POLITICO Pro Sustainability Insights: Greening the agenda — Sustainability reporting disagreements — Bayer splashes out

By Eline Schaart and Paola Tamma | @elineschaart | @paola_tamma | View in your browser

With thanks to David M. Herszenhorn and Eddy Wax.

GOOD AFTERNOON READERS and welcome back to Sustainability Insights. As usual, send those tips, tricks and tales to Eline Schaart at eschaart@politico.eu and Paola Tamma at ptamma@politico.eu.

EU INSTITUTIONS

GREENING THE AGENDA: At their summit Thursday, EU leaders plan to adopt a new “Strategic Agenda” for the next five years, laying out priorities for the bloc’s new leadership (see here an earlier draft version from June 7).

Climate neutrality: Efforts by a bloc of countries led by France to get the leaders to agree to a 2050 target for cutting emissions to net zero are running into trouble. Draft conclusions, dated today and seen by POLITICO, don't call for climate neutrality by then. Instead, the European Council "invites the Council and the Commission to advance work on the conditions, the incentives and the enabling framework to be put in place to support a transition to a climate-neutral EU in line with the Paris Agreement." That's a recognition of opposition from countries like Poland and Bulgaria, which fret about the economic cost of such an ambitious goal.

2050 momentum: Despite the cautious wording of the draft, the momentum is with the countries wanting a 2050 target. The latest addition to the group is Germany. Kalina Oroschakoff and Helen Collis report, or read below.

Green lobbying: Environmental group WWF this morning listed all EU country positions supporting a net zero target for 2050. So far, 16 of the 28 member states are officially on board, according to the document. Only three countries are strongly opposed: Bulgaria, the Czech Republic and Poland. Another nine are ranked as “looking promising,” “unlikely to block” or “opposed but might do a deal.”

NGO reax: Environmental advocacy groups were pleased about Germany's shift of position on 2050, but angry over the lack of any reference in the draft Strategic Agenda to the need to curtail agriculture emissions — notably from livestock farming. In response, the new draft adds language citing the need “to promote sustainable agriculture, which is vital to guaranteeing food safety and fostering quality production.”

MEPs JOINT PROGRAM TALKS: Representatives from the four main pro-EU political groups in the European Parliament — the European People's Party, the Social Democrats, Renew Europe and the Greens — met this morning to put the finishing touches to a joint program for the next five years. It includes the environment, climate change and green issues. The goal is to have a draft text ready for approval at a Conference of Presidents meeting on Tuesday.

AUDITORS AND COMMISSION DIFFER ON SDG REPORTING: The European Commission and European Court of Auditors are looking at what constitutes good sustainability reporting. Last week, the auditors published a report saying the Commission, and other EU institutions and agencies, fall short on reporting on sustainability, despite being committed to implementing the Sustainable Development Goals (SDGs) and telling companies to do so.

Brussels push-back: But the Commission doesn’t entirely agree with its (bad) score. Vice President Jyrki Katainen said this morning at a forum on sustainability reporting that “progress assessments are provided [for] in several reports,” referring to a Eurostat report and EU reflection paper on sustainability. “So as a first reflection to [the auditor’s report] I wish to underline that the Commission of course does report and monitor how” EU policies impact the environment. Gert Jan Koopman, head of the EU's budget department, said that complexity of sustainability reporting at the national and EU level is “daunting.” He also noted that the SDGs “fall outside the scope of our responsibility and action.”

Eva Lindström, a member of the audit committee, responded during the event to the Commission officials, by saying that the Eurostat report and reflection paper are not sustainability reports.

More sustainability reporting disagreement: A $10 trillion investor alliance today accused more than 700 companies of failing to reveal the full extent of their impact on climate change, water shortages and deforestation. The report by Corporate Disclosure Project, an NGO, said that 547 companies were being targeted to disclose information on the climate crisis, 166 on water security and 97 on deforestation. “We know that climate change, water security and deforestation present material risks to investments, but these risks cannot be managed without proper information,” said Emily Kreps, a director at the project.

**Can Europe find a way to reconcile people’s economic aspirations with their wish to build an economic model more respective of the environment? Join POLITICO’s 1st edition of its Sustainable Future Summit on November 14 in Brussels and share your thoughts on sustainability. Bear in mind that you can still benefit from a 40% Crazy Early Bird Discount.**

CLIMATE CHANGE

SUSTAINABLE ENERGY WEEK: The EU sustainable energy week kicked off today with a series of events about renewables and efficient energy use. The focal point of the week is a policy conference running from Tuesday to Thursday, with Energy Commissioner Miguel Arias Cañete and Romanian Energy Minister Anton Anton speaking at the opening ceremony. You can find the full schedule here.

