EBA Proposes Major Simplification of ESG Supervisory Reporting Requirements for Banks
EU banking supervisor The European Banking Authority (EBA) announced the publication of a significant proposed update to its ESG supervisory reporting framework, aimed at simplifying ESG-related disclosure requirements for banks, and introducing proportionality measures to enable reduced reporting for smaller institutions.
Among the key changes proposed by the EBA is the removal of several reporting EU Taxonomy-related reporting templates, including a requirement for banks to report to supervisors on the share of exposure aligned to the taxonomy (BTAR) – which remain part of banks’ Pillar 3 reporting requirements – and a significant reduction in reporting requirements overall for small banks.
The new proposal forms part of a series of measures launched by the EBA to reduce the reporting burden for banks, while ensuring that supervisory authorities continue to receive the information they need to fulfil their supervisory responsibilities.
In 2024, the EU published a new Banking Package (CRR3), which included changes to reporting requirements for banks beginning in 2025, including separate disclosure of environmental physical and transition risks, and their social and governance risks, total exposure to fossil fuel sector entities, and disclosures on how institutions integrate the identified ESG risks in their business strategy and processes, and governance and risk management. The banking package also extended the scope of ESG risks-related disclosures from only large institutions to all institutions, in areas such as environmental physical risks and transition risks.
Following the publication of the banking package, the EU launched a significant simplification initiative, including its Omnibus I package to reduce the sustainability reporting and regulatory burden on companies, encompassing regulations including the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), as well as the Taxonomy Regulation, and the Carbon Border Adjustment Mechanism (CBAM).
In light of the EU’s simplification initiative, in May 2025, the EBA launched a consultation exploring its own proposed amendments to banks’ Pillar 3 ESG reporting requirements, which included simplifications and clarifications around ESG risk-related reporting, with the new proposals effectively providing a parallel framework for supervisory reporting requirements.
The new proposal includes the introduction of a proportionality-based 3-tiered framework, setting out different obligations for large listed and non-listed institutions, other listed institutions and large subsidiaries, and small and non-complex institutions (SNCIs) and other non-listed institutions.
The framework for large institutions, or those with more than €30 billion in total assets, is largely aligned with the Pillar 3 ESG disclosure framework, removing Taxonomy-related templates, while adding two additional supervisory-specific templates, including one on environment-related corporate exposures, and one on exposure to environmental risks beyond climate.
The framework for smaller institutions includes only one template, requiring annual reporting on climate change-related physical and transition risks in a simplified format relative to larger banks, and removing information on GHG financed emissions.
In a statement introducing the package of simplification measures, incoming EBA Chair, François-Louis Michaud, said:
“With this unprecedented simplification package, the EBA is proposing very concrete changes to make supervisory reporting considerably simpler, smarter and more proportionate. The new approach would reduce unnecessary burden while preserving the quality and relevance of the information supervisors need. It should also support easier data sharing and more integrated reporting across Europe.”
The EBA opened a consultation on the new measures, which remains open until July 10, 2026 with the proposed changes set to apply from September 2027.