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Commission study shows the need for EU-level legislation on due diligence throughout the supply chain on #HumanRights and #EnvironmentalImpacts

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On 24 February, the European Commission published the results of a study on due diligence requirements through the supply chain. This study shows that only one in three businesses in the EU are currently undertaking due diligence on human rights and environmental impacts.

Due diligence, in this context, means that for example a company checks their suppliers and operations to be sure it “does no harm”. It could imply that a company needs to check if their suppliers are not using child labour, or that they do not pour waste products into the rivers. 70% of  the 334 business survey respondents agreed that EU-level regulation on a general due diligence requirement for human rights and environmental impacts could provide benefits for business.

Justice Commissioner Didier Reynders said: “Companies told us they believe that EU rules would here provide legal certainty and a harmonized standard for businesses' duty to respect people and the planet. As working towards climate neutrality is among the top priorities of this Commission, I will make sure the results of this important study are taken into account for future work.”

The study was launched in December 2018, as part of the Commission's Action Plan on Financing Sustainable Growth. It examines options for regulating due diligence in companies' own operations and through their supply chains for adverse human rights and environmental impacts, including relating to climate change. This study also feeds into the objectives of the European Green Deal, which highlights that sustainability should be further embedded into the corporate governance rules across the EU, as many companies focus too much on short-term financial performance compared to their long-term development and sustainability aspects. More information on the study can be found here.

Denmark

Commission approves Danish support for Thor offshore wind farm project

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The European Commission has approved, under EU state aid rules, Danish support for the Thor offshore wind farm project, which will be located in the Danish part of the North Sea. The measure will help Denmark increase its share of electricity produced from renewable energy sources and reduce CO₂ emissions, in line with the European Green Deal, without unduly distorting competition in the Single Market.

Executive Vice President, Margrethe Vestager, in charge of competition policy, said:  “This Danish measure is a very good example of how member states can provide incentives to companies to take part and invest in green energy projects, in line with EU state aid rules. The Thor offshore wind farm project will contribute to achieving the EU's ambitious energy and climate targets set out in the Green Deal, without unduly distorting competition in the Single Market.”

Denmark notified to the Commission an aid measure, with a total maximum budget of DKK 6.5 billion (approximately €870 million), to support the design, construction and operation of the new Thor offshore wind farm project. The project, which will have offshore wind capacity of minimum 800 Megawatt (MW) to maximum 1000 MW, will include the wind farm itself, the offshore substation and the grid connection from the offshore substation to the point of connection in the first onshore substation.

The aid will be awarded through a competitive tender and will take the form of a two-way contract-for-difference premium of the duration of 20 years. The premium will be paid on top of the market price for the electricity produced.

The Commission assessed the measure under EU state aid rules, in particular the 2014 Guidelines on state aid for environmental protection and energy.

The Commission found that the aid is necessary and has an incentive effect, as the Thor offshore wind project would not take place in the absence of the public support. Furthermore, the aid is proportionate and limited to the minimum necessary, as the level of aid will be set through a competitive auction. Finally, the Commission found that the positive effects of the measure, in particular the positive environmental effects, outweigh any possible negative effects in terms of distortions to competition, in particular, since the selection of the beneficiary and the award of the aid will be carried out through a competitive bidding process.

On this basis, the Commission concluded that the measure is in line with EU State aid rules, as it will foster the development of renewable energy production from offshore wind technologies in Denmark and reduce greenhouse gas emissions, in line with the European Green Deal, and without unduly distorting competition.

Background

The Commission's 2014 Guidelines on State Aid for Environmental Protection and Energy allow member states to support projects like the Thor Offshore Wind Farm. These rules aim at helping member states meet the EU's ambitious energy and climate targets at the least possible cost for taxpayers and without undue distortions of competition in the Single Market.

The Renewable Energy Directive established an EU-wide binding renewable energy target of 32% by 2030. The project contributes to reaching this target.

The recent EU Offshore Strategy identifies the importance of offshore wind as part of the Green Deal.

