10.3.2017   

EN

Official Journal of the European Union

C 75/1

Rapporteur:

Thierry LIBAERT

1.1.

The EESC calls in this opinion for society to begin an economic transition from over-exploitation of resources and a throw-away culture to a more sustainable, job-rich era, based on quality rather than quantity. The EESC would very much like to see Europe take the initiative in devising new economic models.

1.2.

The EESC considers that the functional economy must be supported, as it will enable all or some of these challenges to be met. The functional economy is not an end in itself, but rather a tool which will help to achieve new consumption model objectives.

1.3.

Given the many unresolved questions and unknown factors regarding the supposed economic, environmental and social benefits of the functional economy, a thorough assessment should be carried out of services or product types in order to identify the advantages and if necessary establish the conditions under which the functional economy should be rolled out to people’s benefit.

1.4.

Labelling will then need to be promoted to indicate the environmental, social, economic or other impacts of the product or service acquired through the functional economy approach of access or use rather than ownership. Such labelling will enable consumers to know whether it would be best to opt to buy the product or service, and to make informed choices. With this in view, it is crucial that the information provided by companies be accurate and trustworthy, and authorities and mechanisms must be designated to guarantee this in the eyes of consumers.

1.5.

The EESC recommends that the Member States and stakeholders promote responsible consumption, including over the whole of the education process, with an emphasis on the functional economy. Provided it is rolled out sensibly, the functional economy can help overcome many current consumption challenges.

1.6.

More generally, the EESC recommends stepping up the pace of research and achievements in new methods of production and consumption connected to the functional economy:

1.7.

An EU legislative package could provide a structure for services delivered through the functional economy, particularly with an eye to new consumption issues such as collaborative consumption, obsolescence, consumer understanding of these models, and a legal and tax framework that is friendlier to innovative businesses.

1.8.

By regionalising the functional economy it will be possible to meet the new challenges of sustainable regional development by experimenting with new economic models. The functional economy is useful for harnessing regional assets, getting away from the standardisation inherent in mass production — which is partly responsible for the disillusion with current consumption — and allowing for all production externalities. Cities are also one of the most suitable regional levels for developing functional economy solutions, as their density lends itself to approaches based on pooling.

1.9.

In order to cope with the fundamental shift to a new economic model with major systemic consequences in many areas, it is recommended that a new cross-cutting and permanent body be set up in the EESC to analyse these developments.

1.10.

An exchange platform making functional economy initiatives more visible across the EU would be useful, given that there are still few good practices and that these do not always receive the attention they deserve. Such a platform could be built into the European circular economy platform endorsed by the EESC in its opinion on the European Commission’s circular economy package.

1.11.

The functional economy can realign the various types of value of a good. Both use values and labour value must thus find a way to coexist within the functional economy.

1.12.

Clarifying and simplifying insurance issues relating to functional economy models will be crucial; models must be made clearer for end consumers so that the new functional economy services can be developed.

2.1.

The functional economy is based on using rather than owning products. However, this means more than just incorporating added ‘services’ into a ‘product’: the functional economy takes into account all the changes in consumption by more effectively factoring-in the end-user and more resource-efficient economic models, even delivering co-benefits for regions. With this model, companies do not sell the product, but rather a function whose use is charged for. Manufacturers therefore have an interest a priori in gearing their business models towards developing good-quality, repairable goods which are easy to maintain, and in introducing appropriate production chains and logistics.

2.1.1.

The underlying economic paradigm still holds: that value lies in the benefits derived from use (use value) as well as in the good or service itself or its worth in the eyes of others (its labour value or exchange value).

2.1.2.

Under the traditional economic model, producers create value and consumers destroy it through consumption. With the functional economy, the interests of both parties must align, or at least converge, so that each safeguards — or even creates — that value. With the current digital revolution, the production and exploitation of usage data is such a new resource or value created by both parties.

2.1.3.

The new dynamic emerging around with the — still hypothetical — figure of the ‘prosumer’ (a neologism combining the two historically separate roles of producer and consumer) demonstrates how highly linear or vertical economic relationships are turning into more interlinked or horizontal patterns and structures.

2.1.4.

The functional economy can promote the dematerialisation of the economy by integrating all costs into the final price, and it must promote the decoupling of economic activity from its environmental impact.

2.2.

There are two schools of thought, offering two more or less successful models for applying the concept of the functional economy. The first covers service provision centred on use and ties in with the general idea of a service economy. It rethinks ownership relations but has little to say about products. The second focuses on the externalities of the functional economy which can lead to new solutions, where the sale of goods and services is seen as an integrated whole (looking at issues of work or the production of intangible resources, including regional resources) and the consumer is an integral part of the solution devised.

2.3.

The EESC advocates a balanced approach. The idea is not to promote the functional economy across the board but to do so only where it provides answers to the new challenges mentioned.

3.1.

The functional economy is interesting because in theory, or at least under certain conditions, it is able to provide an answer to the many challenges (whether economic, social, environmental or cultural) connected to current consumption.

3.2.

As part of an integrated approach, particularly at regional level, it can deliver co-benefits or positive externalities. For example, by using cooperation-based, cross-cutting working methods, local authorities factor into their provision of street-lighting considerations such as economic performance, safer public areas and reduced light pollution and energy consumption. By integrating this range of goals rather than focusing on one single parameter, it is possible to meet several objectives and keep costs under control.

3.2.1.

Pooling investment allows the functional economy to be used to promote innovation and thus sustainable development, including clean or green technological innovations. Such forms of innovation are often more capital-intensive than traditional solutions, and the functional economy enables them to be rolled out by consumers, who individually would not have the requisite financial capacity. For instance, an energy performance contract may give the user access to often costly energy-efficient technologies and services in return for a small monthly fee.

3.3.

Environmentally speaking, current consumption patterns based on individual ownership lead to under-use of goods and thus significant waste of natural resources: for instance, a car is currently unused 95 % of the time and in urban areas the number of passengers barely exceeds one (the average is 1,2 per vehicle).

3.3.1.

Acquiring a mobility service (such as a seat for a given number of kilometres or a car for a specified length of time and distance) allows these resources to be used more intensively. The functional economy can therefore increase the intensity of use of many consumer goods and thus create greater value with a smaller environmental footprint.

3.3.2.

Price-setting for functional economy services builds in all product and service costs and not just the marginal cost, meaning that the user has a more accurate understanding of the real costs. This sends a price signal that more closely reflects the real impact of production and thus promotes more responsible behaviour. (For instance, when buying an hour of car-sharing the user contributes to the total costs of wear and tear of the vehicle, insurance, parking, fuel, etc., with all the costs calculated on a pro rata basis. They are therefore likely to take a rational approach to using the vehicle as opposed to an approach based on ownership, where generally only the fuel is seen as a usage cost).

3.4.

In social terms, by reducing the cost of accessing a product or service, whether through pooled investment by several parties or by limiting the cost of the intended use to the access price, the functional economy can enable more consumers to access services that were previously unavailable to them. From an economic, legal or insurance point of view, the key issue then is to identify the investor and the holder of the capital made available to the users. The new legislation to be framed will be crucial here.

3.4.1.

There are many social issues which, like the environmental challenges, must be explored carefully to establish whether the functional economy will be beneficial in this area, and above all to establish the conditions under which the functional economy can be rolled out with an eye to social progress.

3.5.

The paradigm shift involved in moving from ownership to access is far from inconsequential. It underpins a switch from the model of conspicuous consumption and mimetic desire to more moderate consumption which is less rooted in compulsive behaviour or is at least less dependent on ownership of material goods.

3.6.

Digitalisation can extend the scope of the functional economy, so that is no longer limited to its original sphere of business-to-business (B-to-B). If the costs of distribution and roll-out are reduced, digital solutions can provide functional economy solutions for everyone in a wide range of areas (such as music, mobility, equipment and the home). With these goals in mind and in order to ensure that the new economic model can operate alongside the existing one, a suitable tax and regulatory framework must be developed and implemented swiftly.

3.7.

Recent work and feedback have shown that functional economy practices succeed and are adopted when the solutions improve user experience and consumers’ quality of life, rather than on the basis of purely economic or environmental criteria. Good examples of this are car-sharing, which provides an effective solution to the crucial issue of city centre parking, and streaming, which offers almost instant access to a vast online catalogue.

4.1.

In some instances the functional economy can speed up the rate of consumption and product renewal. In mobile telephony or long-term hire purchase of vehicles, it is not intuitively obvious that these models (generally long-term lease with option to purchase) do in fact extend product life or improve end-of-life recycling.

4.2.

While big industrial groups are best known for implementing specific projects, more traditional sectors such as agriculture — for instance via joint purchasing — and start-ups have a role to play in consolidating and rolling out the functional economy in society. Moreover, SMEs may also find new solutions for their clients in this concept and its application. Certain types of organisational structure, notably cooperatives, can also promote more horizontal forms of governance in which users are fully involved.

4.3.

By reducing the costs of accessing products or services, the functional economy can be an advantage for people on the lowest incomes, offering adaptable and flexible access to services and products. However, at the same time it can make these least well-off people more vulnerable if they are no longer able to pay to access, use or subscribe to a service. From this perspective, and in the current context of increasing economic insecurity in many European countries, ownership may seem preferable and safer for people with little material security. In addition, as regards access to certain goods and services, unequal access cannot be attributed solely to economic capital (i.e. financial resources): cultural and educational capital (social background, training) also come into play.

4.4.

From a societal perspective, the functional economy can make consumers, i.e. citizens, somewhat more dependent on economic organisations or a given technical or economic system. Once registered for a service, it is difficult — or even impossible — to repair, amend or change the product made available. The functional economy can therefore increase external control if users are not sufficiently involved in the design of the products and solutions developed. Economic and administrative models that promote consumer autonomy (in terms of consumer choices, behaviour and habits) must be sought and promoted.

4.5.

