Financial firms concerned over EU ‘omnibusʼ data rollback

Leading financial firms and some of Europe’s largest corporates are concerned that plans by the European Commission to reset its sustainability rules will leave them without the data to fulfil their own reporting requirements.

The commission is currently revising some of its most prominent sustainability rules, with its so-called omnibus package expected to be completed before the end of the year. The proposals will reduce administrative burdens on firms by 6.3 billion euros, according to the commission.

But a gathering of some of the continent’s largest financial institutions and corporates in Amsterdam last month aired concerns that the rollback on regulations could hamper the green transition efforts of these larger groups, leaving them struggling to meet their own sustainable reporting obligations.

A key concern mentioned throughout the two-day Association of Financial Markets in Europe (AFME) Sustainable Conference was the plan to remove 80% of European corporates from the scope of the Corporate Sustainability Reporting Directive (CSRD) and delay the start date for the next wave of in-scope firms by two years.

“Simplification is fine. Taking everything out is quite another thing,” said Catherine Bohill, environmental, social and governance (ESG) development and impact director at Telefónica, a Spanish multinational telecom.

The majority of Telefónica emissions are Scope 3 — indirect emissions — and the company needs sustainability data from its supply chain to calculate this, Bohill said.

In her view, it would be better to simplify the regulation rather than just release many smaller firms from the requirement to report their sustainability data. Don’t “just deregulate and introduce an asymmetry” of reporting obligations, she added.

Digby Walker, senior manager for climate risk and opportunities at consultancy The Carbon Trust, agreed the omnibus would hinder progress in delivering comparable data. It should “simplify without reducing the scope so far that it becomes not useful”, said Walker, adding that investors needed sufficient “decision-useful information”.  

Proxy

Celia Lambert-Alcantara, head of sustainable finance and ESG compliance at Crédit Agricole, said where businesses did not report data, the bank used estimated data from third-party suppliers to fill in the gaps. She said her institution relied on client data and the original CSRD would have improved data flow from smaller corporates.

The bank would now be stuck relying on proxies for data on these smaller clients as the omnibus had taken them out of the scope of the CSRD. This was “not positive”: it presented a problem for Crédit Agricole’s internal risk modelling, and would not help the bankʼs efforts to channel money into sustainable investments, added Lambert-Alcantara.

Dan Bressir, director for European corporates at NatWest’s sustainable finance advisory group, agreed there was no rollback on the sustainability data his bank needed to do credit risk assessments. He said the bank had been doing a lot of education work with clients, explaining why NatWest needed the sustainability data it requested and why such data was important for its ongoing ability to assess a business’s creditworthiness.

“Hopefully itʼs valuable in terms of education, and hopefully itʼs valuable for us because the next year we donʼt have to chase that information,” he said.

According to Didier Milerot, head of the sustainable finance unit at the European Commission, said removing small and medium-sized enterprises (SMEs) from mandatory reporting did not mean the commission did not want them to report their sustainability data.

“That is not true,” he said, adding that he thought with the right incentives well designed, voluntary reporting standards would be taken up by SME instead.

The European Financial Reporting Advisory Group (EFRAG) voluntary sustainability reporting standard (VSME) for non-listed SMEs published in December 2024 was one such option according to Milerot.

Wasted?

Luiza Trindade, global ESG reporting specialist at Dutch flower producer Chrysal, said her company had already spent a great deal of time preparing, even though it might now fall outside the CSRD. “When the whole omnibus [talk] started, I was a bit frustrated knowing that we had put so much effort on this,” she said.

Despite now being outside mandatory reporting, Chrysal had benefited from its preparation, she added, as the work had provided “an X-ray” of the company, helping it to identify “what it needed to focus on”.