Archive for the ‘European Union’ Category

How the new EU directive will rewrite ESG reporting – GreenBiz

Europe has long been the trendsetter in policy and regulation around environmental, social and governance issues. The Corporate Sustainability Reporting Directive (CSRD) is the latest in a line of European Union policies intended to nudge economic and investment activity towards more sustainable outcomes.

The CSRD replaced the Non-Financial Reporting Directive (NFRD), which only covered the disclosure requirements for about 11,000 EU companies. In contrast, the CSRD will require nearly 50,000 companies to enhance their reporting around sustainability. This number includes about 10,000 companies outside the EU, and it doesnt just include the largest of the large companies.

The CSRD was adopted by the EU Council in November. EU companies already subject to the NFRD will have to begin compliance with the CSRD, which means reporting in 2024. Those for whom this reporting will be new, including companies outside the EU, have until 2025 to begin complying.

The NFRD was never mandatory. As a result, investors, regulators and civil society groups were often frustrated with the lack of sustainability-related information from companies and the lack of comparability of that data. The European Parliamentary Research Service (EPRS) recently released animplementation appraisal on the NFRD that highlighted many shortcomings of the NFRD:

The purpose of the CSRD is to provide investors and businesses with more information about the sustainability of companies operating in the EU, that is timely, consistent and comparable.

In essence, the CSRD is becoming the de facto sustainability disclosure regulation for large global companies; as companies with significant business in Europe will have to adhere to the rules Europe sets down.

The rules will cover both public and private business that satisfy two of the following criteria:

Compliance with CSRD isnt that far away. Companies that meet the reporting requirements will have to submit their first report of aligning with CSRD by Jan. 1, 2025. Smaller and medium-sized entities (SMEs) wont have to comply with the rules until January 2026.

Companies outside of Europe that do business in the EU will also be covered by the new rules companies that generate total revenue of $167 million in the EU and have at least one branch or subsidiary in the EU with more than $44.51 million in net revenue will be required to comply with the new disclosure requirements.

In essence, the CSRD is becoming the de facto sustainability disclosure regulation for large global companies; as companies with significant business in Europe will have to adhere to the rules Europe sets down. The hope of European regulators and sustainability-minded professionals around the world is that this higher disclosure bar will export European best practices in disclosure globally. As large companies in global markets are forced to raise their standards, these disclosure standards will cause other companies in those markets to follow the more stringent disclosure standards set by the EU in order to keep up with best practices.

In addition to information already required by the NFRD, companies that comply with the CSRD will have to publish information related to:

Companies will be required to set annual ESG targets and report their process hitting these targets, including transition plans (if any).

The CSRD will require third-party assurances, including integration into the auditors report, a requirement not covered by the NFRD. This information will be required to be presented in a companys annual financial reports, not in a separate sustainability report. Assurances can at first be "limited" but must reach the threshold of "reasonable" assurances by 2028. For those of you out there who are not accountants (good for you), reasonable assurances amount to an auditor affirming that the information reported is materially correct, while limited assurances simply state that the auditor is not aware of any material modifications that need to be made.

The European Financial Reporting Advisory Group (EFRAG) is drafting the upcoming EU Sustainability Reporting Standards (ESRS) that the CSRD will adopt as its reporting standard. The European Commission is due to adopt the initial ESRS standards in mid-2023.

If all of this sounds like a lot of work, you are right. If all of this sounds like a lot of work and a little bit intimidating if you are not a European company used to European regulation, accounting and disclosure standards, you are right again. Companies outside the EU that will be subject to CSRD reporting have realized the daunting task ahead of them. Those ahead of the curve have already started the process of adjustment to the CSRD landscape.

Chris Librie, senior director of ESG at Applied Materials, acknowledged that CSRD will require companies outside the EU to change their perspective on sustainability. "CSRD is pretty comprehensive," Librie said. "It involves double materiality, which may bring into scope things that we may not have considered. For example, we havent traditionally looked at biodiversity, but that may come up."

Most companies will need to expand their ability to measure and manage sustainability issues in their own operations; as well down their supply chains to comply with CSRD disclosure rules.

