Omnibus in Focus: Key Updates, Market Reactions & Next Steps

Tom Willman: Welcome everybody, and thank you for joining today's webinar where we'll be covering the European Commission's recent Omnibus announcement. Good morning, good afternoon, or good evening for wherever you're joining us from. It feels very recently that we convened to talk a little bit about the political landscape and understand the implications of the recent US election.

And today our focus is shifting to the new buzzword within the eu, which is Omnibus. The main aim of today's webinar is to try and understand the implications of the proposal for the market and what the main next steps to watch out for will be. We will also try and tackle a couple of the thornier questions.

So was this a much needed simplification or have we gone too far towards deregulation? And ultimately how can we ensure that the market has access to the relevant sustainability data that it needs to make business and financial decisions whilst maintaining the ambitions of the EU's green deal?

Claudia and I have attended many webinars over the past few days, and we've seen many webinars go through that proposal line by line. So, for today, we will assume a degree of prior knowledge on your part, and we'll only highlight the main changes and focus much more on the main implications. And as I said, the next steps.

If you do wish to see a comprehensive overview of the proposal, we will share the source material after the webinar. Within that in the annex, you have a line by line going through each of the three regulations and the change that has been proposed in each area.In terms of the agenda, I will shortly turn to Claudia, who will walk you through those high-level changes, and I'll start to unpack some of the implications.

We will then have a short fireside chat where we'll delve further into some of the issues, and we've left a little bit of time at the end to answer questions that you have, including some that were submitted as you registered. Before we begin, a couple of housekeeping points. As I mentioned there is going to be a q and a session, so please feel free to submit any questions that you have using the q and a tab.

And if we can't answer all those questions today, we will follow up and share responses with you afterwards. And we will also launch a live poll during the webinar, and we ask that you please participate as your responses will help make the session more interactive and engaging for everybody. By way of introduction, I'd firstly like to introduce Claudia, who is the regulatory associate at Clarity ai, and she works mostly on our regulatory monitoring analysis and institutional engagement.

For those who are unaware, clarity, AI is a leading sustainability technology platform, and we support our clients with a range of sustainability, data analytics, and tech-driven tools to support them in a wide range of sustainability use cases. Prior to joining Clarity ai, Claudia worked as a public affairs consultant in the financial sector advising mostly on digital and green transitions.

And my name is Tom Willman. I'm the regulatory leader, clarity ai. I lead on clarity AI's regulatory engagement, and I focus on ensuring that our suite of regulatory products at up-to-date with the latest regulatory developments. Prior to joining Clarity AI, I was a regulator, firstly, at the UK FCA and then with IOSCO. So, with the introductions out the way, I will pass you over to Claudia who is going to walk us through the main points from the Omnibus announcement. Thank you very much, Claudia.

Claudia Marin: Thanks Tom. As Tom mentioned, we're going to walk you through what the Omnibus proposal is, the main changes, and most of all, focus on the main implications.

So, to frame the presentation and the discussion. Two main points, right? What is the Omnibus and what are its main elements? The first thing we want to highlight is that the Omnibus is for now just a proposal. It's the commission's opening plea. This means that the text or several texts that comprise the Omnibus have to go.

Scrutiny from the EU Parliament and the EU Council. This is a long regulatory process until a final text is agreed on, published, and then enters into force. The first meetings of the EU parliament took place on Monday and yesterday, and today we're seeing the subsequent meetings taking place at the EU council level.

These are essentially the first debates around this subject. That are part of a much longer regulatory process, and that is why we're monitoring them very closely in these debates, especially at the EU parliament level. We can expect a lot of pushbacks, but also a lot of support from the different political groups and also a lot of lobbying forces surrounding this debate.

1. So to understand what is subject in, what are the subjects in these debates, it's worth highlighting that the proposal of the Omnibus has three main elements that are relevant for us in this context. So, relating sustainable finance and those three elements are first what is called a stop the clock proposal.

So that is an initiative that is aimed to be fast tracked, to stop the wave two and wave three of. CSRD companies from reporting in the coming years. Now for context, what we call Wave two and Wave three companies in their CSRD is First Wave two. Those companies have more than 250 employees, more than 25 million in their balance sheet, or 50 million revenue and Wave three are listed SMEs now Wave two companies were expected to report first in 2026 on fiscal year 2025.

