EU Friday – 5 July

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EU Friday

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The centre right EPP Group, which emerged as the largest parliamentary political group in the last elections, held its party convention in Portugal this week. The meeting allowed for strategic discussions on the new EU term, and for EPP members to agree on a set of proposals for the next Commission’s work programme. A leaked draft of the EPP’s “5-point plan for a strong Europe” places competitiveness at the heart of the EPP’s agenda and proposes that two thirds of the EU budget should be dedicated to it. Building upon Ursula von der Leyen’s 2023 commitment to reduce the reporting obligations of companies, the draft work plan also suggests to “halt implementation” of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), which were both adopted in the last mandate and have either already entered into force or are about to. Similarly, the EPP wants to postpone the implementation of the EU’s Deforestation Regulation (EUDR), which will ensure that companies do not place products that have contributed to deforestation on the EU market. The EUDR is scheduled to start being implemented by companies in 2025.


After weeks of hearsay and informal discussions, Hungarian Prime Minister Viktor Orbán (Fidesz), together with former Czech Prime Minister Andrej Babiš (ANO) and Austrian far-right leader Herbert Kickl (FPÖ), announced their intention to form a new political group in the European Parliament. The new populist alliance, called “Patriots for Europe”, will publish a “Patriotic Manifesto” in the coming weeks, which is expected to adopt a tough stance on migration, to oppose the Green Deal and the delivery of weapons to Ukraine, and to advocate for an overall reduction of EU competences. It will also likely propose reducing the size of the European Parliament. In order for “Patriots for Europe” to now become a parliamentary group, the coalition needs to find members in at least four more EU countries. Portugal’s far-right Chega has already announced it is keen to join the group, while Italy’s Lega, which currently seats in the Identity and Democracy (ID) group, is examining this scenario as well. Other delegations, such as the Dutch PVV, the German AfD or the Slovenian SDP, could be tempted to join as well. The creation of a new far-right group in Parliament could be a huge blow to the far-right ID Group – and especially its French member the Rassemblement National, which largely won the elections in France but would be completely marginalised in Brussels if ID is unable to retain a sufficient number of members in order not to collapse.


Long seen as simply crying wolf by environmentalists, the European Commission in a report published this week explains how climate-related risk in industries such as mining, manufacturing and electricity production could destabilise the financial system and lead to a potential systemic crisis. The study runs through the policy initiatives that have been taken to identify the “lower bound or floor estimate” for the impact of climate-related transition and physical risks on the financial system. It confirms that the long-term integration of sustainability drivers, on which the EU’s financial sector supervisors will later this year deliver a report, should be used to discuss “prudential risk-based measures in Pillar 1”. In plain English: the Commission should consider proposing that holding “green” assets should be made “cheaper” for financial institutions and holding “brown” assets more expensive. In less than a decade, the EU policy debate has moved from reporting (Pillar 3) to supervisory practise (Pillar 2) and now sustainability-risk based capital requirements (Pillar 1). Who would have thought that sustainability is not just about doing good, but also a major driver for financial performance of investments?