I4CE's answer to EBA's consultation on draft Guidelines on the management of ESG risks

The European Banking Authority (EBA) is clarifying how the banks should frame their 'transition plan' as required by the EU prudential regulation. The transition plan is the bank's strategic roadmap to prepare for the transition to a sustainable economy as framed by the jurisdictions they operate in, including an EU climate-neutral economy. It has been introduced in several EU regulatory frameworks, including as a disclosure requirement arising from the CSRD. The prudential framework and the EBA are focusing on a specific angle: how the banks plan to manage their financial risks related to the transition. EBA's framing of these plans will be key to determine whether the banks will manage their financial risks consistently with the broader need of financing the transition to a low-carbon economy