meta_id 3020676

The European Securities and Markets Authority (ESMA), in coordination with the European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA), has published joint guidelines on environmental, social and governance (ESG) stress testing. The guidelines, referenced as JC/GL/2025/78, provide a coordinated framework for financial institutions across the European Union to conduct ESG stress testing. The joint guidelines establish standardised methodologies and approaches for integrating ESG factors into stress testing frameworks. These guidelines are applicable to banks, insurance undertakings, and investment firms operating within the EU regulatory perimeter. The guidelines aim to enhance the resilience of financial institutions by ensuring they adequately assess and manage risks arising from environmental, social and governance factors. This coordinated approach reflects the regulatory focus on sustainable finance and the need for consistent application of ESG risk assessment across the financial sector. The guidelines have been published in all official EU languages, facilitating implementation across member states. Financial institutions should review the guidance to ensure their stress testing methodologies align with the ESA recommendations. The publication of these joint guidelines represents a significant step in harmonising ESG stress testing practices across EU financial regulators and establishes a common baseline for industry compliance. **Reference:** JC/GL/2025/78, ESAs Joint Guidelines on ESG Stress Testing