EBA Puts ESG Disclosure Pressure on Hold While Brussels Rewrites the Rules

Key Takeaways

• EBA No-Action Letter: The EBA advised national supervisors not to prioritize enforcement of specific ESG disclosure templates under Pillar 3, citing legal and operational uncertainties.
• Regulatory Transition Period: The pause in enforcement applies to large listed institutions and others newly brought into scope under the expanded ESG disclosure rules in CRR3, effective January 2025.
• Omnibus Package in Play: The move reflects ongoing legislative reforms under the European Commission’s Omnibus package, which aims to simplify sustainability reporting across the CSRD, CSDDD, and EU Taxonomy.
• ESG Risk Dashboard Updated: The EBA’s latest dashboard shows a stable ESG risk landscape as of December 2024, but future editions will adjust to reflect the relaxed enforcement stance.
• Supervisory Clarity: The no-action letter aims to reduce compliance burdens, avoid regulatory overlap, and give institutions legal clarity during the transition to new disclosure requirements.

Deep Dive

The European Banking Authority (EBA) has issued a no-action letter signaling a temporary pause on enforcement of important ESG disclosure requirements. The decision comes as financial institutions across Europe brace for yet another wave of sustainability reporting reforms, and the regulators themselves admit things are in flux.

For now, the EBA is telling supervisors to not rush. Don't prioritize enforcement of certain ESG templates under the current Pillar 3 disclosure rules, not until the new rulebook is more settled.

Let’s be clear, this isn’t a license to ignore ESG risks. But it is a recognition that forcing institutions to comply with technical disclosure requirements that are already halfway out the door is, frankly, a recipe for confusion.

At the heart of the issue are templates EU 6 to EU 10, and a few columns in Templates 1 and 4, part of the EBA’s Implementing Technical Standards (ITS) for Pillar 3 disclosures. These were meant to bring transparency to climate and ESG exposures. But with the European Commission’s “Omnibus” legislative package still working its way through Brussels, those templates may soon be outdated.

To avoid banks being whipsawed between overlapping rules, the EBA has effectively told national supervisors to hold your fire. Until the revised ITS lands, enforcement of these particular templates shouldn’t be a top priority.

That applies to:

• Large institutions with listed securities under CRR Article 449a
• Smaller or newly in-scope institutions facing the new CRR3 requirements kicking in from January 2025.

In short, this buys everyone some time, and spares banks from investing heavily in disclosures that might be rewritten in six months.

Why Now?

This isn’t just regulatory navel-gazing. The timing is everything. Earlier this year, the European Commission introduced its “Omnibus” package, an effort to simplify and streamline sustainability reporting across the board. It proposes targeted amendments to the CSRD, the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy Regulation.

For the EBA, that package throws a wrench in the gears. If lawmakers are still finalizing how companies should report sustainability information, then locking in technical templates for banks risks building the plane while flying it.

In May, the EBA floated proposed changes in a Consultation Paper. Today’s no-action letter essentially solidifies that position: don’t enforce ESG templates that might soon be replaced. Legal clarity and supervisory consistency take priority.

And while that may sound like bureaucratic tap dancing, for compliance teams trying to keep up, it's a welcome dose of realism.

Alongside the no-action letter, the EBA also updated its ESG Risk Dashboard using December 2024 data. No alarm bells there, the risk landscape remains stable, in line with the slow-burn nature of climate risks and the cautious evolution of banking portfolios.

But the EBA also made clear that future editions of the dashboard will reflect the relaxed enforcement stance and evolving disclosure landscape. So don’t be surprised if certain data points get slimmed down or reformatted in the next few quarters.

A Delicate Balancing Act

Today’s no-action letter isn’t about abandoning ESG transparency, it’s about making sure the foundation is stable before the scaffolding goes up. The EBA wants to avoid a situation where banks are chasing compliance ghosts, templates that might change, overlap, or contradict other EU rules.

It also reflects a growing awareness within EU institutions that sustainability reporting, while critical, has become an alphabet soup of overlapping obligations. The Omnibus package is supposed to fix that, but until it’s finalized, the EBA is calling for a little patience.

In the meantime, banks should stay engaged, prepare for eventual changes, and keep an eye on what Brussels decides over the coming months. The sustainability reporting road may still be under construction, but at least for now, there’s a detour that makes the ride a little smoother.

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