Omnibus Package – EU set to simplify Sustainability Reporting, but Lessors will still Count the Numbers

February 13, 2025

The EU’s Corporate Sustainability Reporting Directive (CSRD) marked a significant milestone in the pursuit of a sustainable global economy, seeking to build transparency and accountability in sustainability reporting across industries. That pursuit has only just begun, meaning there is still limited real-world experience to determine what works effectively and what does not. And yet, political pressure and concerns about global competitiveness sees the EU already being asked to significantly reduce the scope of sustainability reporting – even as the first category of listed and public interest companies are busy completing their CSRD disclosures.

In aircraft leasing, a capital-intensive industry, any reduction in reporting obligations will naturally be welcomed, particularly as many lessors currently qualify as Large Companies based only on balance sheet values and revenues, not on the number of employees. The planned simplification could potentially shrink the number of companies in scope for CSRD and the depth of disclosures that will be required, but while this possibility of escaping the net is tantalising, any changes in reporting obligations will not see lessors taking their eyes off the financial impacts, risks and opportunities of carbon emissions related to their financed assets.

Carbon data as a financial indicator – asset value is everything

Financial reporting is the backbone of business strategy, guiding investment decisions, risk assessments, and long-term planning. Increasingly this applies to carbon emissions data. So even if CSRD mandates are weakened under the imminent Omnibus Package (the first part of which is expected to be announced by the end of February), lessors will still treat “carbon accounting” as an integral financial discipline because in leasing, asset value is everything. Historically, aircraft age has been a key indicator of asset desirability, particularly when considering portfolios and the weighted average age therein. The current lack of supply of aircraft across the industry means that fuel efficiency and the associated carbon intensity are currently considered as longer-term factors in asset value, but nevertheless they are ones which risk managers in lessors have been steadily gathering data on in recent years. Carbon considerations in risk assessment range from the future “leaseability” of certain aircraft types driven by concerns from airlines facing increased environmental scrutiny, to more fundamental concerns of future stranded assets, prevented from flying in certain markets because they do not meet emissions standards. So even with simplified CSRD reporting, the rationale for aircraft lessors to understand their carbon emissions remains intact. Much as regulatory uncertainty would not dictate financial prudence, lessors who proactively monitor their carbon emissions programmes will continue to stay ahead of financial, regulatory, and market shifts, protecting asset value and strengthening investor confidence.

Omnibus rules versus Market rules

While it would be an exaggeration to say that at the time of writing CSRD appears to be at a crossroads, European financial policy experience suggests regulators will not be alone in shaping the rules, as investors, banks, and insurers have been a driving force in demanding carbon transparency. Often it is capital, not rules, which encourages disclosure. Aircraft lessors do not exist in a vacuum. They are financial entities who depend on capital markets, which are increasingly pricing in climate risk. Whether or not the EU forces lessors to disclose sustainability metrics in the simplified CSRD, it is likely that the banks and investors will. Aircraft are long-term assets, and financiers underwriting aircraft transactions are driven by the long-term viability of these investments. Any perceived unmanaged carbon risk in the sector could see investors move their capital elsewhere. Global requirements in sustainability led by the International Sustainability Standards Board (ISSB) will continue driving institutions to account for climate risk in annual statements.

So even if the Omnibus Package means that aircraft lessors will have to worry less about what they need to report today, they know that it will not change the reality of how their businesses will increasingly be viewed tomorrow.

Thank you note:

This article was drawn from conversations with Gerry Hastings, CEO Fexco Aviation Services and Eduardo Mariz, Senior Analyst at Ishka. Eduardo and his team will be sharing a deeper dive into the Omnibus Package and its potential implications for aviation stakeholders shortly.

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