(1)

The regulatory framework governing the Union’s cohesion policy for the period from 2021 to 2027, in the context of the next multiannual financial framework, contributes to the fulfilment of the Union’s commitments to implement the Paris Agreement adopted under the United Nations Framework Convention on Climate Change (5) (the ‘Paris Agreement’), pursuing efforts to limit the temperature increase to 1,5 °C above pre-industrial levels, and the United Nations Sustainable Development Goals by concentrating Union funding on green objectives. This Regulation should implement one of the priorities set out in the Commission Communication of 11 December 2019 entitled ‘The European Green Deal’ and is part of the Sustainable Europe Investment Plan that provides dedicated financing under the Just Transition Mechanism in the context of cohesion policy to address the social, economic and environmental costs of the transition to a climate-neutral and circular economy, where any remaining greenhouse gas emissions are compensated by equivalent absorptions.

(2)

The transition to a climate-neutral and circular economy constitutes one of the most important policy objectives for the Union. On 12 December 2019 the European Council endorsed the objective of achieving a climate-neutral Union by 2050, in line with the objectives of the Paris Agreement. While fighting climate change and environmental degradation will benefit all in the long term and provides opportunities and challenges for all in the medium term, not all regions and Member States start their transition from the same point or have the same capacity to respond. Some are more advanced than others, and the transition entails a wider social, economic and environmental impact for those regions that rely heavily on fossil fuels for energy use - especially coal, lignite, peat and oil shale - or greenhouse gas intensive industries. Such a situation not only creates the risk of a variable speed transition in the Union as regards climate action, but also of growing disparities between regions, detrimental to the objectives of social, economic and territorial cohesion.

(3)

In order to be successful and socially acceptable for all, the transition has to be fair and inclusive. Therefore, the Union, Member States and their regions must take into account its social, economic and environmental implications from the outset, and deploy all possible instruments to mitigate adverse consequences. The Union budget has an important role in that regard.

(4)

As set out in the European Green Deal and the Sustainable Europe Investment Plan, a Just Transition Mechanism should complement the other actions under the next multiannual financial framework for the period from 2021 to 2027. It should contribute to addressing the social, economic and environmental consequences, in particular for workers affected in the process of transitioning towards a climate-neutral Union by 2050, by bringing together the Union budget’s spending on climate and social objectives at regional level and by aiming for high social and environmental standards.

(5)

This Regulation should establish the Just Transition Fund (JTF) which is one of the pillars of the Just Transition Mechanism implemented under cohesion policy. The aims of the JTF are to mitigate the adverse effects of the climate transition by supporting the most affected territories and workers concerned and to promote a balanced socio-economic transition. In line with the JTF’s single specific objective, actions supported by the JTF should directly contribute to alleviating the impact of the transition by mitigating the negative repercussions on employment and by financing the diversification and modernisation of the local economy. The JTF’s single specific objective is established at the same level and listed together with the policy objectives set out in Regulation (EU) 2021/1060 of the European Parliament and of the Council (6).

(6)

Reflecting the European Green Deal as the Union’s sustainable growth strategy and the importance of tackling climate change in line with the Union’s commitments to implement the Paris Agreement and the United Nations Sustainable Development Goals, the JTF is intended to contribute to the mainstreaming of climate action and environmental sustainability and to the achievement of an overall target of 30 % of Union budget expenditure supporting climate objectives and to the ambition of providing 7,5 % of annual spending under the multiannual financial framework to biodiversity objectives in 2024 and 10 % of annual spending under the multiannual financial framework to biodiversity objectives in 2026 and 2027, while taking into account the existing overlaps between climate and biodiversity goals. Resources from the JTF’s own envelope are additional to the investments needed to achieve the overall target of 30 % of the Union budget expenditure contributing to climate objectives. Those resources should contribute fully to the achievement of this target along with resources transferred on a voluntary basis from the European Regional Development Fund (ERDF) established by Regulation (EU) 2021/1058 of the European Parliament and of the Council (7) and the European Social Fund Plus (ESF+) established by Regulation (EU) 2021/1057 of the European Parliament and of the Council (8). In this context the JTF should support activities that respect the climate and environmental standards and priorities of the Union and do no significant harm to the environmental objectives within the meaning of Article 17 of Regulation (EU) 2020/852 of the European Parliament and of the Council (9), and that ensure the transition towards a low carbon economy in the pathway to achieving a climate-neutral Union by 2050.

(7)

The resources from the JTF should complement the resources available under cohesion policy.

(8)

Transitioning to a climate-neutral economy is a challenge for all Member States. It will be particularly demanding for those Member States that rely, or which until recently have relied, heavily on fossil fuels or greenhouse gas intensive industrial activities which need to be phased out or which need to adapt due to the transition towards a climate-neutral economy and that lack the financial means to do so. The JTF should therefore cover all Member States, but the distribution of its financial means should focus on those territories that are the most affected by the climate transition process, and that distribution should reflect the capacity of Member States to finance the necessary investments to cope with the transition towards a climate-neutral economy.

(9)

Horizontal financial rules adopted by the European Parliament and by the Council pursuant to Article 322 of the Treaty on the Functioning of the European Union (TFEU) apply to this Regulation. Those rules are laid down in Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (10) (the ‘Financial Regulation’) and determine in particular the procedure for establishing and implementing the budget through grants, prizes, indirect management, financial instruments, budgetary guarantees, financial assistance and the reimbursement of external experts, and provide for checks on the responsibility of financial actors. Rules adopted pursuant to Article 322 TFEU also include a general regime of conditionality for the protection of the Union budget.

(10)

In order to ensure the effective use of the JTF resources, access to the JTF should be limited to 50 % of the national allocation for those Member States that have not yet committed to implement the objective, in line with the objectives of the Paris Agreement, of achieving a climate-neutral Union by 2050, with the other 50 % being made available for programming upon acceptance of such a commitment. In order to ensure fairness and equal treatment of Member States, where a Member State has not committed to implement the objective of achieving a climate-neutral Union by 2050, by 31 December in any year starting from 2022, the budgetary commitment for the preceding year should be decommitted in its entirety the following year.

(11)

In accordance with Council Regulation (EU) 2020/2094 (11) and within the limits of resources allocated therein, recovery and resilience measures under the JTF should be carried out to address the unprecedented impact of the COVID-19 crisis. Such additional resources should be used in such a way as to ensure compliance with the time limits provided for in that Regulation.

(12)

This Regulation should identify types of investments for which support of expenditure by the JTF would be permitted. All supported activities should be pursued in full respect of the climate, environmental and social commitments and priorities of the Union. The list of investments should include those that support local economies through stimulating their endogenous growth potential in accordance with the respective smart specialisation strategies, including sustainable tourism where appropriate. Investments need to be sustainable in the long-term, taking into account all the objectives of the European Green Deal. The projects financed should contribute to a transition to a sustainable, climate-neutral and circular economy, including measures that aim to increase resource efficiency. Waste incineration should not receive support given that this activity belongs to the lower part of the waste hierarchy in the circular economy. Consultancy services that contribute to the implementation of measures supported by the JTF should be eligible. Renaturation of sites, development of green infrastructure and water management should be able to be supported as part of a land restoration project. When supporting energy efficiency measures, the JTF should be able to support investments such as those which contribute to reducing energy poverty, principally through energy efficiency improvements of housing stock. The JTF should also be able to support the development of innovative storage technologies.

(13)

To protect citizens who are most vulnerable to the climate transition, the JTF should also cover the upskilling and reskilling, including training, of the affected workers, irrespective of whether they are still employed or have lost their job due to the transition. The JTF should aim to help them adapt to new employment opportunities. The JTF should also provide any appropriate form of support to jobseekers, including job search assistance and their active inclusion into the labour market. All jobseekers who have lost their job in sectors affected by the transition in a region covered by the territorial just transition plan should be eligible to be supported by the JTF even if the workers who were dismissed do not reside in that region. Due regard should be paid to citizens at risk of energy poverty, in particular when implementing energy efficiency measures for improved social housing conditions.

(14)

Support for activities in the areas of education and social inclusion should be allowed, as well as support for social infrastructure for the purposes of child- and elderly-care facilities and in training centres, provided that these activities are appropriately justified in the territorial just transition plans. For elderly care, the principle of promoting community-based care should be preserved. Social and public services in those areas could complete the investment mix. All support in those areas should require appropriate justification in the territorial just transition plans and should follow the objectives of the European Pillar of Social Rights.

(15)

To address the specific situation and role of women in the transition to the climate-neutral economy, gender equality should be promoted. Women’s labour market participation and entrepreneurship, as well as equal pay, play an important role in ensuring equal opportunities. The JTF should also pay special attention to vulnerable groups that suffer disproportionately from the adverse effects of the transition, such as workers with disabilities. The identity of mining communities needs to be preserved and the continuity of past and future communities needs to be safeguarded. This involves paying special attention to their tangible and non-tangible mining heritage, including their culture.

(16)

In order to enhance the economic diversification of territories impacted by the transition, the JTF should provide support to enterprises and economic stakeholders, including through support to productive investments in micro, small and medium-sized enterprises (12) (SMEs). Productive investments should be understood as investment in fixed capital or immaterial assets of enterprises with a view to producing goods and services, thereby contributing to gross-capital formation and employment. For enterprises other than SMEs, productive investments should only be supported if they are necessary for mitigating job losses resulting from the transition, by creating or protecting a significant number of jobs, and do not lead to or result from relocation. Investments in existing industrial facilities, including those covered by the Union Emissions Trading System, should be allowed if they contribute to the transition to a climate-neutral economy of the Union by 2050 and go substantially below the relevant benchmarks established for free allocation under Directive 2003/87/EC of the European Parliament and of the Council (13) and if they result in the protection of a significant number of jobs. Any such investment should be justified accordingly in the relevant territorial just transition plan. In order to protect the integrity of the internal market and cohesion policy, support to undertakings should comply with Union State aid rules as set out in Articles 107 and 108 TFEU and, in particular, support to productive investments in enterprises other than SMEs should be limited to enterprises located in areas designated as assisted areas for the purposes of points (a) and (c) of Article 107(3) TFEU.

