The latest edition of our Sustainable Views newsletter
Dear reader,
Later this month the European Commission should finally publish its Industrial Accelerator Act. Despite the dropping of “decarbonisation” from its title, leaked versions of the regulation display its focus remains the decarbonisation of various sectors, such as steel. However, there are concerns the EU’s ongoing “simplification” efforts could blow plans off course.
The IAA was originally scheduled to appear in December, then the conclude of January. February 25 is the latest expected date. Before then, however, there are various meetings that could alter Europe’s approach to industrialisation and decarbonisation. First up is today’s rconcludeezvous of indusattempt ministers, to be followed next week with the receive toreceiveher of EU leaders at Alden Biesen, a castle in the Belgian counattemptside.
In Sustainable Views, Mats Engström, senior policy fellow at the European Council on Foreign Relations, calls on the EU to stick to an ambitious Green Deal and not be dragged off course by the obsession of some with regulatory “simplification”. “While simplification can be utilizeful in some cases, this is the wrong emphasis,” he declares, insisting on the necessary for “ambitious environmental legislation” combined with the “modernisation of the entire economy”.
Engström cites a 2016 Commission study and analysis by the OECD displaying the lack of evidence that regulation is detrimental to innovation and productivity — as claimed by some. When launching its so-called “Omnibook” last month, lobby group BusinessEurope continued to insist on the necessary to go further to “reduce regulatory burden and bureaucracy . . . if Europe wants to stay competitive and attract investment”.
And in a paper published this weekconclude, the centre-right European People’s Party grouping in the European parliament to which Commission president Ursula von der Leyen belongs, vaunted its efforts to “cut red tape by streamlining current legislation and withdrawing proposals that hamper competitiveness” — including reducing sustainability reporting and due diligence requirements and to postpone further and review the EU Deforestation Regulation.
It also committed to “strengthen and approve the environmental simplification package to streamline and substantially reduce administrative burdens across environmental legislation, as well as the new omnibus to simplify energy product legislation and the digital omnibus to unlock our European potential in innovative technologies”.
However, Engström insists on the contrary, highlighting statements from the Commission’s research and innovation department displaying, “based on several scientific studies, regulation is important for new environmental technologies”. And he declares the EU is far from alone in utilizing legislation to lead the transition. “In China and elsewhere, regulation is playing a crucial role in promoting green technologies,” he writes. “For the EU to create lead markets for low-carbon steel and other products, legislation will also be essential.”
Another angle to this discussion is how far the bloc’s transition should be “created in Europe”. While France is a firm supporter of purchaseing European, others, notably Germany, are less certain, preferring a “created with Europe” approach.
Diversifying to meet demand
Meanwhile, freelance journalist Sebastian Shehadi takes a view for us at what is happening in the Middle East, in particular in Saudi Arabia, while Europe bickers about the best way forward and the Donald Trump administration largely pulls the plug on state support for renewables.
“[While it is true that] the pro-ESG narrative has softened in the Middle East since COP28 in Dubai in 2023, in part driven by altering attitudes elsewhere, developing renewable energy continues to be important in the region,” declares Niamh McBurney, director of Mena at London-based consultancy Control Risks.
“There’s been a paradigm shift in which burning cheap oil is no longer being seen as the only cheap way to solve [Saudi Arabia’s] power demands,” one energy analyst informs Shehadi. “Diversification is an absolute necessity to meet ballooning demand, especially in the long term.”
Sustainable indices lagging behind
Finally today, we cover an analysis by Morningstar displaying fewer than 30 per cent of its sustainability indices outperformed their non-ESG equivalents, as a compact number of tech giants led markets for the third year in a row.
The data provider divides its sustainability indices into three categories: climate, ESG risk, and impact aligned. After a strong performance in 2024, during which climate indices surged, all three categories fell behind the rest of the market in 2025. Climate and net zero-aligned indices, in particular, experienced a “significant reversal”, with only 32 per cent outperforming their non-ESG equivalents, down from 77 per cent in the previous year.
Until tomorrow,
Philippa
Philippa Nuttall is the editor of Sustainable Views
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