In this week’s edition of Economy and Society:
- EU signals flexibility on ESG rules after U.S. pressure
- European banks offer better loans to greener clients
- AGs warn companies about European ESG compliance
- SBTi revises net-zero rules for businesses
- China drives global green-bond surge as Europe slows
In Washington, D.C., and around the world
EU signals flexibility on ESG rules after U.S. pressure
What’s the story?
The European Commission’s economy and productivity chief, Valdis Dombrovskis, said the European Union (EU) may adjust its approach to upcoming environmental, social, and governance (ESG) reporting and due-diligence rules after pressure from the U.S. and Qatar. dombrovskis told Bloomberg News that the EU would consider global feedback on the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD), which are scheduled to take effect in 2026.
Why does it matter?
Dombrovskis' comments mark the clearest sign yet that Brussels may soften its sustainability disclosure regime amid growing opposition from the U.S., Qatar, and multinational firms. Any delay or narrowing of the directives could ease compliance costs for non-EU companies operating in Europe and reshape global ESG reporting standards.
What’s the background?
The European Commission proposed an Omnibus package in February to narrow CSRD/CSDDD scope, while the European Parliament’s legal committee voted Oct. 13 to limit further cuts. On Oct. 22, however, the full Parliament rejected that mandate on Oct. 22, sending revisions back to the full European Parliament for debate. In early November, ExxonMobil warned it could exit Europe over the costly rules.
European banks offer better loans to greener clients
What’s the story?
The European Central Bank (ECB) reported that Eurozone banks are offering more favorable lending terms to companies and households with stronger environmental performance. Drawing on data from its Bank Lending Survey, the ECB said banks apply a climate discount to green and transition firms and a premium to high-emitting ones. A net 20% of surveyed banks expect to ease credit standards for green firms, compared with 35% that plan to tighten lending for high-emitting companies.
Why does it matter?
The findings indicate that climate considerations are becoming embedded in Europe’s credit system. Because the eurozone relies heavily on bank financing rather than capital markets, climate-related lending policies could shape access to capital across entire industries—rewarding companies investing in green technologies while raising borrowing costs for others.
What’s the background?
The ECB has long urged banks to manage climate-related financial risks through disclosure and supervision. In August 2025, the European Banking Authority asked regulators to pause enforcement of new ESG disclosure rules while the EU finalizes its Omnibus simplification package. Despite that pause, the ECB’s latest survey shows banks are already factoring climate risk into lending, suggesting sustainability goals are shaping credit decisions ahead of formal rule changes.
In the states
AGs warn companies about European ESG compliance
What’s the story?
A coalition of 16 state attorneys general sent letters in October 2025 to corporate leaders at Microsoft, Google, and Meta warning that compliance with the European Union’s sustainability directives could violate U.S. law. The officials cited the CSRD and the CSDDD, saying the measures would effectively impose ESG and diversity, equity, and inclusion (DEI) mandates restricted under several state statutes. The letters stated that such compliance could expose companies to lawsuits and enforcement.
Why does it matter?
The warning continues state-level resistance to global ESG-related regulations. State attorneys general argue the EU’s climate and human rights reporting rules conflict with U.S. laws that limit consideration of non-financial or social factors in business and investment decisions. The move underscores growing tension between international sustainability mandates and various states’ efforts to restrict ESG-driven corporate policies.
What’s the background?
In August 2025, the EU and Trump administration reached a framework agreement to reduce those rules' burdens on U.S. firms, though U.S. officials later warned of trade consequences if the CSDDD were not amended. Republican-led states have previously sent similar ESG-related warning letters to asset managers and ratings agencies.
On Wall Street and in the private sector
SBTi revises net-zero rules for businesses
What’s the story?
The Science Based Targets initiative (SBTi) released a second draft of its updated Corporate Net-Zero Standard on Nov. 6, 2025, opening a month-long public consultation. The proposal would give companies more flexibility in how they set and meet climate goals, replacing a requirement to commit to reach net-zero emissions by 2050 with language asking them to set an ambition to align with that goal. The updated framework introduces multiple pathways for setting targets across different emissions scopes and allows limited use of carbon credits and environmental certificates under strict conditions. The consultation runs through Dec. 8, 2025.
Why does it matter?
The update aims to expand participation in corporate decarbonization while preserving scientific credibility. More than 12,000 companies have either validated or pledged targets through SBTi, but many have said the current framework is too restrictive. The revisions seek to make climate goals more practical for businesses of different sizes and sectors.
What’s the background?
The CDP and other organizations founded the SBTi in 2015. It has recently drawn scrutiny from some state officials. On Aug. 4, 2025, Florida Attorney General James Uthmeier (R) launched an investigation into SBTi and CDP, alleging deceptive trade practices and antitrust violations. In November, 23 Republican attorneys general sent a letter to SBTi warning that its standards could violate federal and state antitrust and consumer protection laws. The group continues to update its standards as these inquiries proceed.
China drives global green-bond surge as Europe slows
What’s the story?
Global issuance of green bonds rose to approximately $72 billion in September 2025, nearly double the prior month’s total, reaching the highest monthly figure since June. Chinese issuers accounted for almost all of the increase, while issuance from firms based in Germany and France declined year-on-year. Green bonds are a subset of debt where proceeds are earmarked for environmental projects only, unlike broader ESG bonds, which may also include social or governance criteria.
Why does it matter?
This shift signals a changing geographic balance in the green finance market. With European issuance faltering and China accelerating, capital flows and investor attention may realign. For markets, the scarcity of new green bonds can tighten spreads (the so-called “greenium”) and increase competition among issuers.
What’s the background?
Green bonds are debt instruments whose proceeds are certified for environmentally-beneficial uses and governed by frameworks like the International Capital Market Association (ICMA) Green Bond Principles. Broader ESG bonds include green, social, sustainability and sustainability-linked categories. China reportedly issued a record $70.3 billion in green bonds in 2025, accounting for more than 17 % of global volume, while the U.S. accounted for about 3 %.