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"55 per cent target is ambitious but necessary"

Date

21 Apr 2021

Sections

Climate & Environment
EU and climate neutrality
  • VDMA: EU Commission ignores mechanical engineering's contribution to climate protection
  • EU taxonomy for sustainable finance must comprehensively include machinery and plant construction
  • Innovative technologies are imperative to combat climate change
  • New CSR directive is enormous burden for small and medium-sized enterprises

Brussels/Frankfurt, 21 April 2021 - The 55 per cent reduction in greenhouse gas emissions by 2030 agreed by EU policy makers is an ambitious but necessary step towards climate neutrality in 2050. "The new climate protection target for 2030 offers significant opportunities in global competition. But achieving it now requires a rapid, market-oriented revision of the policy framework. Innovations must be stimulated by openness to technology," says Thilo Brodtmann, Executive Director of VDMA.

However, with its latest proposals on the taxonomy for sustainable finance and a revision of the CSR Directive, the European Commission is steering the opposite course. "The EU Commission's proposals disadvantage important climate technologies and hinder innovative SMEs. We will not achieve a 55 percent reduction in greenhouse gas emissions by 2030 in Europe in this way," criticises Brodtmann.

The EU Commission has defined which economic activities are climate-friendly and should still receive financing from banks in the future. The mechanical engineering industry is not included in the new set of rules - the so-called first delegated act under the EU taxonomy - without there being any justification for this.  "In its climate policy, the EU Commission unfortunately ignores the mechanical and plant engineering industry and its contribution to achieving the European climate and sustainability goals. It is thus denying support to an important developer of climate-friendly technologies," criticises Brodtmann.

EU needs engineering industry for success of Green Deal

This is because mechanical and plant engineering is already the most important supplier of sustainable and competitive technologies that lead to a circular and climate-neutral future. "With the green technologies developed by the mechanical and plant engineering sector, we can reduce greenhouse gas emissions across all industry sectors by almost 90 percent," explains Brodtmann, referring to a study by VDMA and BCG from 2020.

However, this potential can only be achieved with the right political framework conditions. "The EU Commission is making it more difficult for our companies to access sustainable finance and is thus depriving them of the opportunity to drive innovation and invest in future technologies," says Brodtmann. He therefore demands: "The approach of dividing technologies into climate-friendly and climate-hostile is already questionable in itself. Now, however, there is an urgent need for improvement. The list of sustainable economic activities must be supplemented by the many green technologies offered by the mechanical and plant engineering sector." This would certainly be feasible, as the EU Commission sees the Delegated Act as an open document that needs to be supplemented.

New CSR directive brings enormous burden with it

At the same time, the EU Commission has also reviewed the Corporate Social Responsibility Directive. It has been in force since 2017 and has now expanded its scope of application. Not only will large capital market-oriented companies be obliged to report on their social and ecological activities but also all companies with more than 500 employees, alongside smaller listed companies.

"For the medium-sized and largely family-run mechanical engineering companies, these reporting obligations represent a considerable amount of additional expense," criticises Brodtmann, estimating the additional burden to be around five to six-figure sums per company. "It would be desirable if the EU Commission limited itself here to capital market-oriented companies that already have experience with financial reporting instead of imposing additional bureaucratic hurdles on small and medium-sized enterprises - especially in the current time of crisis," Brodtmann sums up.

 

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