The latest edition of our Sustainable Views newsletter
Dear reader,
Yesterday, more details emerged from the ongoing negotiations between the EU and the US. For supporters of sustainability policy, it’s not good news.
The EU’s statement is decidedly vague, but includes considerable concessions from the EU: not only on tariffs and higher purchases of US energy, but also on the Corporate Sustainability Reporting Directive, the Corporate Sustainability Due Diligence Directive, the Deforestation Regulation and the Carbon Border Adjustment Mechanism.
The EU says it will ensure both frameworks “do not pose undue restrictions on transatlantic trade”. That could be read as minor tweaks — but it also could mean an essential carve-out for US companies.
The details are yet to be hashed out, but this is clearly a big win for the Trump administration.
The deal shows that “trade is the new universal weapon used by the US to get rid of unwanted regulations”, Andreas Rasche, professor and associate dean at Copenhagen Business School, tells me.
On the CSDDD, the EU also says it will propose changes to the requirement for a civil liability regime to hold companies accountable. This was what really gave the directive teeth, taking it further than national-level supply chain rules. Without liability, some would argue there is little to no incentive to comply. That may be doubly true for companies that have the Trump administration batting for them.
The EU has in effect tied its own hands on the omnibus now as it cannot allow US companies a lighter deal on the CSDDD than their European counterparts, adds Rasche. He sees this as a strong signal that a “substantial rollback” of the supply chain framework is on the cards.
The agreement “serves as a painful reminder of Europe’s current dependency on the US”, ING global head of macro Carsten Brzeski said in a blog post. “It’s difficult to call this a ‘deal’ when it reads more like a document of damage control for Europe.”
But Michael Mehling, deputy director of the Center for Environmental Policy Research at the Massachusetts Institute of Technology, is more optimistic. He doesn’t expect the EU to “materially alter” rules such as the CBAM, the CSDDD or the CSRD as a result of the agreement.
Making major changes to rules that have already been revised via the omnibus process “would risk seriously destabilising the complex political balance achieved over years of negotiations . . . and create a slippery slope towards similar requests from other trade partners”, Mehling tells me.
It would also put the EU in a tricky spot with its World Trade Organization obligations, and could “accelerate a downward spiral in obsolescence”. He points out that the agreement’s accompanying FAQs say the agreement will not “lead to any changes to EU domestic rules . . . nor grant US companies more favourable treatment”.
Long time coming
As I reported in January, US business groups long ago set their sights on the CSDDD, which applies to non-EU companies generating more than €450mn turnover in the bloc. For US businesses, this was estimated to be around 315 in total.
And in March, a Republican senator introduced the Protect USA Act, with the express purpose of shielding US companies “from the EU’s harmful extraterritorial regulations”.
Everything went quiet for a while, but it was clear the bloc’s sustainability agenda was going to be a key sticking point in ongoing trade negotiations between the two superpowers.
Indeed, it has been quite a month for US influence on global environmental policy: last week, the Trump administration successfully derailed the second attempt at a global plastics treaty, and announced its rejection of the International Maritime Organization’s net zero framework.
As COP30 draws closer, optimism for any real multilateral progress is fading fast.
Taking a stand
Elsewhere on Sustainable Views, Triodos Bank chief economist Hans Stegeman explains why his organisation decided to leave the Net-Zero Banking Alliance.
It is not for the same reason as the world’s biggest banks: instead, after the majority vote to lower its climate goals, Triodos felt that the alliance had “failed to shift the agenda towards meaningful climate action, and must now take a principled stand”, he says.
As Stegeman notes, that vote was largely in vain anyway, as “even this watering down did not keep big banks on board”. He argues that voluntary commitments are no substitute for real accountability and “only the force of law will suffice”.
Stranded asset risk ahead
A survey has revealed that UK retailers face an average £139mn annual loss from their buildings if they are not upgraded to meet UK net zero regulations by 2050.
Thirty-five per cent of survey respondents believe more than a third of their estate could become stranded if previously proposed minimum energy efficiency standards are introduced for commercial properties.
Retail businesses are already losing, on average, £146mn annually from energy leakage due to inefficient heating, ventilation and air conditioning, the report finds.
SBTi target setters grow
We also have some data from the Science Based Targets initiative, which shows a record number of companies are continuing to set science-based climate targets, despite political headwinds. Asia accounts for the fastest growth in the number of companies, with 134 per cent.
Global companies adhering to SBTi standards now account for 40 per cent of total global market capitalisation, Aniket reports.
You can find all of this week’s sustainability-related news and views in our round-up, expertly put together by Florence and Erin. And, as every Friday, we bring you the most-read stories of the week.
Finally, as Monday is a bank holiday in the UK there will be no newsletter, but we will be back in your inbox on Wednesday.
Have a good weekend,
Elizabeth
Elizabeth Meager is acting deputy editor at Sustainable Views
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