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By Sharon Kimathi, Energy and ESG Editor, Reuters Digital

Hello!

The saying “when America sneezes, the world catches a cold” by the former CEO of Citigroup, Charles Prince, takes on new relevance this week as Europe experiences a growing ‘greenlash’ against its decarbonization plans, threatening its green agenda as severe heat waves and wildfires rage.

Analysts say politicians are increasingly tapping into worries about the expense of green policies ahead of regional, national and European Union elections over the next year-and-a-half.

Just last month, a study found that U.S. Republican politicians proposed some 165 pieces of legislation in 37 states to counter environment, social and governance (ESG) investment practices, according to Pleiades Strategy, a climate-focused research and advisory firm. But of those 165 proposals, only 22 anti-ESG laws in 16 states were approved this year.

So far, the impact of the green backlash in the European Union is limited, say policymakers and analysts, because most of Europe’s main CO2-cutting policies are fixed into law.

But EU politicians are going to need to address more concerns of citizens and businesses if they want to maintain support as they legislate on sectors that hit close to home.

People shelter from the sun as they queue to enter the Saint Peter’s Basilica square during a heatwave across Italy, in Vatican July 19, 2023. REUTERS/Remo Casilli

“It’s definitely different circumstances than in 2019 when we started with this maximum support and the political willingness to act from … across the parties,” European Environment Commissioner Virginijus Sinkevicius told Reuters.

Politicians must consider polls showing a large majority of citizens are worried about climate change and strong business interests behind the green transition. “We have this stable majority which supports the green deal,” he said, referring to the level of support in the European Parliament for the EU’s overall green agenda.

“But then we come to more difficult files (EU legal proposals) where I think, inevitably, they are very much affected by the political debate,” Sinkevicius added.

As a result, officials say it is getting harder to pass green laws, with some EU governments resisting new emissions limits for cars and seeking to weaken pollution controls for livestock farms. A proposal to improve the energy efficiency of buildings faces pushback from countries worried by the cost.

Poland’s government, which faces October elections, is even suing Brussels over climate policies.

Italy’s right-wing government, which took office late last year, is pushing back on an array of European Union initiatives aimed at greening the economy, arguing that local business can ill-afford previously agreed transition goals.

Rows over green policies have propelled right-wing populist parties to second place in both Dutch and German polls.

And outside the EU, British Prime Minister Rishi Sunak last month warned of climate policies that “unnecessarily give people more hassle and more costs”, days after his ailing Conservatives unexpectedly clinched a local election after opposing charges for the most polluting vehicles.

Angst over a law to phase out oil and gas heating brought Germany’s ruling coalition close to breaking point this spring. After weeks of wrangling, it agreed to changes which watered down the original bill.

The row has helped propel the far-right Alternative for Germany to second place in the polls. The party disputes human activity is a cause of climate change.

Dutch Minister for Climate and Energy Policy Rob Jetten told Reuters in June that the main challenge for the next few years was for politicians to show that the green transition was also a just one, with support available for those in need.

The German heating law debacle underscored the importance of ensuring green laws enabled transition without overwhelming anyone, Nina Scheer, climate protection spokesperson for the ruling Social Democrats in parliament, said.

“Otherwise, citizens might start to feel that climate policy is always financially overwhelming and bad, and that sentiment is then exploited by populists.”

Activists from ‘Mothers Rise Up’ protest outside of Downing Street, the official residence of Prime Minister Rishi Sunak, in London, Britain, August 3, 2023. REUTERS/Alishia Abodunde 

Reece Tomlinson, CEO and founder of the international private equity firm Saône Capital, shares her thoughts on the anti-ESG movement: 

“Anti-ESG sentiment is unlikely to spread to the UK at the same rate or degree as what we have witnessed in some parts of the United States.

“We can see this through not only the capacity of how ESG related impacts can be financially materialized, but also the impact of fiduciary responsibility that rests on investment or fund managers.

“Whilst ESG is not perfect, at present, it’s likely our most effective tool for measuring a company’s activities and their impact on associated issues.

“In terms of what is next for the ESG movement, it is largely a reporting requirement that traditionally hasn’t always lined up with the actual impact. The problem is that companies that ‘meet’ ESG requirements can still operate in ways that are damaging to our environment and society.

“I think the ESG landscape needs to catch up in a way that ensures compliance does in fact ensure positive results for society. We need a level playing field to ensure adoption and effectiveness.  

“Ultimately, inclusiveness is critical to effective governance and therefore ensuring that inclusivity remains a key consideration is imperative to long-term success.

“Personally, I believe that ESG needs to strive to ensure that reporting on these aspects can become standardized across different jurisdictions. This way, it holds companies accountable towards operating in a way which is positive for society versus simply providing reports that can be manipulated or ineffective.”

At least 36 people have died after wildfires, fanned by winds from a faraway hurricane, devastated much of the resort city Lahaina on Hawaii’s Maui island, the Maui County said in a statement late on Wednesday.

Multiple neighborhoods were burnt to the ground as the western side of the island was nearly cut off, with only one highway open and thousands to evacuate as officials told of widespread devastation to Lahaina, its harbor and surrounding areas.

Cows in Ted Dykman’s barn in Abbottsford, British Columbia, Canada November 22, 2021. REUTERS/Jennifer Gauthier

From cows bred to burp less methane in Canada to lab-grown meats in China, today’s spotlight shines a light on environmental innovations in animal farming.

When Canadian dairy farmer Ben Loewith’s calves are born next spring, they will be among the first in the world to be bred with a specific environmental goal: burping less methane.

Loewith, a third-generation farmer in Lynden, Ontario, in June started artificially inseminating 107 cows and heifers with the first-to-market bull semen with a low-methane genetic trait.

“Selectively breeding for lower emissions, as long as we’re not sacrificing other traits, seems like an easy win,” Loewith said.

Lab-grown meat served by CellX at an event to mark the opening of the cultivated meat company’s pilot production facility in Shanghai, China August 9, 2023. REUTERS/Aly Song

Over in China in an unassuming industrial park on the outskirts of Shanghai, an unusual taste test was happening.

The cultivated meat company CellX served up meat developed in a laboratory from animal cells. The offerings included lab-grown meat kebabs and tofu with minced lab-grown meat. CellX said each dish costs less than 100 yuan ($13.87) to produce.

They are part of a race globally to develop commercially viable lab-grown meat and fish products to appeal to consumers concerned about the environmental impact of livestock farming, a major source of greenhouse gas emissions.

“We are entering into an era of political and legal battles of jurisdictions, with nature and climate as the center of gravity, resulting in new forms of trade and protectionisms becoming viable again.” 

Carlos Lopes, professor at the Mandela School of Public Governance at the University of Cape Town, South Africa & advisory council chair at the African Climate Foundation 

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