Omnibus and the simplification shock: What is at stake for the banking sector?

Revisions to timelines, thresholds, and non-financial reporting requirements… The Omnibus Directive proposal, presented in February 2025 by the European Commission, has been at the center of debates and sustainability-related developments in recent months.

With a strong focus on “simplification,” the Omnibus Directive seeks to clarify the reporting standards set within the European Union (EU) under the Corporate Sustainability Reporting Directive (CSRD) and the EU Green Taxonomy.

Omnibus consists of two directives:

• “Stop the clock”, which postpones by two years the application of CSRD requirements for companies that have not yet begun reporting;
• “Content”, which aims to reduce by nearly 80% the scope of companies subject to the CSRD and to significantly simplify the reporting requirements under the ESRS standards.

The CSRD, which came into force in January 2024, is thus significantly amended by this Omnibus draft directive. A central piece of the EU Green Deal, the CSRD was designed to turn non-financial reporting obligations into a true tool for corporate transformation and the reallocation of financial flows toward a more sustainable economy.

Our experts break down the challenges for the banking sector in adapting to the evolution of non-financial reporting. What issues lie behind this European strategy? How can banks approach this simplified regulatory context while staying on course with sustainability? What lessons can be drawn from the first Sustainability Reports published for fiscal year 2024 in the sector?

CSRD and non-financial reporting: an essential tool for the banking sector

CSRD: a real opportunity through a structured and standardized framework

Designed to cover a broad range of companies, the CSRD in its original form was intended to improve the availability and reliability of non-financial data, particularly through the establishment of a common set of reporting standards (ESRS) and the requirement for third-party assurance of sustainability reports. With nearly 50,000 companies initially subject to it in the European Union, this regulation gives banks access to a wide range of ESG data generated through harmonized reporting practices.

For the banking sector, the CSRD represents a real opportunity: it enables better integration of ESG information into risk management systems. Specifically, the framework offers:

• The ability to strengthen mechanisms for assessment, impact measurement, and anticipation of non-financial risks, making portfolios more resilient and banking offerings better adapted;
• The means for banking institutions to contribute more effectively to the transition;
• The opportunity for banks to tap into new business levers linked to the development of sustainable finance products and services (green bond issuance, ESG-linked loans, impact financing, creation of responsible investment funds, etc.).

ESG data: a key challenge

For example, RSM France’s analysis of the first sustainability reports published by French banks shows that nearly half of institutions identify opportunities linked to developing new banking offerings aimed at supporting the environmental transition and fighting climate change.

On the other hand, banks publishing their sustainability reports highlight the need for access to high-quality ESG data in order to capture these opportunities. Crédit Agricole S.A., for instance, noted “the inaccessibility of ESG data and the great difficulty of collecting ESG data, particularly from the value chain” in building its sustainability strategy¹.

Moreover, beyond the CSRD, banking regulation is increasingly converging toward greater non-financial expectations. In particular, the evolution of the European prudential framework, with the entry into force of the banking package in 2025 and 2026 (CRR3/CRD6), strengthens the role of non-financial aspects in the strategies of financial institutions.

These requirements notably include the integration of climate and environmental risks into banking risk management, through stress tests and the development of prudential transition plans (CRD6). Banks can thus benefit from regulatory synergies between their ESG integration obligations under governance and the collection and consolidation of non-financial data carried out under the CSRD.
 

Omnibus: how to adapt to the simplification shock ?

Objectives, timeline and impacts

The Omnibus Directive, as proposed in February 2025 by the European Commission, has the primary objective of simplifying and aligning several aspects of the Green Deal regulation: the EU Taxonomy, the CSRD, the CS3D (Corporate Sustainability Due Diligence Directive), the CBAM (Carbon Border Adjustment Mechanism), as well as other sectoral regulations.

As for the adoption process of Omnibus, the “Stop the clock” directive must still be formally approved by the European Council, after the European Parliament’s favorable vote on April 3. In France, lawmakers already anticipated this CSRD timeline deferral with the DDADUE law (law on Miscellaneous Provisions for the Adaptation of EU Law) in April 2024.

As for the “Content” directive, EFRAG has been mandated to propose a revised set of ESRS standards by October 2025, enabling the adoption of these simplifications through delegated acts for application from fiscal year 2027 (with the option to apply them voluntarily as early as 2026). EFRAG’s mandate notably includes reducing the number of data points (DPs), prioritizing quantitative over qualitative/narrative disclosures, and clarifying what constitutes mandatory reporting versus voluntary publication.

Omnibus I - European Commission : 

The Omnibus Projet in detail

What are the implications for the banking sectors ?

Omnibus would reduce the reporting burden. The central aim of this directive proposal is to cut the number of mandatory disclosures while clarifying expectations and facilitating implementation.

