Ref. Ares(2020)3025851 - 11/06/2020
May 2019
AFEP’s 10 Initiatives for an
Attractive, Competitive
and Sustainable Europe
The European Union enters this year into a new
This is why we are calling on the European Union to
political cycle, with the election of the Euro-
set
three goals for the next five years:
pean Parliament, the new Commission and the
President of the European Council. The French
Enhance the European territory’s attractive-
Association of Large Companies (Afep), which
ness to encourage and sustain investment and
represents 115 of the largest French compa-
employment in Europe;
nies, is seizing this opportunity to propose 10
priority initiatives for the next five years.
Act in favour of European economic interests
beyond the borders of the Union to ensure a level
Afep supports European integration, which allowed
playing field with our major economic partners;
companies to benefit from the single market, an
Provide companies with the conditions for
indispensable engine of their growth. However,
them to invest in low-carbon technologies in
companies have also had to face dramatic regula-
Europe to achieve the revolution of climate neu-
tory inflation over the last decade, both at national
trality by 2050, by integrating all related policies,
and European level. This inflation, while helping to
including environmental and trade policies.
ensure financial stability and better protection for
consumers and investors, has also created new
barriers to the development of European compa-
We call on the European institutions to take into ac-
nies and degraded their competitiveness compared
count the competitiveness of European companies
to that of their main competitors from the US and
in the legislation they wish to adopt and to ensure
emerging countries.
that legislation does not constitute barriers, but
tools for competitiveness. This paradigm shift is ab-
Companies are calling for a paradigm shift: business
solutely necessary for the European Union to remain
regulation should no longer focus solely on stability
a global economic power and an engine of global
or the protection of consumers and investors, but
growth, and to create more jobs.
must also
become a tool for competitiveness
both internally and externally, and live up to
current transformations, particularly in terms of
climate change.
(N.B. : the numbering of the initiatives does not imply a priority order)
French Association of Large Companies
11 avenue Delcassé
4-6 rue Belliard
www.afep.com
75008 Paris
1040 Bruxelles
Initiative 2: Ensure That European and
1 .
Foreign Investments Are Well Protec-
ted in the EU
ENHANCE THE EUROPEAN TER-
The dismantling of bilateral investment treaties
RITORY’S ATTRACTIVENESS TO
between Member States following the Achméa jud-
ENCOURAGE AND SUSTAIN IN-
gement calls for the establishment of
a renewed
VESTMENT AND EMPLOYMENT IN
framework for the protection of intra-EU invest-
ments during the next legislature. A pure and
EUROPE
simple referral to the national courts is unsatisfac-
Initiative 1: Ensure More Efficient and
tory as it would lead to increasing duration and
Stable Financing of the Real Economy
costs of the proceedings and to deteriorating the
in the Long Term
legal protection of investors.
There is a need to
rapidly develop a legislative
Companies’ priorities and constraints should
framework or an interstate agreement of subs-
be better integrated into the development of
titution at European level, based on arbitra-
financial market regulation in order to make Eu-
tion. This framework should, firstly, grant investors
ropean markets more attractive and thereby
push
rights equivalent to those guaranteed under
forward the Capital Markets Union.
It is essential
bilateral treaties, and secondly, establish an
ef-
that the effectiveness and relevance of existing and
fective and impartial system of dispute resolu-
new regulation are no longer evaluated solely on
tion, independent of host states and accessible to
the basis of financial stability and investor protec-
all companies. It should thus reaffirm the
right to
tion.
compensation in the event of direct and indirect
expropriation. Companies want first and foremost
It is necessary to
create a long-term investor
that solutions based on
arbitration continue to be
status, by developing a regulatory environment
explored. It could be a
European Court of Arbitra-
that fosters long-term investment. This is essential
tion or pre-existing arbitral bodies such as the
in order to meet the long-term financing needs for
Permanent Court of Arbitration. Should this kind
infrastructure and R&D, in particular to address in-
of solutions not be possible, the option of a
Euro-
vestment challenges for energy transition and the
pean investment court, modelled on the Unified
fight against climate change.
Patent Court or a specialised chamber of the Court
Seeking to create a supranational employee
of First Instance, could be explored.
shareholding system harmonising all the rules, in-
cluding tax and social rules, would be difficult to
Initiative 3: Take the Lead to Define
achieve. However, Europe must
at least aim to a
the Tax Rules That Will Allow Europe
harmonisation of the rules deemed essential
to Be Attractive and Its Companies to
by companies such as discount and matching
Remain Competitive
contributions and encourage mutual recogni-
tion mechanisms of existing national regimes.
