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The Common Agricultural Policy (CAP) is the European Union's main instrument for agricultural planning, with a new reform approved for 2023–2027. The CAP intends to align with the European Green Deal (EGD), a set of policy initiatives underpinning sustainable development and climate neutrality in the European Union (EU), but several flaws cast doubts about the compatibility of the objectives of these 2 policies. We reviewed recent literature on the potential of CAP environmental objectives for integration with the EGD: protection of biodiversity, climate change mitigation and adaptation, and sustainable management of natural resources. The CAP lacks appropriate planning measures, furthering instead risks to biodiversity and ecosystem services driven by landscape and biotic homogenization. Funding allocation mechanisms are not tailored to mitigate agricultural emissions, decreasing the efficiency of climate mitigation actions. The legislation subsidies farmers making extensive use of synthetic inputs without adequately supporting organic production, hindering the transition toward sustainable practices. We recommend proper control mechanisms be introduced in CAP Strategic Plans from each member state to ensure the EU is set on a sustainable production and consumption path. These include proportional assignment of funds to each CAP objective, quantitative targets to set goals and evidence‐based interventions, and relevant indicators to facilitate effective monitoring of environmental performance. Both the CAP and the EGD should maintain ambitious environmental commitments in the face of crisis to avoid further degradation of the natural resources on which production systems stand. [ABSTRACT FROM AUTHOR]