"Our ESG team is fairly small," Librie said, "so we will be reaching to other divisions such as human resources, environmental health and safety and others, as well as our outside auditors and consultants. The number of potential topics are so many that we are taking a team approach to develop a structured approach to the CSRD process."

The race is on to train financial professionals for the transition. Several organizations are working with companies to help them prepare for the transition. One of these is Accounting for Sustainability (A4S). A4S was established by King Charles III in 2004, with the aim of working with chief financial officers and other financial leaders to drive a shift towards more sustainable business models. A4S routinely hosts workshops to share best practices and build knowledge of financial professionals to bring them up to speed.

The number of potential topics are so many that we are taking a team approach to develop a structured approach to the CSRD process.

Brad Sparks, executive director of A4S Foundation U.S., emphasized how A4S is seeing significant interest from finance and accounting professionals that A4S works with around CSRD.

"CSRD has become part of the reporting workshops that we host," Sparks said. "We also started a new controllers forum and had a meeting earlier this year where we brought in someone from EFRAG to discuss the emerging ESRS standards. The forum is designed for chief accounting officers, controllers and ESG controllers to exchange insights, challenges and responses to sustainability issues among peers. Our initial meeting had a focus on double materiality a topic that is new to many in the finance and accounting community."

Part of the learning curve for those outside the EU will be navigating the differences in accounting standards, investor expectations and legal systems that underpin EU regulation and norms outside the EU. "Finance and accounting professionals in the United States are seeking additional guidance to help with the emerging standards," Sparks said. "In general, global accounting standards are typically principles-based, while U.S. accounting (GAAP) is typically rules-based. This is similar with the ESRS following a more principles-based approach, which some in the U.S. view as more challenging to implement."

Although adjusting to a CSRD world will take time and resources, in the end, the goal is to provide investors, policymakers, civil society and companies themselves with better information. It may move sustainability reporting more to the mainstream, which has both positive and negative implications.

Preparing for CSRD reporting will be a step change in managing and measuring sustainability data for many companies outside the EU. Companies that need to report under the CSRD standard will need to start now if they havent already: January 2025 isnt that far away. There are steps companies can take to get ready. Here are just a few places to start:

"I see this possibly driving companies toward more integrated reporting," Librie said. "I think ultimately we will see more 10-Ks and sustainability reports that merge, so we will have a one-stop shop for all this information. That is a positive but a potential negative is that in a 10-K type document, you cant be as verbose. You have to be more economical about telling your story, and that might make ESG engagement more challenging."

"Companies are seeking to understand how they can comply with reporting requirements in an effective, efficient and impactful manner," Sparks said. "They want to understand what best practices are and are looking for more guidance." Sparks noted that A4S plans to hold more workshops around CSRD in the future, as it sees increasing demand from the CFOs and financial professionals they meet with.

[Continue the dialogue on emerging sustainable investment trends at GreenFin 23 the premier sustainable finance event taking place June 26-28 in Boston.]

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How the new EU directive will rewrite ESG reporting - GreenBiz

Cohen to meet Borrell in Brussels on Iran, Israel-EU tensions – The Jerusalem Post

With an eye to securing European Union support against Iran and calming tensions over the Palestinian conflict, Foreign Minister Eli Cohen is slated to visit Brussels on Tuesday to meet with EU foreign policy chief Josep Borrell.

Israel and the European Union have many common interests in the Middle East, chief among them is stopping the Iranian nuclear program and the threat of terrorism, Cohen said on Sunday.

Prime Minister Benjamin Netanyahu and Cohen have heavily lobbied Europe over the Iran issue. Tehrans alliance with Moscow has opened a window for Israel to try and align Brusselss policies with that of Jerusalem when it comes to the strategy for preventing the Islamic Republic from developing nuclear weapons.

Israel in particular wants the International Atomic Energy Agencys board to vote in June to ask the UN Security Council to reinstate crippling sanctions against Iran.

Cohen will ask the EU to take a hard line against Iranian uranium enrichment and to add Irans Islamic Revolutionary Guards to its list of terrorist organizations.