The convergence of tax rules must continue, but
This would both strengthen the stability of the
from now on in a perspective of attractiveness
shareholding that companies need to innovate and
of the European territory and of competitive-
invest, and facilitate the participation of employees
ness of its companies: the American tax reform
in the capital of their company on advantageous
must bring about a wake-up call in an international
terms, while developing a sense of belonging to
context of increased tax competition.
the company regardless of the country in which
they are located.
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May 2019
Work on the Common Consolidated Corporate
ronmental standards, should be required to com-
Tax Base must succeed to allow European compa-
ply with these standards and the same reporting
nies to compete as well as their foreign competitors:
obligations as EU companies, once they operate in
a common tax system that encourages innovation
the European market and exceed a certain turnover
and investment is essential.
This convergence
threshold.
must also concern the corporate tax rate.
Initiative 5: Preserve the Positive
Europe must act as an international tax le-
gislator,
in the face of the OECD in which Member
Contribution of Companies to Society,
States are advancing in a disorganised manner.
Without Replacing the States
Initiative 4: Modernise Corporate Re-
Corporate Social Responsibility issues are at the
porting by Integrating Competitive-
heart of the concerns of Boards of Directors. Howe-
ness Issues
ver, due to the extreme complexity of the challenges
related to globalisation as well as climate change,
governments tend to require companies to carry out
European companies are facing an
increasingly
social and societal missions that they are not able or
complex and costly regulatory environment that
that they do not want to assume anymore. However,
places them in an unfavourable position com-
companies must not be diverted from their pri-
pared to their competitors which are not subject to
mary purpose of generating value and making
the same amount of regulatory obligations, particu-
profit, even if they must integrate their develop-
larly in terms of reporting.
ment in a complementary approach by contribu-
Europe must
embark on a major exercise to
ting to the collective well-being.
simplify information, reporting and compliance
A Recommendation on companies’ long-term
obligations, taking into account technological
development
value creation could be drafted to acknowledge this
: this is about revising the different
texts in a coordinated and coherent way and eli-
evolution towards the creation of value in the long
minating the obligations made obsolete by tech-
term whilst considering the interest of all stakehol-
nological evolution. Regulators must also take into
ders of the company. There is no need to consider a
account this evolution in their supervisory practices
European directive or regulation, since most corporate
in order to reduce the administrative burden for
governance codes in Europe already include these
companies, while identifying and controlling risks.
principles at the heart of the missions of Boards of Di-
rectors. A recommendation to Member States could
It is necessary
to develop a single non-finan-
allow national codes to converge.
cial reporting standard under the leadership of
the European Union. The EU must position itself
forcefully in the discussions between prescribers
and standard setters, involving companies, to de-
fend the European vision and values in this area.
Materiality must remain the guiding principle of
non-financial information to avoid constant and
endless development of new reporting obliga-
tions and injunctions.
Europe must
make the Directive on non-fi-
nancial reporting applicable to third-country
companies. Third-country competitors, which
sometimes disrespect European social and envi-
May 2019
3
Finally, the EU needs to further
protect the
2 .
strategic interests of its economy and compa-
nies.
The swift implementation of the Foreign
Direct Investment Screening Regulation should
ACT IN FAVOUR OF EUROPEAN ECO- be a first step towards a more integrated approach
NOMIC INTERESTS BEYOND THE
to screening at Community level.
BORDERS OF THE UNION TO EN-
SURE A LEVEL PLAYING FIELD WITH
Initiative 7: Adapt Merger Control to the
Challenges of Globalisation
OUR MAJOR ECONOMIC PARTNERS
Initiative 6: Better Defend European
Merger control must take into account dis-
Interests in International Trade Rela- tortions of competition in third countries. The
tions
takeover of European companies by third-country
companies should be analysed in particular with re-
The EU needs a
comprehensive trade and eco-
gard to the
status of the latter (state-owned com-
nomic strategy, especially with respect to its two panies) or
aid/subsidies received in their country
main partners, the United States and China,
to re-
of origin. The Commission must first collect speci-
duce the competitiveness gap between these fic information. To this end, EU trade agreements
countries and the EU, to maintain a level playing
with third countries must require transparency of
field between EU companies and their US and subsidies and state aid.
