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Dear reader,

Welcome to Publyon’s monthly Sustainability Newsletter. This month’s edition contains an invitation for you to be part of the Publyon ‘Beyond the Ballot’ campaign, which will give you all the insights about the European and Belgian Elections.

Furthermore, we are delving into the latest trialogue updates on the Packaging and Packaging Waste Regulation. Additionally, we speak to Burçak İnel of the European Banking Federation about the importance of sustainability and corporate reporting for businesses willing to access capital, as well as about best lobbying practices.

The spotlight

The spotlight

Publyon’s Beyond the Ballot

Undoubtedly, 2024 is a time of political shift. The upcoming European and Belgian elections taking place in June are a unique moment for businesses. They offer an opportunity to proactively shape the political discussions and decisions that will influence the priorities of the forthcoming Belgian government, and the EU.

Publyon is proud to introduce our Beyond the Ballot series, consisting of webinars and reports that will help you to be well-informed about the political developments in Brussels and provide you with guidance on how to effectively take advantage of opportunities stemming from the elections.

Sign up to our free webinars here below! 

For more information, visit our dedicated page

Policy update

Policy update

Packaging and Packaging Waste Regulation

As you read this newsletter, the European Institutions are currently discussing the Packaging and Packaging Waste Regulation. These talks officially started on January 10. The discussions are moving quickly, and the leaders aim to agree on a final text by March. This gives the Parliament enough time to vote on the rules before their final meeting in late April.

Although they’ve made progress on the technical parts, there are still big challenges ahead.

They need to decide on reusing and refilling targets, limit the use of single-use packaging, and figure out how to shape deposit systems. These tough issues will be discussed in the first talk on February 5, and the talks about reusing things will happen in another meeting on March 4.

But this is not nearly all. European Parliament President Roberta Metsola announced she will conduct an internal investigation into whether industry lobbyists went too far lobbying Members of the European Parliament.

An inquiry has been initiated by the European Parliament to examine potential overstepping by industry lobbyists in influencing lawmakers to relax new EU regulations intended to replace disposable packaging with reusable alternatives. According to POLITICO, President Metsola confirmed in an email that the institution’s security department would conduct an internal investigation to uncover the conduct and potential security violations of interest representatives in this instance. Furthermore, certain MEPs reported instances where lobbyists followed their staff into restrooms, and others noted unauthorized entries into their offices.

Upon a thorough review of the proposed amendments to the legislation, it becomes evident that different groups of MEPs have introduced remarkably similar changes, mirroring those advocated by certain paper and predominantly single-use industries. The Parliament’s ultimate stance suggests an inclination toward easing restrictions on single-use packaging and diluting the emphasis on reusable alternatives, a direction that many perceive as contrary to the intended goals. This is the matter President Metsola aims to explore further.

Though the trajectory of the investigation remains uncertain at this point, stay tuned for updates, and in the meantime, explore our dedicated blog post for insights into how upcoming packaging regulations impact businesses.

 

Expert interview

Expert interview

Burçak Inel, Director of Financing Sustainable Growth

This month we prepared a special interview with Burçak Inel. She oversees the European Banking Federation (EBF) team dedicated to advancing the financial sector’s contribution to inclusive and sustainable growth through SME lending, financial markets, and sustainable finance.

She employs regulatory advocacy, research, and best practices to facilitate the expansion of banks’ financing for the economy. In this edition, we discuss sustainability and key considerations for businesses to meet the expectations of financial institutions as well as best practices in lobbying.

 

Could you introduce yourself in 2-3 sentences explaining your background and role at EBF?

My name is Burçak İnel. I am a member of the leadership team of the European Banking Federation, the pan-European trade body that represents 3500 commercial, private banks through their national banking associations. Within the EBF, I manage a strategic pillar dedicated to improving bank financing of sustainable and inclusive growth through regulatory advocacy, best practices and partnerships.

We are a team of seven and work with a senior group of members and bankers and banking association experts from the main three fields we work on, which are business finance, financial markets, and sustainability.

On a personal note, I am a naturalized Belgian citizen, originally from Turkey, with an American background and a German spouse. After moving from Washington, D.C., to Brussels over 20 years ago, I worked on the EU’s financial sector policies from different angles. Over the years, I have taken an increasing interest in the underlying economic, political, and social challenges facing Europe and how the EU can create prosperity for its own citizens and be a force for good in the world.  I am personally passionate about democracy, freedom, and economic and social justice.

