Italian Sustainable Investment Forum
Consultations on ESRS and voluntary standards, simplifications for banks and new rules on ESG ratings and bonds
The process of simplifying the European sustainable finance regulatory framework continues, with significant developments in recent weeks.
ESRS review and voluntary standards
The European Commission has launched two parallel consultations: one on the revision of the European Sustainability Reporting Standards (ESRS) and one on new voluntary standards (VS) for companies outside the scope of the Corporate Sustainability Reporting Directive (CSRD). As regards the ESRS, the revision – requested by the Omnibus I package – aims at a significant reduction of datapoints (around -60%) and a greater focus on materiality, with a top‑down approach. Among the main objectives are improving the quality of representation (“fair presentation”), greater consistency with other EU regulations (such as the due diligence directive - CSDDD) and alignment with global standards, particularly on GHG emissions. It is also envisaged that certain data may be omitted in specific cases. In parallel, a new voluntary standard is under consultation, which the European Commission intends to adopt (via a delegated act) for companies with up to 1,000 employees. It is based on the VSME and will serve as a “cap” on sustainability data requests across the value chain. The framework is more proportionate and simplified with respect to the ESRS and introduces a two‑module architecture (basic and comprehensive) and a classification system for disclosures. The consultations will close on June 3, 2026, with adoption expected by the second quarter and mandatory application starting in 2027.
ISSB and nature-related disclosures
The International Sustainability Standards Board (ISSB) has announced that it will not develop a standalone standard dedicated to nature, nor amend the International Financial Reporting Standards (IFRS) S1 and S2 to include specific rules. Instead, a Practice Statement is expected to provide application guidance, definitions and disclosure datapoints that companies may use on a voluntary basis when nature-related information is material. Nature-related disclosures will therefore remain integrated within the existing framework, particularly when linked to climate-related risks and opportunities.
Simplification of ESG reporting for banks
The European Banking Authority (EBA) has put forward a proposal to simplify ESG prudential reporting under the Capital Requirements Regulation (CRR3), introducing a proportional approach structured across three levels, with an estimated reduction of around 50% of datapoints. Key changes include the removal of several Taxonomy-related templates, including the share of aligned exposures (BTAR), which will remain under Pillar III. At the same time, the template on climate transition risks (D 01.00 – Climate Change Transition Risk) is strengthened, and a more structured focus is introduced on non-climate environmental risks, such as biodiversity and pollution, in line with the recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD) and of the Network for Greening the Financial System (NGFS).
Market trends and ESG risks
The European Securities and Markets Authority (ESMA) published its Report on Trends, Risks and Vulnerabilities. According to the document, the global investments in clean energy continue to grow despite a less favourable political context. The ESG market is showing signs of maturation, with outflows from Article 9 funds and significant inflows into Article 8 funds. In the ESG bond market, the overall stock is increasing (+8%), but green and social bond issuances are declining, while sustainability bond issuances are rising. New instruments are also emerging, such as the first bonds compliant with the European Green Bond Standard (EU GBS). Key risks identified include greenwashing (considered systemic), excessive exposure to technology/AI securities, and the expansion of catastrophe bonds, which are characterised by potentially high losses and uncertainty in payout mechanisms.
ESG ratings and new rules for bonds
Two delegated regulations have been adopted containing regulatory technical standards (RTS) for the implementation of the ESG Ratings Regulation (Reg. 2024/3005). The new rules introduce stringent organisational separation requirements to avoid conflicts of interest and enhanced obligations for providers active in other financial sectors. Entry into force is expected in July 2026, following scrutiny by Parliament and the Council.
In addition, the amendment to the Listing Act introduces new, specific ESG disclosure requirements for bonds, effective from June 5, 2026. In particular, an ESG Disclosure Annex is established, requiring standardised information on objectives, ESG factors and how they are integrated into the product, with the aim of increasing transparency and comparability and reducing the risk of greenwashing.
