Compliance with laws and regulations is an important pre-condition when executing our strategy. Due to the nature of our business and size of our company, we have to comply with a broad range of laws and regulations. However, like our business, these regulatory requirements are continually being developed. In this section we outline the most relevant regulatory developments and their potential impact on PostNL.
The Dutch postal market has undergone fundamental changes in recent years. Since 2005, mail volumes have decreased by more than half, and the decline is set to continue. Below we discuss the impact regulation is having on the postal sector in which we operate.
In 2020, the State Secretary of Economic Affairs and Climate published proposed amendments on the Postal Law for the Dutch Parliament. The amendments aim at keeping nationwide mail delivery affordable and reliable against the backdrop of a changing market. The proposal was put on hold by parlement after the resignation of the former national government. The proposal is currently still on hold.
The increase in volumes due to the concentration of PostNL with Sandd and the one-off volume increases in consumer post due to the Covid-19 pandemic have a lasting positive impact on the stamp prices. However, the formulas in the Ministerial Decree do not allow to take into account these exceptional circumstances and (using these volumes for forecasts) would lead to fluctuating prices. Therefore, in October 2021, the Minister of Economic Affairs and Climate changed the Ministerial Decree 2009, to facilitate moderate price trends in subsequent years.
After the state secretary of Economic Affairs and Climate Policy cleared the acquisition of Sandd by PostNL in 2019, this decision was annulled by the court of Rotterdam based on litigations from several postal parties in 2020, after which the state announced to appeal the court ruling. In April 2021 the state secretary took a new, more substantiated decision with additional conditions for PostNL. The new decision has been appealed against and is now a part of the proceedings. The hearing at the "College van Beroep voor het bedrijfsleven" (CBb) took place end of August 2021, a second hearing is expected in March/April 2022.
The European Commission published an evaluation of the Postal Service Directive (PSD) in November 2021. No clear policy conclusions were made in this report, apart from the need for more standardisation and competition in the postal market. A market development study is now being launched for the postal services sector which should provide policy recommendations on future USO, competition in the sector, environmental and social issues, and digitalisation. The report is expected by Q3 2022.
On 1 January 2021, the United Kingdom (UK) formally left the European Union (EU). As of 2021, the Trade and Cooperation Agreement between the EU and the UK applies. Following Brexit, the UK government is preparing full import controls for goods being imported from the EU to the UK. Partly due to the impact of the Covid-19 pandemic, the implementation of these controls have been delayed until 2022. The phased approach of implementation will result in additional administrative requirements for the import of goods to the UK from the EU in 2022, for example in relation to safety and security declarations.
Financing sustainable growth is one of the elements of the European Green Deal established to overcome challenges related to climate change and environmental degradation. To help investors understand whether an economic activity is environmentally sustainable, the EU implemented EU Taxonomy, a classification system in which environmentally sustainable activities are specified. The taxonomy identifies six environmental objectives: Climate change mitigation, climate change adaptation, use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems.
Following the taxonomy regulation of 2020, the EU adopted delegated acts on sustainable activities for climate change and on disclosures as of 2021. While the reporting requirements over 2021 are limited to the eligibility of activities on climate change only, significant extensions of requirements classification, monitoring, and reporting on progress are expected to be formalised in 2022 for all six objectives. The implementation of this regulation may impact administrative processes and systems and the development of new policies on sustainable activities.
At the UPU congress in August 2021, several relevant topics were discussed in relation to international collaboration for postal services. Decisions were made on topics such as the acceptance of the proposed remuneration package and agreement on a new budget / contribution system. Other topics include a global initiative on reduction of CO2 emissions in the postal sector and the possibility to open up the UPU for a broader range of players in the postal sector. The UPU is preparing proposals for this topic, which will be on the agenda for this year's congress. We do not expect the agreements made in 2021 to have a substantial impact on PostNL's business.
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