France’s EU Council presidency priorities
A focus on sustainable finance
The French Presidency has already set its main ambitions for the current term in a program titled “Recovery, Strength and a Sense of Belonging”. The program establishes three main horizontal ambitions for the French Presidency: strengthening Europe’s sovereignty, consolidating a new European model for growth, and building a more humane Europe.
The plan seeks to give continuity to the achievements of the Slovenian Presidency and to turn Europe into a “land of production, job creation, innovation, and technological excellence” where economic recovery is reconciled and dependent upon the achievement of the green and digital transitions. France’s EU Council Presidency will probably have an impact on the French elections, scheduled on 10 and 24 April, and in which president Macron has yet to confirm his candidacy.
1. A zoom into the CSRD and taxonomy proposals:
Under the headline “Building a Responsible, Sustainable Capitalism” the French Presidency aims to achieve significant progress on several dossiers, but mainly in the Fit for 55 package and the Sustainable Finance Strategy, which will be the cornerstones of the French Presidency´s climate agenda. The CSRD proposal has raised quite a lot of interest, reaching a breathtaking number of 600 amendments to the original text at the European Parliament. Some of the most relevant amendments include changes in the scope of the proposal (now extended to non-EU companies and medium companies in high-risk sectors, concept to be further specified by the European Commission), the new obligation to report in AI readable formats, and the introduction of new obligations such as separating the reports of parent and subsidiary companies, recruiting different consultancies for the auditing of sustainable and financial data, or including information not only on sustainability matters but also in human and labor rights. It is also worth mentioning the request put forward by the European Parliament to postpone the entry into force of the CSRD by a year. Finally, the proposal coming forward faces extra pressure as the US and China are also working on their own approaches and a delay will mean the EU will lose its competitive advantage in standard-setting and would then be subject to third countries’ frameworks.
The second star of the season, the EU Taxonomy, when finalized, will have great implications for the energy industry. Amongst the many challenges, companies will have to invest in transforming data, operational, and reporting systems to comply with new sustainable regulations. Additionally, there will be no “one-size-fits-all” to perform taxonomy screening in companies (every case will be assessed individually) for which companies might not have sufficient time or human capital to manually perform the screening requested by the taxonomy.
On the side, the European Commission is currently working on a complementary climate delegated act to address sustainable investment, where once and for all it will decide the fate of nuclear energy and gas. This issue was surrounded by great controversy as some voices raised concerns about the inclusion of ‘non-sustainable’ energy sources in the taxonomy while others have advocated that it is crucial to enable transitional energy mixes. The French Presidency is of that view, making it crystal clear that “nuclear energy is vital” for Europe´s energetic future. In that regard, on January 21, the Platform on Sustainable Finance presented their final contributions, the key to the final outcome of the commission´s proposal.
2. Final comment – Are the priorities too ambitious?
Together with the many green ambitions, the French Presidency has set a very long list of items on its agenda in fields such as competitiveness, research, innovation, and education. Some journals have gone so far as to rename the program as “the never-ending list of issues” and have called into question whether the word “priority” has been abused by the current Presidency. They do have a point, for as much as the agenda should be ambitious, it will, nonetheless, be the circumstances under the current Covid-19 recovery that will set the pace of the legislative and economic activity of 2022. However, what we can surely expect is a push of the green and digital agendas with a great emphasis on regaining Europe´s sovereignty.
Marta Inchausti, Consultant at Vinces