EBA Proposes Streamlined ESG Reporting for Banks

Overview

The European Banking Authority (EBA) has proposed simplified ESG disclosure requirements for small and non-complex institutions (SNCI). The changes aim to reduce the compliance burden while maintaining data quality and transparency.

Photo by EBA

What’s Changing?

The EBA is revising ESG Pillar 3 disclosure rules to better fit banks of different sizes.

Key changes include:

• A lighter reporting framework for SNCIs

• Adjusted disclosure templates and tables

• Simplified qualitative and quantitative requirements

• Proportional reporting aligned with risk level and exposure

This approach intends to improve accessibility while preserving consistency with broader sustainability goals.

Focus Areas of Disclosure

The new consultation paper outlines three main areas for ESG risk reporting:

1. ESG Risks

   • Banks must disclose how they manage environmental, social, and governance risks.

   • Specific attention is given to transition and physical climate risks.

2. Equity Exposures

   • Institutions must detail equity exposures, especially those measured at fair value.

   • This helps investors understand how ESG risks affect financial positions.

3. Shadow Banking

   • New disclosure rules cover exposures to shadow banking entities.

   • This ensures transparency in risk associated with less-regulated sectors.
     

Simplified Framework for Smaller Banks

Smaller banks, which lack the scale of larger institutions, will benefit from reduced reporting burdens.

Simplifications include:

• Fewer disclosure requirements

• Exemptions from some templates

• Less granular data obligations

• Use of qualitative descriptions where appropriate

These changes apply only to banks that meet EBA’s SNCI criteria.

Timeline and Next Steps

The EBA has opened a public consultation on the proposed amendments.

Key dates:

• Consultation closes: August 26, 2025

• Public hearing: July 3, 2025

Final draft amendments will follow based on stakeholder feedback.

Why It Matters

The proposal strikes a balance between transparency and operational feasibility. It allows smaller banks to meet ESG expectations without facing excessive reporting demands.

Larger banks remain subject to full disclosure rules, preserving comprehensive ESG visibility across the sector.

Read more here!