Italian Sustainable Investment Forum
Progress on the revision of the SFDR, new European measures to support the energy transition, and financial risks posed by extreme weather events
The European sustainable finance regulatory framework continues to evolve, with significant developments in recent weeks.
SFDR and Taxonomy Delegated Acts revision
The revision of the Sustainable Finance Disclosure Regulation (SFDR) continues to move through the legislative process. Following the European Commission’s proposal, the European Parliament and the Council are working on their respective negotiating positions, aiming to launch the trilogue by the autumn and reach an agreement by the end of the year. Among the first indications from the European Parliament is the support for the three-category product structure, albeit with more stringent requirements. The proposals include a minimum set of mandatory and standardised Principal Adverse Impact (PAI) indicators; stricter criteria for the ESG Basics category and for climate benchmark-related safe harbours; a minimum threshold of 20% Taxonomy-aligned investments for sustainable and transition products; and more detailed requirements regarding engagement strategies. Retail investors' protection would also be strengthened, while greater clarity would be provided for products that do not fall within the categories established under the new classification system.
The Platform on Sustainable Finance has submitted more than 280 recommendations to the European Commission as part of the consultation on the revision of the Taxonomy Climate and Environmental Delegated Acts. The objective is to improve the clarity and usability of the technical criteria while preserving the ambition of the Regulation. Most recommendations relate to the Climate Delegated Act and to the transport, energy, manufacturing, construction and forestry sectors, alongside cross-cutting measures such as updates to the Taxonomy Compass and interpretative guidance. The revision represents an important step towards ensuring greater consistency between the Taxonomy, related EU legislation and market practices.
New European measures for the energy transition
The European Commission has approved an Italian renewable energy support scheme worth approximately €23 billion to support more than 37 GW of new generation capacity. The mechanism is primarily based on Contracts for Difference (CfDs), which will provide renewable energy producers with greater revenue stability over a twenty-year period while simultaneously reducing the risk of windfall profits. At the same time, Brussels has announced that part of the fiscal flexibility already granted to support higher defence spending may also be used to finance investments in the energy transition. Member States will be allowed to allocate up to 0.3% of annual GDP, within an overall ceiling of 0.6% of GDP over three years, to green investments, including technologies such as heat pumps, electric vehicles, solar panels and energy storage systems. Subsidies for fossil fuels remain excluded.
Green Bonds and the fight against greenwashing
From 21 June, external reviewers wishing to operate under the European Green Bond Standard (EU GB) Regulation will be required to register with the European Securities and Markets Authority (ESMA). Reviewers will be responsible for assessing both the pre-issuance documentation (the European Green Bond Factsheet) and the allocation of proceeds (Allocation Report).
On the green claims front, the European Commission has published new FAQs on the Empowering Consumers for the Green Transition Directive. The guidance clarifies that information derived from sustainability reports may fall within the scope of the Directive when used in marketing activities or consumer-facing communications. Particular attention is given to generic environmental claims (“green”, “eco-friendly”, etc.) and statements regarding future environmental performance, which must be adequately substantiated and, in some cases, verified by independent experts. Finally, the Commission confirms that company names, brands, and product names may also be considered environmental claims and will be assessed based on the average consumer's perception and the context in which they are used.
New ISO standard for transition plans
The International Organization for Standardization (ISO) has published the new ISO 32212 standard on climate transition plans for financial institutions. The standard provides a common framework for the development, maintenance and integration of transition plans across financing, investment and insurance activities. The standard covers areas including the assessment of climate-related risks and opportunities, the definition of objectives and targets, the integration of transition plans into financial decision-making and engagement activities, the communication of results, and governance and monitoring mechanisms.
Climate risks and financial stability
As requested by the French G7 Presidency, the Network for Greening the Financial System (NGFS) has published a report on the economic and financial impacts of extreme weather events. Based on an analysis of 31 case studies covering 28 economies between 2015 and 2025, the report highlights that extreme weather events already constitute a material risk to economic growth and financial stability. According to the NGFS, direct global losses associated with extreme weather events have exceeded USD 200 billion per year, while climate-related shocks are transmitted along value chains, affecting inflation, economic growth, employment and credit quality. The report also stresses the importance of strengthening insurance coverage, improving the availability of physical risk data and developing public-private risk-sharing mechanisms to reduce the so-called insurance protection gap.
