Institut Veblen / Veblen Institute

European ISDS Scorecard: a ranking of the harmful effects of 30 countries' investment treaties

Mathilde Dupré — 2026-04-21T22:30:00Z

France ranked among the most active European countries in developing and maintaining the investor–state dispute settlement (ISDS) mechanism.

France ranks as the fourth most active country in Europe in supporting the international investment arbitration regime, according to a new study (1) published by a coalition of eight European organisations, including the Veblen Institute, Powershift and CAN Europe (2). These findings are released on the eve of the first International Conference on Transitioning Away from Fossil Fuels, to be held from 24 to 29 April in Colombia, during which the investor–state dispute settlement (ISDS) system will be examined as a major obstacle to the defossilisation of our economies.

Arbitration tribunals, known as investor–state dispute settlement (ISDS) mechanisms, are provisions embedded in many trade and investment agreements. They allow investors (multinational corporations or individuals) to sue governments before private tribunals outside domestic legal systems over public interest policies — such as environmental protection or public health regulation — that they claim harm their profits, with compensation awards often reaching millions or even billions of euros.

The report entitled “Investment Arbitration Index: A Comparative Analysis of the Harmful Effects of Treaties Across 30 European Countries”, published today alongside an interactive “scoreboard”, ranks 30 European countries (3) to measure the scale of their investment treaty networks, their actual use by investors, and their concrete impacts. The index is based on ten indicators, including the number of agreements signed with ISDS provisions, their use in sensitive sectors such as fossil fuels, and the amounts of compensation claimed and awarded.

The report highlights Europe's pivotal role in the global ISDS architecture and underscores the responsibility of a small group of countries — the United Kingdom, the Netherlands, Germany, France and Switzerland — which account for a significant share of the treaties, disputes and climate risks generated by this opaque system.

The ranking reveals that:

The United Kingdom ranks first among countries responsible for the development and maintenance of ISDS; British investors are particularly active in ISDS proceedings in the mining and fossil fuel sectors.
The Netherlands follows closely behind; Dutch investors (often using shell companies with no substantial economic activity) have initiated more ISDS proceedings than those from any other European country.
France is characterised by treaties covering a large volume of investments linked to future greenhouse gas emissions and containing very long survival clauses. This configuration may constitute a structural obstacle to the adoption of ambitious energy transition policies.
Ireland is the only country with no bilateral investment treaties with other states (although this may soon change if EU trade agreements containing ISDS provisions enter into force) (4), and Norway has already terminated half of its relatively small number of treaties, demonstrating that European countries can choose alternative paths.

The report makes several recommendations:

That European governments stop signing new agreements containing investment protection chapters with ISDS or an Investment Court System mechanism. (4)
That they begin systematically terminating existing treaties. For treaties containing “sunset clauses” — which allow provisions to remain in force for a period often ranging from 10 to 20 years after termination — countries should pursue “coordinated withdrawals” to neutralise them.
That they cooperate with other countries, including outside Europe, to promote a broader exit from the ISDS system.

Examples of cases

The consequences of treaty networks, rooted in post-colonial economic relationships, are felt particularly strongly in countries of the Global South, which are the target of the majority of ISDS claims. France has been the home state of investors in 69 cases; for example, the disputes initiated in 2021 by Vinci against Peru and Chile over the economic effects of public health measures adopted during the pandemic (5).

However, European countries themselves are increasingly targeted by claims, notably in connection with environmental policies. Severgroup and KN Holdings, two investment companies controlled by sanctioned Russian oligarch A. Mordashov, initiated a proceeding against France in 2021 under the France–Russia BIT, seeking €4.5 billion in compensation following the French government's withdrawal of support for the Montagne d'Or open-pit gold mining megaproject in French Guiana. France is also being sued by Russo-Armenian businessman S. Karapetyan, whose villa on the French Riviera was seized amid allegations of money laundering and acting as a nominee for the sanctioned oil and gas giant Gazprom. This case forms part of a recent wave of claims in Europe directly challenging sanctions imposed following Russia's invasion of Ukraine (6).

