ESG Weekly Update – June 15, 2022 – Corporate Governance

EU: provisional political agreement reached on draft EU directive on adequate minimum wage

On 7th June the European Council and Parliament reached a provisional political agreement on the draft directive on adequate minimum wages in the EU. The minimum wage currently varies across the EU, with each member state setting its own standards: 21 out of 27 countries have a statutory minimum wage, while the rest have minimum wages determined by collective bargaining. This translates into monthly minimum wages ranging from €332 in Bulgaria to €2,202 in Luxembourg.

The draft directive establishes a framework for adequate minimum wages but does not set a fixed minimum wage. The areas addressed by the new law are minimum wage adequacy and effective access to minimum wage protection. The draft directive also requires Member States to monitor the coverage and adequacy of minimum wages and report the data to the Commission on an annual basis.

I. Adequacy of minimum wages

Member States will be required to promote collective bargaining on minimum wage setting. In Member States where collective bargaining coverage is below 70%, an enabling framework needs to be created either by law or by defining an action plan; this action plan must be made public and provided to the Commission.

The draft directive requires Member States to take the necessary measures to ensure that the fixing and updating of statutory minimum wages is guided by “adequacy” criteria established with the aim of achieving “working and decent lives, social cohesion and upward convergence”. The suitability criteria taken into account should include, at a minimum, the following considerations:

  • the purchasing power of legal minimum wages, taking into account the cost of living and the contribution of taxes and social benefits;

  • the general level of gross wages and their distribution;

  • the growth rate of gross wages; and

  • changes in labor productivity.

The draft directive allows different statutory minimum wage rates for specific groups of workers, but these variations must be kept to a minimum and any such variation must be non-discriminatory, proportionate, time-limited if relevant and objectively and reasonably justified by an objective.

The draft directive also asks Member States to involve the “social partners” (ie trade unions and employers’ organisations) in setting a minimum wage, in particular by setting up consultative bodies. In addition, Member States should contribute to strengthening the capacity of social partners, in particular workers’ representatives, to engage in collective bargaining.

ii. Effective access to minimum wage protections

The draft directive also requires member states to cooperate with social partners to take certain measures to improve workers’ access to legal minimum wage protections. These steps include:

  • the strengthening of on-the-spot checks and inspections carried out by labor inspectorates;

  • develop guidance for law enforcement authorities to proactively target and prosecute non-compliant companies; and

  • ensure that information on statutory minimum wages is made available to the public in a clear, comprehensive and easily accessible manner.

  • Member States now have two years to transpose the directive into national law.

Connections:

Draft guideline

Press release

EU: European Parliament votes on key climate change proposals

On June 8, the European Parliament voted on several key climate change proposals. The first vote was on a proposal to reform the European emissions trading system (ETS) to reduce pollution from power stations and factories. This proposal sought to confirm Parliament’s negotiating position on the reform of the EU ETS and supported an approach to reduce emissions in sectors covered by the EU ETS by 67% by 2030, against a European Commission proposal of 61% Last year. When the proposal was tabled, the members of the European Parliament adopted amendments aimed at watering down the proposal for the reform of the EU ETS: the emission reduction target was changed to 63% and the reduction of carbon credits was slowed down, which which means that more carbon credits would be available for purchase. and carbon emissions would rise accordingly. The whole proposal was rejected, with 340 votes against, 265 votes for and 34 abstentions.

As a result, two related proposals have been postponed: namely, one relating to the Social Climate Fund, which would be partially funded by revenues from the sale of ETS permits, and the Carbon Border Adjustment Mechanism, which impose a carbon border tax.

All three proposals have now been referred to the committee level.

A proposal to revise CO2 emissions standards for cars and vans – which would effectively ban the sale of combustion engines by 2035 – was approved, with 339 votes in favour, 249 against and 24 abstentions. Intermediate emission reduction targets for 2030 would be set at 55% for cars and 50% for vans. The final text will now be negotiated in the European Council.

Connections:

minutes of parliament

Parliament press release (emission standards)

Parliament press release (ETS)



United States: the Biden administration seeks to increase American solar capacity

On June 6, the Biden administration announced measures to encourage the production and deployment of solar panels in the United States and to encourage the development of domestic solar manufacturing capacity. In support of this effort, the Biden administration announced duty-free imports from Southeast Asia for two years and issued presidential rulings authorizing the Department of Energy (DoE) to s rely on the Defense Production Act (DPA) to reduce dependence on foreign manufacturers. .

This decision allows duty-free imports of solar modules and cells from Cambodia, Malaysia, Thailand and Vietnam, which account for about three-quarters of imported solar modules and the majority of solar module installations in the United States. United States. The tariff exemption will serve as a “bridge” as US manufacturing ramps up. The administration authorizes the DoE to use the DPA to accelerate domestic production of solar panel parts as well as other clean energy technologies.

In a memo released by the White House on the DPA’s invocation, President Biden said, “I find that steps to expand domestic solar power generation capacity…are necessary to avoid a resource shortage. industrial or critical technological elements that impair the national defense capability”.

Connections:

Biden waives solar panel tariffs for four countries, invokes Defense Act



Global: Launch of the Voluntary Carbon Markets Integrity Initiative

The Voluntary Carbon Markets Integrity Initiative (VCMI) is a multi-stakeholder initiative co-funded by the Children’s Investment Fund Foundation (CIFF) and the UK Department for Business, Energy and Industrial Strategy. The Initiative was created to develop guidance on how companies can transparently use voluntary carbon markets (including the use of carbon credits) to contribute to climate change mitigation commitments.

The VCMI Initiative’s Claims Code of Practice is backed by the UK Government and helps companies develop science-aligned claims around the use of carbon offsets, including providing guidance on the use of carbon credits in as part of the commitments to achieve net zero emissions. To increase transparency around corporate climate pledge statements, before a company makes an announcement regarding the purchase of carbon credits, short-term science-based targets for reducing emissions should also be developed. According to VCMI guidelines, companies should rely on credible organizations to formulate and execute these science-based purchases and commitments.

The VCMI initiative also helps investors ensure the credibility of companies’ carbon offset claims. A company can be named VCMI Gold, Silver or Bronze, depending on the company’s progress towards meeting intermediate targets and its effective coverage of all remaining emissions with carbon credits.

The VCMI Initiative is accepting comments on its Complaints Code of Practice until August 12, 2022.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

Helen D. Jessen