 

For non-financial sector businesses aligning with EU policies on sustainable finance, what key considerations and opportunities should they focus on, and how can they adapt to meet evolving EU financial sector industry expectations?

First of all, for non-financial sector businesses, there are many reasons to adopt sustainable business strategies, and many are doing exactly that. Sustainable business strategies are smart business strategies because they allow you to improve your financial performance, build up your long-term resilience and competitiveness, and get aligned with the expectations of your core stakeholders (investors, clients, suppliers, employees and communities).

Actually, banks are very similar to their corporate clients in that sense: they too have their strong intrinsic reasons to adopt sustainable business strategies, no matter what the sustainable finance framework says, because it makes business sense. And European banks have been integrating sustainability at the heart of their businesses, focusing on the impact of their financing. They have been executing governance changes, adopting targets and metrics, training their staff, adapting business policies and processes, etc., acting both individually and collectively, for example through the NZBA, and of course through many initiatives within the EBF. 

Against this backdrop, banks are already engaging with their corporate and household clients on sustainability, rolling out new products and services, and seeking to accompany the clients on their sustainability journeys. Corporations should expect to have more of such conversations with their banks and work with their banks to make the transition to a more sustainable business model. They should also consider that banks’ own reporting depends on data from their clients, so having good transition plans based on good data will help companies to secure access to the funding they need.

In other words, we need corporates that are aware, that have the capacity and the willingness to initiate and implement the necessary changes to their business models. But for all this to run smoothly, we also need underlying economic policies that make such investments profitable and we need a truly enabling financial sector policy framework. That means EU policies that set the ground rules for transparency, fair competition and legal certainty, and prevent inconsistencies, gaps and uncertainty.  

 

Can you share with our readers some best practices of implementing the EU Taxonomy and navigating the regulatory landscape set by the European Union? / How can businesses effectively navigate and leverage the EU Taxonomy to enhance their sustainability efforts, and what impact will this have on their access to financing?

We are now starting the implementation of the complex set of reporting rules applicable to companies and banks. We will see a lot more reporting, and requests for information. Our view is that, despite everyone’s best efforts, there are many gaps in the data, and remaining inconsistencies in the methodologies, so we have to continue to improve the practical implementation of the rules. I encourage companies to work with their industry bodies and to also invest internally in a sustainable business transformation, not just as a compliance exercise but as a way to become more competitive.

We as the EBF have been focused on improving the implementation of the EU taxonomy on banks’ balance sheets from the start; we have a partnership with the UNEP Finance Initiative and prepared two reports that looked at what the Taxonomy means in the context of general purpose and use of proceeds financing provided by banks. We also worked closely with SMEunited to understand how best to help SMEs, on a voluntary basis, to assess and improve their own sustainability performance.

The EU Taxonomy is the symbol of the EU’s global leadership in this area. We should all be proud of having a science-based classification system to make sense of sustainability claims. On the other hand, we know that data will simply not be there to accurately and comprehensively capture, through the Taxonomy, all the investments that many of us would consider as green, for example solar panels or e-vehicles.  (We therefore welcome the EBA’s recent call for a broader green loan definition). That does not mean we cannot get any useful information from reporting based on the Taxonomy, but we just have to realize that this reporting may not fully reflect the true sustainability performance of companies or their financiers.

 

What role do Chief Sustainability Officers play in aligning banking practices with EU sustainability objectives, and how does this relate to EU policy goals?

We had a very interesting report on this topic in 2022 (“The big picture: how Chief Sustainability Officers can drive the banking sector’s sustainability efforts”). We discovered that many banks have something equivalent to a CSO (even if they may call it differently) and that these roles are emerging as a powerful new addition to the C-suite. These are not just a revamped version of the long-standing Corporate Social Responsibility positions. The CSOs act in different capacities as an agent of change, mediator, coordinator, influencer, business leader and a trusted colleague in a challenging and rapidly evolving business and regulatory environment. 