Santa Marta Conference on Transitioning Away from Fossil Fuels

This publication also comes ahead of the first Conference on Transitioning Away from Fossil Fuels, to be held from 24 to 29 April in Santa Marta, Colombia — a country that has just announced its intention to withdraw from the ISDS system. ISDS is among the central items on the conference agenda, and organisations across Europe are calling on their governments to “seize this opportunity” to plan a coordinated withdrawal from the ISDS regime together with other participating countries (7).

According to Mathilde Dupré, Co-Director of the Veblen Institute:
“This report reveals the responsibility of European countries in establishing and maintaining an investment protection regime that is incompatible with states' current commitments to environmental protection and national security. The termination of intra-EU treaties and withdrawal from the Energy Charter Treaty have only partially reduced the risks that this system poses to our democracies. It is time to address the stock of older treaties held by EU Member States in order to reduce, in parallel, the risks faced by countries in the Global South.”

For Stéphanie Kpenou, Programme Officer for Trade Policy Reform at the Veblen Institute:
“France must seize the major opportunity offered by the upcoming conference in Colombia on transitioning away from fossil fuels to unlock investment protection constraints, starting with this sector.”

Notes

(1) The full report is available in English and French, and the results can be accessed online on this website.
(2) The report is jointly published by the Veblen Institute, Powershift (Germany), Global Justice Now and Trade Justice Movement (UK), TROCA (Portugal), Alliance Sud (Switzerland), CAN Europe and the European Coalition for Just Trade.
(3) The index ranks 30 European countries — the 27 EU Member States plus Norway, Switzerland and the United Kingdom — according to their structural involvement in the ISDS system. It adopts a home-state perspective, examining which treaty networks and economic actors feed the system as sources of ISDS claims. Ten indicators measure different dimensions of this involvement, ranging from the size of a country's treaty network to the number and financial scale of disputes initiated by its investors, as well as the fossil fuel assets covered by those treaties. Raw values were normalised, weighted to produce a composite score, and transformed onto a 0–10 scale, where a higher score indicates greater involvement in the ISDS system. The full methodology is available in the annex to the report.
(4) The EU has recently concluded several agreements containing investment protection chapters, including treaties with Canada, Singapore, Vietnam and Chile, pending ratification by Member States, as well as the EU–Mexico agreement pending ratification at EU level.
(5) See the UNCTAD online France page.
(6) See the report “Frozen Assets, Hot Claims: How Russian Oligarchs and Other Investors Use Investment Arbitration to Challenge Sanctions”, December 2025.
(7) See the Veblen Institute brief on the obstacles posed by investment arbitration to phasing out fossil fuels, published on the occasion of the Santa Marta Conference.

Residues of pesticides banned in the EU in imported food: ending a dangerous and unjust double standard

Mathilde Dupré & Stéphanie Kpenou — 2026-04-21T08:14:23Z

An independent legal opinion commissioned by the Veblen Institute, PAN Europe and foodwatch concludes that the EU practice of allowing residues of banned pesticides in imported food is highly questionable from an EU law perspective.

European consumers are exposed, through their food, to residues of hazardous pesticides banned on our market. Residues of at least 88 pesticide substances not approved in the EU are still allowed in imported products. Of these substances, 13% are classified as carcinogenic, mutagenic and toxic to reproduction (CMR) or as endocrine disruptors. Six PFAS pesticides, known as ‘forever chemicals', are also included among these substances (1).

Currently, when a pesticide is banned in the EU, its residue limits are not automatically lowered. Instead, the Commission sets import tolerances for pesticides used in third countries, or adopts residue limits set at international level by the Codex Alimentarius Commission.

In abriefing note, the three organisations outline the key points of the legal opinion and put forward proposals to address this shortcoming.

The findings confirm that, under the current EU legal provisions, the Commission not only has the power, but also the obligation to stop allowing these residues.

For pesticides banned on public health grounds, the practice of authorising residues of EU-banned pesticides is illegal. Import tolerances cannot apply to substances not authorised in the EU on public health grounds. Allowing such residues is contrary to the MRL Regulation, which requires the automatic deletion of MRLs following the revocation of an active substance in the EU. The EC's practice also breaches fundamental EU principles (the principle of regulatory equivalence and the principle of non-discrimination, which protects EU farmers from unfair competition from third-country producers).

