From Washington to Warsaw, a ‘greenlash’ is picking up steam despite extreme heat

In the wake of a U.S. crusade against mission-driven investments, signs of a green political backlash in Europe appear to be gathering pace.

State laws restricting the use of environmental, social and governance factors have swept across the U.S. in recent months, fomenting uncertainty for an increasing range of businesses.

In Florida, Republican Gov. Ron DeSantis signed a bill into law in early May that barred state and local officials from investing public money to promote ESG goals and prohibited municipalities from selling ESG bonds. “We do not want them engaged on these ideological joyrides,” DeSantis reportedly said at the time.

Analysts expect the outcome of next year’s U.S. presidential election to determine whether the political backlash against ESG will have a deep and lasting effect.

A pushback against climate policies is not just a U.S. issue. In Europe, indications of a green backlash — or “greenlash” — have started surfacing as businesses and citizens feel the costs of the energy transition.

Nathalie Tocci, director of Istituto Affari Internazionali, an Italian international relations think tank, told CNBC that the weaponization of climate issues from traditionally skeptical political parties was nothing new.

“This is really a story of the last couple of years, but I think it is really picking up steam now,” Tocci said.

Reprisals over climate policies come at a time of record-breaking extreme heat across the globe, with July poised to be the hottest month in human history.

It prompted U.N. chief António Guterres to signal, “The era of global warming has ended; the era of global boiling has arrived.”

In the U.K., London mayor Sadiq Khan’s push to expand a contentious Ultra Low Emission Zone policy across the entire city has sparked an economy vs. climate fight — as well as a green identity crisis among Britain’s major political parties.

Dutch farmers have been staging protests over stringent limits on nitrogen emissions, with the BBB or BoerBurgerBeweging (Farmer-Citizen Movement) party lashing out at what it sees as a policy that symbolizes “everything that is not going right” in the country.

In Poland, the conservative government recently filed four complaints against EU climate policies, calling them “authoritarian” and a potential threat to its energy security. Ruling party leader Jarosław Kaczyński described the bloc’s green policies as “madness” and akin to “green communism.”

French President Emmanuel Macron and Belgian Prime Minister Alexander De Croo have also called for a “regulatory pause” of Europe’s green legislation, saying that a period of “stability” is necessary to avoid losing momentum in the climate fight.

Anti-green parties could look to latch onto a burgeoning European greenlash in a bid to surge in the polls, with the Netherlands, Poland, the U.K. and European Parliament all due to hold elections over the next 18 months.

“At the moment, it looks like green parties are not doing going fantastically well. I think the challenge is going to be for those, like myself, who really believe in this agenda to reframe the issue,” Tocci said, citing U.S. President Joe Biden’s landmark Inflation Reduction Act as one example.

The IRA, which was signed into law last year, will funnel billions of dollars into programs designed to accelerate the country’s transition away from fossil fuels and battle the climate emergency.

“The IRA is called an IRA, it is not called a climate act because there’s no way that you could get Democrats and Republicans to agree on something called climate,” Tocci said.

“In the case of Europe, if you have this ‘greenlash’ that persists … the trick is going to be that of reframing this in terms of industrial policy.”

In the case of the Netherlands, the BBB is seeking to capitalize on Prime Minister Mark Rutte’s resignation by becoming one of country’s largest parties in the 150-seat parliament.

The pro-farmer’s party stunned Dutch politics in mid-March by winning provincial elections, shortly after more than 10,000 Dutch farmers rallied against government plans in The Hague.

The backlash follows a landmark court ruling in 2019, which said the Netherlands must reduce excess nitrogen levels. Some of the remedial measures include voluntary buy-out schemes and developing more sustainable farming methods.

Dutch farmers are up in arms over government plans, which they say will bring an end to many farms nationwide and hit food production.

The nitrogen crisis is “an example of what will happen with climate, because climate regulations and targets … will have much more consequences for the farmers than nitrogen,” Jan Willem Erisman, professor of environmental sustainability at Leiden University in the Netherlands, told CNBC by telephone.

“So, I think that solving the nitrogen problem is not enough, it is solving the climate problem — and nitrogen will be solved also,” he added.

Polish voters are expected to head to the ballot box in the fall. Polish Prime Minister Mateusz Morawiecki has criticized the EU’s “Fit for 55” climate law, saying Warsaw never supported the package and “one size does not fit all.”

Michal Hetmanski, head of Instrat, a Warsaw-based independent think tank, told CNBC that Poland’s government appeared to be determined to remain “a veto player” within the bloc on climate policies.

A spokesperson for Poland’s ruling Law and Justice party did not reply to a CNBC request for comment.

At the European parliamentary level, meanwhile, lawmakers are not expected to scale back on climate action ahead of elections next spring.

An overwhelming majority of European citizens recognize the climate emergency is a serious problem, and most agree that adapting to the adverse impacts of the crisis can have a positive outcome.

“It’s worth remembering that the EU has already committed to cut CO2 emissions by 55% by 2030 and achieve climate neutrality by 2050,” Arthur Carabia, director of ESG policy research at Morningstar Sustainalytics, told CNBC via email.

The EU’s “Fit for 55” law is designed to help the 27-nation bloc achieve its target of reducing net greenhouse gas emissions by at least 55% by 2030 and reach climate neutrality by 2050.

“While there is still a long way until May 2024, we don’t expect that the results of the upcoming EU elections will cause to the EU to deviate from this objective,” Carabia said.