Recovering from the Omnibus Review

Since the European Commission issued its Omnibus Package on 26 February 2025, we have been actively engaging with financial services clients on the potential impacts.

Having held client surveys, workshops and web conferences in the last two months, Crowe are well placed to understand what finance, sustainability, and risk leaders are now prioritising in response to the delay and potential changes to the European Union Corporate Sustainability Reporting Directive (CSRD) brought about by the Omnibus proposals.

2025 is turning out to be an interesting and, in some ways, challenging year for financial services organisations seeking to navigate the choppy waters of political and regulatory change. This is not only in North America, where regulatory change is proving to be hard to anticipate.

In February 2025, the European Union made changes to several regulatory initiatives through its Omnibus package. Financial services organisations were well advanced in their efforts to report against CSRD disclosure requirements. Public Interest Entities were, in fact, days away from their first reports in many cases.

Crowe has been in close dialogue with several firms and has gained significant insights into how organisations have been adapting through conducting market flash surveys and convening web conferences.

In the immediate aftermath of the changes, survey respondents reported that they struggled in three key areas.

• Managing regulatory uncertainty given significant speculation.
• Maintaining or re-establishing executive buy-in and sponsorship for sustainability programmes.
• Maintaining resources for sustainability programmes, given that in many cases, budgets had been rapidly redeployed to other critical change initiatives.

Attendees at web conferences and roundtables indicated that it was crucial for the credibility of their programmes to ensure that the time and money invested in their CSRD initiatives, particularly in the Double Materiality Assessments (DMA), yielded significant value.

We have collated eight ‘no regrets’ action points for financial services firms to actively consider.

Reflect on what Double Materiality Assessments are saying

All firms reporting under CSRD conducted materiality assessments, and many invested considerable time and effort in doing so. In some cases, firms and their advisors went ‘very deep’ into analyses of stakeholder perceptions of a wide range of impact, risks, and opportunities (IROs) across environmental, social, and governance topics. Several companies reported that external auditor expectations had driven them to go into far more detail than they would otherwise have thought appropriate, and this led to complex findings that were challenging to effectively utilise and communicate internally.

Most attendees at our recent meeting aimed to step back from the detail of their assessments and focus on extracting the fundamental messages and identifying the strategic sustainability priorities for their organisations. This approach aligns with the original purpose of the DMA studies. DMAs are powerful tools to help firms focus on what matters and explain their choices to stakeholders.

Firms are also focused on ‘stripping back’ complexity and adapting their assessments to be more engaging for management and easier to explain and repeat in the future on an ongoing basis. Less is more when it comes to communicating priorities to boards and management.

Focus on Climate Change and Biodiversity

Of all the CSRD elements, climate change is the most material to financial institutions. Crowe’s market survey suggests that all firms had the E1 Climate Change module within their material IROs. A key takeaway from client conversations is that Climate Change remains central to firms’ sustainability initiatives and is core to sector regulatory expectations. While climate-related disclosures, such as those required by the Taskforce for Climate-related Financial Disclosures (TCFD) and the Prudential Regulation Authority (PRA), such as SS3/19, remain mandatory for several firms, the delay to CSRD (wave 2 and 3 firms) allows more time before any mandated nature-related reporting across the majority of jurisdictions. Nonetheless, firms are recognising the interconnectivity between biodiversity and climate risk, as well as the importance of managing their own impact. Therefore, identifying and assessing IROs related to climate change and biodiversity remains key for understanding the risk landscape, as well as being very helpful for firms in addressing statutory and emerging reporting.

Revisit sustainability governance and operating models

Most firms establish project teams to drive through their CSRD reporting change initiatives. These, in many cases, sat in parallel to entity and group governance arrangements and have meant that, in the rush to ensure compliance, embedding of these changes to various roles and responsibilities is still ongoing. As the dust settles on the CSRD Omnibus review, many organisations are now revisiting these governance arrangements and testing whether their Sustainability Operating Model (SOM) remains fit for purpose. This is particularly the case in complex matrix organisations where role holders report to multiple stakeholders and may have conflicting priorities. Conversations are also happening about the future responsibility for sustainability-related reporting, with many firms giving CRD-related reporting responsibility to the finance function. However, with the delay and proposed changes, responsibility for reporting appears to be back with the sustainability team.

Challenge sustainability reporting processes

Many organisations put in place a first pass CSRD disclosure process which relied heavily on interim project resources and manual reporting tools. Given this was the first attempt at preparing CSRD reporting, this is to be expected. There is now an opportunity to step back and reflect on how this could be improved in a business-as-usual environment. Maybe now is the time to revisit the need for specialised data management and reporting tools and reflect on how these will be integrated across the sustainability operating model.

Understanding entity headcount

A more technical learning point that has arisen from client surveys and engagement is the importance for businesses to fully evaluate the total headcount of employees involved in maintaining and supporting entities. This is especially relevant with uncertainty over the CSRD reporting threshold while the omnibus proposals are being debated in the EU parliament. Financial services firms often rely on centralised services, and smaller European entities, particularly Brexit vehicles, have a heavy reliance on intra-company outsourcing. Given the delay for waves 2 and 3 companies to report against CSRD, it is worthwhile taking the extra time to document and formalise these assessments and ensure that they are consistent with other regulatory disclosures related to transfer pricing and intra-group outsourcing.

Get under the skin of what limited assurance reviews mean

Clients have been caught out by the expectations of external audit firms appointed to undertake limited assurance reviews of their CSRD disclosures. Independent reviews have, in some cases, demanded very specific and detailed  audit trails and evidence to support disclosures. This likely stems from audit firms’ lack of experience in reviewing non-financial disclosures due to the CSRD regulations being new, which should settle down over time.

It is worth reflecting on the nature of limited assurance reviews, which are less demanding than full financial audits (against a Reasonable Assurance standard) and aim to prove a negative; that nothing was found which would indicate disclosures were inaccurate.

Crowe’s experience in conducting limited assurance reviews suggests that having robust procedures and process documentation are usually sufficient to meet these standards, without the need for excessive detailed evidence.

Organisations should proactively engage their independent assurance providers to understand their expectations and consider alternative providers if these expectations seem unreasonable.

Invest in management and board education and engagement

Most respondents to our surveys indicated that maintaining board and management engagementwith sustainability strategies was going to be a key challenge once the regulatory CSRD spotlight was moved away. Spending time with boards and executive teams to ensure they continue to sponsor and buy-in to programmes is crucial. This ensures they remain aware of their regulatory and fiduciary responsibilities, as well as the commercial opportunities that could arise. Additionally, this is not just a CSRD requirement; best practice for both TCFD and transition plans requires board oversight and training.

Conduct a timely process review

Few organisations have considered completing a ‘lessons learned’ review on their CSRD implementation project. However, we believe this is an excellent way of capturing key learnings from the project team and initial implementation before resources are redeployed. These reviews powerfully identify process and governance improvements that may apply more broadly than CSRD to sustainability reporting across the organisation.

Strengthening sustainability strategies

Through our practical and experienced team, Crowe continues to support our clients in setting their own agenda to address rapidly changing sustainability and climate-related reporting requirements.

For more information, contact Alex Hindson or your usual Crowe contact.