Whereas, wave three, we're expected to report for the first time in 2027 on fiscal year 2026, although they could be subject to a two more year opt-out. Now, the meaning of this Stop the clock proposal is to delay reporting for these two groups by two years to allow for the commission and other EU institutions to work on this second element that you can see on the slide, which is the wider changes to the three.

Core regulations subject to the Omnibus proposal, which are EU taxonomy, CSRD, and CS Triple D. This is aimed essentially to give some kind of certainty while the EU institutions come to an agreement on what the changes to these regulations will be. And lastly, there is a more targeted approach to technical elements of the EU taxonomy, and this essentially means that it will be a more swift process of approval as there are changes that are much more focused and thus require less debate.

And we, this I signal this is relevant for when we discuss later how the debate is going to work and what the timelines, what are the expected timelines. So the main question that is roaming our heads right now is what now?

What does the EU Omnibus proposal actually mean? From clarity, we have three high level messages to send your way. First of all, regulatory uncertainty should not mean in action. This means on the one side, this is a proposal still has to undergo. A long regulatory process in the EU. And second of all, there are major sustainability regulations such as SFDR, pillar three, EU Benchmark Regulation and EU Green Bonds, which are still enforced and still require obligations around sustainability related data.

Second of all, and very much related, integrating sustainability is a competitive advantage and an activity that really creates value and firms that have already been doing it will be more resilient. And we'll also be better positioned in the future to address any regulatory changes such as the ones we're living today, but also any other regulatory changes that come our way in the future.

And lastly, sustainability data is still critical for investors. We talked in the second point about value creation, right? And how integrating sustainability can contribute to that. Investors looking to select the correct investment opportunities to advance sustainability goals also are very reliant on robust and transparent data.

Cutting re requirement reporting requirements under can undermine that. It also can increase the risks of greenwashing and ultimately reduce market trust, which is essentially one of the goals of the Omnibus proposal, which is creating more competitive markets in the EU, right? So there's a very fine line between all these goals and is what leads to a very complex debate.

As we mentioned before, you'll find in as an annex to this presentation, the side-by-side comparison between the regulations that are currently in force and what is being proposed under the Omnibus. But just to give a few points on what the main changes and impacts of the Omnibus proposal is, we'll go regulation by regulation, so on CSRD three main points to highlight the scope of reporting companies.

As a result of the Omnibus proposal would be reduced by 80%. And with that 80% we referred to all the companies in its scope. Once all the obligations are rolled out, as there are certain requirements spaced in over the years, to give you some kind of rough numbers, there are reporting companies would go from around 50,000 companies to around 10,000 companies according to the EU commission's assessment and its report that they published together with the CSRD Omnibus proposal.

Not only the number of companies will be reduced, but the number of data points is also aimed for revision. So, the EU Commission has proposed a review of the European Sustainability Reporting Standards, or ESS focusing a lot on the numerical data points, so more quantitative data points, and also aiming to align those data points.

To other existing regulations that I mentioned before. And lastly, the audit requirements would be lowered. So this would essentially mean there would not be such a high standard for the information that is reported. And that benchmarking exercise that companies could do between the information, the report, and what is reported.

More widely in the market would be less robust in terms of CS. Triple D, which is the biggest due diligence regulation in the eu. The main changes are reducing the scope of that due diligence exercise to direct suppliers, also known as tier one, whereas before it was to your whole supply chain, that due diligence exercise is.

It reduced to every five years. Whereas before it was an annual exercise and there was an element of civil liability for companies in breach of this regulation, which has been removed from the Omnibus. And as for EU taxonomy since reporting under EU taxonomy is linked with CSRD reporting, the number of companies reporting on their EU taxonomy is also expected to be reduced around by 80%.

A proposal to simplify the information reported under EU taxonomy templates, as well as a first exercise of simplification of the do no significant harm principle. And lastly, one of the elements we also wanted to highlight was the introduction of materiality thresholds. So that is. The ability for firms to not report on the alignment of a certain activity as long as it's less than 10%, or it represents less than 10% of its revenue.

