Key Developments and the Latest Trends in the Italian ESG Markets – From a Legal Perspective

In a geopolitical and economic landscape marked by growing uncertainty, it is significant that the European Union and Italy are reaffirming the ESG policy that has characterised the last decades of European politics.

It should be noted that this path has certainly not been uniform, and there have been adjustments and rethinking of the approach, as demonstrated by the various amendments introduced by the Omnibus Package I (Directive EU 2026/470), which significantly simplified and lightened the non-financial reporting and due diligence obligations set out by the CSRD and the CS3D.

However, as mentioned, it is undeniable that the direction has been set, that ESG is here to stay, and that it dictates the political and legislative course of EU member states.

If, within the social pillar of ESG, we were to identify a paradigmatic area of the ongoing evolution, it would be the growing focus on transparency. The correction of the information asymmetry between employees and employers is considered by the European legislator to be an effective means of improving corporate social sustainability without overburdening companies with bureaucracy and costs.

Accordingly, within a broader European regulatory trajectory that has progressively transformed corporate sustainability from a discretionary choice into a binding legal obligation—alongside the CSRD and the ESRS standards as a further element of a coherent and systematic regulatory framework—one of the main transparency topics of 2026 has undoubtedly been the gender pay gap, a statistical distortion that signals a problem in the social culture of EU member states.

Gender Pay Gap: The Italian Case

The Italian case is emblematic: according to INPS data from 2024, men earn on average EUR 111.25 per day, compared to EUR 82.63 for women, resulting in a gender pay gap of approximately 26%.

The phenomenon appears all the more serious when one considers that Italian salaries are already among the lowest in Europe: according to Eurostat and OECD data, the average gross monthly salary in Italy in 2023 was approximately EUR 2,729, compared to a European average of EUR 3,155—a gap of approximately EUR 430 per month, equivalent to over EUR 5,000 per year.

In an attempt to address this phenomenon, Italy adopted, now twenty years ago, the Equal Opportunities Code (Legislative Decree No. 198 of 2006), which introduced a broad definition of direct and indirect discrimination and specific judicial protection instruments—both summary and ordinary proceedings—available in both individual and collective form.

In particular, workers who are discriminated against, including from a pay perspective, have access to summary relief of an injunctive and restorative nature, brought before the Court directly by the employee, trade union representatives, or the Equality Adviser.

The European Gender Pay Gap Directive

In this context, Italy has timely transposed Directive (EU) 2023/970 through Legislative Decree No. 96 of 7 May 2026, which entered into force on 7 June 2026, exactly within the deadline set by the European Union.

It should be noted that Italy is one of the few member states to have met the deadline set by the Directive, which is certainly a signal that the country has sent to markets and stakeholders of its unchanged commitment to the S pillar of ESG.

Indeed, pay transparency, while it can be viewed as a new, forced bureaucratic obligation for companies, is equally legitimately interpretable as an instrument of democratisation and fairness aimed at making the Italian labour market more attractive to foreign investors.

As is well known, the EU, through the Directive, intends to address the gender pay gap phenomenon through several fundamental pillars:

1) Pre-employment transparency: companies are required, on one hand, to indicate the pay level or the relevant pay range in the job advertisement and, on the other hand, are prohibited from asking candidates about their salary history;

2) Individual right to information: every employee may request information on their own pay level and on the average pay level disaggregated by gender of colleagues performing the same work or work of equal value. The employer is obliged to provide such information;

3) Periodic reporting obligation: companies must periodically prepare reports, to be communicated to stakeholders (trade unions, public authorities), indicating the overall pay gap levels, the percentage of workers receiving complementary or variable pay components, the distribution of workers by pay quartile, and the pay gap by category of workers, broken down between base salary and variable components.

The decree adopted by the Italian government follows the lines of the Directive, introducing concrete and immediately operative obligations for public and private employers.

Indeed, from the selection phase onwards, it is prohibited to request information from candidates about remuneration received in previous employment, and job advertisements must indicate the expected pay range.

