European Sustainable Finance: What to Expect in 2025

The year 2024 marked a significant shift for the European regulation regarding sustainable finance. The new rules introduced, along with the delays and changes, are redefining the timing and methods of applying sustainability obligations for companies. During the Salone del Risparmio 2025, the seminar "Half an Hour of Sustainable Finance" from the Sustainable Finance Forum took stock of the situation, starting from the fact that the Forum reached 173 members, representing a wide range of stakeholders: institutional investors, NGOs, trade unions, academics, and trade associations. Among the main highlighted innovations, is the two-year delay in the entry into force of the obligations provided by the CSRD for large companies and listed SMEs. The paradox, according to experts, is that companies already obligated to the Non-Financial Declaration could now stop for two years, interrupting an already initiated process.

From January 1, 2024, financial market operators must declare the alignment of their investments with all six environmental objectives defined in the EU Taxonomy. This obligation has significantly expanded the scope of environmental communications, intensifying the need for reliable and comparable data. In parallel, by the end of 2025, an update proposal for the SFDR (Sustainable Finance Disclosure Regulation), which governs the transparency of sustainable financial products, is expected. The goal of the review is twofold: on the one hand, to strengthen the effectiveness of ESG communication and, on the other, to prevent greenwashing practices through stricter standards. In this context, the work of the European Platform on Sustainable Finance, which has proposed an official categorization of ESG financial products and ESMA guidelines on fund nomenclature, is also included.

One of the most debated topics is the so-called "Omnibus" simplification package. Presented as a tool to increase Europe's competitiveness and reduce bureaucratic burdens, it aims to reduce administrative loads by 25% for large companies and up to 35% for SMEs. However, initial simulations conducted on ESRS standards suggest that the actual reduction in burdens would be around 3-4%, far from the declared goals. The package addresses three fundamental pillars: CSRD, Taxonomy, and CSDDD. In particular, the number of companies required to publish a sustainability report under CSRD has drastically decreased: from 49,000 to about 7,000 at the European level. An 80% cut that could compromise the availability of ESG data, making it more difficult for investors to properly assess environmental, social, and governance risks.

The analysis of the Omnibus package highlights further issues related to due diligence. Among these, the choice to include only direct business partners, the so-called Tier 1 suppliers, in ESG assessments reduces companies' ability to identify and prevent violations in the deeper levels of the value chain, where most environmental and human rights abuses are concentrated. Additionally, assessments will have to be conducted every five years instead of annually and the obligation to terminate relationships with suppliers involved in serious violations is removed. Another critical element is the removal of civil liability at the European level for companies, which limits victims' ability to obtain justice, leaving legal actions to individual national jurisdictions.

The 2025 is shaping up to be a decisive year to understand whether Europe will be able to strengthen or weaken its commitment to sustainable finance. In the background are the changes to the CBAM (Carbon Border Adjustment Mechanism), which now includes an exemption for small importers with less than 50 tons per year. A choice that, on the one hand, protects micro-enterprises, but on the other hand, could create new loopholes in the emissions regulation system. Ultimately, the main challenge for 2025 will be to firmly maintain the European ambition to lead the sustainable transition, while avoiding the risk of weakening the most effective tools through regulatory compromises.

This article was created as part of the project "Biodiversity services EU expansion" (CUP: E43D22000480009) under the call by Regione Lombardia "PR FESR 2021-2027 – LINEA INTERNAZIONALIZZAZIONE 21-27", aimed at supporting the internationalization of Italian companies. 3Bee is the naturetech company that develops innovative technologies for monitoring, protecting, and regenerating biodiversity, supporting companies in defining customized climate strategies based on the analysis of their impacts and dependencies on nature. With a consolidated portfolio in Italy, Germany, and France and significant partnerships, 3Bee continues its expansion into international markets to create a concrete impact through technology.