As I mentioned, more information or very detailed line by line comparison of the changes introduced is in the annex of this presentation. But I think this is enough to give us a bit of context and most of all to understand what the complexities of the regulatory process are. Essentially what we want with this slide is to illustrate how these three main elements that we mentioned in one of our first slides, so that is the stop the clock, the proposal with the wider changes and the more technical targeted changes to the taxonomy will follow different regulatory procedures.

The first two, that is to stop the clock. So, the stop of the rollout of CSRD and. The regulation that contains the most changes to the three csr, D Cs, triple D and EU taxonomy have to go through a process that corresponds because they're both directives, right? So this means they have to go a certain regulatory procedure and they later have to be transposed by member countries.

The technical changes to the U taxonomy, however, are what we call the delegated Act. And so that means that they follow a more swift regulatory procedure. That doesn't need the input or such a complex debate in EU parliament and council and does not require transportation. So it's a shorter process overall.

And with this in mind, we can go into the timelines or the expected timelines. This is of course indicative taking into account how the regulatory process usually develops in the eu and the complexity of these debates. So for those two elements that I mentioned, and that is the two directives, they require, as I said, a longer process and after this process, transposition by member states, which can also take a long time in this sense.

The initiative to introduce changes to CS D-C-S-R-D and EU Taxonomy would follow a process by which. The proposal was published by the EU Commission, as we know on the 26th of February. Now, as I mentioned, debates at the EU Parliament and EU council level have begun. These debates have just begun, it has been the first sessions introductory sessions to this debates, and we can expect that they will last for several months and as their, the EU parliament convenes around once a month. So we can tentatively expect this to last between six and nine months depending on how the complexity of the debates and how many changes are the different forces in the EU Parliament aimed to introduce.

We're also taking into account the recess that takes place in August in EU institutions, which means if before summer there isn't an agreement at the level of these two institutions, then. Would have to wait until September. Once these two institutions have a final position, they convene together with the EU Commission to discuss in meetings that are known as trial logs because they involve three EU institutions to come to an agreement on a final text, which is then approved.

Published and enters into force, which we can expect to be published at sometime around 2026, depending on how these first negotiations go. And parallel to this, as I mentioned before, the intention is since this is such a long regulatory process. The EU Commission wants to introduce a stop the clock for CSRD.

In this sense, it gives or it aims to give some certainty to companies in Wave two and three that you know would be reporting at the same time that these negotiations are taking place. The Stop the clock proposal is expected to be fast tracked and approved in a much shorter timeframe which would be at around six to nine months.

And as I mentioned, there's the third element which would follow a much more simple procedure within the EU institutions, and that is the changes to the EU Taxonomy delegated Act. Now for this, the EU Commission has already opened a consultation open until the 26th of March. Once that closes, the EU Commission will review responses.

Integrate the feedback that they consider relevant. And after that, there is no period, real period, of debate between the EU parliament and council, such as with these directives. But there is a period for these institutions to present objections. If this doesn't happen, then the text would be passed and adopted.

And the aim of the EU commission is that this happens before or on January, 2026, so that the regulation can enter into force in the same month. So given these two these three timelines, right? As I mentioned, the debates have begun at the EU parliament and the EU council level. At the EU Parliament, there is a much more heated debate with lots of political forces with very different opinions and really strong opinions across the spectrum.

Whereas at the level of the council, whereas a more high level political leader's conversation there is less debate to be expected and let's say an easier consensus to be reached as it is around the wider goal of the Omnibus rather than specific changes, which would be most discussed in the EU parliament level.

Tom Willman: Thank you, Claudia. That was an extremely succinct summary of a very complex proposal. And maybe just to get the ball rolling in terms of what the implications are in the discussion. You can see on the slide a couple of initial reactions and we'll delve more into this as we get into the fireside chat.

I heard the word certainty two or three times as you spoke that, that word again. And really interestingly, actually, in trying to provide some certainty to the market there's actually been a great degree of uncertainty injected into the market. And we're seeing frustration in terms of the level of ambition.