(17)

In order to provide flexibility for the programming of the JTF resources under the Investment for jobs and growth goal, it should be possible to prepare a self-standing JTF programme or to programme JTF resources in one or more dedicated priorities within programmes supported by the ERDF, the ESF+ or the Cohesion Fund. In accordance with Regulation (EU) 2021/1060, JTF resources could be reinforced on a voluntary basis with complementary funding from the ERDF and the ESF+. In such a case, the respective amounts transferred from the ERDF and the ESF+ should be consistent with the type of operations set out in the territorial just transition plans.

(18)

The JTF support should be conditional on the effective implementation of a transition process in a specific territory in order to achieve a climate-neutral economy. In that regard, Member States should prepare, in social dialogue and cooperation with the relevant stakeholders, in accordance with the relevant provision of Regulation (EU) 2021/1060 on partnership, and supported by the Commission, territorial just transition plans, setting out the transition process, consistent with their integrated national energy and climate plans. To that end, the Commission should set up a Just Transition Platform, which would build on the existing platform for coal regions in transition, to enable bilateral and multilateral exchanges of experience on lessons learnt and best practices across all affected sectors. Member States should ensure that municipalities and cities are involved in the implementation of the JTF resources and that their needs in that context are taken into account.

(19)

The territorial just transition plans should identify the territories most negatively affected, where JTF support should be concentrated, and describe specific actions to be undertaken to reach the Union’s 2030 targets for energy and climate and a climate-neutral economy of the Union by 2050, in particular as regards the conversion or closure of facilities involving fossil fuel production or other greenhouse gas intensive activities. Those territories should be precisely defined and correspond to level 3 of the common classification of territorial units for statistics (‘NUTS level 3 regions’), as established by Regulation (EC) No 1059/2003 of the European Parliament and of the Council (14), or be parts thereof. The plans should set out the challenges and needs of those territories, taking into account depopulation risks, and identify the type of operations needed to contribute to job creation at the level of the beneficiaries of the plan and in a manner that ensures the coherent development of climate-resilient economic activities that are also consistent with the transition to a climate-neutral economy and the objectives of the European Green Deal. Where such territories are identified, additional attention should be given to the specificities of islands, insular areas as well as the outermost regions, where the geographical and socio-economic characteristics may require a different approach to support the transition process towards a climate-neutral economy. Only investments in accordance with the territorial just transition plans should receive financial support from the JTF. The territorial just transition plans should be part of the programmes, supported, as the case may be, by the ERDF, the ESF+, the Cohesion Fund or the JTF, which are approved by the Commission.

(20)

In order to enhance the result orientation of the use of JTF resources, the Commission, in line with the principle of proportionality, should be able to apply financial corrections in the case of serious underachievement of targets established for the specific objective of the JTF.

(21)

In order to set out an appropriate financial framework for the JTF, implementing powers should be conferred on the Commission to set out the annual breakdown of available resources by Member State.

(22)

Since the objective of this Regulation, namely to support the people, economy and environment of territories facing economic and social transformation in their transition to a climate-neutral economy, cannot be sufficiently achieved by the Member States owing to the disparities in the levels of development of the various territories and to the backwardness of the least favoured territories, as well as to the limit on the financial resources of Member States and territories, but can rather, by reason of the need for a coherent implementation framework covering several Union funds under shared management, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve that objective.

(23)

In view of the adoption of this Regulation after the start of the programming period, and taking into account the need to implement the JTF in a coordinated and harmonised manner, and in order to allow for its prompt implementation, it should enter into force on the day following that of its publication in the Official Journal of the European Union,

(1)

On 17 November 2017, the European Pillar of Social Rights (the ‘Pillar’) was jointly proclaimed by the European Parliament, the Council and the Commission as a response to social challenges in Europe. The 20 key principles of the Pillar are structured in three categories: equal opportunities and access to the labour market; fair working conditions; and social protection and inclusion. The 20 principles of the Pillar should guide the actions under the European Social Fund Plus (ESF+). In order to contribute to the implementation of the Pillar, the ESF+ should support investments in people and systems in the policy areas of employment, education and social inclusion, thereby supporting economic, territorial and social cohesion in accordance with Article 174 of the Treaty on the Functioning of the European Union (TFEU).

(2)

At Union level, the European Semester for economic policy coordination (the ‘European Semester’) is the framework to identify national reform priorities and monitor their implementation. Member States develop their own national multiannual investment strategies in support of those reform priorities. Those strategies should be presented alongside the yearly national reform programmes in order to outline and coordinate priority investment projects to be supported by Union or national funding.

They should also help to use Union funding in a coherent manner and to maximise the added value of the financial support to be received, in particular from the programmes supported by the Union under, where relevant, the European Regional Development Fund (ERDF) and Cohesion Fund the specific objectives and scope of support of which are set out in Regulation (EU) 2021/1058 of the European Parliament and of the Council (4), the ESF+, the European Maritime, Fisheries and Aquaculture Fund (EMFAF) established by a Regulation of the European Parliament and of the Council, the European Agricultural Fund for Rural Development (EAFRD) established by Regulation (EU) No 1305/2013 of the European Parliament and of the Council (5) and the InvestEU Programme established by Regulation (EU) 2021/523 of the European Parliament and of the Council (6) (InvestEU Programme).

(3)

Revised guidelines for the employment policies of Member States were adopted by means of Council Decision (EU) 2020/1512 (7). The text of those guidelines has been aligned with the principles of the Pillar, with a view to improving Europe’s competitiveness and making it a better place to invest, create jobs and foster social cohesion. In order to ensure the full alignment of the ESF+ with the objectives of those guidelines, particularly as regards employment, education, training and the fight against social exclusion, poverty and discrimination, the ESF+ should support Member States by taking into account the relevant integrated guidelines and relevant country-specific recommendations adopted pursuant to Article 121(2) and Article 148(2) and (4) TFEU and, where appropriate, the national reform programmes underpinned by national strategies. The ESF+ should also contribute to relevant aspects of the implementation of key Union initiatives and activities, in particular the Commission communications of 10 June 2016 entitled ‘A new Skills Agenda for Europe’, of 30 September 2020 entitled ‘European Education Area’, and of 7 October 2020 entitled ‘A Union of Equality: EU Roma strategic framework for equality, inclusion and participation’ as well as the Council Recommendations of 15 February 2016 on the integration of the long-term unemployed into the labour market, of 19 December 2016 on Upskilling Pathways, of 30 October 2020 on A Bridge to Jobs – Reinforcing the Youth Guarantee and of 12 March 2021 on Roma equality, inclusion and participation.

(4)

On 20 June 2017, the Council adopted conclusions entitled ‘A sustainable European future: the EU response to the 2030 Agenda for Sustainable Development’. The Council underlined the importance of achieving sustainable development across the three dimensions (economic, social and environmental) in a balanced and integrated way. It is vital that sustainable development is mainstreamed into all Union internal and external policy areas and that the Union is ambitious in its policies that address global challenges. The Council welcomed the Commission communication of 22 November 2016 entitled ‘Next steps for a sustainable European future’ as a first step in mainstreaming the United Nations (UN) Sustainable Development Goals (SDGs) and applying sustainable development as an essential guiding principle for all Union policies, including through its financing instruments. The ESF+ should contribute to the implementation of the SDGs by, inter alia, eradicating extreme forms of poverty (SDG 1); promoting quality and inclusive education (SDG 4); promoting gender equality (SDG 5); promoting sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all (SDG 8); and reducing inequality (SDG 10).

(5)

Recent and ongoing developments have aggravated the structural challenges arising from economic globalisation, social inequalities, the management of migration flows and the increased security threat, clean energy transition, technological change, demographic decline, unemployment, in particular youth unemployment, and an increasingly ageing workforce as well as challenges stemming from growing mismatches between demand and supply of skills and labour in some sectors and regions, experienced especially by small and medium-sized enterprises (SMEs). The green and digital transitions and the transformation of European industrial ecosystems are likely to entail many new opportunities, if accompanied by the right skill sets and employment and social policies and actions. Taking into account the changing realities of the world of work, the Union should be prepared for current and future challenges by investing in relevant skills, education, training and lifelong learning making growth more inclusive and by improving employment and social policies, while taking into account economic and industrial sustainability, labour mobility and aiming to establish a gender balanced labour market.

(6)

Regulation (EU) 2021/1060 of the European Parliament and of the Council (8) establishes the framework for action by the ERDF, the ESF+, the Cohesion Fund, the Just Transition Fund (JTF) established by Regulation (EU) 2021/1056 of the European Parliament and of the Council (9), the EMFAF, the Asylum, Migration and Integration Fund (AMIF), the Internal Security Fund (ISF) and the Instrument for Financial Support for Border Management and Visa Policy as a part of the Integrated Border Management Fund and lays down, in particular, the policy objectives and the rules concerning programming, monitoring and evaluation, management and control for Union funds implemented under shared management. It is therefore necessary to specify the general objectives of the ESF+ and to lay down specific provisions concerning the type of activities that may be financed by the ESF+.

(7)

Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (10) (the ‘Financial Regulation’) lays down rules on the implementation of the general budget of the Union (Union budget), including the rules on grants, prizes, procurement, indirect management, financial instruments, budgetary guarantees, financial assistance and the reimbursement of external experts. Co-financing for grants may be provided from beneficiaries’ own resources, income generated by the project or financial or in-kind contributions from third parties. In order to ensure consistency in the implementation of Union programmes, the Financial Regulation is to apply to the actions to be implemented under direct or indirect management under the ESF+.

