The European Commission has presented an “Omnibus” proposal to revise several pillars of sustainable finance regulation (CSRD, the Green Taxonomy, and CS3D) in order to simplify the framework without diminishing its ambition.
Key objectives: narrowing the scope, easing requirements, and staggering timelines to limit companies’ administrative burden.
Here is how!
Environmental scope post-Omnibus: today and beyond
- Omnibus: adjustments, not a revolution
- Banks: what continues and what changes
- Focus on the GAR: limits and challenges
- Asset management: SFDR today and tomorrow
Levers to anchor the environmental issues at the heart of financing
- Persistent uncertainties: the GAR and the trajectory of European texts
- Reconciling climate ambition and economic attractiveness
Priority environmental issues for banks, starting now
- Offer attractive products to capture credit lines
- Integrate environmental criteria into credit assessment
- Strengthen the quality and comparability of ESG data
- Establish pragmatic policies for financing sensitive sectors
- Provide large-scale training for employees
Too fast, too far: this phrase aptly captures the dominant feeling around environmental regulation in Europe. The multiplication of texts (Taxonomy, CSRD, CS3D) has met with a mixed reception. To answer the concerns expressed, the Commission decided in February 2025 to review this body of rules in order to simplify and rationalize it. Concretely, the Omnibus Directive currently under adoption, should refocus the issues, reduce the scope of application, and extend the timelines.
In practice, the initial regulations proved difficult to implement due to their rapid pace and their focus on defining concepts to the detriment of operational approaches and implementation. With Omnibus and the simplification wave under way, two questions now arise: for the regulator, how to keep ESG (Environmental, Social, Governance) issues at the forefront and encourage companies to act? For companies, how to turn this more pragmatic regulation into truly effective strategies that take a long-term imperative into account?
For banks in particular, this topic touches the core of their business: financing the economy. Every investment now entails greater consideration of environmental impacts, which vary widely by sector. The recent tensions around financing energy or defense are an illustration: they highlight how sensitive the subject is.
After Omnibus, what is now the environmental regulatory scope to take into account, today and in the years to come
Omnibus: adjustments, not a revolution
First, the initial regulations are all confirmed even though their scope is being revised (for example, fewer companies in scope and eased requirements). The objective remains to maintain Europe’s sustainable ambition while reducing administrative burdens for companies, particularly SMEs.
Banks: what continues and what changes
On the financial services side, specifically, banks had already launched initiatives to comply with the new regulations before Omnibus; most of these will continue, especially since banks are subject to sector-specific regulations that continue to be rolled out and are not (yet) covered by this simplification effort.
The Basel framework, related to risk supervision, have thus been enriched with new ESG disclosure obligations under Pillar 3 as of 2025, without these being called into question. In practice, 10 new supervisory templates, including the Green Asset Ratio (GAR) also used by the initial version of the European taxonomy, must be produced.
Focus on the GAR: limits and challenges
Banking supervision therefore does indeed continue in this area, even if the ratios chosen by the supervisor still raise questions. The Green Asset Ratio thus has several limits. Its coverage remains restricted, since only assets aligned with the EU Green Taxonomy are considered, excluding a large share of banking exposures. The calculation methodologies, left to the discretion of each institution, prevent any reliable comparison, while the lack of robust data, notably on the Do No Significant Harm criteria, reduces the ability to qualify assets as “green.” Finally, the ratio remains low (below 8.15% on average), without a mandatory regulatory threshold, which gives it mainly indicative reach and reputational value.
Asset management: SFDR today and tomorrow
For its part, the field of asset management has also seen ESG requirements strengthen since the entry into force of the SFDR (Sustainable Finance Disclosure Regulation) in March 2021. The regulation introduced an initial classification of investment funds based on how environmental issues are considered in the investment strategy. After 4 years of application, assessments of its effectiveness have been made and an overhaul of these obligations has been launched, with a new version that the European Commission plans to publish in the fourth quarter of 2025. In particular, the European Banking Federation (EBF) wishes for a more detailed classification of funds’ investment strategies. We will need to wait a few months to better understand the consequences of this revision for financial institutions.
Within this still demanding regulatory framework, which levers will, in the years ahead, make it possible to anchor environmental issues concretely at the heart of financing the economy?
Persistent uncertainties: GAR and the trajectory of European texts
As seen previously, the evolution of the regulatory landscape remains difficult to predict. In fact, the European authorities now seem to be seeking a balance between regulatory rigor and the protection of economic competitiveness. The texts under revision, like Omnibus, reflect this shift and this desire to move from coercion to incentives: postponement of the CS3D directive, easing of certain obligations, and a preference for a pragmatic approach. However, as detailed above, certain measures, like the GAR, continue to raise questions… perhaps they will also be revised?
