The recent EU parliamentary elections have raised questions about potential political backlash against the Green Deal. This article explores the impacts of these political changes within the European Union on ESG regulations under the Green Deal. It analyses the complexities of amending existing regulations, the role of the European Commission's 'right of initiative', and the influence of national elections on the Council. This comprehensive view illustrates how the new political landscape might shape future ESG policies.

THIS ARTICLE IS WRITTEN BY CEM ADIYAMAN ([email protected]) AND SEFA GECIKLI ([email protected]). CEM AND SEFA ARE BOTH PART OF RSM NETHERLANDS BUSINESS CONSULTING SERVICES WITH A FOCUS ON SUSTAINABILITY. 

Political Dynamics and the EU Green Deal

During the previous legislative cycle, The Green Deal was introduced and backed by the Commission, led by Ursula von der Leyen from the center-right European People's Party (EPP), the party formed alliances with the Socialists and Renew Europe to drive through these policies. However, skepticism within EPP towards the green push increased with the concerns over the election. Recently, the party has closely monitored farmers' protests to address their concerns especially regarding the Green Deal. 

The far-right political factions exhibited markedly lower enthusiasm for the legislations under the EU Green Deal. Recently, the nationalist ECR group has criticized the EU's "unrealistic ambition" to cut emissions by 90%. Similarly, members of the Identity and Democracy (ID) group opposed the climate targets, claiming they would lead to de-industrialization and unaffordable electricity prices for companies.

Meanwhile, the Socialists and Democrats (S&D) supported emission cuts, and the Greens and the Left group generally backed the Green Deal, often advocating for even more stringent measures.Following the EU parliament elections, the center-right EPP reinforced its status as the largest group of lawmakers. Right and far-right groups gained more seats, while the Greens and liberal Renew Europe saw a reduction in their representation. 

This shift raised questions about potential political backlash against the Green Deal and its regulations. However, it is important to analyze how easily existing regulations can be abolished or amended and how the new political composition may affect those still undergoing the legislative process.

EU Legislative Procedure

Amending an existing EU regulation or directive involves a structured legislative process that includes several key steps, which are similar to those used for new legislative initiatives but tailored to modifying existing laws. In the adoption of legislative acts, a distinction is made between the ordinary legislative procedure (co-decision), which puts Parliament on an equal footing with the Council, and the special legislative procedures, which apply only in specific cases where Parliament has mainly a consultative role. In brief: 

Analyzing the Political Shifts in the context of EU Law

There are certain take-aways from the EU legislative procedure when it comes to potential backlash for ESG regulations. Firstly, as seen, amending existing regulations require almost as much as effort to enact a new one. It means that it is not that easy to abolish or completely change the ESG regulations with an already completed EU legislative cycle, such as the CSRD and CSDDD.

The European Commission is responsible for planning, preparing, and proposing new or amended European legislation, a process known as the 'right of initiative'. According to media sources, the former Commission President who supported the Green Deal is seeking a second term, with backing from the center-right EPP, the Socialists and Democrats (S&D), and the liberal Renew Europe. If she secures a second term, it is unlikely that the Commission's stance will fully reverse. However, the EPP aims to revisit the de facto 2035 ban on new combustion engine cars, while S&D insists that car CO2 standards should remain unchanged. Similarly, the EPP wants to postpone the Deforestation Regulation, which S&D considers a significant achievement that must be upheld. Therefore, while a complete reversal of the Commission’s stance is improbable, revisiting some existing regulations for some amendments is possible.

National elections play a crucial role in shaping the composition of the Council, which holds significant legislative power alongside the European Parliament. The Council's composition, determined by the outcomes of these elections, can greatly influence its legislative decisions and priorities. 

Forward-Thinking for Businesses: Navigating the Green Deal's Future

As the European Union adapts to the outcomes of recent parliamentary elections, the future of the Green Deal and its associated ESG regulations hangs in a delicate balance. The new political landscape, characterized by the strengthened presence of center-right and far-right groups, poses both challenges and opportunities for sustainable development policies. While a complete reversal of the Green Deal is very unlikely, certain regulations may be revisited with no significant changes probably.

Contrary to expectations before the elections, it would not be a prudent strategy for entities to await a full reversal of these regulations and remain inactive. Significant abolishment of already enacted regulations are very unlikely, even with the recent political shifts: Entities should maintain their compliance efforts. However, as political shifts may introduce potential amendments to existing rules, companies should stay informed and agile. 

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