The ESG Shift: How Legal Insight Shapes the Future of EU Research

As the European Union strengthens its sustainability agenda, the legal environment surrounding Research and Innovation funding is changing as we move forward. Horizon Europe, the EU’s most significant funding Programme for innovation, research, science, and technology, is no longer focused solely on cutting-edge development; projects are also expected to contribute to environmental protection, social inclusion, and ethical governance. ESG principles are no longer optional, they are fundamental.

This article aims to provide insights into the legal dimensions of EU-funded projects, offering an overview of the relevance of ESG frameworks and exploring how legal counsel can make an impact in unfamiliar scenarios, where legal consultants will hopefully play an important and decisive role.

Understanding EU-Funded Projects and the Legal Opportunity

In 1984, with Framework Programme 1 (FP1), the European Union started to encourage large-scale research and innovation through structured funding initiatives. Today, after 40 years of constantly promoting initiatives, the current Programme, Horizon Europe (2021–2027), allocates over €95 billion to science, technology, and sustainability-driven initiatives. These EU Initiatives have funded collaborative projects that bring together different kinds of entities, like universities, SMEs, NGOs, public authorities, research institutes, and corporations from across EU Member States and associated countries.

The projects are carried out by a temporary consortium under a major contractual umbrella, known as the Grant Agreement, a legally binding document signed between all the beneficiaries involved and the European Commission. For over 2 to 5 years, participants implement a well-structured plan divided into “Work Packages” with defined objectives, tasks and deliverables. All projects must comply with strict legal and financial rules and are subject to periodic audits and reviews.

While technical and research experts typically lead the project and most of its activities, legal professionals have been underrepresented, not knowing that lawyers can indeed contribute at multiple levels, for example, in roles as In-house Consultants for participating institutions as specialists in topics such as EU compliance, contracts, and policy. The legal counsel’s contributions can be of

great value in topics such as contract negotiation, intellectual property protection, regulatory compliance (e.g., GDPR, REACH), and increasingly, the integration of Environmental, Social, and Governance (ESG) principles.

The Legal Foundations of ESG in EU Research

Although ESG was originally developed in the investment sector, it has now been integrated across major EU policies and legislative instruments. These frameworks are transforming how publicly funded research is expected to operate:

- EU Taxonomy Regulation (Regulation (EU) 2020/852): Adopted in June 2020, it provides a legally binding classification system to determine whether an economic activity is environmentally sustainable. It legally influences how sustainability claims must be justified in EU-funded projects, particularly those contributing to climate or green innovation goals.

- Corporate Sustainability Reporting Directive (CSRD): The CSRD introduces mandatory ESG disclosures for participating entities, including large companies, listed SMEs, and eventually non-EU companies with EU operations. While many beneficiaries of EU funding are not yet directly subject, this directive is setting the future standard for transparency and ESG reporting, which all consortium participants should begin preparing for now.

- General Data Protection Regulation (GDPR): This regulation is legally binding for participants and is directly applicable to all EU-funded projects. GDPR ensures the lawful handling of personal data, a key aspect in health, AI, or social research projects.

- Green Deal & Horizon Europe Missions: These important policy agendas frame the EU’s sustainability and innovation goals. Projects aligned with Green Deal objectives, such as climate neutrality, biodiversity, or circularity, are required to embed ESG-related outcomes from the proposal stage.

- Corporate Sustainability Due Diligence Directive (CSDDD): This recently adopted directive introduces legal obligations for companies to assess and mitigate human rights and environmental risks in their supply chains. Its principles, risk mapping, grievance mechanisms, and stakeholder engagement are increasingly seen as best practices for project governance, even in research environments. Legal counsel should view the CSDDD not only as future law but as a blueprint for proactive ESG integration in EU-funded projects.

Together, these instruments reflect a clear policy shift: ESG is no longer a voluntary add-on but a legal and strategic foundation for publicly funded research. For EU project participants, and especially legal advisors, understanding and applying these frameworks is essential to ensure compliance, strengthen project credibility, and align with the EU’s evolving expectations for responsible innovation.

