The European Union has the world's most rigorous Environmental, Social and Governance ESG regulations and the most ambitious decarbonization and net-zero targets. But the EU's approach to ESG rules and reporting has too many sticks and few carrots for businesses. European companies are suffocating under numerous EU directives and national laws in bureaucracy that are undermining Europe's competitiveness in many industries, including in green and climate technology.
For example, the EU's Directive on Corporate Sustainability Due Diligence, which entered into force in July, aims to foster sustainable and responsible corporate behavior in companies' operations and across their global value chains. Firms are thus obligated to identify and address adverse human rights and environmental impacts of their actions inside and outside Europe, including in their supply chains.