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 and transparency. These types of risks are increasingly viewed as a challenge to the stability and soundness of financial institutions, as they can affect other, more traditional, categories of financial risk to which institutions are exposed. The EU is increasingly recognizing the impact of ESG risks and has recently increased its focus on them through a regulatory framework aimed at ensuring the resilience of the financial system.

Background on the Guidelines

In a recent legislative package, the EU imposed new requirements regarding ESG risks on credit institutions. Through amendments to the CRD and the Capital Requirements Regulation (the “CRR”), credit institutions will have to integrate ESG risks into their governance, risk management, and capital planning. The revised CRD mandates the EBA to issue Guidelines on minimum standards and reference methodologies for how institutions should identify, measure, manage and monitor ESG risks. In January 2025, the EBA published these Guidelines and the SFSA has recently confirmed its intention to comply with them. As a result, credit institutions under the SFSA’s supervision are now expected to incorporate ESG risks into their internal governance, strategic planning, and risk management frameworks in line with the EBA’s guidance.

Requirements under the Guidelines

Under the EBA’s Guidelines, credit institutions are required to:

• Identify and measure ESG risks using regular and comprehensive materiality assessments, sound data processes and various methodologies, including exposure-, portfolio- and sector-based, portfolio alignment, and scenario-based methodologies.
• Integrate ESG risks into their regular risk management framework by considering their role as potential drivers of all traditional categories of financial risks.
• Maintain a robust and sound approach to managing and mitigating ESG risks over the short, medium, and long term.
• Embed ESG risks in their regular internal processes including risk appetite frameworks and internal capital adequacy assessments.
• Implement effective governance processes and designate key roles.
• Monitor ESG risks through effective internal reporting frameworks and a range of ESG risk metrics and indicators.
• Develop specific plans to address risks arising from the transition to a sustainable economy.

The Guidelines apply from 11 January 2026. However, small and non-complex institutions (as defined in the CRR) will have an extended timeline for implementation until 11 January 2027.

Concluding remarks

The Guidelines offer detailed instruction on how credit institutions should comply with the ESG risk management requirements introduced by the revised CRD. Their implementation represents a significant regulatory shift, requiring credit institutions to take concrete action. In particular, credit institutions must develop comprehensive frameworks to identify, manage, and monitor ESG risks across their operations. This may include revising governance structures, strengthening risk management practices, and incorporating ESG considerations into strategic planning.

At Delphi, our teams within Financial Regulatory and ESG combine substantial hands-on experience of the financial sector with in-depth knowledge of the complex and changing regulatory landscape credit institutions are facing. Our specialized team is happy to offer tailored guidance to help financial institutions in meeting the SFSA’s and EBA’s requirements.