Money and the environment

Green finance does not retreat in the markets despite deregulation attempts

The Forum for Sustainable Finance takes stock of the situation in the light of market developments and changing regulations

by Antonio Criscione

28 January 2026

3' min read

Translated by AI

Versione italiana

3' min read

Translated by AI

Versione italiana

At the start of the year, it is time for balance sheets and projects. At a meeting in Milan, the Forum for Sustainable Finance - a non-profit association whose aim is to encourage the inclusion of environmental, social and governance criteria in financial products and processes - outlined the prospects for sustainable finance in 2026, within the current international framework and while the European regulatory simplification process continues.

Markets

Despite a public narrative that sometimes suggests a downturn or 'backlash' towards sustainability, the objective data,' explains Bicciato, 'describe a scenario in which financial reality belies pessimism, confirming that sustainable finance remains a crucial driver for investors.The green economy has reached impressive proportions, with a current value of USD 5 trillion and a projected annual growth rate of 6% that will take the market to over USD 7 trillion by 2030.

This trend is underpinned by concrete financial performance: between 2020 and 2024, the 'green' revenues of listed companies grew by 12%, twice the rate of 6% for conventional revenues. Decarbonisation technologies, such as solar and batteries, have seen costs plummet by 90% over the past decade, making fossil alternatives increasingly uncompetitive.

The asset management sector also reflects this solidity: as of September 2025, the global assets of sustainable funds exceeded USD 3,700 billion. In Italia, the trend is confirmed by the behaviour of institutional investors who, contrary to rumours of a retreat, are increasing their exposure: pension plans adopting sustainable investments have risen from 79 to 95, banking foundations from 31 to 34, and 99.7% of insurance companies now include ESG criteria in their policies.

With respect to these changes, Bicciato recalled that the Forum is in favour of easing and simplifying burdens on businesses, but this cannot lead to a push for deregulation, as seems to emerge from the evolving legislation, and thinks that some choices will have to be reconsidered.

Evolving regulations

2025 was an extremely busy year on the regulatory front, characterised by a push towards bureaucratic simplification that, however, raises concerns about the future availability of data for investors.

The so-called 'Omnibus' package has drastically changed the scope of application of the European rules: the thresholds for the Reporting Directive (Csrd) have been raised, leading to the exclusion of approximately 90% of the companies currently involved (set by the package at 1,000 employees and 450 million euro turnover), while for the Due Diligence Directive (Csddd), the reduction of the target group is 70%, with thresholds set at 5,000 employees and 1.5 billion euro turnover.

At the same time, the revision of the Sfdr (sustainable finance transparency regulation) was initiated, with the aim of overcoming the misuse of the regulation as a marketing label and introducing, probably from 2028, clearer product categories such as 'Sustainable', 'Transition' and 'Esg Basics'. An immediate impact on the market was generated by Esma's guidelines on fund names, created to combat greenwashing and ensure consistency between name and strategy: the analysis revealed that 64% of the monitored funds had to change their names and 56% updated their investment policy, often tightening exclusions on fossil fuels in order to maintain terms related to sustainability. The analysis also revealed that the number of funds that had to change their names was increasing

Engagement

Engagement activity confirms itself as a fundamental tool for dialogue between investors and issuers, demonstrating that Italian companies are not lagging behind on ESG issues despite the political climate.

The 2025 monitoring of 22 listed companies shows tangible progress: 14 companies have adopted a climate adaptation strategy and 13 have a formal transition plan, of which 10 explicitly incorporate the principles of 'just transition'.

Alignment with science standards is also improving, with 8 companies following the parameters of the Science Based Targets initiative (SBTi) compared to 5 the previous year. However, new challenges are emerging, particularly on artificial intelligence: although 17 out of 22 companies have already integrated AI technologies into their processes, governance is still lagging behind, with only 10 issuers having a specific code of ethics.