A European Perspective on Sustainability, CSRD, and the Omnibus Package: An Interview with Ferruccio Bongiorni of Studio Bongiorni

Environmental General Counsel (“EGC”) Founder and Principal Catherine W. Johnson recently interviewed Ferruccio Bongiorni, Founder and Managing Director of Studio Bongiorni located in Milan, Italy, about sustainability issues and trends from the perspective of the European Union (EU) and Italy – with a special focus on the EU’s Corporate Sustainability Reporting Directive (“CSRD”), and the impact of the recently proposed Omnibus Package. Studio Bongiorni, specializing in tax and accountancy consulting, has been preparing clients for compliance with the CSRD.

The EU’s CSRD bears similaries to California's reporting laws, embodied in Senate Bill (SB) 253 and SB 261, which require large companies doing business in California to publicly disclose their greenhouse gas (GHG) emissions and climate-related financial risks.

EGC and Studio Bongiorni are both members of IR Global, an exclusive international networking association of more than 1,400 attorneys and accountancy professionals.

Question: What are the primary environmental initiatives global companies should be focused on right now within Italy and the European Union?

Examples of environmental initiatives companies can consider to become more sustainable include:

1. Reducing CO₂ Emissions and Energy Transition

·      Use of renewable energy: Installation of solar panels, purchase of certified renewable energy (Guarantees of Origin).

·      Energy efficiency: Replacing equipment and machinery with low-energy consumption technologies.

·      Emission reduction plans: Setting decarbonization targets aligned with the Paris Agreement and EU regulations (CSRD, CS3D).

2. Circular Economy and Waste Management

·      Waste reduction and material reuse: Implementing production processes that minimize waste.

·      Recycling and upcycling: Introducing internal and external recycling programs (e.g., sustainable packaging, recycled materials in products).

·      "Zero waste" strategies: Partnering with specialized companies for waste recovery and valorisation.

3. Sustainable Resource Management

·      Water conservation: Rainwater harvesting systems, technologies to reduce consumption in production processes.

·      Regenerative agriculture: For agribusinesses, practices that improve soil fertility and sequester CO₂.

·      Biodiversity: Reforestation projects, creation of corporate green spaces, protection of local ecosystems.

4. Sustainable Mobility

·      Corporate mobility plans: Encouraging carpooling, public transport, or electric mobility for employees.

·      Electric corporate fleets: Replacing company vehicles with electric or hybrid models.

·      Smart working policies: Reducing commuting to lower emissions from transportation.

5. Green Supply Chain and Suppliers

·      Sustainable procurement: Selecting suppliers that meet ESG criteria, using certified raw materials (e.g., FSC, Fair Trade).

·      ESG audits on the supply chain: Monitoring suppliers' environmental impact to ensure sustainable practices across the value chain.

·      Reducing logistics impact: Optimizing shipments and adopting low-emission transportation.

6. Integrating Sustainability into Corporate Strategy

·      Transparent ESG reporting: Adopting ESRS for environmental reporting.

·      Setting measurable environmental targets: Defining clear and quantifiable objectives for reducing environmental impact.

·      Internal and external awareness campaigns: Training employees on sustainability and engaging customers and stakeholders in green initiatives.

Question: Of these considerations, what is voluntary and what is required?

The distinction between voluntary and mandatory sustainability reporting depends on whether a company exceeds certain thresholds.

Currently, sustainability reporting requirements are evolving, and we follow the provisions set forth by the CSRD. Under this framework, starting from 2025, all large companies will be required to prepare a sustainability report in compliance with the European Sustainability Reporting Standards (ESRS). A company qualifies as “large” if it meets at least two out of the following three criteria:

·      €50 million in net turnover,

·      €25 million in total assets,

·      250 employees on average during the financial year.

If a company exceeds these thresholds, sustainability reporting is mandatory, and the report must align with the ESRS to ensure transparency, comparability, and compliance with EU sustainability objectives.

For companies below these thresholds, sustainability reporting remains voluntary. However, to facilitate reporting for small and medium-sized enterprises (SMEs), the Voluntary SME Standard (VSME) has been introduced.

The VSME aims to provide SMEs with a simple, standardized tool to respond efficiently to sustainability-related requests from banks, investors, and clients. This approach not only enhances transparency but also supports the transition towards a sustainable economy, enabling businesses to better understand their strengths and areas for improvement in sustainability performance.

