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.
Dear Members of the European Parliament, In the next couple of weeks, various committees in the European Parliament will vote on their proposals to reform the EU Corporate Sustainability Reporting Directive (CSRD). In view of that, the co-signing organisations are calling for broadening the scope of the companies to be covered by the new rules by including all listed SMEs, as well as non-listed SMEs operating in high-risk sectors, subject to proportional rules.
In response to demands from investors and companies, the European Commission presented a proposal for a Corporate Sustainability Due Diligence Directive (CSDDD) in February 2022. The Directive is also a response to France, Germany and Norway adopting legislation on due diligence and attempts to harmonize and introduce one European standard of responsible business conduct.
After several months of delay, today, the European Commission presented its proposal for a Corporate Sustainability Due Diligence Directive in Brussels. The main objective of this new legislation is to integrate into European law international standards such as the UN Guiding Principles on Business and Human Rights - adopted globally over a decade ago - and standards developed and approved by the OECD.
