Pillar III: Information related to ESG risks

European Banking Authority (EBA)

Sustainability and risks derived from climate change are increasingly important at a corporate, social, economic and regulatory level. Regulators, supervisors, and international institutions have begun to develop regulations and standards with the aim of channeling investments into the transition to a low-carbon economy. In this context, under the Capital requirements regulation (CRR), large institutions with securities traded on a regulated market of any Member State are required to disclose prudential information on environmental, social and governance risks (ESG) and climate change risks, including transition and physical risk. In this sense, the European Banking Authority (EBA) must develop draft implementing technical standards (ITS) specifying uniform formats and associated instructions for the disclosure of this information. Following the publication of the consultation paper in March 2021, the EBA has published on January 2022 the final draft ITS on Pillar 3 information on ESG risks.


Pillar III: Information related to ESG risks

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Executive summary

The EBA has published the draft ITS on Pillar 3 disclosures will imply the standardised disclosure of ESG risks by banks every six months. This new disclosure requirements will start in 2023, with December 2022 as the first reference date. The disclosure approach is gradual. The EBA has provided phase-in period until the second half of 2024.

Main content

This Technical Note summarizes the main aspects of the ITS:

  • Qualitative disclosures. Qualitative information on the management of environmental, social and governance risks will be disclosed: level of integration in business strategy and management, roles and responsibilities of committees, functions and the three lines of defence, among others.
  • Quantitative disclosures. A total of 12 quantitative templates on climate risk will be disclosed. These templates capture institutions' exposure:
    • Transition risk. Information that must be disclosed includes: i) credit risk quality of exposures and the implications these exposures may have in terms of credit risk; ii) the energy efficiency of underlying real estate collateral and foreclosed assets, including non-EU countries; iii) institution plans and potential methodology for implementing the disclosure of its scope 1, 2 and 3 financed emissions.
    • Physical risk. It includes template on Exposures in the banking book subject to climate change physical risk.
    • Quantitative information on mitigation actions. Includes templates on assets and exposures that are contributing and enabling climate change mitigation and adaptation: i) Assets for the calculation of the Green Asset Ratio (GAR); ii) assets for the calculation of the Banking Book Taxonomy Alignment Ratio (BTAR); iii) other climate change mitigation actions.

Next Steps

  • This information shall be disclosed on a semi-annual basis with the first reference date being 31 December 2022.
  • The disclosure of GAR will apply from December 2023.
  • A phase-in period until June 2024 is proposed for: i) disclosures on institutions’ financed emissions (scope 3 emissions) ii) the information on the BTAR and iii) KPIs related to Taxonomy.
  • It is expected that the Commission will still make some adjustments to the templates, although these changes should be minor and would not involve additional data requirements.

Download the technical note by clicking here.