ARE ESG REGULATIONS NECESSARY?

Abstract

In order to clarify the goals of the green transition on a global scale, it is necessary to familiarize ourselves with the specific legislative initiatives already made by the EC. A concrete example is the Green Deal, which focuses on decarbonising the economies of the EU countries and achieving carbon neutrality in the Union by 2050, setting out the steps to make Europe the first climate-neutral continent by 2050 in line with the objectives of The Paris Agreement. The EU's Green Deal also includes protecting biodiversity, establishing a circular economy and eliminating pollution, increasing industrial competitiveness and ensuring a fair transition for affected regions and workers. Carbon emissions are given a key place to ensure the contribution of every person and every sector. The EU plans to adopt a carbon tax for third countries this year and a revision of the Energy Taxation Directive.
The European Green Deal is one of the priorities of the European Commission. It aims to make Europe the first climate-neutral continent by 2050 and preserve its nature and biodiversity, while strengthening the competitiveness of European industry and ensuring a fair transition for affected regions and workers.
The ESG regulation entered into force at the beginning of 2024. It is mandatory for the largest companies, with over 25 million euros in assets and over 500 employees. It will gradually become mandatory for smaller companies as well. In 2028, it will become mandatory for small and medium-sized companies, and then for those with subsidiaries in Europe ESG stands for Environmental, Social and Corporate Governance - the three aspects of business. "Behind each letter are different things, indicators related to climate change. Behind E are energy efficiency, measurement of greenhouse emissions and water resources. S - stands for social aspects - aimed at the company's employees, such as workplace safety and equal pay for men and women G - is for governance policies such as reducing corruption and tax transparency In reality, ESG is the tool that enforces sustainable financial models that cover environmental, social and corporate governance norms. Along with their financial reporting, companies will also have to disclose their ESG practices through non-financial reporting. They will have the same important role in determining the state of a business along with its financial indicators.