Italian Sustainable Investment Forum
In recent weeks, significant developments have emerged concerning the Omnibus Simplification Package, alongside new initiatives aimed at strengthening the EU’s path toward climate neutrality.
Updates on the Omnibus Package
On 23 June 2025, representatives of EU Member States agreed on a Council negotiating position to simplify sustainability reporting and due diligence duties, based on the Omnibus I proposal. Concerning amendments to the Corporate Sustainability Reporting Directive (CSRD), the Council proposed implementing a net turnover threshold of over €450 million, alongside the initial 1,000-employee threshold suggested by the Commission. The Council also included a review clause for a potential future expansion of the scope. For the Corporate Sustainability Due Diligence Directive (CSDDD), it proposed increasing the thresholds to 5,000 employees and €1.5 billion in turnover. Additionally, it confirmed the Commission's proposal to remove the harmonised EU-level civil liability regime. Lastly, the Council recommended delaying the deadline for adopting the directive to 26 July 2028. In the upcoming weeks, the Council will begin negotiations with the European Parliament to reach a final agreement on the Omnibus proposal.
Further CSRD amendments
As part of the broader revision of the sustainable finance regulatory framework, the European Commission has approved a delegated act to simplify reporting obligations for companies falling under the first wave of CSRD application, introducing a “quick fix” to the European Sustainability Reporting Standards (ESRS). This measure allows companies preparing sustainability reports for fiscal year 2024 to omit disclosures required under ESRS E4 (biodiversity and ecosystems), S2 (workers in the value chain), S3 (affected communities), and S4 (consumers and end-users). In addition, all first-wave companies, including those with more than 750 employees, may benefit from the transitional provisions applicable to these same ESRS. Concerning ESRS S1 (own workforce), it may be entirely omitted in 2025 and 2026, but only by companies with over 750 employees. Companies omitting E4, S1, S2, S3 or S4 are still expected to indicate: whether the standard was assessed as material; how the business model and strategy reflect related impacts, targets, and progress, including whether biodiversity goals are science-based; and disclose any relevant policies, actions, and metrics.
Taxonomy simplification
Building on efforts to simplify, the European Commission has adopted a delegated regulation amending Regulation (EU) 2021/2178 on Taxonomy-related disclosures, introducing several measures to facilitate implementation. Among the changes, the Commission proposes exempting both financial and non-financial companies from assessing Taxonomy eligibility and alignment for economic activities that are not financially material to their operations. Simplifications are also introduced for certain key performance indicators (KPIs), such as the Green Asset Ratio (GAR) for banks. Moreover, the number of required data points has been reduced by 64% for non-financial undertakings and by 89% for financial institutions through streamlined reporting templates. These measures will apply from 1 January 2026, covering the 2025 financial year.
New initiatives for climate neutrality
The latest update concerns a proposed amendment to the European Climate Law, introduced by the European Commission. The proposal establishes a new intermediate target for 2040: a 90% reduction in net greenhouse gas emissions compared to 1990 levels. This is one of the key measures in the EU’s 2024–2029 Strategic Agenda, marking an important milestone on the EU’s path towards climate neutrality by 2050. Notable changes include increased flexibility compared to previous approaches, across sectors and regions. Among the proposed tools: limited use of international credits from 2036 onwards; the integration of permanent CO₂ removals into the Emissions Trading System (ETS); and cross-sectoral compensation mechanisms (e.g., if a Member State finds it difficult to reduce emissions in land use, it may compensate through better performance in transport or waste management). Alongside the climate law proposal, the Commission also released a communication on implementing the Clean Industrial Deal, part of the EU Climate Strategy. Measures already underway include: a new state aid framework to encourage investment in the energy transition; streamlining the Carbon Border Adjustment Mechanism (CBAM), which now grants exemptions to 90% of importers; and a green investment tax recommendation, advocating tools such as accelerated depreciation and tax credits. New initiatives have also been announced to ensure energy remains affordable.
