The European Banking Authority (EBA) has issued a no action letter advising regulators not to prioritize enforcement of the upcoming ESG Pillar 3 disclosure requirements for banks, pending clarity on the European Commission’s Omnibus I initiative to simplify sustainability reporting and compliance obligations.

The guidance follows the EU’s 2024 Banking Package (CRR3), which introduced ESG-related reporting requirements from 2025, including separate disclosures on environmental physical and transition risks, social and governance risks, fossil fuel sector exposures, and how institutions integrate ESG risks into their strategies, governance, and risk management. These rules expanded ESG disclosure obligations from only large banks to all institutions.

In February 2025, the European Commission launched Omnibus I, aimed at reducing sustainability reporting burdens and revising multiple regulations, including the CSRD, CSDDD, Taxonomy Regulation, and CBAM. The EBA is also reviewing amendments to the banking package in light of this initiative.

According to the EBA, ongoing changes—particularly to the EU Taxonomy and CSRD—are likely to significantly affect the structure and content of ESG risk disclosures. The regulator warned that enforcing the current rules amid this uncertainty could result in conflicting requirements, such as those linked to the Green Asset Ratio, and impose disproportionate burdens on smaller banks facing these disclosures for the first time.

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