(8)

The forms of Union funding and the methods of implementation under this Regulation should be chosen on the basis of their ability to achieve the specific objectives of the actions and to deliver results, taking into account, in particular, the costs of controls, the administrative burden, and the expected risk of non-compliance. For grants, this should include consideration of the use of lump sums, flat rates and unit costs, as well as financing not linked to costs as referred to in Article 125(1), point (a), of the Financial Regulation. To implement measures linked to the socio-economic integration of third-country nationals, and in accordance with Article 94 of the Regulation (EU) 2021/1060, the Commission may reimburse Member States using simplified cost options including lump sums.

(9)

In order to streamline and simplify the funding landscape and create additional opportunities for synergies through integrated funding approaches, the actions which were supported by the Fund for European Aid to the Most Deprived established by Regulation (EU) No 223/2014 of the European Parliament and of the Council (11), and by the European Union Programme for Employment and Social Innovation established by Regulation (EU) No 1296/2013 of the European Parliament and of the Council (12) should be integrated into the ESF+. The ESF+ should comprise of two strands: the strand under shared management (the ‘ESF+ strand under shared management’), to be implemented under shared management, and the Employment and Social Innovation strand (the ‘EaSI strand’), to be implemented under direct and indirect management. This should contribute to reducing the administrative burden linked to the management of different funds, in particular for Member States and beneficiaries, while maintaining simpler rules for simpler operations such as the distribution of food and/or basic material assistance.

(10)

In view of the wider scope of the ESF+, it is appropriate that the aims to enhance the effectiveness of labour markets, promote equal access to quality employment, improve equal access to and quality of education and training to aid reintegration into education systems, promote social inclusion, facilitate access to healthcare for vulnerable persons and contribute to eradicating poverty, are not only implemented under shared management under ESF+ strand under shared management, but also, for actions required at Union level, under direct and indirect management under the EaSI strand.

(11)

This Regulation lays down a financial envelope for the entire duration of the ESF+, which is to constitute the prime reference amount, within the meaning of point 18 of the Interinstitutional Agreement of 16 December 2020 between the European Parliament, the Council of the European Union and the European Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management, as well as on new own resources, including a roadmap towards the introduction of new own resources (13), for the European Parliament and the Council during the annual budgetary procedure. It should specify the allocation for the ESF+ strand under shared management and the allocation for actions to be implemented under the EaSI strand.

(12)

With a view to facilitating the implementation of the specific and operational objectives of the EaSI strand, the ESF+ should support activities related to technical and administrative assistance, such as preparatory, monitoring, control, audit and evaluation activities, while communication and dissemination activities should be part of the actions eligible under the EaSI strand.

(13)

The ESF+ should aim to promote employment by means of active interventions enabling integration and reintegration into the labour market, in particular for young people, especially through the implementation of the reinforced Youth Guarantee, for long-term unemployed people, for disadvantaged groups on the labour market and for inactive people, as well as by means of promoting self–employment and the social economy. The ESF+ should aim to improve the functioning of labour markets by supporting the modernisation of labour market institutions such as the public employment services in order to improve their capacity to provide intensified targeted counselling and guidance during the job search and the transition to employment and to enhance the mobility of workers. The ESF+ should promote a gender-balanced participation in the labour market through measures that aim to ensure, inter alia, equal working conditions, improved work-life balance and access to childcare, including early childhood education and care. The ESF+ should also aim to provide a healthy and well-adapted working environment in order to respond to health risks related to changing forms of work, and the needs of the ageing workforce.

(14)

The ESF+ should provide support for the improvement of the quality, inclusiveness, effectiveness and labour market relevance of education and training systems, including by the promotion of digital learning, the validation of non-formal and informal learning and the professional development of teaching staff, in order to facilitate the acquisition of key competences in particular as regards basic skills, including health literacy, media literacy, entrepreneurial skills, language skills, digital skills and competencies for sustainable development, which all individuals need for personal fulfilment and development, employment, social inclusion and active citizenship. The ESF+ should help progression within education and training and transition to work, should support lifelong learning and employability with a view to facilitating full participation in society for all, and should contribute to competitiveness, including through graduate tracking, and to societal and economic innovation by supporting sustainable initiatives that are capable of being scaled up in those fields and adapted to different target groups such as persons with disabilities. Such help, support and contribution could be achieved, for example, by means of online learning, work-based training, traineeships, dual education and training systems, and apprenticeships as defined in the Council Recommendation of 15 March 2018 on a European Framework for Quality and Effective Apprenticeships, lifelong guidance, skills anticipation in close cooperation with industry, up-to-date training materials and delivery methods, forecasting and graduate tracking, training of educators, validation of learning outcomes and recognition of qualifications and industry-based certifications.

(15)

Support from the ESF+ should be used to promote equal access for all, in particular for disadvantaged groups, to quality, non-segregated and inclusive education and training from early childhood education and care, while paying special attention to children coming from a socio-economically disadvantaged background, by means of general and vocational education and training, in particular apprenticeships, to tertiary level, as well as by means of adult education and learning, including through sport and cultural activities. The ESF+ should provide targeted support to learners in need and reduce educational inequalities, including the digital divide, prevent and reduce early school leaving, foster permeability between the education and training sectors, reinforce links with non-formal and informal learning and facilitate learning mobility for all and accessibility for persons with disabilities. Synergies with Erasmus+ established by Regulation (EU) 2021/817 of the European Parliament and of the Council (14), in particular to facilitate the participation of disadvantaged learners in learning mobility, should be supported in this context.

(16)

The ESF+ should promote flexible opportunities for upgrading of skills and acquiring new and different skills by all, in particular entrepreneurial and digital skills, skills for key enabling technologies and skills for the green economy as well as industrial ecosystems in line with the Commission communication of 10 March 2020 entitled ‘A New Industrial Strategy for Europe’. In line with the Skills Agenda for Europe and the Council Recommendation on Upskilling Pathways (15), the ESF+ should support flexible pathways, including accessible, short, targeted, modular training leading to credentials, with a view to providing people with the skills that are adjusted to labour market and industrial ecosystems needs, the green and digital transitions, innovation and social and economic change, the facilitation of reskilling and upskilling and employability, career transitions, geographic and sectoral mobility and supporting in particular low-skilled persons, persons with disabilities and poorly qualified adults. The ESF+ should also facilitate the provision of support to individuals with regard to integrated skills, including employed, self-employed and unemployed persons, through instruments such as individual learning accounts.

(17)

Synergies with Horizon Europe – the Framework Programme for Research and Innovation – established by Regulation (EU) 2021/695 of the European Parliament and of the Council (16) (Horizon Europe) should ensure that the ESF+ is able to mainstream and scale up innovative curricula supported by Horizon Europe in order to equip people with the skills and competences needed for the jobs of the future.

(18)

The ESF+ should support the efforts of Member States to contribute to the eradication of poverty with a view to breaking the cycle of disadvantage across generations and promote social inclusion by ensuring equal opportunities for all, reducing barriers, tackling discrimination and addressing health inequalities. Such support implies mobilising a range of policies targeting the most disadvantaged people regardless of their sex, sexual orientation, age, religion or belief, racial or ethnic origin, in particular marginalised communities such as Roma people, people with disabilities or chronic diseases, homeless people, children and elderly people. The ESF+ should promote the active inclusion of people far from the labour market with a view to ensuring their socio-economic integration. The ESF+ should also be used to enhance timely and equal access to affordable, sustainable and high-quality services that promote the access to housing and person-centred care such as healthcare and long-term care, in particular family and community-based care services. The ESF+ should contribute to the modernisation of social protection systems with a particular focus on children and disadvantaged groups and with a view, in particular, to promoting the accessibility of such systems, including for persons with disabilities.

(19)

The ESF+ should contribute to the eradication of poverty by supporting national schemes aiming to alleviate food and material deprivation and promote social integration of people at risk of poverty or social exclusion and the most deprived persons. With the overall aim that, at Union level, a minimum of 4 % of the resources of the ESF+ strand under shared management support the most deprived persons, Member States should allocate at least 3 % of their resources of the ESF+ strand under shared management to address the forms of extreme poverty with the greatest social exclusion impact, such as homelessness, child poverty and food deprivation. The provision of food and/or basic material assistance to the most deprived persons should not replace existing social benefits provided to them under national social systems or pursuant to national law. Due to the nature of the operations and the type of end recipients, it is necessary that simpler rules apply to support which addresses material deprivation of the most deprived persons.

(20)

In light of the persistent need to enhance efforts to address the management of migration flows in the Union as a whole and in order to ensure a coherent, strong and consistent support to solidarity and responsibility-sharing efforts, the ESF+ should provide support to promote the socio-economic integration of third-country nationals, including migrants, which may include initiatives at local level, complementary to the actions financed under the AMIF, the ERDF and other Union funds which can have a positive effect on the inclusion of third-country nationals.

(21)

Due to the importance of access to healthcare, the ESF+ should ensure synergies and complementarities with the EU4Health Programme established by Regulation (EU) 2021/522 of the European Parliament and of the Council (17) and the scope of the ESF+ should include access to healthcare for people in vulnerable situations.

(22)

The ESF+ should support policy and system reforms in the fields of employment, social inclusion, access to healthcare for vulnerable persons, long-term care, education and training, contributing to poverty eradication. In order to strengthen alignment with the European Semester, Member States should allocate an appropriate amount of their resources of the ESF+ strand under shared management to implement relevant country-specific recommendations relating to structural challenges which it is appropriate to address through multiannual investments falling within the scope of the ESF+, taking into account the Pillar, the Social Scoreboard of indicators, as revised following the adoption of the new targets set out in the Social Pillar Action Plan, and regional specificities.

