In his political guidelines for the new EU Commission, President Juncker pledged to create a European Capital Markets Union (CMU) to increase non-bank financing of the European economy and further integrate capital markets. In this context, the EU Commission launched a public consultation in February 2015.
Frank Bold submitted a response to the consultation and prepared an accompanying paper outlining the recommendations sent to the EU Commission on the guiding principles of a proper functioning CMU.
Frank Bold has stated that financing through capital markets is not appropriate for most private companies, especially SMEs, which will continue to be primarily financed through relationship-based bank lending. Private companies are often rightly concerned about listing due to the risk of pressure from capital markets. Therefore, Frank Bold recommends clarifications to the role of investors in corporate governance and the protection of corporate purpose.
More broadly, future policy should integrate sustainability and corporate responsibility into its central priorities. We highlight necessary changes to insolvency, company and tax laws for the development of a strong, stable and equitable pan-European financial market.
Our response includes the following recommendations:
The next phase will be this summer when the EU's financial services commissioner, Jonathan Hill, will adopt an Action Plan establishing the roadmap to put in place the building blocks for CMU by 2019.
If you are interested to know more about Frank Bold's recommendations to promote sustainable financing of European companies you can read the accompanying paper to the CMU public consultation Written by Paige Morrow, head of Frank Bold Brussels Operations and responsible for the Purpose of the Corporation Project.
By the end of July, the European Commission is expected to adopt its first set of sustainability reporting standards (ESRS). The standards will impact 50,000 European companies and thousands international corporate groups. As part of the EU Corporate Sustainability Directive (CSRD) ecosystem, they will require large companies to report information on their sustainability impacts on people and planet as well as their sustainability-related risks and opportunities.
Last Friday, the European Commission published for public consultation a draft Delegated Act on the first set of European Sustainability Reporting Standards. NGOs, civil society groups and investors associations are very concerned with the significant reduction of the ambition compared to EFRAG’s technical advice and urge the Commission to introduce a robust, mandatory and consistent reporting framework and to not allow greenwashing.
The Committee on Legal Affairs of the European Parliament adopts improvements on the Corporate Sustainability Due Diligence Directive.