Of the green deal we're seeing a loss of momentum in terms of, there was a 5, 6, 7 years of building of all of this before this Omnibus proposal. And we're also seeing some costs. So there's lots of money that may have already been spent on implementing these regulations or in terms of expanding resources.

So we touch a little bit more onside interesting theme is this kind of, data gap that might be emerging. So you touched on a few regulations, SFDR, banking regulation benchmark regulation that's with demands or was expecting this data from companies through the CSRD. And what does that now mean for the market?

So where does that data come from? And we'll again, we'll touch on that a bit more as we move into the discussion. And then I think the other kind of key point to make is that nothing changed from the 26th of February. So even for those. Regulations that were part of that proposal. Nothing changed overnight.

It's the opening play of the commission and we need to see how this rolls out to the market and what that will mean. And more broadly, I think there are questions about the ambition of the eu. So is this the tip of the iceberg? What is the temperature of those other institutions?

We talked about the parliament, we talked about the council but we also have ESMA and the EBA and the other Europe, European Super Israel authorities. How does this feed into the SFDR review that we're expecting at the end of the year? And what does it mean for sustainable finance more broadly?

Trust in the financial system and ultimately the level of greenwashing. So with that, I think it's a good moment to take a temperature check. So we would like to launch a poll to see how you feel about the changes that you've seen. So the question we're asking is what do you think is the main implication of this omni announcement?

And the options are: much needed simplification it's made compliance much easier; too much deregulation and it puts the sustainability ambition of the EU at risk; it's creating uncertainty and I dunno what to do next; it scales back ambition, and I will rethink my sustainability strategy; or I'm gonna wait and see approach. I'm holding off decisions for now.

While I give everyone a moment to cast their vote, we also wanted to just direct you towards a resource that was published last week by Clarity AI. It's an ebook covering regulatory developments globally. So it picks up on some of the issues that we've touched on today, but it also covers more broadly outside of the EU all of the major sustainability regulatory developments in 2025.

And you can download that through the QR code and we'll share that with attendees after. With that we will close the poll and we can move into the fireside discussion. Maybe to have a look at those results very quickly, it feels like there is a pretty even spread across the different answers.

Interestingly, we've seen rethinking and rolling back ambition seems to be the lowest scoring answer along with the waiting and see. So, that is quite encouraging because we are aware of some in the market who are potentially thinking that this is a signal of a lowering ambition.

And then a bit of a split between whether this was really a much needed simplification and many more in the camp where I think I would put myself, which is probably has gone too far in terms of the pendulum swinging towards deregulation. So, I think, all of that together, it's a split vote. And I think it's fair to say that there is a fair degree of uncertainty in the market. So maybe we can close the poll question and I'll put the question to you as well, Claudia: where do you come down? Do you think this was much needed, simplification? Or have we crept in towards the deregulation area?

Claudia Marin: I think it's a question that has been. That everyone has been asking themselves from the beginning of the Omnibus before the proposal of the Omnibus, when we first started hearing noise about the possibility of an Omnibus proposal, and it has always been a very fine line between deregulation and simplification.

I certainly think that the regulatory tools used in this exercise are relevant and tilt the balance in one way or another. So, in that sense, using or changing the scope, the number of entities in scope, the timelines on which the different regulations apply. Which are called level one changes.

So that is true the directives are a very ambitious change and certainly tilts the balance a bit towards that deregulation. Whereas the changes that, for instance, were introduced to taxonomy through those delegated acts could have been a tool to amend other regulations as well. So perhaps simplifying the reporting requirements, simplifying certain guidance that had to be issued with by the different EU institutions.

And really focusing on the most practical aspects of the application, of the regulation would've been more of an exercise of simplification than what we have seen right now.

Tom Willman: Yeah, so I think you picked up on it when you went through the changes on that slide a little earlier. I think what we've seen is almost a triple whammy and maybe given the audience today, it's most useful to think about: what does it mean for the availability and quality of sustainability data and indeed the relevance.

There's almost a triple whammy, right? So you've got this reduced scope straight out of the box. So you're cutting 80% of the companies, okay? Fewer companies reporting. There is then this commitment to review the European sustainability reporting standards and do away with the sectoral standards.

