How to Comply With EU Sustainability Laws

Worldwide, nations are attempting to undo the catastrophic impacts of climate change. Governments and regulatory bodies are taking the side of environmental advocacy, and legislation proves it. Initiatives like the Paris Agreement and the United Nation’s Sustainable Development Goals demonstrate this is a global priority, and the European Union (EU) sustainability laws reflect these urgencies. 

Navigating these promises and documents is overwhelming, but the EU sustainability laws consolidate and advise how citizens and companies can become better stewards of the planet.

What Are the Pillars of EU Sustainability Laws?

Sustainability refers to reducing carbon emissions and plans to protect the environment for the long term. Without regulatory action, humanity will fail at consistency and prioritizing the most impactful directives. However, it involves more than planting trees and moving to electric vehicles. That’s why the EU created three pillars to guide the nuances of sustainability legislation:

• Economic
• Social
• Environmental

For sustainability law to be successful, it must work synergetically with these three concepts. Every policy for the EU must acknowledge sustainable development, which expands on how the pillars function. It’s defined more broadly as fulfilling present-day needs that allow the future to continue meeting its needs. These needs include environmental and social conditions, committing to safeguard the environment, promoting social and labor justice, and advocating corporate responsibility.

Though the EU created these pillars to guide their internal policymaking, it’s an easily replicated model that can help other nations in their eco-friendly objectives. The EU laws focus on rehabilitating the environment within the EU. Still, the goal represents a mindset shift for EU citizens that encourages global change and productive ecological justice that transcends borders. 

What Is the EU Planning to Achieve With These Laws?

The EU’s sustainability laws are comprehensive, setting a global precedent for how to have a holistic perspective on the issue. They even outlined sustainable taxonomy to ensure clarity on language, creating a binding, tangible definition for how words outline green perspectives. It’s a first step in accountability, so companies and individuals understand what qualifies as climate-friendly or greenwashing — demystifying language has a firmer grasp on cohesive progress. 

Under the EU Climate Law, the overarching objective is to have no greenhouse gas emissions by 2050 while changing to a circular economy that protects biodiversity. Here are some of the ways countries plan to achieve this goal:

• Renovating
• Farm-to-fork practices
• Renewable energy
• Cutting pollutants
• Reimagined transportation

How Can Entities Stay Compliant?

Numerous sector-specific laws exist, such as rules for packaging waste and making products deforestation-free. However, here are a few main ways nations and businesses within the EU can stay compliant to meet their goal of the first climate-neutral continent. 

The EU Taxonomy for Sustainable Activities regulation provides screening guidelines for how to make economic activity defined as sustainable with some of the objectives including:

• Preventing pollution
• Restoring biodiversity
• Using marine resources responsibly

The EU also released the Corporate Sustainability Reporting Directive (CSRD). It continues to standardize expectations and language by making sustainability reporting as cut-and-dry as financial reporting — with digital data tagging and third-party verification. Every company in the EU must meet these requirements, including non-EU companies that meet revenue requirements that sell in the EU. This was a recent inclusion by the Non-Financial Reporting Directive (NFRD). Many of the laws explain transparency and financing objectives that funnel investments into eco-friendly initiatives, such as:

• Diversity of board members
• What environmental risks are impacting the company
• Employee treatment
• Green focus areas 

The Sustainable Finance Disclosure Regulation (SFDR) contains the nitty-gritty financial standards. It includes the EU Green Bond Standard, which describes eco-labeling and how to achieve ethical product sourcing and creation. However, it encompasses more that companies have to watch for to stay adherent, including:

• Disclosing investments
• Success of funding sustainability KPIs
• How companies allocate assets

Most importantly, remaining compliant means undergoing assessments and providing evidence for reports in all of these areas.

How Well Is the EU Meeting Goals?

Though countries look to the EU as a model, this doesn’t mean they succeed in every regard. Advocating for the Earth has many moving parts, from investing in renewable energy generation and infrastructure to creating a more circular economy. On top of that, there’s wildlife and natural land conservation and ocean protection. These topics only scratch the surface, so perhaps it’s impossible to excel everywhere all at once, but here is what the EU is doing well and what could be improved.

The most impactful advocacy in these laws is an attempt to standardize sustainability. Rather than making these laws hyperspecific to the EU, it allows other nations to use it as inspiration for their policies. Standards around transparency are critical for meeting aggressive timetables and giving third-party audits strict rules to follow when keeping reporting bodies accountable.

Additionally, the laws cover more than companies. It holds shareholders accountable for promoting and supporting projects, using compliance as an incentive to fund climate-friendly companies. However, nonprofits like Amnesty International argue there are oversights regarding how products could impact human rights.

It’s not sure how well these will work until several rounds of reporting. Still, it’s certain regulatory bodies will face some resistance as companies acclimate to the time and financial investment involved in the auditing process. The most tension it will cause is controversy about what businesses should and shouldn’t disclose. However, it’s unlikely the standards will relent on their goal of transparency.

What the EU Is Doing to Fight the Climate Crisis

EU sustainability laws force entities to seek compliance or fall behind. The Commission will have a busy year, evaluating the first round of adopted standards in 2023 and the second in 2024, with continuous adjustments every several years to match global priorities. New procedures like this will inevitably adapt to changing technology and revelations of loopholes. The first draft will be flawed, no matter what nation the law resides in. 

Regardless, the EU sustainability laws will be living and growing reminders of how humanity must change its perspective on corporate responsibility to achieve a sustainable planet for the future of humankind.