Response to consultation on Implementing Technical Standards on amended disclosure requirements for ESG risks, equity exposures and aggregate exposure to shadow banking entities
1. Do you have any comments on the proposed set of information for Large institutions?
EY welcomes the opportunity to comment on the EBA Consultation Paper on ITS on disclosures of ESG risks, equity exposures and aggregate exposures to shadow banking entities. We offer feedback from the standpoint of a third party that works with firms subject to these regulatory requirements. Accordingly, our response contains observations on specific aspects of the proposed amendments to Pillar 3 ESG-related risk disclosures outlined in the Consultation Paper.
Overall, EY acknowledges the EBA’s efforts to simplify Pillar 3 ESG reporting. The paper represents a step towards developing a proportionate ESG prudential disclosure framework that is consistent with the aims of the European Commission’s Omnibus Simplification agenda. While the guidance is generally clear, there are certain areas where additional clarification from the EBA would support consistent and reliable disclosure of ESG-related risks. Further details and suggestions for amendment are provided to the individual questions below.
In response to the question regarding the proposed information requirements for large institutions, we note that Banks will be expected to disclose how they incorporate identified ESG risks into their business strategy, operations, governance frameworks, and risk management practices. Given the lack of prescribed content and structure for such disclosures, institutions may adopt varying approaches. We recommend that the EBA develops structured qualitative templates aligned with the best practices outlined in the 2024 CSRD reports.
2. Do you have any comments on the simplified set of information for Other listed institutions and Large subsidiaries?
N/A
3. Do you have any comments on the simplified set of information proposed for SNCI and other non-listed institutions?
N/A
4. Do you have any comments on the proposed approach based on materiality principle to reduce the frequency (from semi-annual to annual) of specific templates (qualitative, template 3, and templates 6-10) for large listed institutions?
N/A
5. Do you have any comments on the transitional provisions and on the overall content of section 3.5 of the consultation paper?
N/A
6. Do you have any comments on the proposed amendments to Table 1 and Table 3?
N/A
7. Do you have any further suggestions on Table 1A?
We suggest providing clearer guidance on the required detail for responses in Table 1A, based on information from Tables 1, 2, and 3.
8. Do you have any comments on the proposed additions and deletions to the sector breakdown?
N/A
9. Do you have any views with regards to the update of the templates to NACE 2.1?
N/A
10. Do you have any views with regards to NACE code K – Telecommunication, computer programming, consulting, computing infrastructure and other information service activities, and in particular K 63 - Computing infrastructure, data processing, hosting and other information service activities, whether these sectors should be rather allocated in the template under section Exposures towards sectors that highly contribute to climate change?
N/A
11. Do you have any comments on the inclusion of row “Coverage of portfolio with use of proxies (according to PCAF)”?
We note that the PCAF currently utilizes different levels of assumptions and estimations in calculating financed emissions. For this reason, further clarification regarding the term “use of proxies” in this context would be beneficial.
12. Do you have any further comments on Template 1?
N/A
13. Do you have any comments or alternative suggestions for SNCIs and other institutions that are not listed, regarding the sector breakdown?
N/A
14. Do you have any additional suggestions how to adjust Template 1A for SNCIs and other institutions that are not listed?
We observe that Template 1A references ‘transition risk’; however, it is not clear within the template whether transition risk is adequately addressed, either through the sectoral (NACE) breakdown or by including relevant transition risk metrics such as financed GHG emissions (Scope 1, 2, and 3). We consider it would be beneficial to firms if further guidance or context regarding this aspect of the template were provided to minimize potential confusion.
Additionally, if the template’s intention is to require more detailed information—such as financed GHG emissions—this may present significant challenges for SNCIs, particularly in light of the proposed revisions to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). Specifically, the proposal to reduce the number of undertakings subject to sustainability reporting under the CSRD would limit the availability of firm-level data, thereby making it more difficult for SNCIs to obtain such information from smaller counterparties.
15. Do you have any further comments on Template 1A?
N/A
16. Should Template 2 in addition include separate information on EPC labels estimated and about the share of EPC labels that can be estimated?