The Foreign Ministry stressed that Irans pursuit of nuclear weapons and its being the global sponsor of terrorism is top on the agenda.

At the governments weekly meeting, Netanyahu said, We will not allow Iran to tighten a ring of terrorism around us to strangle us.

We are taking action on this matter around the clock, at all times, even now, and we will continue to take both offensive and defensive action against Iranian aggression and that of its terrorist proxies.

In Brussels, Cohen also plans to tackle tensions between Israel and the EU over the Israeli-Palestinian conflict, particularly in his meeting with Borrell, who has taken a particularly harsh stance and made comments that have riled Netanyahus government.

In March, the Foreign Ministry barred Borrell from making a diplomatic visit to Israel to protest statements he made that appeared to equate Israeli terror victims with Palestinians killed by the IDF.

Israel and Brussels have also been at odds over the EUs support for the construction of illegal Palestinian structures in Area C, particularly for Palestinian and Bedouin herding communities.

The EU sees this move as a humanitarian gesture on an issue of basic rights, the provision of housing. It has noted in particular the dearth of housing permits for Palestinians in Area C of the West Bank, which is under IDF civilian and military control.

Israel has also been concerned by EU support for Palestinian civic groups that it has deemed to be associated with terror activity.

It is important for me to make it clear to our friends in Europe that Israel is not opposed to humanitarian aid coming from European countries and the union to the Palestinian Authority, Cohen said.

Despite this, he added, Israel will not allow European aid to indirectly reach terrorist organizations and incitement against Israel and Israelis.

Last week, European Commission President Ursula von der Leyen angered the PA when she spoke of how Israel made the desert bloom when she issued a congratulatory statement on the countrys 75th birthday. The PA said her words were racist and it demanded an apology.

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Cohen to meet Borrell in Brussels on Iran, Israel-EU tensions - The Jerusalem Post

Brexit has been an utter disaster: the royal heritage firm that cant sell its wares abroad – The Guardian

Brexit

The Derbyshire business has its playing cards for sale at Buckingham Palace, but getting them over the Channel is now a nightmare

Sat 29 Apr 2023 08.00 EDT

With products on sale at Buckingham Palace, Westminster Abbey and museums across the country as well as in European capitals Jeremy Shaw, the managing director of Derbyshire-based Heritage Playing Cards, has particular reason to hope the coronation will be good for the business he set up 30 years ago.

The past few years have been anything but. First, the Covid pandemic shut all museums and their shops, meaning an almost total collapse in domestic and overseas sales. Then the countrys leading producer of heritage playing cards whose popular kings and queens of England pack has been updated ahead of the coronation to include one of Charles III saw its export business almost completely wiped out by Brexit.

The effect of Britain leaving the European Union has destroyed 85% of his companys trade with EU customers which accounted for 35% of its total turnover.

Before Brexit, we got an order at nine in the morning and three days later it was sitting in a shop or museum in Paris or Brussels or Vienna, said Shaw. Now almost all of our EU customers have given up. The paperwork and the costs of getting packages over to the EU mean they think it is just not worth it. Brexit has been a complete and utter disaster.

As well as UK-themed packs the kings and queens, the prime ministers, the stately homes and many more subjects the company has supplied European markets with bespoke packs for different countries, such as German castles and a pack celebrating the Brothers Grimm fairytales.

But not for much longer. We are running down all our German and French stock and then we will finish. We will donate whatever we have left to schools as teaching materials for foreign language lessons, said Shaw.

We are just battering our heads against a brick wall. We spent so much time, effort and investment building up that market, and we might as well not have bothered.

The initial problem for EU shops or museums that order cards from the UK is the form-filling. Then the customers find themselves stung by extra VAT charges when the goods arrive. All in all, it is proving too much for many small operators.

We have to pay a fee to get the parcel out of this country something like 3, said Shaw.

Then, when it gets to their end, they have to pay a processing fee. Then customers are told there is a VAT charge on that parcel. They then refuse the parcel, which has to be returned to us and, to cap it all, we have to pay import duty to get it back again.

