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Our regular update provides members with an insight into the latest leasing and car rental industry news, policy developments, and upcoming events in an easily digestible format. It brings together up to date information on topics that will impact the leasing and car rental industry in a single place, and keeps members updated on the work of Leaseurope’s advocacy team.
In this issue, we provide updates on Leaseurope work regarding business taxation, the MVBER framework, AI Act, charging infrastructure and securitisation. We inform you on the French Presidency priorities, updates to the Taxonomy Regulation, the new Urban Mobility Framework, the revised Energy Performance of Buildings Directive, integrated prudential reporting, ESG risk disclosures, and the EBA Quarterly Risk Dashboard.
LEASEUROPE ACTIVITIES
BUSINESS TAXATION FOR THE 21st CENTURY
Last year, the European Commission published their Communication on Business Taxation for the 21st Century, setting out their long-term vision to provide a fair and sustainable business environment and EU tax system. Leaseurope has pointed out that initiatives should not focus solely on large corporates and infrastructure providers, as this would be a missed opportunity to help SMEs contribute to a more sustainable European economy through their investment in new equipment and vehicles. As a key enabler of SME investment, all types of leasing and automotive rental should be carefully considered in any tax policy goals to support investment and sustainability.
MOTOR VEHICLE BLOCK EXEMPTION RULES TO BE EXTENDED
The block exemption rules in competition policy for motor vehicles (MVBER) expire on 31 May 2023. Following last year’s review process, which included feedback from Leaseurope and various other stakeholders, the European Commission will propose to prolong the duration of the existing MVBER regime for another 5 years period (i.e. until 31 May 2028). According to recent exchanges, the European Commission plans to introduce limited targeted updates to the Supplementary Guidelines to reflect developments in the automotive industry since 2010. They will be consulting stakeholders on the draft rules in the second quarter of 2022, and the final adoption is foreseen in the second quarter of 2023. Whilst Leaseurope is pleased the Commission acknowledges a need to prolong the MVBER regime, we will continue to argue for a significantly updated regime, both in the Articles themselves as well as updated guidelines.
NEGOTIATIONS AROUND ARTIFICIAL INTELLIGENCE COMMENCE
At the beginning of this year, political negotiations around the world’s first AI bill started in earnest. Providers of “high risk” AI systems will have to ensure that their “training, validation and testing data sets shall be relevant, representative, free of errors and complete” and give authorities “full access” to their training data. Leaseurope members already apply a variety of AI driven processes, for example when conducting Credit Worthiness Assessments, and it will be key to ensure these regulations are not costly to the point of stifling innovation. Romanian MEP Tudorache will team up with MEP Benifei (S&D, Italy), who leads negotiations in the internal market committee. The Rapporteur has indicated that his primary focus will be on the AI Act’s governance structure, by creating a new Artificial Intelligence Board. The French Presidency proposes limiting the collection of personal data and ensuring human oversight for high risk systems. The European Council aims to discuss the full text of the AI Act by the end of February, and circulate a consolidated compromise text in March, although negotiations could drag over many months. Leaseurope is working together with Eurofinas and ACCIS on this topic, to ensure governance structures and risk definitions remain workable and fit for purpose for our respective industries.
LEASEUROPE DISCUSSES CHARGING INFRASTRACTURE WITH PARLIAMENT
Leaseurope was invited by MEP Ertug to participate in a virtual mini hearing to express our views on his draft proposal on the Alternative Fuels Infrastructure Regulation. In our speech, we underlined the need to address different aspect of zero-emission mobility: range anxiety and adequate infrastructure, a consumer-friendly charging experience, adequate vehicle supply and adequate grid capacity. We stressed that charging infrastructure targets should match ambitions for electric fleets. In particular, we asked Mr. Ertug to support doubling of the urban node deployment target and underlined a key omission in the European Commission proposal regarding public charging infrastructure in Mobility Hubs. Finally, we stressed the importance of secure, open and non-discriminatory provision of charging data to both consumers and mobility providers, including from charging infrastructure and the vehicle itself, to ensure a level-playing field in the development of new and innovative EV-based mobility services.
ECB CONSULTATION ON NOTIFICATION OF SECURITISATION TRANSACTIONS COULD RAISE COSTS
Leaseurope highlighted some technical issues for lease securitisation on the proposed ECB guide on the notification of securitisation transactions. We are concerned with the fact that the proposed reporting procedures may ultimately impact the costs of the product financed, especially for SME transactions as those usually have smaller transaction size but the reporting requirements are the same as for the bigger transactions.
FRENCH PRESIDENCY OF THE COUNCIL SETS AMBITIOUS PRIORITIES
The French presidency of the Council of the European Union set their programme for 1 January until 30 June 2022, a time period which includes presidential and legislative elections in France. France has foreseen actions in several important fields including, but not limited to, competitiveness, transport, telecommunications and energy, environment, agriculture and fisheries, health, labour and consumer rights. Concrete proposals include the establishment of minimum wages in the EU, the regulation of digital giants and the creation of a carbon tax for products imported into the EU, based on their environmental impact.
