The European Supervisory Authorities have published joint guidelines setting out how ESG risks should be incorporated into supervisory stress testing across the EU’s financial system.
The guidelines, issued by the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority, provide national banking and insurance supervisors with a common framework for integrating ESG risks into existing stress test exercises, as well as into complementary assessments of ESG-related impacts.
According to the ESAs, the guidelines establish shared standards for embedding ESG considerations into stress testing methodologies, including guidance on scenario design and on the organisational and governance arrangements supervisors should have in place.
The authorities said the framework is intended to support a consistent, long-term approach to ESG stress testing across the EU, while remaining flexible enough to reflect future methodological developments and improvements in data availability. The guidelines do not introduce any new obligations for national authorities to conduct ESG-specific supervisory stress tests.
Under the next steps, national competent authorities will be required to apply the guidelines on a “comply or explain” basis. The text will be translated into all official EU languages in the first quarter of 2026.
The publication follows a public consultation and is accompanied by a final report summarising feedback received and explaining how comments were addressed. The guidelines have been developed in line with Article 100(4) of the Capital Requirements Directive and Article 304c(3) of Solvency II, which require the ESAs to issue joint guidance on ESG stress testing by 10 January 2026.