The situation is more complex for pesticides banned on environmental grounds, as the MRL Regulation was originally designed to protect consumers. However, the Commission's recent measures regarding neonicotinoids show that change is possible within the current framework. A revision of the MRL Regulation to include environmental protection would strengthen future action. Furthermore, this regulation should also cover crops intended for animal feed, energy production and ornamental purposes.

The ‘omnibus' simplification package on food and feed safety proposes measures to address this situation. However, the proposal currently on the table is insufficient and largely symbolic. Under this proposal, the vast majority of banned pesticides would continue to enter the EU via food imports. It covers only a limited subset, representing around 22% of EU-banned substances (2). Furthermore, the omnibus significantly weakens the general legal framework governing pesticides and their residues. It is therefore unacceptable as it stands.

To address this long-standing shortcoming, the Omnibus Regulation must introduce a clear and binding obligation on the Commission to automatically ban residues of any pesticide not approved in the EU, regardless of the reason for the ban and for all food products. Any less stringent measure would perpetuate a system that knowingly allows harmful substances to end up on Europeans' plates and undermines the EU's own standards.

Notes
(1) List based on banned and restricted active substances included in the Prior Consent Inform (PIC) Regulation
(2) The Omnibus proposal covers active substances that are Carcinogenic, Mutagenic and Toxic for reproduction (CMR) Categories 1A/1B, Endocrine Disruptors for humans or non-target organism, Persistent Organic Pollutant (POP), Persistent, Bioaccumulative and Toxic (PBT), or very Persistent and very Bioaccumulative (vPvB). We calculated, on the basis of available data, that 20 of the 88 substances meet these criteria. While official lists exist for CMR substances and endocrine disruptors, no equivalent official list of PBT/vPvB substances has been established at EU level. This figure should therefore be treated as an estimate.

Unlocking the Investment Arbitration System to Phase Out Fossil Fuels

Mathilde Dupré & Stéphanie Kpenou — 2026-04-20T13:28:15Z

Investment arbitration is increasingly recognised as an obstacle to the implementation of ambitious climate policies by states. This issue will be on the agenda of the “First Conference on Transitioning Away from Fossil Fuels”, which will take place in Colombia from 24 to 29 April 2026 and will be co-hosted by Colombia and the Netherlands.

In this context, and as part of the consultation on the Brazilian COP Presidency Roadmap entitled “Transitioning Away from Fossil Fuels” (TAFF), the Veblen Institute has prepared this brief to put forward several concrete proposals.

Removing protection for fossil fuel investments is an essential prerequisite to ensure that taxpayers do not bear the excessive costs of the transition by compensating fossil fuel investors — often under valuation methods highly favourable to them — for public policies aimed at phasing out fossil fuels and managing stranded assets.

Such removal of protection does not prejudge the trajectory or pace of the fossil fuel phase-out, which may legitimately vary from one country to another depending on their level of development and degree of dependence on fossil fuels.

In response to the call launched by more than 200 economists and academics, Colombian President Gustavo Petro announced on 23 March his intention to withdraw his country from the investor–state dispute settlement (ISDS) system. European governments should seize the opportunity of the Santa Marta Conference to plan a coordinated exit from the current investment protection regime together with other participating countries.

Europe plays a pivotal role in the global ISDS architecture, particularly a small group of countries — the United Kingdom, the Netherlands, Germany, France and Switzerland — which account for a significant share of the treaties, disputes and climate risks generated by this system. This is what we demonstrate in our “Investment Arbitration Index: A Comparative Analysis of the Harmful Effects of Treaties Across 30 European Countries”, accompanied by an interactive “scoreboard” ranking 30 European countries according to the scale of their respective investment treaty networks, their actual use by investors, and their concrete impacts. The index is based on ten indicators, including the number of ISDS agreements signed, their use in sensitive sectors such as fossil fuels, and the amounts of compensation claimed and awarded.