Digitalisation can extend the scope of the functional economy to include all consumers. However, it also raises many questions: value capture by some platforms, tax optimisation or avoidance, privacy (particularly through the way in which the data collected are used), market concentration (platform monopolies) and labour issues (as mentioned in point 1.6).

4.6.

Simply shifting to a ‘service economy’ will not shield the functional economy from the risk of all these obstacles or limitations. However, these can be overcome by adopting a more integrated approach to the functional economy, one that addresses issues of corporate governance, work and the regional perspective, and that factors in the consumer from the stage of designing the service through the product lifecycle.

4.7.

Nonetheless, legal measures are certainly necessary in relation to several of these points and particularly as regards competition and privacy.

5.1.

There are many reasons — environmental, social, cultural, as well as economic — why the EU must concern itself with the functional economy. Digital issues, and more generally the relevance of this area to new economic models such as the sharing or circular economies, are also important here, particularly given the pace of change.

5.2.

In Europe, the functional economy provides a way for business to recreate added value and promote job-rich solutions (particularly upstream, in areas such as maintenance and repairs, but also downstream, when designing innovative economic models and related services) and in particular a way to make certain industries more competitive. By developing services that reflect consumer needs as closely as possible, rather than standardised, poorly adapted products, the functional economy could rekindle confidence between business and consumers and make consumption meaningful again.

5.3.

While large companies’ innovation departments, regional authorities and many experts support the functional economy, it is astonishing to see just how weak Europe’s efforts are in this area. Although the functional economy is at the heart of the circular economy, there is not a single reference to it in the Commission’s recent Closing the loop communication on the circular economy.

5.3.1.

Despite these uncertainties and limitations, in light of the uncertain political and economic situation in Europe at present, the functional economy is an opportunity for Europe to build on and develop the expertise and skills of many different players.

10.3.2017   

EN

Official Journal of the European Union

C 75/6

Rapporteur:

Antonio GARCÍA DEL RIEGO

1.1.

The EESC encourages the Commission to pursue its efforts to develop policy proposals aimed at promoting the creation of innovative and high-growth firms and recommends that these initiatives are conducted, led and coordinated by a single unit responsible for assessing, monitoring and achieving synergies between innovative policies delivered by different DGs. These policy proposals should strengthen the single market, reinforce the clusters and ecosystems in which innovative start-ups are created, develop the equity component of the European capital markets, encourage an academic agenda focusing on jobs for the future and minimise the cost and red tape involved in starting a new entrepreneurial venture.

1.1.1.

The Commission should continue its work to enforce the existing rules of the single market: long-term harmonisation projects such as accounting and insolvency standards, automatic recognition of professional and academic qualifications, accelerated implementation of the digital single market strategy and the full deployment of the Capital Markets Union initiative (1) would greatly assist the EU in benefiting from the full potential of a genuine single market. Simple and effective cross-border contract rules should boost cross-border e-commerce, reducing legal fragmentation in consumer law as well as compliance costs for business.

1.1.2.

Equity financing needs to be further expanded to support start-ups in their development phase. Among other factors, this implies a more neutral tax system that treats debt and equity financing equally by enabling the deductibility of both interest and dividend payments (2). Start-ups should be able to use ‘stock option’ packages to attract and retain talent.

1.1.3.

An equity culture should be created and promoted, including educational and non-legislative initiatives. The European financial system needs to develop liquid investment products suited to retail investors in order to encourage them to invest in innovative small businesses.

1.1.4.

Cutting unnecessary red tape and reducing ‘gold plating’ are also crucial in order to minimise administrative burdens and avoid unnecessary costs and time inefficiency for entrepreneurs.

1.1.5.

The development of new types of collaboration between universities and businesses involving both big industry and smaller firms needs to be strengthened and accelerated across Member States, undertaking novel policy measures aimed at turning the EU into a magnet for talent.

1.1.5.1.

The EESC encourages the Commission to remove any legal constraints to student and young entrepreneur exchanges (3), for example with the creation of an Erasmus programme for young entrepreneurs.

1.1.5.2.

To raise awareness of promising companies, the EESC advocates setting up a platform-based information database integrated into the European Investment Advisory Hub (EIAH) and the European Investment Project Portal (EIPP) (4). It would include the EU’s high-growth firms, in different sectors, selected on the basis of objective and transparent criteria and allowing for cross-company comparison and benchmarking.

1.1.6.

The EESC believes that sharing and assessing good practices offers valuable insights for experimenting with new policies (5).

1.2.

The European Investment Fund (EIF) and the European Investment Bank (EIB) are asked to support innovative firms with specific venture and seed capital to facilitate technological transfer from universities and research centres. This could be structured in the form of first loan guaranties that would help to overcome initial resistance to private funding.

1.3.

The European Fund for Strategic Investments (EFSI), a EUR 21 billion fund made up of European Union guarantees and European Investment Bank capital, should play a critical role in helping innovative projects attain scale and make it to the market. Moreover, the EFSI could be a model for future EU budgets, moving from a traditional grant-based method of financing projects to a more efficient investment-led model, which would ‘crowd in’ funds for projects. The EFSI has successfully funded relatively risky areas that could have been easily overlooked (6).

1.4.

The EESC calls for building a broader investment toolkit to stimulate growth-stage investment, including ‘asymmetric funds’, which deliver different returns to different classes of asset investors, and alternative finance vehicles, such as crowdfunding (7). The creation of sub-markets should also be considered in order to facilitate access to markets for European SMEs.

1.5.

The Commission should address regulatory asymmetries between European and the US regarding the treatment of investments in software and remove the regulatory constraints that hamper the European financial sector in investing in digital development.

2.1.

Small and medium-sized enterprises (SMEs) are a key element of the European economy, contributing significantly to job creation and economic growth (8).

2.1.1.

In 2015, more than 22,3 million SMEs in the European Union made up 99,8 % of all non-financial enterprises, employed 90 million people (66,9 % of total employment), generated 57,8 % of total added value (9) and provided 85 % of new jobs. Europe needs to ensure that a new breed of SME is created to compensate for the 200 000 that go into bankruptcy every year (10), affecting 1,7 million workers. However, what matters more for future economic growth are those businesses that want to innovate, grow and export.

2.2.

The creation of start-ups with high rates of growth is of crucial importance because of their focus on innovation in fast-growing sectors with high added value. These are the businesses that will create jobs in the future and drive productivity growth, which is central to improving living standards. While Europe is reporting progress in some areas, it is lagging behind in the move from the start-up to the scale-up phase, which should ultimately lead to the growth and job creation that Europe needs (11).

2.3.

This own-initiative opinion focuses on scale-ups: high-growth companies with an average annual growth in employees (or turnover) greater than 20 % over a three-year period, and with 10 or more employees at the beginning of the observation period (12). A key characteristic of scale-ups is that they run business models that are highly scalable. Scalability is the capacity to grow in terms of market access, revenues, and structure triggered by, for example, rapid replication of the business model in different markets or new management practices.

2.3.1.

An OECD study of 11 countries (13) found that scale-ups accounted for less than 10 % of firms in all 11 countries but created up to two-thirds of all new jobs (14).

2.4.

Start-ups tend to be less profitable in the short term and are dependent on external finance. If these innovative businesses are unable to finance their expansion plans, they fail to scale up, and the underlying potential for productivity growth and job creation is likely to be stunted.

2.4.1.

A World Bank analysis (15) estimates that the average rate of SME non-performing loans in developed markets in 2007 was 6,93 %, more than twice that of large business loans at 2,54 %. Non-performing loans increased dramatically during the crisis in Portugal, Spain, Italy and Ireland to between 10 % and 25 %.

2.4.1.1.

Policies that encourage banks to extend loans to riskier firms, particularly early-stage companies with limited collateral, could create a set of risky banks, credit contraction and increasing financial instability (16).

2.5.

Europe needs to focus on the smooth functioning of the ‘funding transition’, which is currently broken.

2.5.1.

The funding transition is composed of four chapters: start-up phase (funded by grants, seed capital, family and friends); equity growth phase (crowdfunding, microfinance, business angels); sustained growth (securitisation, private equity, venture capital, institutional investors, private debt placement) and exit (acquisition, public equity markets).

3.1.

Successful innovation ecosystems that nurture scale-up companies are characterised by strong interconnected networks of research and education institutions, large industries, venture capital investors, and the presence of creative and entrepreneurial talent (17).

3.1.1.

Normally, start-ups are created in technology hubs built around first class universities that act as key players in the development of a dynamic business environment, because they are a source of talent, both in terms of students and of academics. Powerful, well-connected clusters improve the productivity of business, drive the direction and pace of innovation and stimulate the genesis of new businesses. The USA and China, as well as certain centres in Europe, are leading a long-term battle to attract talent and capital and foster innovation.

3.1.2.

However, the fragmentation of the European labour markets impedes the transition from start-ups to scale-ups. In this respect, it is paramount to facilitate labour mobility across the EU as well as to attract talent from third countries that serves as a magnet, thus creating a virtuous circle.

3.1.3.

An Erasmus programme for young entrepreneurs could be encouraged. It fits in with the guiding principle of growth and jobs, and it is an initiative that would facilitate mobility and would be well received by businesses.

3.1.3.1.

Some policies have been recently adopted to attract talent from outside the EU. The Blue Card, introduced in 2009, has expedited the entry of skilled workers with an EU employer (18). At national level, some European countries have already created specific visa procedures for entrepreneurs and others are beginning to introduce these (19).

3.1.4.

A remarkably successful case of a technology hub would be ‘Oxbridge’, which refers to the region of influence encompassing Oxford and Cambridge universities in the UK. The high-tech community in the UK continued to grow and innovate during the prolonged period of economic recession and stagnation between 2008 and 2012 (20).

3.1.4.1.

However, many of Europe’s universities do not have the standing, structure, or inclination to create conditions for the growth of entrepreneurial ventures on campus or to champion this agenda to governments (21). University leaders and Government should develop links with industry, investing in technology transfer offices on campus and education in entrepreneurship (22).

