EBA Finalises Expanded ESG Disclosure Rules for All EU Banks from December 2026

The European Banking Authority has published its final draft Implementing Technical Standards amending the EU bank Pillar 3 disclosure framework to extend ESG risk disclosure requirements to all institutions, not just large listed banks, while simultaneously simplifying the existing disclosure burden for large institutions by reducing required data points by approximately 37 percent from 2,614 to 1,648. The expanded framework, which applies from 31 December 2026 for most institutions and from 31 December 2027 for small and non-complex institutions, introduces a three-tier proportionality structure with different disclosure requirements for large institutions, other listed institutions and large subsidiaries, and small and non-complex institutions. The ITS also removes Taxonomy-related templates six through nine covering the Green Asset Ratio and Banking Taxonomy Alignment Ratio, eliminates the top 20 carbon-intensive firms template, and introduces new disclosure requirements for aggregate exposure to shadow banking entities under Article 449b of CRR3.

 

The Three-Tier Proportionality Framework

 

The core structural innovation of the final ITS is the replacement of a single disclosure requirement applicable only to large listed institutions with a graduated three-tier framework that matches disclosure depth to institutional size and complexity. Large institutions will apply a full set of templates covering qualitative environmental, social and governance risk information, quantitative climate transition and physical risk templates and a new template on mitigating actions and exposures contributing to sustainability objectives, with semi-annual frequency for key quantitative templates and annual frequency for qualitative disclosures where information has not materially changed. Other listed institutions and large subsidiaries will apply a simplified set of templates excluding some quantitative detail and all qualitative disclosure obligations, with large subsidiaries given the option to voluntarily adopt the full large institution template set where this better reflects their group integration.

Small and non-complex institutions will be required to disclose only the simplified EU CRFR1.1 template covering both transition and physical risk information in a single streamlined format, with qualitative Table 1A removed following consultation feedback that found mandatory qualitative disclosures disproportionate for smaller institutions not subject to supervisory qualitative ESG reporting. The EBA responded to industry concerns about implementation timelines by setting the first reference date for small and non-complex institutions at 31 December 2027, providing additional preparation time aligned with the forthcoming Pillar 3 Data Hub framework for smaller banks. This proportionality architecture delivers a disclosure outcome where small and non-complex institutions report 269 data points compared with 1,648 for large institutions, a differential that reflects the principle that transparency requirements should be calibrated to the systemic importance and risk profile of the disclosing institution.

 

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Template Revisions and the Removal of Taxonomy Disclosures

 

The removal of Templates 6 through 9 covering the Green Asset Ratio and Banking Taxonomy Alignment Ratio represents the most commercially significant simplification in the final ITS, eliminating what the EBA described as duplicative information already covered under the Taxonomy Regulation framework and responding to the reduced scope of the CSRD and Taxonomy Regulation following the Omnibus Directive. The EBA concluded that retaining Taxonomy-related templates in the Pillar 3 framework would create duplication and inconsistency as the proportion of bank counterparties within the Taxonomy disclosure scope continues to shrink, making the GAR an increasingly incomplete measure of sustainable exposure that could mislead rather than inform market participants. Template 10 on mitigating actions has been revised and retained in a broadened form, now requiring disclosure of all exposures contributing to climate risk mitigation regardless of Taxonomy alignment rather than only those meeting Taxonomy criteria.

The EU CRFR1 template for climate transition risk has been updated to add five new fossil fuel sector NACE codes not previously captured, including peat extraction, petroleum extraction support activities, natural gas distribution brokerage, wholesale of solid and liquid fuels and pipeline transport, alongside the addition of data centre computing infrastructure under NACE code K.63 as a sector that highly contributes to climate change following consultation feedback on the rapidly growing energy consumption and emissions associated with AI infrastructure. Agricultural sector exposure has been expanded to three NACE sub-categories covering crop production, forestry and fishing to provide more granular visibility of exposures linked to multiple environmental objectives including biodiversity, water and marine ecosystems. The physical risk template EU CRFR2 has been restructured to replace NUTS level 3 regional breakdowns with country-level geographic disclosure, addressing consultation feedback that NUTS 3 granularity was operationally burdensome and created confidentiality risks without improving comparability.

 

Shadow Banking and Equity Exposure Changes

 

The final ITS introduces a new disclosure template EU SB1 for aggregate exposure to shadow banking entities under the new Article 449b of CRR3, requiring institutions to disclose the total aggregate exposure to entities involved in credit intermediation activities outside the regulated banking framework as defined by Commission Delegated Regulation 2023/2779. The EBA chose a simplified approach requiring only the aggregate total without breakdown by counterparty type, consistent with the principle that disclosure requirements should not pre-empt ongoing policy development on shadow banking exposure limits under the CRR3 mandate to update the EBA guidelines on shadow banking entity exposure limits within 30 months of CRR3 entry into force. This approach reflects a deliberate sequencing where the disclosure framework establishes a transparency baseline now while the more detailed policy framework on shadow banking limits is developed, with more granular breakdown to be considered in future ITS revisions.

The equity exposure template EU CR 10.5 has been amended to reflect CRR3 changes that eliminated the Internal Ratings-Based Approach for equity exposures except under transitional provisions, requiring disclosure only of the total amount of equity exposures under the Standardised Approach categories without a breakdown by category. The amended NACE Rev. 2.1 classification has been incorporated across relevant templates including EU CQ5 on credit quality of loans to non-financial corporations by industry, aligning the disclosure framework with the updated statistical classification that applies from January 2026 across European statistical, supervisory and resolution reporting frameworks. The EBA also clarified that the guidelines on non-performing and forborne exposures have been repealed as the equivalent requirements are now embedded directly in the Pillar 3 ITS templates, eliminating a parallel disclosure track for listed small and non-complex institutions.

 

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International Alignment and Implementation Timeline

 

The final ITS has been developed in alignment with the Basel Committee on Banking Supervision's voluntary framework on climate-related financial risk disclosures published in June 2025, with the amended ESG disclosure templates structured consistently with the BCBS framework's principles-based approach covering governance, risk management and exposures to transition and physical climate risks. This international alignment supports comparability of EU bank climate disclosures with those of banking institutions in other major jurisdictions operating under BCBS guidance, reducing the risk of duplication for EU banks operating internationally and contributing to the global convergence of prudential climate disclosure standards. The EBA will submit the final draft ITS to the European Commission following publication, with the Commission expected to adopt the implementing regulation and publish it in the Official Journal before the 1 December 2026 application date.

The ITS will apply from 1 December 2026 for most institutions with the first reporting reference date of 31 December 2026, providing a limited implementation window that reflects the EBA's judgment that the framework changes are largely clarifications and extensions of existing requirements rather than entirely new disclosure obligations. The EBA will develop a data point model and XBRL taxonomy based on the ITS for implementation within the Pillar 3 Data Hub and intends to provide an updated mapping tool with supervisory reporting during 2026 to support institutions in aligning their disclosure and reporting processes. An updated mapping tool will be published to help institutions understand the relationship between Pillar 3 disclosure templates and supervisory reporting requirements, supporting operational efficiency for institutions subject to both frameworks simultaneously.

 

Source: European Banking Authority (EBA)