Official Journal of the European Union

CE 65/128

(2004/C 65 E/143)


by Esko Seppänen (GUE/NGL) to the Commission

(11 July 2003)

Subject:   Entry of emission allowances in businesses' balance sheets

When the European Parliament was considering the directive on emission allowances (report A5-0207/2003) in plenary on 1 July, Commissioner Margot Wallström did not reply exactly to the question as to how the emission allowances allocated administratively to businesses would be entered in businesses' books and thus in their balance sheets, on the basis of which businesses' stock exchange quotations are likely to be determined. How can the Commission ensure that emission allowances are treated in the same way in all Member States and all businesses, and what provisions does the Commission intend to adopt on this subject?

Answer given by Mrs Wallström on behalf of the Commission

(10 September 2003)

The Commission is aware of the importance of harmonised accounting standards for the efficient functioning of the Community capital market and the Internal Market. Accounting issues are regulated by the Fourth Council Directive 78/660/EEC of 25 July 1998 based on Article 54(3) (g) of the Treaty on the annual accounts of certain types of companies (1), and the Seventh Council Directive 83/349/EEC of 13 June 1983 based on Article 54(3) (g) of the Treaty on consolidated accounts (2). These Directives do not contain any specific rules on emission rights (allowances) as such, but the Recommendation on the recognition, measurement and disclosure of environmental issues in the annual accounts and annual reports of companies (3) published on 30 May 2001 by the Commission deals with this specific subject. In this Recommendation the Commission recommends the Member States to ensure that companies covered by the two Directives apply the provisions of the Recommendation, which also cover emission rights.

Moreover, according to Regulation (EC) No 1606/2002 of the Parliament and of the Council of 19 July 2002 on the application of international accounting standards (4), Community companies, whose securities are admitted to trading on a regulated market in any Member State shall, from 2005 onwards, prepare their consolidated accounts in conformity with international accounting standards that have been adopted by the Commission. Member States may also permit or require other companies to use such accounting standards in their annual and/or consolidated accounts. This was further facilitated by the Directive of the Parliament and of the Council to modernise and update accounting rules adopted on 6 May 2003 (5).

The Commission adopts international accounting standards by way of a comitology procedure in accordance with Regulation (EC) No 1606/2002. It provides that the Commission can adopt International Accounting Standards (IAS), International Financial Reporting Standards (IFRS), and related Interpretations (SIC-IFRIC interpretations) to the extent that their application results in a true and fair view of the financial position and performance of an enterprise, is conducive to the European public good and meets the basic criteria as to the quality of information required for financial statements to be useful to users (Article 3 of the Regulation).

Recently, in May 2003, the International Accounting Standards Board's (IASB) International Financial Reporting Interpretations Committee (IFRIC) issued its first draft Interpretation (D1) of existing standards, which addresses the accounting treatment of emission rights.

Once the IASB has issued this interpretation on emission rights, the Commission will consider it for endorsement at Community level.

(1)  OJ L 222, 14.8.1978, Directive as last amended by Directive 2003/38/EC of the Parliament and of the Council of 13 May 2003, OJ L 120, 15.5.2003.

(2)  OJ L 193, 18.7.1983, Directive as last amended by Directive 2003/38/EC.

(3)  OJ L 156, 13.6.2001.

(4)  OJ L 243, 11.9.2002.

(5)  http://register.consilium.eu.int/pdf/en/03/st03/st03611en03.pdf