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After the EU Elections: What’s Next for ESG?




The results of last month's EU elections confirmed a long-anticipated shift to the right delivering a fragmented political landscape with significant gains for right-leaning parties, Eurosceptics, and old-fashioned nationalists.


The Greens lost more than a quarter of their seats while far-right groups won big, especially in Germany, France, and Italy and now make up almost a quarter of all seats.   


What's interesting is that much of that shift to the right is based on anti-green sentiment now rampant in some segments of society.


Why environmental issues have become so heavily politicized is beyond the scope of this article but it is worth mentioning that this happened at a point when environmental regulations are starting to take force and have a real economic impact.


Many industries, especially fossil fuels, manufacturing, and agriculture, perceive environmental regulations as threats to their operations and profitability. Job losses in these sectors also spark fear.


This makes environmental policies a target for political debate, particularly around who bears the costs.


Misinformation also contributes significantly.

 

The Election results were quickly dubbed as “greenlash” by some analysts, but that doesn’t tell the full story.


Greens gained seats in some Nordic countries, and the far-right groups that got voted in are made up of such a broad field that it is unlikely they will be able to unite under a single powerful voting bloc.

 

The post-election question for the EU companies facing an elaborate, expensive, and cumbersome reporting regime is what will change.

 

Will the alphabet soup of acronyms hold? Will the EU stand by its ambitious green goals and maintain its global leadership in environmental sustainability?

 

It is hard to predict, but the consensus is that the new commission will deprioritize ESG reporting. Progress in this area is expected to slow significantly, with ambitious new regulations facing an uphill battle and new policies encountering more resistance.

 

While the new administration may not push forward with the same vigor, dismantling existing frameworks would be a complex and unlikely endeavor.

 

What is already in place is likely to remain. For one, a full reversal of the policies adopted in the past five years is legally challenging. This includes the Corporate Sustainability Reporting Directive (CSRD), which came into force earlier this year.

 

 

The practical consequence for companies under ESG reporting obligations is that they should not pause or delay their preparations under existing regulations in the hope that they will be revoked or trimmed down.

 

For regulations currently in the legislative pipeline, however, it is worth keeping an eye on developments and having reasonable expectations for delays and significant reductions in corporate responsibilities.

 

Another consequence might be a shift in the labeling of regulations. Terms like "green" could disappear, replaced by language appealing to right-leaning voters. New regulations might be framed as job creation, national support, or social policies, etc. This strategic rebranding could help pass necessary measures without invoking the ire of populists.




 

How can we help?


uIMPACT is a full-service provider of sustainability assessment, reporting, and management services. We help companies report on CSRD, SFDR, and EU Taxonomy and meet the sustainability expectations of partners and investors.


Small and medium-sized companies can benefit from our intuitive web-based platform for ESG screening and SDG alignment assessment to effortlessly start their sustainability journey.


Reach out to us at


 


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