This provision is highly relevant in practice, as it aims to break the mechanism by which pre-existing pay inequalities carry over into new employment. Transparency, therefore, is not merely an instrument of subsequent control, but also a means of preventing future discrimination.

Every worker also acquires the right to request, including through their representatives, information on average pay levels by gender within their professional category. The employer must respond within two months and must also annually inform all workers of the existence of this right. The provision is aimed at eliminating the information asymmetry between company and employees, a condition that often underpins pay opacity.

In this same direction, the provision—introduced by the Directive and maintained in the decree—also grants employees the right to discuss their remuneration with each other, as workers cannot be prevented from disclosing their own pay, and contractual clauses that restrict workers’ ability to disclose information about their own remuneration are prohibited.

Companies with at least 100 employees are required to periodically report data on the gender pay gap, with graduated deadlines based on company size.

On the governance front, the decree establishes a monitoring body within the Ministry of Labour, with equal representation from trade union representatives, public institutions (INPS, ISTAT, CNEL, INAPP), and central government administrations. This institutional safeguard ensures transparency, data collection, and periodic reporting to the European Commission.

The gender pay gap thus becomes a relevant KPI within ESG reporting and assessment systems. After all, pay transparency was already an ESG risk indicator that affects banking assessments, feeds into CSRD/ESRS S1 reporting, and propagates along supply chains.

Organisations that act promptly will be able to transform regulatory compliance into an opportunity to strengthen trust, internal equity, and the ability to attract and retain talent, thereby consolidating Italy’s position as a reference point in the European ESG landscape.

Notwithstanding the foregoing, it should be emphasised that, in implementing Directive 2023/970/EU on pay transparency, the Italian legislator adopted a strictly minimalist transposition approach, forgoing the exercise of so-called gold plating—that is, the option recognised under EU law to introduce higher standards of protection than the minimum level imposed by the Directive itself.

This choice reflects a legislative policy orientation aimed at avoiding the imposition of additional burdens on businesses, but which inevitably has consequences for the breadth of protections afforded to workers.

A striking example of this approach is found in Article 7 of Legislative Decree 96/2026, concerning the individual right to pay information. The EU provision of reference, Article 7 of Directive 2023/970/EU, places no limit on the frequency with which a worker may request information on the pay levels of colleagues in the course of the year: the right is freely exercisable, without frequency restrictions. The Italian legislator, by contrast, introduced a significant restriction, providing that such a request may be made no more than once per year.

Article 7 of Legislative Decree 96/2026 grants each worker the right to request and receive in writing information on average pay levels disaggregated by sex for their category, on an annual basis at most, with the employer obliged to respond within two months of the request. Simplified mechanisms are provided for complying with this obligation, and the request may also be made through trade union representatives or equality bodies. The restrictive definition of “pay level” adopted by the national legislator also risks further narrowing the scope of the right, depending on the interpretation applied in practice, departing from the broader meaning adopted at European level.

In this context, it should be noted that the application of a collective bargaining agreement to company employees, entered into by comparatively more representative organisations at the national level, constitutes a presumption of compliance with the principles of pay equality and transparency.

This choice by the Italian legislator highlights the role of collective bargaining as a safeguard for pay fairness, while leaving open the possibility of demonstrating the existence of discriminatory individual treatment.

This is an important balance: the collective agreement is taken as a benchmark of reliability, but not as an absolute shield against any challenge.

The most innovative part of the framework, however, concerns the monitoring of the gender pay gap. The decree introduces reporting obligations graduated according to company size, with particular attention to undertakings with at least one hundred employees.

Data must be reported on the gender pay gap, the median gap, the distribution of workers across pay quartiles, and complementary or variable pay components. The objective is to build a solid and comparable information base, capable of revealing not only the overall gap, but also its structural components. The system is designed progressively, with differentiated deadlines by size bands, so as to mitigate the administrative impact on smaller companies.

