EU Insight 9 July, 2021

Brussels, 9 July 2021

NEW STRATEGY AND PROPOSAL AIM TO RAISE THE AMBITION ON SUSTAINABLE FINANCE

The Commission published its Renewed Sustainable Finance Strategy, aiming to integrate the objectives of the European Green Deal into the financial system and outlines four main areas where additional actions are needed including: (i) financing the path to sustainability, (ii) inclusiveness, (iii) financial sector resilience and contribution, and (iv) global cooperation. In parallel, the Commission published its legislative proposal for the EU Green Bond Standard which lays down the foundation for a common framework of rules regarding the use of designation “European green bond” or “EUGB” for bonds that pursue environmentally sustainable objectives within the meaning of Taxonomy Regulation.

COMMISSION PUBLISHES DELEGATED ACT ON EU TAXONOMY ARTICLE 8 DISCLOSURES

The Commission also published a Delegated Act under Article 8 of the Taxonomy Regulation. The Delegated Act specifies the content, methodology and presentation of information to be disclosed by large financial and non-financial companies captured within scope of the Non-financial Reporting Directive on the share of their business, investments or lending activities that are Taxonomy-aligned. The Delegated Act will now be subject to scrutiny by the European Parliament and Council. Following scrutiny, the Delegated Act will be published in the Official Journal and will apply from 1 January 2022.

SUMMER FORECAST HIGHLIGHTS STRONG ECONOMIC REBOUND AND INCREASING INFLATION

The Commission presented its Summer 2021 Economic Forecast, which strikes a positive tone, as activity in Q1 2021 exceeded expectations and the improved health situation prompted a swifter easing of restrictions. This is expected to drive a strong economic recovery, setting the economy to expand by 4.8% this year and 4.5% in 2022; GDP is projected to return to its pre-crisis level in the last quarter of 2021, although this will vary between countries. In addition, inflation is revised upwards due to factors such as rising energy and commodity prices, production bottlenecks and the shortage of some input components and raw materials, as well as strong demand both within the EU and abroad.

PARLIAMENT URGES COMMISSION TO LAUNCH INVESTIGATION ON RULE OF LAW BREACHES

In a resolution adopted this week, the European Parliament expressed its regret for the Commission’s decision to abide by the non-binding December 2020 European Council conclusions and delay the application of the rule of law conditionality regulation by developing application guidelines. Parliament calls on the Commission to immediately launch an investigation into any potential breaches of the principles of the rule of law, adding that the Commission should report to Parliament on the first cases under investigation as soon as possible. Finally, the text welcomes the 23 June letter by the President of Parliament saying that if the Commission does not act, the EP will take action in the Court of Justice.

PARLIAMENT CONDEMN HUNGARIAN ANTI-LGTBIQ LAW

The European Parliament condemned “in the strongest possible terms” a new Hungarian law that restricts freedom of speech and children’s rights by banning LGBTIQ content from being featured in school educational materials or TV shows for under-18s. In a resolution adopted on Thursday, a majority in the Parliament denounced the dismantling of democracy and the rule of law in Hungary in what constitutes “another intentional and premeditated example of the gradual dismantling of fundamental rights”. The resolution also called on the Commission to launch an accelerated infringement procedure and to use all tools in the Court of Justice, such as interim measures and penalties for non-compliance if necessary.

COMING UP NEXT WEEK

• 12 July: Eurogroup. On the agenda: Economic and financial policies, Banking union, Euro area fiscal stance, euro as a digital currency.
• 12 July: Foreign Affairs Council. On the agenda: Current affairs, geopolitics of new digital technologies, Globally Connected Europe.
• 13 July: Economic and Financial Affairs Council. On the agenda: Implementation of Recovery and Resilience Facility, European Semester, sustainable finance.
• 13 July: EU-Bosnia and Herzegovina Stabilisation and Association Council.
• 14 July: College of Commissioners. On the agenda: Fit for 55 package, new EU forest strategy.
• 14-16 July: Informal meeting of justice and home affairs ministers.

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.