Reconciling climate ambition and economic attractiveness
Moreover, political divergences are beginning to appear between European countries, some of which advocate a more radical approach to regulatory simplification. For example, at the Choose France summit in May 2025, Emmanuel Macron, with the support of German Chancellor Friedrich Merz, called for the outright abolition of CS3D, going beyond its postponement. Their argument: more sharply reducing regulatory density in order to strengthen competitiveness in the face of the American and Chinese models.
Conversely, defenders of the directive point out that it applies as much to European companies as to international players, by imposing minimum social and environmental standards and thus protecting local actors, historically more regulated. For non-European companies such as Shein and Temu, which are massively present on the European market, this implies monitoring their suppliers, strengthening transparency, and managing ESG risks. In the event of non-compliance, they face financial penalties, trade restrictions, and a loss of consumer trust.
These debates, which are stirring both regulators and politicians, show that a fundamental question remains: how to reconcile climate ambition and associated regulations with economic attractiveness and competitiveness?
Considering this necessary balance between regulation and competitiveness, what environmental issues must banks address—starting now?
Five specific priorities can be highlighted on the subject:
Offer attractive products to secure credit lines
It is essential for banks to design attractive financing to attract new clients. In 2022, Sopra Steria indexed its €1.1 billion credit line to measurable carbon-footprint reduction targets. To promote sustainability, loans must rely on viable business models. Without strong signals and effective risk-control mechanisms, sustainable investments will continue to be assessed as too risky by the financial sector. The European Banking Federation thus published in July 2025 a report proposing solutions to strengthen banks’ involvement in structuring green loans.
Systematically integrate environmental criteria into credit assessment
Beyond attractive terms, it is crucial to include environmental impact in risk assessment and financing terms. Today, this consideration remains insufficient, largely due to the lack of dedicated, standardized tools.
Strengthen the quality and comparability of ESG data, which regulations have highlighted as currently limited in quality and availability
Without reliable and comparable data, it is difficult to measure ESG risks precisely and adjust financing conditions accordingly, limiting the effectiveness of green loans and banks’ ability to promote the sustainable transition. Partnerships are emerging with new market players, for example with Iceberg Data Lab or Carbon4Finance, to obtain more robust tools.
Establish pragmatic policies for financing sensitive sectors, such as Defense, which are now essential
In France, the government is promoting the need to prepare a Defense economy, which will only be possible with banks’ collaboration in financing the sector. However, banks want to avoid negative impacts on their mandatory sustainable finance reporting. Collaboration will be indispensable between banks and regulators to find a way forward that respects the different economic and environmental constraints.
Provide large-scale employee training
Teams, especially sales, must be able to support clients in their transition and integrate environmental criteria into their decisions, including for SMEs, which need support in structuring and obtaining financing for their ESG initiatives.
Ultimately, the overhaul of environmental regulatory obligations is by no means an obstacle to the banking sector’s integration of this dimension. On the contrary, this revision, which adopts a more pragmatic approach, should enable institutions to better structure their priorities around the sustainable financing of the economy. If uncertainties remain about future developments, the general direction seems to be moving toward greater realism, and in any case, banks have no choice but to integrate these issues concretely into their activity.
FAQ:
What is the Omnibus law and what does it simplify?
Omnibus is a European Union legislative package that adjusts the sustainable finance framework: it revises several key texts (CSRD, the Green Taxonomy, CS3D) to reduce scope, lighten certain requirements, and spread out timelines, in order to limit administrative burden (notably for SMEs) while maintaining climate ambition.
Does Omnibus change anything in 2025–2026?
Omnibus favors a more incentive-based and proportionate approach, without touching sector-specific rules for banks. Pillar 3 requirements remain in place: banks must still produce 10 reporting templates, including the Green Asset Ratio (GAR) linked to the green taxonomy. In practical terms, they continue to track their ESG indicators and improve ESG data quality.
Will the CSRD disappear?
Omnibus does not abolish the CSRD; it aims instead at a refocus with revised scope, lightened requirements, and extended timelines to make sustainability reporting more workable, while preserving the ambition of sustainable finance at EU level and seeking a better balance with European competitiveness.
What are the consequences for non-EU players on the European market of the Omnibus package? (h3)
The requirements apply to European companies as well as international players: non-EU companies very present in Europe (e.g., Shein, Temu) must monitor their suppliers, strengthen transparency, and manage ESG risks. In the event of non-compliance, they face financial penalties, trade restrictions, and a loss of consumer trust.
Sopra Steria stands alongside banking players to support them in understanding and anticipating ESG regulations, present and future. Thanks to our expertise in market issues and sector best practices, we help institutions define relevant operational strategies to finance the economy in a sustainable and efficient way while staying aligned with regulatory developments and stakeholder expectations.