EU Omnibus - What banks need to know

As small businesses face both customer and regulatory pressures to report on the sustainability of their practices, they often lack the resources to adequately respond to these new requirements.

‍

We discussed this trend and research at length in our latest eBook, The Hidden Impact of Climate Regulations on Small Businesses, laying out the opportunities for banks to support their small business customers on Net Zero initiatives.  

‍

Following up on a key development in the climate regulation space, last week on Feb 26^th 2025 the EU Commission announced a new set of proposals aimed to simplify the reporting required by businesses, particularly as scoped by the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD). The idea is to ease the administrative burden for businesses to get started on the reporting requirements while still making progress towards governmental Net Zero goals. You can read more on the EU Commission website.

‍

It is important to note that this is still in proposal stage, and is going through the review and approval process. Nothing is confirmed in the meantime.

‍

We recognize there has been a lot of discussion since this was announced. Therefore, we are focusing this blog on our key takeaways and how this affects the opportunity for banks and supporting their customers on Net Zero initiatives.

‍

Small Businesses continue to demand support on Net Zero

The Omnibus proposal does not change the fact that small businesses will still get asked to provide climate emissions reporting. They will get requested by any customer or stakeholders in their value chain who are directly affected by the regulations. According to global statistics, 58%¹ of those surveyed by the SME Climate Hub cited lack of skills and knowledge as a barrier to taking climate action.

Beyond regulations, there are still many incentives for why small businesses see the urgency of adopting sustainable business practices. In the same survey, the top three incentives they listed were

·      It’s the right thing to do (80%)

·      Enhance the reputation of my business (73%)

·      Differentiate my business from competitors (65%)

We expect that the demand from small businesses for support on Net Zero initiatives will only grow, and those who start now can better differentiate and stay competitive.

‍

Banks still need to report on their financed emissions

Omnibus does not affect the status of banks and their obligation for sustainability reporting. Banks and large financial institutions will still need to report according to the requirements set forth by CSRD and CSDDD. A significant part of this includes the emissions of goods and projects they help finance.

With a sustainability journey embedded into the customer banking experience, this helps nurture the demand and uptake of loans for more sustainable lifestyles (electric cars, solar panels, green homes, etc). The emissions of such financing can be tracked and included in a bank’s regulatory reporting.

‍

Decarbonization and transparency are still key priorities

While Omnibus was proposed to simplify and reduce administrative costs across parties to more efficiently meet climate regulations, it’s clear the importance of decarbonization and transparency is still imperative.

This move of efficiency still nevertheless represents a commitment towards decarbonization across the EU, and doing so in an iterative way that ensures long term success and progress.  

‍

^{1 SME Climate Hub 2023 Survey; Bridges and Barriers}