EBA publishes ESG-focused updates to product governance and Pillar 3 disclosure frameworks

EBA clarifies POG Guidelines to address ESG features and greenwashing risks

On 30 June 2026, the European Banking Authority (EBA) published revised Guidelines on product oversight and governance (POG) for retail banking products. The revised Guidelines strengthen the existing POG framework by explicitly incorporating ESG and greenwashing considerations.

Embedding ESG features into the POG framework

The amended Guidelines clarify that product oversight and governance arrangements for retail banking products for both manufacturers and distributors should also apply to products with ESG features.

Manufacturers and distributors are expected to take ESG features of a product into account throughout the manufacturing and distributing arrangements, including identification of target market, selection of distribution channels and sharing of information with distributors and consumers.

Stronger focus on greenwashing risks

The amended Guidelines specify that the manufacturer’s management body should set up sound processes to identify and prevent greenwashing practices and to manage and monitor greenwashing risks, in line with the EBA Guidelines on the management of ESG risks. Distributors should ensure that sustainability-related communications are fair, clear and not misleading, and that such sustainability claims are accurate, substantiated, up to date and presented in an understandable manner.

These updates should also be viewed in the context of the EU’s wider anti-greenwashing agenda, as they sit alongside Directive (EU) 2024/825 on empowering consumers for the green transition (EmpCo), specifically referenced in the Guidelines. EmpCo seeks to strengthen consumer protection against misleading environmental and sustainability claims, reinforcing a growing regulatory expectation that ESG-related statements should be appropriately substantiated and capable of withstanding supervisory scrutiny.

Next steps

The revised Guidelines reinforce the role of ESG and greenwashing considerations within retail banking product governance.

Institutions offering products with ESG features may wish to review their product governance arrangements, product approval processes and sustainability-related communications, and organise training where necessary ahead of the application of the Guidelines from 11 January 2027. In doing so, they should also bear in mind that EmpCo starts to apply on 27 September 2026.

EBA updates Pillar 3 disclosure requirements on ESG risks, equity and shadow banking exposures

On 22 June 2026, the EBA published its final draft Implementing Technical Standards (ITS) amending the Pillar 3 disclosure framework on ESG risks and introducing new disclosure requirements on equity and shadow banking exposures (EBA/ITS/2026/02). The publication completes the second step of the EBA’s Pillar 3 roadmap under CRR3 and is part of the EU’s broader regulatory simplification effort.

Background

CRR3 (Regulation (EU) 2024/1623) introduced a series of new Pillar 3 disclosure obligations that the EBA is implementing in two steps. Step 1, completed with Commission Implementing Regulation (EU) 2024/3172 (applicable from 1 January 2025), addressed the Basel-related mandates. Step 2, covered by these ITS, finalises the remaining mandates: ESG disclosures for all institutions (Article 449a CRR3), aggregate exposures to shadow banking entities (Article 449b CRR3) and revised equity disclosures (Article 438(e) CRR3).

The ITS reflect the EU’s simplification agenda: in response to the Omnibus I Directive (Directive (EU) 2026/470), all Taxonomy-linked disclosure requirements are removed, and the ITS are aligned with the ESRS to allow institutions to cross-refer to their Pillar 3 disclosures within their sustainability reporting.

Key developments

• ESG disclosures extended to all institutions, with significant simplification. CRR3 extends ESG Pillar 3 disclosures to all EU credit institutions for the first time, using a tiered “core plus supplement” approach. Large institutions apply a full set of templates; other institutions a simplified set; and SNCIs a minimal essential template only, with no mandatory qualitative disclosures. Data point reductions are material: 37% fewer for large institutions, 17% fewer for other institutions and 84% fewer for SNCIs compared to large institutions. All Taxonomy-linked templates, including the GAR and BTAR, are removed.
• SNCIs: disclosures pre-filled centrally by the EBA. The EBA will centrally pre-fill and publish ESG information in the Pillar 3 Data Hub on behalf of SNCIs, based on supervisory reporting data.
• New shadow banking and equity templates. Under Article 449b CRR3, a new template requires institutions to disclose their aggregate on- and off-balance sheet exposures to shadow banking entities. On equity, template EU CR 10.5 is updated to reflect the standardised approach categories under Article 133(3) to (6) CRR3 and the transitional provisions of Article 495a(3) CRR3.
• Other changes. The EBA Guidelines on non-performing and forborne exposures are formally repealed, with requirements now incorporated into the Pillar 3 ITS under Articles 433b and 433c CRR3. Template EU CQ5 and the fossil fuel sectoral breakdown in EU CRFR1 are updated to NACE Rev. 2.1, with new sectors added including data centres, pipeline transport and peat extraction.

Next steps

The EBA will submit the final draft ITS to the EU Commission for adoption and develop the data point model and XBRL taxonomy for the Pillar 3 Data Hub, with an updated supervisory reporting mapping tool expected in 2026.

The ITS apply from 31 December 2026 for all institutions other than SNCIs, and from 31 December 2027 for SNCIs, subject to any adjustment by the EU Commission. The ITS should be read alongside the EBA’s consultation paper on ESG supervisory reporting published on 10 April 2026.

Authors : Sophie Selftsick, Adam Zerrouk and Elouan Mara