The non-confidential version of the decision will be made available under the case numbers SA.57858 in the state aid register on the Commission's Competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

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EU

Commission and UN Environment Programme agree to reinforce co-operation in tackling the crises in climate, biodiversity and pollution

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The European Commission represented by Environment, Oceans and Fisheries Commissioner Virginijus Sinkevičius and the UN Environment Programme (UNEP) represented by its Executive Director Inger Andersen, agreed to enhanced co-operation between the two institutions for the period 2021-2025. A stronger focus on the promotion of circular economy, the protection of biodiversity and the fight against pollution lie at the heart of the new agreement for greater cooperation. Commissioner Sinkevičius said: “I welcome this new phase of co-operation with the UN Environment Programme that will help us to implement the European Green Deal and achieve the Sustainable Development Goals, but also to form a strong alliance ahead of crucial summits, which are to take place later in the year.”

In a virtual session, Commissioner Sinkevičius and Executive Director Andersen signed a new Annex to an existing already since 2014 Memorandum of Understanding (MoU). The signing of this document is very timely. It takes place following the fifth UN Environment Assembly meeting last week and the launch of the Global Alliance on Circular Economy and Resources Efficiency (GACERE), while the global community seeks to respond to the COVID-19 pandemic and the pressing climate, resource and biodiversity emergencies. The partners underscored the need to mobilise all areas of society to achieve a green-digital transition towards a sustainable future. More information is in the news release.

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Agriculture

CAP: New report on fraud, corruption and misuse of EU agricultural funds must be wake up call

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MEPs working on protection of the EU's budget from the Greens/EFA group have just released a new report: "Where does the EU money go?", which looks at the misuse of European agricultural funds in Central and Eastern Europe. The report looks at systemic weakness in EU agricultural funds and maps out in clear terms, how EU funds contribute to fraud and corruption and undermining the rule of law in five EU countries: Bulgaria, Czechia, Hungary, Slovakia and Romania.
 
The report outlines up to date cases, including: Fraudulent claims and payments of EU agricultural subsidies Slovakia; the conflicts of interest around Czech Prime Minister's Agrofert company in Czechia; and state interference by the Fidesz government in Hungary. This report comes out as the EU institutions are in the process of negotiating the Common Agricultural Policy for the years 2021-27.
Viola von Cramon MEP, Greens/EFA member of the Budgetary Control Committee, comments:   "The evidence shows that EU agricultural funds are fuelling fraud, corruption and the rise of rich businessmen. Despite numerous investigations, scandals and protests, the Commission seems to be turning a blind eye to the rampant abuse of taxpayer's money and member states are doing little to address systematic issues. The Common Agricultural Policy simply isn't working. It provides the wrong incentives for how land is used, which damages the environment and harms local communities. The massive accumulation of land at the expense of the common good is not a sustainable model and it certainly shouldn't be financed from the EU's budget.
 
"We cannot continue to allow a situation where EU funds are causing such harm in so many countries. The Commission needs to act, it cannot bury its head in the sand. We need transparency on how and where EU money ends up, the disclosure of the ultimate owners of large agricultural companies and an end to conflicts of interest. The CAP must be reformed just so it works for people and the planet and is ultimately accountable to EU citizens. In the negotiations around the new CAP, the Parliament team must stand firm behind mandatory capping and transparency."

Mikuláš Peksa, Pirate Party MEP and Greens/EFA Member of the Budgetary Control Committee said:   “We have seen in my own country how EU agricultural funds are enriching an entire class of people all the way up to the Prime Minister. There is a systemic lack of transparency in the CAP, both during and after the distribution process. National paying agencies in CEE fail to use clear and objective criteria when selecting beneficiaries and are not publishing all the relevant information on where the money goes. When some data is disclosed, it is often deleted after the mandatory period of two years, making it almost impossible to control.
 
“Transparency, accountability and proper scrutiny are essential to building an agricultural system that works for all, instead of enriching a select few. Unfortunately, data on subsidy recipients are scattered over hundreds of registers, which are mostly not interoperable with the Commission’s fraud detection tools. Not only is it almost impossible for the Commission to identify corruption cases, but it is often unaware of who the final beneficiaries are and how much money they receive. In the ongoing negotiations for the new CAP period, we cannot allow the Member States to continue operating with this lack of transparency and EU oversight."

The report is available online here.

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