3.1.5.

Spin-offs created as a result of technological transfers from universities face difficulties in scaling up due to a lack of money and specialised management. It is crucial therefore that they are able to count upon institutional public support to overcome the initial reluctance of private funding providers to invest in spin-offs with a technical profile, since these are perceived as too technical and risky and are often not well understood.

3.2.

Despite having a similar level of education, Europeans set up new businesses remarkably less frequently than Americans. The manifold reasons for this include high levels of risk aversion, administrative burdens, an underdeveloped culture of second chances, underdevelopment of entrepreneurship-related education programmes and lack of private equity culture. Attention should also be paid to early development of an entrepreneurial culture at elementary and secondary-school level.

3.2.1.

In fact, the risk of bankruptcy is what Europeans fear most about setting up a new business: 43 % in Europe v 19 % in the US. In the US (23), the fairly efficient and non-punitive corporate bankruptcy regime, as well as a generally greater acceptance of corporate failures, contributes to a willingness to take risks. Developing a more entrepreneurial culture should become a priority for policymakers as well as educational institutions.

3.2.1.1.

A recent study shows that companies founded by re-starters have higher turnover and employment growth and higher chances of acquiring external funding (24). In Spain, only 20 % of entrepreneurs creating their first start-up succeed; for those that try a second time, the success rate goes up to an astonishing 80 %.

3.3.

High-growth and innovative businesses are often more likely to be rejected for bank loan financing because they lack capital, which forms a key part of banks’ credit assessments (25). Equity finance is therefore fundamental for start-ups and for businesses with significant expansion plans but uncertain or negative-forecasted cash flows. Bank lending should thus be complemented by improving the diversity and flexibility of funding sources with special emphasis on the role of equity finance.

3.4.

An equity culture should be created and promoted in Europe, and European financial systems need to develop investment products that are suitable for retail investors and provide the necessary liquidity for them to invest in innovative small businesses.

3.4.1.

Due to the lack of later-stage funding, European start-ups cannot keep up with the growing pace of their US counterparts and either need to generate revenues earlier in order to stay alive or are sold at a premature stage at a discount price. Indeed, by 2009, only 5 % of European companies created from scratch since 1980 were in the top 1 000 in terms of market capitalisation. In the US, this share was 22 % (26).

3.4.1.1.

Remarkably, over half of all venture capital worldwide is granted in the US, only 15 % in Europe. In 2013, EUR 26 billion of venture capital was provided in the US and EUR 5 billion in Europe, while business angel investors provided EUR 6 billion to European start-ups and EUR 20 billion in the US.

3.4.1.2.

The EU thus suffers from a major deficit in business angel and venture capital funding, which are respectively three and five times higher in the US. This is a crucial difference as it is this kind of capital that is needed to transform firms into larger and more successful enterprises.

3.4.1.3.

The main reason for this is the high fragmentation of the EU venture-capital industry along national borders. At around EUR 60 million, the average European venture fund is only half the size of the average fund in the US, and 90 % of the EU venture-capital investment is concentrated in only eight EU Member States (Denmark, Finland, France, Germany, the Netherlands, Spain, Sweden and the UK) (27). Due to the diversity of rules in the Member States, venture capital firms face high costs in raising funds across Europe. As a result, they are small and have less capital to support growing businesses. If Europe’s venture capital markets were as deep as in the US, as much as EUR 90 billion of additional funds would have been available to finance companies between 2008 and 2013 (28).

3.4.1.4.

Also problematic is the insufficient involvement of private investors. Over the last decade, the European venture capital sector has become increasingly reliant on public sector institutions, which contributed 31 % (29) of the total investment in 2015, up from a mere 15 % (30) in 2007. The aim should not be less public money but more private sources. The investor base needs to be broadened and diversified if the industry is to become self-sustaining in the long run.

3.4.1.5.

To incentivise public-private partnerships, asymmetric funds could be considered. These are venture capital funds where investors are given different conditions and returns based on their investment goals, recognising the various interests of partners in different collaborations. They already exist in Finland, Greece, the UK and the Netherlands.

3.4.2.

The creation of sub-markets should also be considered in order to facilitate access to markets for European SMEs. They should allow for low listing costs and a flexible tailored approach to the needs of smaller, dynamic companies. Good examples are London’s Alternative Investment Market (AIM), Paris’s Nouveau Marché, or Madrid’s Mercado Alternativo Bursatil (MAB). This flexible regulation system can be a double-edged sword. Small companies can have easier access to the stock exchange to float shares but, on the other hand, inexperienced investors could face difficulties in assessing the exact risk profile of a firm.

3.4.3.

Specific sector regulation is sometimes hampering the capacity of EU businesses to invest in technology development when compared to their US counterparts. For example, there is a regulatory asymmetry between European, US and Swiss financial entities regarding the needed investments in software and other intangible assets, which are critical for digital development.

3.4.3.1.

The banking sector is, by far, the biggest IT sector in the world: USD 700 billion are spent on IT innovation — 1 in 5 EUR is spent by the financial sector and 5 to 10 % of investment (31). Consequently, banks are both a major actor in the digital transformation and the main financier of the digital economy.

3.4.3.2.

Nevertheless, the regulatory framework is penalising their much-needed investments in IT. Financial regulation should treat software as an ordinary asset and should not force EU banks to deduct this investment for capital requirement purposes.

3.5.

Different tax treatments across Member States and between different types of financing pose an obstacle to the development of pan-European capital markets, with an impact on both investors and issuers.

3.5.1.

Most corporate tax systems in Europe favour financing by debt rather than equity, by allowing a deduction for interest costs; there is no deduction for dividend payments in the case of equity. Such debt bias could be addressed through tax deductions for the cost of both equity and debt financing (32).

3.5.1.1.

Tax incentives play an important role in the provision of finance to high-growth early-stage companies, and several governments around the world allow tax deductions for individuals and companies invested in high technology start-ups or qualified venture capital funds (33).

3.5.1.2.

A traditionally attractive benefit to employees and start-up entrepreneurs is to put in place stock option programmes, as many of them would forego salary compensation. In the majority of Member States, the tax treatment of stock options is very punitive since they are treated as normal income and taxed at a marginal rate. A preferred tax treatment for stock options should be encouraged in a similar manner to the incentive stock options (ISOs) (34) in the US.

3.5.2.

It is costly for businesses to comply with VAT obligations, in particular if the company sells goods or services cross-border. The EESC is pleased to learn that the Commission has announced, as part of its Digital Single Market strategy, that it will put forward legislative proposals by the end of 2016 to reduce the administrative burden on businesses caused by different VAT regimes. Among these measures, the Commission proposes introducing a VAT-free threshold to help start-ups and microbusinesses (35).

3.6.

Unlocking the full potential of the single market is essential so that start-ups can offer their services and products across the whole EU at an early stage and swiftly scale up to compete in global markets.

3.6.1.

Simple and effective cross-border contract rules for consumers and businesses are a priority in the digital single market strategy. They would foster cross-border e-commerce in the EU by eliminating legal fragmentation in the area of consumer contract law. The removal of barriers due to contract law differences would boost consumption in the EU by EUR 18 billion and gross domestic product would increase by EUR 4 billion from its current level (36).

3.7.

Unnecessary administrative burdens are also a cause of extra costs and time inefficiency for entrepreneurs.

3.7.1.

During 2013-2015, the average cost for starting a business in the EU was 4,1 % of GDP per capita, while in the US it was 1,17 % (37).

3.7.2.

In terms of the time taken to establish a company in the EU, on average registration was completed within 11,6 days. In the US, it takes just 6 days to start a business.

3.8.

Information asymmetry is another reason why Europe does not produce enough high-growth firms. Investors lack a complete view of all investment opportunities. Moreover, non-European investors face additional limitations trying to understand the specifics of the different national markets. A dedicated portal, integrated with the European Investment Advisory Hub (EIAH) and the European Investment Project Portal (EIPP) (38), would help to provide visibility to high-growth projects and reduce information asymmetry.

4.1.

A number of countries have developed good practices to support start-ups and scale-ups. The EESC recommends that the Commission study carefully the possibilities for their implementation at a European level

4.1.1.

Germany requires firms to join a German chamber of commerce (IHK) that in turn provides support and advice (39).

4.1.2.

Government loan guarantee schemes like those in Italy, the UK, Poland and France should be explored, as well as state co-financing such as in Germany and Sweden (40).

4.1.3.

The United Kingdom is providing tax incentive schemes to increase the flow of funds into riskier assets with its EIS, SEIS and VCT schemes (41).

4.1.4.

The Piedmont region in Italy has developed networks in 12 industry clusters, bringing together firms, universities and local government (42).

4.1.5.

In the Basque region in Spain, the Elkar-Lan cooperative encourages the creation of other cooperatives via a complete viability analysis of the project, training, and access to subsidies and financial aid (43).

4.1.6.

Digitalisation of government services, as demonstrated by the case of Estonia, could provide a breakthrough in facilitating the growth of high-tech, innovative companies. On a pan-European scale, developing e-government would have a massive impact.

4.1.7.

In the era of the data-driven economy, a competitive advantage may rely on intangible assets, which are difficult to assess and value using traditional financing mechanisms. The UK’s Intellectual Property Office has developed ways to identify and measure these assets in terms of cash flow (44).

4.1.8.

In the United Kingdom, a dedicated team within Tech City UK called Future Fifty supports the UK’s top 50 growth-stage digital companies. The programme provides access to expertise within government and the private sector, builds links to the UK’s institutional investor base, and offers tailored support to help companies grow rapidly and establish the foundation for IPO (45) readiness, M&A and global expansion (46).

4.1.9.

In 2015, the US federal government put in place the STEM scheme, which aims to inspire children to study science, technology, engineering and maths. A key pillar is dedicated to preparing students for the future needs of the labour market (47). There is an increasing focus on transferable skills and STEAM, with the ‘A’ referring to ‘Arts’.