The Commission and Member States should ensure coherence, coordination and complementarity between the ESF+ strand under shared management and other Union funds, programmes and instruments such as the JTF, the ERDF, the EU4Health Programme, the Recovery and Resilience Facility established by Regulation (EU) 2021/241 of the European Parliament and of the Council (18), the European Globalisation Adjustment Fund for Displaced Workers established by Regulation (EU) 2021/691 of the European Parliament and of the Council (19), the EMFAF, Erasmus+, the AMIF, Horizon Europe, the EAFRD, the Digital Europe Programme established by Regulation (EU) 2021/694 of the European Parliament and of the Council (20), InvestEU Programme, the Creative Europe Programme established by Regulation (EU) 2021/818 of the European Parliament and of the Council (21), the European Solidarity Corps established by Regulation (EU) 2021/888 of the European Parliament and of the Council (22), and the Technical Support Instrument established by Regulation (EU) 2021/240 of the European Parliament and of the Council (23).

In particular, the Commission and Member States should ensure, in all stages of the process, effective coordination in order to safeguard the consistency, coherence, complementarity and synergy among sources of funding, including technical assistance thereof.

(23)

By supporting the specific objectives set out in this Regulation, inter alia, by contributing to the policy objective ‘a more social and inclusive Europe implementing the European Pillar of Social Rights’ as referred to in Regulation (EU) 2021/1060, the ESF+ will continue to contribute to territorial and local development strategies in order to implement the Pillar. It will support the tools set out in Article 28 of that Regulation and thereby also contribute to the delivery of the policy objective ‘a Europe closer to citizens by fostering the sustainable and integrated development of all types of territories and local initiatives’ as referred to in Regulation (EU) 2021/1060, including through poverty reduction and social inclusion measures, taking into account the specificities of urban, rural and coastal regions in view of tackling the socio-economic inequalities in cities and regions.

(24)

In order to ensure that the social dimension of Europe, as set out in the Pillar, is duly put forward and that a minimum amount of resources is targeting those that are most in need, Member States should allocate at least 25 % of their resources of the ESF+ strand under shared management to foster social inclusion.

(25)

In order to address the persistently high level of child poverty in the Union, and in line with principle 11 of the Pillar, which states that children have the right to protection from poverty and that children from disadvantaged backgrounds have the right to specific measures to enhance equal opportunities, Member States should programme an appropriate amount of their resources of the ESF+ strand under shared management for the implementation of the Child Guarantee for activities addressing child poverty in line with the specific objectives of the ESF+ that allow for programming resources towards actions directly supporting children’s equal access to childcare, education, healthcare, decent housing and adequate nutrition. Member States that had an average rate above the Union average of children of less than 18 years old at risk of poverty or social exclusion for the period between 2017 and 2019, on the basis of Eurostat data, should allocate at least 5 % of their resources of the ESF+ strand under shared management to those activities. Operations contributing to this thematic concentration requirement should count towards the 25 % of thematic concentration requirement for social inclusion when programmed under the relevant specific objectives.

(26)

In order to facilitate an inclusive economic recovery after a major crisis and to support youth employment in a changing world of work and in light of persistently high levels of youth unemployment and inactivity in a number of Member States and regions, it is necessary that Member States invest an appropriate amount of their ESF+ resources in measures to support youth employment and skills, including through the implementation of schemes under the Youth Guarantee. Building on the actions supported by the Youth Employment Initiative in the 2014 to 2020 programming period under Regulation (EU) No 1304/2013 of the European Parliament and of the Council (24), which target individuals and on the lessons learnt, Member States should further promote quality employment and education reintegration pathways and invest in early prevention and effective outreach by prioritising, where relevant, long-term unemployed, inactive and disadvantaged young people including through youth work. Member States should also invest in measures aiming to facilitate the transition from school to work as well as adequate capacities of employment services to provide tailor-made and holistic support and better-targeted offers to young people. By fully integrating the Youth Employment Initiative into the ESF+, the delivery of targeted actions for youth employment will be more effective and efficient and the scope will be extended to structural measures and reforms, thus ensuring a better match between support from Union funding and the implementation of the reinforced Youth Guarantee.

Upgrading of skills and acquiring new and different skills should help young people seize the opportunities of growing sectors and prepare them for the changing nature of work, while harnessing the opportunities arising from the digital and green transitions and the transformation of the Union industrial ecosystems. Therefore, Member States that had an average rate above the Union average of young people of 15 to 29 years of age who are not in employment, education or training for the period between 2017 and 2019, on the basis of Eurostat data, should allocate at least 12,5 % of their resources of the ESF+ strand under shared management to those actions.

(27)

In accordance with Article 349 TFEU and Article 2 of Protocol No 6 on special provisions for Objective 6 in the framework of the Structural Funds in Finland, Norway and Sweden annexed to the 1994 Act of Accession (25), the outermost regions and the northern sparsely populated regions are entitled to specific measures under common policies and Union programmes. Due to the permanent constraints, such as depopulation, those regions require specific support.

(28)

Efficient and effective implementation of actions supported by the ESF+ depends on good governance and partnership between all actors at the relevant territorial levels and the socio-economic actors, in particular the social partners and civil society organisations. It is therefore essential that Member States allocate an appropriate amount of their resources of the ESF+ strand under shared management to ensure meaningful participation of the social partners and civil society organisations in the implementation of the ESF+ strand under shared management. That participation should include relevant bodies representing civil society, such as environmental partners, non-governmental organisations, and bodies responsible for promoting social inclusion, fundamental rights, the rights of persons with disabilities, gender equality and non-discrimination. Member States with a country-specific recommendation on capacity building of the social partners or civil society organisations should allocate at least 0,25 % of their resources of the ESF+ strand under shared management for that purpose due to the specific needs they have in that area.

(29)

With a view to rendering policies more responsive to social change as well as to encouraging and supporting innovative solutions, support for social innovation is crucial. In particular, testing and evaluating innovative solutions before scaling them up is instrumental in improving the efficiency of the policies and thus specific support from the ESF+ is justified. Social economy enterprises could play a key role in delivering on social innovation and contributing to economic and social resilience. The definition of a social economy enterprise should be in line with the definitions provided in national law and the Council conclusions of 7 December 2015 on the promotion of the social economy as a key driver of economic and social development in Europe. Moreover, with a view to enhancing mutual learning and exchange of knowledge and practices, Member States should be encouraged to continue their transnational cooperation actions under shared management in the areas of employment, education and training, and social inclusion in line with the specific objectives of the ESF+.

(30)

Member States and the Commission should ensure that the ESF+ contributes to the promotion of equality between women and men in accordance with Article 8 TFEU to foster equality of treatment and opportunities between women and men in all areas, including participation in the labour market, terms and conditions of employment and career progression. They should also ensure that the ESF+ promotes equal opportunities for all, without discrimination in accordance with Article 10 TFEU, promotes the inclusion in society of persons with disabilities on equal basis with others and contributes to the implementation of the UN Convention on the Rights of Persons with Disabilities adopted on 13 December 2006 in New York. The ESF+ should contribute to the promotion of accessibility for persons with disabilities with a view to improving integration into employment, education and training, thereby enhancing their inclusion in all spheres of life. The promotion of such accessibility should be taken into account in all dimensions and in all stages of the preparation, monitoring, implementation and evaluation of programmes, in a timely and consistent manner while ensuring that specific actions are taken to promote gender equality and equal opportunities. The ESF+ should also promote the transition from residential or institutional care to family- and community-based care, in particular for those who face multiple discrimination. The ESF+ should not support any action that contributes to segregation or to social exclusion. Regulation (EU) 2021/1060 provides that rules on eligibility of expenditure are to be established at national level, with certain exceptions for which it is necessary to lay down specific provisions with regard to the ESF+ strand under shared management.

(31)

All operations should be selected and implemented respecting the Charter of Fundamental Rights of the European Union (the ‘Charter’). The Commission should do its utmost to ensure that complaints are assessed in a timely manner, including complaints related to infringements of the Charter, and should inform the complainant of the result of the assessment in line with the Commission communication of 19 January 2017 entitled ‘EU law: Better results through better application’.

(32)

In order to reduce the administrative burden for the collection of data, reporting requirements should be kept as simple as possible. Where data are available in registers or equivalent sources, Member States should be able to allow managing authorities to collect data from registers.

(33)

With regard to the processing of personal data within the framework of this Regulation, national data controllers should carry out their tasks for the purposes of this Regulation in accordance with Regulation (EU) 2016/679 of the European Parliament and of the Council (26). The dignity of and respect for the privacy of end recipients of operations under the specific objective ‘addressing material deprivation through food and/or basic material assistance to the most deprived persons, including children, and providing accompanying measures supporting their social inclusion’ should be guaranteed. In order to avoid any stigmatisation, the persons receiving food and/or basic material assistance should not be required to identify themselves when receiving the support and when taking part in surveys on the most deprived persons who have benefitted from the ESF+.

(34)

Social experimentation is a small-scale project testing which allows gathering of evidence on the feasibility of social innovations. It should be possible and encouraged for ideas to be tested at local level and for those ideas that are feasible to be pursued on a wider scale, where appropriate, or transferred to other contexts in different regions or Member States with financial support from the ESF+ or in combination with other sources.

(35)

The ESF+ lays down provisions intended to achieve freedom of movement for workers on a non-discriminatory basis by ensuring close cooperation of the public employment services of Member States, the Commission and the social partners. The European network of employment services should promote better functioning of the labour markets by facilitating the cross-border mobility of workers, in particular through cross-border partnerships, and a greater transparency of information on the labour markets. The scope of the ESF+ should include developing and supporting targeted mobility schemes with a view to filling vacancies where labour market shortcomings have been identified.

