The PRA’s SS5/25 implementation deadline was four months ago, and one question keeps coming up in smaller lenders’ risk committees. What does “proportionate” actually look like when you don’t have a 40-person sustainability team?
A smaller balance sheet doesn’t mean a smaller Data Gap in your SME book.
Proportionate Doesn’t Mean Optional
According to the Prudential Regulation Authority, SS5/25 applies to building societies and smaller banks as well as the largest lenders. Proportionality is judged by how material a firm’s climate exposure is, not by how big the firm is. Firms are also expected
to critically assess their climate data sources and address gaps in coverage and quality.
For a challenger with a concentrated SME book, that can mean more scrutiny, not less. A regional building society lending to local hospitality and property businesses has the same blind spots as a high street bank, with fewer people to fill them.
Why Buying a Dataset Doesn’t Close the Gap
The instinct is to buy your way out. But most off-the-shelf climate datasets were built for a different problem: large, listed companies that publish structured disclosures.
Point them at a book of UK mid-market borrowers and three things tend to happen:
- Coverage drops, so much of the portfolio gets filled with sector averages
- Proxy figures stand in for each company’s own evidence, which is hard to defend to a board or supervisor
- Customer surveys fill the rest, bringing slow responses, inconsistent answers and survey fatigue
The evidence itself exists. Many UK SMEs publish policies, certifications and sustainability reports on their websites and in their documents. It’s just fragmented and not streamlined into anything a credit team can use.
What Proportionate Actually Looks Like
A proportionate approach works in layers.
Start with public evidence
Analyse what borrowers already disclose publicly, and benchmark them against peers in their sector, industry and revenue group. That gives a portfolio-wide view with no customer effort.
Validate where it’s material
For the exposures that matter most, ask customers to confirm a pre-populated profile. A few quick questions on turnover, employees and energy use are enough.
Give something back
Engagement lands better when customers get something back. That might be peer benchmarking, energy savings, or support preparing for EcoVadis, B Corp or ISO.
This is the thinking behind the Climate Action platform, developed and deployed by NatWest and National Australia Bank. Built on TDH’s sustainability intelligence, it helps SME customers build their own sustainability data profile and see relevant actions. The bank gets consistent, validated data for financed emissions and transition reporting.
What This Means for Smaller Lenders
SS5/25 doesn’t ask building societies and challengers to match the big banks’ headcount. It asks them to understand their material exposures and be honest about the quality of their data.
A layered approach, anchored in each company’s own reported evidence, gets you there with a far smaller team than a vendor dataset or a survey campaign.
Talk to Our Team
If your SME book still sits in the Data Gap, talk to our team about a proportionate starting point for your portfolio. We’ll show you what your borrowers already disclose before you ask them for anything.