EU VS. HOT AIR: Kalina had a look at whether a global effort to rein in the airline industry’s greenhouse gas emissions undermines the EU’s fight against climate change. Have a read here, or scroll below.

WASTE / PLASTICS / CIRCULAR ECONOMY

INCINERATION RULES: National experts today agreed on a draft implementing act — a way of setting policy that doesn’t require parliamentary oversight — defining the limits for industrial emissions from waste incineration. That means only incinerators that run exclusively on non-biomass waste such as unrecyclable plastic will have to follow stricter limits and cut emissions. Those mixing their waste with some biomass — like wood chips or vegetable waste — could be exempt from the new, more stringent rules. “It is important that the Commission and governments now heed our warning to remove this loophole,” said Schaible.

Worried NGOs: Environmental groups are concerned that the standards include a loophole that could encourage some to use a poisonous mix of waste to dodge EU limits, said Christian Schaible, policy manager for industrial production at the European Environmental Bureau, an NGO.

G20 ENVIRONMENT MINISTERS TACKLE PLASTIC WASTE: G20 environment ministers meeting in Japan over the weekend agreed to tackle marine plastic waste.

G19 stick to Paris: Unity broke down when it came to climate change. “All countries except the United States affirmed in the joint conclusions their commitment to implement the Paris climate deal,” according to a German environment ministry statement.

CHEMICALS

CHEMICALS LEGISLATION COMPLAINTS: A group of 27 NGOs today sent a letter to the European Commission asking why the publication of a report on the fitness check on chemicals legislation had been delayed. The environmental groups said they had "previously understood" that the purpose of a June 27-28 high-level conference on chemicals policy was "precisely to use this document ... to have an informed discussion on the future of chemicals policies." The NGOs urged the Commission to "urgently release the outcome" ahead of the conference. The letter adds: "We also urge you to clarify by then the proposed timeline for the development of the non-toxic environment strategy, the promised overhaul of the strategy on endocrine disruptors and the assessment of the interface between chemicals, product and waste legislation."

BAYER SPLASHES OUT: Bayer will spend €5 billion on new ways to combat weeds, as the company prepares for the possibility that glyphosate — the key ingredient in its controversial herbicide Roundup — could be banned in the EU from the end of 2022.

In a statement released Friday, the pesticides-maker said: “While glyphosate will continue to play an important role in agriculture and in Bayer’s portfolio, the company is committed to offering more choices for growers.” French President Emmanuel Macron has outlined plans to ban glyphosate in France by 2021 and last week Austria announced it would soon hold a parliamentary vote on a ban. Glyphosate’s five-year EU license is up for renewal in December 2022. Spending of this magnitude — equivalent to the amount Bayer budgets annually on all research and development — suggests it knows glyphosate is in trouble.

Bayer’s bind: Christian Hartel, a Bayer spokesperson, said the funding announcement was “completely independent” of any talk about glyphosate being banned. “We would invest this money anyway,” he said. But Bayer is in a tricky position. If it admits it is plowing money into a potential post-glyphosate future, it would undermine its argument that there is no imaginable weedkiller as safe and efficient for farmers.

AGRICULTURE

SUSTAINABLE FARMING IN THE NETHERLANDS: The Dutch agricultural sector must become more sustainable, which means food will become more expensive, according to Agriculture Minister Carola Schouten. In a letter sent to Dutch parliament today, Schouten said the government wants to make €135 million available for making agriculture more circular, including replacing artificial fertilizers with manure and making animal feed more sustainable. The idea is to cut agriculture carbon dioxide emissions.

According to Schouten, responsibility for the change lies not only with the government, but also with banks, the retail sector, social organizations, consumers and farmers. "We should no longer produce as cheaply as possible," she said, "but produce with as little loss of raw materials as possible and careful management of soil, water and nature. That is the core of a circular agriculture."

SUSTAINABLE FINANCE

FUNDING ENVIRONMENT: The European Commission on Tuesday introduces a technical expert group’s final report on a “taxonomy” to define what economic activity merits a climate-friendly label. The policy aims to channel Europe’s copious savings into investment needed to meet the commitments of the Paris Agreement. Since 2016, the EU has introduced legislation to wire green terminology into corporate disclosures, market indexes and rules for money managers. The taxonomy will fill in the keywords.

This week’s final submission will set out the expert panel's thinking, but the Commission still gets to decide how to cast the measures into binding rules. “We are already doing some preparatory work for preparing the taxonomies themselves,” Valdis Dombrovskis, the Commission vice president for financial services, told journalists on Friday.

