A note from the Council of the European Union, dated 23 July 2026, publishes the European Banking Authority's (EBA) draft implementing technical standards (ITS) amending Commission Implementing Regulation (EU) 2024/3172 on prudential disclosures. The draft ITS updates disclosure requirements for ESG risks, equity exposures, and aggregate exposure to shadow banking entities, aiming to enhance transparency and comparability for market participants.
The document, circulated by the Council's Banking Union and Financial Services working party, presents the EBA's final report submitted to the Commission on 30 June 2026. The draft ITS introduce new templates and tables for ESG risk disclosures, requiring banks to report on climate change transition risk, physical risk, and other environmental, social, and governance factors. For equity exposures, the amendments refine the classification and disclosure of equity instruments held in the banking book, aligning with the revised Capital Requirements Regulation (CRR III). Regarding shadow banking, the ITS mandate more granular reporting of exposures to entities outside the regulated banking sector, including investment funds and special purpose vehicles.
The proposed changes are expected to impose additional compliance costs on EU banks, particularly those with significant equity portfolios or shadow banking linkages. Smaller institutions may face disproportionate administrative burdens relative to their size. However, the enhanced disclosures aim to improve risk assessment by investors and supervisors, potentially reducing systemic vulnerabilities. The EBA estimates that the new ESG templates will require banks to invest in data collection and IT systems, but argues that long-term benefits include better capital allocation and market discipline.
Next steps involve the European Commission's endorsement of the draft ITS, followed by scrutiny by the European Parliament and Council. If no objections are raised within three months, the amendments will enter into force, with a phased implementation timeline starting in 2027. The Council note serves as a formal transmission to member states, inviting comments ahead of the Commission's adoption decision.