(36)

The lack of access to finance of microenterprises, social enterprises and social economy is one of the main obstacles to business creation, especially among people furthest from the labour market. Under the EaSI strand, this Regulation should lay down provisions in order to create a market ecosystem to increase the supply of and access to finance for social enterprises as well as to meet demand from those who need it most, and, in particular, the unemployed, women and vulnerable people who wish to start up or develop a microenterprise. That objective will also be addressed through financial instruments and budgetary guarantees under the social investment and skills policy window of the InvestEU Fund. Social economy enterprises, where they are defined under national law, should be regarded as social enterprises within the context of the EaSI strand, regardless of their legal status, insofar as those enterprises fall within the definition of a social enterprise provided for in this Regulation.

(37)

Social investment market players, including philanthropic actors, could play a key role in achieving several ESF+ objectives, as they offer financing as well as innovative and complementary approaches to combatting social exclusion and poverty, reducing unemployment and contributing to the SDGs. Therefore, philanthropic actors such as foundations and donors should be involved in ESF+ actions, as appropriate and provided that they do not have a political or social agenda that is in conflict with Union ideals, in particular in those actions that aim to develop the social investment market ecosystem.

(38)

Guidance under the EaSI strand is needed with regard to the development of social infrastructures and related services, in particular for social housing, childcare and education, healthcare and long-term care, including facilities to assist transitions from institutional- to family- and community-based care services and taking into account accessibility requirements for persons with disabilities.

(39)

Reflecting the importance of tackling climate change in line with the Union’s commitments to implement the Paris Agreement, adopted under the UN Framework Convention on Climate Change (27), and the SDGs, this Regulation will contribute to mainstream climate actions and to the achievement of an overall target of 30 % of Union budget expenditure supporting climate objectives. Relevant actions will be identified during the preparation and implementation, and reassessed in the context of the mid-term evaluation.

(40)

Pursuant to Council Decision 2013/755/EU (28), persons and entities established in overseas countries and territories are to be eligible for funding subject to the rules and objectives of the EaSI strand and arrangements applicable to the Member State to which the relevant overseas countries and territories are linked.

(41)

Third countries which are members of the European Economic Area may participate in Union programmes in the framework of the cooperation established under the Agreement on the European Economic Area (29), which provides for the implementation of the programmes on the basis of a decision under that agreement. Third countries may also participate on the basis of other legal instruments. A specific provision should be introduced in this Regulation requiring third countries to grant the necessary rights and access required for the authorising officer responsible, the European Anti-Fraud Office (OLAF) and the Court of Auditors to comprehensively exercise their respective competences.

(42)

It is appropriate to lay down indicators for the purposes of reporting under the EaSI strand. Those indicators should be output-based, objective, easy to retrieve, and proportionate to the share of the EaSI strand within the entire ESF+. They should cover the operational objectives and funding activities under the EaSI strand, without requiring the setting of corresponding targets.

(43)

In accordance with the Financial Regulation, Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council (30) and Council Regulations (EC, Euratom) No 2988/95 (31), (Euratom, EC) No 2185/96 (32) and (EU) 2017/1939 (33), the financial interests of the Union are to be protected by means of proportionate measures, including measures relating to the prevention, detection, correction and investigation of irregularities, including fraud, to the recovery of funds lost, wrongly paid or incorrectly used. In particular, in accordance with Regulations (Euratom, EC) No 2185/96 and (EU, Euratom) No 883/2013, OLAF has the power to carry out administrative investigations, including on-the-spot checks and inspections, with a view to establishing whether there has been fraud, corruption or any other illegal activity affecting the financial interests of the Union.

The European Public Prosecutor’s Office (EPPO) is empowered, in accordance with Regulation (EU) 2017/1939, to investigate and prosecute criminal offences affecting the financial interests of the Union, as provided for in Directive (EU) 2017/1371 of the European Parliament and of the Council (34). In accordance with the Financial Regulation, any person or entity receiving Union funds is to fully cooperate in the protection of the financial interests of the Union, grant the necessary rights and access to the Commission, OLAF, the Court of Auditors and, in respect of those Member States participating in enhanced cooperation, pursuant to Regulation (EU) 2017/1939, the EPPO and ensure that any third parties involved in the implementation of Union funds grant equivalent rights.

(44)

Horizontal financial rules adopted by the European Parliament and the Council on the basis of Article 322 TFEU apply to this Regulation. Those rules are laid down in the Financial Regulation and determine in particular the procedure for establishing and implementing the budget through grants, prizes, procurement, indirect management, and provide for checks on the responsibility of financial actors. Rules adopted on the basis of Article 322 TFEU also include a general regime of conditionality for the protection of the Union budget.

(45)

Since the objectives of this Regulation, namely enhancing the effectiveness of labour markets, promoting equal access to quality employment, improving equal access to, and the quality of, education and training, promoting social inclusion and contributing to the eradication of poverty, as well as the objectives pursued under the EaSI strand cannot be sufficiently achieved by the Member States but can rather, by reason of the scale or effects of the action, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.

(46)

In order to amend certain non-essential elements of this Regulation, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission in respect of amending and supplementing the annexes on the indictors. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making (35). In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States’ experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(47)

In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Commission. The implementing powers relating to the model for the structured survey of end recipients should be exercised in accordance with the advisory procedure referred to in Article 4 of Regulation (EU) No 182/2011 of European Parliament and of the Council (36) given the nature of this model.

(48)

In order to allow for a rapid response to exceptional or unusual circumstances, as referred to in the Stability and Growth Pact, that may arise during the programming period, implementing powers should be conferred on the Commission to adopt temporary measures to facilitate the use of support from the ESF+ in response to such circumstances, with a maximum time limit of 18 months. The Commission should adopt the measures that are most appropriate in light of the exceptional or unusual circumstances that a Member State is facing while preserving the objectives of the ESF+, but this should not include amendments to the thematic concentration requirements. Furthermore, the implementing powers in relation to the temporary measures for the use of support from the ESF+ in response to exceptional or unusual circumstances should be conferred on the Commission without committee procedures, given that the scope of application of those measures is determined by the Stability and Growth Pact and is limited to the measures set out in this Regulation. The Commission should also monitor the implementation and assess the appropriateness of the temporary measures. Where the Commission deems it to be necessary to amend this Regulation due to the exceptional or unusual circumstances, the scope of the amendment should not include the thematic concentration requirements related to youth employment nor support for the most deprived persons due to the fact that young people and the most deprived persons are often most adversely affected by such crisis situations. Therefore it is necessary to ensure that those target groups continue to receive an adequate amount of support.

(49)

In the administration of the ESF+, the Commission should be assisted by a Committee as referred to in Article 163 TFEU (the ‘ESF+ Committee’). In order to enable the ESF+ Committee to have all the necessary information at its disposal and obtain a wide range of views of relevant stakeholders, the ESF+ Committee should be able to invite representatives without a voting right provided that the agenda of the meeting requires their participation, including representatives of the European Investment Bank and the European Investment Fund and relevant civil society organisations.

(50)

In order to ensure that the specificities of each ESF+ strand continue to be addressed, the ESF+ Committee should establish working groups for each ESF+ strand. Composition and tasks of those working groups are to be established by the ESF+ Committee. The working groups should have the possibility to invite civil society representatives as well as other stakeholders to their meetings. The tasks of the working groups may include ensuring coordination and cooperation between Member State authorities and the Commission on the implementation of the ESF+, including consultation on the work programme of the EaSI strand, monitoring the implementation of each ESF+ strand, exchanging experience and good practice within and across the ESF+ strands and fostering potential synergies with other Union programmes.

(51)

In order to ensure a greater transparency regarding the implementation of this Regulation, the Commission should establish the necessary links with relevant policy committees active in the social and employment field, such as the Employment Committee, the Social Protection Committee or the Advisory Committee on Safety and Health at Work.

(52)

In accordance with Article 193(2) of the Financial Regulation, a grant may be awarded for an action which has already begun, provided that the applicant can demonstrate the need for starting the action prior to the signature of the grant agreement. However, the costs incurred prior to the date of submission of the grant application are not eligible, except in duly justified exceptional cases. In order to avoid any disruption in Union support which could be prejudicial to Union’s interests, it should be possible to provide in the financing decision, during a limited period of time at the beginning of the multiannual financial framework 2021 to 2027, and only in duly justified cases, for eligibility of activities and costs from the beginning of the 2021 financial year, even if they were implemented and incurred before the grant application was submitted.

(53)

Regulation (EU) No 1296/2013 should therefore be repealed.

(54)

In order to ensure continuity in providing support in the relevant policy area and to allow implementation as of the beginning of the multiannual financial framework 2021 to 2027, this Regulation should enter info force as a matter of urgency on the day following that of its publication in the Official Journal of the European Union and should apply, with retroactive effect with regard to the EaSI strand, from 1 January 2021,

Part I

Article 1

Article 2

Article 3

Article 4

Article 5

Article 6

Part II

Chapter I

Article 7

Article 8

Article 9

Article 10

Article 11

Article 12

Chapter II

Article 13

Article 14

Article 15

Article 16

Article 17

Chapter III

Article 18

Article 19

Article 20

Article 21

Article 22

Article 23

Article 24

Part III

Chapter I

Article 25

Chapter II

Article 26

Article 27

Article 28

Article 29

Chapter III

Article 30

Article 31

Article 32

Article 33

Article 34

Article 35

Article 36

Part IV

Article 37

Article 38

Article 39

Article 40

Article 41

Article 42

ANNEX I

ANNEX II

ANNEX III

ANNEX IV

(1)

Article 176 of the Treaty on the Functioning of the European Union (TFEU) provides that the European Regional Development Fund (ERDF) is intended to help to redress the main regional imbalances in the Union. Pursuant to that Article and the second and third paragraphs of Article 174 TFEU, the ERDF is to contribute to reducing disparities between the levels of development of the various regions and the backwardness of the least-favoured regions, among which particular attention is to be paid to regions which suffer from severe and permanent natural or demographic handicaps, including in particular handicaps resulting from demographic decline, such as the northernmost regions with very low population density, islands, and cross-border and mountain regions.

