Tallinn University of Technology

The European Union's green transition directive is at risk of becoming a colossal greenwashing machine spinning oil into great quantities of beets, Triinu Tapver writes.

Triinu Tapver
Triinu Tapver, researcher in finance and economics at TalTech

Sustainability and the green mindset have become buzzwords and one is hard-pressed to find a sector or company unaffected by them in light of the EU Corporate Sustainability Reporting Directive (CSRD). Therefore, if we close our eyes, we could claim that a paradigm shift is happening and nature conservation has finally become a universal value.

But only if we close our eyes, as scientists are ringing out the bell to criticize growing greenwashing and tendencies to overlook the knowledge-based approach. The green transition in its current form is perceived as promoting superficial treatments and investments in projects that are green only on the surface.

One example of this is favoring electric vehicles over ICE counterparts, which is meant to improve air quality in Europe. What we are really doing is outsourcing our carbon footprint to the periphery in the form of mines that will irreversibly alter the natural environment there, spout toxic fumes and often use child labor. We have not come up with a good way of utilizing broken EV batteries.

Even a brief look at the CSRD reveals that it is far removed from both a knowledge-based approach and sporting a long perspective. We might even say that the green transition directive is at risk of becoming a colossal greenwashing machine that can even spin oil into great quantities of beets.

The directive does nothing to motivate a real effort or considering long-term environmental effects. While flexibility is good, especially in nascent fields, there is a common sense line somewhere. Right now, determining, interpreting and measuring that green level is left up to companies themselves. But the latter mostly lack necessary know-how and ability or sport less than environmentally rosy goals to begin with.

Estimates suggest the EU is roughly €1 trillion short annually of achieving its 2030 climate goals (McKinsey report). Investments require money, while long-winded projects of environmental conservation, which might not become profitable for decades, do not inspire confidence.

Instant profitability is worth more, with companies opting for convenient and low-effort activities and investments instead. Many companies have set themselves sustainability goals that are one-off, achievable with little to no effort or simply within reach already.

The green transition and green investments must not be allowed to remain nothing more than buzzwords. It is vital to work with scientists, and not just on the grassroots level but also when looking down from the moon.