Of particular importance is also the provision for joint pay assessment. If in a category of workers a mean pay gap of at least 5% emerges, the employer fails to justify it on the basis of objective criteria, and does not correct it within six months, a joint assessment must be initiated with workers’ representatives. In this sense, the decree shifts the focus from simply ascertaining the violation to organisational accountability of the undertaking.

Finally, the relationship between transparency and the other great regulatory creation of this century—employee privacy—must be considered. The GDPR is expressly referenced and restricts access to the most sensitive information to authorised parties, such as workers’ representatives, the labour inspectorate, and equality bodies. The legislator thus seeks to prevent the right to know about pay disparities from resulting in the indiscriminate disclosure of individual salary levels by the company (as noted, the individual employee’s right to share their own remuneration is always permitted, and indeed contractual clauses to the contrary are null and void).

As regards remedies, the decree refers back to the Equal Opportunities Code and provides judicial and administrative instruments already known to the Italian legal system, extending them, however, to violations of the new pay transparency rules.

On this point, it may be noted that the decree may prove less effective in practice than one might hope.

Indeed, with respect to the obligations listed thus far, no specific sanctioning regime has been introduced, at least for the time being.

The only element provided to workers by the decree to enforce their rights is a procedural protection, whereby, where an employee alleges discriminatory treatment or a violation of transparency obligations, they are entitled to a reversal of the burden of proof, meaning it falls upon the company to demonstrate the non-existence of discriminatory conduct or the reasonableness of the pay difference based on neutral and objective criteria, rather than requiring the employee to prove the existence of the conduct itself.

Also relevant in this regard is the protection against direct or indirect retaliation, without which the right to information would risk remaining purely theoretical: it is prohibited to adopt less favourable treatment towards workers or their representatives for having exercised the rights provided for by the decree.

Lastly, the decree establishes a monitoring body within the Ministry of Labour, tasked with collecting data, analysing the causes of the gender gap, publishing information, and transmitting periodic reports to the European Commission.

Conclusions

To date, despite the adoption of numerous rules and instruments aimed at recognising the equality of both genders, the glass ceiling—or rather the “sticky floor” (indicating the over-representation of women in sectors and jobs characterised by low pay)—remains firmly in place and entrenched across all EU member states.

The Directive represents a step forward, but the significant delays that virtually all member states have experienced in its adoption are certainly concerning for its concrete effectiveness. Through timely adoption, Italy has sent an important signal to markets and economic operators, effectively declaring its intention to strengthen equality and social sustainability policies.

However, it must be acknowledged that the measures introduced— which establish a prevention model based on information, traceability, comparability, and accountability—are probably not yet sufficient to overcome stereotypes and ensure effective pay equality.

Pay discrimination is not merely the result of opaque corporate practices, but often has its roots in cultural and organisational dynamics that continue to influence the career paths and advancement opportunities of female workers.

For this reason, the success of the reform will depend not only on formal compliance with the new obligations, but also on the ability of companies and institutions to promote a substantive change in personnel management practices.

In this regard, there is, in effect, no genuine direct sanctioning system in the event of non-compliance with the new obligations: the reversal of the burden of proof procedure and the subjection of corporate pay policy to trade union scrutiny are potentially deterrent instruments against improper conduct, but their effectiveness in practice will need to be verified.

Rather, the most significant innovation lies in the approach taken by the Directive: by adopting the principle of measurability, it has required companies to collect, communicate, and act on precise data.

This is the most important element from the standpoint of substantive justice, because only data that is measured can be discussed and corrected.

In this perspective, the Directive is not the endpoint of the journey towards pay equality, but rather the beginning of a new phase in which transparency and the measurement of imbalances become essential instruments for transforming the legal principle into a concrete social and economic reality.

Companies will therefore need to equip themselves not only with the tools necessary to comply with the new information obligations, but also with internal processes capable of critically analysing the data collected and translating it into concrete interventions on pay policies, placing social sustainability at the heart of their governance.