MEPs call for human rights and environmental due diligence
The European Parliament (EP) Legal Affairs Committee approved (21 votes in favour, 1 against and 1 abstention) the draft legislative initiative report on human rights and environmental due diligence in the corporate supply chain drawn up by Lara Wolters (S&D, Netherlands) on 27 January.
The report indicates that the future European Commission’s (EC) Directive will have to require companies to monitor, identify, prevent, and remedy risks to human rights, the environment and governance in their operations and business relationships — including suppliers and sub-contractors. The scope of the future legislation should encompass large companies (including financial institutions), listed SMEs and high-risk SMEs.
The final vote is expected at the March plenary. The EC will present its proposal by June.
Summary of the stakeholder views on the upcoming renewed sustainable finance strategy
The EC’s summary report indicates that one of the challenges to mainstreaming sustainability in finance is the availability, comparability and quality of data on environment, social and governance. The EC is expected to publish its renewed sustainable finance strategy in the first half of 2021.
European Supervisory Authorities (ESAs) publish draft regulatory technical standards (RTS) on sustainability-related disclosures
The Joint Committee of the three ESAs (EBA, EIOPA and ESMA) delivered to the EC their final report, including the draft RTS, on the content, methodologies and presentation of disclosures under the EU Regulation on sustainability-related disclosures in the financial services sector (SFDR). The proposed RTS aim to strengthen protection for end-investors by improving environmental, social and governance (ESG) disclosures on the adverse impacts of investment decisions and on the sustainability features of a wide range of financial products. The EC is expected to endorse the RTS within three months.
Exchange of Views with the President of the Council (ECOFIN)
The EP Economic Affairs Committee held an exchange of views with Mr. Joao Leão, ECOFIN President and Portuguese Minister for Finance on 1 February. He presented the three main priorities for the Portuguese presidency on economic issues:
- relaunch the economy through the Recovery and Resiliency Fund and sustainable fiscal policies in the medium term
- strengthen the European Monetary Union and reduce the fragmentation in financial regulation
- address the challenges of green and digital transition, with a special focus on a renewed sustainable finance strategy
The EC adopts ‘do no significant harm’ technical guidance to protect the environment
The guidance was presented in the context of the Recovery and Resilience Facility (RRF). It aims to support Member States in ensuring that all investments and reforms to be financed by the RRF ‘do no significant harm’ to the EU’s environmental objectives, within the meaning set out in the Taxonomy Regulation. It outlines key principles and a two-step methodology for the assessment of ‘do no significant harm’ in the context of the RRF to facilitate the work of Member States in the preparation of their plans.
European Central Bank sets up climate change centre
The European Central Bank (ECB) has decided to set up a climate change centre to bring together the work on climate issues in different parts of the institution. This initiative demonstrates the growing relevance of this issue for the economy and the ECB’s policy, and the need for a more structured approach to strategic planning and coordination. The work areas of the centre will focus on: financial stability and prudential policy; macroeconomic analysis and monetary policy; financial market operations and risk; EU policy and financial regulation; and corporate sustainability.
UK joins the International Platform on sustainable finance
The EC welcomed the UK to the International Platform on Sustainable Finance (IPSF). The UK’s membership of IPSF will support the global commitment to greening financial systems, and mobilising finance for clean and resilient growth, and the aims of COP26.