It is an administrative nightmare for us and the customers. None of this happened before we left the European Union.

Shaw said he recently received an order from the National Trust in Northern Ireland. Even this transaction involved post-Brexit form-filling, despite Northern Ireland being part of the UK, and London and Brussels spending much of the past two years trying to make intra-UK trade across the Irish sea easier. It is just unbelievable, he said.

Shaws company operates from the Derbyshire town of Ilkeston. Nearby is Cluny Lace, another small firm. It provided material for Royal wedding dresses, including that worn by Kate Middleton. It too has been in the headlines because of the disastrous effect Brexit has had on its business model.

The firms managing director, Charles Mason, says the taxman imposed an 8% duty on the return of all the lace it sent to France for dyeing. In a letter to the Financial Times he wrote: We have spent more than 200 years building our business, fought for 30 years against the global textile trend of moving to the far east and have now been killed off by our own side in a couple of years. We all lose.

The Office for Budget Responsibility has forecast that Brexit will result in the UKs trade intensity being 15% lower in the long run than if it had remained in the EU.

Shaw added: I have written to HMRC several times about all this and they dont reply. They just send out their pointless circulars. They never get back with any answers.

An HMRC spokesperson said: We have extensive guidance on GOV.UK to help businesses with all queries relating to importing and exporting. This includes detailed step-by-step guides and videos. You can also find information through our online services and HMRC app. For more complex queries, businesses can use our web chat to talk to an adviser or call us.

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Brexit has been an utter disaster: the royal heritage firm that cant sell its wares abroad - The Guardian

EU: European Union must protect human rights in upcoming AI Act … – Amnesty International

Ahead of the European Parliaments vote on the AI Act in May, the European Union (EU) has a significant opportunity to regulate artificial intelligence (AI) technologies in order to protect and promote human rights, said Amnesty International in an open letter to Members of Parliaments leading committees.

The AI Act offers EU lawmakers an opportunity to put an end to the use of discriminatory and rights-violating artificial intelligence (AI) systems, said Mher Hakobyan, Advocacy Advisor on Artificial Intelligence Regulation at Amnesty International.

The EU must ban the use of discriminatory AI systems which disproportionately affect people from marginalized communities, including migrants, refugees and asylum seekers. Such technologies profile people and communities, claiming to predict crimes, or identify people who supposedly pose a security risk, even leading to them being denied the right to asylum. EU lawmakers must not miss this opportunity to prohibit the use of certain AI-based practices and protect the rights of migrants, refugees, and asylum seekers against harmful aspects of AI.

Use of mass surveillance technologies, such as retrospective and live remote biometric identification tools must also be banned. The proposed law must also ban discriminatory social scoring systems that prevent people from accessing essential public and private services, such as child support benefits and education.

EU lawmakers must not miss this opportunity to prohibit the use of certain AI-based practices and protect the rights of migrants, refugees, and asylum seekers against harmful aspects of AI.

The AI Act should also address the development of European technologies that are exported to third countries. Firstly, AI systems that are prohibited in Europe should not be allowed to be exported abroad. Secondly, permitted high-risk technologies that are exported must meet the same regulatory requirements as high-risk technologies sold in the EU.

Strong accountability and transparency measures must also be enforced when public and private bodies use AI systems in the EU. These actors must disclose their use of high-risk AI systems, and publish thorough human rights impact assessments. This is important, so that people harmed by AI systems can seek redress. The AI Act should establish a mechanism for this purpose.

The European Commission proposed legislation governing the use of artificial intelligence on 21 April 2021. The Council of the EU,representing EU national governments, adopted itsposition in December 2022. The European Parliament aims to finalize its position in spring this year, after which the two institutions,together with the European Commission,will have to agree on a common text for the Regulation.

Our latest open letter, written by our Secretary General, Agnes Callamard, urges members of the European Parliament to prohibit the use of certain AI systems that are incompatible with the human rights of migrants, refugees, and asylum seekers. The letter was published on 26 April 2023.

Amnesty International, as part of a coalition of civil society organizations led by the European Digital Rights Network (EDRi),has been calling for EU artificial intelligence regulation that protects and promotes human rights.

