It seems to be OK, according to "EFI system partition" entry of Wikipedia, but if I recall correctly, I've seen a page (possibly by Microsoft) which said to use FAT32, but FAT16 is "allowed". Possibly, default loader of Windows hesitates to read something from FAT12 ESP.I am not sure if this violates the UEFI standard.
It depends on the implementation of specific UEFI firmwares. Possibly some UEFI firmware forces its upgrade image to be located on specific directory, filename in ESP. It could require a large amount of free space in ESP.But I do not want to use a +260MB sized partition for a ~900KB binary.