(2)

The Cohesion Fund was set up in order to contribute to the overall objective of strengthening economic, social and territorial cohesion of the Union by providing financial contributions in the fields of environment and trans-European networks in the area of transport infrastructure (TEN-T), as set out in Regulation (EU) No 1315/2013 of the European Parliament and of the Council (4).

(3)

Regulation (EU) 2021/1060 of the European Parliament and of the Council (5) sets out common rules applicable to the ERDF, the European Social Fund Plus (ESF+), the Cohesion Fund, the Just Transition Fund, the European Maritime, Fisheries and Aquaculture Fund (EMFAF), the Asylum, Migration and Integration Fund (AMIF), the Internal Security Fund (ISF) and the instrument for financial support for Border Management and Visa Policy (BMVI), which operate under a common framework.

(4)

In order to simplify the rules that were applicable to both the ERDF and the Cohesion Fund during the 2014-2020 programming period, a single Regulation should set out the applicable rules covering both funds.

(5)

Horizontal principles as set out in Article 3 of the Treaty on the European Union (TEU) and in Article 10 TFEU, including the principles of subsidiarity and proportionality as set out in Article 5 TEU, should be respected in the implementation of the ERDF and the Cohesion Fund, taking into account the Charter of Fundamental Rights of the European Union. Member States should also respect the obligations set out in the United Nations Convention on the Rights of the Child, and in the United Nations Convention on the Rights of Persons with Disabilities (UNCRPD), as well as the principles of the European Pillar of Social Rights, proclaimed by the European Parliament, the Council and the Commission in 2017, and ensure accessibility in line with Article 9 of the UNCRPD, and in accordance with the Union law harmonising accessibility requirements for products and services. In that context, the ERDF and the Cohesion Fund, in synergy with the ESF+, should be implemented in a way that promotes the transition from institutional to family-based and community-based care and should pursue their objectives with a view to contributing to the creation of quality jobs, eradication of poverty and promoting social inclusion. Member States and the Commission should aim at eliminating inequalities and at promoting equality between men and women and integrating the gender perspective, as well as at combating discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation. Neither fund should support actions that contribute to any form of segregation or exclusion, and, when financing infrastructure, both should ensure accessibility for persons with disabilities.

(6)

The objectives of the ERDF and the Cohesion Fund should be pursued in the framework of sustainable development and the Union’s promotion of the aim of preserving, protecting and improving the quality of the environment as set out in Article 11 and Article 191(1) TFEU, taking into account the polluter pays principle. Reflecting the importance of tackling climate change in line with the Union’s commitments to implement the 2015 Paris Agreement on climate change following the 21st Conference of the Parties adopted under the United Nations Framework Convention on Climate Change and to achieve the United Nations Sustainable Development Goals (‘UN Sustainable Development Goals’), both funds will contribute to mainstream climate actions and to the achievement of an overall target of 30 % of the Union budget expenditure supporting climate objectives. To that end, operations under the ERDF are expected to contribute 30 % of the overall financial envelope of the ERDF to climate objectives. Operations under the Cohesion Fund are expected to contribute 37 % of the overall financial envelope of the Cohesion Fund to climate objectives. Furthermore, the actions under this Regulation should contribute to the ambition of providing 7,5 % of annual spending under the Multiannual Financial Framework (MFF) to biodiversity objectives in the year 2024 and 10 % of annual spending under the MFF to biodiversity objectives in 2026 and 2027, while considering the existing overlaps between climate and biodiversity goals.

Both funds should support activities that respect the climate and environmental standards and priorities of the Union and do no significant harm to the environmental objectives within the meaning of Article 17 of Regulation (EU) 2020/852 of the European Parliament and of the Council (6) and that ensure the transition towards a low-carbon economy in the pathway to achieve climate neutrality by 2050. ERDF and Cohesion Fund programmes should take account of content of integrated national energy and climate plans adopted in the framework of the Governance of the Energy Union and Climate Action as established by Regulation (EU) 2018/1999 of the European Parliament and of the Council (7).

(7)

In order to protect the integrity of the internal market, ERDF and Cohesion Fund operations benefiting undertakings are to comply with Union State aid rules as set out in Articles 107 and 108 TFEU.

(8)

The principle of partnership is a key feature in the implementation of the ERDF and the Cohesion Fund, building on the multi-level governance approach and ensuring the involvement of regional, local, urban and other public authorities, civil society, economic and social partners and, where appropriate, research organisations and universities. Implementation of both funds should ensure coordination and complementarity with the ESF+, the Just Transition Fund, the EMFAF and the European Agricultural Fund for Rural Development (EAFRD).

(9)

It is necessary to establish provisions regarding the support of the ERDF under the Investment for jobs and growth goal and the European territorial cooperation goal (Interreg).

(10)

In order to identify the types of activities which can be supported by the ERDF and the Cohesion Fund, specific policy objectives for providing support from both funds should be laid down to ensure that they contribute to one or more of the common policy objectives set out in Article 5(1) of Regulation (EU) 2021/1060

(11)

With small and medium-sized enterprises (SMEs) being the backbone of the European economy, the ERDF should continue to support the development of SMEs by enhancing their sustainable growth and competitiveness. Additionally, taking into account the potentially profound impact of the COVID-19 pandemic or any other potential crisis situation arising in the future having an impact on businesses and employment, the ERDF should support the recovery from such crisis situations through supporting job creation in SMEs, including by way of productive investments.

(12)

Investments under the ERDF should contribute to the development of a comprehensive high-speed digital infrastructure network, and to promoting pollution-free and sustainable multimodal mobility with a focus on public transport, shared mobility, walking and cycling, as a part of the transition to the net-zero carbon economy.

(13)

In order to grasp the opportunities from the digital age, the ERDF should contribute to the development of an inclusive digital society where citizens, research organisations, businesses and public administrations take full advantage of the opportunities that digitalisation offers. Effective e-government at national, regional and local level involves developing tools as well as rethinking organisation and processes, in order to deliver public services more effectively, easily, quickly and at a lower cost. In particular, digital and telecommunication technologies should be used to enhance traditional networks and services for the benefit of local communities through developing projects such as smart cities and villages.

(14)

Support from the ERDF under policy objective 1 (PO 1) should be based on building capacities for smart specialisation strategies, which set priorities at national or regional level, or both, to increase their competitive advantage by developing and matching research and innovation strengths with business needs and necessary skills through an entrepreneurial discovery process. The process should allow entrepreneurial actors, including industry, education and research organisations, public administrations and civil society, to identify the most promising areas for sustainable economic development based on a region’s distinctive structures and knowledge base. As the governance process of smart specialisation is crucial for the quality of the strategy, the ERDF should provide support to developing and enhancing the capacities necessary for an efficient entrepreneurial discovery process and the preparation or updating of smart specialisation strategies.

(15)

In order to promote the achievement of a climate-neutral Union by 2050, taking due account of social and economic consequences that it entails, the ERDF and the Cohesion Fund should contribute to reducing greenhouse gas emissions and to tackling energy poverty. In that context, investments in energy efficiency, including energy savings schemes, in sustainable renewable energy in accordance with the sustainability criteria set out in Directive (EU) 2018/2001 of the European Parliament and of the Council (8), in smart energy systems, as well as investments aiming at disaster prevention, promoting biodiversity and green infrastructure, including preservation, valorisation and the highlighting of protected natural areas, and other measures to reduce greenhouse gas emissions, such as the preservation and restoration of natural areas with high potential for carbon absorption and storage, including by rewetting of moorlands, the capture of landfill gas or emission reduction in industrial processes or products, would be particularly important. Furthermore, investments aiming at reducing every form of pollution, such as air, water, soil, noise and light pollution, should be supported.

(16)

Integrated national energy and climate plans, which outline the policies and measures and which address energy poverty and greenhouse gas emissions, need to be taken into account while preparing programmes co-financed by the ERDF and the Cohesion Fund. With a view to contributing to achieving national objectives to reduce energy poverty set out in integrated national energy and climate plans, the ERDF should support in particular energy efficiency improvements in housing and buildings in line with the amended Directive (EU) 2018/844 of the European Parliament and of the Council (9) to contribute to the achievement of a decarbonised building stock by 2050, thus reducing energy consumption and creating savings for households affected by energy poverty.

(17)

To improve transport connectivity, the ERDF and the Cohesion Fund should promote the development of a trans-European transport network, as referred to in Regulation (EU) No 1315/2013, through investment in infrastructure for railway transport, inland waterway transport, road transport, maritime transport and multimodal transport, including noise reduction measures. The ERDF and the Cohesion Fund should also support national, regional and local, cross-border and urban mobility. In doing so, both funds should pay attention to improving safety in particular of existing bridges and tunnels.

(18)

In an increasingly interconnected world and in view of the demographic and migration dynamics, it is clear that Union migration policy requires a common approach that relies on the synergies and complementarities of the different funding instruments. Therefore, the ERDF should pay attention to demographic challenges when preparing and implementing programmes. In order to ensure coherent, strong and consistent support for solidarity and responsibility-sharing efforts between Member States in managing migration, the ERDF should provide support, at the most appropriate territorial level, to facilitate the long-term, inclusive integration of third-country nationals, including migrants, for the benefit of social and economic development, by adopting an approach aimed at protecting their dignity and rights.

(19)

In order to promote social innovation and inclusive access to high quality employment, the ERDF should support ‘social economy’ entities such as cooperatives, mutual societies, non-profit associations and social enterprises.

(20)

In order to promote social inclusion and combat poverty, particularly among marginalised communities, it is necessary to improve access, including through infrastructure, to social, educational, cultural and recreational services, including sports, taking into account the specific needs of persons with disabilities, children and the elderly.

