Italian Sustainable Investment Forum
In recent weeks, significant updates have emerged concerning the regulatory framework for sustainable finance, both at the European and Italian levels.
Updates on the Omnibus Package
The European Commission has published a draft regulation aimed at reducing compliance and administrative burdens for SMEs. The proposal, part of the Omnibus IV Simplification Package, introduces a new category of undertakings: small mid-caps, defined as companies with between 250 and 750 employees and either an annual turnover up to €150 million or a total balance sheet up to €129 million. These entities would be eligible for simplified rules and specific benefits, such as those already available to SMEs.
Moreover, the European People's Party's rapporteur in the Parliament, Jörgen Warborn, has presented a report that includes amendments diverging significantly from the European Commission’s initial proposals released in February. Regarding the scope of the Corporate Sustainability Reporting Directive (CSRD), the report proposes increasing the thresholds to 3,000 employees and €450 million in annual turnover. Regarding the Corporate Sustainability Due Diligence Directive (CSDDD), the report proposes additional measures to further ease due diligence obligations for companies. Additionally, it suggests restricting Member States from introducing more stringent national measures than those specified in the directive. Finally, it proposes to make the disclosure of transition plans voluntary.
Climate risk management
In Italy, two significant reports have recently been published addressing climate risk management. The Bank of Italy has released its annual report on sustainable investments and climate risks, outlining how the institution manages the investment of its non-monetary policy portfolios, with particular attention to integrating sustainability and climate risk considerations. One of the key findings is a marked reduction in the portfolios’ weighted average carbon intensity between 2020 and 2024. The most pronounced decreases were observed in equity and corporate bond holdings, which recorded reductions of 59% and 58% respectively. This progress is attributed to a combination of investment strategies that favour lower-emission assets, corporate advancements in sustainability, particularly in decarbonisation efforts, and the broader macroeconomic effects of inflation, which have influenced asset composition and valuation. In parallel, the Italian Institute for Insurance Supervision (IVASS) published a report presenting the results of its annual monitoring of natural catastrophe and sustainability risks across the Italian insurance market. The report provides a detailed overview of the sector’s exposure to climate-related threats from a financial stability perspective, highlighting the central role of insurance companies in supporting physical risk adaptation. The analysis reveals a growing exposure of the insurance industry to natural catastrophe risks. This expansion of coverage has been accompanied by a significant decline in profitability, primarily due to the impact of extreme weather events during 2023. The report also highlights the challenges faced by many insurers in gathering the necessary sustainability-related information.
National Energy and Climate Plans (NECPs)
Another relevant development concerns the publication of the European Commission’s assessment of the National Energy and Climate Plans (NECPs) submitted by EU Member States. Nearly a year after the official submission deadline, Poland, Estonia, and Belgium have yet to deliver their final plans. Despite these delays, the Commission notes significant progress compared to the initial drafts submitted in 2023. According to the Commission’s analysis, the current NECPs would enable the EU to achieve a 54% reduction in greenhouse gas emissions by 2030 compared to 1990 levels, a target that comes very close to the legally binding European goal of 55%. Within the broader EU-level evaluation, Italy is explicitly mentioned. The Commission highlights the need for the country to increase investments in grid infrastructure optimisation and cross-border interconnections, which are essential to accelerating the deployment of renewable energy.
EU Deforestation Regulation (EUDR)
The European Commission has also published a classification of countries under the EU Deforestation Regulation (EUDR), which assigns risk levels (high, standard, or low) based on a country’s exposure to deforestation. This categorisation will determine the level of due diligence required for imports of products such as cocoa, coffee, soy, palm oil, and beef. Regardless of the assigned risk level, all countries will be required to ensure full traceability of relevant products, including the geolocation coordinates of production areas, to certify that they originate from land not affected by deforestation. In addition to the 27 EU Member States, the United States, China, Australia, and Canada have been classified as low risk. In contrast, countries subject to international sanctions (i.e., Belarus, Myanmar, North Korea, and Russia) have been placed in the high-risk category. All other countries fall under the standard-risk classification. The regulation will take effect on 30 December 2025 for large enterprises and on 30 June 2026 for SMEs.
