion Paper provides a comprehensive proposal on how ESG factors and ESG risks could be included in the regulatory and supervisory framework for credit institutions and investment firms. The paper identifies for the first time common definitions of ESG risks, building on the EU taxonomy and an overview of current evaluation methods. It also outlines recommendations for the incorporation of ESG risks into business strategies, governance and risk management as well as supervision.

Discussion form

The EBA invites comments on all proposals put forward in this paper and in particular on the specific questions detailed below.

Comments are most helpful if they:

  • respond to the question stated;
  • indicate the specific point to which a comment relates;
  • are supported by a clear rationale;
  • provide evidence to support the views expressed/ rationale proposed; and
  • provide alternative regulatory options for consideration by the EBA.

Response details

Common definitions of ESG factors, ESG risks and their transmission channels (Chapter 4)

Quantitative and qualitative indicators, metrics and methods to assess ESG risks (Chapter 5)

The management of ESG risks by institutions (Chapter 6)

ESG factors and ESG risks in supervision (Chapter 7)

Annex 1