In order to reflect the ESG risks in the supervisory evaluation, the EBA sees a need to proportionately incorporate the ESG factors and considerations into the business model analysis, in particular with regards to the analysis of business environment, the current business model, the analysis of the strategy, and the assessment of the viability and sustainability of the business model. [...] the development of appropriate qualitative and quantitative criteria for the assessment of the impact of ESG risks on the financial stability of institutions in the short, medium and long term; such criteria shall include stress testing processes and scenario analyses to assess the impact of ESG risks under scenarios with different severities; c. [...] the criteria, parameters and metrics by means of which supervisors and investment firms can assess the impact of short‐, medium‐ and long‐term ESG risks for the purposes of the supervisory review and evaluation process. [...] This discussion paper has been prepared as a step towards the fulfilment of the EBA’s mandates stipulated under Article 98(8) of CRD5 and Article 35 of the IFD, aiming to receive stakeholders’ feedback on the proposed approach for incorporating ESG risks into the risk management of institutions and the supervisory review. [...] Examples of ESG factors that are common across those definitions and practices for financial and non-financial firms include greenhouse gas emissions, biodiversity and water use and consumption in the area of environment; human rights, and labour and workforce considerations in the area of social; and rights and responsibilities of senior staff members and remuneration in the area of governance (s.
Authors
- Pages
- 154
- Published in
- Malta
