Drill, baby, drill – and Omnibus Regulation – Critical time for ESG?

By Søren Rahbek, Director I January 30, 2025

Just as all of us, who are engaged in facilitating the transition to a sustainable economy on market terms, are looking forward to having the data needed to create insights and advice customers, the whole trajectory got thrown into uncertainty.

Finance professionals have accepted to be the horses before the carriage in the last couple of years as fund managers and investment advisors have had to report on the ESG impacts of their investments, using data, which were not really available (and both difficult and expensive to get).

We are thus looking forward to getting better data in more areas through the CSRD, where the first reports are just about to be published. And then Ursula von der Leyen announces an omnibus regulation aimed at easing the reporting requirements (and thus potentially moving the goalpost on data availability).

Combining with the inauguration of Donald Trump and the immediate withdrawal of the US from the Paris Agreement and the realization that “drill, baby, drill” was not a campaign trail joke, but official policy can easily take the wind out of the sails of any individual who dreams of a greener world for our grandchildren.

After a few drinks and deep sighs, it may be time to reflect on the merits of the European approach (there is not enough wine in this world to make me accept DJT).

First and foremost, the EU regulation is very massive. Demands are huge. The demands on the larger companies are trickling down to their smaller suppliers, who might struggle to live up to expectations. The EU taxonomy is difficult to understand, does not cover all industries and economic activities and are subject to ongoing change. What was sustainable yesterday may not be tomorrow. Generating a CSRD report for the first time is a daunting experience – how do we get data and what does good look like?

Some of the data points are quite difficult to get your hands around. During 2024, many of the people we talked to agreed that biodiversity would be the next big thing. But nobody really knew how. We were asked,” should we count butterflies?”

It is thus probably a very good idea to step back, have a careful look at the total of the regulation and demands and prioritize.

Surely, global warming must be the most important challenge we are facing. Weather is getting more extreme. Rising sea levels will impact many countries – attractive communities will be under water (or burn in extreme fires). So let us focus on reducing emissions in all industries and all economic activities and agree on a schedule for when we move to implementation of the next demands.

The wider ESG agenda IS important. Butterflies and fair labor practices are just examples.

Those, who are about to give up, saying that it does not matter what we do in Europe when the US is abandoning all efforts, should rather accept the challenge and be a beacon for the rest of the world.

Because We care. And we might learn a few new tricks in the process that will allow us to compete in new ways in new markets – just like China has learned how to become a market leader in solar panels and other sustainable energy systems because they see the need to ALSO have green energy.

So yes, this is a critical time for the work on ESG. We believe it is important to focus and keep moving towards a sustainable economy. We believe that it is possible to do good business when transforming the world.

We would love to talk – and even more to help you with your challenges.