Welcome to Better Europe’s weekly update on EU Affairs.
MEPS ACCEPT COMMISSION PROPOSAL TO DELAY SUSTAINABILITY REPORTING
Sustainability reporting was high on the agenda of the European Parliament’s Committee on Legal Affairs this week, as it voted on the delay of sector-specific reporting standards and also discussed the 2024 Work Programme of the European Financial Reporting Advisory Group (EFRAG), who are currently providing technical advice to the Commission on the standards. MEPs agreed to accept the Commission proposal to delay by two years the adoption of sector-specific sustainability reporting standards, which is now envisaged for 2026. This vote is consistent with the Commission’s highly political push to reduce specific reporting obligations for EU companies in attempt to fight administrative burden. While MEPs accept the delay, they do suggest that the Commission publishes any reporting standards for sectors most crucial to the green transition as soon as they are ready, ahead of the formal 2026 deadline. This aligns to EFRAG’s ambition to finish a first set of sectoral standards for high-priority sectors in 2025.
TEN THINGS TO WATCH THIS YEAR ACCORDING TO PARLIAMENT RESEARCH SERVICE
This week, the European Parliament Research Service (EPRS) presented a report on ten issues to watch in 2024. The first group of topics relates to international political developments with a focus on Ukraine (financing its reconstruction and prosecution of war crimes) and how the elections in the US and in India will impact Europe. In the field of climate change, the report discusses the need to turn to adaptation policies as the recent IPCC findings warn that we are likely to exceed 1.5°C, and how the El Niño effect exacerbates the situation. Finally, the report looks inwards at the European Union, discussing the future of the EU automotive sector, with a focus on affordability and access to raw materials, and the 2024 EU elections, where the report notes the trend to allow voters younger than 18 in Belgium, Germany, Malta, Austria, and Greece.
EUROPEAN CENTRAL BANKER WARNS BANK PORTFOLIOS REMAIN OFF-TRACK FOR PARIS
Supervisors continue to urge banks to better understand climate and wider sustainability risks, with European Central Bank Executive Board Member Frank Elderson warning that scientific evidence (above) shows we are heading for a path of 3°C. In a blog appropriately titled “Failing to plan is planning to fail”, he suggests banks need to rapidly develop transition planning as 90% of 95 banks studied in an ECB analysis have credit portfolios that are substantially misaligned with the Paris objectives. Most of these risks stem from exposures to companies in the energy sector lagging behind in the transition and failing to invest in renewables, he adds. At the international level, the Financial Stability Board in its 2024 work programme warns that the vulnerability of the global financial system continues to be elevated in the short term due to high interest rates and an uncertain growth outlook, while in the long run threats arise from climate change, cyber and crypto-asset markets.