In June, the citizens of the EU will vote in the European elections to determine the composition of the new EU Parliament. The newly elected Parliament and the next European Commission have important tasks ahead of them: in addition to political challenges, and economic challenges such as securing global competitiveness, the digital and sustainable transformation must also be tackled. For this to succeed, reforms are important in three specific areas: a significant reduction in bureaucracy and better and more efficient legislation, modernisation of company law and the strengthening of equity culture. These are the key points of our European paper "Getting Europe Back on Track. Leveraging Capital Markets to regain and ensure Europe's global competitiveness".

Companies in the EU are facing enormous economic challenges as a result of increasing regulation. In the coming years, they will have to master not only the sustainable but also the digital transformation and invest in innovation and future technologies. The EU institutions should support companies in tackling these challenges instead of imposing an excess of regulations and inflexible legal frameworks as additional hurdles. This reduces the EU's competitiveness and innovative strength. "Cutting red tape" should be the motto.

These bureaucratic hurdles include the reporting obligations under the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS). The latter comprises more than 800 data points. The question arises as to whether the examination and fulfilment of these tightly meshed standards are always so conducive to the goal of a more sustainable economy or whether principle-based regulations would not be more practical. Instead of checking and reporting on granular requirements, companies could and should concentrate more on developing sustainable innovations.  

Capital is leaving the EU

Revised capital market regulation would also enable improved corporate financing. The twin transition to a sustainable and digital economy requires immense investment. Public financing is not sufficient, the capital market is needed. In order to make the capital market more attractive in Europe, a reform of company law is necessary. Many European companies currently prefer to go public in other regions such as the USA, as the capital markets there are deeper and offer a more flexible legal framework.

A possible solution here could be a "genuine" European form of corporation as an option for companies. Unlike the existing Societas Europaea (SE), however, this should not include any exceptions for member state law. Hopefully, the new EU Commission will take on the development of such a legal form, as well as the general strengthening of the share culture in Europe.

Joint solutions for a win-win situation

In the best-case scenario, a win-win situation is possible: if the Commission were to encourage people in Europe to use the capital markets for pension purposes, the consequences of demographic change could be cushioned on the one hand. On the other hand, more capital would be available to finance the digital and sustainable transition.

These are certainly not easy goals to achieve in the short term. Nevertheless, it is crucial that the next EU Commission tackles them. The best way to achieve this is for the EU institutions to enter into dialogue with the stakeholders, including the companies and seek joint solutions. "Team play" is required, because we are only strong together. We are ready for dialogue.

In June, the citizens of the EU will vote in the European elections to determine the composition of the new EU Parliament. The newly elected Parliament and the next European Commission have important tasks ahead of them: in addition to political challenges, and economic challenges such as securing global competitiveness, the digital and sustainable transformation must also be tackled. For this to succeed, reforms are important in three specific areas: a significant reduction in bureaucracy and better and more efficient legislation, modernisation of company law and the strengthening of equity culture. These are the key points of our European paper "Getting Europe Back on Track. Leveraging Capital Markets to regain and ensure Europe's global competitiveness".

Companies in the EU are facing enormous economic challenges as a result of increasing regulation. In the coming years, they will have to master not only the sustainable but also the digital transformation and invest in innovation and future technologies. The EU institutions should support companies in tackling these challenges instead of imposing an excess of regulations and inflexible legal frameworks as additional hurdles. This reduces the EU's competitiveness and innovative strength. "Cutting red tape" should be the motto.

These bureaucratic hurdles include the reporting obligations under the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS). The latter comprises more than 800 data points. The question arises as to whether the examination and fulfilment of these tightly meshed standards are always so conducive to the goal of a more sustainable economy or whether principle-based regulations would not be more practical. Instead of checking and reporting on granular requirements, companies could and should concentrate more on developing sustainable innovations.  

Capital is leaving the EU

Revised capital market regulation would also enable improved corporate financing. The twin transition to a sustainable and digital economy requires immense investment. Public financing is not sufficient, the capital market is needed. In order to make the capital market more attractive in Europe, a reform of company law is necessary. Many European companies currently prefer to go public in other regions such as the USA, as the capital markets there are deeper and offer a more flexible legal framework.

A possible solution here could be a "genuine" European form of corporation as an option for companies. Unlike the existing Societas Europaea (SE), however, this should not include any exceptions for member state law. Hopefully, the new EU Commission will take on the development of such a legal form, as well as the general strengthening of the share culture in Europe.

Joint solutions for a win-win situation

In the best-case scenario, a win-win situation is possible: if the Commission were to encourage people in Europe to use the capital markets for pension purposes, the consequences of demographic change could be cushioned on the one hand. On the other hand, more capital would be available to finance the digital and sustainable transition.

These are certainly not easy goals to achieve in the short term. Nevertheless, it is crucial that the next EU Commission tackles them. The best way to achieve this is for the EU institutions to enter into dialogue with the stakeholders, including the companies and seek joint solutions. "Team play" is required, because we are only strong together. We are ready for dialogue.

In June, the citizens of the EU will vote in the European elections to determine the composition of the new EU Parliament. The newly elected Parliament and the next European Commission have important tasks ahead of them: in addition to political challenges, and economic challenges such as securing global competitiveness, the digital and sustainable transformation must also be tackled. For this to succeed, reforms are important in three specific areas: a significant reduction in bureaucracy and better and more efficient legislation, modernisation of company law and the strengthening of equity culture. These are the key points of our European paper "Getting Europe Back on Track. Leveraging Capital Markets to regain and ensure Europe's global competitiveness".

Companies in the EU are facing enormous economic challenges as a result of increasing regulation. In the coming years, they will have to master not only the sustainable but also the digital transformation and invest in innovation and future technologies. The EU institutions should support companies in tackling these challenges instead of imposing an excess of regulations and inflexible legal frameworks as additional hurdles. This reduces the EU's competitiveness and innovative strength. "Cutting red tape" should be the motto.

These bureaucratic hurdles include the reporting obligations under the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS). The latter comprises more than 800 data points. The question arises as to whether the examination and fulfilment of these tightly meshed standards are always so conducive to the goal of a more sustainable economy or whether principle-based regulations would not be more practical. Instead of checking and reporting on granular requirements, companies could and should concentrate more on developing sustainable innovations.  

Capital is leaving the EU

Revised capital market regulation would also enable improved corporate financing. The twin transition to a sustainable and digital economy requires immense investment. Public financing is not sufficient, the capital market is needed. In order to make the capital market more attractive in Europe, a reform of company law is necessary. Many European companies currently prefer to go public in other regions such as the USA, as the capital markets there are deeper and offer a more flexible legal framework.

A possible solution here could be a "genuine" European form of corporation as an option for companies. Unlike the existing Societas Europaea (SE), however, this should not include any exceptions for member state law. Hopefully, the new EU Commission will take on the development of such a legal form, as well as the general strengthening of the share culture in Europe.

Joint solutions for a win-win situation

In the best-case scenario, a win-win situation is possible: if the Commission were to encourage people in Europe to use the capital markets for pension purposes, the consequences of demographic change could be cushioned on the one hand. On the other hand, more capital would be available to finance the digital and sustainable transition.

These are certainly not easy goals to achieve in the short term. Nevertheless, it is crucial that the next EU Commission tackles them. The best way to achieve this is for the EU institutions to enter into dialogue with the stakeholders, including the companies and seek joint solutions. "Team play" is required, because we are only strong together. We are ready for dialogue.