Italian Sustainable Investment Forum
New developments regarding the Omnibus Simplification Package. Presentation of the monitoring results of PAI statements
In recent weeks, new updates have emerged regarding the Omnibus Simplification Package, and a report has been presented on the progress of PAI disclosures.
Omnibus Negotiations
The European Parliament members voted to reject the Legal Affairs Committee (JURI) request to go directly to the trilogue with the Commission and the EU Coucil non the amendments to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). In particular, the JURI Committee proposed the following application thresholds: for the CSRD, companies with at least 1,000 employees and a turnover exceeding €450 million; for the CSDDD, companies with at least 5,000 employees and an annual net turnover above €1.5 billion, as well as non-EU companies with a net turnover within the EU exceeding the same threshold.
Moreover, regarding CSDDD, the Committee’s position included the obligation to submit climate transition plans, even if without an obligation to put them into effect, and excluded the EU-harmonised civil liability regime. The members of the European Parliament will vote on amendments to the file at the upcoming plenary session in Brussels on 13 November. The trilogue negotiations among the European Parliament, the European Commission, and the Council of the European Union will follow to reach an agreement on the final version of the Omnibus Package.
Non-paper on the CSDDD
Within the framework of the simplification process launched through the Omnibus Package, the Norwegian government has submitted a non-paper to the European Commission, emphasising the importance of maintaining the CSDDD aligned with the United Nations Guiding Principles on Business and Human Rights (UNGPs) and the Organisation for Economic Co-operation and Development (OECD) Guidelines.
In particular, the letter recommends avoiding the creation of a new regulatory framework that could diverge from already established international standards by introducing a parallel system. Furthermore, it highlights the need to uphold proportionality and a risk-based approach. The overarching message of the letter is to pursue the necessary regulatory simplification without undermining the integrity of the due diligence process, as already envisaged by global standards.
Simplification of the ESRS
In recent weeks, several responses have been submitted to the public consultation launched by the European Financial Reporting Advisory Group (EFRAG) on the draft revised and simplified European Sustainability Reporting Standards (ESRS).
In its feedback, the European Central Bank (ECB) staff expressed general support for EFRAG’s proposals, while highlighting some potential areas for improvement. Among these, it stressed the importance of clearly distinguishing between disclosure requirements and methodological guidance, as well as between mandatory and non-mandatory guidance. Moreover, according to the response, it is essential to preserve the key data points from ESRS E1 and E4 (climate change and biodiversity) and to maintain mandatory quantitative information regarding the expected financial impacts of ESG risks.
Finally, the ECB staff recommended that exemptions be time-limited, that information not be restricted to the downstream value chain, and that sector-specific and audit-related guidance be developed.
Similarly, the European Securities and Markets Authority (ESMA) expressed support for EFRAG’s work in its comment letter, reiterating the importance of safeguarding the reliability and quality of sustainability information for market integrity. Among the suggested improvements, ESMA recommended providing a clear definition of materiality, minimising exemptions, and strengthening interoperability with international standards. In addition, it underlined that the proportionality assessment should consider any changes to the scope of application following the completion of the CSRD review.
PAI Reporting
The latest update concerns the presentation by the European Supervisory Authorities (ESAs) of their fourth annual report on the voluntary disclosure of Principal Adverse Impacts (PAI).
The report indicates an improvement in the quality, clarity, and completeness of PAI statements, signalling a growing commitment by financial market participants to sustainability reporting. However, the authorities note that further progress is needed, particularly regarding the explanation of actions taken and targets set, as well as the coverage and quality of published data.
In view of the upcoming review of the Sustainable Finance Disclosure Regulation (SFDR) expected at the end of the year, the authorities recommend that the European Commission enhance transparency between actual and estimated data and strengthen proportionality by basing PAI disclosure requirements on the value of investments rather than on the number of employees of financial market participants.
