The following is a written account of various anecdotes that helped me better understand the differences between ESG (Environmental, Social, and Governance) in the US and Europe. It’s an attempt to explain how my viewpoint evolved from the typical argument—that ESG is a political issue in the US and a bureaucratic or tax issue in Europe—into a far more complex perspective.

For a long time, I took for granted the differences in how ESG is approached in the US and Europe. I always simplified my thinking, assuming ESG was a political matter in the US and a procedural one in Europe. I never delved into the nuances. However, several comments and conversations along the way prompted me to reflect more deeply on this issue, pushing me to develop a richer understanding rather than clinging to the typical, oversimplified view that aligns with common consensus. Preparing for the Palooza with a webinar titled “Europe and US Regulatory Update” gave me the perfect opportunity to step back, examine this topic, and strive for a more detailed grasp of the differences on both sides of the Atlantic.

About a year ago, I had a conversation with an ESG expert in Europe who concluded that ESG is a political issue in the US and a tax issue in Europe—echoing the prevailing consensus. It was an extremely simplified take, skimming the surface without digging into the core of the matter. If experts can view it so reductively, what hope is there for the average citizen?

The first time I truly examined the differences in ESG governance between these two continents was after watching a CRE webinar. During the Q&A, Debbie Nisson, a CRE member, commented on ESG regulations in the EU. She noted how much easier it would be to work in a country with such clear regulations and defined procedures, particularly praising the checklists in EU regulations and lamenting their absence in the US. These weren’t her exact words, but her point was clear and valid. My immediate reaction was twofold: I understood her admiration for the EU’s structure, but it was quickly overshadowed by concerns about the long-term implications. Having spent most of my career in Europe—many years in a communist country—fear of bureaucracy is ingrained in me. The communist regime of Yugoslavia ensured that. Add the EU’s bureaucratic tendencies, and my worries feel justified. While regulations are necessary—and EU regulations have proven their worth—there’s a risk of overregulation. Bureaucracy can dilute key issues, stifle growth and innovation, as we’ve seen in both the EU and the US, and eventually, it can collapse under its own weight. Where’s the line? When do regulations become excessive, and is overregulation better than none at all? When does bureaucracy become too much? Who decides?

Just a few days ago, I discussed with my business partner how to manage the growing web of regulations in Europe. It’s becoming a daunting task. We’ve reached the point where we might need to designate someone in the office solely to oversee compliance—it’s come to that. But perhaps that’s the price we all must pay. As a company, one must focus on fulfilling ESG requirements and also focusing on their core business, thus spending vast resources in time on the complexicity and interrelationship between the various regulations such as biodiversity, carbon tax, financial reporting, disclosures, greenwashing, etc.

A few months ago, I watched another webinar where, during the Q&A, someone asked who would drive ESG in Europe and which profession would lead the charge. The speaker’s response—lawyers and engineers—didn’t surprise me. Engineers leading the effort was expected, but lawyers in the mix might catch some off guard. Don’t misunderstand me—I work with lawyers, respect them, and have learned from them—but lawyers and engineers spearheading the fight for a sustainable world somewhat reinforces my concern about excessive bureaucracy in ESG. Is this the case on the other side of the ocean? I don’t think so.

Time has proved that it is not just the engineers and lawyers that are leading the charge, in addition to engineers and lawyers, accountants and investor relations personnel are also quickly becoming part of the professions “leading the charge.”

While preparing our SIG event for the CRE Palooza, titled “Europe and US Regulatory Update,” Daniele Horton, a CRE member presenting the US perspective, shared her slides with me. One slide featured these headings along with an explanation of each value:

• Protect value: conduct an energy audit and implement strategic energy management practices to control operating costs thereby preserving asset value in alignment with the pro forma for the asset over its hold period.
• Drive value: negotiate an energy procurement contract to lock in energy rates, make capital investments to make property located in a flood plain more resilient and thereby attractive to the next perspective buyer.
• Create value: get a green building certification that provides a third-party validation of the sustainable and high-performance features of a space, thereby supporting efforts to attract and retain tenants.

I’ll admit, I’m jealous. She gets to talk about value in sustainability, while I’m stuck discussing regulations and checklists. Life isn’t fair. We in Europe are further along with our regulations, no question, but we rarely focus enough on finding value in sustainability. Sometimes it feels like the profit aspect of sustainability has been sidelined. It’s in the EU regulations, but not in the conversation. Doesn’t it make sense today to discuss profits and values and weave them into the dialogue?

In the US there are some regulations, and they are growing at the state and local levels, but the majority of sustainability best practices are being adopted due to voluntary efforts and market forces, such as capital providers demanding more sustainable and resilient investments, rising prices of insurance premiums as well as questions of insurability due to persistent weather-related events, redefining class A office space as green certified and enhanced amenities that include daylight, health and wellness, and active spaces, etc.

While working on the Palooza presentation, I was also preparing a webinar, “ESG in Europe,” for the CRE European Chapter. Join us at the end of May to explore what’s happening across various EU regions—it’ll be worth it. During our preparations, two compelling viewpoints emerged. One side argued that the financial value of sustainability should drive ESG, while the other insisted that people are, and will continue to be, the driving force behind ESG’s future. Both sides have merit. Any investor will adopt a solution that boosts profit. If it’s sustainable, they’ll embrace it without hesitation—just look at how much wind energy Texas and Oklahoma use. The counterargument highlighted the Nordic states, which lead Europe in ESG results. Yes, geography may favor them, but they operate under the same regulations as the rest of Europe, yet outperform. The claim was that it’s rooted in their people—their history, awareness, and willingness to go the extra mile, embracing ESG not just as a legal obligation, but as a way of life.

One morning two months ago, while the wildfires were still ravaging LA, I woke up eager to check the news. As I watched, two striking facts appeared on screen: a 2000% surge in Google searches for wildfires and a 9% drop in searches for climate change. Do we realize these are connected? Another fact noted that over the past thirty years, the percentage of people who believe in climate change hasn’t risen—in fact, it’s dipped slightly by 1-2%.

So, is the grass greener on the other side? What began as a simple question no longer has a straightforward answer. It’s complicated. On one side of the ocean, we have strict, necessary regulations, especially in the early stages. But those same regulations can slow innovation and fuel bureaucracy. On the other side, we see a more market-driven approach, less encumbered by Europe’s heavy regulation. Yet, we also find value driving sustainability in unexpected places in the US, while in Europe, people can outshine regulations as a force for change. Meanwhile, a significant chunk of the global population remains skeptical. Whose fault is that? It’s always the profession’s fault. We need to better explain what ESG is and avoid getting swept up in the political storms that rage on both sides of the Atlantic.

What started as a regulatory issue on one side and a political one on the other has morphed into an intricate challenge demanding more from us than oversimplified takes. So, is the grass greener on the other side? We can’t deny it’s greener on one side—ours, perhaps—but we must ask: is it really all that green?

Consider the past two months. In the US, with a new administration, deregulation is in full fledge at the federal level. In Europe, ESG reporting regulations have been simplified to boost EU competitiveness, but at the cost of lower standards. In just two months, much has shifted—or rather, everything has. Watch our May webinar where we discussed what’s changed in the ESG world and how to navigate these turbulent times.