So you're also within that smaller universe, you have a constrained amount of data that is being reported and it remains to be seen. Perhaps those changes will direct reporting entities towards much more relevant data points, in which case it could be very promising. But all we know now is that it will be a reduction.

And then the third leg, which you explained really well, removing that assurance or lowering the bar of the assurance could also have implications for the quality of that data. So fewer companies. Less data points and potentially at a lower quality. So it does feel very deregulatory, especially in terms of the availability and potentially the quality of ESG data.

And I suppose the relevance is that open question. And I think that points a little bit towards some of the complaints that we've been hearing, which is around the process and the lack of an impact assessment. It does feel like this was rushed through that there is no impact assessment.

There is some commentary around some of the costs and benefits, but it's quite high level. It didn't talk, for example, about sunk costs. It didn't think about the benefits of having that data available. So I think we have snuck into to deregulatory territory. Before moving on to the next question as well, I see a few questions coming in through the QA.

Please keep them coming and we'll, so maybe another question for you, Claudia. We touched a little bit on the debates that have started in the Parliament and the council. Could you give us a bit more of a flavor of how you've seen those going so far? And a difficult question. How far do you think the final text is gonna diverge a lot from the text we see today?

Or how might it diverge? As we see that proposal make its way through the Brussels machinery?

Claudia Marin: I think it's easier for me to answer that last part of the question first. There's definitely, a lot of question marks and uncertainty around what the final proposal is going to look like, and that will certainly de debate, depend on how the debates develop.

I think it's a bit too soon to determine where or how the political forces within the EU parliament are going to work together. And I talk specifically about the EU Parliament because it's where there's more potential for changes to be introduced rather than in the council where the general agreement or the general position, it tends to be a more, a bit more straightforward.

So in that sense, there is still an element of waiting and keeping a very close tab as we are doing around the EU Parliament debates. And in that sense, and to give you a bit of flavor of what these debates have been looking like in the EU, latest EU Parliament debate, or the first one. There was a lot of talk or maybe messages around how the Omnibus has been a publicity stunt by the EU Commission in its first a hundred days to get out a very clear message given the geopolitical situation, and to give or try and give the EU a really strong message around its competitiveness and the goals it has for its competitiveness in the coming years.

There's also very mixed reactions amongst the different spectrum of political forces in the European Parliament, so as to complete disagreement with an Omnibus proposal itself, and any changes to the existing regulations to actually asking for, even a more ambitious Omnibus regulation and deregulation exercise.

So that is where I see that it's a very important factor, how these different political forces are finally going to come together and negotiate. There are certainly many lobbying forces around this debate, as I mentioned before, and a very big question around what happens to all the investment and all the capacity building that firms have been doing in the latest years to comply with the regulation and how that exercise of deregulation might undermine those investments and effectively, how does that match with the goal of making EU markets more competitive? So I think that is for now. And we'll, as I said, we'll keep monitoring these debates to see what the final agreement looks like.

Tom Willman: Maybe just to pick up on one of the points you made at the end there.

We, we had a a Q&A and a. It's more of a comment, but touching on some of that stuff. Even for those companies in wave one, there's a big degree of uncertainty and this attendee makes the point very well. They're planning for what's in force at the moment. Many of them have begun to report this year. But actually, what's been signaled by this announcement is that we might move the goalpost in a couple of years, and there's ESRS that you've based your systems around, that you've built your capacity around, they could change. I think that's a very fair point too. 

Claudia Marin: Yeah, certainly. And despite this, the cons and uncertainty that we keep mentioning, I think Tom, maybe you can point towards what the main elements are that have been retained and some kind of, are there any victories for maintaining the EU's ambition around the green deal and wider sustainability goals?

Tom Willman: Yeah, thanks. I think it's a good way to look at it. Yeah, I think the general reception of that of the announcement on the 26th of February was that it was quite strong.

And in some sense it's quite an extreme version of what. Where are the small victories? So I think there was a genuine concern in some quarters that this could be an even more extreme proposal. So there was some discussion that the taxonomy might be made voluntary, some discussion of the future of the corporate sustainability due diligence directive.

