Untangling the EU’s web of sustainability regulations

The number of sustainability-related regulatory developments in the European Union has doubled in the last decade.¹ If we consider the situation from a wider perspective, we can see that the current regulatory environment is rooted in the goals and targets of the European Green Deal. This package of policy initiatives lays out the path to a green transition, aiming for net zero by 2050. A web of sustainability regulations has been introduced to achieve the Green Deal’s ambitious goals.

One issue that has been coming to light is that the regulations currently in place lack the necessary alignment, which makes the regulatory environment quite challenging and frustrating to navigate. Mario Draghi, former president of the European Central Bank, highlighted several issues in a report to the EU Commission in September 2024. He identified challenges stemming from unclear definitions, overlapping methodologies, and unharmonized timelines. His conclusion? EU companies are less competitive.

Companies are more likely to meet the ever-increasing requirements if they can identify opportunities and create value during implementation.

The interplay between key EU regulations

The European Green Deal was adopted in 2019 and needs a lot of investment from both the public and private sectors to achieve its objectives. It has stimulated the creation of new regulations that pursue the same sustainability goals. Although these regulations are based on the same goals and targets, their scope of application and the nature of their requirements vary widely, contributing to what many companies consider an extremely complex regulatory burden.

To implement overlapping regulations more efficiently and find ways to create value, it can be helpful for companies to understand the larger goals and strategies behind the EU’s sustainability requirements (see Figure 1).

Figure 1. Connecting the dots in the EU’s sustainability regulatory framework (Click below on “Download supporting PDF” to zoom in on the figure.)

Be aware of the synergies and interconnections between different EU regulations! It can help companies identify ways to streamline their approach to compliance, reduce costs and workload, enhance efficiency, and create value.

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¹According to data collected by ECOFACT Policy Outlook.