As an ESG professional working with organizations across Europe and North America, I’ve seen firsthand how regulatory frameworks can accelerate or hinder climate progress. That’s why the European Commission’s proposed EU 2040 climate target caught my attention. It’s more than just another emissions goal—it’s a powerful signal of what the future of sustainability regulation and corporate responsibility will look like.

The proposed target? A 90% reduction in net greenhouse gas emissions by 2040, compared to 1990 levels. While it’s not yet legally binding, this goal aligns with the EU’s long-term commitment to become climate-neutral by 2050 under the European Climate Law. And it’s no coincidence that this milestone falls between the implementation of the European Green Deal and the deadlines associated with ESRS (European Sustainability Reporting Standards) and the CSRD (Corporate Sustainability Reporting Directive).

Why This Target Is a Game-Changer

The 2040 target builds on the EU’s current ambition of 55% emissions reduction by 2030. However, reaching the 90% mark in the following decade requires a massive acceleration in clean energy, sustainable industry, and supply chain transparency.

According to the European Commission’s Impact Assessment, reaching this goal would:

• Reduce fossil fuel imports by 80%

• Improve energy security across member states

• Decrease pollution-related deaths by 60%

• Create significant economic and social co-benefits

This makes the 2040 target not only an environmental necessity but a social and economic imperative.

The Business and ESG Implications

From an ESG (Environmental, Social, and Governance) perspective, this proposed target sets the tone for regulatory expectations in the years ahead. It pushes companies to:

• Reevaluate carbon strategies, especially Scope 3 emissions

• Embed net-zero roadmaps into corporate governance

• Align disclosures with EU regulations like the ESRS

• Prioritize green innovation across operations and supply chains

As the founder of CSE (Centre for Sustainability and Excellence), I’ve seen many companies struggle with these transitions. But those that invest now in ESG training, stakeholder engagement, and robust climate strategy are more likely to lead rather than follow in this transformation.

Global Lessons from the EU Approach

The EU’s leadership offers a valuable blueprint for other regions. In fact, many U.S. companies with operations in Europe are already adjusting to comply with CSRD and ESRS. The ripple effects are real. Policies like the Carbon Border Adjustment Mechanism (CBAM) are already creating incentives for global emissions accountability.

What’s more, the EU’s data-driven approach to climate governance—using science-based targets and transparent reporting frameworks—is setting new standards for ESG performance metrics globally.

What Organizations Must Do Now

To prepare for the next phase of climate policy and ESG alignment, I recommend companies take the following steps:

1. Conduct a double materiality assessment aligned with CSRD and ESRS.

2. Map Scope 1, 2, and 3 emissions, especially in high-impact sectors.

3. Train internal teams and boards on ESG and climate disclosure.

4. Invest in third-party ESG assurance to build credibility and investor trust.

And of course, staying up to date with evolving EU and international standards is crucial.

A Critical Decade Ahead

The next 15 years will define whether we succeed in keeping global warming below 1.5°C. The EU’s 2040 target is bold—but necessary. And while challenges remain, I remain optimistic that through collaboration, innovation, and accountability, we can meet this moment.

Let’s treat the 2040 target not as a far-off ambition, but as a roadmap for urgent action today.