Exempt From Reporting, Not From Expectations

Many small and medium-sized companies have interpreted the EU Omnibus changes as a reason to stop thinking about sustainability reporting.

The relief is understandable. But we believe it is the wrong conclusion.

The Omnibus package narrows the scope of CSRD. From 2027, it will apply only to companies with more than 1,000 employees and over €450 million in net annual turnover, thresholds far above the reality of most SMEs. For many, this means they are outside the direct legal reporting requirement.

What the Omnibus changes do not touch is what your customers, banks and business partners expect from you. That pressure has not gone anywhere. As one recent analysis put it, 85% fewer companies are required to report, but that does not mean 85% fewer investors, banks, customers, or procurement teams asking about your sustainability performance.

The pressure is moving from regulation to the market

Researchers from EPFL and IMD recently laid out why this matters, and their arguments go beyond the obvious. Yes, large customers will ask for your data. But sustainability expectations are also increasingly written into contracts as binding terms, not just voluntary codes. Banks and lenders are factoring environmental risk into financing conditions. The European Banking Authority's ESG Guidelines, which came into force in January 2026, now require banks to integrate sustainability risks into lending decisions. Companies that cannot provide structured sustainability data risk being classified as higher risk, which can mean stricter loan terms or denied financing altogether. And companies making sustainability claims without data to back them up are facing real greenwashing consequences, which is no longer just a risk for large corporations.

The OECD has also been clear on this: SMEs are under growing pressure to provide sustainability data to both supply chain partners and financial institutions, with sustainability reporting offering tangible commercial benefits for those who get ahead of it.

The shift after Omnibus is not that sustainability stops mattering. It is that the obligation moves from a regulator to the market, and markets are less predictable than regulators.

A note on the value chain cap

One thing worth knowing: the Omnibus does introduce a "value chain cap," which limits what large companies can demand from their smaller suppliers. Under the new rules, data requests from large companies to SMEs should not go beyond the VSME standard, and SMEs now have a legal right to refuse requests that exceed it. This is a genuine protection. But it also means the VSME standard effectively becomes the baseline expectation. Having that documentation in place is no longer just useful. It is the minimum that the market will assume you can provide.

Sustainability data is becoming part of doing business

For SMEs, sustainability documentation is increasingly needed in ordinary business situations: when entering supplier agreements, participating in tenders, responding to customer questionnaires, applying for financing, and making any claims about climate or environmental responsibility.

Telling a procurement team or a bank that you are exempt from CSRD is not a reassuring answer. It just tells them you have not thought about it.

Waiting is the expensive option

Many SMEs will only start collecting sustainability data when a customer asks for it. At that point, data is missing, responsibilities are unclear, and policies are not documented. The result is often rushed, expensive, and weak.

The companies that prepare now will have a documented track record of improvement. The companies that wait will only act when a customer asks, often with a short deadline.

How we work with SMEs at Format Green

At Format Green, we help SMEs create sustainability documentation based on the VSME standard, a framework designed specifically for smaller companies that need a structured, proportionate way to collect and present sustainability information.

CSRD may not apply directly to many SMEs after Omnibus. But customers, banks and procurement teams will still ask questions. And in our experience, "we are exempt" is never a strong answer.

Sources: Elliott Carballo, R., Hoos, F., Neri-Castracane, G. & Ratti, S. (2026). "The Exemption Illusion: Why European SMEs Still Need Sustainability Data Post-Omnibus." The European Business Review. // Sprih (2026). "CSRD 2026: Critical Changes Every Business Must Know Now." // Envoria (2025). "How ESG Performance Will Influence Financing Access from 2026." // OECD Platform on Financing SMEs for Sustainability. // Stratecta (2026). "Value Chain Cap: New Limits for Sustainability Data Requirements in the Supply Chain."