MEPs Call for Stricter ESG Obligations and Sanctions on Companies and Directors as Global Airlines Call EU “Anti-Aviation”: GMPB

Covered in this week’s Green Mobility Policy Brief: MEPs call for stricter ESG obligations and sanctions on companies and directors; Global airlines call EU ‘anti-aviation’ over sustainability policies; New green hydrogen shipping corridor announced between Spain and the Netherlands.

MEPs call for stricter ESG obligations and sanctions on companies and directors. The European Parliament has adopted its position to negotiate with member states on integrating human rights and environmental impact into companies’ governance. Under the new rules, companies will be obligated to identify and, when necessary, prevent, end, or mitigate the negative impact of their operations on human rights and the environment. This includes addressing issues such as labour exploitation, pollution, environmental degradation, and biodiversity loss. Furthermore, companies will be required to monitor and assess the impact of their value-chain including sales, distribution, transportation, storage, and more. MEPs want the new rules to apply to all EU-based companies that have more than 250 employees and a worldwide turnover over 40 million euro. Non-EU companies with a turnover higher than 150 million euro, if at least 40 million was generated in the EU, will also be included. One crucial aspect of the new regulations is the implementation of a transition plan aimed at limiting global warming to 1.5 degrees Celsius. For large companies with over 1,000 employees, meeting the plan’s targets will directly impact the variable remuneration of directors, such as bonuses. The regulations also emphasise the importance of companies engaging with stakeholders affected by their actions, including human rights and environmental activists. Introduction of a grievance mechanism and regular monitoring of the effectiveness of due diligence policies are additional requirements. “The European Parliament’s support is a turning point in the thinking about the role of corporations in society. A corporate responsibility law must ensure that the future lies with companies that treat people and the environment in a healthy way – not with companies that have made a revenue model out of environmental damage and exploitation.” noted rapporteur Lara Wolters (S&D, NL) following the plenary vote. Transport sector undertakings will invariably be impacted by the new rules; they may face additional pressures from commercial customers and new obligations to engage with activists and other stakeholders.

Global airlines call EU ‘anti-aviation’ over sustainability policies. The International Air Transport Association’s (IATA) Director General, Willie Walsh, was quoted as saying “I think it’s fair to portray the EU as being anti-aviation, whereas other parts of the world are very positive, pro-aviation”. The remarks were made at IATA’s Annual General Meeting which was held last week in Turkey. Walsh, who previously headed British Airways, Iberia, and Aer Lingus’ parent company, the International Airlines Group, lashed out against a number of European policies, including inaction on air traffic management reform, proposals to make the EU ETS extra-territorial, and European proposals to tax jet fuel. On the topic of sustainable aviation fuel (SAF), Walsh hinted his scepticism towards the EU’s approach, saying that “the US approach to SAF is the most advanced with a system of tax credits to drive up production levels. This will be more effective than purchase mandates being considered as far and wide as Singapore, India and Europe. When there is not enough supply, a purchase mandate will drive prices up, stall innovation and limit competition long before supply increases.” According to IATA, member airlines from across the globe are expected to carry 4.4 billion flyers over the course of 2023.

New green hydrogen shipping corridor announced between Spain and the Netherlands. Cepsa, a Spanish energy company, and Yara Clean Ammonia, a Norwegian multinational, have joined forces to establish an alliance aimed at connecting southern and northern Europe with green hydrogen. The partnership was formalised in the presence of King Felipe VI of Spain and King Willem-Alexander of the Netherlands. The agreement established the first green hydrogen maritime corridor in Europe, linking the ports of Algeciras in southern Spain and Rotterdam in the Netherlands. The project, which is part of the larger Andalusian Green Hydrogen Valley scheme, will create thousands of jobs and facilitate the production and transportation of green ammonia, a product derived from green hydrogen. According to a press release, green ammonia is perceived as a sustainable solution for decarbonizing maritime transport. The companies claim that the announcement is in line with the European Commission’s Fit for 55 package, and that the new announcement should help stimulate demand for sustainable alternative maritime fuels.