Unlike mandatory reporting under the ESRS, the VSME is non-binding and does not intend to increase administrative burdens for SMEs. On the contrary, its goal is to reduce complexity by providing a structured but flexible framework.

Furthermore, the European Financial Reporting Advisory Group (EFRAG) has acknowledged the growing number of sustainability questionnaires and has worked to harmonize them, reducing duplication and ensuring a more streamlined reporting process for SMEs.

While voluntary, the VSME addresses the same key sustainability topics covered by the CSRD standards, but in a proportional and tailored manner that reflects the specific characteristics and resources of SMEs.

By adopting voluntary reporting, SMEs can proactively demonstrate their sustainability commitment, enhance their competitive positioning, and build stronger relationships with stakeholders who increasingly value transparency in environmental, social, and governance (ESG) matters.

Question: How are companies gearing up for the Corporate Sustainability Reporting Directive? What impact does the Omnibus Package have on planning?

Companies across Europe are taking a structured and proactive approach to prepare for the implementation of the Corporate Sustainability Reporting Directive (CSRD). Given the scope and complexity of the new requirements, businesses are adopting several key strategies to ensure compliance and smooth integration into their reporting processes.

1. Conducting a Gap Analysis

The first step for many companies is to assess their current sustainability reporting practices in relation to the European Sustainability Reporting Standards (ESRS). This gap analysis helps organizations identify areas where they already comply and where additional data collection, processes, or disclosures are required.

2. Strengthening Internal Processes and Governance

With the expanded scope of the CSRD, companies are enhancing their internal governance structures by:

• Appointing dedicated sustainability teams or ESG officers to oversee compliance,

• Improving cross-departmental collaboration between finance, sustainability, compliance, and risk management,

• Developing internal policies and controls to ensure reliable ESG data collection and reporting.

3. Enhancing Data Collection and Management Systems

One of the biggest challenges under the CSRD is the need for accurate, auditable, and comparable data. Companies are:

• Investing in digital tools and software to automate ESG data collection,

• Establishing new data governance frameworks to improve transparency and traceability,

• Engaging with suppliers and stakeholders to gather necessary sustainability information.

4. Training and Capacity Building

Since sustainability reporting is becoming as important as financial reporting, businesses are training their teams to ensure a clear understanding of the CSRD framework, ESRS requirements, and double materiality analysis. Many organizations are:

• Organizing internal workshops and certification programs,

• Collaborating with external consultants and auditors,

• Following industry-specific guidance to align their sustainability disclosures with sectoral best practices.

5. Engaging with External Stakeholders

To ensure credibility and alignment with market expectations, companies are increasingly engaging with:

• Investors, who are now integrating ESG factors into their decision-making processes,

• Regulators and industry associations, to stay updated on evolving compliance expectations,

• Banks and financial institutions, to facilitate access to sustainable finance opportunities.

6. Preparing for Limited Assurance Requirements

Unlike previous sustainability frameworks, the CSRD mandates third-party assurance on ESG reports. As a result, companies are already:

• Strengthening internal audit procedures,

• Engaging with independent auditors,

• Establishing more robust documentation and verification processes to ensure compliance.

Looking Ahead: The Strategic Advantage of CSRD Compliance

While preparing for the CSRD poses challenges, many companies see it as an opportunity to:

• Enhance corporate reputation and stakeholder trust,

• Improve risk management and long-term resilience,

• Access sustainable financing and investment opportunities,

• Drive innovation through sustainability-driven business models.

The transition to mandatory sustainability reporting is not just about compliance—it represents a fundamental shift toward greater transparency, accountability, and sustainability-driven value creation. Companies that take a proactive approach will be better positioned to leverage these changes for long-term growth.

Recent Updates: Omnibus Package

On 02/26/2025, a series of reforms (Omnibus Project) were proposed that could change the CSRD (Corporate Sustainability Reporting Directive). The proposed changes to the Directive come from the European Commission and are still at the “proposal” stage. The text will go to the European Parliament and the EU Council for consideration, where negotiations and amendments could change the initial proposal. In any case, even after adoption at the European level, a Directive must be transposed into national law, which can take 6 to 12 months. Therefore as of today, and presumably at least until the end of 2025, companies or groups will have to continue to comply with existing obligations until the new rules officially enter into force.

