These Joint Guidelines on ESG Stress Testing provide a unified European framework for assessing how environmental, social, and governance risks impact the financial sector. These standards require competent authorities to evaluate both the short‑term financial stability and long‑term business model resilience of credit institutions and insurance firms. The methodology initially prioritizes climate‑related environmental risks, examining both physical threats like weather events and transition risks such as policy shifts. To ensure practical application, the guidelines emphasize proportionality and materiality, allowing for simplified approaches based on the size and complexity of the entity. 𝗜𝗺𝗽𝗹𝗲𝗺𝗲𝗻𝘁𝗮𝘁𝗶𝗼𝗻 𝗶𝘀 𝘀𝗲𝘁 𝗳𝗼𝗿 𝗝𝗮𝗻𝘂𝗮𝗿𝘆 𝟭, 𝟮𝟬𝟮𝟳, following a refinement process that integrated public feedback on data granularity and scenario timelines. Ultimately, the guidelines aim to foster supervisory consistency across the EU while adapting to the evolving maturity of ESG data and modeling.