Changing the narrative: the case for preserving policies and regulations essential for a clean energy economy
María Mendiluce
In a polarised world, with strong headwinds coming from multiple directions, we see dangerous false narratives reappearing: that green is not compatible with growth – despite phenomenal growth in clean technologies. Or that slashing regulation means being more competitive, even though a fossil fuel-led race to the bottom exposes our economies to insecurity, instability and stranded assets.
There is a better story to tell – one rooted in both present market realities and a vision of a liveable and prosperous future. This is a story of ‘competitive sustainability’, in which governments work with businesses and communities in a just transition to clean energy, that ensures energy security and long-term economic stability.
It is of utmost importance that we tell this story in the EU right now. The recent Draghi report and ‘competitive compass’ evoke the need for the EU to ‘close the innovation gap’ with other major economies by making it easier for companies selling future technologies and services to emerge and scale up. However, there is deep concern that the EU’s Omnibus simplification package, to be proposed on 26 February, will reopen the bloc’s sustainability rules, objectives and implementation – dismantling progress towards a future-proof economy.
This would only benefit the laggard companies. As I wrote in a letter to the editor of the Financial Times, changing course now would penalise forward-thinking companies that have already invested in compliance with these standards and in the sustainable supply chains, investments and operations they are intended to foster.
Business leaders need predictability. Leading companies including Velux and Signify have joined our partners CLG-EU in calling for the regulations to be protected from political renegotiation, which would threaten the policy certainty business needs. Whilst businesses support changes to reduce redundant or overlapping regulation, it is pivotal that regulatory simplification enhances efficiency while still driving the foundations of sustainable business practices that foster long-term growth and risk management, benefiting companies, workers, communities and the environment.
As part of our ongoing work with standard-setters to streamline reporting structures, we’ve published a new report Quality Matters that outlines some of the challenges in current ESG reporting and how they can be solved. But, as our Director of Net Zero Finance outlines in a new blog, quick fixes such as replacing existing digital reporting with AI, which has been proposed in the EU Omnibus package, can’t replace the structure, assurance and standardization that benefits business and investors alike.
Now, more than ever, business will need to use its voice to make the case for preserving the policies and regulations essential to building a clean energy economy – and talk about how decarbonization is boosting their competitiveness, alongside many other benefits.
To ensure companies have what they need to advocate on these critical issues in the EU and beyond, we will continue to step up our work on responsible policy engagement over the coming year. A new advocacy reporting template is the latest tool to be released in this workstream. It helps companies to meet external expectations from investors and stakeholders – including simple steps for complying with frameworks such as the EU’s CSRD framework – and harness the business benefits of robust reporting, such as identifying where engaging on climate policy supports long-term strategy.
Ten years since business and other non-state actors played a pivotal role in building the ambition necessary to deliver the Paris Agreement, the world is in a very different place. Stand with us to move forward.