LONDON (AP) 鈥 A flagship EU law intended to push European companies toward net zero faces being seriously weakened by member states, a confidential document passed to The Associated Press reveals, with firms seemingly no longer forced to implement Paris Agreement goals.
The was designed to make companies eliminate environmental and human rights violations throughout all areas of their business. The legislation was meant to ensure firms鈥 operations were aligned with a global rise in temperatures of no more than 1.5 degrees Celsius (2.7 Fahrenheit).
But a Nov. 9 briefing obtained by The AP details a watered-down proposal that would drop the entire financial sector from the initial law.
Banks and insurers are among Europe鈥檚 biggest contributors to global warming, by financing or insuring new oil and gas projects, or agribusinesses that chop down tropical rainforests. Nonprofits also warn the new proposal would mean firms merely need to have plans to hit low carbon targets, not actually deliver them 鈥 a recipe for greenwashing.
When it was unveiled, environmentalists hailed the law. But there鈥檚 currently a standoff on the final text between the European Parliament, which wants tough legislation, and the Council of the European Union, formed of ministers from all 27 member countries.
Many of the latter want less onerous provisions, worried about the impact of stringent regulation on their economies.
Spain currently holds the council鈥檚 presidency, and is trying to get all the member states to agree on their desired version of the law. Its attempt at breaking the impasse was set out in the confidential briefing.
The proposed rules on the financial sector had led to 鈥渄ifficult problems to overcome in working out a reasonable landing zone鈥 with the European Parliament, it said. As a solution, 鈥渢he Presidency proposes 鈥 a possible exclusion of the financial sector which would delay the extension to the financial sector to a later stage.鈥
This came as a shock to campaigners, who warn if it鈥檚 kicked into the long grass, the inclusion of finance may never happen. The next European elections are due in June 2024, and many believe after that the chance to add to it will be gone.
As part of its plan to become climate neutral by 2050, the European Union has adopted a wide of measures, from reducing energy consumption to sharply cutting transportation emissions and reforming the EU鈥檚 trading system for greenhouse gases. But with the elections looming, some leaders and lawmakers are concerned about antagonizing voters with binding legislation and restrictive requirements.
As recently as October, the council's proposal was to create laws for the financial sector that individual nation states could opt in or out of.
Richard Gardiner, head of EU policy at the World Benchmarking Alliance, a Dutch nonprofit that examines the sustainability of global companies, called the current approach a 鈥渕assive rowback on the progress made.鈥
鈥淲hen you exclude finance you exclude a major driver of change,鈥 he said. 鈥淚t goes against the majority views of the EU parliament, Commission and most member states,鈥 he added, questioning the 鈥渦ndue influence" of large countries "willing to pander to the financial sector鈥檚 lobbying needs.鈥
Ren茅 Repasi, lead negotiator on the law鈥檚 financial clauses, said in a phone interview that finance was the fuel of the world economy and fundamentally connected to the environment.
He laid the blame for the change firmly at the door of France, but said he was yet to hear a credible or convincing argument justifying their stance. A deal on finance was previously supported by all member states, he revealed. 鈥淎nd then in a last minute move, France said they will veto it.鈥
鈥淔rance is the driving factor,鈥 he said.
A document authored by French officials last November obtained by The AP shows it proposed removing legal obligations for the financial sector to address environmental harms linked to its financing activities. Meanwhile, minutes from an EU meeting this October also seen by AP show France 鈥渟poke out against the proposal and against all options鈥 then proposed on finance.
A source in the French negotiation team said on the phone, 鈥淔rance supports the exclusion of the financial sector from the scope of the directive.
鈥淏ut France supports a certain number of dispositions that reinforce obligations of the financial sector in the framework of this directive.鈥
鈥淲e know companies are responsible for the vast majority of climate-wrecking emissions,鈥 said Alban Grosdidier, of Friends of the Earth Europe. He warned the proposed changes would make the new law 鈥渨eak and unenforceable.鈥
And Grosdidier said another clause, forcing companies to adhere to the Paris Agreement, would be left toothless by the changes. The European Parliament wants member states to ensure their companies implement a plan to limit global warming to 1.5 C above pre-industrial levels. But the council鈥檚 preferred version would merely order companies to 鈥渁dopt a plan鈥 aligned with the Paris Agreement, along with some actions.
They also want to amend the enforcement of the bill to make clear that nations need only police whether plans have been 鈥渁dopted.鈥 The implication, campaigners say, is that these plans wouldn鈥檛 necessarily need to be delivered.
The leaked briefing shows the EU Presidency now prefers the weaker regulation, nonprofits warn. As a 鈥減roposed solution鈥 to the standoff, it said companies should show an 鈥渙bligation of means鈥 to align with the Paris Agreement.
In legal terms, an 鈥渙bligation of results鈥 would have been much stronger, said Marion Lupin, a lawyer and policy officer at the European Coalition for Corporate Justice.
鈥淯se of the phrase 鈥榦bligation of means鈥 here has the effect of meaning companies only need to have a plan for aligning with Paris, as opposed to actually implementing that plan,鈥 said Romain Hubert, a research fellow at Paris-based analysts the Institute for Climate Economics.
Friends of the Earth鈥檚 Grosdidier said the new proposed could even be counterproductive, as the adoption of a plan with no duty to implement was a 鈥渓icense to greenwash.鈥
A spokesman for the Spanish presidency of the EU Council declined to comment.
Ambassadors of member countries are due to discuss the new proposals Wednesday. If they agree on them, they will form the basis for the final negotiation with the European Parliament. Once negotiators from all side will have brokered a compromise, it will need to get formal approval from both the parliament and council to become a law across the bloc with about 450 million citizens.
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