Call for an EU-wide windfall profit mechanism in response to the energy crisis

Madeleine Péron — 2026-04-16T11:19:50Z

In a letter to EU Commission president von der Leyen, a group of NGOs including Veblen Institute say a windfall profit tax on oil companies is needed to support vulnerable households, industry, and the clean energy transition.

The European Union is once again confronted with a severe energy crisis, driven by war and the escalating geopolitical tensions in the Middle East, with direct consequences for global fossil fuel markets. The first days of the current crisis have already imposed significant additional costs on European economies and citizens, further exacerbating cost-of-living pressures and energy insecurity and cost € billions in additional energy imports. To be precise, in just the first 30 days of the conflict, the EU's fossil fuel import bill has increased by approximately €14 billion.

At the same time, major fossil fuel companies are recording extraordinary billions of euros in excess profits, a substantial portion of them generated within Europe by refiners and distributors.

This situation echoes the circumstances that led to the adoption of Council Regulation (EU) 2022/1854, which introduced a temporary solidarity contribution on excess profits in the fossil fuel sector. That instrument demonstrated both the feasibility and effectiveness of coordinated EU-level action. An assessment by the European Commission calculated that total revenue collection was in the order of €28 billion during the fiscal years of 2022 and 2023.

In light of the current crisis and the EU's long-term climate and security objectives, it is necessary to reintroduce and strengthen such a mechanism at Union level, complementing Member States' efforts, to generate revenues to support vulnerable households, industry, and the clean energy transition.

We therefore call upon the European Commission to:

Propose a renewed EU-wide windfall profit tax, building on Council Regulation (EU) 2022/1854, under Article 122(1) TFEU or an appropriate legal basis, to ensure a coordinated and timely response to the current energy crisis. The design of the solidarity contribution should be strengthened, including by increasing the share of excess profits captured, in order to better reflect the scale of windfall gains observed in the fossil fuel sector and ensure a fair contribution from those benefiting most from the crisis;

Expand the scope of the mechanism to address profits generated by international fossil fuel companies, including those not headquartered in the EU but deriving significant revenues from the European market, exploring all available legal and fiscal instruments to ensure comprehensive coverage;

Ensure that revenues are clearly and transparently earmarked for socially and environmentally beneficial purposes, including targeted support for vulnerable households, investment in energy efficiency, and accelerated deployment of renewable energy and electrification solutions;

Embed the mechanism within a broader strategy to reduce Europe's dependence on fossil fuels, ensuring that crisis response measures are aligned with the EU's climate objectives and contribute to a faster, fairer transition to a clean energy system.

The time has come to put an end to the structural vulnerabilities of Europe's reliance on fossil fuels. A robust, EU-level windfall profit mechanism would not only ensure fairness in times of crisis but also reinforce public trust by demonstrating that extraordinary profits are being redirected towards the common good.

We urge the European Commission and Member States to act swiftly and decisively, and to take into account our recommendations ahead of the package of measures to tackle the energy crisis, to be unveiled on 22 April 2026, as well as ahead of the informal European Council on 23–24 April 2026.

View online : Read our joint letter

Windfall profits in times of crisis : can we tax them all ?

Madeleine Péron — 2026-04-09T08:00:00Z

Join us for the presentation of an upcoming study by the International Tax Observatory, making it a unique moment to bring together cutting-edge research and frontline advocacy around the same policy debate.

In the wake of the conflict in Iran and the de facto closure of the Strait of Hormuz, the world is once again facing an acute energy crisis. Governments are scrambling to craft emergency responses — under far tight fiscal constraints, with mounting pressure from soaring energy costs, and a stark reminder that the transition itself is the long-term answer to this vulnerability.

Among the hard lessons of 2022 looms one glaring failure: the taxation of windfall profits. Energy companies reaped billions during that crisis, yet collective efforts to claw back a fair share fell dramatically short. In France, the windfall tax on oil and gas companies yielded a mere €60 million, while the broader levy on energy producers brought in around €600 million a fraction of the profits at stake, partly due to aggressive tax avoidance strategies that exposed the limits of hastily designed fiscal tools.