Chinese competitors, and to ensure a stronger
The Commission’s relevant market analy-
EU influence on world markets.
sis must consider not only global competition,
The EU must
continue its efforts to open up but also potential future competition in time
third-country markets through the negotiation of
horizons consistent with the economic reality
trade agreements in priority areas for EU compa-
(beyond 5 years). The aim is to build a more dyna-
nies and the adoption of level-playing-field rules at
mic and long-term approach to global competition
the multilateral and/or bilateral level, in particular
that takes into account both the well-being of the
to correct the distorting policies of its main trading
consumer and the economic reality faced by Euro-
partners.
pean companies.
The EU trade policy must
equip itself with uni-
The Commission must support its decisions
lateral tools for gaining/restoring market ac-
by taking better account of the impacts in areas
cess, particularly in the area of public procurement
other than competition (competitiveness, em-
(“IPI” initiative) in the face of barriers such as the
ployment, international trade, etc.), according
“Buy-American Act” or
for guaranteeing respect to transparent and fair procedures.
Interservice
for intellectual property, including in the case of
consultation should be strengthened from the
online sales of counterfeit products on platforms
notification stage and should not only concern
located in third countries.
the draft decision; it should fully involve in DG
COMP’s investigation the relevant Commission
The EU must also be able
to counter the restrictive
Directorates-General, in particular DG GROW, DG
effects for companies of US and Chinese initiatives
TRADE, and DG EMPL. To ensure this process
, the
vis-à-vis third countries, for example by introdu-
Merger Regulation needs to be amended to take
cing positive conditionalities in past partnership into account in the competition analysis the si-
agreements with these third countries. The EU
gnificant positive contributions of mergers to
must also
safeguard its companies from the ef-
adopted European policies, similar to the prece-
fects of extraterritorial legislation adopted by its dent existing in the European texts encouraging
trading partners.
IPCEIs.
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May 2019
Initiative 8: Build a European Union Tax
3 .
Diplomacy to Better Defend European
Companies
PROVIDE COMPANIES WITH THE
European companies are increasingly confronted
CONDITIONS FOR THEM TO INVEST
with the protectionist tax practices of third coun-
IN LOW-CARBON TECHNOLOGIES
tries. Bypassing tax treaties, claiming an increa-
IN EUROPE TO ACHIEVE THE REVO-
singly important share of the profit of European
companies: the practices of source States are de-
LUTION OF CLIMATE NEUTRALITY
veloping to increase the share of tax of European
BY 2050, BY INTEGRATING ALL RE-
companies on their territory. These protectionist
LATED POLICIES, INCLUDING ENVI-
practices are at the expense of companies but also
RONMENTAL AND TRADE POLICIES
of tax revenues of European countries.
The Member States’ isolated reactions to these
widespread practices are often not very effective.
AFEP supports the Paris Agreement which lays
The European Commission must be able to coor-
down a political objective of climate neutrality
dinate a concerted defence of the companies
for States.
This objective, unprecedented in the his-
against these practices in order to weigh all its
tory, means that greenhouse gas (GHG) emissions
weight to stop them.
must be cut down to the level of the absorption
capacity of natural (forest, biomass) and artificial
(removal technologies) sinks.
First of all, the European Union must show its abi-
lity to deliver on its climate and energy targets by
2030 (40 % GHG reduction, 32 % of renewable en-
ergy, 32.5 % energy efficiency)through the effective
transposition of the newly adopted Energy Union
package and the implementation of an efficient
governance ensuring that national policies are on
track.
To reach climate neutrality by 2050, the EU and
the Member States must set the right condi-
tions, involving the society as a whole, beyond
the economic players and public authorities.
These cumulative conditions must rely on an
integrated and systemic approach. They include:
pursuing the modernisation of the energy system
which is still the main source of emissions today;
changing society behaviours to tap the potential
of emission reductions in transport, building and
agriculture; developing circular economy and pro-
gress beyond the sole CO2 criteria. Moreover, the
two high-priority conditions are:
passing the low
carbon investment “wall”, and removing com-
petition distortions outside the EU,
in particular
through international trade agreements.
