Published on 20 January 2026, CSSF Circular 26/905 introduces a major shift in how Less Significant Institutions (LSIs) in Luxembourg must organise, govern, and operationalise their approach to environmental, social and governance (ESG) risks. Luxembourg’s Significant Institutions (SIs) have already been required to apply the European Banking Authority (EBA) Guidelines as of 11 January 2026, following the ECB Governing Council decision of 28 May 2025 and to continue strengthening their ESG management practices.

With Circular 26/905, the CSSF formally adopts the EBA Guidelines on the management of ESG risks (EBA/GL/2025/01) into its supervisory practice. The Guidelines, originally published by the EBA on 9 January 2025, establish a harmonised and far-reaching framework for how European Union (EU) banks must identify, measure (with the use of scenario analysis), manage and monitor ESG risks across their business models and risk frameworks, supported by environmental scenario analysis to assess resilience under different transition and physical risk pathways. In this context, EU banks are now required to perform regular institution‑specific ESG risk materiality assessments which should give each bank a clear view of how ESG risks affect their business model and risk profile.

According to the CSSF, this step aims to ensure supervisory convergence at the European level, reinforcing a consistent and forward-looking approach to ESG risk oversight. Importantly, the Circular does more than simply “acknowledge” EBA expectations as it integrates them into the CSSF’s regulatory approach, creating binding expectations for all LSIs in Luxembourg.

 

AGENDA

  • Introductions
  • Regulatory Context
  • Embedding the EBA Guidance on ESG Risk
  • Scenario Analysis and Stress Testing
  • Spotlight on Materiality
  • Preparing for Compliance

 

FEATURED SPEAKERS

  • Janice Daly, Partner, Advisory - Consulting
  • Jonathan Fitzpatrick, Partner, Head of Quantitative Risk