5.1.

The European Commission has made a remarkable effort to support entrepreneurs, rolling out multiple initiatives in the past few years, with a number of different directorates-general leading the process, namely DG CONNECT (48), DG EAC (49), DG GROW (50), DG RTD (51) and DG FISMA (52).

5.2.

Many of these initiatives are recent and it is still too early to assess their effects. However, the EESC believes that the Commission is on the right path and encourages it to keep working in this direction, always in consultation with the relevant European and national stakeholders.

10.3.2017   

EN

Official Journal of the European Union

C 75/14

Rapporteur:

Vladimíra DRBALOVÁ

1.1.

The Committee considers it essential that companies are transparent and supports any initiative that helps to make doing business sustainable and predictable over the long term. Transparency is important for all parties, for the companies themselves, and for improving their image and boosting the trust of workers, consumers and investors.

1.2.

The Committee recognises that most companies operating in the EU are indeed transparent. Even so, a series of scandals have recently shown that transparency needs to be improved to become generally a part of companies’ sustainable strategies. Investors and shareholders are increasingly paying attention not only to the profitability indicators of businesses but also to qualitative CSR (1) indicators that help reduce social risks and ensure that businesses can develop in a sustainable way. To meet the needs of enterprises and other stakeholders, information should be material and cost-effective to collect.

1.3.

The Committee notes that Member State governments should motivate and encourage companies to make transparency an asset because it is also a good opportunity for business and support them in fulfilling these requirements.

1.4.

The Committee thinks it important to focus simultaneously on both the effectiveness and scope of the information being filed and on its quality and veracity. Improving transparency should focus both on the results achieved and the process of reporting and disclosing information. Reporting should be forward looking as well as providing information on past performance.

1.5.

The Committee recommends that the Commission set further steps to enable companies to meet their transparency obligations and to remain globally competitive.

1.6.

Generally the EESC understands that small and medium-sized companies are operating under different conditions. For this reason the rules for them should be simplified to allow them to report in a more suitable way in order to ensure full transparency. The EESC welcomes the capacity-building project to assist SMEs to meet these challenges.

1.7.

The Committee believes that any further initiative on disclosure of information should focus on the information that stakeholders really need which should include a common set of indicators and at the same time should take into consideration the nature of the company and the sector in which it is operating.

1.8.

The Committee stresses that corporate social responsibility (CSR) and transparency policy within an enterprise are ineffective without the commitment of its employees and they should therefore be involved in consultations between the social partners.

1.9.

While the audience of corporate reporting is increasing, more stakeholder groups are interested in more aspects of corporate affairs. The Committee thinks it is important, therefore, to evaluate the current reporting model and to make it appropriate to its purpose.

2.1.

In 2010, the Commission published a communication containing 50 proposals for improving the internal market. It stated that businesses, too, must play their part in the concerted effort by demonstrating their responsibility and transparency towards not only their employees and their shareholders, but also towards society at large. The Commission stressed that there was room for improvement in the management of businesses, especially on the composition and diversity of boards of directors, including the representation of women, in order to improve employment, business and trade (2). Business ethics and values have been recognised as a contribution to economic recovery.

2.2.

In 2011, the Commission published a renewed EU strategy for 2011-2014 for corporate social responsibility (CSR) (3) in which it put forward a new definition for this as ‘the responsibility enterprises for their impact on society’. One building block in the strategy was an action plan that pursues the integration of financial and social reporting.

2.3.

In 2012, the Committee adopted its opinion on the EU’s renewed CSR strategy (4), stressing that in the difficult economic and political climate the CSR policy initiative provided an opportunity to engage positively with the business community. It is important to recognise different motivations behind CSR activity. Various benefits are outlined in the communication, and these should be better promoted alongside good practice examples to inform and encourage enterprises to make a stronger commitment to CSR.

2.4.

In recent years, the Committee has produced many other opinions, which are mentioned in this opinion. These opinions stress the importance of corporate social responsibility, company transparency, disclosure of non-financing information and involvement of the relevant stakeholders — investors, consumers, employees and their trade union representatives, NGOs — in the process. In the current opinion the Committee would like to focus on an appropriate framework for the whole process.

3.1.

The economic crisis of 2008 and its social consequences have to some extent damaged citizens’ confidence in business and public and investor attention has focused on companies’ social and ethical conduct. More stakeholder groups are now interested in more aspects of corporate affairs.

3.2.

Investors want transparency and control of their investment and want to know how their money is affecting the environment and society in a negative or positive way. The most important sources of non-financial information for investors are sustainability/CSR reports and annual reports. Qualitative policy statements are important to assess financial reward, but quantitative key performance indicators (KPIs) are viewed as essential.

3.3.

Workers are the first casualties of companies that play little heed to legal rules and their lack of transparency. And yet, employees pay a pivotal role in the development of their companies: their job security, their pay, their health and their working conditions depend on this. They have the right to require transparency and to be informed and involved in the decision regarding the financial situation and the social, environmental and economic policies in their companies.

3.4.

Consumers want transparency and expect it in specific areas important for them. It is very much in the interests of companies, in terms of their relations with other stakeholders (workers, citizens and consumers) to pursue a policy of transparency. This often simply means giving customers the facts and helping them make informed buying decisions. In the end, it is these businesses that will earn the loyalty of more informed customers (5). The food industry is a highly sensitive area in this respect. The latest research from the Centre for Food Integrity (CFI) (6) proves that increased transparency translates into increased consumer trust in food and sets out a clear path to achieve this.

3.5.

With globalisation, a large number of business partners and stakeholders are interested in more information on a wider range of corporate affairs from a large number of countries.

3.6.

Transparency builds trust and businesses need society’s trust. Nevertheless, there is frequently a gap between what the public expects and how they perceive businesses to behave. This gap is caused partly by instances of irresponsible behaviour by some enterprises, as well as by some enterprises exaggerating their environmental or social credentials. Insufficient public awareness of the achievements of enterprises and the constraints under which they operate also contributes to this discrepancy.

3.7.

This was the reason that, in 2009, the European Commission started a series of workshops on corporate transparency. European businesses welcomed this as an initiative coming at exactly the right time — amid the crisis, when transparency and corporate social responsibility (CSR) in general might have the potential to help restore public trust in business, which had also been to some extent damaged by the ongoing crisis. The initiative targeted the various groups of stakeholders (employers, trade unions, NGOs and the media) and the probe was supposed to serve as a guideline for further steps to be taken by the Commission.

3.7.1.

The lessons drew from the initiative:

4.1.

In the EU strategy for CSR, the Commission states that disclosure of social and environmental information, including climate-related information, can facilitate engagement with stakeholders and the identification of material sustainability risks. It is an important element of accountability and can contribute to building public trust in enterprises. To meet the needs of enterprises and other stakeholders, information should be material.

4.1.1.

The Commission also acknowledges that a growing number of companies disclose social and environmental information. SMEs often communicate such information informally and on a voluntary basis. One source estimates that about 2 500 European companies publish CSR or sustainability reports, which puts the EU in a position of global leadership (7).

4.2.

In 2013 the Commission, acting on a European Parliament initiative, drew up a legislative proposal concerning the transparency of the social and environmental information provided by undertakings in all sectors  (8). The goal of the amendment to the ‘accounting directives’ was to set a requirement for certain large companies (for the moment around 6 000 companies and entities in the EU) to disclose relevant non-financial and diversity information in their annual reports.

4.2.1.

The directive is in some countries transposed into national law following a consultation with businesses, so that the implementation takes advantage of the flexibility of a directive, does not go beyond its scope, provides legal security for businesses and meets their real requirements. In this connection, the EESC has drawn up an opinion (9) in which it stresses the right to benefit from this flexible and appropriate mechanism for improving communication with shareholders, investors, workers and other stakeholders and welcomes the fact that this proposal is targeted only at large companies.

4.2.2.

The Commission is just preparing non-binding guidelines on non-financial reporting based on the outcomes of the public consultation. To facilitate the follow-up consultation with the stakeholders (10) the EC has introduced an illustrative background paper mapping the key principles on non-financial disclosure. The reported non-financial information should be material, reliable, balanced and understandable, comprehensive and concise, strategic and forward looking, stakeholders-oriented, company/sector specific, qualitative and quantitative, and consistent.

4.3.

In line with the Europe 2020 strategy, which calls for improvement of the business environment in Europe, the Commission in 2014 published a proposal for a directive, the aim of which is to support the creation of a modern and efficient corporate governance framework for European undertakings, investors and employees  (11) that corresponds to the needs of today’s society and to the changing economic environment.

4.3.1.

The proposal should contribute to the long-term sustainability of EU companies and to a more long-term perspective for shareholders, that ensures better operating conditions for companies whose shares are traded on regulated markets in the EU. In its opinion (12) the Committee stressed that the proposal would lead to a more stable, sustainable corporate governance and investment environment in Europe and also noted that in its impact assessment the Commission argues that its proposals would lead to only a marginal increase in the administrative burden on listed companies. It will be important to assess this balance during the evaluation of the directive.

4.4.

In October 2015, the Commission published a new strategy entitled ‘Trade for all: Towards a more responsible trade and investment policy’, which offers a vision of EU policy directed at reflecting the need for a more responsible and more transparent trade policy.

4.4.1.

In the chapter entitled ‘A trade and investment policy based on values’, the Commission announces a strengthening of consumer rights by reinforcing corporate social responsibility initiatives and due diligence across the production chain, with a focus on respect of human rights and the social — including labour rights — and environmental aspects of value chains. The Commission wants to proceed by improving the sustainable development dimensions of free trade agreements.

4.4.2.

In its opinion (13) focused on decent work in global supply chains (GSCs) the Committee says: ‘The EESC has much experience in the field of sustainability, with participation in the implementation and monitoring of dedicated chapters in the free trade agreements (FTAs), involvement in a wide range of civil society committees that enable it to propose a fair balance between necessary legal requirements in the field of human and labour rights, transparency, the fight against corruption and the necessary flexibility of MNEs to organise and develop their global supply chains (GSCs) in an effective manner suited to the various local situations’.

