Italian Sustainable Investment Forum
New developments regarding the Omnibus Simplification Package. Introduction of a climate factor in collateral valuation.
In recent weeks, new updates have emerged regarding the Omnibus Simplification Package, along with additional measures aimed at strengthening climate-risk management.
Quick Fix on First Set of ESRS
The European Commission has adopted a delegated act, also known as a “quick fix,” amending the European Sustainability Reporting Standards (ESRS), which postpones certain disclosure obligations initially scheduled for financial years 2025 and 2026. The measure applies to “wave one” companies, those already subject to sustainability reporting obligations starting with fiscal year 2024, under the Corporate Sustainability Reporting Directive (CSRD). The quick fix introduces three main changes: a two-year extension (until 2027) for additional ESRS requirements that were due to take effect in 2025 and 2026; a broader phase-in period for all “wave one” companies with respect to the following standards: ESRS E4 (Biodiversity and ecosystems), ESRS S2 (Workers in the value chain), ESRS S3 (Affected communities), ESRS S4 (Consumers and end-users); and extended application of the safeguard clause. The delegated act will now be submitted to the European Parliament and Council, which will have two months (extendable by another two) to raise objections.
ESRS Revision
The European Financial Reporting Advisory Group (EFRAG) has also published a revised draft of the ESRS, launching a public consultation that will remain open until 29 September. This proposal responds to the European Commission’s formal request, under the Omnibus initiative, to make the standards more manageable and accessible without undermining their effectiveness or alignment with Green Deal objectives. EFRAG’s efforts have focused on: simplifying the double materiality assessment, reducing overlaps between standards, clarifying terminology and structure, and removing all voluntary disclosures. The outcome is a 57% reduction in mandatory datapoints (to be reported only if material) and a 68% reduction in the total datapoints.
New VSME Standard
In the area of sustainability reporting, EFRAG has also presented the new voluntary SME standards set (VSME) which will apply to undertakings with less than 1000 employees. The European Commission has adopted the standard as a recommendation and will serve as the basis for drafting the final version, which will be adopted via a delegated act. The VSME standard is structured into two distinct modules: the basic module, designed for micro-enterprises, which requires 11 disclosures; and the comprehensive module, covering nine additional disclosures typically requested by banks, investors, and value-chain partners from SMEs. The Commission’s recommendation represents an interim solution to meet market needs. The adoption of the delegated act will depend on the pace and outcome of negotiations between co-legislators on the Omnibus proposal.
Investigation into the Omnibus adoption process
Lastly, on the Omnibus front, the European Ombudsman has launched a formal inquiry into the process by which the European Commission drafted the reform package. The decision follows a complaint filed by eight NGOs, which accused the EU leadership of breaching the Better Regulation Guidelines by failing to conduct a public consultation and an impact assessment, both of which are required before proposing new legislation. Furthermore, critics argue that the Commission did not assess the package’s consistency with the EU’s legally binding objective of climate neutrality by 2050, as set out in the European Climate Law.
Climate Factor ECB
The last update concerns the European Central Bank’s (ECB) introduction of a climate factor in collateral valuation. The measure builds on climate stress test results, which show that financial asset values can be directly affected by climate-related uncertainties. The adjustment for each asset will be based on an “uncertainty score” composed of three elements: sectoral stress factor, issuer exposure, and asset vulnerability. The measure applies to non-financial corporate assets and their affiliated entities and will reduce the maximum amount the Eurosystem is willing to lend against such collateral. Given the current low debt levels and the limited use of corporate bonds as collateral, the climate factor’s impact on counterparties is expected to be contained. The factor will be implemented in the second half of 2026.
