Navigating the ESG legislation - What implications for carbon removal projects in Europe?

Climate change is increasingly causing environmental damage and disturbing biodiversity across Europe. This situation calls for greater initiatives to reduce global greenhouse gas emissions and industry’s carbon footprint.In this context, the European Commission approved a new legislation on environmental, social and governance (ESG) ratings in February 2024. These scores serve as an informational tool for companies to assess their risks and impacts on people and the environment. The legislation aims to bolster investor’s confidence in sustainable products, while encouraging companies to explore carbon removal projects in Europe.As such, carbon and biodiversity credits can also play a role in corporate environmental strategies. These credits can incentivise companies to compensate for their carbon footprint through carbon removal projects, such as forest conservation and ecosystem restoration projects.Some stakeholders believe that ESG ratings can benefit carbon removal companies. However, some are concerned about companies claiming that they are reducing their carbon emissions by purchasing carbon credits, and about a lack of transparency on ESG ratings methodology and data sources. To address those inconsistencies, the Commission presented a new‘Proposal for regulation on transparency and integrity of ESG rating activities.’Listen to this Euractiv Virtual Conference to discuss the ESG legislation and its implications for carbon removal projects in Europe. Questions to be addressed include:· How can the ESG legislation impact companies’ investment in carbon removal projects in Europe? What are the opportunities for companies specialised in carbon removal?· How can corporations integrate carbon and biodiversity credits into their environmental strategies?· What are the potential implications of higher carbon credits price on companies’ costs and their products?· How effective is the new proposal on transparency and regulation on ESG ratings in ensuring companies reduce their carbon emissions?Life Terra is co-financed by the European Commission through the LIFE Programme (LIFE19 CCM/NL/001200).The content of this publication represents the views of the author only and is his/her sole responsibility. The Agency does not accept any responsibility for use that may be made of the information it contains.