Legal & Regulatory News

Publication of the EBA action plan on sustainable finance

The European Banking Authority (EBA) has published its action plan on sustainable finance, outlining its approach and timeline for delivering mandates related to environmental, social and governance (ESG) factors.

The EBA action plan highlights the importance of financial institutions measuring and monitoring their ESG risks in order to deal with transition and physical risks. The EBA also advises that financial institutions should begin to incorporate ESG factors into their business strategies, and sets out a series of expectations for interim measures, including the identification of simple metrics that can foster market discipline and allow banks to set clear green strategies.

In the next steps of its action plan, the EBA plans to develop a dedicated climate change stress test and look into the evidence around the prudential treatment of 'green' exposures.