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Green Deal or No Green Deal?

Whats in This Week's Newsletter
In the first EU Parliament hearing since the US election, voices against the EU Green Deal from the right and far-right were louder than ever. Emboldened by President Trump’s rhetoric on climate change, MEPs lambasted Teresa Ribera - the new EU minister Minister for Ecological Transition and Demographic Challenge - claiming the Green Deal was equivalent to a “Taliban” policy and blaming it for the recent Spanish flood.
Despite the rightward tilt resulting from June’s EU elections, the EU recently reconfirmed its commitment to the Green Deal. Now, this could change. Professor of EU law Alberto Alemanno said, “The shift towards a less climate and environmentally friendly policy agenda in the US will inevitably further tarnish the EU commitment towards those goals.”
The EU’s landmark sustainability reporting rule, the Corporate Sustainability Reporting Directive (CSRD), which kicks in in 2025, is under the spotlight. A growing chorus of voices is asking for a weakening and rollback of the CSRD. France’s President Michel Barnier claims that there is an “over-transposition” issue for EU rules, making EU farmers and businesses less competitive. Adding that “This is particularly true for European texts such as the CSRD directive, the scope of which should be re-examined.”
Despite warnings of penalties, 17 member states still have not transposed the CSRD into national law. Critics of the CSRD see this lag in adoption as an opportunity to simplify the reporting regulation and reduce the burden on smaller companies by removing SMEs or non-EU companies from its scope. Another simplification proposal is to further delay the application of the full set of ESG standards, with climate reporting first and other sustainability metrics to follow.
In addition to the potential weakening of CSRD, the EU’s Deforestation Rule (EUDR), which was meant to kick in on December 30th this year until it was postponed for a year, was weakened in a vote on Thursday. EU lawmakers voted through 9 amendments, the main one being the exemption of 'no risk' of deforestation countries. Initially, 15 amendments were proposed, which would have substantially weakened the rule, postponing the EUDR for an additional two years. Former EU environment commissioner Virginijus Sinkevičius said this will make the EU “look ridiculous in front of the partners and international community, backtracking on one of the biggest achievements of the previous Commission.” We will know by mid-December if these amendments are in the final rule.
While the EU’s President Ursula Von Der Leyden claims it is business as usual for the green deal, they are clearly under intense pressure to weaken aspects of it. However, most believe the EU’s green transition is too far along for much backtracking now, and for now, they have managed to resist calls for backtracking on rules like the ban on gas-powered cars by 2035.
Preparing For the Hand-Off
Trump’s pick for EPA chair, Lee Zeldin, Eric Lee/The New York Times
President-elect Trump’s nomination to lead the Environmental Protection Agency (EPA) has sent shock waves through the environmental community. Lee Zeldin, (former Republican congressman from New York) has called climate change a ‘scam’ and would likely seek to overturn many of the EPA’s climate rules.
Trump’s hardline on climate policies and international agreements, like the Paris Accord, has received criticism from an unlikely source. Exxon CEO Darren Woods advised the new president against any extreme policy u-turns and to stay in the Paris Agreement, saying, “I don’t think the need to address global emissions is going to go away. Anything that happens in the short term would just make the longer term that much more challenging.”
To mitigate the likely backtracking, this week, the EPA announced a new policy, charging fees for methane leaks and flares above a certain threshold. This rule will be a challenge to roll back as it was enacted by a vote in Congress and will require another Congress vote to reverse.
Likewise, legislators are trying to push through climate rules at the state level. In California, the Air and Resources Board (CARB) voted through tougher rules on low-carbon vehicle fuels. Governor Gavin Newsom was in Washington asking Biden to expedite some of his other climate plans. Other states are embracing climate leadership. New York Governor Kathy Hochul, who indicated she would revive her vehicle congestion plan, said, “Governors filled the void of leadership during President-elect Trump’s first term, and Americans can be assured we’re prepared to fill it again.”
Early Success at COP29
Trump’s election seems to have galvanized some countries at the ongoing UN Climate Meeting (COP29). Even with what Bill Mckibben calls “An America-Sized Hole in The World,” it was a very promising start to proceedings. Here is a snapshot of some of the early wins from COP29’s first week:
New and improved NDCs: Many countries have come to this year’s event with more ambitious national determined contributions (NDCs). Most notably, Brazil's new goal is to reduce emissions by between 59% – 67% by 2035 against 2005 levels, and the UK announced an ambitious goal of an 81% reduction by 2035 compared with 1990 levels.
