EU banks under the spotlight

Deloitte performs a bi-annual benchmark on the ESG Pillar 3 disclosures of 40 European banks. All banks in scope are considered large institutions which have issued securities that are admitted to trading on a regulated market of any Member State and are under European Central Bank (ECB) supervision. The specific analysis of the disclosures of the banks in scope enables a deep dive into the trends for that specific reporting period which can be found in the PDF attachment on this Webpage. A new analysis will be added to this webpage twice a year, in line with the Pillar 3 ESG reporting obligation.

Increasing regulatory focus on climate risk

Highlighting the continuously increasing importance of ESG risk disclosures as an instrument to achieve and safeguard market discipline, the European Banking Authority (EBA) issued binding standards on Pillar 3 ESG risk disclosures in January 2022. These standards enable stakeholders to evaluate banks' ESG-related risks and sustainable finance strategies. Banks are required to provide information about their portfolios in three categories:

• Transition risks
• Physical climate change risks
• Green Asset Ratio and mitigation activities

As illustrated in Figure 1 below, these categories are further divided into ten quantitative granular templates. All templates are mandatory for the reporting periods from 2022 to 2024, except for Template 9, which is to be disclosed on a voluntary basis in the 2024 reporting period.

Figure 1: ESG Pillar 3 disclosures overview

Upcoming changes to the Pillar 3 ESG templates

There are significant ongoing changes across the sustainability regulatory landscape, and the Pillar 3 disclosure framework is no exception. As sustainability requirements continue to evolve, the European Banking Authority (EBA) is responding with targeted updates to Pillar 3 aimed at making ESG reporting more practical, proportionate, and aligned with broader regulatory initiatives. These adjustments, which reflect the European Commission’s drive to simplify sustainability obligations as outlined in the Omnibus proposal, are designed to reduce compliance costs while ensuring transparency. To facilitate a smooth transition, EBA proposes transitional measures and supervisory flexibility, allowing institutions to continue using existing templates until the end of 2026, with new requirements phased in as regulations are finalised. All of these proposed changes are currently subject to consultation until the end of August 2025. We will monitor the impact of these changes on the Pillar 3 ESG templates in our benchmark. Deloitte is closely tracking these developments and will continue to share insights in our ESG Pillar 3 blogs.

Impact on small banks 

A key feature of the proposals is the extension of the Pillar 3 scope from the reference date of December 2026 to include large non-listed institutions, small and non-complex institutions (SNCIs), and large subsidiaries. This comes with a proportionality approach that introduces significantly simplified requirements for SNCIs. For these banks, ESG disclosures will be limited to a table containing essential ESG information and one template focused on information around transition and physical risks, with reporting required only on an annual basis.

Impact of EU Taxonomy 

For large and listed institutions, core ESG disclosure requirements remain, but important clarifications and streamlining measures are being introduced. Notably, several templates, including qualitative disclosures, climate transition risk metrics, and EU Taxonomy-aligned templates, would move to annual rather than semi-annual reporting, unless there are material changes. This adjustment recognises the typically stable nature of this information and helps reduce unnecessary repetition. Additionally, EBA proposes directly referencing the most up-to-date EU Taxonomy templates, ensuring ongoing alignment with regulatory developments. Importantly, the scope of the EU Taxonomy disclosures will therefore focus on Corporate Sustainability Reporting Directive (CSRD) required publishers only. As part of the transition period, these disclosure obligations under Pillar 3 are suspended until the end of 2026.

Impact of NACE classification 

Additionally, sector classifications within templates will be updated to the latest NACE Rev. 2.1 codes, enhancing both accuracy and comparability. This requires banks to recode sectors as well as report figures directly under this revised taxonomy. Template 1, which evaluates potential climate-transition risk in the banking book by showing credit quality, greenhouse-gas emissions and residual maturity across sectors, and Template 5, which estimates vulnerability to physical hazards such as storms, floods and heatwaves, both rely on the underlying industrial classification. From 2026 onward, each counterparty must be assigned a NACE 2.1 code at the most granular possible, four-digit level. Amounts produced with that new classification must then be reported directly against the existing rows in the templates. As the structural layout of the templates remains unchanged, only a limited number of sector labels will be amended to align with the updated code list.

Impact of data hub 

Throughout 2025, the onboarding process for the Pillar 3 Data Hub (P3DH) will also take place. Developed by the EBA, this centralised platform is designed to standardise and streamline the collection of Pillar 3 disclosures, thereby making data from large and other in-scope institutions across the EU more comparable and transparent. By centralising submissions, the P3DH will significantly enhance the accessibility and usability of banks’ sustainability reporting, facilitating more effective benchmarking and analysis. From the end of 2025, the P3DH will become the primary channel for the Pillar 3 disclosures for institutions currently in scope for Pillar 3 reporting, with small and non-complex institutions expected to be included in a later phase. During the transition period, in which banks will be onboarded to the P3DH in phases, banks will continue to publish their reports on their websites.

We encourage all organisations to take active measures to prepare for consistent and transparent ESG-related reporting and disclosure. To discuss any of the themes of this article, or for help with your own Pillar 3 ESG reporting, please contact Anne-Claire van den Wall Bake-Dijkstra, Eric de Weerdt or your usual Deloitte contact.