There was a lot of talk about the fate of the European Green Deal at the time of the European Parliament elections. There were even concerns that perhaps there would be a fundamental reassessment or even a halt to the initiatives associated with it. But the bubble collapsed relatively quickly after the end of the vote. Now practically no one important disputes that the Green Deal may be changed, but definitely not cancelled.
The vast majority of experts agree that there will hardly be a major departure from the already adopted legislation. On the other hand, we will probably see some changes, but it will be more about the improvement and flexibility of already adopted and planned measures than about their denial. Europeans today are more worried about the rising cost of living than the climate impacts that will appear in a few years. On the other hand, Europeans still express rather serious concerns about the climate, which is proven by the results of the European elections, which was not a political earthquake for the parties that promoted the fight for the greening of European economies, despite some predictions.
It will therefore be mainly about placing this process of sustainable transformation in a broader perspective focused on competitiveness and economic security. As Irina Kustová, a researcher at the Center for European Political Studies, summed it up:
"The Green Deal will be less visible, but it will not change significantly. Major elements such as the 2050 climate neutrality goal are set by law and it is unrealistic to think that new political balances will overturn these regulations. Rather, we could expect some readjustement based on new priorities."
The already adopted Fit for 55 package, which is the basis of the Green Deal, contains many important measures that have already received their final form. For example, the emissions trading system has been strengthened, the Carbon Border Adjustment Mechanism ( CBAM ) has been introduced, as well as the Social Climate Fund. The three largest party groupings in the newly elected European Parliament have already stated that they do not want to disturb them.
Until now, the Green Deal has focused on the transition to a new energy system, primarily by setting targets and making emissions more expensive. The second priority was the promotion of greater transparency of companies' and investors' procedures in the field of sustainability. Many legislative measures have already been introduced in both areas, in particular the absolutely essential EU Taxonomy and the Corporate Sustainability Reporting Directive ( CSRD ). Further legislation should therefore focus on implementation, specifically on deciding how to achieve targets, for example in the area of renewable energy development. In addition, the war in Ukraine has forced EU member states to increase their efforts to eliminate dependence on Russian fossil fuels.
Many companies complain that the new reporting requirements are too complex and burdensome. This problem will also have to be solved. However, let's not imagine that it is possible to stop a train that has already started with, for example, the assessment of ESG criteria. This is because many key major players from the business sector, who have already invested a huge amount of time, energy and money in its introduction, would protest against it since their investments and progress would be lost. Especially when ESG reporting has already started to bring its clear and financially quantifiable benefits.
According to a survey by PwC, nearly three-quarters of global investors want standardized ESG reporting, and 85% of CFA (Global Association of Professional Investors) members said they include at least some of the indicators ESG tracks in their decision-making process.
In markets with mandatory ESG reporting, it appears that investors are willing to pay a higher price for this transparency. In short, the ESG framework is already becoming an essential part of corporate strategies, financial reporting and valuation. So much is at stake to try to halt the Green Deal. It is better to see it as a chance and an opportunity.
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