Welcome to Better Europe’s weekly update on EU Affairs.
ALL I WANT FOR CHRISTMAS IS EU INC.
It’s going to be tight, to deliver on von der Leyen’s promise made in Davos in January this year, that Europe would have an “EU Inc.” company law regime by the end of the year. It is not that the Irish Presidency is not trying hard — four meetings since the summer, two compromise texts, and a plan to start negotiations with the Parliament in November. A few weeks ago, Parliament lead negotiator René Repasi said that that timetable is ‘pretty ambitious’, given that MEPs are clearly unsatisfied with the Commission proposal. And indeed, Parliament decided to postpone its vote earlier this week. Meanwhile, Member States are fighting over what they are prepared to harmonise. For the largest member states, common employee stock option rules are the raison d’être of the proposal. But fourteen others are prepared to sink the whole proposal as it would impact their tax sovereignty. Even if all of that makes it hard to imagine a deal before the end of the year, we already know who will end up as turkeys for Christmas: Europe’s notaries, who in an op-ed warn that an EU Inc. founded in 48 hours with an online signature would create a “European Delaware” of letterbox companies, money laundering and sanctions evasion. Bon appétit.
SFDR 2.0: FROM ESG BASICS TO ESG TRASHCAN
The Parliament is ready for the sustainable finance confrontation of the year: the review of the Sustainable Finance Disclosure Regulation. Say again? Well, basically it’s the set of rules that determine whether a financial investment product is a little bit green (Article 8), a bit darker green (Article 9), or not green at all (Article 6), and how to disclose that to investors. The traffic light idea didn’t really work, or, to use the words of the Parliament’s former rapporteur, it was “institutionalised greenwashing”. So the Commission proposed to move to a new system with three publicly-endorsed labels: Sustainable, Transition, and ESG Basics. Of course, funds want to get the best label they can, so the definition of “sustainable” will be essential. With trilogues starting in two weeks, the Irish Presidency tried to be helpful and made a list of “technical” and “political” topics. Technical: human rights exclusions. Political: the inclusion of oil and gas companies in “sustainable” and “transition” funds. The Council thinks that’s fine, as long as at least 20% of their capital expenditure is green. Other funds can still be called “ESG Basics”, but without disclosing fossil fuel exposures, that label could end up being an ESG Trashcan. Institutionalised? Very much. Greenwashing? To be continued.
HOW MADRID COULD END THE EU GRAND COALITION
Spain has been the last stronghold of the social-democrats in Europe for a while: Pedro Sanchez is their longest-serving government leader, and his comrade Teresa Ribera the only S&D Commission Executive Vice-President. Until now, that arrangement kept MEP Iratxe Garcia, the Spanish leader of the S&D group in Parliament, from challenging von der Leyen’s leadership of the Commission. But with Sanchez on the way out in new elections on 29 November following the eviction and death of Maricarmen Abascal, the cards will be reshuffled. The S&D might even be considering opposition mode. Perhaps not a bad idea: current polls project the group at 118 MEPs in the 2029 elections, far below the current tally of 136. The timing helps: Parliament’s mid-term reshuffle of key posts, including its President, happens shortly after the Spanish elections, and frustration over the EPP claiming a third half-term for President Metsola is building up. But if the Socialists refuse to turn the other cheek, Europe would end up in uncharted territory if the Commission counts on far-right endorsement in Parliament. If anyone in Brussels is still writing a Christmas list: a new red government in Madrid would help.