Simplified Sustainability Reporting: The New EU Directive

Disclaimer: this is an automated translation from Italian. Go to the original article.

Sustainability reporting is a transparency tool that complements the economic report, allowing companies to declare the environmental, social, and governance impacts related to their activities. Through international ESG parameters, companies can communicate results and objectives on sustainability. The Directive CSRD 2022/2464/EU, implemented in Italy with legislative decree 125/2024, establishes that the reporting obligation will be introduced gradually: from 2025 for large listed companies, from 2026 for unlisted ones, and from 2027 for small and medium-sized listed companies.

On January 8, 2025, two new directives were published in the Official Journal of the European Union: the Directive 2025/1 and the Directive 2025/2. The Directive 2025/1 (known as the Insurance Recovery & Resolution Directive or IRRD) introduces preventive measures for the recovery of struggling insurance companies, improving the protection of policyholders and minimizing risks to economic stability. The Directive 2025/2/EU extends the possibility of adopting simplified reporting for "small and non-complex" insurance and reinsurance companies. These companies will be required to provide general information on ESG factors starting from 2027, with reference to 2026 data.

Not all small businesses are required to prepare a sustainability report. The directive allows them to adopt simplified models, except in cases where the competent authorities identify specific national or regional risks. The provisions also update the Solvency II regulation, providing measures that improve supervision, information transparency, and the adequacy of capital requirements. The main objective of the directive is to ensure that sustainability information is relevant, comparable, and reliable, facilitating access to data for investors and stakeholders. The European Parliament aims to strengthen the sector's resilience, promoting more sustainable business practices and preparing companies for future challenges.

The European Union Directive 2025/2 will come into force on January 28, 2025 and must be transposed by the Member States by January 29, 2027. This directive amends Directive 2009/138/EC, introducing changes in various areas, including: proportionality; quality of supervision; disclosure, measures for long-term guarantees; macro-prudential tools; sustainability risks; cross-border and group supervision. In particular, the directive provides simplifications for the sustainability of SMEs, as established by Directive 2013/34/EU. Consequently, the concerned companies will be required to submit the new sustainability reporting starting from 2027.

The Directive 2025/2/EU expands the possibility of simplified reporting for SMEs, which are not required to prepare a complex sustainability report. The directive aims to enhance corporate transparency regarding environmental, social, and governance (ESG) impacts by facilitating access to comparable and reliable data for investors and stakeholders. According to the European Commission, these measures will allow SMEs to increase their competitiveness, improve their resilience, and prepare for future challenges. The simplified reporting, which will come into force in 2027, supports companies in adopting sustainable practices, responding to the growing demand for transparency in sustainability and governance.

This article was created as part of the "Biodiversity services EU expansion" project (CUP: E43D22000480009) under the call for proposals 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 the monitoring, protection, and regeneration of biodiversity, supporting businesses in defining customized climate strategies based on the analysis of their impacts and dependencies on nature. With an established portfolio in Italy, Germany, and France and significant partnerships, 3Bee continues its expansion in international markets to create a tangible impact through technology.