What did we learn ? Is it the same this time ? Could we do better ?

This webinar will explore how extractive multinational enterprises allocate windfall profits and how governments can design smarter, faster, and more effective fiscal responses to energy windfalls, balancing crisis urgency, public finance needs, and the demands of the green transition.

We will welcome :

Ninon Moreau-Kastler, Research Fellow at the International Tax Observatory
Gregor Semieniuk, Associate Professor in the School of Public Policy and Department of Economics at the University of Massachusetts Amherst
Bastien Gebel, Policy Officer at Transport & Environment

The webinar wil be hosted by Madeleine Péron, head of program at the Veblen Institute for economic reforms.

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Toward a Sustainable European Industrial Policy: Tools and Levers

Madeleine Péron — 2026-03-18T15:07:15Z

Europe does not have to choose between competitiveness and the environment. It must build its competitiveness on the ecological transition, or it will fail on both fronts.

One year after the Draghi report, the European Commission is embarking on a dangerous path: abandoning the environmental objectives of the Green Deal in the name of short-term competitiveness, while failing to guarantee the Union's strategic autonomy or economic security.

Under the guise of administrative simplification, what is actually taking place is genuine deregulation. The Commission's first measures reflect trade-offs that are systematically unfavourable to the climate, the environment and social justice. The result: Europe is moving no closer to any of its objectives — neither ecological nor economic. The Commission is offering a false choice between competitiveness, economic security and the environment, when an integrated approach is indispensable.

The Draghi report itself called for greater coherence between the Union's economic, trade and financial policies. Yet the European Commission has not yet translated this call into action. Tools already exist to reconcile ecological transition and competitiveness. The current industrial momentum opens a window of opportunity: the European Union is relaxing its competition doctrine and equipping itself with the means for a more strategic economic policy.

This note examines the real coherence and effectiveness of the proposed policy mix, and sets out proposals to enable the European Union to reconcile its climate, environmental and competitiveness objectives.

Six levers for a sustainable European Industrial Policy

1- Steer industrial policy by integrating economic, environmental and social dimensions
2- Make public support conditional on environmental and social criteria
3- Cooperate on European industrial projects aligned with the transition, such as the small electric vehicle
4- Green public procurement to drive industrial transformation
5- Make full use of the new trade defence tools and ambitiously implement all the instruments of the Green Shield (strengthened requirements for access to the EU market)
6- Increase and strategically direct public and private investment

Joint civil society and cities letter on the revision of the CO2 emission standards for cars and vans

2026-03-17T10:13:15Z

Ahead of a meeting of EU Environment Ministers, 34 organisations call for the ambition of the 2030 and 2035 targets to be maintained.

Dear Climate and Environment Ministers of the European Union,

Cars are responsible for 14% of all greenhouse gas emissions in Europe and air pollution is still linked to over 182,000 deaths in the EU per year, according to the European Environment Agency with a strong exposure of the EU population in urban areas. The solution to both climate damage and toxic air pollution is already available and is soon to become the go-to option for consumers to reduce their mobility costs. Light-duty electric vehicles offer the opportunity to cost-effectively replace the polluting internal combustion engine (ICE) and usher in a new era of zero-emission mobility.

For more than a decade, EU CO₂ standards for cars have been the single most effective policy instrument to reduce road transport emissions, improve air quality and drive the transformation of Europe's automotive industry. They are not only a climate tool. They have become the backbone of Europe's industrial strategy for clean mobility, giving direction to investments in electric vehicles, batteries, charging infrastructure and European manufacturing capacity. The clarity and predictability of the targets have triggered unprecedented industrial investments and positioned Europe on the path toward zero-emission mobility. These investments are now trickling down with a renewed perspective for consumers to find affordable electric vehicles, at a time where high prices pushed many of them away from the new car market.