4.4.3.

Higher standards for the publishing of reports on non-financial matters could be an important issue in trade policy. Regulation at the global level, including trade agreements, should boost transparency on the publication of non-financial information in countries such as the United States and China to ensure a level playing field for European companies.

4.4.4.

The EC intends to strengthen incentives, in particular for multinationals, to provide information on due diligence, a more ambitious approach to mineral extraction in conflict-affected areas  (14), a search for new areas for an enhanced partnership for responsible value chains and the publication of an overview of companies’ reports on the responsible value chain.

4.4.5.

As far as the Commission’s requirements regarding ethical trade and promotion and protection of human rights are concerned, new requirements on businesses can also be expected as a result of the implementation of its Action Plan on Human Rights 2015-2018 (15). In its conclusions the Foreign Affairs Council (June 2016) underlines the critical role of business transparency in enabling markets to recognise, incentivise and reward respect to human rights.

4.5.

In January 2016, the Commission presented its anti-tax avoidance package with a view to ensuring efficient taxation and greater tax transparency.

4.5.1.

One of the areas being carefully scrutinised that will affect multinational enterprises and groups is country-by-country reporting (the obligation to prepare a statement containing the transactions in the group, data concerning revenue, profit, income tax paid, and so on and submit it to the tax authorities). At this stage, the package covers the sharing of information between Member State tax authorities.

4.6.

At the beginning of April 2016 (16), the Commission proposed that multinationals publish a separate statement on the income tax they pay, along with other tax information. Multinationals with a consolidated net turnover exceeding EUR 750 million will have to meet these additional transparency requirements, whether or not they are domiciled in the EU. This obligation also applies to their branches and subsidiaries. In this context the Committee has just adopted an opinion on combating tax evasion (17) in which it encourages the Commission to be more ambitious in requiring fiscal transparency from companies by lowering the EUR 750 million turnover threshold or by drawing up a schedule stipulating a gradual decrease in the threshold.

4.6.1.

Nevertheless the Commission should take into consideration the principles of the EU internal market and the competitiveness of the Union. Unilateral demands within the EU could lead to unintended consequences if non-EU enterprises were exempted from this obligation. Non-EU enterprises should therefore be covered by this obligation via the negotiation of international trade agreements.

4.7.

The European Commission works with other international organisations, such as the Organisation for Economic Cooperation and Development (OECD), the International Labour Organisation (ILO), the WHO and the World Bank and strengthens synergies with their instruments for good corporate governance, transparency and corporate responsibility (18). These instruments are regularly revised and establish requirements for the responsibility and transparency of companies in their social, environmental and human-rights policies. They also encourage risk prevention and analysis and stipulate due diligence measures. The instruments are primarily meant for multinationals, but they are also supposed to serve as guidelines for companies operating at national levels. Any revision of such instruments should focus particularly on their better implementation.

4.8.

The increasing global and European demands for corporate transparency are transferred to companies operating in the Member States. The role of the European Commission should be to guide and coordinate EU Member State policies and thus to reduce the risk of divergent approaches (19).

4.8.1.

The Commission’s strategy for responsible business and the recommendations for the Member States often prompt the assumption at national level that responsible entrepreneurship and transparency should be administered and supervised only by the state.

4.8.2.

Business recognises itself as a driver for transparent and responsible behaviour. This was also recognised in the Commission communication on ‘Implementing the partnership for growth and jobs: Making Europe a pole of excellence on corporate social responsibility’ (20).

4.8.3.

The primary responsibility of every company is to create value not only for its shareholders but also for its employees, its environment and its community and to generate and preserve jobs. The Member States should create the right conditions to facilitate this and support companies’ efforts to be responsible and transparent.

5.1.

The Committee recognises that non-financial reporting is very important for corporate reporting as it helps create a complete picture of corporate affairs.

5.2.

For companies, the regulatory environment for doing business is getting more and more complex. To better address stakeholders’ needs an appropriate framework of corporate reporting should be set and, at the same time, unnecessary administrative and financial burden should be avoided. CSR and transparency should also be promoted and used as an opportunity for companies to avoid social risk and ensure their own sustainable development.

5.3.

During the last decade, the focus on different aspects of Non-financial information (NFI) has been increasing. There are a number of international frameworks for the disclosure of social and environmental information, including the Global Reporting Initiative (GRI).

5.4.

The question raised is whether all these stakeholders can be served by the same report or with a set of reports. Should there be a patchwork of reports or a concept of a single comprehensive one — like, for example, the concept ‘Core&More (21)’ proposed by the Federation of European Accountants (FEE) in 2015?

5.5.

The discussion of future corporate reporting needs to take into account the variances in the information needs of different stakeholders groups depending on the size and nature of the reporting entity.

5.6.

As the European Economic and Social Committee points out in its opinion on ‘Disclosure of non-financial information’, the Commission is asked to launch or facilitate a process that brings together the ‘multiple stakeholders (22) in order to better define the guiding principles and benchmarks that will aid comparison and, in the long term, standardisation’.

5.6.1.

The Committee has in this respect already underlined the need for corrective action against the distortion of corporate values through short-term thinking. It also urged in its opinion on ‘Employee involvement’ (23) the need to map out ways in which EU policy can redirect the current trend for one-sided corporate transparency in the interests of shareholders towards a broader understanding of a business as a ‘sustainable company’, which is in the interests of long-term corporate development.

5.7.

Even if the future of sustainable business will be strongly linked to the social environment and consumer respect, any further initiative on disclosure of information should focus on stakeholders’ real needs.

10.3.2017   

EN

Official Journal of the European Union

C 75/21

Rapporteur:

Mr Simo TIAINEN

1.1.

For half a century, the CAP has helped to build the European Union. At this point in time, a return to basics should be an opportunity for a new long term vision for the CAP to give clear and concrete guidance not only to farmers, but also to millions of citizens. As consistently stated by the Committee, the future CAP should defend the European agricultural model, which is based on the principles of food sovereignty, sustainability and responsiveness to the real needs of European citizens, be they farmers, agricultural employees or consumers.

1.2.

The EESC welcomes the initial discussions and thoughts about the future of the CAP post-2020. While the objectives of the CAP set out in the Treaty — which have remained unchanged since 1957 — and the new challenges that it must address have never been so pertinent, it is of utmost importance to make an in-depth analysis of the current CAP and the result of the previous reform. The purpose of this opinion is to make some suggestions and take part in the reflection on the future of the CAP.

1.3.

First of all, in view of the complexity of the CAP and the difficulty in implementing of the last reform, political stability and a long term vision of agricultural policy are needed by farmers. Especially under the Lisbon Treaty, several years will inevitably be needed to reflect, to share objectives, to discuss challenges and to find solutions. Therefore, the European institutions should quickly agree to extend the term of the current CAP by at least two years.

1.4.

The setting up of young and new men and women farmers should be reinforced in the CAP, not only with specific tools, but with real stability in the policy. Indeed, farmers need more stability to be able to invest for decades and take up the challenge of generational renewal.

1.5.

The future CAP should take into account, on the one hand, the diversity of farming models and regional specificities, and on the other, the diversity of its objectives: economic, social and environmental. Own food production and own agriculture is important and part of the culture of every nation in the world. A European food policy should be based on healthy and good-quality food and create synergies with the CAP. One of the main principles of the CAP should be to keep agriculture alive and sustainable in all regions of the EU.

1.6.

Simplification should be the first underlying priority for the next CAP reform. Implementation of the CAP must be smoother and more reasonable control and sanction systems need to be developed. It is of utmost importance to ensure timely payment to farmers.

1.7.

Considering that the CAP is a policy involving direct intervention at European level, and that the breakdown of Community preference will lead to lower producer prices, the future CAP has to be able to respond to all the challenges it is facing including market turbulence. It is thus necessary to reorient the policy framework to address all these new challenges and to provide adequate tools at European level.

1.8.

In 2017, the European Commission will take forward its work and consult widely on the simplification and modernisation of the CAP. It is important that European civil society has an active role in this process. The EESC should set up a study group to follow and contribute to this process.

2.1.

Agriculture is central to the strategic, economic, environmental and social challenges of tomorrow. The CAP has been a success story for Europe mainly as European consumers have benefited from safer food with decreasing prices over the last decades. However, in some areas we are facing problems with biodiversity, the environment and landscapes which have to be addressed. Production of high quality food with sustainable agriculture is at the core of citizens’ and consumers’ concerns. To meet these expectations there is a need for a Common Agricultural Policy in order to guarantee healthy and safe food, high quality at a fair price, environmental protection, landscape conservation and a dynamic economy in rural areas.

2.2.

When farmers produce food in our market-oriented society, thereby ensuring food security, they also impact upon water availability and quality and air and soil quality, or the natural environment as a whole, while providing employment in rural areas and maintaining rural landscapes. Many of these by-products should be seen as public goods.

2.3.

Agriculture and forestry are closely interlinked as they account for a major part of land use in the EU. Therefore, forestry often participates in the provision of public goods.

2.4.

The factors that influence the CAP post-2020 are firstly the challenges facing agriculture, but also the fact that it is a European question, with a specific reform process and budget availability and above all a clear vision for the next decades.

2.5.

The Common Agricultural Policy has always been one of the key policies of the EU. The CAP is broadly in the interests of European civil society. It is therefore important for the EESC to be proactive in preparing for the next reform of the CAP which relates to the period after 2020.

3.1.

Given expected global demographic trends, there will be around 9 billion people to be fed in 2050. With the improvement of living standards in several regions of the world, we observe increased food demand and a shift to diets including more animal products. These developments would lead to a doubling of food demand in 2050. The EU must assume its responsibility for the world’s food security; however the export of European agricultural products does not solve the problem of world hunger. It is worth noting that food security should be based on sustainable local food systems. Every nation needs to bear responsibility for their own food security, which is also recommended by the FAO. The EESC finds it necessary that the EU concentrates also on knowledge transfer and experience-sharing about how more and better food can be produced sustainably and locally in other parts of the world.

