Credit Institutions Face Stricter Requirements Regarding ESG-Risk: What's New?

The Swedish Financial Supervisory Authority (the "SFSA") has announced its intention to comply with the European Banking Authority's (the "EBA") Guidelines on the management of environmental, social and governance ("ESG") risks (the "Guidelines"). The Guidelines are intended to specify and operationalize certain requirements introduced under the revised Capital Requirements Directive (the "CRD"), specifically regarding how credit institutions should identify, measure, manage, and monitor ESG risks. This text provides an overview of the new regulatory expectations and outlines the key measures credit institutions will need to implement in response.

About ESG risks

ESG risks refer to risks related to environmental, social and governance factors. These relate to a company's impact on the environment or exposure to environmental changes, how it manages relationships with stakeholders such as employees and communities, and how it is governed in terms of leadership