It’s not the first time that the European Union’s reputation as the gold standard for sustainability policies to fight climate change has been tarnished in the new legislative term.
When the European Commission launched its Green Deal in 2019 the world’s largest trading bloc appeared on course to reach net zero greenhouse gas emissions by 2050.
Then in December came the eleventh hour postponement of EUDR, its keynote policy to ensure that products imported into the EU no longer contributed to deforestation, because the EU was not ready to implement the rules and many suppliers were not prepared to deal with the costly bureaucracy of abiding by the regulations.
And last month the European Commission unveiled its Omnibus Simplification Package, widely seen as an attempt to water down its rules on corporate sustainability reporting and supply chain transparency rules in a bid to make the bloc more competitive with the US and China.
Even though it insisted the same net zero targets remained in place, this was a clear shift away from the ambition of the cherished Green Deal.
A move of this sort had been on the cards, of course, ever since Donald Trump won the US presidential election back in November and business leaders took his cue of bemoaning the costs of meeting sustainability reporting rules.
Before he’d even been inaugurated as the 47th US President the country’s six biggest banks had quit the Net Zero Banking Alliance (NZBA), so scared were they of an anti-woke backlash from right-wing Republicans.
Emerging out of Cop 26, the NZBA had been founded in 2021 to unite banks in aligning their lending, investment and capital market activities with sustainability targets. How long ago that now feels.
It’s not just the banks who have strayed from the path of righteousness, the oil and gas companies too have seen how the economics of fossil fuel development have never looked so good, thanks to a “Drill, Baby, Drill” occupier of the White House.
Last month BP announced it would roll back investments into renewables, energized by rivals Shell’s increased profits from doing the same a year ago.
Other big corporates have reined back on Science-Based Target Initiative commitments set up to provide companies with a clearly-defined pathway for reducing emissions in line with goals of the Paris Agreement.
Among the 200 firms who dropped sustainability pledges last March included Microsoft, Walmart and Amazon.
Unilever, once a poster child of ESG, backpedalled so fast that the credibility of the $118bn consumer group was called into question.
Nike laid off dozens of sustainability managers eight years after its then CEO, Mark Parker, proclaimed environmental sustainability would become a “powerful engine for growth”.
With sales flatlining the company brought in a ‘sustainability bloodbath’ last year to cut costs by $2billion.
No real surprise then when the global management consultancy, Bain and Company, produced a report last year which found CEOs were deprioritising sustainability as they reeled from crises including inflation, disruptive technology and geopolitical uncertainty.
When the going gets tough, protecting the future of the planet was the first head on the chopping block.
Unsurprisingly, knowing where Trump’s sympathies lay, it was not long before US business was lobbying for parts of the EU’s green agenda to be ditched.
Last month the wood and paper lobby called for American companies to be exempted from the EU’s deforestation regulation, EUDR, currently due to be enforced next December.
Heidi Brock, CEO of the American Forest and Paper Association said the new rules – whereby suppliers have to demonstrate their goods are not the result of any deforestation since 2020 – would impose “costly and unnecessary obligations” on producers.
Instead, she argued, America should get a pass as a ‘no risk’ country so EUDR doesn’t endanger the Euro-American $1.3 trillion trade relationship.
What about all the other companies around the world who have jumped through costly hoops to meet EUDR requirements? By all means have ‘high-risk’ and ‘low-risk’ countries but nowhere should be deemed ‘no-risk’ and exempt from a global bid to avert climate catastrophe. Not everyone, of course, is putting profits before the planet.
FoodDrink Europe released a statement which, while supportive of the EU’s Simplification package, insisted that ‘swift and appropriate incentives for decarbonisation’ are still available.
Others welcomed the fact that 80% of companies would now be excluded from the Corporate Sustainability Reporting Directive (CSRD).
The proposed changes would save Europe’s SMEs €6.3billion in admin costs they would have incurred meeting sustainability information requests and all companies with up to 1000 employees and €50 million turnover will be exempt from CSRD.
However, about 6000 of the largest EU companies will still fall under CSDDD (Corporate Sustainability Due Diligence Directive).
As you’d expect, President Ursula von der Leyen insisted the EU was staying the course with its Green Deal objectives and that ‘in Europe sustainability and competitiveness should go hand in hand’.
But whether there will be more shifts away from that 2019 Green Deal and the net zero targets for 2050 will still be attainable remains to be seen.
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