ESG Risk Measurement
ESG Risk Measurement encompasses any methodological tools would need to be applied and possibly combined to measure or assess the potential impact of ESG risks on the institution’s exposures. The outcome of an evaluation of classified exposures through the use of methodological tools would be a deeper understanding of the financial vulnerability of the institution to ESG risks.
Issues and Challenges
Given that methodologies to quantify ESG risks and the underlying data that are used as inputs to these methodologies are evolving, a dynamic, flexible approach would be needed.
- EBA Report: On Management and Supervision of ESG Risks for Credit Instituions and Investment Firms, EBA/REP/2021/18