3.2.

At the same time, the expectation is that demand for food in Europe will remain quite stable but diverse as regards quality, health, ethics, origin, etc.

3.3.

Agriculture and the environment are very closely interlinked in a range of ways in all regions. Agriculture and forestry are essential to nature conservation, biodiversity protection, water quality, soil quality and lower pollution.

3.4.

The EU climate and energy framework has set a target of increasing the share of renewables to at least 27 % of energy consumption by 2030. This share is set to increase in the future. Agriculture and forestry could provide biomass to reach this target within a green growth economy. They must also improve their own energy efficiency.

3.5.

On 20 July 2016 the Commission presented a package of legislative proposals laying down detailed rules for the EU’s climate and energy policy framework towards 2030. This will be the EU’s response in order to mitigate climate change as agreed in the COP21 agreement in December 2015. Agriculture and forestry are part of the solution to reduce emissions and to stock carbon in soil or wood. In order to respond to the food security challenge and to mitigate climate change, green growth, an agro-ecological approach and sustainable intensification within efficient agricultural production, will be necessary. Furthermore, adaptation to climate change will be crucial for future agriculture.

3.6.

Agriculture and forestry, and all parts of the bioeconomy linked to them, are fundamental to maintaining rural dynamism and to reinforcing balanced rural development. They are important in terms of employment, culture, territorial cohesion and tourism in rural areas throughout the EU. Depopulation and ageing in many remote areas, mountainous regions or less favoured areas remains the dominant demographic trend. Public policies, especially the CAP, should act to maintain agriculture and support producers across the EU, including regions with specific problems. Payments to farms in rural zones with natural handicaps are essential to rural development. Farming in such areas would not be viable otherwise.

3.7.

Synergies between the two pillars of the CAP are important and should be reinforced. The latest reform reinforces the link and coherence between all ESI funds, and this should be continued.

3.8.

The EESC is in favour of Community-led Local Development (CLLD) being extended and made mandatory for all ESI Funds in order to achieve a balanced development of rural areas. Using Local Action Groups (LAGs) as local partnerships — with farmers involved — to seek out and finance local projects brings benefits for people’s quality of life. This could help in effectively combating depopulation and population ageing in the EU’s rural areas.

3.9.

To maintain agriculture, generational renewal is a key question and setting up young and/or new men and women farmers should be reinforced through all available tools. Coupled payments are also a necessity for those sectors or those regions where specific types of farming or specific agricultural sectors are particularly important for economic or social or environmental reasons. The CAP should also have a clear focus on encouraging active farmers and production.

3.10.

Agriculture is a specific economic activity which does not comply with normal economic law. In a market economy, variations in prices and incomes are the result of shifts in supply and demand. But the nature of food as a basic necessity means that it is, by definition, price inelastic. Nor can the supply of food respond quickly to price changes. Therefore, unexpected changes in output volumes often require a longer period of time and large price changes to restore market equilibrium. For these reasons agricultural markets are considered to be highly volatile. Other innovative market mechanisms could also be trialled.

3.11.

Consumers demand safe, sustainable, nutritious and high-quality food. They also want food at affordable prices and this has been reinforced by economic crisis. Many consumers appreciate traceability and locally produced food. The Special Eurobarometer 410 shows that knowing the origin of meat is regarded as necessary by a large majority of respondents in all Member States. It is the duty of all stakeholders in the food chain to respond to this challenge.

3.12.

The next CAP, like other EU policies, should be consistent with the sustainable development goals (SDGs). The CAP is relevant to numerous goals, but the most relevant is Goal 2: ‘End hunger, achieve food security and improved nutrition, and promote sustainable agriculture’.

3.13.

The role of international trade will inevitably increase in the future. Nevertheless, the recent Russian ban on food products originating from the European Union has led to major uncertainties in relation to international trade. Russia’s embargo has put enormous pressure on EU agricultural markets, especially in some Member States. Combating challenges related to uncertainties in international trade will be crucial for the future of agriculture.

3.14.

In recent years, there has been a shift in bargaining power in the food supply chain, mostly to the advantage of the retail sector and some transnational companies and to the detriment of suppliers, in particular farmers. The future CAP should enhance the bargaining power of farmers.

4.1.

Agriculture is a key issue for the EU. The objectives of the Common Agricultural Policy were laid down in the initial Treaty of Rome in 1957. They are still valid. New challenges — such as environmental concerns, rural development questions, as well as quality and health issues and global hunger — have also arisen, and the Treaties have not yet been adapted to reflect them.

4.2.

The CAP is a fundamental European and integrated policy, which is increasingly interlinked with other policies such as employment, environment, climate, competition, budget, trade and research with specific European added value.

4.3.

The CAP is a precondition for achieving a single market in the food sector in the EU. The European food industry is the biggest industrial sector in the EU, providing more than five million jobs.

4.4.

Complexity and subsidiarity are key words in adapting to all sectors and territories. These features have been enhanced with the latest reform. Preparing and negotiating common rules under the Lisbon Treaty, and with the involvement of 28 Member States and the European Parliament, has been a particularly complex task.

4.5.

Assessments of current policy measures have not yet been carried out. Assessing the implementation of the first year of greening obligations is still underway. The same is true for Ecological Focus Areas. It is important not to rush into another CAP reform without a clear and thorough assessment of the current CAP, so as to identify to what extent policy measures have reached their policy objectives. This requires a proper assessment, especially for measures where more time is needed to see the results, e.g. greening obligations.

4.6.

Considering that the last reform was launched in 2010 and its implementation started in 2015, it took five years to conclude the reform. During the current mandate of the Commission and EP there will be no time to conclude the next CAP reform for possible implementation in 2021. Therefore, a transitional period is needed to continue the current CAP for a sufficient period of time after 2020.

4.7.

The CAP has been founded since 1962 on three basic principles: market unity, Community preference and financial solidarity. The single market is a fact nowadays, but Community preference and financial solidarity have to be reaffirmed at political level.

4.8.

With globalisation, the USA uses financial support to promote its agriculture through consumers with the food stamp programme and the ‘Buy American Act’. The European Union should implement reciprocal measures and could highlight the strategic importance of European preference with a ‘Buy European Act’.

5.1.

Brexit is going to have a major impact on the EU, especially on the single market and on international trade, and therefore on the future of the CAP. During the Brexit negotiations, if the UK is to leave the EU customs union, the current trade flows should be used as the key criterion for dividing the EU-28 WTO quota between the UK and the new EU.

5.2.

Since the 1992 reform, competitiveness has become the first priority of the CAP with the introduction of direct payments. But to press ahead with competitiveness, productivity and sustainability new incentives are needed to concentrate on promoting innovation (development, dissemination and uptake of new technologies).

5.3.

The farming sector needs major investment which could be achieved if the expected income is sufficient and economic risks are manageable. Supporting farm incomes with direct payments is, in the current situation, a necessity.

5.4.

EU producers are no longer isolated from the world market and its higher price volatility. Moreover, agriculture is subject to extreme natural events, and more health problems due to increased mobility of goods and people (pandemics) with considerable losses to production. The CAP should provide specific tools to enable the agricultural sector to limit and manage these risks.

5.5.

There are some risk management tools available in the current CAP. Intervention price, private storage, promotion or futures markets and tools provided by the single CMO should be maintained or developed.

5.6.

But there is a clear need to develop new tools:

5.7.

Environmental preoccupations are clearly a priority in farming. As a result, greening was introduced in the last reform. Policy makers repeatedly highlight this major evolution of the CAP. The environmental dimension of the CAP is both global and complex as farming deals with soil, water, biodiversity, forestry and CO2 emissions. A more efficient policy should be more understandable, feasible and simpler for farmers.

5.8.

There is a need for payments which compensate farmers for providing public goods (especially ecosystem services).

5.9.

The Dutch EU Presidency in particular has promoted the idea of a Common Food Policy. With the new CAP, the EU recognises that European agriculture needs to attain higher levels of sustainable production of safe and quality food. The CAP promotes school fruit and milk schemes for schoolchildren aimed at encouraging good dietary habits from an early age. It also promotes organic production by ensuring an informed choice with clear labelling rules and specific support schemes under rural development policy.

5.10.

Currently the promotion of public health, healthy diets and lifestyles is a matter of national competence. But the European Union must ensure access to healthy and good-quality food for all Europe’s citizens through sustainable food systems. Whereas European actions complement and coordinate national efforts, more synergies should be developed between the CAP and a future European food policy.

5.11.

Bearing in mind public expectations and consumer demand, a special effort should be made to develop Local Food Systems (LFS) and hence short supply chains, particularly in the mass catering sector.

5.12.

Since 1990 the environmental footprint of agriculture has become smaller. Nevertheless, there is still a need to reduce agricultural emissions by 2030. This must be done in keeping with a European model of agriculture and with a cost-efficient emissions reduction policy. There is potential to increase the carbon content in the soil and to substitute fossil energy and petrochemicals with agricultural and forestry products.

5.13.

The multiple objectives of the agriculture and land use sector, with their lower mitigation potential, should be acknowledged, as well as the need to ensure coherence between the EU’s food security and climate policy objectives (1).

5.14.

At farm level, in experimental stations and in laboratories important innovations are discovered continuously. Efforts towards research and development should be stepped up to accompany the evolution of farming towards more sustainable systems. It is also crucial to make these innovations known to other stakeholders. Extension services, cooperation between stakeholders and other means of disseminating innovation and sharing best practices should be promoted.

5.15.

The EU research programme on agriculture should be reinforced in the next programming period to take into account the challenges and the geostrategic importance of food in the 21st century. The digital economy could be the next ‘agricultural revolution’ after the green revolution of the 20th century.

5.16.