GREEN GLANCES

Environmental group Chemtrust is threatening U.K. Environment Secretary Michael Gove with legal action, accusing him of weakening laws on pesticides and allowing the use of endocrine disrupting chemicals post-Brexit.

The Commission wants feedback from member states, industry, NGOs and users on sustainable batteries. The consultation is open until August 8.

Danish economist Inger Andersen on Saturday took over as head of the U.N. Environment Program.

The Guardian reported from 11 countries to track down how U.S. waste makes it way across the world — and overwhelms the poorest nations.

European Environment Agency’s chief Hans Bruyninckx wrote an op-ed as agency turns 25.

The U.K. is set to host the U.N.’s COP26 climate change summit next year, Buzzfeed reports.

The Council of the EU this morning adopted conclusions that approve EU human rights guidelines on safe drinking water and sanitation.

This weekly newsletter is part of POLITICO’s Sustainability Pro service, which dives deep into sustainability issues across all sectors, including: circular economy, waste and the plastics strategy, chemicals and more. For a complimentary trial, email pro@politico.eu mentioning Sustainability.

***POLITICO Pro Articles***

Germany joins push for EU-wide 2050 net zero emissions goal

— By Kalina Oroschakoff and Helen Collis

Germany will join a growing push for an EU-wide target of cutting greenhouse gas emissionsto net zero by 2050, increasing the odds that EU leaders could formally agree to the goal this week, according to EU officials.

The European Commission proposed last year that the bloc adopt a mid-century net zeroemissions goal, meaning the EU would absorb as much greenhouse gases as it emits. Member country leaders are set to discuss the bloc’s long-term climate strategy at a European Council summit Thursday. The EU’s current goal is to cut emissions by at least 40 percent by 2030, and efforts to increase that target have failed.

Germany, along with several Central European countries, was previously wary of backing the 2050 climate neutrality goal over concerns it could hurt jobs and economic competitiveness. Berlin did not express support for the goal at a meeting of EU leaders in Romania last month.

But Chancellor Angela Merkel is under growing political pressure at home to do more to cut emissions and meet climate targets; and last week the government issued a position paper supporting the target, according to officials.

Berlin’s backing adds to growing pressure for the EU to adopt the goal. France is spearheading an alliance of countries that want to get the bloc to make the commitment ahead of a U.N. climate summit in September.

The group — originally made up of eight largely Northern and Western EU members — has grown to more than 16, including Latvia, Slovenia, Malta, Cyprus, Greece and Italy, according to officials. The U.K. government on Tuesday also announced it would put the net zeroemissions goal into law, one of Theresa May’s final moves before leaving her post as prime minister.

Wording pressure

Still, draft Council conclusions, dated June 11 and seen by POLITICO, do not commit countries to the goal, Instead, they adopt more cautious language, calling for the EU to “advance work on the conditions, the incentives and the enabling framework to be put in place to support the fair transition to a climate-neutral EU.”

But officials and observers now hope Germany’s shift could sway Eastern European countries to follow suit. The new German position is a “really big thing,” one European diplomat said, adding that it raises pressure on those wary of the 2050 target.

“It will become more difficult to resist pressure if you not only have [French President Emmanuel] Macron, and also Merkel” supporting the goal, the diplomat said.

According to officials, Bulgaria and Poland “openly” expressed their opposition to the 2050goal at an ambassadors’ meeting last week. European Council conclusions need unanimous support to be adopted, but that doesn’t mean a deal is impossible.

EU officials said countries could be swayed if their support is part of a broader package, including financial incentives, which they can sell to voters back home. Another EU official said the position of resisting countries was to “show me the money first.”

Environmental campaigners are quietly confident that the EU will adopt a 2050 goal ahead of a crucial U.N. summit aimed at spurring governments to ramp up their emission cuts under the Paris Agreement.

“The dominoes are falling … Germany now needs to play an active role to bring all remaining countries on board,” said Sebastian Mang, climate policy adviser with Greenpeace EU. “But to avert climate breakdown and safeguard the EU’s global leadership, European leaders need to show that they are also prepared to boost existing 2030 targets.”

U.N. Secretary-General António Guterres, who will host the September 23 summit, has also urged the EU to step up its climate goals. He said in a letter to European Council President Donald Tusk, dated May 23 and seen by POLITICO, that the EU must commit to increasing its emission reduction efforts by 2030, “while aiming at a target of 55 percent reductions in emissions.”

Guterres added he would also “welcome” the EU adopting a long-term vision for a “carbon-neutral economy by 2050.”

“I am counting on you, once again, to demonstrate the leadership of the European Union,” Guterres said.

