The new EBA guidelines revolutionize ESG risk management

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The new EBA guidelines represent a watershed moment for the European banking sector. For the first time, banks will have to consider risks related not only to the climate, but also to biodiversity and nature. This holistic approach aims to integrate sustainability into every operational aspect. A key objective is to ensure that the financial sector contributes to the EU’s commitments to climate neutrality by 2050. Experiences from the 2020 guidelines, focused on climate, demonstrate how such regulations can transform the sector. Now, the focus on biodiversity further strengthens the push towards a more responsible finance.

With the entry into force expected in January 2026, banks will need to update their risk management strategies. The integration of ESG risks will be mandatory, requiring more in-depth analysis of climate, environmental and social risks. The EBA provides a framework for identifying and measuring risks, helping banks develop more structured approaches. This transformation will require new skills and advanced tools to assess risk and the impact of financial decisions. It is a change that will not only modify business models, but also the relationship with stakeholders, pushing towards greater transparency.

The big news from the EBA guidelines is the introduction of risks related to biodiversity. Banks will have to assess their impact on nature and natural resources, an aspect that has been little explored so far. This means analyzing not only the funded projects but also how they may contribute to environmental degradation or loss of biodiversity. This approach promotes greater awareness of the financial sector's responsibilities towards the environment. It is a first step to transform the banking system into a strategic ally in the protection of ecosystems and in sustainable development.

A key element of the guidelines concerns the planning of the transition to a sustainable economy. Institutions must develop specific plans, with measurable intermediate objectives and milestones, to address financial risks arising from ESG factors. These plans must consider time horizons of at least 10 years and include concrete actions to support customers and counterparties in the transition. The guidelines introduce the principle of proportionality, allowing smaller or less complex institutions to adopt simplified approaches to ESG risk management. However, no institution is exempt from the obligation to assess and mitigate these risks, especially in sensitive economic sectors or geographical areas exposed to high environmental risks.

The 2025 EBA guidelines specify plans to be adopted by institutions in order to monitor and address financial risks arising from ESG factors, including those stemming from the transition process with the aim of achieving climate neutrality in the EU by 2050. The guidelines will apply from January 11, 2026, except for small and non-complex institutions, for which the obligation will apply from January 11, 2027. The guidelines are based on CRD legislation under Article 87(a)5 and have been developed with an analysis of ESG risk management considering the EBA table on sustainable finance and outlined by the EBA actions considered in the table on the implementation of the EU banking package.

The 2025 EBA guidelines represent a crucial step to ensure the resilience of financial institutions and their role in promoting a sustainable economy. The integrated and strategic approach of the new regulations aims to transform ESG risks into opportunities, aligning finance with the EU's climate and social goals. Despite progress made, challenges remain in integrating ESG risks into business strategies and risk management systems. For an effective transition, it is essential that financial institutions are able to systematically identify, measure, and address these risks to prevent them from compromising the solidity and safety of the banking system as the EU continues its path towards a more sustainable economy.

This article was created within the framework of the "Biodiversity services EU expansion" project (CUP: E43D22000480009) under the call of the Lombardy Region "PR FESR 2021-2027 – INTERNATIONALIZATION LINE 21-27" aimed at supporting the internationalization of Italian companies. 3Bee is the naturetech company that develops innovative technologies for monitoring, protecting, and regenerating biodiversity, supporting companies in defining customized climate strategies based on the analysis of their impacts and dependencies on nature. With a consolidated portfolio in Italy, Germany, and France and significant partnerships, 3Bee continues its expansion in international markets to create a tangible impact through technology.