The European Commission has published a proposal for a Corporate Sustainability Reporting Directive (2021/0104) (“CSRD”), which forms just one part of a comprehensive package of sustainable finance measures (see our blog here).  The Commission has put forward these measures in response to demand for stronger and wider sustainability reporting standards, over and above what the EU Non-Financial Reporting Directive currently provides.  The CSRD seeks to mandate sustainability reporting and assurance through the amendment of existing EU laws, including the Transparency Directive, the Accounting Directive, and the Audit Directive.  More fundamentally, according to the Commission, it will move the EU one step closer to realizing its aim of having sustainability reporting be “on a par” with financial reporting, in terms of attached weight and importance.  This is reflected in the change of terminology used in the CSRD proposal, from a focus on “non-financial” information reporting, to “sustainability”.

We cover below the background and detail, but in summary, these are the key elements of the CSRD proposal that corporates should be aware of:

  • Scope: The CSRD reporting requirements will apply to all large EU companies and all listed companies, including listed small and medium-sized enterprises (“SMEs”). This is estimated to cover around 49,000 companies.
  • Reporting: The so-called “double materiality” principle remains, but in-scope companies will now have to report according to mandatory sustainability standards. Simpler and “proportionate” standards will apply to listed SMEs.
  • Audit: The CSRD will require, for the first time, a general EU-wide audit (assurance) requirement for sustainability information.
  • Digitization: The sustainability information must be published in companies’ management reports — and not separately reported — and the information will need to be digitized or “tagged” so it can be incorporated into a planned European Single Access Point.
  • Timing: If the proposal is adopted and standards can be agreed in line with current ambitious estimates, large in-scope companies must comply from financial years starting on or after 1 January 2023, publishing reports from 2024; whilst SMEs have to comply from 1 January 2026.


Continue Reading The EU Corporate Sustainability Reporting Directive Proposal: What Companies Need to Know

The European Commission has presented a package of key enabling legislation on sustainable finance (the “Sustainable Finance Package”).  This includes the much-awaited first technical screening criteria under the Taxonomy Regulation — outlined in the Taxonomy Climate Delegated Act (“TCDA”) — and a proposal for a Corporate Sustainability Reporting Directive (“CSRD”), which significantly revises and expands on the existing Non-Financial Reporting Directive’s remit and disclosure rules for corporates. While the former is directly aimed at financial institutions and investors, and the latter at large and listed entities, the package has broader implications for all corporates.

Sustainable Finance Package: Context and Comment

The Commission’s intention with its Sustainable Finance Package is twofold: (1) in the short term, to set a clear regulatory framework to encourage investments that will contribute to a sustainable and inclusive economic recovery from the COVID-19 pandemic; and (2) in the long term, to ensure the transition to a carbon neutral EU economy by 2050, in accordance with the 2020 European Climate Law.  Following the adoption of the EU Taxonomy Regulation (explained further below), the Sustainable Finance Disclosure Regulation, and the Benchmark Regulation, which enhances the transparency of benchmark methodologies, the Commission has in this legislative package laid out the next building blocks for its envisioned sustainable finance ecosystem.


Continue Reading The EU’s Green Capitalism Takes Shape: Taxonomy Screening Criteria and Corporate Sustainability Reporting

Last week, the European Commission took a major step to implement the climate aspects of its European Green Deal.  It presented a proposal for a European Climate Law and two consultations on its announced Climate Pact and Carbon Border Adjustment Mechanism (“CBAM”).
Continue Reading Climate Change: The EU Moves Towards a Carbon Border Adjustment Mechanism

Electronic devices and their components marketed in the European Union and European Economic Area are subject to a morass of environmental and product safety requirements that is only likely to increase with the EU’s implementation of its Circular Economy Strategy in the near future.  The requirements apply to all types of equipment, from sophisticated information technology equipment, to military equipment, aircraft components, electronic medical devices, household electronics, consumer devices, and industrial tools.
Continue Reading Environmental and Safety Requirements Affecting the Marketing of Electronic Devices and their Components in the European Union and European Economic Area

The European Union has adopted a new obligation on suppliers of articles that contain substances listed in the REACH Candidate List of SVHCs in concentrations above 0,1% to submit a notification to the European Chemicals Agency (“ECHA”).  The new requirement is intended to facilitate the recycling of products and was introduced by a new Directive amending the EU Waste Framework Directive.
Continue Reading New EU Requirements on Products Containing REACH Candidate List SVHCs

Last week the European Commission presented an extensive package of legislative proposals (“Clean Energy Package”) that are intended to achieve and implement the European Union’s climate change and clean energy targets for 2030: a 40% cut of CO2 emissions, a share of 27% for renewable energies, and energy savings of 30%.

