The war in Ukraine does not bury ESG, but rather reinforces it

The war in Ukraine shows clearly that Europe's current dependence on fossil fuels from Russia is a security threat and poses major economic risks. The way towards sustainability and security is to accelerate the transition towards renewable energy sources (RES). 

The Green Deal is absolutely crucial in this respect. The current situation is significantly accelerating the transition to renewables. In response to the war, Germany has already moved its target of 100% renewable energy supply five years ahead: the 2040 target has become the 2035 target, which for Germany means doubling wind energy capacity to 110 GW and tripling solar energy capacity. 

In the REPowerEU plan to reduce dependence on Russia, the European Commission also points to the importance of a faster transition to RES and emphasises the following:

• The importance of buildings' energy efficiency.
• Decarbonisation of European industry - accelerating the transition to RES and renewable hydrogen and strengthening low-carbon production capacities.
• Speeding up the authorisation of renewable projects and improvement of grid infrastructure.
• Doubling the EU's biomethane ambition to 35 bcm/year by 2030.
• Acceleration of renewable hydrogen capacities - increase imports by 10 million tonnes and additional production of 5 million tonnes of renewable hydrogen in the EU.

A key element of this accelerated transition is the need to significantly reduce overall energy consumption. This will translate into requirements for maximum energy efficiency, particularly in buildings, which account for 30% of total energy consumption.

In addition to the faster and more significant use of renewables and energy efficiency improvements, the current emphasis is on addressing the situation through the diversification of gas suppliers and the construction of new liquefied gas terminals. 

Full implementation of the Fit for 55 package would reduce our annual gas consumption by 30% by 2030, equivalent to 100 bcm. Thanks to the measures in the REPowerEU plan, we could gradually reduce our fossil gas consumption by at least 155 bcm, equivalent to the volume imported from Russia in 2021.

The ESG legislation timeline for companies remains unchanged

To ensure that finance flows to activities that actually contribute to the Green Deal, the EU needs companies to report reliable ESG data so that financial institutions can make informed decisions. This is to be ensured by the CSRD and the EU Taxonomy - a classification of sustainable activities. ESG investments are largely focused on renewable energy and therefore directed towards moving European companies away from dependence on fossil fuels and thus Russia. 

We now clearly see that fossil fuels energy prices will hit companies that do not invest in energy efficiency and renewables hard. By beginning to proactively address the sustainability transformation and focus on renewables, companies can prevent further risks and prepare themselves for inevitable changes in government policies.