However, despite their proven effectiveness, the EU CO₂ standards for cars and vans have been subjected to sustained pressure from some industries. In December 2025, the European Commission reopened the regulation and proposed a revision that would significantly lower its ambition through the removal of a phase out date and the introduction of multiple new flexibilities. This shift risks weakening one of the EU's most effective climate instruments, jeopardising industrial, societal, and environmental progress made to achieve the EU's competitiveness and resilience objectives. At a time of escalating climate and energy crises, weakening the car CO₂ standards would be a serious mistake that undermines Europe's strategic autonomy and prolongs its dependence on imported fossil fuels.

Overall, flexibilities will lead manufacturers to postpone action, leading to higher emissions and undermining investment certainty in batteries, charging networks and across the e-mobility value chain. The proposed flexibilities open the door to biofuels and e-fuels which have no role in decarbonising cars and vans and should be excluded from the regulation. Averaging compliance over 2030-2032 would, in practice, slow down the electric vehicles market at the moment when it needs to scale up rapidly.

We therefore call on national governments to:

Reject any weakening of the 2030 target ambition to secure rapid mass adoption of electric cars,
Support the end of the sale of new petrol and diesel cars and vans by 2035 to ensure that the regulation remains aligned with the EU's climate and industrial objectives.

Yours sincerely,

T&E, BEUC, Eurocities, Polis, ERS, EEB, International Federation of Pedestrians, VCÖ – Mobilität mit Zukunft (Austria), Bond Beter Leefmilieu (Belgium), Les Chercheurs d'Air (Belgium), Veblen Institute for Economic Reforms (France), Réseau Action Climat (France), Fondation pour la Nature et l'Homme (France), Canopea (France), Germanwatch (Germany), Nabu (Germany), DUH (Germany), Kyoto Club (Italy), Legambiente (Italy), Nuove Ri-Generazioni (Italy), Greenpeace Italia (Italy), Cittadini per l'aria onlus (Italy), Adiconsum (Italy), Forum Disuguaglianze e Diversità (Italy), Natuur & Milieu (Netherlands), Parent in the City Foundation (Poland), Zero (Portugal), Focus Association for sustainable development (Slovenia), Coalition for sustainable transport policies (KTPP) (Slovenia), Ecologistas en Acción (Spain), Fundación Ecología y Desarrollo (ECODES) (Spain), VCS Verkehrs-Club der Schwei (Suisse), LIVE + BREATHE (UK), Mums for Lungs (UK).

US banks set to face lower capital requirements: a further step towards deregulation

Wojtek Kalinowski — 2026-03-13T10:45:10Z

On March 12, 2026, Michelle W. Bowman, the Federal Reserve's Vice Chair for Supervision, announced proposals to overhaul capital requirements for large US banks. In practice, this means a reduction in capital requirements for the eight largest US banks, including JPMorgan Chase, Bank of America and Goldman Sachs.

This decision is likely to be seized upon by those in Europe already pushing for lighter capital requirements in the name of international competitiveness. The EU Council is already calling for a “simplification” of financial services regulation, including the prudential framework. In February 2026, German and French Finance Ministers Lars Klingbeil and Roland Lescure wrote to Commissioner Albuquerque calling for an ambitious EU-wide “financial services simplification package”.

This political pressure is building at precisely the moment when the Commission is preparing its report on banking sector competitiveness, in response to a call for evidence to which we submitted a response.

On one hand, the Fed is at last completing the US transposition of Basel III standards, which represents genuine progress towards international regulatory convergence. On the other, it is using this exercise in compliance to introduce several substantial easings that cut against the very prudential logic these standards are designed to reinforce.

The G-SIB surcharge reduction: a decision without evidential foundation
The most contestable element of Bowman's announcement is the downward revision of the surcharge imposed on globally systemically important banks (G-SIB surcharge). Bowman justifies this reduction on the grounds that the coefficients used to calculate the surcharge have not been updated since 2015 and have thus “drifted” from the international methodology. She proposes indexing these coefficients to economic growth, on the basis that balance sheet expansion in line with GDP does not reflect a genuine increase in systemic risk.