If these simplifications are ultimately validated under the “Content” directive, institutions would benefit from reduced CSRD requirements.

Medium-sized banks with 500–1,000 employees would no longer be covered by the CSRD if the “Content” directive is adopted and transposed into national law. The thresholds proposed in Omnibus no longer reference Public Interest Entity (PIE) status, meaning credit institutions and insurers with fewer than 1,000 employees would fall outside the scope. While this would ease regulatory burden, it may limit their visibility and ability to demonstrate ESG performance to clients, employees, or investors.

Sector-specific standards originally planned to complement the general ESRS thematic standards could also be abandoned. For the banking sector, such standards would have provided clarity on methodological issues such as value chain definition, stakeholder identification, and reporting boundaries. Without them, each bank will have to define its own approach—an unfortunate outcome given the heterogeneity already observed in French banks’ first sustainability reports.

To accompany the end of mandatory non-financial reporting for some entities, the European Commission, together with EFRAG, has proposed a voluntary framework called VSME (Voluntary Sustainability Reporting Standard for SMEs). This framework is designed to provide SMEs not covered by CSRD with a simplified but structured reporting format that still meets banks’ and major clients’ due diligence and ESG risk assessment needs.

In the same spirit, the Commission also plans to introduce a “value chain cap.” This mechanism would limit the ESG data large companies can demand from non-CSRD partners to what is included in the voluntary reporting standard. The idea is to prevent SMEs from being indirectly subject to the same obligations as large corporations. However, this may reduce ESG data comparability and availability across value chains, forcing financial institutions to put in extra effort to access such information.

Finally, the Omnibus package reignites the debate on competitive distortions between Member States. The fact that some jurisdictions may adopt derogations more quickly, more broadly, or more flexibly represents a threat to a level playing field in the European banking sector.

To address this disparity, European banks are strongly encouraged to:

• Continue their ESG reporting and preparation efforts to maintain a clear comparative advantage in terms of transparency and maturity;
• Anticipate differences in the national adoption timelines of Omnibus provisions.

How can banks prepare ?

While awaiting the finalization of Omnibus and its transposition into national law, banks must cope with ongoing legal uncertainty. Active regulatory monitoring is imperative: sustainability, legal, compliance, and public affairs teams must collaborate to follow negotiations in the European Parliament and Council, and adjust reporting and engagement strategies in real time.

EFRAG, mandated by the European Commission to revise and simplify ESRS standards, also launched a public consultation in spring 2025. Companies in the first wave of CSRD reporters for fiscal year 2024 were invited to respond online to share feedback and shape the revised standards. At the same time, lobbying efforts may intensify to influence co-legislators, particularly around thresholds, ESRS changes, and the scope of VSME+.

For banks that were initially in scope but may be excluded, a voluntary approach remains an option. By capitalizing on existing work—ESG mapping, data collection, internal monitoring—they can continue with full “CSRD-like” reporting or adopt the simplified VSME+ format, thereby maintaining investor confidence and a culture of transparency. This proactive approach could include publishing annual sustainability reports aligned with international best practices, highlighting ESG commitment even outside the legal framework.

It is also essential to strengthen engagement with borrowers and clients to secure access to reliable data. Banks can expand the use of sustainable financial products—green bonds, sustainability-linked loans, social bonds—with contractual clauses that incentivize the quality and transparency of ESG disclosures. This creates a virtuous cycle: client companies improve their reporting, ensure data reliability in exchange for preferential financial terms, and banks secure their ESG risk assessments.

Lastly, the simplification expected from Omnibus offers an opportunity to reallocate internal resources previously dedicated to CSRD compliance projects. Savings on compliance costs and reporting staff can be reinvested into strategic sustainability initiatives: developing innovative products aligned with the EU Taxonomy, investing in portfolio decarbonization, and building stronger partnerships with major green project financiers—turning CSRD into the true strategic transformation lever regulators originally envisioned.

For the banking sector, the Omnibus package stands at the crossroads of two imperatives: reducing the complexity of the CSRD framework to support business competitiveness, while preserving transparency and comparability of ESG data in the financial sector.

While it paves the way for significant simplification—raising thresholds and eliminating sector-specific standards—Omnibus also creates legal uncertainty and competitive risks until transposition is harmonized across the EU.

In this context, banks must not only closely follow European and national decisions but also turn this transition period into a strategic opportunity. By continuing, even voluntarily, to produce robust ESG reporting, by consolidating access to client data (notably through VSME+), and by reallocating freed-up resources toward sustainable transition strategies, they can transform the CSRD amendments under Omnibus into a genuine long-term value creation lever.

¹Crédit Agricole S.A « Sustainability Report », 2024 Universal Registration Document, 2025