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Welcome home. This is a big week in Brussels and there are new details about what the Commission aims to breathe fresh life into the EU economy. Decarbonization remains central to that strategy, but plans to reduce green and social disclosure rules show that Brussels’ passion for sustainability has severe limitations.
Have a great weekend.
European climate policy
The EU sends mixed signals about dedication to climate goals
“We haven’t left our targets for the Green Deal,” European Commission Vice President Bardis Dombrovskis told reporters Wednesday. “They remain very appropriate.”
Dombrovskis was one of six Supreme Committee officials who met with the press to provide variations on the same theme, as he published a major package of green and industrial policy announcements. The EU’s administrative sector claimed it had been pushing to accelerate economic growth and ullify unnecessary bureaucracy without sacrificing ambitious climate goals.
But in reality, this week’s package is a very mixed bag, with some promising measures and some clear compromises on sustainability pursuing growth.
There have been many cases of policy documents on clean industry contracts at the centre of the second term of the Ursula von der Reyen Committee, which aims to create new incentives for low-carbon investment.
One important measure published is the expanded provisions of guarantees through the European Investment Bank. This is a risky investment in the manufacture of renewable energy and electrical grid components.
Another recommended in last year’s major report by Italian Prime Minister Mario Draghi is the reforms targeted by the regulations on state aid, making it easier for member state governments to support low-carbon investments in countries. The committee also announced plans to launch a new industrial decarbonisation bank with a funding target of 100 million euros.
This week’s policy package was drawn in a major report by former Italian Prime Minister Mario Draghi©pur/AFP.
All these measures should create new opportunities for green-oriented investors in Europe. However, these same investors got less welcome news in the form of restrictions on rolling out another document on corporate sustainability disclosure. This reduces the data available for corporate environmental and social risks.
The biggest casualty here was the corporate sustainability due diligence directive, which was passed to the law only in July last year. The law promised to be a game-changer in the company’s approach to human rights and environmental issues in the supply chain, requiring direct or indirect supplier violations to be identified and addressed, and imposed serious penalties for non-compliance.
Under the committee’s proposal this week, CSDDD will be hacked badly. EU companies mostly need to track practices only among direct suppliers, not among their expanded supply chains. They should perform a supervisory assessment only once every five years, not every year. And in most cases, they will no longer face legal liability for the abuse of their suppliers.
There have also been significant changes in the corporate sustainability reporting directive, under which companies must submit reports on environmental and social risks and impacts. A company should only do this if it has more than 1,000 employees and at least 25 million euros of revenue or assets in revenue or 20,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000, Previously, the company ranged from companies with only 250 employees. The committee said this would reduce the number of reporting companies at 80% under the CSRD, covering its most important carbon emissions.
It is not certain that these changes will be implemented. They still need to be approved by the European Parliament and member state governments. The Commission may have the point that sustainability regulations place a severe burden on small EU businesses and threaten business trust when the US is conducting a deregulation blaze.
But the hasty cuts of the law have recently passed, and even slammed the contradiction that it has not yet been fully implemented. As for all the commissioners’ stories of twins focusing on economic growth and sustainability, it’s clear which of the two will prioritize when they face conflict.
Smart Lead
Lawrence Tubiana says both EUs should reject “fake trade-offs” between security and climate goals. (Project Syndicate)
The UK startup, backed by former shareholders of the collapsed British Bolt, is partnering with Chinese suppliers to build a battery factory for electric vehicles.
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