Sustainability reporting, two more years for companies

The Economy Decree Law (95/2025) rewrites the timetable on sustainability reporting obligations, amending Legislative Decree 125/2024. This is a 'due act' after the approval of the European regulation rewriting the timetable on sustainability reporting. The 'stop the clock' directive, 2025/794, postpones sustainability reporting (SSCR) and due diligence (SSCD) obligations for certain categories of companies, allowing more time for compliance with the new regulations. The directive was published in the EU 'Official Journal' on 16 April 2025 and entered into force the following day.

It is Article 10, paragraph 1-bis of Decree Law 95 that realigns the roster for Italian companies with respect to the European sustainability rules (while the legislature has not yet intervened with respect to the due diligence directive). The constraint of sustainability budgets remains, as of the financial years 2024, for large companies that are public interest entities and that, on a consolidated basis, exceed the average number of 500 employees employed during the financial year, and for public interest entities that are also parent companies of a large group and that, on a consolidated basis, exceed the average number of 500 employees criterion on the balance sheet date.

In contrast, for other large companies and other parent companies, the sustainability reporting obligation will not start in 2025 but in the financial year beginning 1 January 2027. Small and medium-sized listed companies (with the exception of micro) will be subject to the obligation from 1 January 2028 (and not from 2026).

Directive 2025/794 does not revise the range of companies subject to sustainability reporting, which is instead addressed by the second act of the proposal presented by the EU Commission in February, according to which the constraint will remain, in addition to public interest entities, for companies with more than 1,000 employees as a rule.

All this jigsaw puzzle is accompanied by the simplification of the Esrs standards: on 31 July, Efrag (the Commission's technical arm) published the drafts of the new standards (with the reduction of the information required) for consultation. With the new exposure drafts (see 'Il Sole 24 Ore' of 1 August) the public consultation opened, until 29 September. Companies, auditors, investors, national authorities and other stakeholders are invited to contribute observations and comments so that Efrag can arrive at the final version of the Esrs to be proposed to the EU Commission for adoption.