The new European Commission took up office on 1 December having laid out a number of promises in order to get approval from the European Parliament. President Ursula von der Leyen has stated that her European Commission will be geopolitical, and not one to shy away from the challenges of today.
Her political guidelines focus on six headline ambitions for Europe:
- A European Green Deal
- An economy that works for people
- A Europe fit for the digital age
- Promoting the European way of life
- A stronger Europe in the world
- A new push for European democracy.
At first glance, no-one could disagree with these ambitions even though some of them are ambiguous. However, what really matters for business is what will underpin these ambitions. In order to get European Parliamentary approval for her Commission, von der Leyen focused more on the social, environmental, climate and consumer protection, somewhat to the detriment of the economic pillar.
Our attention will be turned to how Executive Vice-President Dombrovskis delivers an economy that works for the people. Increased pressure will be on to complete the Capital Markets Union, implement Basel III fully, ensure an effective cross-border payments system and explore the role of fintech and AI within financial services industries. The CBI will continue to engage in Europe to ensure the business voice gets through to decisions made by the European Commission.
EU agrees on sustainable finance taxonomy compromise text
After six trilogue discussions, the Commission, Council and Parliament have agreed a compromise position on the Regulation for a sustainable finance taxonomy. The Finnish Presidency will be pleased to claim this as a big win for their mandate as they get it over the line before their term ends on 31 December.
Critical compromises were made on the scope of the Regulation, exclusion of certain activities and the creation of two new categories of ‘transitioning’ and ‘enabling’ activities:
- Scope - The scope of the taxonomy will be extended to undertakings under the Non-Financial Disclosure Regulation and to all financial products, rather than only those marketed as sustainable
- Sectorial/technological exclusions – Solid fossil fuels will explicitly be excluded from the taxonomy. As for nuclear, it will depend on the “do no significant harm principle”, where the Commission is expected to come up with a definition of the principle in the coming months. As for gas and other technologies, it will be dependent on the screening criteria developed through the delegated acts, as negotiators agreed on a “technology neutral” approach
- Transitioning/Enabling activities - The Regulation introduces both “enabling” and “transition activities” to distinguish between activities that directly enable other activities to make a substantial contribution to improving environmental objectives and those that individually contribute substantially to climate change mitigation.
These new rules are expected to become binding from December 2021. We also expect a report from the Commission setting out how they plan to expand the scope to those activities that don’t necessarily cause a significant impact on environmental sustainability. They will also explore how to include social objectives within the taxonomy by December 2021.
For more information on these issues or to understand more about how the CBI works for members at EU level, please contact Megan Griffith-Otway.