The European Banking Authority (EBA), the EU banking supervisor, has announced new proposed amendments to Pillar 3 disclosure requirements for banks. These amendments focus on simplifying and clarifying ESG risk-related reporting, especially for small and medium-sized banks.
The EBA stated that its new proposals are aligned with the European Commission’s initiatives to simplify sustainability reporting, such as the Commission’s Omnibus package. According to the EBA, these proposals offer a proportionate approach to ESG disclosures, tailored to the institution’s type, size, and complexity, with simplified disclosures for banks other than large ones, particularly those that are small or non-listed.
The proposals also aim to simplify ESG reporting for large banks by clarifying existing requirements based on accumulated experience. The EBA’s proposals follow the EU’s 2024 Banking Package (CRR3) publication, which revised reporting requirements for banks effective from 2025. This includes the expansion of ESG risks-related disclosures from exclusively large institutions to all institutions, covering areas such as environmental physical risks and transition risks.
The new reporting requirements under the banking package encompass separate disclosures of environmental physical and transition risks, social and governance risks, total exposure to entities in the fossil fuel sector, and disclosures on how institutions integrate identified ESG risks into their business strategy, processes, governance, and risk management.
According to the EBA’s new proposals, institutions will be subject to different disclosure requirements: large institutions will need to provide a “full set of information,” other listed institutions and large subsidiaries will provide a “simplified set of information,” and small and non-complex institutions (SNCIs) will provide an “essential set of information.” For example, large institutions will report semi-annually on “Climate Change transition risk: Credit quality of exposures by sector, emissions and residual maturity,” whereas other listed institutions and large subsidiaries will report annually, and SNCIs will have a separate “Transition and physical risk for SNCI” annual disclosure.
Large banks will also be required to disclose their green asset ratio (GAR), reflecting the share of assets aligned with sustainable activities. The EBA’s proposals ensure the full alignment of the GAR with the EU’s Taxonomy regulation. Additionally, the EBA is considering reducing the frequency of some disclosures for large banks based on materiality.
The EBA has launched a public consultation on these new proposals, with submissions due by 22 August 2025. Click here to access the consultation paper.
