Majority of FtseMib Companies Establish Sustainability Oversight Bodies, 92.5% Compliance Rate
Italy is making strides in embedding sustainability into the corporate governance of its listed companies, but practical challenges persist. The country has fully transposed the EU Corporate Sustainability Reporting Directive (CSRD) into national law, requiring Public Interest Entities (PIEs) to report on sustainability from 2025 onwards. This demonstrates Italy's commitment to sustainability, placing it alongside France as a leader in this area among European countries.
Leading Italian companies like Leonardo are embodying this integration by adopting comprehensive sustainability strategies. These strategies focus on Environmental, Social, and Governance (ESG) performance, climate action, and social responsibility through active stakeholder engagement, circular economy, and decarbonization targets validated by the Science Based Targets initiative (SBTi).
However, enforcement actions against companies in sectors like fashion, such as Shein and Giorgio Armani, highlight persistent challenges related to misleading sustainability claims and greenwashing. These practices undermine genuine governance integration and reflect a skills and knowledge gap in sustainability literacy and compliance within corporate leadership and communication.
The Governance Observatory, a monitoring body established by Sustainability Makers and Altis Graduate School of Sustainable Management in 2013, has identified a deficiency in capabilities needed for effective sustainability due diligence, accurate ESG reporting, and strategic implementation. Companies face difficulties in fully satisfying expanding legal requirements under CSRD and the upcoming Corporate Sustainability Due Diligence Directive (CS3D), which demands robust supply chain risk assessment on human rights and environmental impacts.
The enforcement actions against misleading claims further suggest a gap in expertise in sustainability communication and ethical stakeholder engagement. As a result, there is a growing need for enhanced education and capacity building in boardrooms, including skills in sustainability risk management, reporting according to EU standards, understanding double materiality (the impact of companies on society and vice versa), and integrating sustainability into core business strategies.
The Governance Observatory's analysis shows that while competencies are entering company boards, they are still absent or scarce in many cases. An analysis of over 2,500 CVs of board members in Italy reveals a skills gap in sustainability. However, there is some positive progress. In 2022, almost half of the companies (45.9%) have an exclusive committee dedicated to socio-environmental themes, marking an increase of 17.3% from 2020.
In conclusion, while Italian companies are legally required and increasingly motivated to integrate sustainability into governance, practical skills gaps remain in sustainability reporting, due diligence, and credible communication. Ongoing upskilling within corporate leadership and governance bodies is necessary to meet both regulatory demands and stakeholder expectations effectively. The Governance Observatory continues to track the integration of sustainability into corporate governance in Italy and Europe.
[1] Legislative Decree No. 125/2024, Italy [2] Science Based Targets initiative (SBTi) [4] Enforcement actions against fashion companies for misleading sustainability claims [5] Corporate Sustainability Due Diligence Directive (CS3D)
- The Governance Observatory, in its analysis, discovered a skills gap in sustainability reporting and due diligence among many Italian firms, particularly in understanding double materiality and integrating sustainability into core business strategies.
- To meet both regulatory demands and stakeholder expectations effectively, ongoing upskilling within corporate leadership and governance bodies is necessary, focusing on skills such as sustainability risk management, reporting according to EU standards, and the ethical communication of sustainability efforts.