May 2019
5
Initiative 9: Pass the Unprecedented
Initiative 10: Remove Competition Dis-
Low-Carbon Investment “Wall”
tortions Outside the EU
Company leaders at the highest level should be
A shared diagnosis must be established at EU
urgently associated to the European institutions’
level to: (i) objectively identify the interactions
and Member States’ work, in order to assess the
between international trade flows and GHG
needs and pave the way for the necessary invest-
emissions (measurement of import and export
ments in the middle and long term, at French and
emissions), and (ii) then understand the conditions
European level, in line with the climate neutrality
under which climate-related disciplines in trade
objective, for instance through regular meetings in a
international agreements can be an incentive for
dedicated discussion forum.
third countries to reduce their emissions, especially
through investments in low-carbon technologies,
The EU funding policy of R&D&I must be adap-
while ensuring a level playing field between emit-
ted to the identified investment needs, while
ting and competing countries. The European Com-
calibrating all European funding programs to
mission should be encouraged to launch a study or
match the funding capacity of the main com-
a communication on this issue.
peting regions in the world (USA and China in
The EU should assess the opportunity to create
particular), and promoting
a strong ambition for
an annual barometer of the EU carbon footprint
both energy source decarbonisation and energy
including emissions of EU imports and of the
storage.
emission reductions of the planet resulting from
iThose investments should embed comple-
the EU exports of low carbon solutions. This would
mentary solutions addressing environmental is-
allow to evaluate whether emission reductions wit-
sues, which are more challenging to measure but
hin the EU lead to increase the emissions outside
equally strategic for the balance of our societies.
the EU. If so, protection measures of the affected
It is therefore fundamental to take into account
sectors should be taken.
company long cycles of investments, enabling
them to integrate upstream environmental cri-
teria (eco-design, impacts on water resources,
biodiversity, raw materials, workers’ and pu-
blic health) and promote dialogue between all
concerned players.
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May 2019
TOOLBOX
to Improve the Quality of European legislation
Conduct impact assessments on the compromise amendments of the European Parliament
In order to ensure that the European Parliament’s reports are prepared on
the basis of transparent,
complete and balanced evidence, an
impact assessment on the compromise amendments ne-
gotiated between the European Parliament’s political groups should be mandatory before a vote in
the parliamentary committee. These assessments would ensure that
policy makers and stakehol-
ders are aware of the economic, social and environmental effects of the policies discussed. They
would improve European legislation, by informing policy makers of the potential ramifications of
their legislative work, improving the transparency and legitimacy of contributions and reflections,
and clarifying the texts.
Strengthen inter-service consultations
The procedure used within the European Commission to obtain formal advice from other Direc-
torate-Generals when drafting a legislative proposal needs to be strengthened, in order to
make
consultations systematic and transparent.
The response period of the normal procedure (from
two to three weeks) should be extended, the use of the 48-hour «fast track» procedure limited and
clearly justified, and the
feedback and opinions of the consulted services made public.
Make the governance of the techno-economic models used before the impact assessments of
the European Commission more transparent
There is a need to
improve the governance and transparency of the techno-economic models
managed by third parties and used by the Commission for the design of public policies and the
setting of large quantified targets (e.g. PRIMES from the National Technical University of Athens for
energy, GAINS from IIASA for non-CO2 emissions, etc.), by allowing at least
national experts and
experts from impacted activities, as well as other stakeholders, to consult and participate in
their updating. The working process between the Commission and the different parties should
be formalised and made public. In the long run, it would be desirable
to endow the European
Commission with its own model.
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May 2019
About AFEP
Since 1982, Afep brings together large companies operating in France. The Association,
based in Paris and Brussels, aims to foster a business-friendly environment and to present
the company members’ vision to French public authorities, European institutions and in-
ternational organisations. Restoring business competitiveness to achieve growth and sus-
tainable employment in Europe and tackle the challenges of globalisation is Afep’s core
priority. Afep has around 115 members. More than 8 million people are employed by Afep
companies and their annual combined turnover amounts to €2,600 billion.
Afep is involved in drafting cross-sectoral legislation, at French and European level, in the
following areas: economy, taxation, company law and corporate governance, corporate fi-
nance and financial markets, competition, intellectual property and consumer affairs, la-
bour law and social protection, environment and energy, corporate social responsibility and
trade.
Contacts
Jérémie Pélerin - x.xxxxxxx@xxxx.xxx
/ +32 2 219 90 20
Justine Richard-Morin – x.xxxxxxxxxxxxx@xxxx.xxx
MAY 2019
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