Sven Giegold
Mitglied der Grünen/EFA-Fraktion im Europaparlament

Sprecher Europagruppe Grüne
„Kommt, wir bauen das neue Europa!“

EU Budget for 2019: European Parliament’s Economic Committee votes for Green Projects

Last week the Committee on Economic and Monetary Affairs (ECON) in the European Parliament voted on the EU spending for 2019. A majority of MEPs voted in favour of our Green proposals. New pilot projects shall be financed in the areas of sustainable investment, money laundering and taxation. The pilot project in the area of “sustainable investments” provides additional funding for the EU Commission and the Expert Group on Sustainable Investments, which are to develop methods for assessing environmental risks. These methods are a prerequisite for banks, insurance companies and other market players to take appropriate account of climate and environmental risks in the future. To strengthen the fight against money laundering and financial crime in the EU, projects by non-governmental organisations, trade unions and academics are to receive financial support throughout Europe. Strengthening civil society in this area is an important complement to the activities of public authorities. Such support schemes have already been successful in combating tax dumping and in controlling the financial markets. The extension to money laundering would be an important step towards strengthening civil society here, too.

Following the recent adoption of various national and international initiatives to prevent tax avoidance and tax fraud, the effectiveness of these measures will be examined and remaining loopholes in the law revealed. A study will investigate in which tax havens wealthy private individuals hide how much money from the tax authorities. Currently, the data situation here is still moderate at best.

In addition, a majority of MEPs have called for the International Financial Reporting Standards (IFRS) Foundation and Public Interest Oversight Board (PIOB) to receive their full financial contributions from the EU only if they finally comply with the European Parliament’s recommendations on transparency and orientation towards the common good.

The European Parliament’s draft budget has yet to be adopted by the leading Committee on Budgets and the plenary session of Parliament. This will be followed by negotiations with the Council of Member States so that the budget can finally enter into force.

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Green proposals adopted by the Economic Committee

Draft amendment 6487

Pilot project — Capacity building for developing methodological milestones for the integration of environmental and climate risks in the EU banking prudential framework

Tabled by Sven Giegold

Budget 2018: 0

Budget 2019: 1.000.000

Remarks:

Environmental and climate risks carry challenges that are not appropriately taken into account by the financial sector. Between 60 and 80 per cent of the coal, oil and gas reserves of publicly listed companies are ‘unburnable’ if the world is to have a chance of keeping global warming well below 2°C and as closely as possible to 1,5°C as agreed at the COP21 in Paris. This means in practice that a very substantial source of global systemic risk is currently embedded within EU and global financial markets due to such ‘carbon stranded assets’.

As the Commission point out in its action plan for financing sustainable growth adopted in March 2018, ‘The increase in weather-related natural disasters means that insurance companies need to prepare for higher costs. Banks will also be exposed to greater losses due to the lower profitability of companies most exposed to climate change or highly dependent on dwindling natural resources (…) close to 50% of the exposure of Euro area banks to risk is directly or indirectly linked to risks stemming from climate change’.

As a part of its action plan for financing sustainable growth the Commission announced that in the second quarter of 2018 it will propose a Regulation on the principles and scope of a EU taxonomy for climate change, environmental and socially sustainable activities. The aim is to embed the future EU sustainability taxonomy in EU law and provide the basis for using such a classification system in different legal basis such as those regarding banking prudential standards. The Commission will also set up a technical expert group on sustainable finance. The group will be asked, based on broad consultation of all relevant stakeholders, to publish a report providing a first taxonomy with a particular focus on climate change mitigation activities by the first quarter 2019.

In the same context, the ECON committee adopted a report on sustainable finance asking the Commission to adopt a regulatory strategy and a roadmap aimed inter alia at measuring sustainability risks within the Basel IV prudential framework for banks. The report includes a commitment to initiate an EU pilot project within the next annual budget to start developing a methodology with that purpose as well as a call for introducing European ‘carbon stress tests’ and a roadmap towards a mandatory reporting of ‘carbon stranded assets’.

The proposed pilot project aims at supporting the activities of the Commission as well as of the expert group on sustainable finance by providing dedicated resources for exploring how to develop methodologies that could be used by supervisors for measuring the intensity of climate/environmental risks to which banks are exposed (including risks related to the depreciation of assets due to changes to the regulatory treatment). Such dedicated resources will also support capacity building for developing an underlying methodology for ‘carbon stress tests’.

The methodologies would have to be based on specific qualitative criteria and quantitative indicators and would be used by supervisors to assess (i) whether banks manage the abovementioned risks properly and (ii) whether the overall business strategy and investment policy of a bank is aligned with the Paris targets and EU related Environmental, Social and Governance (ESG) goals. The project would be expected to build on the EU taxonomy to be laid down by the Expert Group and further developed by the Platform to be set up by the Commission.

Legal basis:

Pilot project within the meaning of Article 54(2) of Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (OJ L 298, 26.10.2012, p. 1).

