The 2024 European Parliament elections are imminent and could significantly change the course of EU sustainability policy. The parliamentary elections, which are likely to lead to a shift in the balance of political power, could have far-reaching consequences for sustainability goals and the associated regulations. For companies in the DACH region - and small and medium-sized enterprises (SMEs) in particular - it is essential to closely monitor the potential impact of the election results on the sustainability landscape in Europe.

The EU Green Deal and its influence on the European legal landscape

In the 2019-2024 legislative period, the EU paved the way for numerous pieces of legislation aimed at driving decarbonization, promoting respect for human rights, strengthening consumer rights and shaping a more sustainable economy. Some of the key pieces of legislation adopted that directly impact companies' procurement and supply chain practices include

- The Corporate Sustainability Reporting Directive (CSRD)
- The Carbon Border Adjustment Mechanism (CBAM)
- The EU Deforestation Regulation (EUDR)
- The Corporate Sustainability Due Diligence Directive (CSDDD)
- The EU Forced Labor Regulation

More competition, less sustainability?

It is to be expected that the next five years will be strongly characterized by a new political orientation. Initial indications suggest that issues such as economic competitiveness and strategic independence will take center stage. These priorities could lead to a more pragmatic approach to sustainability initiatives, especially if new legislative proposals meet with strong resistance from conservative or right-wing populist camps. It will be particularly tricky for measures that are seen as barriers to industrial competitiveness.

However, this does not mean that the Green Deal and other important sustainability initiatives will be completely abandoned. Rather, it can be assumed that they will have to be brought into balance with economic interests. This could lead to an adjustment of deadlines, targets and the introduction of more flexible mechanisms to harmonize the transformation of industry with climate targets.

The way forward

Over the next five years, the EU will link its sustainability policy more closely with economic and competition-oriented goals. A central keyword of this legislative period will be "competitiveness". Ursula von der Leyen's political guidelines aim to build a bridge between green transformation and economic growth. The most important initiatives include

• Clean Industrial Deal: This is intended to drive forward the decarbonization of industry and promote investment in green technologies.
• Net-Zero Industry Act: This act aims to strengthen the EU's technological leadership and expand production capacities for clean technologies.
• ‍CircularEconomy Act: The aim is to promote demand for secondary materials and create an EU-wide market for waste, particularly with regard to critical raw materials.

Companies must adapt to stricter requirements for resource efficiency and waste management, which brings with it new challenges, but also considerable opportunities in the form of innovation potential and new markets.

The importance for companies: Flexibility and adaptation

For companies, the policy shift will make two things particularly relevant: firstly, the need to remain vigilant and adapt to a potentially more volatile regulatory environment, and secondly, the continued importance of ESG (environmental, social and governance) issues. Despite the potential headwinds of implementing stricter requirements in the areas of circular economy, supply chain due diligence and climate change mitigation, the fundamental shift towards a sustainable economy remains.

In particular, the Corporate Sustainability Reporting Directive (CSRD) and due diligence along the supply chain will continue to be high priorities. While an increase in political resistance to green initiatives is likely, companies should not see this as a setback, but as an opportunity to adapt and innovate. Initiatives to reduce emissions, improve resource efficiency and create sustainable value chains will continue to grow in importance - regardless of how far to the right Parliament may move. After all, the European Union has made a legal commitment to climate neutrality by 2050.

Companies should prepare to review their internal processes in order to react flexibly to new requirements and at the same time take advantage of opportunities in the areas of green technologies and sustainable business models. In addition, new funding programmes and regulatory incentives to promote decarbonization and resource conservation could be added in a more business-oriented legislative period.

Five Glaciers Consulting will continue to help companies navigate this dynamic landscape and implement sustainable solutions that not only meet regulatory requirements but also have a positive impact on business performance.