This argument deserves scrutiny. The size of large US banks has not merely grown in line with the economy: it has also been accompanied by deepening interconnections with the non-bank financial sector, greater exposure to derivatives markets, and increasing complexity in trading activities. The IMF (October 2025) and the ECB/ESRB (January and February 2026) have explicitly flagged that these interdependencies act as amplifiers of systemic shocks. Reducing the G-SIB surcharge in this context means lightening the safety buffer of precisely those institutions whose failure is most likely to trigger a system-wide crisis.

The “credit to the real economy” claim is not backed by evidence
Bowman's central argument is that “excessive” capital requirements constrain lending to households and businesses, and therefore hamper growth, employment and living standards. The rhetoric is well-worn, the metaphor convenient. Her speech bears a telling title—“Capital Rules for the Real Economy”—that presupposes what it would need to prove.

Independent academic research does not support this claim. An ECB study (Behn & Reghezza, 2025) covering large euro area banks between 2019 and 2024 finds that capital requirements have no statistically significant effect on profit efficiency, and that the CET1 level that would maximise productive efficiency is around 18%—well above current levels. A Discussion Paper Bundesbank Discussion Paper (2025) covering US and European banks reaches the same conclusion: no negative link between capital ratios and profitability. The Financial Policy Committee reaffirmed in December 2025 that better-capitalised banks are, on the contrary, more stable lenders across the economic cycle.

The causal chain Bowman invokes—lower capital equals more credit to the real economy—is not empirically documented. What is documented, on the other hand, is that large US banks announced record shareholder returns in 2025, with share buybacks and dividends exceeding $120 billion. Capital requirements have clearly not prevented generous shareholder payouts; there is no evidence that further easing will translate into lending rather than further distributions.

The SVB lesson already forgotten
Less than three years ago, the failure of Silicon Valley Bank illustrated precisely what regulatory rollback—presented, again, as a proportionality measure—can produce in practice. In 2018, raising the systemic threshold from $50bn to $250bn in assets removed SVB from enhanced Fed supervision, a decision presented at the time as reasonable and targeted. The outcome was a bank failure requiring emergency public intervention that briefly threatened the stability of the US financial system. The speed with which this episode appears to have left institutional memory is itself cause for concern.

Banking Regulation and Competitiveness of the EU Banking sector

Jézabel Couppey-Soubeyran & Wojtek Kalinowski — 2026-03-13T10:36:47Z

The European Commission's Call for Evidence frames the challenges facing the EU banking sector in terms of regulatory complexity, fragmentation, and burdens on competitiveness.

Our response draws on recent academic and policy research and is structured in 8 sections, each treating a specific aspect of the problem:
– The state of financial stability risks
– Links between capital requirements and competitiveness
– Sources of complexity in finance and financial regulation
– A critical assessment of the ECB's Buffer Simplification Proposal
– An alternative approach to simplification
– Relation between competitiveness of banks and the needs of the real economy
– Relation between bank competitiveness and sustainability objectives
– Financial risks linked to bank sector concentration

This response has been prepared as part of our “Money & Finance” program activities, supported by Charles-Léopold Mayer Foundation and European Climate Foundation.

Executive Summary

In our response to the European Commission's Call for Evidence on Competitiveness in the Single Banking Market, we challenge the framing that regulatory complexity and capital requirements are the primary obstacles to EU banking competitiveness. Drawing on recent research, we argue that complexity stems from financial innovation and from internal models used by banks in order to reduce effective capital requirements. A misconceived simplification agenda risks weakening financial stability without delivering the economic benefits promised. We propose simplification that eliminates redundancies, reduces regulatory arbitrage while preserving — in some areas strengthening — the prudential architecture built since 2008.

Financial stability risks remain elevated. Recent assessments by the IMF (October 2025), the ECB/ESRB (January and February 2026), and others indicate that financial stability risks remain elevated despite improved headline capital ratios. Growing interconnections between banks and non-bank financial intermediaries, stretched asset valuations, and geoeconomic fragmentation all argue for maintaining, not relaxing, prudential buffers. The Commission's assertion that “banks are well capitalised” understates both the complexity of the current risk environment and the heterogeneity hidden behind the average capitalisation level (large banks remain significantly less capitalised than smaller ones, even though they should be more so given their exposure to systemic risks).