Strategic Legal Roles Across the EU Project Lifecycle

As previously mentioned, most EU-funded projects are conceived and led by technical experts, legal insight could play a crucial role at every stage, from proposal drafting to post-project exploitation. Legal professionals could contribute most effectively to four key areas:

1. Proposal Stage: From the outset, legal advisors add value by helping project proposals align with EU sustainability rules, such as those under the Taxonomy Regulation (Regulation (EU) 2020/852). Law professionals could also support the inclusion of equity and diversity measures required by Horizon Europe and help design solid governance elements like ethics oversight or GDPR-compliant data handling.

2. Work Package Planning: Once a project is approved for funding, legal advisors can help ensure ESG is not treated as a separate box to tick but built into the project’s overall structure. From impact strategy to ethical oversight, lawyers’ input is key to setting up internal procedures that meet both EU and national legal requirements, reinforcing accountability and compliance from the start.

3. Monitoring and Deliverables: Legal input is most relevant when projects produce deliverables specifically tied to regulation, data protection, IPR, or ethics, not technical results. In these cases, legal professionals ensure alignment with EU law, ESG frameworks, and, of course, the Grant Agreement’s obligations. Since all deliverables written within the development of the project may be reviewed by project officers, auditors or even OLAF, legal review helps protect the project’s credibility and ensures its legal and ethical obligations are properly addressed.

4. Impact Monitoring: Legal professionals also play a crucial role in tracking and reporting project results, particularly when ESG-related indicators, such as emissions reduction or gender balance, are involved. Legal guidance helps ensure that reporting aligns with EU rules and emerging frameworks like the CSRD.

   After the project ends, legal responsibilities continue. This includes managing IPR, ensuring exploitation strategies are sound, and setting clear terms for how results are shared or commercialized. Solid legal groundwork at this stage helps protect the project’s legacy and long-term value.

   
   

Examples of ESG in Legal Practice Within EU Projects

In my professional experience, legal and regulatory support has played an increasingly important role in several EU-funded projects where I have contributed, particularly where ESG considerations were central. For example:

•C-Servers (Circular Electronics): Governance tools for electronics reuse and IP alignment were developed in the context of extended producer responsibility frameworks.

•REMADYL (Plastic Decontamination): Legal deliverables included a public Policy Brief on regulatory challenges around recycled PVC, which will contribute to discussions on future EU standards.

•OLEAF4VALUE (Valorizing Agricultural Residues): Legal and ethical input supported compliance in sustainability assessments and beneficiary mapping.

These cases demonstrate how legal professionals can move beyond advisory roles to actively support the integration of ESG principles in project governance, policy alignment, and long-term impact planning.

Expanding Beyond Borders: How Non-EU Entities Can Participate

Although Horizon Europe and similar EU funding programmers are primarily designed for organizations established in EU Member States, many non-EU countries are actively involved, some through formal association agreements (such as Norway, Switzerland, and several Western Balkan nations).

Beyond these associated countries, entities from Latin America, Asia, Africa, and North America can join consortia as international partners, particularly when their expertise aligns with the project’s interests and the EU’s ESG-driven priorities.

Becoming familiar with the legal framework is the first step, especially for legal professionals and companies outside the EU, where this represents a strategic opportunity. Legal advisors with cross-border project experience can help navigate the complexities and open doors to meaningful participation.

Final Reflections: ESG as a Legal Discipline in the Making

For legal practitioners involved in EU-funded projects, ESG is no longer a residual concern, it is evolving into a legal discipline in its own right. It sits at the intersection of regulatory compliance, governance, ethics, and strategic foresight. As environmental and social obligations become embedded in EU funding frameworks, early legal integration can do more than prevent risk: it can drive innovation that is not only lawful but lasting.

Lawyers who understand how to navigate ESG within the EU research landscape can help consortia anticipate regulatory changes, prepare for audits, and design project outcomes with long-term legal durability. Whether supporting proposal development, risk management, or exploitation planning, their role is becoming central, not just for compliance, but for credible, high-impact delivery.

The demand for this expertise will only grow. For the legal community, this represents more than a trend, it’s an invitation to lead. The question is no longer if legal expertise belongs in EU research and innovation, but how far it can go.

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