EBF submits recommendations to further streamline sustainability reporting in the EU

EBF RESPONSE

BRUSSELS, 29 September 2025 - The European Banking Federation (EBF) has submitted its detailed response to EFRAG's consultation on the Exposure Drafts of the European Sustainability Reporting Standards (ESRS). While the EBF welcomes the revised and simplified Exposure Drafts of the ESRS, there is room to further streamline sustainability reporting in the European Union - ensuring it does not impose disproportionate burdens on preparers, particularly within the banking sector - while also supporting a just green transition.

In its response, the EBF emphasises that the final proposal should be more ambitious, incorporating more substantial simplifications and acknowledging the specificities of financial institutions, in particular banks, while preserving the most material data points corresponding to the information needs of the key users of non-financial information.

The EBF's key recommendations include:

Ø Aligning with market practice in how GHG emission reduction targets are set in the banking sector is essential to avoid creating wrong incentives. For banks, publication of absolute emission targets in most cases would not result in useful information and would create wrong incentives in terms of decarbonization of high-emitting sectors, as high-emission sectors are those in need of transition financing. It is essential that banks are allowed to use both intensity and absolute targets, and are not required to convert intensity targets to absolute ones when the latter are not suitable.

Ø Guidelines on assessing positive and negative impacts are overly complex. We welcome the idea of giving more guidance and clarification on how to assess positive and negative impacts. However, the suggested "gross vs net" guidelines do not provide the necessary clarity and simplification, and therefore they should be deleted at this stage. We believe that the whole concept needs reworking, and the guidelines should be subsequently written more clearly.

Ø Apply the relief for missing data for all types of disclosures. The draft standards require banks to calculate and publish GHG emissions across the entire scope, regardless of data quality and coverage. However, banks calculate their own GHG emissions based on their clients' data and do not always have sufficient data or sufficiently high-quality data to achieve a reliable calculation (especially on the upstream and downstream value chain in scope 3). Therefore, the relief for missing data should be applied consistently regardless of the disclosure type, including GHG emissions.

Ø Fair presentation principle. While we are not opposed to the idea of the fair presentation principle, it is essential to ensure that its application leads to real and clear burden reduction for businesses and banks and more coherent sustainability reporting without the risk of imposing additional requirements in the reporting or auditing process. To this end, a clear and complete definition of the fair presentation principle - which could refer explicitly to the ISSB definition - is necessary.

Ø Anticipated financial effects. While the long-term goal of more detailed quantitative data on anticipated financial effects is acknowledged, a phased approach is needed. Given the nascent stage of disclosing anticipated financial effects, Option 2 (qualitative information) provides a workable solution that supports transparency and comparability, without compromising the quality or credibility of disclosures at the moment. It also allows time for methodologies and data availability to mature, paving the way for more robust reporting in the future. Therefore, Option 2 (qualitative information) is preferable at the moment, while Option 1 (quantitative information) could be appropriate in the long run and only once both sustainability reporting and auditing practices have sufficiently matured.

Ø Solution for value chain reporting: We acknowledge that EFRAG has deliberately not included any proposals in the draft standards to limit value chain reporting for financial institutions, on the basis that this issue is subject to Level 1 discussions. However, if no solution is provided at Level 1, it is essential, at a minimum, to include a general provision in ESRS 1 that allows financial undertakings to adapt their sustainability reporting, including value chain reporting, to the specificities of financial institutions, so that their sustainability reporting according to ESRS meets the qualitative criteria of relevance and reliability. While we acknowledge that the financial industry as a whole is dependent on robust and harmonized ESG data to conduct risk assessments and abide by financial regulations, financial institutions have very broad and complex value chains. Financial institutions do not participate directly in the value chains of products or services, but act as financial intermediaries, financing thousands or even millions of customers, each having numerous value chains. Reporting qualitative information and metrics on the downstream value chain is particularly challenging due to varying degrees of proximity to counterparties and differing capacities to obtain and assess the tangible impact they have on sustainability matters.

Ø Fewer data points do not automatically lead to fewer disclosures or reduced effort. While we strongly welcome the significant reduction in the total number of mandatory data points, fewer data points might not lead to fewer disclosures and efforts, as the same information in deleted data points might have been provided via other remaining data points or was already assessed as not material. Some data points have also been merged without decreasing the amount of information that needs to be reported. Therefore, the actual burden of reporting may not be equal to the percentage of deleted data points and may remain higher than anticipated.

The EBF stands ready to continue its active engagement with regulators and standard setters to ensure the ESRS remains clear, relevant, and proportionate, ultimately supporting sustainable finance and transparency without compromising operational feasibility for banks.

You can access the full EBF response here.