We do not support the inclusion of EPC labels in this context, as the relevant and primary data has already been requested in the form of energy consumption figures. The addition of estimated EPC label information is unlikely to offer substantial incremental value and may result in unnecessary reporting requirements for firms.
17. Should rows 2, 3 and 4 and 7, 8 and 9 for the EP score continue to include estimates or should it only include actual information on energy consumption, akin to the same rows for EPC labels?
Yes, we consider it advantageous to incorporate estimates as well as actuals, recognizing that having some information is preferable to having none. Nevertheless, further discussion may focus on the methodology employed to estimate the EP scores.
18. Do you have any comments on the inclusion of information on covered bonds?
N/A
19. Do you have any comments on the breakdown included in columns b to g on the levels of energy performance?
N/A
20. Do you have any further comments on Template 2?
Within Template 2, we have noted ambiguity regarding which values should correspond to the total gross carrying amount and which represent subsets of this total for reconciliation and accuracy checks. For instance, it remains unclear whether the figures reported in the EP scores and EP labels sections should collectively equal the overall total or if they present distinct perspectives on exposures—specifically, should the combined values from EP scores and EP labels separately sum to the total?
Additionally, clarification from the EBA on the intent behind the new column g2, ‘Without EP score in kWh/m² of collateral (neither measured nor estimated)’, would be appreciated. As banks may choose to populate this column rather than identifying an appropriate proxy, it would be beneficial to specify whether this column is intended for properties not eligible for EPC classification, such as land or parking spaces.
21. Do you have any comments on Template 3?
N/A
22. Do you have any comments with the proposals on Template 4 and the instructions?
N/A
23. Do you have any views on whether this template could be improved with some more granular information in the rows, by requesting e.g. split by sector of counterparty or other?
We recommend adding a column for NACE or sector information to enhance comparability across banks, while ensuring sensitive counterparty data remains protected.
24. Do you have any further comments on Template 4?
To enhance clarity and reduce unnecessary effort, we recommend that the EBA provides a more specific source for the list of 20 carbon-intensive firms, rather than relying on illustrative sources. We believe this approach would support enhanced comparability and consistency in reporting practices.
25. Do you have any comments on the proposal using NUTS level 3 breakdown for Large institutions and NUTS level 2 for Other listed institutions and Large subsidiaries? Would NUTS level 2 breakdown be sufficient for Large institutions as well?
We suggest standardising the NUTS breakdown level across institutions, as accessing information at both levels 2 and 3 is similarly straightforward. More detailed data (NUTS level 3) is preferred, since physical risk impact depends on asset location and granular information yields more accurate estimates.
26. Do you have any comments on the instructions for the accompanying narrative and on whether they are comprehensive and clear?
In accompanying narratives, it may be helpful to mandate firms to disclose which physical risk scenario and methodology were employed to assess whether exposures are subject to physical risks.
27. Do you have any further comments on Template 5 and on its simplified version Template 5A?
In our view, we believe that further guidance on treatment of countries without NUTS classification (e.g. China, Japan, India) would be helpful.
28. Do you have any comments on the proposal to fully align templates on the GAR, that is, templates 7 and 8, with those under the Taxonomy delegated act by replacing the templates with a direct cross reference to the delegated act?
N/A
29. Do you have any comments on the proposal related the BTAR and to keep it voluntary?
N/A
30. Do you have any comments regarding the adjustments to template 10?
N/A
31. Do you have any further comments on the Consultation Paper Pillar 3 disclosures requirements on ESG risk?
N/A
32. Are the new template EU SB 1 and the related instructions clear to the respondents? If no, please motivate your response.
N/A
33. Do the respondents agree that the new template EU SB 1 and the related instructions fit the purpose and meet the requirements set out in the underlying regulation?
N/A
34. Are the amended template EU CR 10.5 and the related instructions clear to the respondents? If no, please motivate your response.
N/A
35. Do the respondents agree that the amended template EU CR 10.5 and the related instructions fit the purpose and meet the requirements set out in the underlying regulation?
N/A
36. Do the respondents consider that the “mapping tool” appropriately reflects the mapping of the quantitative disclosure templates with supervisory reporting templates?
N/A