EBA backs NGFS energy transition declaration as climate risks move deeper into EU banking oversight

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Eba backs NGFS energy transition

Highlights

EBA supports the NGFS Declaration, emphasizing macro-financial risks from energy and climate shocks ahead of the 2026 United Nations Climate Change Conference in Antalya.
EBA integrates ESG risk guidelines and enhances disclosure requirements, including its ESG risk dashboard, to improve transparency and risk assessment for EU banks.
From the 2027 EU-wide stress test, EBA will introduce a dedicated module to assess physical and transition climate risks alongside existing stress testing frameworks.

Regulatory support for climate risk framework

As reported by European Banking Authority, the regulator supports the NGFS Declaration on the macro-financial dimension of the energy transition, published on the occasion of the 2026 United Nations Climate Change Conference in Antalya, Türkiye. The declaration says energy price shocks and more frequent climate-related shocks are becoming a macro-financial reality and calls for an orderly transition across the wider economy.

The EBA says it is contributing to the greening of the financial system by integrating sustainability factors into EU banking regulation, in line with its objective of supporting the stability and orderly functioning of the financial system. Its work includes guidelines on how banks should identify, measure, manage and monitor ESG risks, including through scenario analysis and transition planning, as well as guidance intended to support both institutions and supervisors.

The authority also says it is improving transparency and data availability through climate-related disclosure requirements and the publication of its ESG risk dashboard. These measures are designed to strengthen how banks and supervisors assess exposures linked to environmental, social and governance risks.

Implications for EU banks and supervision

The EBA is also bringing climate considerations into its assessment of risks across the EU banking sector. It announced on 9 November 2026 that the 2027 EU-wide stress test will, for the first time, assess physical and transition climate risks through a dedicated module, without affecting the core stress test results.

EBA Chair François-Louis Michaud says climate and energy shocks are already shaping the risks banks face today. He says effective risk management is not in conflict with competitiveness, but instead helps banks keep financing the European economy and its transition, adding that the dedicated climate module marks a shift from principle to practical implementation.

As we noted earlier, MAS detailed its transition finance push and resilience investment plans to scale sustainable capital deployment in Asia.

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