Capital requirements do not undermine competitiveness. Our literature overview finds no evidence that capital requirements are the primary drag on bank competitiveness or lending. Better-capitalised banks tend to lend more steadily through cycles, support higher return on assets, and prove more resilient in stress episodes. The SVB failure of 2023 illustrates what regulatory rollback can produce. We propose that the debate be grounded in this independent evidence rather than in industry self-assessments.

Complexity originates in financial “innovation,” internal model discretion. Regulatory complexity has real costs, but its primary source is not excessive prudential ambition — it is the Internal Ratings-Based (IRB) approach, which allows large banks to use their own models to estimate capital requirements. This creates incentives for strategic underestimation of risk, undermines the level playing field, and generates the complexity that supervisors then struggle to manage. We propose that simplification efforts target this structural problem: replacing internal model discretion with transparent, standardised rules, rather than reducing overall capital levels.

The ECB's buffer simplification proposal would make the framework less legible and harder to activate. The ECB's December 2025 proposal to merge the countercyclical capital buffer (CCyB) and the systemic risk buffer (SyRB) into a single releasable instrument conflates two analytically distinct tools addressing cyclical and structural vulnerabilities respectively. This merger would make the framework less legible and harder to activate. We propose that buffer reform preserve the CCyB/SyRB distinction and prioritise more proactive CCyB deployment rather than instrument consolidation.

An alternative: simplify by eliminating internal model complexity. Genuine simplification without deregulation is possible. Le Quang (2025) identifies real redundancies: the LCR and NSFR could be consolidated into a single NSFR-based liquidity requirement. More substantially, replacing the risk-weighted capital ratio — dependent on manipulable internal models — with a well-calibrated simple leverage ratio would reduce complexity, improve transparency, and maintain loss-absorbing capacity. We propose these targeted reforms as a credible alternative to the deregulatory simplification currently on the table.

Bank competitiveness is not the same as economic competitiveness. We propose broadening the definition of “competitiveness” to encompass the banking system's capacity to finance long-term investment and the ecological transition, not only short-term returns.

Rolling back supervisory engagement with environmental risk is not financially neutral. We propose that the prudential framework's engagement with climate- and nature-related financial risks be maintained and strengthened.

Consolidation risks compounding systemic fragility. Conventional concentration metrics understate the true degree of concentration. We propose that any consolidation be subject to coordinated prudential and competition scrutiny with an explicit systemic risk assessment, and that structural questions about bank size and activity separation be reopened.

Public procurement as a strategic tool for the green and just transition

Madeleine Péron — 2026-01-20T16:45:39Z

How to ensure that public procurement is wisely directed towards a more sustainable economy ?

Based on our work on Industrial policy and ecological transition, we welcome the initiative of the Commission to align public procurement directives with broader social, environmental and strategic goals.

Public procurement should be fully recognised as a strategic policy instrument at the heart of the European Unions ecological, social and industrial transition.

The revision of EU public procurement rules is a decisive opportunity to:

make green and socially responsible public procurement the default option across the EU;
integrate total cost and life-cycle approaches, rather than price-only criteria;
better connect public procurement with industrial strategy, innovation and employment objectives;
facilitate cooperation, mutualisation and coordination at European and territorial levels.

Given its scale and market-shaping power, simplification of procurement rules must not lead to weaker standards, but rather to greater legal certainty, clearer expectations for contracting authorities and bidders, and stronger implementation capacity.

By making sustainable procurement the default through genuine simplification, systematizing life-cycle approaches, explicitly connecting procurement to industrial strategy, enabling multi-level mutualisation, and introducing progressive EU content requirements linked to sustainability, the EU can transform €616 billion in annual spending into a powerful engine of transition, and pretend to even more impact through lower levels of procurement.

The revision of EU public procurement rules is a critical juncture to align public spending with the Union's ecological, social and industrial ambitions. The current moment—with the Clean Industrial Deal, Industrial Decarbonisation Accelerator Act, and clear political commitment to strategic autonomy—offers unprecedented opportunity for transformation to the benefit of citizens, workers and future generations.

Photo de Waldemar Brandt sur Unsplash