The main proposed amendments to the Directive are as follows:

·      CSRD: the limit of 1,000 employees on average employed during the fiscal year is to be compulsorily exceeded, in addition to one of the two size limits (which remain the same), otherwise you are out of the obligation to prepare a sustainability report according to CSRD

·      stop the clock: postponed by 2 years the entry into force of CSRD for wave 2 (large unlisted companies, including the Scalapay Group)

·      freezing of publication of ESG standards (so only ESRS remains)

·      reduction in ESRS datapoints, resulting in less information to monitor and report on and a limit on the data that can be requested from value chain actors: a company subject to CSRD can ask its supplier for at most the info required by the VSME — it might then be strategic to report under the VSME

·      LSME (which was the standard for small listed companies) is permanently dropped

 The strategic recommendations that we share are:

·      Legislative process: the reform is still at the proposal stage and must go through the European Parliament and the EU Council. It is crucial to keep abreast of legislative developments, as the final outcome may differ from the current proposal.

·      National transposition: even after eventual adoption at the European level, a directive must be transposed into national law. Companies will need to continue to comply with existing obligations until the new rules officially come into force.

·      Compliance strategy: it is advisable to continue to structure CSRD reporting according to current requirements. This will allow us to be prepared in case the reform is not passed or is changed. Maintaining a rigorous approach to ESG reporting can provide a competitive advantage, particularly by meeting the expectations of investors and clients.

·      Dual materiality analysis: it is useful to continue or initiate a dual materiality analysis. This exercise helps identify significant environmental and social impacts, which is valuable regardless of legal obligations.

·      VSME indicators: focusing on VSME (small and medium-sized enterprises) indicators is a prudent approach. This helps prepare for various regulatory scenarios and meet potential requirements of business partners subject to CSRD.

·      Strategic choice: In addition to legal obligations, it is important to define an ESG strategy aligned with the company's values and goals. Sustainability can be a lever for competitiveness and resilience, regardless of regulatory requirements.

Question: What is your perspective on the future trends for ESG regulation in Europe?

The future of ESG regulation in Europe is evolving towards greater integration, standardization, and enforcement, positioning sustainability as a fundamental pillar of corporate strategy rather than merely a compliance obligation. Several key trends are shaping this transformation:

Stronger Alignment Between ESG and Corporate Strategy

Regulatory frameworks such as the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CS3D) are driving companies to move beyond disclosure requirements and embed ESG principles into their core business strategies. ESG is no longer viewed as an isolated initiative but rather as an essential driver of long-term business resilience and growth, ensuring a harmonized approach across environmental, social, and governance factors.

A Shift from Compliance to Value Creation

Businesses that proactively integrate ESG considerations into their decision-making processes will gain a competitive advantage, attracting investors, talent, and customers who prioritize sustainability. ESG reporting is evolving from a regulatory burden to a strategic asset, enhancing risk management, market positioning, and financial stability.

ESG as a Financial and Investment Benchmark

Institutional investors and financial institutions are increasingly factoring ESG performance into credit ratings, investment decisions, and access to capital. Companies demonstrating robust ESG credentials will strengthen their market positioning, enhance investor confidence, and secure preferential financing conditions.

Digitalization and Data-Driven ESG Strategies

Technology is set to play a pivotal role in ESG compliance and reporting. AI-powered sustainability tools, blockchain-enabled supply chain transparency, and automated ESG data collection will become industry standards, improving data reliability, comparability, and real-time monitoring of ESG performance.

The trajectory of ESG regulation in Europe is clear: sustainability is no longer optional—it is a fundamental requirement for doing business. Companies that view ESG as a strategic driver of value rather than a regulatory constraint will emerge as industry leaders. Ultimately, the real strength of ESG lies in its capacity to foster balanced, responsible, and financially resilient enterprises, benefiting not only the environment but also society and corporate governance structures.

Question: Are there especially important principles for strategic compliance? (e.g., robust data tracking and organization?)

Yes, effective strategic compliance in ESG requires a structured, forward-thinking approach that goes beyond simple regulatory adherence. Companies must view ESG compliance as an opportunity to create value, enhance corporate resilience, and strengthen stakeholder trust. The key principles for a successful ESG compliance strategy include:

Robust Data Tracking and Organization

Accurate, verifiable ESG data is the foundation of compliance. Companies should implement:

• Automated data collection systems to track sustainability metrics efficiently.