(21)

The ERDF and the Cohesion Fund should promote the socioeconomic inclusion of marginalised communities, with particular attention paid to the National Roma inclusion strategic policy framework as referred to in Annex IV to Regulation (EU) 2021/1060 which set out integration measures, low-income households, including households at risk of poverty and social exclusion, and disadvantaged groups, including people with special needs. In particular, in line with principle 19 of the European Pillar of Social Rights, the ERDF and the Cohesion Fund should be able to support the provision of social housing. Taking into account challenges facing marginalised Roma communities in terms of access to basic services, the ERDF and the Cohesion Fund should contribute to improving their living conditions and development prospects.

(22)

In order to strengthen the preparedness for distance and online education and training in a socially inclusive manner, the ERDF should, in its task of improving equal access to inclusive and quality services in education, training and lifelong learning, in particular contribute to fostering resilience for distance and online learning. The efforts to ensure the continuity of education and training during the COVID-19 pandemic have revealed important shortcomings in the access to the necessary information and communication technology (ICT) equipment and connectivity by learners from a disadvantaged background and in remote regions. In that context, the ERDF should support making available the necessary ICT equipment and connectivity, thus fostering the resilience of the education and training systems for distance and online learning.

(23)

In order to strengthen the capability of public health systems to prevent, quickly respond to, and recover from health emergencies, the ERDF should also contribute to the resilience of health systems. Additionally, as the unprecedented COVID-19 pandemic has revealed the importance of immediate availability of critical supplies to provide an effective response to an emergency situation, the scope of support from the ERDF should be broadened to allow for the purchase of supplies necessary for strengthening disaster resilience and the resilience of health systems including primary care, and promoting the transition from institutional to family-based and community-based care. When purchasing supplies to strengthen the resilience of health systems, these should be consistent with and not go beyond the national health strategy and ensure complementarities with the EU4Health Programme established by Regulation (EU) 2021/522 of the European Parliament and of the Council (10), as well as the rescEU capacities under the Union Civil Protection Mechanism established by Decision No 1313/2013/EU of the European Parliament and of the Council (11).

(24)

The ERDF should support and promote transition from institutional to family-based or community-based care through supporting facilities that would seek to prevent segregation from the community, would facilitate the integration of people to the society and would seek to ensure independent living conditions.

(25)

A dedicated specific objective should be provided for supporting the regional economies strongly dependent on the tourism and cultural sectors. This would allow to exploit the full potential of culture and sustainable tourism for an economic recovery, social inclusion and social innovation, without prejudice to the possibilities to provide support from the ERDF to those sectors under other specific objectives.

(26)

Investments supporting the creative and cultural industries, cultural services and cultural heritage sites could be financed under any policy objective provided that they contribute to the specific objectives and that they fall within the scope of support from the ERDF.

(27)

Sustainable tourism requires a balance between economic, social, cultural and environmental sustainability. The approach to supporting sustainable tourism should be in accordance with the Commission communication of 19 October 2007 entitled ‘Agenda for a sustainable and competitive European tourism’. In particular, it should take into account the welfare of tourists, respect the natural and cultural environment and ensure the socio-economic development and competitiveness of destinations and businesses through an integrated and holistic policy approach.

(28)

In order to support the efforts of Member States and regions in facing new challenges and ensuring a high level of security for their citizens as well as the prevention of marginalisation and radicalisation, while relying on the synergies and complementarities with other Union policies, investments under the ERDF should contribute to security in areas where there is a need to ensure safe and secure public spaces and critical infrastructure, such as transport and energy, thus contributing to building more inclusive and safer societies.

(29)

The ERDF should provide support under policy objective 5 (PO 5) in an integrated manner to the economic, social and environmental development based on cross-sectoral territorial strategies using integrated territorial development tools to ensure the harmonious development of both urban and non-urban areas. Furthermore, when developing urban areas, special attention should be paid to supporting functional urban areas due to their importance in triggering cooperation between local authorities and partners across administrative borders as well strengthening urban-rural linkages.

(30)

The ERDF should support sustainable tourism in an integrated manner, in particular through strengthening cooperation within functional territories. In order to boost the impact of sustainable tourism on the economy, enterprises and public authorities should systematically cooperate to deliver quality services more efficiently in areas with a high potential for tourism, taking due care to create a stable legal and administrative environment conducive for sustainable growth of such areas. Supported actions in the area of sustainable tourism could take into account best practices in this area, such as the ‘tourist district’ approach.

(31)

As a result of the overall aim of the Cohesion Fund provided for in the TFEU, it is necessary to set out and limit the policy objectives to which the Cohesion Fund is to provide support.

(32)

In order to improve overall administrative capacity of institutions and governance in Member States implementing programmes under the Investment for jobs and growth goal, it is necessary to enable supporting measures for programme authorities and sectoral or territorial actors responsible for carrying out activities relevant to the implementation of the ERDF and the Cohesion Fund under all of the specific objectives pursued taking into account the horizontal principles referred to in the Regulation (EU) 2021/1060 , including the UN Sustainable Development Goals.

(33)

In order to encourage and boost cooperation measures within programmes implemented under the Investment for jobs and growth goal, it is necessary to enhance cooperation measures with partners including those at local and regional level within a given Member State or between different Member States in relation to support provided under all of the specific objectives. Such enhanced cooperation is additional to the cooperation under Interreg and should in particular support cooperation among structured partnerships with a view to implementing regional strategies as referred to in the Commission communication of 18 July 2017 entitled ‘Strengthening Innovation in Europe’s Regions: Strategies for resilient, inclusive and sustainable growth’. Partners could therefore come from any region in the Union, but could also include cross-border regions and regions which are covered by a European Grouping of Territorial Cooperation under Regulation (EC) No 1082/2006 of the European Parliament and of the Council (12), a macro-regional or sea-basin strategy or a combination of these two types of strategies.

(34)

The ERDF should help to redress the main regional imbalances in the Union and to reduce disparities between the levels of development of the various regions and the backwardness of the least favoured regions, including those facing challenges due to decarbonisation commitments and through that foster regional resilience. ERDF support under the Investment for jobs and growth goal should therefore be concentrated on key Union priorities in line with policy objectives laid down in Regulation (EU) 2021/1060. Therefore support from the ERDF should be concentrated on the policy objectives of a more competitive and smarter Europe by promoting innovative and smart economic transformation and regional ICT connectivity and a greener, low-carbon transitioning towards a net zero carbon economy and resilient Europe by promoting clean and fair energy transition, green and blue investment, the circular economy, climate change mitigation and adaptation, risk prevention and management and sustainable urban mobility. The resources dedicated to sustainable urban mobility and broadband investment could be partly taken into account when calculating compliance with the thematic concentration requirements. Member States should decide in their Partnership Agreements whether to comply with the thematic concentration requirements at the level of category of region or at national level for the entire programming period. Thematic concentration at national level should be established by three groups of Member States formed according to respective gross national income and should allow for flexibility at the level of individual programmes. As the support from the Cohesion Fund could also contribute to the thematic concentration, the conditions for such a contribution should be set out. In addition, the methodology to classify Member States should be set out in detail, taking into account the specific situation of the outermost and northern sparsely populated regions.

(35)

In order to concentrate the support on key Union priorities, it is also appropriate that thematic concentration requirements should be respected throughout the programming period, including in the case of transfer between priorities within a programme or between programmes.

(36)

In order to enable the ERDF to provide support under Interreg in terms of investments in infrastructure and associated investments related thereto, as well as training and integration activities, it is necessary to provide that the ERDF should also be able to provide support for activities under the specific objectives of the ESF+, set up under Regulation (EU) 2021/1057 of the European Parliament and of the Council (13).

(37)

In order to concentrate the use of limited resources in the most efficient way, the support by the ERDF given to productive investments under the relevant specific objective should be limited to micro, small and medium-sized enterprises within the meaning of Commission Recommendation 2003/361/EC (14), except for specific investments set out in this Regulation.

(38)

In the context of the ERDF support for productive investments, it is opportune to clarify that productive investment should be understood as investment in fixed capital or immaterial assets of enterprises, with a view to producing goods and services and thereby contributing to gross capital formation and employment. It should also be provided that, under certain conditions, the ERDF and the Cohesion Fund might support investments in enterprises other than SMEs. Furthermore, based on the experience of previous programming periods, the ERDF and the Cohesion Fund should also support investments in enterprises other than SMEs, including in particular utilities, when they concern investment in infrastructure that ensures access to services available to the public in the field of energy, environment and biodiversity, transport and digital connectivity.

(39)

This Regulation should set out the different types of activities the costs of which should be able to be supported by means of investments from the ERDF and the Cohesion Fund, under their respective objectives as set out in the TFEU, including crowdfunding. The Cohesion Fund should be able to support investments in TEN-T and the environment, including investments related to sustainable development and energy presenting environmental benefits. In that context, the Cohesion Fund should also be able to support combined energy and seismic retrofitting. With regard to the ERDF, the list of activities should take into account specific national and regional development needs as well as endogenous potential and be simplified. The ERDF should be able to support investments in infrastructure, including for research and innovation business infrastructure for SMEs, housing for marginalised communities and disadvantaged groups, low-income households and migrants, culture and heritage, sustainable tourism and services to enterprises, investments in relation to access to services with a particular focus on disadvantaged, marginalised and segregated communities, productive investments in SMEs, equipment, software and intangible assets, as well as measures with regard to information, communication, studies, networking, cooperation, exchange of experiences between partners and activities involving clusters. In order to support the programme implementation, both funds should also be able to support technical assistance activities. Finally, in order to provide support for a broader range of interventions for Interreg programmes, the scope should be enlarged to also include the sharing of a broad range of facilities and human resources and costs linked to measures within the scope of the ESF+.

