Welcome to Better Europe’s weekly update on EU Affairs.
NEW YEAR, NEW LEADERSHIP: POLAND TAKES THE HELM OF THE EU FOR THE FIRST HALF OF 2025
As the year 2025 begins, Poland takes over the Presidency of the European Union for the second time history. To mark the occasion, a grand gala was held at Warsaw’s National Theatre, where Prime Minister Donald Tusk called for a united Europe, emphasising that the continent’s future is inextricably linked to its strength and sovereignty. Poland’s Presidency comes at a critical time, with the ongoing war in Ukraine, escalating tensions at the Polish-Belarusian border, and Europe’s broader security concerns. With a focus on defence and European stability, Poland plans to increase EU efforts to support Ukraine and address the growing security threats. Tusk framed Poland as a “pro-European” nation committed to safeguarding European values and strengthening the Union’s strategic position on the global stage. Poland’s Presidency also coincides with significant shifts in global geopolitics, including the upcoming inauguration of Donald Trump, who will return as US President on 20 January. Trump’s rhetoric on Europe and NATO has already sparked debate, and Poland’s role in preserving EU unity and strengthening the bloc’s position in the face of these new challenges will be put to the test, as the coming months promise to be both challenging and transformative.
GREEN TAXONOMY TO BE EXPANDED IN LINE WITH EU INDUSTRIAL INTERESTS
One of the complaints often made about the Taxonomy Regulation is that its scope is limited due to its binary nature (“What is green and what is not” as Commission VP Dombrovskis dubbed it). While the further expansion of transition activities effectively creates a middle category of contributing but not dark green activities, an exhaustive list of what is “good” by definition limits the “investment universe” for an investor who wants to align their assets or products to the EU’s green finance bible. So it’s no surprise that the taxonomy keeps expanding, with the first major review to be undertaken this year, three years after the first standards went live. In a consultation, the Platform on Sustainable Finance is suggesting several new activities to be covered, as well as a reclibration of the technical screening criteria for existing activities. The report also confirms that that companies have again massively been pleading with the Platform to include their activity, as incentives to qualify will only increase and so it’s important to be part of the standard. And in line with geoplitical and EU legislative developments, it’s not a surprise that the refining and mining of critical raw materials that substantially contribute to climate change mitigation, are on the list of activities to be added.
COMPANIES MORE AMBITIOUS ON SUSTAINABILITY DISCLOSURES THAN EU MEMBER STATES
As Brussels holds its breath for the “Omnibus Regulation” on sustainability disclosures including potential measures weakening due diligence rules, French industry has come out in favour of maintaining the status quo, saying they have made significant progress to align with the rules already and that a slow-down would foster “a culture of delay”. The move is interesting as the Franch government is understood to be supportive of a German push to reduce the data reporting requirements, the number of companies covered, and push back application by two years. The national German position was last confirmed in a letter sent by four cross-party German Ministers just before the holidays, and seems to have also influenced the European Investment Bank, the “Member States’ bank”, who join the call to postpone sustainable finance disclosure rules, in this case the ones required under the Taxonomy Regulation. The EIB in particular fears a “reputational disaster” as disclosing its Green Asset Ratio of “around 1 per cent” will make the bank look a bit meagre compared to its current internal metric, the “Climate Action ratio”, which scores a nice 50 per cent. Of course, the data that the EIB would need to collect the GAR would also be an “excessive” reporting burden for Europe’s poor SMEs. Bien étonnés de se trouver ensemble !