On 19 April 2023, Amnesty International and coalition partners published an open statement calling on the European Parliament to protect human rights in the AI Act ahead of the coming vote.

Mher Hakobyan, Advocacy Advisor on Artificial Intelligence Regulation at Amnesty International,is available for interviews and briefings.

11 May: Planned committee vote on the AI Act

[emailprotected]

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EU: European Union must protect human rights in upcoming AI Act ... - Amnesty International

European Union to implement a unitary SPC and centralised … – JD Supra

The European Commission has published its long awaited (and delayed) proposals for a substantial revision of the EU regulation on Supplementary Protection Certificates (SPCs), which wraps up a series of various legislative scenarios suggested in the past years in favour of the recasting of the SPC regulations towards a more centralised system.

As already recalled in a previous article, the SPC system as it stands is based on a mix of national and European legislations. While the substantial conditions for the grant of an SPC are common to all EU Member States, based on European Regulation (EC) 496/2009 of 6 May 2009 for medicinal products and Regulation (EC) 1610/96 for plant protection products, SPC applications are filed with the national patent office of each Member State and have a national territorial effect, similar to the national designations of a European Patent.

With the Unitary Patent system and the UPC about to enter into force, it was time for the EU to think about a similar unified system for SPCs. As it stands, the relevant EU Regulations 1257/2013 and 1260/2012 do not provide for a unitary SPC but merely offer European patent holders (for which the basic patents would not have been opted-out) the opportunity to have the relevant national SPCs litigated before the UPC (which will then be mandatory for any SPC granted on the basis of a unitary patent). However, the grant procedure for such SPCs and their effects would still remain at the local level.

Several propositions had been submitted between 2018 and 2022 to consider a legislative review of the SPC system.

The European Commission itself first highlighted in 20181 the necessity to think through a revised SPC system in light of the fragmentation of the case-law with a consequential lack of legal certainty for the stakeholders, as well as a multiplication of proceedings which represent significant costs for the SPC holders.

The European Commission reiterated its criticism of the fragmentation and lack of transparency of the actual SPC system in its evaluation of the SPC Regulation published on 25 November 2020, together with the European Commissions IP Action Plan. This led the European Parliament in November 2021 to adopt a resolution on the European Commissions IP Action Plan which supports the implementation of a unified SPC system and called on the European Commission and the Member States to take the relevant measures.

A centralised SPC system was also suggested in the European Commissions call for evidence for an impact assessment on proposals for a unitary SPC and/or a unified procedure for granting national SPCs, published on 8 March 2022, with the aim of adopting a proposal for a revised legislation by the end of 2022. Several models were also suggested by the Max Planck Institute in a second study published by the European Commission in September 2022, with a proper unitary SPC system however identified as the least preferred route in light of the uncertainties at the time surrounding the implementation of the unitary patent package.

These various suggestions eventually led the European Commission to publish today two different proposals for a revision of the SPC Regulation: a proposed brand new Regulation creating a unitary SPC and a recast of the current SPC Regulations for medicinal products and plant protection products to include a centralised examination procedure for some SPCs.

The first set of proposals from the European Commission consist of introducing a centralised procedure for the grant of national SPCs, in line with the suggestions introduced in the Max Plank study of September 2022. Such a centralised procedure is described in a recast of the current SPC regulations on medicinal products (Regulation (EC) 469/2009) and plant protection products (Regulation (EC) 1610/96).

The aim would be to enable holders of European patents and centrally authorised medicinal products to file a single SPC application which will be examined through a centralised examination procedure and enable the simultaneous grant of national SPCs in all the EU Member States designated in the application. The central authority in charge of the examination would be the EUIPO, which would issue a binding opinion to the attention of the national IP offices of each Member State which will then grant or refuse the application (in accordance with their national formal rules). The relevant SPCs would have a national effect like current SPCs.

During the examination procedure, after assessing the formal admissibility of the SPC application, the EUIPO will entrust the substantive examination to a panel made of a member of the EUIPO and two SPC-qualified examiners drawn from two different national IP offices in the Member States.