***

EU takes aim at global airline emissions pact

— By Kalina Oroschakoff

This article is part of a special report called Aviation’s Climate Challenge.

Could a global effort to rein in the airline industry’s greenhouse gas emissions undermine the EU’s fight against climate change?

That’s what regulators in Brussels worry could happen as the United Nations takes on one of the fastest growing causes of global warming.

At issue is the so-called Carbon Offsetting and Reduction Scheme for International Aviation (Corsia), which would require airlines to buy into forest planting schemes or other efforts to suck carbon dioxide from the atmosphere if they pollute more than they are currently doing.

Some EU officials say the approach proposed by the U.N.’s International Civil Aviation Organization is not transparent enough, vulnerable to fraud and miscounting, and in any case doesn’t go nearly far enough.

Worse, it could derail the EU’s own efforts to force the industry to cut its greenhouse gas emissions.

“We can no longer rely on offsetting to deliver long-term climate goals,” Mauro Petriccione, the European Commission’s top civil servant working on climate change, said at a conference on international carbon markets. “The use of international carbon markets needs to reflect ambition. We cannot remain stuck in the past.”

Green skies ahead

Aviation accounts for about 2.5 percent of global CO2 emissions, and grew by 5 percent last year. But the sector has largely been left out of global efforts to rein in rising greenhouse gas emissions.

Airline emissions are not covered by the landmark 2015 Paris climate accords. The schemes that do try to address the industry largely aim at keeping aviation emissions flat, even as emissions from other parts of the economy — power stations, manufacturing industries, cars — are required to cut back. This means that the sector’s emissions will make up an ever larger share of global emissions.

The one place where the industry is required to cut back is in the EU. Since 2012, airlines flying within the European Economic Area are forced to buy permits covering 15 percent of the sector’s emissions under the Emissions Trading System — a bloc-wide carbon market. The EUhas sought to expand the scheme to include international flights, but the effort was rebuffedin 2012 by major powers such as the United States and China.

Far from wanting to lighten these regulations, the political winds, as evidenced by last month’s European Parliament election, are blowing toward holding the industry to higher standards.

“It’s the most important fight we have to fight internationally,” said Peter Liese, the environmental coordinator for the European People’s Party, the parliament’s biggest group.

By 2024, the EU will also have to review whether to include international aviation in the ETS. European lawmakers are already gearing up to tighten the screws on airlines.

Leading environmental MEPs such as the EPP’s Liese now want to boost the number of emission allowances carriers have to buy from 15 percent to as much as 100 percent.

Free emissions allowances are “effectively a fossil fuel subsidy,” said Bill Hemmings, director of aviation and shipping with the NGO Transport & Environment. “Why should the ETS provide a fossil fuel subsidy to the aviation sector? … It’s perverse that they don’t have to pay.”

‘Hot air’

Corsia, by contrast, takes a much lighter approach.

The scheme would cap airline emissions at an average of 2019 and 2020 levels, and by 2027 carriers emitting more than that would have to buy carbon offsets — although it’s still unclear who they’d buy those offsets from and who would regulate such a global program.

Corsia is backed by the aviation industry, which is keen on a global market-based measure that would avoid having to comply with a tangle of regional schemes. But the plan hasn’t found much favor among environmental activists or many European politicians.

The concern among EU climate officials and environmental campaigners is that Corsia will be full of loopholes.

That includes double-counting emissions savings, worries over whether regulators will stick to offsetting standards, and poor compliance rules. Another issue is whether the system will allow the sector to use surplus emission permits created under the 1992 Kyoto Protocol, the Paris Agreement’s precursor.

European Commissioner for Energy and Climate Miguel Arias Cañete warned last week that continued use of “substantial” amounts of Kyoto emission permits in global carbon market schemes “will reduce ambition or at least defer action for many years.”

There are also questions over the effectiveness of Corsia, which will be voluntary until 2027, and whether major polluters will opt in from the start. Signals suggesting China won’t join the voluntary phase has EU officials worried this could undermine the case for the U.S. to comply and leave Europe saddled with more onerous obligations than its rivals.

The European Commission has to make an assessment on whether Corsia is robust enough, once it’s started, to allay the bloc’s environmental concerns, and how the EU should apply it domestically.

“If Corsia is not more than a fig leaf, there will be lots of voices, not least in the Parliament, to say, ‘No, let’s not count it,” said a long-standing EU observer who was involved in aviation measures. “Politically, we back the scheme but we always left open that it should be meaningful.”

Some have already made up their mind.

“Corsia — that’s an absolute joke,” said Liese, adding the scheme doesn’t require emission reductions from the industry. “It’s just hot air.”