Time for Action: Why the Era of Climate Rollback Demands Urgent Policy Changes

The EU is considering changes to its sustainability reporting rules, British airports are expanding, and BP is shifting focus back to fossil fuels. Meanwhile, the White House is seeing its own set of challenges. Are these trends in environmental policy partially to blame?

Recently, the European Union launched the Corporate Sustainability Due Diligence Directive and the Corporate Sustainability Reporting Directive. These rules aim to set minimum standards for environmental and human rights practices across organizations in the EU. This means that companies must not only consider their own practices but also those of their partners and subsidiaries.

While many environmental advocates welcomed this legislation, some businesses expressed concern over its broad reach and complex requirements. To address this, the EU proposed a series of reforms, acknowledging the difficulties companies face in complying with these regulations.

Last week, Politico leaked an amendment suggesting significant rollbacks. If these proposed changes go ahead, 85% of companies would no longer be required to report their environmental impacts, leaving only firms with over 1,000 employees accountable. This could reduce the number of companies under the directive to around 5,000, according to financial expert Maximilian Müller.

This change might exclude many U.S.-based multinationals that operate globally but have fewer employees in the EU. For those companies still affected, rule implementation might be delayed by six months, allowing them more time to prepare their data.

Updated regulations would apply only to direct stakeholders, potentially freeing subsidiaries from any obligations. Moreover, companies could backtrack on their climate transition plans. Some argue that any company with a long-term strategy would have already developed these plans without the EU’s influence.

Katie Fensome, an expert in environmental consultancy, believes that Europe’s tough stance on sustainability has caused temporary difficulties. However, businesses that prepare for sustainable practices and invest in green technology will find compliance easier and may even discover new opportunities for growth.

Looking beyond the EU, the environment has faced setbacks in various ways lately. Last year’s COP29 climate summit fell short of its goals, unable to secure adequate funding or progress on moving away from fossil fuels. Similar setbacks can be seen among major corporations like Volvo and Shell, which have started to roll back their climate commitments even before the summit.

The U.S. has its own struggles regarding climate action. Donald Trump’s presidential campaign focused on reversing climate measures, including pulling out of the Paris Agreement. As president, he has removed climate-related content from government platforms, which might have long-term negative effects on environmental research. The banking sector, including major banks, also stepped back from net-zero commitments during this time.

Recently, BP shocked many by announcing a return to fossil fuels after a disappointing financial performance. Despite making a profit, BP is backtracking on its renewable energy commitments, leaving its future goals uncertain.

Compared to the EU’s efforts, which aim to eliminate 90% of carbon emissions by 2040, the recent actions reflected in the U.S. show a clear division in priorities. The European Commission continues to promote a “clean industrial deal” to assist high-polluting sectors in transitioning to greener practices, but the gap between intention and reality remains wide.

As governments and corporations navigate these changes, the future of environmental policy hangs in the balance. The conflict between economic growth and sustainable practices will be critical in shaping our planet’s future.