EU Insight 6 May, 2022

Brussels, 6 May 2022

COMMISSION PROPOSES RUSSIA OIL EMBARGO BUT NO COUNCIL AGREEMENT YET

The European Commission proposed to introduce a complete ban on oil imports from Russia as part of the upcoming sixth package of sanctions against Russia following the invasion of Ukraine. The proposal, which is still being discussed by EU countries, also entails disconnecting Sberbank and other two major Russian banks from SWIFT, and seeks to ban the provision of professional services to Moscow. Since the announcement, discussions on the oil ban component of the proposed package have been difficult, as many EU Member States (including Hungary, Bulgaria, and Slovakia) have notably been asking for exemptions or phasing-in of the ban.

TRILOGUES TO BEGIN ON NEW RULES AGAINST DISTORTIVE FOREIGN SUBSIDIES

Both the European Parliament and the Council adopted their respective positions on the Regulation on foreign subsidies distorting the internal market. The proposal seeks to ensure a level-playing field for all companies operating in the EU market by tackling distortive subsidies granted by non-EU countries and hence imposing equivalent EU State aid rules to third-country companies. The new rules would establish a comprehensive framework enabling the Commission to investigate any economic activity benefiting from a third-country subsidy on the internal market. Interinstitutional negotiations are expected to begin shortly.

ECB AMENDS MONETARY POLICY GUIDELINES

The European Central Bank (ECB) amended its monetary policy implementation guidelines. The updated guidelines represent the ECB’s decision to (i) phase out the pandemic collateral easing measures from April 2020, as well as (ii) the option to accept certain marketable assets, (iii) clarify eligibility criteria for sustainability-linked bonds and asset-backed securities (ABSs), (iv) align the Eurosystem’s collateral framework with the requirements of the Covered Bond Directive and respective Regulation, and (v) introduced provisions applicable in case of activation of the Enhanced Contingency Solutions (ECONS) under the TARGET2 systems.

CONFERENCE ON FUTURE OF EUROPE PROPOSES TREATY REVIEW

The Plenary on the Conference on the Future of Europe reached an agreement on its proposals after two years of discussion, panels, and events. The recommendations aim at fostering sustainable growth by introducing new macroeconomic indicators to address new EU priorities such as the Green Deal, as well as strengthening the competitiveness and resilience of EU’s economy, SMEs and strategic sectors. Moreover, the European Parliament asked its Committee on Constitutional Affairs (AFCO) to draft proposals to reform the EU Treaties. The Parliament adopted a resolution on the follow-up on the conclusions on the Conference, which will have its closing ceremony in Strasbourg on 9 May.

EFRAG PUBLISHES DRAFT EUROPEAN SUSTAINABILITY REPORTING STANDARDS

The European Financial Reporting Advisory Group (EFRAG) published the draft European Sustainability Reporting Standards (ESRS) as mandated by the Corporate Sustainability Reporting Directive (CSRD). Overall, the draft standard is comprised of four elements including (i) cross-cutting standards, (ii) environment standards, (iii) social standards and (iv) governance standards. The drafts are quite dense and reflect the EU’s ambitious approach to sustainability reporting standards, including on elements such as double materiality. The draft ESRS are subject to stakeholder feedback until 8 August, following which EFRAG will seek to deliver the final standards to the Commission by November.

COMING UP NEXT WEEK

• 10 May: Supporting the future of Syria and the region – Brussels VI Conference. On the agenda: support to Syria and its people, humanitarian and resilience issues, hosting refugees from Syria, and political and financial support for Syria’s neighbours.
• 11 May: College of Commissioners meeting. On the agenda: Financial package (Debt Equity Bias Reduction Allowance (DEBRA)), and distance marketing of consumer financial services); child rights package.
• 12 May: EU-Japan summit. On the agenda: Russia’s war against Ukraine, EU-Japan relations, adoption of joint declaration, and launch of digital partnership.

Karl Isaksson, Managing Partner Brussels, Kreab

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Kreab • Tel: +32 2 737 6900 • karl.isaksson@kreab.com • www.kreab.com/brussels • Twitter: @KreabEU