The pace of environmental degradation is seconded by the pace of environmental regulation

The peed of the development of various innovations and the pace of incoming signals about environmental degradation are increasing, creating a confusing tangle of calls for quick solutions, new constraints and other environmental protection plans. And all of this often before we can figure out the consequences of previous actions. Hence, regulatory patches are created, such as mentioned compensation scheme for the expected high price of emission allowances so that companies do not leave Europe.

Environmental regulation is quite exceptional in its pace and scale. No industry can survive unless it is at least tracks emerging solutions to the effects of climate change and trying to adapt to a new regulatory environment for its business. However, it is necessary to follow not only new laws, but also authoritative studies and recommendations, which are being transformed first into preferred behaviours and then into a mandated standard, in shorter and shorter cycles. Foresighted firms proactively monitor the impact of their activities react before someone writes a study about their problem and takes regulatory action. A number of instruments are created to do this (we attach two – to analyse the price of river and sea pollution and climate risk on the credit portfolio).

Recovery plan for Europe stands on green pillars

The European Commission has presented a Recovery plan for Europe, the main pillars of which are the Green Deal and the support of green transformation. Unprepared companies could be surprised by the adopted taxonomy of economic activities. Details of other plans were presented by the European Commission as part of Frequently Asked Questions. And the area of biodiversity funding is also surprising – the total revenues of all biodiversity related taxes were less than 1% of the total revenues of all environmental taxes. On the other hand, the Czech Republic is the second country from the OECD with the highest number of subsidies introduced, and it also ranks at the top of the list of total number of established economic instruments.

Among supporters of sustainable finances and crowdfunding, the event prepared by Deloitte in collaboration with the European Crowdfunding Network (“ECN”) has resonated significantly. The conference called “5th ECN CrowdCamp: Sustainable Finance” took place from 10 until 12 June 2020. Almost two dozen experts from all over the world sat down online to discussed the European Union’s current vision for sustainable finance, the Green Deal, sustainable crowdunding financing and Sustainability from investor’s point of view, including transparent information sharing.

Martin Spolc, Head of Sustainable Finance and Fintech Unit at the European Commission’s Directorate-General for Financial Services and Ondřej Kovařík, member of the European Parliament, spoke about the activities of the European Commission. The impact on the financial sector and the economy was presented by Rafał Rudzki, our colleague from Deloitte, Poland. And a number of private sector representatives spoke as well. Take a look at the record from this three-day conference.

New rules will allow irrigate agricultural crops with water from wastewater treatment plants

Drought is one of the biggest problems of adaptation to climate change. That is why the European Union has prepared new rules on the use of waste water for agricultural irrigation, allowing it to be recycled and reused to ensure soil protection and human health. Marine plastic pollution is also an intense problem. We have calculated that globally this pollution has financial implications of up to $19 billion a year. Plastic pollution is therefore not only an environmental, but also an economic problem.

The circular economy will have a positive impact on employment

It turns out that circular policies should have a positive impact on employment in the future. But the devil hides in detail, and there is not much data available. It turns out that the most effective tool is to reduce labour taxation while taxing environmentally negative activities. But we have more data in the construction sector. In fact, the European Commission has published examples of best practice and the guiding principles that should be applied in the construction and use of buildings.

One man’s tras his another man’s treasure

The circular economy is not just buzzword, but it also has practical use at present. At the end of each production process, waste is generated in addition to the resulting product. However, this waste may be categorised as a by-product under certain conditions. This means that the producer does not have to pay for waste disposal, but can sell or donate a by-product for further use.

The main advantages of by-products are:

  • Opportunity to significantly save waste management costs
  • Minimising the environmental impact of the company

By categorising waste as a by-product, business processes can be streamlined and cost savings achieved, improving the environmental impact and finding new synergies with business partners.

From farm to fork: What are the first manifestations of the Green Deal?

Small but still significant steps towards a greener future have been taken in several areas in recent months. The Green Deal setting out the direction of the European Union for the coming years is beginning to be reflected in the sub-strategies approved by the European Commission on a sustainable food system and biodiversity. The Czech Republic did not hesitate to plan for the future as well and carried out an update of the National Clean Mobility Action Plan.

Compensation for electricity consumption

Carbon leakage refers to a situation where a company ceases its production in the EU and moves it to another country where less emphasis is placed on reducing emissions, thereby reducing costs at the expense of environmental protection (zero cost of emission allowances, no emission limits, etc.). In order to prevent such a move, from 2021, it will be possible to apply in selected sectors for a compensation for the ancillary costs associated with electricity consumption incurred in 2020.

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