(40)

Trans-European transport networks projects under Regulation (EU) No 1316/2013 of the European Parliament and of the Council (15) are to continue to be financed from the Cohesion Fund via both shared management and the direct implementation mode under the Connecting Europe Facility established by a Regulation of the European Parliament and of the Council establishing the Connecting Europe Facility (the ‘CEF Regulation for 2021-2027’).

(41)

At the same time, it is important to clarify those activities which fall outside the scope of the ERDF and the Cohesion Fund, including investments to achieve the reduction of greenhouse gas emissions from activities listed in Annex I to Directive 2003/87/EC of the European Parliament and of the Council (16), in order to avoid duplication of available financing, which already exists as part of that Directive, and investments in undertakings in difficulty as defined in Commission Regulation (EU) No 651/2014 (17) unless authorised under de minimis aid or temporary State aid rules established to address exceptional circumstances. The ERDF and the Cohesion Fund should also not support certain investment in airports, facilities for landfilling and residual waste treatment or fossil fuels. Therefore, the ERDF should be able to support targeted environmental mitigation, security and safety measures in regional airports as long as the primary objective of the investments would be clearly identified in terms of environmental, security or safety standards of the Union and would be in line with the State aid rules.

For investments increasing the capacity of facilities for the treatment of residual waste, residual waste should be understood as primarily non-separately collected municipal waste and rejects from waste treatment. Modernisation of district heating networks could be supported with a view to improving the energy efficiency of efficient district heating systems, as defined in Directive 2012/27/EU of the European Parliament and of the Council (18), pursuant to objectives laid down in integrated national energy and climate plans. With a view to promoting renewable energy, support could be provided for district heating boilers supplied by a combination of gas and renewable energy sources. In such cases, support from both funds should correspond pro-rata to the share of renewable energy input to such boilers. In addition, it should be explicitly set out that the overseas countries and territories listed in Annex II to the TFEU are not eligible for support from the ERDF or the Cohesion Fund.

(42)

Member States should regularly transmit to the Commission information on the progress made using the common output and result indicators set out in Annex I. Common output and result indicators could be complemented, where relevant by programme-specific output and result indicators. The information provided by Member States should be the basis on which the Commission should report on the progress towards the achievement of specific objectives over the whole programming period using for this purpose a core set of indicators set out in Annex II.

(43)

Pursuant to paragraphs 22 and 23 of the Interinstitutional Agreement of 13 April 2016 on Better Law-Making (19), the ERDF and the Cohesion Fund should be evaluated on the basis of information collected in accordance with specific monitoring requirements, while avoiding an administrative burden, in particular on Member States, and overregulation. Those requirements, where appropriate, should include measurable indicators as a basis for evaluating the effects of both funds on the ground.

(44)

Within the framework of the relevant rules under the Stability and Growth Pact as clarified in the Code of Conduct, Member States should be able to make a duly justified request for further flexibility for the public or equivalent structural expenditure supported by the public administration by way of co-financing of investments activated as part of the ERDF and the Cohesion Fund. The Commission should evaluate such a request in accordance with the Stability and Growth Pact and the Code of Conduct.

(45)

The ERDF should address the problems of disadvantaged areas, in particular rural areas and areas which suffer from severe and permanent natural or demographic handicaps, including demographic decline, in accessing basic services, including digital services, enhancing attractiveness for investment, including through business investments and connectivity to large markets. In doing so, the ERDF should pay attention to specific development challenges encountered by certain island, border or mountain regions. Furthermore, the ERDF should pay particular attention to the specific difficulties of areas at NUTS level 3 and local administrative unit level, as referred to in Regulation (EC) No 1059/2003 of the European Parliament and of the Council (20), that are sparsely populated, in accordance with the criteria set out in point 161 of the Guidelines on Regional State Aid 2014-2020, namely those that have a population density of less than 12,5 inhabitants per square kilometre, or areas that have suffered from an average annual population decrease of at least 1 % of inhabitants over the 2007-2017 period. Member States should consider developing specific voluntary action plans at local level for such areas to counter these population challenges.

(46)

In order to maximise the contribution to addressing more effectively economic, demographic, environmental and social challenges in particular in areas with natural and demographic handicaps, as envisaged in Article 174 TFEU, actions in the field of territorial development should be based on integrated territorial strategies including in urban and rural areas and paying attention to urban-rural linkages. Therefore, the ERDF support should be delivered through the forms set out in Article 28 of Regulation (EU) 2021/1060 ensuring appropriate involvement of local, regional and urban authorities, economic and social partners and representatives of civil society and non-governmental organisations. Territorial strategies should also be able to benefit from a multi-fund and integrated approach involving the ERDF, the ESF+, the EMFAF and the EAFRD.

(47)

To improve the resilience of communities in rural areas and their economic, social and environmental conditions, support from the ERDF should be used to develop projects such as smart villages, as referred to in the European Parliament resolution of 3 October 2018 on addressing the specific needs of rural, mountainous and remote areas, in particular by developing new opportunities, such as decentralised services and energy solutions, digital technologies and innovations.

(48)

Within the framework of sustainable urban development, it is considered necessary to support integrated territorial development in order to more effectively tackle the economic, environmental, climate, demographic and social challenges affecting urban areas, including functional urban areas, while taking into account the need to promote urban-rural linkages. Support targeting urban areas might take a form of a separate programme or a separate priority and should be able to benefit from a multi-fund approach. The principles for selecting the urban areas where integrated actions for sustainable urban development are to be implemented, and the indicative amounts for those actions, should be set out in the programmes under the Investment for jobs and growth goal with a minimum target of 8 % of the ERDF resources allocated at national level for that purpose. It should also be established that this percentage should be respected throughout the programming period in the case of transfer between priorities within a programme or between programmes, including at the mid-term review.

(49)

In order to identify or provide solutions which address issues relating to sustainable urban development at Union level, the Urban Innovative Actions in the area of sustainable urban development should be replaced by a European Urban Initiative, to be implemented under direct or indirect management. That initiative should cover all urban areas, including functional urban areas and support the Urban Agenda for the European Union. To stimulate participation of local authorities in the thematic partnerships under the Urban Agenda, the ERDF should provide support for organisational costs related to such participation. The initiative could include inter-governmental cooperation on urban matters, in particular cooperation aimed at capacity building at local level to achieve UN Sustainable Development Goals. Member States, regional and local authorities should be actively involved in managing and implementing the European Urban Initiative. Actions agreed within such a management model could include exchange for regional and local representatives. Actions undertaken within the European Urban Initiative should promote urban-rural linkages within functional urban areas. Cooperation with European Network for Rural Development is of particular importance in this respect.

(50)

The commercialisation and upscaling of interregional innovation projects should be promoted over the whole territory of the Union through the new interregional innovation investments which are to be managed by the Commission. By supporting innovation projects in smart specialisation areas, including pilot projects and capacity building measures, they will, in particular, benefit less developed regions, boosting their innovation eco-systems and their capacity to integrate in larger Union value chains. They should also contribute to the implementation of the Commission communication of 18 July 2017 entitled ‘Strengthening Innovation in Europe’s Regions: Strategies for resilient, inclusive and sustainable growth’, in particular to support thematic smart specialisation platforms on critical fields.

(51)

Specific attention should be paid to outermost regions, namely by adopting measures under Article 349 TFEU providing for an additional allocation for the outermost regions to offset the additional costs incurred in these regions as a result of one or several of the permanent restraints referred to in Article 349 TFEU, namely remoteness, insularity, small size, difficult topography and climate, economic dependence on a few products, the permanence and combination of which severely restrain their development. That allocation should be able to cover investments, operating costs and public service obligations aimed at offsetting additional costs caused by such restraints. Operating aid should be able to cover expenditure on freight transport services and start-up aid for transport services as well as expenditure on operations linked to storage constraints, the excessive size and maintenance of production tools, and the lack of human capital in the local market. That allocation should not be subject to the thematic concentration requirements. In order to protect the integrity of the internal market, and as is the case for all operations co-financed by the ERDF and the Cohesion Fund, any ERDF support to the financing of operating and investment aid in the outermost regions should comply with State aid rules as set out in Articles 107 and 108 TFEU.

(52)

In order to allow for a rapid response to exceptional and unusual circumstances as referred to in the Stability and Growth Pact that could arise during the programming period, implementing powers should be conferred to the Commission to adopt temporary measures to facilitate the use of the support from the ERDF in response to such circumstances. The Commission should adopt the measures that are most appropriate in light of the exceptional or unusual circumstances that a Member State is facing while preserving the objectives of the fund. Furthermore, the implementing decisions in relation to a temporary measure for the use of the ERDF in response to exceptional or unusual circumstances should be adopted without committee procedures given that the scope of application is determined by the Stability and Growth Pact and limited to the measure set out in this Regulation. The Commission should also monitor the implementation and assess the appropriateness of the measures.

(53)

In order to amend certain non-essential elements of this Regulation, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission in respect of making adjustments, where justified, to Annex II which sets out a list of indicators used as a basis to provide information to the European Parliament and to the Council on performance of programmes. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States’ experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(54)

Since the objective of this Regulation, namely to reinforce economic, social and territorial cohesion by redressing the main regional imbalances in the Union, cannot be sufficiently achieved by the Member States but can rather, by reason of the extent of the disparities between the levels of development of the various regions and the backwardness of the least favoured regions and the limit on the financial resources of Member States and regions, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve that objective.

(55)

In view of the adoption of this Regulation after the start of the programming period, and taking into account the need to implement both the ERDF and Cohesion Fund in a coordinated and harmonised manner, and in order to allow for its prompt implementation, it should enter into force on the day following that of its publication in the Official Journal of the European Union,

CHAPTER I

Article 1

Article 2

Article 3

Article 4

Article 5

Article 6

Article 7

Article 8

CHAPTER II

Article 9

Article 10

Article 11

Article 12

Article 13

Article 14

CHAPTER III

Article 15

Article 16

Article 17

Article 18

ANNEX I

ANNEX II