Today, the European Parliament successfully fended off efforts to reject the European Sustainability Reporting Standards (ESRS), a key legislative piece to ensure the effective application of the Corporate Sustainability Reporting Directive (CSRD) and the transitioning efforts in the context of the Green Deal. A majority of 359 Members of the Parliament voted against a motion to reject the ESRS and its replacement with an emptied and diluted piece of legislation.
“The cross-party support confirms how critical role transparency plays in the EU sustainability framework and in enabling sustainable finance to flow to climate transition. It is encouraging to see that MEPs trust the technical, multistakeholder process to develop the standards in EFRAG,” says Filip Gregor, head of Responsible Companies’ Team at Frank Bold.
The motion to reject the proposed standardisation of sustainability data was brought by a group of German EPP and Renew members of the Parliament, who ignored calls from financial market participants and other stakeholders outlining the need for sustainability information being promptly available in order to comply with other pieces of legislation. The support to the motion was provided primarily by ID and ECR groups.
Notably, a number of MEPs from the EPP did not support the group’s line of vote and the vast majority of Renew rejected the motion. The motion was based on the arguments that reporting translates into an overwhelming burden and that the standards are overly complex and extensive, which does not meet reality. In fact, only 0.2% of EU companies fall under the scope of this directive, and the implementation costs are estimated to range between 0.017% to 0.034% of companies' turnovers. In comparison to other reference standards, namely the new IFRS sustainability standards, the actual number of disclosure datapoints per standard is roughly the same.
By requesting the reduction of reporting standards, this initiative failed to consider the ratio of the legal piece. Sustainability reporting is already a business reality, and standardisation serves to simplify the process. Without standardisation, companies not publishing sustainability information would increasingly face demands from financial institutions to report it in multiple non-standardized ways, causing additional burden and uncertainty. The ESRS, by covering a wide range of ESG topics, provide enough legal certainty for different activities while creating a rich and comprehensive technical piece of legislation for jurisdictions worldwide.
After today’s session, the EU once again has emerged as a global leader in sustainable finance and corporate transparency, setting an aspiring high bar for other jurisdictions to follow. The set 1 of ESRS, which will apply from January 2024, provides a vital framework for transparency in climate and circular economy transition, human rights, and biodiversity. In light of the hottest summer on record and the crossing of six out of nine planetary boundaries, the Parliament confirmed today the EU's ambition of building a better economy that prioritises environmental respect and protection while ensuring social fairness.
Now and until the end of the scrutiny period the Delegated Act is still to be discussed in the Council of the EU.
In mid-December, the European Commission acknowledged a large part of the arguments put forward by the Czechia in an effort to prevent the expansion and continuation of illegal mining at the Turów mine in Poland, that endangers the sources of drinking water for thousands of people in the Liberec region and, according to new studies, has serious impacts on groundwater in Germany as well. Frank Bold's lawyers, who defend the interests of Czech citizens, have long been involved in the case.
The Frank Bold Society and the Neighbourhood Association Uhelná called on the Czech government today to be more consistent in its negotiations with Poland over mining at the Turów brown coal mine. According to both organisations, the government did not have enough information or time to prepare an agreement that would truly protect Czech interests. Moreover, the government has acted in a non-transparent manner by failing to inform the public in advance of the terms of the agreement being prepared, which should lead to the withdrawal of the action against Poland at the EU Court of Justice. The organisations have therefore drawn up a document with seven basic demands on which the Czech side should insist.
The European Commission recently introduced a draft of the revised EU ETS Directive which, among other things, proposes that 100 % of ETS revenues should be used for environmental measures. We welcome this idea but we’re also sceptical about how the ETS revenues are used in the Czech Republic. Therefore, we have prepared an analysis mapping the use of ETS revenues in Czech Republic and sent it to the European Commission as an input for the recent public consultation. The main conclusions are presented below.
