Welcome to Better Europe’s weekly update on EU Affairs.
COP30 SHOWS DIVIDED EU CLIMATE FRONT
Halfway through COP30 in Belém, the EU is failing to live up to its reputation as a climate leader. While 82 countries called for a roadmap to phase out fossil fuels, the EU didn’t sign due to opposition from a few reluctant member states. Germany and Denmark individually backed the demand, showing the internal fractures. At the same time, a lack of finance is hindering progress. Developing countries are insisting that the Global North must provide predictable and accessible funding and recognise its historic responsibility. Negotiators warn that no significant agreement will be reached without progress on financing. Trade tensions add another layer to the situation. At the heart of this dispute? The EU’s Carbon Border Adjustment Mechanism (currently being omnibused!), with emerging economies accusing Europe of using climate policy to protect its market. EU officials argue that the measure is necessary to prevent carbon leakage and raise global ambition. With just days to go in Brazil, the prospect of a diplomatic breakthrough is looking increasingly unlikely, and the outcome could be even more disappointing.
EUROPE’S DEMOCRACY MOMENT?
This week, Brussels hosted the first EU Parliamentary Democracy Forum, which brought together national MPs, MEPs and civil society groups to discuss ways of defending Europe’s democratic systems amid rising polarisation, disinformation and declining trust. Guest star and Nobel Prize laureate Maria Ressa opened the event by issuing a stark warning that democracies cannot afford to be complacent in the face of digital manipulation. Very timely, given the publication of the Digital Omnibus this week, which completely undoes EU’s digital safeguards as “training AI” becomes a legitimate use of our private data. The discussions in the Parliament came just days after the Commission unveiled its new European Democracy Shield proposal, which was referenced repeatedly throughout the event. The initiative promises stronger protection against election interference and hybrid threats, but reactions are cautious. Critics argue that the Shield risks becoming just another EU buzzword: ambitious in its language but vague in its enforcement and potentially contradicting civic freedoms under the guise of ‘security’. The lesson is that instead of grand speeches and new labels, we need something far less glamorous: clear rules, accountability, and the political courage to enforce them. In other words, a real strategy, not just a slogan.
COMMISSION KILLS FINANCIAL SECTOR DUE DILIGENCE
Inclusion of the financial industry in the EU’s due diligence directive? It was on the table in 2022, then became a review clause in 2024, and when the trilogue negotiations end in a month from now, even that review clause is scheduled to be deleted. Inclusion of the financial industry in the EU Deforestation Regulation? Review clause, so don’t expect too much of it. But wait, weren’t investment product manufacturers required to disclose their sustainability due diligence thanks to the Sustainable Finance Disclosure Regulation adopted in 2019? Yes, and now that’s out of the window too, if the Commission proposal presented this week sails along as planned. Rebranded as “entity level disclosures”, the Commission argues that a hedge fund is the same as a cookie factory: only companies with more than 1000 staff should disclose their due diligence policy, under the general corporate due diligence rules post-Omnibus. In other words: large parts of the financial sector will be fully excluded from any sustainability due diligence rules. More broadly, this “simplification” of thresholds based on U.S.-inspired headcounts throws the concept of proportionality, one of the last concepts of Better Regulation, out of the window. It confirms the trend to introduce extremely generous de minimis thresholds throughout EU legislation, as if the financing of deforestation or fossil fuel is OK as long it is done by a cute little mom-and-pop SME hedge fund with 999 staff and billions of assets under management.