The package presents both opportunities and challenges for energy-related industries as well as for information technology companies whose products will help to achieve Europe’s energy efficiency objectives.  According to the Commission, its proposals should mobilize up to 177 billion Euros of public and private investment per year from 2021, and generate up to a 1% increase in GDP over the next decade.

The Commission’s proposals are a first step of a legislative process in the European Parliament and Council that is likely to last at least 18 months, and will provide industry with opportunities to influence the legislation on renewable energies and energy efficiency that will apply in the EU as of 2021.


Continue Reading The European Commission Presents its 2030 Clean Energy Package

The European Commission calculated years ago that someone flying from London to New York and return generates roughly the same level of CO2 emissions as the average person in the EU does by heating their home for a whole year. And air traffic is supposed to double by 2035…

This is why the European Union decided as early as 2008 that, as part of its effort to address climate change, it would extend its so called EU emissions trading system (“ETS”) to the aviation sector.[1] By 2012, in principle, emissions from all flights from, to and within the European Economic Area (EEA) – the 28 EU Member States, plus Iceland, Liechtenstein and Norway – should have been included in the EU ETS system.

But this proposal was very negatively received by third countries. Airlines for America (A4A) together with several American air carriers engaged in legal disputes against the EU Directive, arguing that it broke the EU-US open sky agreement, the Kyoto Protocol, and the International Civil Aviation Convention. After their case was lost in the European Court of Justice, a coalition of countries led by the United States, China, Russia, India, Japan, and others launched a major political offensive against the unilateral character of the EU scheme. Their major argument was that the Directive, by imposing obligations on third countries, went against the principle of sovereignty. They pleaded that a satisfactory solution could only come through a global market based scheme, as it was discussed (but with not much success at the time) in the International Civil Aviation Organization (ICAO) Assembly .

As a result of these pressures – which included retaliation threats targeting Airbus sales – the EU renounced, provisionally, imposing its system to extra-EU flights. ETS requirements for flights to and from non-European countries were ‘suspended’ until the end of 2016, in order to give time to ICAO to develop a global ‘market-based measure’ (MBM) scheme. ICAO’s Assembly in 2013 decided in principle that a mechanism would be agreed by 2016 and applied by 2020. In the meantime, only flights within the EEA continued to be covered by the ETS system, with some exemptions for operators with low emissions.

ICAO has respected its self-imposed deadline: In its 39th session, on October 6th 2016 in Montreal, an agreement was reached on a ‘Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). According to the scheme, CO2 emissions for international aviation would be capped at the level of average emissions between 2019 and 2020, with participants offsetting any increases; the offsetting obligation would apply to all international flights between States that are part of CORSIA. In order to offset its emissions, an airline operator would have to buy ‘Emission Units’ originating from various emission reduction programs and projects across the globe. The specific criteria for these ‘Emission Units’ will be developed by ICAO in the next two years.

But, in order to ensure broad support, negotiating States concluded substantive compromises on the timeline of implementation, exemptions to the agreement, and the distribution of offsetting requirements among airline carriers.[2]  The European Union fought to reduce these exceptions or delays to a minimum but with limited success. It decided, anyway, in the end, to accept the final agreement.
Continue Reading The EU reaction to ICAO ’s Agreement on Aviation Emissions

The EU recently published a Guidance on Compliance Criteria on Environmental Claims (“Environmental Claims Guidance”).  The Guidance is intended to support economic operators and EU Member State enforcement authorities in  their application and implementation of the principles of the Unfair Commercial Practices Directive (“UCP Directive”) to self-declared environmental claims and related graphics and imagery.  The UCP Directive establishes principles to prevent unfair commercial practices that may harm the commercial interests of consumers.
Continue Reading EU Adopts New Guidance on Environmental Claims

The International Energy Agency (IEA)’s latest monthly market report, published on November 13, 2015, revealed that the already “massive cushion” of oil stockpiles has inflated further to reach a record level of almost 3 billion barrels.  Following the announcement, oil prices reportedly dropped to a two-month low.

The IEA described this stockpile as “an unprecedented buffer against geopolitical shocks or unexpected supply disruptions.”  The glut in oil supplies is expected to maintain pressure on global oil prices, which many analysts predict will remain at the lower end of a $54-$64.0/bbl range during 2016.

In this post, we highlight two observable trends in the M&A activities of industry participants during 2015 as they navigate the current challenges facing the sector.


Continue Reading What’s the Deal with Low Oil Prices?