NEW LIST OF "GREEN" TECHNOLOGIES PROPOSED FOR TAXONOMY REGULATION
The European Commission recently put forward a new list of technologies that meet standards for being included in the Taxonomy Regulation — the rules on green investing that set out what types of services can qualify as being ‘green’. The list now includes nuclear and natural gas, a decision that has sparked controversy amongst stakeholders as well as several Member States, illustrating ongoing disagreements on the matter. Ultimately the discussion on gas and nuclear energy underscores a much broader problem with the taxonomy framework, which will force banks and leasing companies to start reporting on how sustainable their services are. Leaseurope will continue to participate in this debate, highlighting the climate mitigating role cleaner and better maintained assets can play in today’s Europe.
EUROPEAN COMMISSION RELEASES NEW URBAN MOBILITY FRAMEWORK
Following the Commission’s proposal for revised guidelines for the Trans-European Transport Network (TEN-T), which foresees all major cities (‘urban nodes') developing a sustainable urban mobility plan by 2025, the Commission has adopted a complementary new European Urban Mobility Framework. This framework includes a common list of measures and initiatives for these cities, as well as the remaining cities in the EU, to meet the challenge of making their mobility more sustainable. Its objectives include contributing to EU Green House Gas reduction targets as set in the Climate Law (including -55% by 2030), improving transport and mobility to, in and around cities, as well as improving the efficiency of goods deliveries. The new framework also includes elements on the provision and processing of commercially-sensitive data for multimodal digital mobility services such as Mobility as a Service (MaaS), a common European mobility data space, and the development of the CIVITAS Initiative. A detailed study will be undertaken this year to clarify which digital solutions would enable more effective and user-friendly low-emission zones and other types of urban vehicle access regulation.
ENERGY PERFORMANCE OF BUILDINGS REQUIRES E-MOBILITY DEPLOYMENT
The European Commission announced that some new and renovated buildings in the EU will need to be equipped with charging points for electric cars - or the necessary infrastructure to install them. The proposal is part of the revised Energy Performance of Buildings Directive, which aims to improve energy efficiency of buildings to reduce the sector's emissions. Under the new rules, new residential buildings and those undergoing a major renovation, with more than three parking spaces, must have pre-cabling installed for every parking spot to allow owners to easily set up a charging point at a later stage. For new and renovated non-residential buildings with more than five parking spots, such as offices or shopping centres, EU member states must ensure the deployment of at least one recharging point and the installation of pre-cabling for every parking spot. Existing buildings with more than 20 parking spots are required to have one recharging point for every ten parking spaces by 2027 and pre-cabling of one in two parking spaces by 2033 if the building is occupied by public authorities.
EBA STUDY PROVIDES VISION FOR INCREASING EFFICIENCIES AND REDUCING REPORTING COSTS
After two years of consultations, the European Banking Authority (EBA) has published its final report on the feasibility study of an integrated reporting system (IRS). This study is part of a broader strategy of the European Commission to improve and modernise EU supervisory reporting while minimising the aggregate reporting burden for all parties. They conclude that the IRS is indeed feasible, however it requires the dedicated commitment of all parties involved. A common data dictionary would be the first step to achieve effective data comparability, data sharing and coordinated reporting.
EBA PUBLISHES STANDARDS ON PILLAR 3 DISCOSURES ON ESG RISKS
The European Banking Authority (EBA) has published its final draft implementing technical standards (ITS) on Pillar 3 disclosures on Environmental, Social and Governance (ESG) risks. The final draft ITS establishes comparable disclosures showing how climate change may exacerbate other balance sheet risks, how those risks are mitigated, and ratios on financing taxonomy-aligned activities. This includes a green asset ratio (GAR) and a banking book taxonomy alignment ratio (BTAR), to show how institutions are embedding sustainability considerations in their risk management, business models and strategy. Their goal is to ensure that stakeholders are well-informed about institutions’ ESG exposures, risks, and strategies and can make informed decisions and exercise market discipline.
EBA QUARTERLY RISK DASHBOARD SHOWS IMPROVED ASSET QUALITY
The European Banking Authority (EBA) published its quarterly risk dashboard for Q3 2021, together with the results of the autumn edition of the Risk Assessment Questionnaire (RAQ). The data shows an improvement in EU non-performing loan (NPL) ratio and return on equity (RoE) was reported to be higher than pre-pandemic levels. The rising trend in forborne loans has stopped and the volume of loans under moratoria has decreased further. RAQ results show that 80% of banks are taking ESG factors into account in credit risk, while more than 70% of banks consider them for reputational and operational risks. It remains to be seen to what extent the Omicron-related wave of infections will affect asset quality and profitability.
POLITICO FINANCE SUMMIT
From 10-11 February, POLITICO Live's Finance Summit is taking place in Paris and online. Key debates will focus around transformation in the post-pandemic era into a greener and more digital industry, with top EU regulators, financial services industry stakeholders, and civil society actors speaking. Find out more and register here.
THE 3rd DIGITAL SERVICES ACT CONFERENCE
On 22 March, ForumEurope is organising the 3rd edition of the Digital Services Act Conference in Brussels and online. The debate will focus on how the Digital Services Act and Digital Markets Act will shape the future of Europe's digital economy. You can register for free for this hybrid event here.