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Where is ESG regulation heading? Banks caught between easing measures and the status quo

ESG regulation remains extremely dynamic in 2025. While political signals point to a “streamlining” of requirements, the already established expectations of banking supervisors remain unchanged. In our strategic guide for dealing with regulatory ESG challenges, we analyse the situation using a catalogue of FAQs – including solution approaches at both the data and process levels.

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Volatile ESG requirements are causing growing uncertainty for banks

While political signals from Brussels point to a “streamlining” of ESG regulation – for example through the EU Omnibus Regulation package of measures – the EU continues to adhere to regulations on sustainable corporate governance.

Even if the EU omnibus package provides for simplifications in sustainability reporting, the core requirements under banking supervisory law remain in place."

This means that banks must continue to meet the requirements of MaRisk for risk management and lending and – for ECB-supervised institutions – the EBA guidelines on the management of ESG risks.

Banks caught between relief and the status quo

In this area of tension between partial regulatory relief on the one hand and existing ESG regulation as a continued central audit and control factor on the other, banks are faced with these central questions:

  • Which requirements must be met in concrete terms?
  • What new requirements are to be expected and when will they apply?
  • How can ESG risks be managed effectively despite data gaps and process complexity?
  • How can credit institutions remain capable of acting despite the uncertainty surrounding ESG requirements?
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Changing ESG requirements in 2025

In a comprehensive Q&A, our experts analyze what banks will need to know in 2025 (and beyond) – in a concise and practical way.

ESG passivity harbors considerable risks."

They answer questions such as:

  • Has the topic of ESG become less important in regulatory terms in 2025?
  • What relief will actually apply?
  • Why are physical climate risks a top risk factor for banks in 2025?
  • How can ESG be used as a strategic differentiating factor despite regulatory uncertainty?

and many more.

Table of contents
  1. Current situation in 2025: Between retreat and relevance
  2. Three key challenges for ESG risk management in 2025
  3. FAQs for decision-makers: What banks need to know in 2025
  4. Infographic: From ESG risk to a robust basis for decision-making – in three steps with msg.CST
Sebastian Bader

Sebastian Bader

holds a Master of Accounting and Finance and has many years of professional experience in various roles and positions in the banking sector. At msg for banking, he is responsible for non-financial risk and sustainable finance. In close cooperation with his highly qualified team, he offers comprehensive solutions for banks and financial service providers - from strategic issues and ESG data procurement to embedding in risk management and reporting (MaRisk/EU taxonomy/CSRD). By combining in-depth knowledge of regulatory requirements and comprehensive consulting experience, particularly at the interface between IT and specialist departments, we offer our clients tailor-made end-to-end solutions.

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