Do not miss other topics we cover in our EnviLaw newsletter #2:

• New rules will allow irrigate agricultural crops with water from wastewater treatment plants
• The circular economy will have a positive impact on employment
• From farm to fork: What are the first manifestations of the Green Deal?

5th ECN CrowdCamp: Sustainable Finance

Among supporters of sustainable finance and crowdfunding, the event prepared by Deloitte in collaboration with the European Crowdfunding Network (“ECN”) has resonated significantly. The conference entitled “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 discuss 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 others private sector leaders spoke as well. Take a look at the record from this three-day conference.

The Recovery plan for Europe

The European Commission has proposed the Recovery plan for Europe, which is facing the consequences after the COVID-19 pandemic. The European economy is to be started through two instruments – the Next Generation EU and a strengthened long-term EU budget. €750 billion will be raised on the financial markets through the extraordinary issue of short-term bonds on behalf of the EU, a further €540 billion has been earmarked under SURE and €1100 billion under the Multiannual Financial Framework.

The funds used to rebuild after the COVID-19 crisis will be divided into three pillars:

1. To support Member States in recovery, recovery from crisis and strengthening: More than 80% of the funds collected under the Next Generation programme will be used to support Member States. In line with the objectives of the European semester, grants and loans will be granted to Member States to implement national plans to promote recovery and resilience. The European Agricultural Fund for Rural Development will receive new funds to implement structural changes in accordance with the Green Deal for Europe.
2. To kick-start the economy and promote private investment: Very flexible grants will be provided from the European budget to the private sector, municipalities and hospitals, as well as other businesses, without the need for co-financing by the Member States. The main objective is to promote green and digital transformation, launch projects with the potential to harness technological innovation such as 5G, artificial intelligence, pure hydrogen or renewable energy from the coast.
3. To reflect the COVID-19 crisis and related structural changes: In the future, the EU should be more action-efficient in the event of a crisis, thanks to the new Health Programme and RecsRU.

ClimWise

Deloitte is not idle in the creating the sustainable finance products. Entities that have not been able or willing to comply with the rules of a low-carbon economy will bear the legal and economic results of this passivity. One of the most vulnerable sectors in this context will be banking.

In response to the European Banking Authority, which recommends the integration of climate change to the risk procedures of banking institutions, Deloitte team created a framework for combining global management and identifying climate risks through modelling of individual climate scenarios.

ClimWise is intended to help bank institutions implementation of climate stress tests into the financial portfolio, or in part thereof. Deloitte offers comprehensive advice in the choice of individualised climate scenarios, including assistance in macro and microeconomic data gathering, setting up risk models and related expertise with overlap to other sectors.

Taxonomy FAQ

With the adoption of the long-awaited regulation on the taxonomy of economic activities, the work of the Technical Expert Group on Sustainable Finance (“TEG”) culminated. To deal with the technical issues related to implementation, the TEG mandate was extended until the end of August 2020, when the advisory body’s scepter should be taken over by the Sustainable Finance Platform established under the Taxonomy Regulation. The answers to the most frequently asked questions related to taxonomy, including those of the European Commission and TEG, are published on the Website of the European Commission.

According to this information, the European Commission intends to propose further legislation summarising the climate target at the end of 2020, on the basis of the TEG recommendation. At the same time, in accordance with the “Best Regulation”, impact assessment guidelines will be issued and stakeholders will be able to comment on individual criteria. The currently set criteria for assessing activities that contribute to climate change mitigation and adaptation (i.e. greenhouse gas emissions and potential reductions in these emissions) will be changed every three years.

As regards companies located outside the EU, their activities on the financial market will be subject to the same regime as EU entities under the Taxonomy Regulation. The International Platform for Sustainable Finance will then take care of the global setting and consistency of activities. Supervision of compliance with the obligation to publish information shall be ensured by national authorities.

Deloitte Central Europe: Join the European Sustainable Finance Survey

As we want to better understand the needs of enterprises in the area of sustainable financing, we invite you to sustainable finance survey led by colleagues from Deloitte, Poland. The goal is to better understand your needs and the challenges you face. The survey will take you a maximum of 10 minutes.

In addition to the survey, you can also read the overview of sustainable finance news, prepared by our colleagues from Deloitte, Poland.

Europe is leading the support of biodiversity

The OECD has issued a manual summarising the performance of biodiversity-related economic instruments. Data from more than 110 countries are essential to assess whether the targets are being met. According to these data, the number of taxes imposed in the context of biodiversity, i.e. the number of taxes imposed in relation to biodiversity, is increasing in the long term, e.g. taxation of pesticides, fertilisers, forest production products and forest extraction, etc. More than 200 such taxes generate an amount in excess of USD 7.5 billion per year. The number of other charges associated with biodiversity is also increasing, e.g. in the form of a biodiversity charge. admission to national parks, fees for permits to hunt or discharge wastewater.

The number of subsidies granted to support forest management and afforestation is also increasing. In the ranking of the number of such subsidies, the Czech Republic is the second country in the OECD with the highest number of subsidies in place, behind the United States of America. The Czech Republic is also at the top of the list of the total number of economic instruments in place to promote biodiversity – with 24 different instruments, it is fifth in the OECD rankings. In the top ten, there are 8 EU countries together with the US and Canada, which shows Europe’s dominance in environmental protection.

However, the sspace for the use of biodiversity-promoting economic instruments remains wide, especially given that the total revenue generated in 2016-2018 from biodiversity promotion instruments accounted for only 0.92% of total revenue from environmental taxes.