A Declaration: Why I Welcome the Pullback of the EU's CSRD Sustainability Regulation

My LinkedIn feed is full of discussion about the EU’s rollback of the #CSRD and #CSDDD sustainability regulations through the omnibus mechanism. So here is my declaration: I welcome the pullback of EU's CSRD sustainability regulation.

Transatlantic Trade – The EU on the Defensive

The joint statement by the EU and USA from August 21st, 2025, highlights this trend. The EU is offering more concessions to the USA and is acting from a weak negotiating position. The statement shows that the US is essentially pushing the EU to exclude US firms from excessive regulation.

So, one perspective is to analyze this regulatory shift as a macro-political game between the US and the EU. And in this game, the sustainability policy dimension is less important right now than the broader security concerns (and security, in itself multidimensional, is only one of several major dimensions). 

Given the current political climate, which has shifted substantially, I favour this regulatory reversal on sustainability and reducing the EU's CSRD regulation (my current opinion).

Personal Impact: Pelt8

I say this even though the recent move has affected me personally and professionally. It undermined the viability of the company I founded four years ago and "exited" earlier this year, which was built on the assumption that these regulations would create a huge need and market for sustainability data management. For now, that market has collapsed.

When I founded Pelt8, I strongly supported the CSRD regulations (which had previously been the NFRD). It would have required any company in the EU with more than 250 employees to issue a sustainability report.

A central argument for this push to “measure sustainability” was the hope that companies would change, and manage their behaviour: become more sustainable. 

This belief turned out to be a hypothesis not backed by real-world observations; at least not in my experience.

Compliance or Real Change?

In the short term, I did not observe any real change in company behaviour due to these reporting requirements. Instead, compliance became a costly exercise. Many reports ended up as marketing tools, featuring unrealistic goals. For most companies, behaviour did not change.

I am open to the idea that, in the long run, reporting might inspire better corporate behaviour. But we don’t know yet, and I do not expect to see these changes any time soon (my current working hypothesis) based on the observations I outline below.

The US Shift – Deregulation and the AI Race

Trump is less than one year into his term, with three years to go. The US and Trump have done exactly as promised and put the USA first. He will not change this approach any time soon. Sustainability is not a priority for the current administration.

President Trump has tapped several leading Silicon Valley figures for key roles in his administration, including Scott Kupor (Andreessen Horowitz), Sriram Krishnan (Andreessen Horowitz), David Sacks (PayPal/Venture Capital), Emil Michael (Uber), and Michael Kratsios (Scale AI, former CTO). These tech industry leaders are now shaping policy from top cabinet and advisory positions. Their influence ensures deregulation and small government are at the forefront, making new regulatory waves extremely unlikely. 

America’s tech sector is betting heavily on AI. For details, see “Winning the Race: America's AI Action Plan” (July 2025)! The plan outlines enormous investments in energy, infrastructure, and the systems needed to support AI. Multiple recent studies indicate that the surge in energy demand from new data centers will likely be supplied by fossil fuels in the short term. In practice, natural gas is already the default solution for meeting rising demand, with many new gas-fired power plants under development across the United States to support data center operations. Again, sustainability is secondary in this race. 

By the way, America’s main counterpart in this race is China, not the EU. The US produced more than forty notable AI models in 2024, China fifteen, while Europe managed only three. China, meanwhile, is investing heavily in sustainable energy; but mainly for security and self-reliance.

European Dependency – Why Sovereignty Matters

The US is pushing the “art of the deal” in its tariff negotiations with the EU, taking advantage of the EU’s weakened position and dependency. However, this dynamic extends well beyond economics. Europe continues to rely on the US military for deterrence against Russia (though increased defence spending is beginning to address this). 

On another dimension, US technology fundamentally runs Europe. To illustrate the depth of this reliance: about three-quarters of Europe's publicly listed companies depend on American technology firms for their core operations, such as email, cloud infrastructure, and IT services. In several countries (e.g., Iceland, Norway, Ireland, Finland, and Sweden), more than 90 percent of companies rely on US tech giants for cloud services. This overwhelming reliance exposes Europe’s digital sovereignty as an “illusion,” while granting US firms a dominant position in running European infrastructure and data. 

Kill Switch Paradox – Digital Sovereignty versus Control

Considering how tightly the US government and tech sector are linked, it’s worrying that Europe’s critical cloud and tech infrastructure remains under US control. 

The irony here is that, while the EU pushes for digital sovereignty and mandates “kill switches” for high-risk technologies - such as those required by the EU Artificial Intelligence Act - Europe is still reliant on US-operated infrastructure. In theory, if such a kill switch exists and is managed by US providers, the US could potentially use it to shut down or disrupt key European operations. 

So, even as Europe tries to protect itself with regulatory safeguards, the actual power over those safeguards could rest with America, undercutting the very goal of sovereignty. 

In response to these challenges, Draghi has proposed the EuroStack - a €800 billion investment over the coming years. Its focus is on digital sovereignty and reducing European reliance on US tech giants. The strategy is designed to promote competition - but is likely to prioritize technological independence over sustainability.

Taking Stock – Where Are We Going?

The trends above are unfolding now. Of course, things could change, but they are massively important and, until they do change, it makes sense to use them as a guide to where the US, Europe, and sustainability might be heading.

Viewed in this context, I support the removal of CSRD and other extensive sustainability regulations for now. In the short term, the EU must cut red tape for businesses. I hope that mandatory sustainability reporting will return at some point, but not in the excessive form that CSRD demanded.

But right now, Europe is often stuck in the past and losing competitiveness, and in this world of political realism, “losing” feels like the right word. 

For example(s), since 2019, labour productivity per hour worked in the euro area has increased by only 0.9%, while in the United States, it rose by 6.7%. In the fast-growing information and communications sector, US productivity surged by 27%, compared to just 6.5% in the euro area. Even across market services, the US saw a 12.4% increase, while Europe managed only 3.8%. This productivity gap contributes directly to the wider economic challenges Europeans face. 

What about Climate?

Based on publicly available data, the trend is clear: Europe is heading toward a hotter climate and more frequent extreme weather events. At the same time, I see no major change in consumer or corporate behaviour - these entrenched patterns show little sign of shifting. 

Because of this, my view is that adaptation must be our top priority. We need to prepare for living with new climate realities. 

Adding to this challenge, we also face major disruption from AI, which is transforming professional and educational systems, leading to significant societal shifts. This is further intensified by Europe’s demographic changes: Between 2023 and 2050, the working-age population is projected to decline in 22 out of 27 EU countries.

What Next?

The status quo in climate and other key areas will not remain. Change is inevitable; “different” does not have to mean worse, even if it might look that way now. I am trying to define my role moving forward to help support resilience, creativity, and agility. By enabling others to adapt and meet these overlapping challenges, I hope we can build the capacity needed for whatever comes next.

Initial LinkedIn Post.