On September 17, 2024, Mario Draghi, former President of the European Central Bank, released a pivotal report addressing ESG regulation and sustainable competitiveness in the European Union. The Draghi Report highlights the EU’s potential as a global leader in clean technologies, including wind turbines and low-carbon fuels, noting that over 20% of all sustainable technologies are developed in the region. 

To enhance competitiveness and growth, Draghi emphasizes the need for the EU to close the innovation gap with the US, decrease reliance on China for critical raw materials, and establish a unified decarbonization strategy. However, the report also identifies the burden of extensive regulation as a significant challenge for European businesses. Draghi points out that ESG regulations in the EU are more stringent than those in the US, which can hinder business operations. 

Key regulations affecting sustainability include the Corporate Sustainability Reporting Directive (CSRD), the Taxonomy Regulation, and the Sustainable Finance Disclosure Regulation (SFRD). The CSRD is particularly noted as a major regulatory burden, with compliance costs estimated between €150,000 for non-listed companies and over €1 million for listed companies. 

The report advocates for simplifying existing ESG regulations, particularly the EU Taxonomy Regulation, to alleviate confusion and inefficiencies stemming from unclear definitions, such as “do no significant harm.” Streamlining these regulations would not only reduce compliance costs but also foster a supportive environment for sustainable business practices aligned with the EU’s ESG strategy. 

Looking ahead, the Draghi Report’s recommendations will form the foundation for an EU-wide Clean Industrial Deal, promoting sustainability while ensuring European businesses remain competitive globally. As the importance of ESG reporting grows, tools like IMPAKTER PRO will become essential for companies to navigate compliance and maintain a competitive edge in the evolving regulatory landscape. 

Sources:  

https://impakter.com/esg-europe-draghi-report-business-leaders/ 

https://www.stibbe.com/publications-and-insights/the-draghi-report-a-reality-check-for-esg-regulation-in-the-eu 

https://media-publications.bcg.com/205-Weekly-Brief-The-Draghi-Report-What-Business-Leaders-Need-to-Know.pdf 

https://www.responsible-investor.com/esg-round-up-draghi-report-warns-of-regulatory-burden-from-eu-sustainability-rules/