Executive summary

The European Banking Authority (EBA) has published its final draft of Implementing Technical Standards (ITS), updating Pillar 3 disclosure requirements for environmental, social and governance (ESG) risks, equity exposures and shadow banking exposures under CRR3. The revised framework introduces a significantly more proportionate approach to ESG disclosures, reducing reporting burdens while maintaining transparency and supervisory effectiveness. The changes align Pillar 3 disclosures with the evolving ESG supervisory reporting framework and broader initiatives simplifying EU sustainability reporting.

Key takeaways

Context: The EBA has updated Pillar 3 disclosure requirements to support the implementation of CRR3 and extend ESG-related disclosures across a broader set of institutions.

Challenge: Banks, particularly smaller and less complex institutions, have faced greater complexity and higher costs associated with reporting ESG disclosures.

Chartis Insight: The revised framework represents a shift from ‘one-size-fits-all’ ESG reporting toward a more risk-based and proportional disclosure model that better reflects institutional size, complexity and materiality.

Implications: Financial institutions should use this transition period to strengthen ESG data governance, align Pillar 3 and supervisory reporting processes, and invest in scalable ESG reporting architectures.

Strategic outlook: The convergence of Pillar 3 disclosures, ESG supervisory reporting and future supervisory data collection initiatives signals a move toward integrated sustainability reporting ecosystems across Europe.

Overview and context

The EBA’s latest Pillar 3 update under CRR3 marks a significant step toward simpler, smarter ESG disclosures. Covering ESG risks, equity exposures and shadow banking, the framework strengthens transparency while substantially reducing reporting burdens.

This more proportionate approach cuts disclosure requirements by up to 84% for smaller institutions, with ESG data for Small and Non-Complex Institutions (SNCI) set to be centrally pre-filled via the Pillar 3 Data Hub. The reforms also bring Pillar 3 disclosures into closer alignment with the EBA’s broader ESG supervisory reporting framework, paving the way for a more streamlined and integrated sustainability reporting ecosystem.

Chartis Insight

Chartis views the EBA’s revised Pillar 3 framework as a pivotal step toward smarter ESG reporting. The emphasis is moving from more disclosures to better disclosures, with greater proportionality, consistency and usability across institutions.

The alignment of Pillar 3, ESG supervisory reporting and the Pillar 3 Data Hub signals a broader shift toward integrated regulatory reporting. Institutions that invest in unified ESG data and reporting platforms today will be best positioned to meet tomorrow’s regulatory and supervisory demands.

Implications and recommendations

For financial institutions: Reassess ESG reporting operating models and leverage the simplified framework to improve efficiency while maintaining data quality and governance.

For risk and compliance teams: Align ESG risk measurement, Pillar 3 disclosures and supervisory reporting processes to create a single source of truth for ESG data.

For technology vendors: Focus on integrated ESG reporting architectures that support both supervisory and public disclosure requirements through common data models.

For regulators: Continue harmonizing disclosure and supervisory reporting frameworks to reduce duplication and improve data consistency across jurisdictions.

For executive management: Treat this reduction in the reporting burden as an opportunity to improve ESG data quality, analytics and strategic risk management capabilities rather than simply reducing the compliance workload.