EBA Tells Regulators to Pause ESG Disclosure Enforcement Pending Omnibus Outcome

The European Banking Authority has issued a no-action letter recommending that national regulators not prioritise enforcement of new ESG Pillar 3 disclosure requirements for banks while the EU's Omnibus simplification initiative remains unresolved. The move reflects concerns that banks could face conflicting disclosure obligations if required to comply with rules that may change significantly under the Omnibus package.

The EU's 2024 Banking Package introduced ESG Pillar 3 requirements from 2025, including separate disclosures on environmental physical and transition risks, social and governance risks, fossil fuel exposures, and integration of ESG risks into business strategy. The package also extended ESG risk disclosure obligations beyond large institutions to all banks. However, the European Commission's February 2025 Omnibus I initiative proposed major changes to CSRD, CSDDD, the EU Taxonomy, and the Carbon Border Adjustment Mechanism, creating uncertainty over how those changes will cascade into the EBA's banking disclosure requirements.

The EBA noted specific timing risks, including the possibility that banks could simultaneously face conflicting requirements — such as those around the Green Asset Ratio under the Taxonomy — or that smaller institutions newly in scope of ESG disclosures could face disproportionate compliance burdens for requirements that may change substantially once the Omnibus is finalised. The EBA is also evaluating its own proposed amendments to the banking package in light of the simplification initiative.

The EBA stated it remains committed to delivering a coherent and streamlined ESG disclosure framework and will work closely with EU institutions to ensure smooth implementation once the final Omnibus outcome is clear. For banks with operations in India and other jurisdictions, the pause reduces near-term compliance pressure while adding uncertainty about the final shape of European ESG reporting obligations that often affect multinationals' global disclosure practices.

Key figure — Omnibus I launched February 2025, targeting major changes to CSRD, CSDDD, and EU Taxonomy