The European Union’s climate and governance agenda, once guided by the ambitious European Green Deal, is showing signs of strategic dilution. This study examines the organizational consequences of recent policy reversals, notably delays in the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). Grounded in institutional theory and critical policy analysis, it synthesizes findings from recent academic literature, policy documents, and market data to assess how shifting political priorities influence corporate environmental, social, and governance (ESG) engagement. The review identifies a pattern in which policy uncertainty fosters symbolic compliance, reduces ESG investment, and weakens internal alignment with sustainability objectives. These dynamics reflect a broader organizational tendency to mirror institutional instability, undermining long-term strategic transformation. The analysis concludes that durable sustainability outcomes require policy frameworks that remain consistent beyond electoral and economic cycles. Recommendations include embedding sustainability commitments into constitutional or statutory provisions, establishing independent oversight mechanisms, and ensuring strategic continuity in governance to protect against short-term political fluctuations.