There is clear evidence of the malfunctioning of the supply chain in almost every Member State due to high concentration downstream. Distribution of added value between stakeholders in the food supply chain is unfair.

5.17.

Due to EU competence in competition and single market issues, this problem should be tackled at European level. The European Commission should propose European regulatory frameworks for arranging contractual relations within the chain and legal possibilities for organising collective actions by farmers. Indeed, producer organisations are important players in the food supply chain and contribute to strengthening the position of producers. The next CAP should enhance the bargaining power of producer organisations. The results of the work by the Agricultural Market Task Force (AMTF) should be taken into account.

5.18.

The CAP has to be adapted to the reality and the rapidity of economic change. In the CAP, Articles 219 to 222 of Regulation (EU) No 1308/2013 must be developed to be workable and achievable for the European Commission and the producer.

5.19.

World trade and open markets strengthen competitiveness and could reduce the price of food. Nevertheless, fair trade is of utmost importance for the EU in order to compete with the same production methods and rules with third countries. Non-tariff barriers could jeopardise international development. In the various and numerous solutions to achieving global food security, trade has its role to play as regards increasing agricultural exports.

5.20.

Nevertheless, the CAP and trade policy should enable European producers to compete on a level playing field with imported products. Therefore, the EU should require that imported products meet the same standards.

5.21.

Historically the CAP has been financed at European level. The CAP accounts for an important share of the EU budget (38 % in 2015), but amounts to only about 0,4 % of European public expenditure. The CAP budget is lower than its US or Chinese equivalents. Moreover, it has been stable or decreasing for several years, in spite of EU enlargement. The CAP has to respond to the many important challenges it will face in the future; it is necessary therefore to increase the budget for agricultural policy at European level.

5.22.

Specific aspects of the European budget, such as annuality, represent a huge constraint for CAP design. Mutual funds or crisis measures are limited by these constraints. Furthermore, budget distribution is a source of political tension and could result in inefficiencies.

5.23.

Simplification has been a priority for many years in the CAP and particularly in the first years of implementation of the 2013 CAP reform. Nevertheless, simplification should be the first underlying priority for the next reform. In particular, adequate controls and proportionate sanction systems should be improved. Currently, payment reductions for greening and cross compliance measures can be unreasonable and disproportionate. It is of the utmost importance to ensure the timely payment of direct supports.

5.24.

For the past decades the structure of the CAP has been based on two pillars. While the pillar I is entirely EU-financed, pillar II is co-financed and adapted to each Member State’s needs by means of multiannual programmes. The diversity of Member States and regions and their different needs requires that the two pillar structure be retained in the future CAP.

5.25.

In its 2017 work programme published on 25 October 2016, the Commission states that it will work and consult widely on the simplification and modernisation of the CAP to maximise its contribution to the Commission’s ten priorities and to the Sustainable Development Goals. It is important that European civil society is actively involved in this process.

10.3.2017   

EN

Official Journal of the European Union

C 75/28

Rapporteur:

Thierry LIBAERT

1.1.

‘Nudges’ are emerging as a public policy tool to complement those already used by European public authorities (information and awareness-raising, financial incentives, legislation and exemplarity). However, they are proving to be particularly useful for overcoming certain social, environmental and economic challenges.

1.2.

Encourage the use of nudges in public policy-making in conjunction with traditional tools, and in particular their change in approach to individual behaviour. Nudges could thus be integrated into the general public policy framework and accelerate public policy implementation at very little cost. Given their flexibility and simplicity, they can be used simultaneously in different contexts and by different categories of stakeholder: intergovernmental bodies, the internal departments of each ministry, local and regional authorities, NGOs, private organisations, and so on.

1.3.

Prioritise in particular the nudges which meet environmental, social and other objectives (energy/ecological transition, reducing resource wastage, enhancing social well-being, improving population health, etc.). They can thus be used as part of measures which address predefined collective objectives, for which traditional public policy tools have proven ineffective and/or too costly.

1.4.

Promote the exchange of information and good practices on nudges between all potential participants (public institutions, authorities, businesses, associations, NGOs, etc.) at EU level. A platform mapping out the initiatives and/or a dedicated observatory are possibilities to consider.

1.5.

Study in greater depth the different effects of nudges according to culture, socioeconomic profile, geographical area and so on. This would give rise to a better understanding of the advantages and constraints of the scope of nudges and their implementation among countries and sectors, etc. In particular, the question of the duration of the effect of nudges on behaviour deserves to be looked at in greater detail.

1.6.

Identify general conditions of use for nudges so as to reduce their negative impact and ensure that they are ethically acceptable. They could be gathered together in a good practice charter, jointly drawn up by stakeholders and adopted at EU level before being applied in the Member States. In addition, a guide could be published and distributed to interested parties.

1.7.

Introduce information procedures on the use of different types of nudge to ensure transparency for those who are ‘nudged’. Nudges should be understood, discussed and shared to be accepted in the best possible way. This would avoid ‘abuse’ and the risk of manipulation when using nudges.

1.8.

Provide a proper code of ethics for nudges to prevent them drifting towards irresponsible objectives. The following four conditions should be met when organising a nudge: the transparency of the process, flexibility for the persons involved who should always have the choice of acting in one way or in another, the reliability of the information given to them and not making individuals feel guilty.

1.9.

Develop monitoring and evaluation procedures for nudges according to different criteria (social, environmental and economic). This may involve an initial testing phase to gain an understanding of the exact impact of the nudge according to its type, the target group, the context and so on. Swift adjustments could therefore be made if the results of the nudge prove disappointing, or the nudge could even be dropped if deemed ineffective.

1.10.

Encourage the teaching of disciplines related to behavioural economics in training courses (both new and ongoing). This would improve understanding of the tool and encourage various groups (civil servants, company employees, elected representatives, etc.) to use it wisely and critically. This also calls for the barriers between academic disciplines to be broken down since the nudge is based on a cross-cutting approach.

1.11.

Retain a degree of flexibility when using nudges in order to exploit their full potential. As with the other tools available to public authorities, nudges are not a miracle tool, nor are they completely new. However, they can prove very useful in conjunction with other tools in changing certain behaviours. The main attraction of this concept is that it encourages psychological consideration of behaviour when developing public policies, rather than focusing solely on their ‘economic rationality’.

1.12.

Organise, on the initiative of the EESC, the first EU conference on nudges, which would represent a unique opportunity for those working with this tool within the EU to exchange their experiences.

1.13.

In order to deal with the radical shift towards a new economic model which will have major systemic consequences in a number of areas, create a new horizontal permanent body within the EESC that would be tasked with analysing these developments, including nudge thinking and other related subjects such as the circular, sharing economy and functional economy.

2.1.

Public authorities have traditionally used four types of tool to change the behaviour of individuals: information and awareness-raising, financial incentives, legislation (prohibition or obligation) and exemplarity. These four tools have limitations, however, with regard, in particular, to behaviour and responsible consumption, or rather consuming fewer natural resources. There is still a disparity between individuals’ knowledge levels and how they behave on a daily basis.

2.2.

The reasons for the gap between actions and intentions have been analysed through behavioural economics, a discipline which looks at the factors which influence individual behaviour. According to researchers in this discipline, individual actions are determined by many factors. We are complex, deeply emotional beings with limited rationality, influenced by others and social interactions, but also by context and the environment in which we make our decisions.

2.3.

In the end, our decisions and behaviour are largely the result of what Daniel Kahneman, winner of the Nobel Prize for Economics, calls our ‘System 1’: a largely unconscious, automatic and super-fast way of thinking which enables us to take many decisions a day with minimal effort and by saving on our attentional resources. However, this system feeds on stereotypes and associations and often leads us away from mathematical rationality.

3.1.

In behavioural economics, traditional public policy levers may not be enough to change behaviour because they do not take into the account the various factors that influence the decision-making process. In 2008, two American professors, Richard Thaler (professor of economics in Chicago and leading figure in behavioural economics) and Cass Sunstein (Harvard law professor) started from this assumption and published the first ever work on nudges (1), based on the idea that behavioural changes should come from ‘gentle nudges’. The authors define a nudge as ‘any aspect of the architecture of choice which changes people’s behaviour in a predictable way, without eliminating any of the options or drastically changing financial incentives’. To be considered a simple nudge, individuals must be able to avoid the action easily, i.e. nudges are in no way obligatory.

3.2.

The nudge is designed to create ‘architectures of choice’, highlighting the choice seen as most beneficial to the individual and/or group, without changing the number or nature of the choices available. The user or consumer is steered towards what is considered the best choice. Nudges have three characteristics: they provide total freedom of choice for individuals, are simple to implement and cost little to put into practice.

3.3.

Public authorities in some countries are showing increasing interest in nudges as they have two major advantages: they do not restrict the freedom of individuals, and they cost very little but have the potential to make a considerable impact. They can therefore be used as a complementary tool for public policies which seek to make individuals behave more responsibly towards their health, the environment and so on. Nudges give individuals a simpler choice which aids in the decision-making process.

4.1.

Choice by default. This concept is the process of automatically applying the default solution which the implementing authority considers best, but also simplest to apply. It is based on the inertia of individuals. For example, French income tax declarations have assumed since 2005 that households own a television by default. The estimated fraud rate has fallen from 6 % to 1 % as a result. Default choices are also being used increasingly by banks, energy providers and other businesses which send out electronic bills by default, rather than paper bills printed double-sided, and so on.

4.2.

The strength of social norms, which nudge advocates see as a powerful behavioural determinant. Social norms can be used to encourage individuals to act in a given way. More specifically, this strategy involves highlighting a behaviour exhibited by the majority of those around you (neighbours, colleagues, etc.). It is supposed to encourage individuals to behave in the same way so that they conform to social norms. In 2011, the energy provider OPOWER conducted an experiment in the US. Using information collected about the energy consumption of 600 000 households, letters were sent out which said, for example: ‘Last month you used 15 % more electricity than your most energy-saving neighbours’. Infographics helped them to compare their household’s energy consumption with that of their neighbours and other consumers, and they received a happy ‘smiley’ when their consumption was low. According to OPOWER, following this correspondence, energy consumption fell by an average of 2 % in participating households, which generated a total saving of USD 250 million (2). Many similar experiments have shown a reduction in energy consumption of between 1 and 20 %.