Justification:

The ECON committee adopted report on sustainable finance committing to initiate an pilot project for developing methodology for the integration of environmental and climate risks in the EU banking prudential framework as well as the development of ‘carbon stress tests’. The proposal has receive an ‘B grade’ in the Commission’s pre-assessment and the scope of the proposal was adapted to fully integrate the remarks made by the Commission to ensure that the project can be implemented.

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Draft amendment 6455

Preparatory action — Capacity building, programmatic development and communication in the context of the fight against money laundering and financial crimes

Tabled by Sven Giegold

Budget 2018: 0

Budget 2019: 1.000.000

Remarks:

This preparatory action will help to strengthen a wide range of civil society organisations, including some new actors not actively involved in fighting money laundering and financial crimes, so as to build up their expertise and capacity in connection with European law and rules, enhance awareness-raising efforts and further develop tools and instruments to fight money laundering and financial crimes. In the light of the challenges revealed by Panama and Paradise Papers scandals and the fifth revision of the Anti-Money Laundering Directive (providing public access to beneficial owner registers of companies and access to people with a legitimate interest for beneficial owners of trusts), it is apparent that the Union-level capacity of a wide range of organisations (e.g. NGOs, trade unions and academic communities) in this field needs to be boosted. Enhanced capacity building for research, training and awareness raising, alliance building (including with journalists) and greater involvement of civil society experts in the design and implementation of, and advocacy for, action to combat money laundering and financial crimes will create synergies with current Union efforts to put an end to such abusive and criminal practices.

Legal basis:

Preparatory action within the meaning of Article 54(2) of Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (OJ L 298, 26.10.2012, p. 1).

Justification:

In the light of the challenges revealed by the Panama and Paradise Papers scandals and the fifth revision of the anti-money laundering directive, it is apparent that the Union-level capacity of a wide range of organisations (e.g. NGOs, trade unions and academic communities) in this field needs to be boosted.

The proposal has receive an ‘A grade’ in the Commission’s pre-assessment, explaining that the project can be implemented as originally proposed.

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Draft amendment 6456

Pilot project — Monitoring the amount of wealth hidden by individuals in offshore financial centres and impact of recent internationally agreed standards on tax transparency on the fight against tax evasion

Tabled by Sven Giegold

Budget 2018: 0

Budget 2019: 200.000

Remarks:

New tax standards have been recently agreed and implemented to increase automatic exchange of tax information among tax authorities. Whether they are national (but with international effect, like the FATCA legislation in the US) or international (like the OECD Common Reporting Standards, implemented in the European Union through the Directive on Administrative Cooperation), these standards aim at curbing tax evasion by individuals by ensuring greater access to information by tax authorities. This pilot project aims at measuring to what extent these measures are effective in curbing international tax evasion as tax evaders might find new loopholes or shift their wealth to less compliant jurisdictions. Thanks to an analysis of data from multiple sources, including but not limited to data from the IMF, the Bank for International Settlements, the European Commission and from academics, this pilot project aims at presenting a study on cross-border transactions involving personal wealth (and therefore potentially relevant for tax evasion by individuals) such as portfolio investments, loans and deposits or foreign direct investments. The study should also look at potential new loopholes to be exploited in order to circumvent these standards (e.g. citizenship/residency programmes or other aggressive tax competition measures for high net worth individuals). This project will build on ongoing studies currently conducted by the European Commission (on the evaluation of the directive on administrative cooperation and on tax evasion by individuals) and available early 2019. With a timeframe of two years (2019-2020) and with a spirit of complementarity, this research will provide additional geographical and statistical information as to offshore financial centres and their impact for the fight against tax evasion in the Union.

Legal basis:

Pilot project within the meaning of Article 54(2) of Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (OJ L 298, 26.10.2012, p. 1).

Justification:

New tax standards have been recently agreed and implemented to increase automatic exchange of tax information among tax authorities in order to fight tax evasion. This pilot project aims at measuring to what extent these measures are effective in curbing international tax evasion as tax evaders might find new loopholes or shift their wealth to less compliant jurisdictions.

The proposal has been revised to fully take into account the Commission’s pre-assessment and feedback.

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Draft amendment 6138

Standards in the fields of financial reporting and auditing

Tabled by Sven Giegold

Budget 2018: 8.446.000

Budget 2019: 8.515.000 but 1.000.000 put into the reserve

Conditions for releasing the reserve:

The reserve is to be released under the condition that the requests made in the European Parliament (Stolojan) initiative report on IAS evaluation and the activities of the IFRS Foundation, EFRAG and the PIOB (2016/2006(INI)) are fulfilled by the IFRS Foundation and the PIOB.

Justification:

Funding for the requests made in the European Parliament (Stolojan) initiative report on IAS evaluation and the activities of the IFRS Foundation, EFRAG and the PIOB (2016)/2006 (INI) should be ensured.

Rubrik: Mein Europa

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