As a regulation at all. The fact that they are there, albeit in a slightly different form and let's be very candid about it on the taxonomy that some of those changes are sensible for the CSDDD think it's really hollowing out, the meaningfulness of that regulation, some of the changes that are being proposed.

But they are still there. So not to clutch straws too much, but they survived. I think there's, there's other victories too. So one of the things that we've heard a lot of discussion about is that the double materiality has been maintained. I think that is, that should definitely be counted as a small victory on the subject of small victories.

But we also need to think about how this will actually work in practice. So in terms of double materiality assessment, of course, it's still there. We're also at the same time saying that for those outta scope CSRD companies, the maximum amount of information that can be asked of them is limited to the information within the voluntary SME standard that FR published in December.

And that is a very scaled back reporting standard and has fewer than 20 sort of concrete data points. Spoke. Three is actually not included in the current version of that document, and there is a review penciled in. This could change., but for now, I think there are actually quite reasonable questions about how easy it will be to do a meaningful double materiality assessment if the amount of information that could be requested from companies in your value chain is so constrained.

So Claudia, one for you maybe on a, on the topic that I've a few times in the q. What about, yeah, what about sunk costs? Do you have any anything to share with companies who maybe have spent resources already in implementing this and feeling that maybe it wasn't necessary or things could change again?

Yeah. Any word on the sunk cost element.

Claudia Marin: Yeah, I think it's certainly a big part of this debate, a big part in the political debate, and I've seen a couple of questions in the q and a specifically related to this. First of all, let's say for this wave one companies under CSRD, so companies that are already reporting under the regulation, also under I.

Huge taxonomy, right? There is a large investment behind those reporting exercises. For now, the obligation remains, and those first wave companies, specifically under CSRD remain under scope and under the CSRD obligations until we have a new form of the CSRD. Once the Omnibus is approved. Until then, the obligations remain and the reporting exercise issues remain the same.

I think the question then is more around if there are any further investments to be made. Around these disclosures going forward, which is certainly something that depends on the result of the ous, right? But there's also a big element, which is the other regulations that I mentioned before that are part of the wider sustainable finance regulatory framework that are also still enforced.

So that is for investors as FDR. For banks, pillar three and the need to assess the profile of their counterparties, both in their lending and in their investment activities, to then integrate it in their risk management and the EU benchmark regulation, which will have benchmark administrators needing robust information around the companies they are constructing with, which they are constructing indexes, so there is still a big demand for data and specifically for those larger wave one companies there is still room for, or there is still a need to comply with the existing regulation and especially since it's such big machinery, there's still need a need to assess to assess the reporting obligations,

Tom Willman: yeah, and I think, we've had a couple of comments coming through. I think specifically on those sort of wave one companies and it's true that it's created a, an awful lot of uncertainty for them. Maybe also just the word on the wave two companies because that certainty, that, that word that we keep hearing.

So the idea was to postpone that requirement and that buys the time that's needed for that longer legislative process to play out. And we have a sort of more longer term idea of who the companies that are gonna be within the scope of CSRD are. I think there's a very flawed assumption upon which all of that is built, which is that, we are now in March and the reporting period is three months old. Just because you don't actually produce that report until next year doesn't mean that you won't have already spent quite a lot of time and money and capacity building efforts to be ready for that. So I also think it's it's fair to call out those companies in waves two and three who albeit haven't, may not have published anything yet, may have actually spent a lot of resource trying to bring these things in.

Claudia Marin: Yeah, I agree. I think just another similar point to add, which is these activities, as we mentioned in one of the slides before, are really activities that create a lot of value. And it's not just an exercise of compliance, but really extracting the full value of integrating this. Reporting, but also sustainability, wider sustainability management practices and now reframing it from just a compliance exercise to really a value creation exercise.

And in that sense, and related to what we've just been discussing around other existing regulations, Tom, and there have been a couple of questions in the chat around SFDR. What do you think the decrease in reported data under. CSRD, what are the main implications for asset managers and do you think the changes results in lower or lesser quality data being reported and thus being used for investment decisions?

Tom Willman: Yeah, it's something that's come up an awful lot. And so we mentioned in the presentation, this data gap emerging.