Deal on global carbon market: On the first day of COP29, a deal for a global carbon market was reached. The new framework, the so-called Article 6, will use UN emissions rules to make a fair and reliable carbon market, which will help polluters reduce emissions and give finance to developing nations.
EFRAG and CDP interoperability: The European Financial Regulation Advisory Group (EFRAG) announced extensive interoperability between the European Sustainability Reporting Standards (ESRS) and CDP’s questionnaire. CDP disclosures and the EU climate standard will have a high level of commonality, which will help 90% of the companies on EU stock markets that already report to CDP use the same information to report under the European policy.
Development bank financing: A group of development banks announced they would increase funding for developing countries mitigating and adapting to climate change. The fund would be $120 billion by 2030, a 60% increase from 2023.
EFRAG Transition Plans
Image by Christian Lue on Unsplash
EFRAG also released a draft Implementation Guide for the Transition Plan for Climate Change Mitigation. The guidance gives companies guidelines for making ESRS-compliant climate transition plans. The guide also explains how the transition plans can be implemented in line with other EU regulations like the Corporate Sustainability Due Diligence Directive (CS3D) and provides clear guidance on disclosing decarbonization measures, investments, progress, and more. The draft plans will go out for public comment later this year and will likely be finalized sometime in 2025.
New Sustainability Assurance Standard
The International Auditing and Assurance Standards Board (IAASB) released the finalized version of their sustainability assurance standard, the International Standard on Sustainability Assurance 5000 (ISSA 5000). The new standard will apply to both limited and reasonable assurance and will be critical for upcoming assurance requirements under the CSRD. It can also be used for ISSB-aligned reports. IAASB Chair Tom Seidenstein said that the ISSA 5000 was made with “particularly conscious of European timelines and requirements under CSRD.”
ISSB Sees Adoption Progress
ISSB Chair Emmanuel Faber Image: EPA-EFE/MAXIM SHEMETOV/POOL
This week, the International Sustainability Standards Board (ISSB) released its first progress report since adopting the framework from the Task Force on Climate-Related Financial Disclosures (TCFD) in 2023. The report found that 82% of surveyed companies used at least 1 of the 11 recommended disclosures from the TCFD framework, but only 3% used all 11 recommendations. The report also announced that more than 1,000 companies mentioned ISSB in their sustainability reports, and more than 30 jurisdictions are making progress toward aligning their national regulations with the ISSB standards.
The views expressed on this website/weblog are mine alone and do not necessarily reflect the views of my employer.
Other Notable News:
Climate Litigation
A case that has been ongoing for a while took another turn this week as Shell won an appeal against an order from a Dutch court for them to cut emissions. The Dutch court agreed that other oil and gas suppliers would fill the gaps left by Shell. The Friends of the Earth will now likely appeal the verdict.
Climate Regulations
China releases its first-ever energy law to promote its net zero goals. The law, which will be adopted in 2025, is designed to help China reach net zero by 2060 and peak emissions by 2030.
Fossil Fuels
Sustainability Research
Notable Podcasts:
This week’s episode of BCG’s The So What podcast features an interview with BCG’s climate and sustainability lead, Hubertus Meinecke, and CEO of NetZero, Axel Reinaud. Together, they discuss how large corporations and start-ups can learn from each other and collaborate to drive green growth.
On Monday’s episode of the Guardian’s Today in Focus, the podcast focussed on how to find $1 trillion at COP29. The podcast host attempts to answer the question. Will rich countries reach a deal on finance to combat the devastating impact of the climate crisis?
Notable Jobs:
Sustainability Analyst, BTG Pactual Timberland Investment Group, New York
Senior Climate Program Manager, Data & Reporting, Atlassian, Austin, Texas
Senior Associate, Client Solutions, Re:Co Insights, London, UK
Sustainability Platform Analyst, Postion Green, Buffalo, New York
Director, Strategic Initiatives, ESG Reporting & Engagement, Walmart, Bentonville, AR
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