The Czech government presented five key priorities it wants to focus on during the Presidency of the Council of the European Union, beginning on 1 July. The priorities include post-war reconstruction of Ukraine, energy security, strengthening European defence and cybersecurity, as well as the resilience of the European economy and of democratic institutions. However, according to Frank Bold experts, there is a lack of emphasis on the green transition - which is crucial for both energy security and economic resilience.
Energy security is one of the pressing issues for the Czech Republic, which is dependent on Russian gas and other fossil fuels. Despite increasing discussions on the need for greater use of renewable energy sources and steep reductions in greenhouse gas emissions, the topic is not sufficiently emphasised in the priorities for the Czech presidency.
"In the context of the already published European packages Fit for 55 and RePower EU, energy security means above all getting rid of dependence on fossil fuels and accelerating the massive development of renewable energy sources. This is where the Czech government has a long-term deficit in domestic policy. It has neglected the transposition of European energy legislation that would enable greater development of decentralised renewables and community energy. The government should work more in this direction at the European level," comments Laura Otýpková, lawyer at the Frank Bold expert group.
In addition to the green transformation, the issue of the EU's energy security is also closely linked to economic resilience, as high fossil energy prices have a major impact on companies that do not invest in energy saving and renewable energy. Another current economic issue is the disruption of supply chains. Companies that have well analysed their risks and vetted their suppliers are better off in the current situation. This good practice needs to be further developed through sustainability due diligence.
To increase the strategic resilience of the EU economy, companies and investors need clear and transparent sustainability data (ESG). Comparable data is necessary, among other things, to assess the extent to which companies are exposed to the risks associated with dependence on fossil fuels from Russia. The provision of such data is the aim of the Corporate Sustainability Reporting Directive (CSRD), which is being finalised these days in closing negotiations in Brussels, and the related EU sustainability reporting standards.
"Timely adoption of EU reporting standards is crucial to ensure that companies know what data to focus on and that investors have key information on energy consumption, greenhouse gas emissions, human capital and supply chain management, and hence on business resilience to crises. It is essential that companies have these standards in place as soon as possible and can report against them from 2024 at the latest," explains Filip Gregor, sustainability reporting expert at Frank Bold.
Another vital piece of economic resilience and guidance for companies is the Corporate Sustainability Due Diligence Directive (CSDDD). Its proposal was published by the European Commission in February this year and will be further discussed under the Czech Presidency.
If the due diligence system proposed by the Commission had been in place before the Russian war in Ukraine began, European firms would have been able to respond more flexibly and at a lower cost to the Russian aggression. European firms would also avoid the risk of directly supporting the Russian regime, as due diligence requires firms to screen risks and avoid engaging in particularly risky business relationships. By setting out clear rules, the CSDDD will also help to clarify the requirements for sustainable financing.
Clear support for the green transformation is also expressed by Czech business and a range of experts associated with the Change for the Better initiative. Its members also presented a joint position paper to the Czech government entitled: "Five things that would help progressive business during the Czech Presidency", mentioning, for example, the need to advance community energy and the timely adoption of EU standards for sustainability reporting.
This spring, the European Commission's ETIP SNET platform released a study on the impact of energy communities on the grid. The analysis was followed up in August by the major pan-European CIGRE conference, where study authors discussed their findings with energy experts, including scientists and grid operators. They concluded that well-structured energy communities could benefit the grid if supported by the regulatory framework and other market participants.
The study on the sustainability disclosures of 100 influential companies from high-impact sectors provides an early reflection on the general readiness for businesses in the EU to meet the expectations of the upcoming EU sustainability rules and standards. Our report contributes to identifying the main challenges, as well as to highlight emerging good practices.
Thanks to legal support from the Frank Bold expert group, the Czech Neighborhood Association Uhelná, which has been opposing the adverse effects of mining at the Polish Turów mine, has achieved a significant milestone: at their initiative, the Czech Environmental Inspectorate (CEI) launched an investigation to assess whether mining activities at Turów are causing long-term water loss on the Czech side of the border. This is one of the first cases in which the Czech office has applied the Act on the Prevention of Ecological Damage. The Inspectorate has also included the Polish mining company PGE in the proceedings.