Illustrate that in with a bit more of a concrete example. There was an expectation within the market that over the course of the next few years as the CSRD rolled out that there would be the data that was required through the SFDR. So the reporting on the principal adverse impacts that taxonomy data that was required for Article eight and nine products and any other data points that were required to sustainable investment.

But that would slowly but surely become available from a bigger and bigger portion of the market. And that data would be assured and that would be a very helpful resource for asset managers as they try and comply with the SFDR. So, what we what we see is that, potentially under this proposal and the likelihood is that we will see quite such a large rollout of that data.

I guess there's a couple of points. One is that, it is, to some extent, the status quo today. So asset managers already operate in a world where there isn't that data, right? We've stopped the rollout, but there was already a gap. It's just that gap is gonna be maintained for a lot longer than was thought.

And there are mechanisms in place to try and fill that gap. That can come from bilateral engagement with investee companies. That can come through using proxies or estimates, and it can come from partnering with third party data providers as well. I think a lot of the attention is now turning to the SFDR review, which has been mentioned a couple of times.

So for those unaware we have a level one review, so a review of the SFDR regulation. It was supposed to be published towards the summer. It's been delayed, and it's likely to be published towards the end of this year. What we were expecting in that review was potentially the European Commission to propose a new version of SFDR that looked a little bit more like the UK's SDR regulation for anyone who's aware of that.

So actually building some sustainable fund categories that would enable us to move on from article 9 classifications that have been used to date.

I think the really interesting thing now in that review is, does that review mirror the ambition of this Omnibus or does it double down and maintain its own ambition? So that will be very interesting to see. And, what will happen with the principal adverse impacts?

How many of those are gonna be maintained? Do we need to reposition the reporting standards so that they mirror that SFDR data requirement more closely? But I think the short message is that the current, even once that proposal's out, it will take a couple of years before it's enforced. So the current version of SFDR is still very much in force.

And ESMA, it's a completely different institution to the commission. So the supervisory expectations certainly didn't change overnight on the 26th of February. And there are other things on ESMA's agenda and its priority list, including its name rule, which is gonna come fully into force in May of this year.

And yeah I guess a word of caution to anyone thinking that this has direct knock on implications for the SFDR today. I think we still need to wait and see what the full impact on SFDR will be once that review is published.

Claudia Marin: Yeah, I,

Tom Willman: Yeah, go ahead. Claudia.

Claudia Marin: Just to add one further point around the, this wider sustainable finance framework that composed by SFDR and other regulations and specifically, there's also an element to pillar three reporting by EU banks.

The recent, or the most recent development in this regulation was that these requirements were expanded to all banks at the end of last year coming into force at the beginning of this year, 2025. And with an expectation that reporting under CSRD would close that existing gap, as Tom was mentioning that would allow banks to assess more effectively the ESG risks stemming from their lending and investment activities.

And integrate those ESG risks as drivers of traditional financial risk within their management, internal risk management mechanisms. And it's also a question mark, right? Right now this will, this, banks were expected to use proxies data and industry averages. For a certain amount of time until CSRD was fully rolled out.

And there's also a question on what is going to happen there as that demand from the banking side is still present. But again, as with the SFDR review, this is a longer term knock on effect or would be a longer term knock on effect that would be, would have to be assessed in the coming years.

Tom Willman: I think that's definitely something we will need to be monitoring very closely as well.

So I'm just conscious of time. We have a couple of questions to get through. So I think we were gonna touch a bit on positioning of the EU and maybe some inherent tension between what we're hearing on the clean industrial deal and what we're seeing with the Omnibus. I think we might have to park that for another occasion.

And also what it means for greenwashing, but very happy to follow up if anyone is interested to have that conversation. Similarly, a couple of questions I've seen on supply chain data, we can. Take those offline to maybe one final question to tackle quickly that we received earlier. A couple of words about the taxonomy.

What do we think about those changes? Claudia, I'll turn it to you and then I'll make, I add a couple of thoughts.

Claudia Marin: Yeah, I think very quickly, even the changes to the scope of this taxonomy that are also, dependent on the changes of the scope to CSRD, even those changes do not remove the requirements at a product level.