Sustainability cannot be dealt with single-handedly by one position or one team, but a clear job description with authority, resources and links to the top leadership of a bank do seem to allow the CSOs to steer, accelerate and reinforce their bank’s sustainability journey. We get together with our CSOs on a regular basis (as a complement to the meetings we have with experts from the business lines of banks and banking associations). CSOs strengthen their banks’ sustainability practices and make it easier for us as their federation to understand what is really changing on the ground.

 

In light of EU policies, what guidance would you provide to businesses seeking investments or contemplating going public?

I think my most important advice would be to internalise sustainability as part of their business model and to tap into the EU’s banking and capital markets financing to achieve their investment goals. Putting aside the implementation glitches we have to overcome as an industry, with the help of the policymakers, the reality is that the EU is a leader in sustainability, with a much stronger political consensus about the change that must happen, and with a policy framework that reflects this worldview. Hence Europe is a good place in which to borrow, to raise capital, to invest.

I am also confident that the emerging ecosystem of market participants providing services and products to issuers and investors will find top-notch solutions to the practical problems, so we will be able to draw full benefit from the fact that we, as a jurisdiction, were the first one to establish such a comprehensive framework. 

 

As a former “Lobbyist of the Year,” what advice would you give to businesses seeking to influence the EU policy arena?

It was back in 2003 – only in my second year as a lobbyist, to be honest – that I was given this title in a global Euromoney competition. It was a campaign that I executed, coordinating all the main stakeholders from the industry, to improve a piece of primary markets legislation that fundamentally changed companies’ access to capital markets.

Even though many years have passed and the EU itself has also changed, some things have remained the same: to be effective in EU affairs, one has to have strong, fact-based arguments that relate to the common good. EU policymakers need to know who will be affected how by their proposals and consolidate this feedback in a rational, efficient, just policy. Then there is the pure process: one has to provide input at the right moment of the process.

Finally, it is best to act in collaboration with others who are affected by the same issue. In this sense EU associations play a key role, but it is even better when associations are able to collaborate with one another on a clear message, as had been the case with that campaign. I had worked with issuers, investors, and different parts of the industry serving them, to come up with clear improvements based on facts, and provided that input at the right moment of the legislative process.

 

How can collaboration between financial institutions, businesses, and regulatory bodies be strengthened to achieve a more cohesive and effective approach to sustainable finance?

There are things we can do to improve the functioning of the policy framework. We all have to work on further standardisation and on closing data gaps. We need to provide feedback to the EU, which is itself doing its best to improve the implementation. There are also solutions that are not regulatory in nature, such as voluntary standards, which could reduce the compliance costs and grow the sustainability market.

Then there are things that the financial sector industry and the non-financial sector actors can do to increase the universe of bankable projects. There are initiatives led by the industry, NGOs, government bodies, etc to identify and expand the universe of such projects and purchases.

 

How do you see international collaboration shaping the future of sustainable finance, and what efforts are being made to align with global standards and initiatives in this regard?

The EU has been a leader in both climate policies and the sustainable finance framework, but to turn that into an advantage for the EU’s economy, we need sustainable finance markets, products, and services to grow.  To some extent, whether such a market grows will depend on structural policies that have seemingly nothing to do with sustainability – such as those needed for the further development and integration of our capital markets and the re-emergence of a sound securitization market.

On the other hand, a consistent, inter-operable international policy framework will also be helpful for boosting the competitiveness of EU banks active globally. That is why we are following international developments closely and have been advocating for the concept of inter-operability, based on the acknowledgement that EU banks’ compliance with EU rules, clearly the most robust in the world, must be considered as compliance with international standards.

Blog

Blog

Top EU sustainability trends to watch in 2024

The EU is committed to its goal of achieving climate neutrality by 2050. This commitment not only tackles climate change risks but also enhances the EU’s strategic autonomy, long-term competitiveness, social economy model, and global leadership in the net-zero economy. Looking ahead to 2024, Publyon has analysed the upcoming trends shaping the EU’s sustainability agenda.

READ ARTICLE
Top EU sustainability trends to watch in 2024
Eliza Druta

Eliza Druta

Hi, my name is Eliza and I am curating this newsletter to bring Brussels’ main sustainability insights to your inbox, every month. Do not hesitate to reach out should you need more information on the newsletter’s content or if you have suggestions for our next editions.

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