BRUBEG: Why ESG data is suddenly becoming relevant for all companies

Many companies are currently focusing on ESG data, particularly in connection with the CSRD, the EU Taxonomy, or supply chain issues. At the same time, there is often the impression that small and medium-sized enterprises (SMEs) or companies not subject to reporting requirements might be less affected in the future.

However, this is precisely where a misunderstanding lies.

The Banking Directive Implementation and Red Tape Reduction Act (BRUBEG) creates a new driver for ESG data – not through reporting requirements, but through banks. In the future, credit institutions in Germany will have to assess their customers’ ESG risks more rigorously. As a result, sustainability information will increasingly become part of loan discussions, ratings, and financing decisions.

For companies, this means that ESG data is no longer relevant only for reports, auditors, or investors, but also for their relationship with their own bank.

What is BRUBEG?

BRUBEG stands for the Banking Directive Implementation and Bureaucracy Relief Act. It is a German law that transposes European requirements – particularly those from the Capital Requirements Directive VI (CRD VI) – into German law.

Banks, savings banks, cooperative banks, development banks, and other supervised financial service providers headquartered or operating in Germany are directly affected.

A key focus of the law is to integrate ESG risks more closely into banks’ risk assessment, lending, and corporate governance. In the future, banks must examine more closely whether climate risks, high emissions, rising energy costs, regulatory changes, or supply chain issues could affect a company’s economic stability.

Why does the law affect not only banks but also companies?

Formally, the BRUBEG is directed at banks, but its effects extend far beyond that. This is because banks can only assess ESG risks if they receive sufficient information from their clients. Companies will therefore be confronted more frequently in the future with ESG questionnaires, additional documentation, or expanded information requirements.

This is particularly relevant for companies that:

• have high energy consumption
• operate emission-intensive processes
• own or finance real estate
• have complex supply chains
• plan investments or financing
• are heavily reliant on debt financing

This means that even companies without a legal reporting obligation may be affected. This is because banks must assess ESG risks not only for large corporations but across their entire loan portfolio and thus also for medium-sized enterprises, real estate companies, or smaller corporate clients.

Many companies, however, assume that ESG data will become less relevant to them in the future as a result of the Omnibus Initiative and the resulting relaxation of reporting requirements such as the CSRD. In practice, however, the exact opposite could occur. Even without a legal reporting obligation, banks will increasingly request information on emissions, energy consumption, climate risks, supply chains, or ESG targets in the future.

And not just in the context of new loan applications, but also for existing financing!

For small and medium-sized enterprises in particular, this means that ESG is increasingly becoming a key factor in financing. Many SMEs will therefore need to deal with ESG data, documentation, and internal responsibilities in a much more structured way in the future.

What ESG data banks will request increasingly in the future

The information banks require depends on the industry, company size, and type of financing. Depending on the bank, this information may be requested via ESG questionnaires, interviews, documents, or internal ratings.

The following topics will become particularly relevant in the future:

• Scope 1, Scope 2, and Scope 3 emissions
• Energy consumption and share of renewable energy
• Energy efficiency of buildings and renovation needs
• Climate risks for locations
• Supply chain risks and human rights
• Compliance structures and governance
• ESG goals, KPIs, and sustainability strategy

ESG is becoming a financing issue

For companies, this means: ESG is increasingly evolving from a reporting issue to a financing issue.

In the future, banks must incorporate ESG risks more heavily into credit decisions, ratings, and risk models. To do so, they need more information from companies – regardless of whether these companies are directly required to report or not. Companies will therefore be confronted more frequently in the future with ESG questionnaires, additional documentation, and new requirements in the financing process.

Those who have ESG data available in a structured format can better prepare for financing discussions, avoid follow-up questions, and respond more quickly to banks’ requirements. Companies that have to gather ESG data from various departments at short notice, on the other hand, risk additional effort, uncertainty, and delays.

For small and medium-sized enterprises in particular, it will therefore be important in the future to maintain ESG data not only for reports or regulatory requirements, but also for credit discussions, ratings, and financing.

Learn more about the topic

In our white paper, we detail exactly what data banks such as Sparkasse and Volksbank request and how small and medium-sized enterprises, in particular, that have not yet established ESG processes can prepare:

“BRUBEG: How the new German banking law requires companies to disclose ESG data”

Included in the whitepaper:

• What BRUBEG is and who it affects
• Why ESG risks are becoming more important for banks
• What consequences this has for companies in Germany
• Why even companies not subject to reporting requirements may be affected
• What ESG data banks will request more frequently in the future
• What ESG questionnaires, ESG scores, and ratings look like in practice
• How companies can prepare for new requirements

Download here.