So for article eight and Article nine products in their SFDR. Maintain that requirement of reporting at product level on EU taxonomy alignment. So that is another one. Or some kind of this knock on effect, that we continue to see and still standing obligations despite the large change in scope, I think is one of the biggest points to highlight.

Tom Willman: Yeah, and I think if you've taken that in, in combination with the reduced sort of entity or potentially reduced entity level reporting. Data gap materialize and a potential space for estimated data or equivalent data or whatever that might be. Maybe just one very quick word on some of the technical changes too, as that's something that we've been looking at internally and we will certainly be in engaging the commission in that consultation.

It was an odd part of the whole package. There was a lot of, quite bold statements and a lot of things that looked like they maybe had been rushed through a process. And then there were actually some quite sensible technical changes being proposed in terms of how the taxonomy is reported.

So simplifying those templates a little bit, making it both easier for the reporting entity. But also for the entity that wants to use that data and, potentially use it as a basis for an investment strategy. So there are some sensible changes there. There's a couple where perhaps it could have gone further so that, that do no significant harm changes quite focused on a specific part of that part of the regulation, so on, on harmful chemicals.

And perhaps could have gone further to help the market in implements.

So I think we are nearly at time. So maybe just to recap on a couple of the key messages. I think one of the words that we kept hearing over and over again is that Omnibus has injected this unwanted uncertainty into the market. And it's likely to persist for a little while. And I think there are very reasonable questions about what that means for EU competitiveness, because let's not forget that was the aim of this Omnibus package.

I've seen a few comments coming in around the ability to react. So how can both investors, financial institutions and companies ensure that they're collecting the data that they need? How can they plan for the longer term and how can those reporting entities ensure that they're able to pivot as quickly as possible to those new requirements?

And overall I think there's a lot of work to be done within the institutions in terms of ensuring that, these changes are proportionate and they make the right sustainability data available that does enable the right access to that data for the financial institutions and ultimately drives the changes that were set out at the beginning of the.

So, thank you so much to Claudia for joining and thanks to everyone who joined and asked questions and participated in the poll. And any of those questions we didn't get to, we will follow up with you soon. Thank you. And good morning, good afternoon, or good evening.

Claudia Marin: Thank you everyone.

The Omnibus proposal is a set of regulatory changes introduced by the European Commission to simplify and amend existing sustainability regulations. However, as Claudia Marin explains, "The first thing we want to highlight is that the Omnibus is for now just a proposal... This means that the text has to go through scrutiny from the EU Parliament and the EU Council. This is a long regulatory process until a final text is agreed on, published, and then enters into force."
While the proposal aims to simplify compliance, it also reduces reporting obligations, potentially limiting available sustainability data.

The proposal significantly reduces the number of companies required to report under CSRD. As Claudia Marin notes, "The scope of reporting companies as a result of the Omnibus proposal would be reduced by 80%, from around 50,000 companies to around 10,000."
Additionally, the number of required data points will be reviewed, and audit requirements will be lowered, potentially impacting the reliability of reported information.

The proposal raises concerns about a data gap for investors. Tom Willman explains:
"There was an expectation that over the next few years, as the CSRD rolled out, the data required for SFDR reporting—such as principal adverse impacts and taxonomy data—would become widely available. With this proposal, that expectation is now in question."
Despite this uncertainty, SFDR remains in force, and asset managers must still comply with sustainability disclosures.

No, businesses should continue preparing for sustainability reporting. Claudia Marin emphasizes:
"Regulatory uncertainty should not mean inaction... Major sustainability regulations such as SFDR, Pillar 3, and EU Green Bonds are still in force and require obligations around sustainability-related data."
Companies already working on sustainability integration will be better positioned to adapt to future regulatory changes.

 The Omnibus proposal is still undergoing the legislative process. As Claudia Marin outlines:
"The EU Parliament and EU Council have begun their debates, which are expected to last six to nine months... If no agreement is reached before summer, we may have to wait until September for further discussions. The final text is expected to be published in 2026."
Meanwhile, some elements—such as the "stop the clock" proposal delaying CSRD reporting for Wave 2 and Wave 3 companies—may be fast-tracked within six to nine months.