• AI-powered analytics and blockchain technology for real-time ESG performance monitoring and supply chain transparency.

• Centralized ESG databases to ensure consistency, comparability, and audit readiness.

Double Materiality Assessment

Under CSRD and ESRS, companies must assess both financial and impact materiality to determine which ESG issues are most relevant to their business and stakeholders. This requires:

• Mapping internal and external sustainability impacts across the value chain.

• Engaging with stakeholders to align ESG priorities with business objectives.

• Adopting a sector-specific approach, ensuring compliance is tailored to industry risks and opportunities.

Governance and Accountability

Strong ESG compliance is driven by corporate leadership and accountability. Best practices include:

• Appointing ESG officers and sustainability committees at the board level.

• Integrating ESG KPIs into executive compensation to align leadership incentives with sustainability goals.

• Ensuring cross-functional collaboration, with compliance teams working alongside finance, legal, and operations departments.

Integration of ESG Compliance into Business Strategy

Rather than treating ESG as a compliance burden, leading companies embed it into their core business strategy by:

• Aligning ESG initiatives with long-term corporate growth objectives.

• Developing transition plans to meet Net-Zero targets and regulatory expectations.

• Linking ESG compliance to financial and operational performance to enhance risk management and market competitiveness.

Transparency and Stakeholder Engagement

Proactive ESG compliance requires clear, transparent communication with investors, customers, employees, and regulators. This includes:

• Comprehensive and accessible ESG disclosures, following ESRS (European Sustainability Reporting Standards).

• Engaging stakeholders in ESG strategy development, ensuring a shared vision and commitment.

• Avoiding greenwashing, by ensuring claims are backed by measurable and verifiable data.

Question: In your experience, how can companies best position themselves within the growing push towards sustainability? (e.g., awareness of global initiatives, effective communication, internal goals?)

To thrive in an increasingly ESG-driven business landscape, companies must go beyond compliance and proactively integrate sustainability into their corporate strategy. The most successful organizations approach ESG not as an obligation, but as a competitive advantage that enhances reputation, operational efficiency, and financial resilience. The key factors for positioning effectively in the sustainability transition include:

Embedding Sustainability into Corporate Strategy

• Align ESG goals with business objectives: Sustainability should be integrated into core operations, R&D, and financial planning.

• Develop a long-term ESG roadmap: Establish clear, measurable targets aligned with regulatory requirements (CSRD, CS3D) and global initiatives (EU Green Deal, UN SDGs).

• Incorporate ESG into risk management: Sustainability is not just about compliance—it mitigates business risks, from supply chain disruptions to regulatory fines.

Robust ESG Data Management and Transparency

• Implement reliable ESG data tracking systems: Companies must ensure their ESG reporting is accurate, transparent, and in compliance with the European Sustainability Reporting Standards (ESRS).

• Leverage digital solutions for ESG performance monitoring: AI-driven tools and blockchain can enhance data integrity and supply chain traceability.

• Ensure consistent and credible sustainability disclosures: Avoid greenwashing by using standardized ESG frameworks (GRI, SASB, TCFD) to enhance comparability and investor confidence.

Effective Stakeholder Engagement and Communication

• Educate and involve employees: Sustainability should be embedded in corporate culture, with training programs and internal incentives.

• Engage investors and financial institutions: ESG-linked financing and sustainability bonds are growing trends—companies with strong ESG credentials will have better access to capital.

• Communicate ESG commitments clearly: Build credibility through transparent reporting, case studies, and active participation in global sustainability initiatives.

Sustainable Supply Chain and Business Operations

• Conduct ESG due diligence on suppliers: Under CS3D, companies will be legally responsible for ensuring sustainability across their supply chain.

• Prioritize circular economy practices: Reducing waste, optimizing resource use, and adopting innovative recycling solutions will be key differentiators.

• Integrate carbon footprint reduction strategies: Setting Net-Zero targets and adopting renewable energy solutions will position companies as sustainability leaders.

Adapting to the Evolving ESG Investment Landscape

• Strengthen ESG governance and accountability: Companies must integrate ESG performance into executive compensation and governance structures.

• Monitor regulatory developments: ESG regulations are evolving rapidly—companies that anticipate and adapt to new requirements will maintain a competitive edge.

• Leverage sustainability for market differentiation: Consumers and investors increasingly prefer brands and companies with clear sustainability commitments and a positive social impact.