Of note, the SPC applicant who would receive a negative opinion from the EUIPO panel can file an appeal before the Boards of Appeal of the EUIPO. Further appeals can be filed before the General Court and ultimately before the CJEU (for legal review).

As also suggested from the study of the Max Plank institute, third parties (such as generic companies or Member States) will be able to file third party observations during the examination of the centralised SPC application (within 3 months as from the publication of the SPC application) and file opposition briefs to challenge the validity of the SPC with a centralised effect (within 2 months after the publication of the examination opinion from the EUIPO panel).

The centralised procedure is however restricted to SPCs based on centrally authorised medicinal products, and expressly exclude national MAs (including those granted in the context of a decentralised procedure or a mutual recognition procedure). SPC applicants fulfilling the conditions to apply through the centralised procedure will be obliged to follow to this new procedure. Any SPC application filed with a national IP office while the conditions for using the centralised procedure are met shall be rejected by that national office.

National IP offices will thus remain competent to grant national SPCs based on national MAs (including MAs granted under the decentralised procedure and mutual recognition procedure).

The conditions for grant as provided for under the current SPC Regulation (under Article 3) remain unchanged, and the relevant CJEU case-law remains applicable. However, the European Commission noted the discrepancies amongst the Member States on the duration of European patents and thus on the starting date of SPCs (up to a one-day difference), and consequently suggested to clarify that rule at least for unitary SPCs.

The proposed Regulations also suggests to amend Regulation (EC) 1901/2006 to enable the application for SPC paediatric extensions through the centralised procedure (for national and unitary SPCs).

In its second set of regulations, the European Commission also suggests the parallel implementation of a unitary SPC, which would be applied for on the basis of European patents with a unitary effect (unitary patents). Such a new system is described in the proposal for a New Regulation for SPCs on medicinal products and plant protection products.

For such SPC application, the new centralised procedure described above also applies. The opinion of the EUIPO panel will thus lead to the grant of a unitary SPC with a uniform effect in all the EU Member States in which the basic patent has unitary effect (17 States to date).

Of note, holders of a European patent with a unitary effect will be able to file a combined application' with a view to the grant of both a unitary SPC (which would have effect in the 17 Member States which have ratified the UPCA) and national SPC for additional Member States not covered by the unitary patent.

The new Regulation would thus be fully aligned with Regulation 1257/2012 and the UPCA, and unitary SPCs would be litigated in the UPC just like their basic patents. It is expected that the UPCA will be amended to include unitary SPCs in its scope.

After the grant of a unitary SPC, third parties will also be able to challenge the validity of the SPC by initiating an action for a declaration of invalidity before the EUIPO. Related decisions can also be appealed to the Boards of Appeal and eventually to the General Court. The Proposals also address the interplay with counterclaims for a declaration of invalidity that could be brought against a unitary SPC before the competent court (including the UPC provided that the UPCA is amended accordingly).

In line with its IP Action Plan, the European Commission expects the implementation of the four proposals to tackle the remaining fragmentation of the EUs IP system, and improve transparency and legal certainty by notably providing for a more consistent case-law on SPCs.

The Proposals also suggest to implement a central database with the EUIPO which would gather all the data collected and stored by the office from applicants and third parties (e.g. third party observations).

This improved harmonisation mostly aims at hastening generic/biosimilar entry by facilitating their information on the current SPC protection across the EU and planning their product launches.

The Proposals are also expected to involve cost reductions for SPC applicants, with estimated savings of 137,000 EUR for a 5-year protection in all 27 EU Member States.

In terms of next steps, the proposed Regulations will now be discussed by the European Parliament and the Council of the European Union in view of their potential adoption and entry into force.

1 As resulting from a Summary of the replies to the public consultation on SPCs and patent research exemption, a Study on the legal aspects of Supplementary Protection Certificates in the EU written by the Max Plank Institute, and a Study on the economic impact of supplementary protection certificates, pharmaceutical incentives and rewards in Europe

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European Union to implement a unitary SPC and centralised ... - JD Supra