Forum per la Finanza sostenibile
Updates regarding the proposals of the Omnibus package.
The regulatory framework for sustainable finance is currently undergoing significant transformation following the publication of the Omnibus Simplification Package, discussed in the April article. Alongside updates on the proposals for the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy, other noteworthy developments have also emerged.
Omnibus Simplification Package and ESRS revision
In recent weeks, the European Parliament and Council have approved the European Commission's proposal to postpone the dates of application of certain corporate sustainability reporting and due diligence requirements, as well as the transposition deadline of the due diligence provisions. According to the so-called "Stop-the-Clock" directive, the following postponements have been introduced:
- By two years, the entry into application of the CSRD requirements for large companies that have not yet started reporting, as well as listed SMEs, and
- By one year, the transposition deadline and the first phase of the application (covering the largest companies) of the CSDDD.
Member states must transpose this directive into their national legislation by 31 December 2025.
Moreover, the European Financial Reporting Advisory Group (EFRAG) has launched a public consultation to gather feedback on the revision of the first set of European Sustainability Reporting Standards (ESRS Set 1). Following the publication of the Omnibus proposals on 26 February 2025, EFRAG received a specific mandate from the European Commission to provide technical advice for adopting a delegated act to revise and simplify the existing European Sustainability Reporting Standards (ESRS). The technical advice is expected to be delivered by 31 October 2025.
The public call for input aims to gather input on the key areas of simplification identified in the Explanatory Memorandum of the Omnibus proposal, including:
- ESRS mandatory datapoints that are least important or problematic for general-purpose sustainability;
- suggestions on how to modify the ESRS provisions that are deemed unclear;
- Suggestions on how to improve consistency with other EU legislation;
- Suggestions on how to improve the ESRS provisions on materiality
- Suggestions on how to simplify the structure and presentation of the standards;
- Suggestions on how to further enhance interoperability with global sustainability reporting standards.
The deadline for submitting feedback is Tuesday, 6 May.
Impact of the Guidelines on funds’ names
In preparation for the full application date of the European Securities and Markets Authority’s (ESMA) Guidelines on funds’ names using ESG or sustainability-related terms on 21 May 2025, preliminary data have been published to assess their potential impact on already existing funds. According to research conducted by Morningstar Sustainalytics, the guidelines are expected to affect between 30% and 50% of the funds within their scope, equating to approximately 1,200 to 2,200 funds out of the nearly 4,500 sustainability-oriented investment funds currently operating in Europe.
Indeed, since ESMA’s Guidelines were published in May 2024, affecting only the funds existing before the date of application, the number of instruments with sustainability-related names has declined by approximately 20%. Such funds are subject to EU Paris-aligned Benchmarks (PAB) exclusions and required to “meaningfully invest in sustainable investments” (SI), i.e., at least 50% of a fund’s assets. Environmental- and ESG-related fund names, which are subject to PAB criteria but not the 50% SI threshold, declined by 10% and 12%, respectively. In contrast, transition-related fund names, which are subject to EU Climate Transition Benchmarks exclusions that allow fossil-fuel-based investments, grew by 4%.
Nature-related financial disclosures
Regarding nature-related disclosures, the IFRS Foundation and the Taskforce on Nature-related Financial Disclosures (TNFD) have announced that they have signed a Memorandum of Understanding (MoU) signalling both parties’ commitment to build upon the TNFD recommendations in the ongoing work of the International Sustainability Standards Board (ISSB), to enable nature-related financial disclosures for use by capital markets.
Under the MoU, ISSB and TNFD will share research, knowledge and technical expertise to address the needs of global capital markets for information about nature-related risks and opportunities.
