The European Banking Authority (EBA) was requested by the European Commission to provide its opinion on the draft amendment of the simplified sustainability reporting standards (ESRS). This opinion focuses on the data needs of institutions for risk management and the interoperability with ESG risk disclosure requirements. The EBA adopted this opinion in accordance with its responsibilities and applicable regulations.
- Title: Opinion on the draft simplified European Sustainability Reporting Standards (ESRS)
- Author: European Banking Authority (EBA)
- Date: 17 February 2026
- Type: opinion report
- Scope: analysis of the simplified draft European sustainability reporting standards (ESRS) “Set 1”, focusing on aspects related to financial institutions, notably data needs for ESG risk management, interoperability with prudential requirements (article 449a CRR) and international ISSB standards (p. 1-2).
The EBA was requested by the European Commission to provide its opinion on the simplified ESRS draft, aiming to reduce reporting burden while improving competitiveness and interoperability with international standards (p. 1-3). The EBA supports the simplification objectives and the priority given to quantitative data but expresses significant reservations about the proposed permanent reliefs, notably exemptions related to excessive cost or effort, which risk permanently reducing the quality and availability of essential data for ESG risk management by financial institutions (p. 3-7). It emphasizes that this data is crucial for reliable risk assessment, financial stability and financing the real economy (p. 3-4). The EBA recommends setting time limits (three years, until 2029) for these reliefs to avoid prolonged disclosure gaps, especially for large companies covered by the revised CSRD (p. 6-7, 8-9). It also warns against greenwashing risks linked to exemptions on acquisitions, disposals and joint operations, and calls for better alignment of standards to cover impacts in the value chain, crucial for the financial sector (p. 9-11). Finally, the EBA insists on maintaining the GHG emissions intensity ratio, removed in the simplified version, as it is widely used to assess financial climate risks (p. 11-12). In conclusion, the EBA calls on the Commission to adopt a calibrated approach to reliefs, ensuring consistency with ISSB standards, data quality and transparency, to support the sustainable transition and financial stability in Europe.
The document responds to a request from the European Commission addressed to the EBA in December 2025, within the framework of the revision of the simplified European sustainability reporting standards (ESRS), prepared by EFRAG (p. 1-2). The objective is to reduce complexity and reporting burden while ensuring consistency with European regulation (CSRD, CRR) and international standards (ISSB) (p. 2-3). The EBA is competent to assess the relevance of standards for financial institutions, notably regarding data needed for ESG risk management and financial stability (p. 2). The scope of the opinion covers transversal standards (ESRS 1 and 2) and key environmental standards (ESRS E1 Climate, E4 Biodiversity) (p. 2). The document is based on the public consultation, technical exchanges with EFRAG and stakeholder feedback (p. 2-3).
Objectives and principles of simplification:
- The EBA supports simplification aiming to reduce the number of mandatory data, prioritize quantitative data and strengthen interoperability with international standards (p. 3).
- However, it stresses the need to preserve the quality and availability of essential data for ESG risk management (p. 3-4).
Proposed reliefs and exemptions:
- Several permanent reliefs are criticized, notably the exemption for “excessive cost or effort” which would allow partial or incomplete reporting without time limit (p. 5-7).
- The EBA recommends a three-year limit (until 2029) for these exemptions to avoid lasting data gaps (p. 6-7, 8-9).
- Exemptions on acquisitions/disposals and joint operations are considered risky, potentially fostering greenwashing and reducing interoperability with ISSB (p. 9).
Interoperability and consistency with international standards:
- The EBA highlights the importance of aligning ESRS with ISSB standards to avoid divergence and preserve the competitiveness of European companies (p. 3, 19-20, 40-41).
Importance of data for financial institutions:
- Institutions need reliable and comparable information on ESG risks of their counterparties, notably through the value chain, to manage their risks and ensure financial stability (p. 3-4, 10-11).
- The EBA recommends better articulation of requirements to explicitly cover the value chain, especially for financial institutions (p. 10-11).
Maintenance of key indicators:
- The EBA regrets the removal of the GHG emissions intensity ratio (ESRS E1-6), an indicator widely used by analysts and investors to assess financial climate risks (p. 11-12).
- It recommends reintegrating it into the revised standards (p. 12).
Established facts:
- The simplified ESRS draft reduces the number of data to be provided and introduces several permanent reliefs (p. 3-7).
- These reliefs notably concern partial data coverage, use of information available without excessive cost, acquisitions/disposals, joint operations, and anticipated financial effects (p. 5-10).
- The revised CSRD limits its scope to large companies (more than 1,000 employees, turnover > €450 million) (p. 4).
Assumptions and interpretations:
- The EBA considers that these permanent reliefs risk causing a lasting reduction in the quality and quantity of available data (p. 6-7, 8-9).
- It believes large companies have the capacity to fully comply with requirements within a reasonable timeframe (p. 6-7).
- The absence of time limits could encourage greenwashing practices and delay methodological progress (p. 5-6, 9).
Uncertainties:
- The exact impact of these reliefs on data quality and financial stability remains to be measured.
- The evolution of company practices and implementation of recommendations will depend on the Commission’s final decisions (p. 7-9).
The EBA concludes that ESRS simplification is desirable but must be calibrated so as not to compromise the availability and quality of essential data for ESG risk management and financial stability (p. 3-4, 19-20).
It recommends:
- Setting a three-year limit (until 2029) for reliefs related to “excessive cost or effort” to avoid prolonged data gaps (p. 6-7, 8-9, 40).
- Making the exemption for acquisitions and disposals conditional on the absence of data accessible without excessive cost, and improving wording to cover the exposure of the entity and the group (p. 9-10).
- Removing the permanent exemption for joint operations to avoid significant omissions (p. 10).
- Strengthening the articulation of standards so that financial institutions can obtain information on risks in their value chain (p. 10-11).
- Maintaining the GHG emissions intensity ratio (ESRS E1-6) in the revised standards (p. 11-12).
- Ensuring consistency and interoperability with ISSB standards, notably regarding exemptions on anticipated financial effects (p. 8-9, 40-41).
These recommendations aim to guarantee the reliability, comparability and relevance of ESG data for users, especially financial institutions, and to support the sustainable transition and financial stability in Europe.
Synthesis note written from the full document by DataSAI Academy. This note comes from the scientific library of the DataSAI Academy, open to all.