The Alignment of the Financial Sector with European Sustainability Reporting Standards: A Study of the Italian Context

Purpose – This study examines Italian banks’ alignment with the European Sustainability Reporting Standards (ESRS) established by EFRAG under the new Corporate Sustainability Reporting Directive (CSRD). Given banks’ potential as a driving force for sustainable practices, the aim is to evaluate their adherence to ESRS through recent non-financial statements. Design – A content analysis of recent non-financial statements published by Italian banks is performed to assess the alignment with ESRS standards. Additionally, a t-test was conducted to evaluate potential bank differences based on size, type, and adherence to Global Report Initiative (GRI) standards. Findings - The study finds moderate adherence among Italian banks to ESRS standards, with better alignment observed in larger institutions and those reporting GRI-aligned NFS. However, on average, Italian banks will need further adjustments to meet ESRS demands by 2025 fully. This highlights the significant preparatory work required in measurement and reporting for future compliance. Originality - This study contributes to corporate reporting literature and adds insights into the banking sector. By focusing on ESRS compliance in Italian banks, the research underscores current gaps and guides regulatory bodies to support banks’ transition to new sustainability standards. These findings are pivotal as they precede the CSRD implementation deadline, offering both theoretical and practical implications for banks and policymakers. The findings may align with policymakers’ concerns contributing to the ongoing work on the Omnibus Package aimed at streamlining reporting requirements.