SUSTAINABILITY FEED & ADDITIVE MAGAZINE March 2024 61 SUSTAINABILITY REGULATIONS IN THE EUROPEAN UNION The European Union is both the fastest warming region (with the exception of the Arctic) and probably the most advanced in terms of regulatory pressure. It has been steadily developing not just specific regulations aimed at green growth, but also specific reporting tools to avoid greenwashing and standardize the monitoring and measuring of this commitment. The largest sustainability initiative, the EU’s Green Deal, unveiled in 2019, is a comprehensive policy framework aimed at making Europe the world’s first climate-neutral continent by 2050. Among its objectives are reducing greenhouse gas emissions, increasing energy efficiency, and promoting circular economy practices. Key regulations include: • European Emissions Trading System (EU ETS): The EU ETS is a “cap and trade” scheme that aims to reduce greenhouse gas emissions in the European Union. It is the first and largest carbon market, covering around 45% of the EU’s greenhouse gas emissions, and is operational across the EU, Iceland, Liechtenstein, and Norway. The system works by setting a cap on the total amount of greenhouse gases that can be emitted by all participating installations. Within this cap, operators buy or receive emissions allowances, which they can trade with one another as needed. The fourth phase started in January 2021 and is to continue until December 2030, however the reduction target for 2030 needs to be reassessed. • Single-Use Plastics Directive: This regulation aims to reduce single-use plastics and their impact on the environment by banning certain products and promoting recycling. • Circular Economy Action Plan: Designed to reduce waste and promote recycling, this plan outlines initiatives to make products more durable and easier to repair. The plan includes measures on product design, waste management, and resource efficiency. • Taxonomy Regulation: This regulation establishes an EU-wide classification system for environmentally sustainable economic activities. The taxonomy defines which economic activities can be considered environmentally sustainable, based on their contribution to environmental objectives such as climate change mitigation and adaptation, biodiversity, and water protection. More recent but directly concerned with regulating and reporting sustainability in business practices are the following: • Sustainable Finance Disclosure Regulation (SFDR): The SFDR requires financial market participants and advisers to disclose information about how they integrate sustainability risks into their investment decisions, consider and disclose the adverse impacts of their investments on sustainability factors. • Corporate Sustainability Reporting Directive (CSRD): This requires companies to report on a wide range of sustainability issues, including environmental, social, and governance (ESG) factors. The reporting requirements will be phased in, starting from January 1, 2024, for certain large EU and EU-listed companies, and will apply to all in-scope companies by January 1, 2028. In addition to these regulations, the EU also provides financial support for sustainable projects through its Horizon Europe research and innovation program. Horizon Europe has a budget of €95.5 billion for the period 2021-2027, and a significant portion of this funding will be used to support research and innovation in areas such as climate change mitigation, renewable energy, and sustainable agriculture. SUSTAINABILITY REGULATIONS IN THE UNITED STATES The United States traditionally has a more decentralized approach to regulations, with federal, state, and local governments all playing important roles. Key federal regulations and initiatives in the field of sustainability include: 1970. Clean Air Act: Enforced by the Environmental Protection Agency (EPA), this law aims to
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