Omnibus proposal, transition finance, and other news
Forum per la Finanza Sostenibile
Updates regarding the potential release of an Omnibus package. Reports on transition finance published
Several policy updates have emerged regarding the European regulatory framework on sustainable finance in recent weeks.
EU Commission: Omnibus Proposal updates
The first update concerns the European Commission’s announcement of an Omnibus Simplification Package on sustainability. This legislative proposal is simultaneously addressing legal obligations under the Corporate Sustainability Reporting Directive (CSRD), the EU Taxonomy for sustainable activities, and the Corporate Sustainability Due Diligence Directive (CSDDD).
Initially announced in November 2024, this initiative aims for a 25% reduction in administrative burden for companies and 35% for SMEs, in accordance with the recommendations of the Draghi Report.
According to the European Commission 2025 Work Program, three omnibus packages are expected to be introduced in 2025, which will deal with:
- simplifying sustainability reporting with proposals to adjust reporting obligations and measures related to due diligence and taxonomy;
- simplifying and tailoring the regulatory framework available to small mid-cap companies;
- investment simplification, including a review of the Sustainable Finance Disclosure Regulation (SFDR).
PSF: Simplifying the EU Taxonomy to Foster Sustainable Finance
Ahead of the publication of the Omnibus package, the Platform on Sustainable Finance (PSF) has released a report commissioned by the European Commission to simplify and improve the usability of the EU Taxonomy.
The report presents four key recommendations to the Commission:
- reducing corporate reporting burden by more than one-third, for example by adjusting the OpEx KPI as a voluntary disclosure, except for R&D, and enhancing the alignment with financial reporting;
- simplifying the Green Asset Ratio (GAR) to support sustainable investments, such as by allowing for proxies and estimates and simplifying retail exposure reporting;
- developing a practical approach to the “Do No Significant Harm” (DNSH) criteria, introducing a lighter compliance assessment process and a "comply or explain" approach for DNSH assessment of the Turnover KPI, as a temporary measure;
- helping SMEs access sustainable finance, for example, by adopting a streamlined and voluntary approach for banks and investors’ exposures to unlisted SMEs.
PSF: report on corporate transition plans assessment
Regarding transition finance, the PSF has published a report titled Building Trust in Transition: Core Elements for Assessing Corporate Transition Plans, which provides guidance for companies in developing their transition plans and helps financial market participants (FMPs) assess them. Among the key findings, the report underlines that FMPs can assess corporate transition plans based on four core elements aligned with the EU requirements, notably CSDDD and CSRD: 1) science-based and time-bound targets, 2) key levers and actions to achieve these targets, 3) financial planning (investments and funding supporting the plan) and 4) governance and oversight of the plan and its implementation. The report is open for public consultation until mid-April 2025.
PSF: report on Investing for Transition Benchmarks (ITB and ITBex)
Finally, the PSF has proposed the introduction of two voluntary benchmarks, the Investing for Transition Benchmarks without and with exclusions (ITB and ITBex), the latter having stricter exclusion criteria for certain activities, particularly those related to fossil fuels. An Investing for Transition Benchmark is defined as an investment benchmark that incorporates – next to financial investment objectives – specific objectives related to the greening of CapEx, greenhouse gas (GHG) emission reductions in line with IPCC’s scientific evidence and the transition to a low-carbon economy, through the selection and weighting of underlying constituents.
