Amidst growing concerns about the impact of agriculture on the environment, the Common Agricultural Policy (CAP) has been overhauled to prioritize sustainable rural development in European agriculture. Based on this line of thought, the present contribution delves into the details of the CAP’s shift, focusing on the main environmental concerns faced in the policy-making framework. Grounded in a political science perspective, the current study looks at how environmental and climate change concerns were gradually elevated inside the CAP’s policy-making framework and how they helped create the “green architecture” for European agriculture. Examining the process of policy change under the lens of historical institutionalism and neo-institutionalism within the multilevel governance framework of the European Union (EU), the key role played by the gradual introduction of measures aimed at promoting measurable environmental criteria and climatic targets is highlighted. For instance, measures aimed at preserving carbon-rich soils and enhancing water resources can have positive impacts on the environment. However, these measures were also recognized to increase the cost of production for the European farmers, who faced serious difficulties in adjusting to the new framework. Within this context, this research delves into the roles played by two additional fundamental entities: the consumer and environmental activism. Additionally, the study underscores the EU’s commitment to addressing climate change and sustainable development challenges and how conditionality is being used to link funding to results. Upon analyzing the CAP’s shift, the reflection of a more flexible and rational approach is argued to be embodied by the new policy architecture. By incorporating both CAP pillars, encouraging collaboration with compatible policies, and allowing for greater adaptability in response to the unique circumstances and objectives of each member state, the CAP is taking significant steps towards sustainability and climate action. These insights into the significance and implications of the CAP’s shift towards sustainability offer valuable recommendations for future policy developments, emphasizing the need to balance environmental concerns with the needs of farmers and other stakeholders.