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In Brief: German ministers oppose EU CSDDD; Polish energy giant Enea sued for lack of due diligence

The latest ESG policy and regulatory news

The massive farming protests in Brussels and elsewhere have been heard. Despite agriculture not being on the official agenda at Thursday’s European Summit, it was impossible for leaders to ignore the issue with the EU institutions encircled by thousands of tractors. As ministers sat down to debate Ukraine and the EU budget, horns hooted, fires burned and firecrackers whizzed through the air. The meeting’s final conclusions acknowledged that “the challenges in the agricultural sector and concerns raised by farmers” had been discussed. “Recalling the essential role of the Common Agricultural Policy,” the conclusions called on the European Council and the European Commission “to take work forward as necessary”.

Commission president Ursula von der Leyen suggested this work would include cutting more measures farmers have to implement to protect nature while producing food. Reducing the “administrative burden” was a topic “close to my heart”, she commented after the leaders’ meeting. On Wednesday, the commission opted to suspend a requirement of the CAP that demands farmers set aside a certain amount of land for nature.

Meanwhile, French Prime Minister Gabriel Attal has announced a series of measures that will also reduce environmental demands on farmers, including putting on hold the Ecophyto Plan aimed at cutting the use of pesticides in France by 50 per cent between now and 20230.

We reported earlier this week how members of the liberal Free Democratic party in Germany’s coalition government were making clear their unhappiness with the planned EU Corporate Sustainability Due Diligence Directive. On Thursday, German finance minister Christian Lindner and justice minister Marco Buschmann issued a joint letter declaring they could not support the provisional agreement on the CSDDD because it would, they claimed, create too much bureaucracy for too many companies. Chancellor Olaf Scholz has until the European Council meeting of February 9 to decide how to manage this situation.

Shell’s investments in its Renewables and Energy Solutions division in 2023 reached $2.7bn, 11 per cent of $24.4bn in total investments, according to the company’s annual results. In 2022, investments in the clean energy division represented $3.5bn out of $24.8bn, or 14 per cent of total investments.

The management of Polish energy giant Enea are suing the company’s former directors and its insurers for a lack of due diligence over a coal power plant investment that lost the company more than 650mn zlotys ($164mn). The company is seeking this amount as damages from former management and supervisory board members who had voted in favour of the investment, and from its insurers under its directors’ and officers’ liability insurance. Eighty-seven per cent of shareholders voting in an extraordinary meeting approved the company’s filing of the lawsuit.

The French government is pushing British ministers to provide loan guarantees for the nuclear power station Hinkley Point C to try to ease state-owned EDF’s financing costs on the UK’s new flagship nuclear power station as its price tag has soared, reported the FT.  EDF said last week that the cost of the project could hit as much as £46bn, up from £18bn in 2015 prices, and pushed the completion date of the first of two reactors back by at least two years to 2029 at the earliest.

US President Joe Biden has appointed John Podesta, a Democrat with long-standing experience in climate politics, to replace John Kerry, who said he was stepping down last month as the US’s climate envoy. Podesta’s job title will be senior adviser to the president for clean energy innovation and implementation. 

Meanwhile, financial services provider Allianz has launched a tool outlining how the green transition can be achieved in line with what climate science shows is necessary to avoid the most dangerous levels of global heating. The Allianz Sector Assessment of Multiple Emissions pathways tool provides analysis of the transition pathway needed for more than 50 industries worldwide, and examines the energy mix and how the speed of implementation can vary by region, country and sector.

The fossil fuel industry will spend more than $1tn globally over the next decade on producing gas for European markets, despite the EU’s pledges to reduce its reliance on fossil fuels to meet its net zero ambitions, according to Global Witness analysis of Rystad Energy data.

The European Council has adopted two regulations to phase down fluorinated gases (F-gases) and other substances that cause global warming and deplete the ozone layer. Under the new rules, the consumption of hydrofluorocarbons will be phased out by 2050.

A provisional political agreement has been reached between the European parliament and the council on the European Commission’s proposal revising the Urban Waste Water Treatment Directive. The revised directive is aimed at strengthening the protection of human health and the environment from harmful discharges of urban waste water. It will also lead to cleaner rivers, lakes, groundwater and seas all around Europe, claims the commission. The new measures should mean more nutrients are removed from urban waste waters and new standards applied to micropollutants. The directive will also apply to smaller agglomerations starting at 1,000 inhabitants.

The European Parliament and council have also reached a provisional deal on an EU “right to repair” bill that aims to reduce waste and bolster the repair sector by making product repairs more accessible and cost-effective. The agreement was welcomed by the European consumer organisation Beuc. “The EU is finally putting pressure on producers to make durable and repairable products the norm,” says Ursula Pachl, the organisation’s deputy director. “Longer-lasting and more repairable products is a no-brainer to save consumer money and natural resources. The new rules will strengthen consumer rights when goods are defective and will make repair more attractive and accessible for consumers,” she says.

The International Ethics Standards Board for Accountants has announced the launch of two exposure drafts — the International Ethics Standards for Sustainability Assurance ED, which includes revisions to the existing code related to sustainability reporting, and Using the Work of an External Expert ED.

CCS Europe, which campaigns for carbon capture and storage in the EU, has written to von der Leyen urging her to come forward with actions to speed up the deployment of CCS as part of its plans for industrial carbon management, expected to be launched on February 6. The letter says the EU is behind on plans to capture and store the amount of carbon dioxide it needs to meet its net zero by 2050 goal. It calls on the commission to show leadership, arguing for the EU to take technological leadership on climate-neutral industrial processes. The commission is expected next Tuesday to adopt a package of measures, including a target to reduce greenhouse gas emissions by 90 per cent by 2040.

A report on heat resilience and sustainable cooling from the UK Environmental Audit Committee warns of the economic and human costs of more frequent and intense heatwaves, a trend linked to climate change. Interrupted sleep patterns due to high temperatures can cost the British economy £60bn a year, or 1.5-2 per cent of gross domestic product, according to the report. This figures comes on top of the economic costs of heat-related mortality, estimated to be £6.4bn a year, notes the report. “Early adaptation investments deliver high value for money, with heat alert and heatwave planning generating returns above 10:1,” it states.

EU clean energy projects and technologies need more investment to scale up, says a report from the Cleantech for Europe initiative. It cites the H2 Green Steel project in Sweden and the battery gigafactory developer Verkor in France as successful scale-up examples that are “pushing the boundaries of traditional financing, leveraging a capital stack of equity, commercial debt and subsidies to build multibillion [euro] cleantech projects”.

The European Central Bank has announced it will step up its climate work and singled out three areas for greater focus: the impact and risks of the transition to a green economy, especially the associated transition costs and investment needs; the increasing physical impact of climate change and how measures to adapt to a hotter world affect the economy; and the risks stemming from nature loss and degradation, how they interact with climate-related risks and how they could affect the ECB’s work through their impact on the economy and financial system.

A service from the Financial Times