4.3.

Risk of loss, which is designed to highlight what an individual could lose (particularly in financial terms) if they do not change their behaviour, for example with regard to energy consumption. The concept involves giving the individual an estimate of how much they are losing by not changing their behaviour, or, conversely, how much they stand to gain if they do. Non-financial indicators (calories, CO2 emissions, etc.) can also be used to visualise the loss.

4.4.

Emulation, which, for example, is the practice of organising competitions to encourage certain practices, such as in the fight against waste. The French NGO Prioriterre is eager to encourage the public to take an interest in energy-saving. To do so, it organises a ‘Positive-energy family’ challenge every year, which in 2014 brought together around 7 500 families. Families had to decrease their energy consumption by 8 % in order to win various prizes (3).

4.5.

Using games and entertaining concepts. Amsterdam airport introduced one of the most well-known nudges: fake flies were painted inside urinals to encourage men to take proper aim. In 2009, Volkswagen transformed the stairs leading to the exit of Odenplan station, Stockholm, into an enormous keyboard. When pressure was applied to a step, a musical note sounded (4). The aim was to encourage passengers to use the stairs, rather than the escalators. In South Korea, markings on the ground show the risk of being overweight for people using escalators.

4.6.

Nudges can also be used to change how choices are presented and the appearance of certain products, in an effort to highlight those considered healthiest or most environmentally-friendly, etc. This type of nudge is sometimes likened to the principle of branding. Several experiments have also been carried out in canteens with the aim of encouraging customers to eat healthy foods. Healthy foods were displayed at the start of the display stand, which in some cases can double their consumption compared to when they are displayed in the middle or at the end. Other canteens have attempted to reduce waste by reducing plate size: customers filled their plates just as much, but less food was served (bearing in mind that customers can always go back for more if they wish) (5).

5.1.

Since 2008, more and more countries have become interested in the potential of public policy tools based on nudges, which have the triple advantage of being low-cost, effective and more attractive to the public than regulations or taxes. The following paragraphs provide a number of non-exhaustive examples.

5.2.

In 2010, David Cameron’s British government created the ‘Behavioural Insights Team’, headed by David Halpern and responsible for applying behavioural science to public policy in the UK. For example, the group made changes to the government website for organ donor registration. It wrote: ‘Every day, thousands of people who see this page decide to register’ and displayed the logo of the NHS (National Health Service), the British social security system, on the website. In one year, sign-up rates went from 2,3 % to 3,2 % (+96 000 registrations). Since 2014, the ‘Nudge Unit’ has functioned independently and advises foreign governments, local authorities, businesses and so on (6).

5.3.

In 2014, the Obama administration also launched a Nudge Squad under Maya Shankar. In an executive order published in September 2015, President Obama ‘encouraged’ government departments and agencies to use the findings of behavioural science (7). The governments of Singapore, Australia and Germany have also set up teams of experts in behavioural economics.

5.4.

In France, the General Secretariat for the Modernisation of Public Action (SGMAP) and the Directorate-General for Public Finances (DGFIP) (8) have been experimenting further with nudges since 2013.

5.5.

The European Commission has set up a Foresight and Behavioural Insights Unit within the Joint Research Centre, headed by Xavier Troussard. In 2016, it published a report which highlights the fact that EU public policies are increasingly incorporating elements of behavioural economics (9). The unit believes that exchanges on the subject should be developed between universities and the political sphere. Above all, it recommends increasing the use of behavioural economics tools in all stages of public policy-making, but also improving discussion of their use and understanding of their impact.

6.1.

Nudges have their limitations. They need to be carefully designed and implemented and raise both technical and ethical questions. Nudges are not a substitute for informing individuals and educating them about their choices, nor can they substitute the traditional government activities of legislation and financial incentives. Furthermore, the risks and constraints associated with their use must not be under-estimated.

6.2.

Currently, few studies on the effectiveness of nudges are available, particularly in the medium and long term. Some stress the fact that individual reactions to this tool differ markedly. In the experiment carried out by OPOWER, for example, households whose energy consumption was already lower than average tended to increase their consumption when informed of their place in the ranking. Conversely, nudges can instil a sense of guilt or inferiority in those who learn that they consume more energy than their neighbours. Some studies have found that receptiveness to nudges can vary according to individual values and opinions (10), but also according to political and cultural context. More generally, the studies highlight the different impacts of nudges according to population groups, cultures and contexts. It is therefore necessary to assess the effects of nudges, either directly or randomly.

6.3.

Another issue is the duration of the effects of nudges. Studies on water and electricity consumption have shown that the repeated effects of social norms tend to diminish over time, even though they can last to a lesser degree for several years (11). The long-term effect of nudges depends on whether they can make a real change to habits. Once a default option is changed, if it is kept that way, there is no reason to believe that behaviour will not stay the same. This is more a question of whether it is possible to go further or to modulate the action taken. In fact, it appears easier to adjust a tax or a rule gradually rather than a default option.

6.4.

Nudges can have negative effects, as demonstrated by the fact that an individual may tend to act more virtuously after having behaved badly, and vice versa. For example, experiments have shown that buying ‘green’ products could be followed, under certain circumstances, by an increase in negative behaviour, such as cheating or stealing (12). Attempts to encourage virtuous behaviour in some areas can thus have a negative impact in others. These adverse effects, if they do exist, make assessing the overall impact of nudges very difficult. They are apparently very rare and do not call into question the usefulness of nudge-based approaches. However, it is important not to rule out the possibility of such effects.

6.5.

The effectiveness of a nudge is measured in relation to a desirable behaviour, which raises the question of how to define and measure what is desirable. It can be very difficult to assess individuals’ happiness. Nudges also raise the issue of who makes the decision about the objective to be followed, or rather about what is desirable for the individual and/or for society. A public decision-maker could steer the objective and the nudge in a particular direction for opportunistic reasons, although it might also be less intentional, for example as a result of lack of information.

6.6.

Finally, the line between information, communication and manipulation is sometimes blurred. For example, some of the many hotels that encourage their customers to reuse their towels deliberately ‘inflate’ the numbers of hotel guests who do so already (13). The aim of these messages is not to trick their target audience, but to establish a sort of self-fulfilling prophecy by ensuring that they come true. However, customers are in fact led to base their behaviour on a lie. Lying, even if it leads to more virtuous behaviour, is not judged morally acceptable, and even less so by public decision-makers. It can also tarnish the reputation of the decision-maker and reduce the effectiveness of nudges by talking down to consumers.

10.3.2017   

EN

Official Journal of the European Union

C 75/33

Rapporteur:

Mr Carlos TRIAS PINTÓ

Co-rapporteur:

Mr Mihai MANOLIU

1.1.

The emergence of a decentralised digital economy suggests that a significant proportion of new economic peer-to-peer exchange will be intertwined with social relations and embedded in communities, which will lead to a transformation of what it means to set up a business or have a job, in terms of ‘democratising how we produce, consume, govern, and solve social problems’. At the same time, it is necessary to ensure that this is not accompanied by job insecurity and tax avoidance, and that the value added does not massively shift away from industrial players towards the owners of proprietary digital platforms (1).

1.2.

Faced with this new paradigm, the EESC encourages the Commission to develop a more detailed and inclusive conceptual approach to the collaborative economy, in order to avoid any bias that equates it with the digital economy. The collaborative economy, which embraces a democratic and participatory dynamic similar to that of the social economy, therefore has the following features:

1.3.

Ultimately, the collaborative economy encompasses a range of methods with specific contributions and challenges. The ‘access economy’, for example, brings underused properties to the market, creating greater supply for consumers and more efficient use of resources, but entails the risk of stimulating overall production through the rebound effect. In the ‘low demand economy’, the workforce is fragmented, creating more flexibility, but increasing the risk of employment insecurity. And the ‘gift economy’, in which goods and services are shared on an altruistic basis, helps build stronger communities, but often remains invisible to administrations.

1.4.

For their part, digital platforms, in particular those that support gainful activity, deserve the full attention of the European Commission, in order to regulate and harmonise their activity and ensure a level playing field on the basis of transparency, information, full access, non-discrimination and appropriate use of data. In particular, it is essential to redefine the concept of legal subordination with regard to the economic dependence of workers, and guarantee labour rights regardless of the type of activity.

1.5.

The challenge, therefore, consists in drawing a line between the different forms that this economy can take and proposing differentiated regulatory approaches (2), giving priority to those digital initiatives that are founded on democratic, solidarity-based and inclusive governance, in harmony with social innovation, which results in the need to inform consumers about their identity-giving values and their organisation and management arrangements. In this regard, the EESC recommends carrying out qualitative research into the network of relationships established by its agents in the collaborative economy environment itself.

1.6.

As a result, the EESC calls for the development of a specific methodology for regulating and measuring a new economy with different standards. From this perspective, the value of trust — from the point of view of information symmetry — plays a central role. The criteria for transparency, honesty and objectivity in assessing the product or service should also be strengthened, rather than simply resorting to algorithms automatically.

1.7.

The EESC likewise recommends that an independent European rating agency for digital platforms be created, with harmonised competences in all Member States, which can assess the governance of these platforms with regard to competition, employment and taxation.

1.8.

Moreover, the Communication’s approach to the collaborative economy ignores fundamental issues such as those related to virtual and social currencies as operational instruments of that economy, as well as knowledge, information and energy as objects of its practice, or the role that co-creation and technological innovation, among others, play in the collaborative economy.

1.9.

With regard to the complex approach of the collaborative economy in the current context, the EESC recommends ensuring balanced coexistence between models that guarantees its full development without causing negative externalities in the market, especially when it comes to protecting competition, taxation and high-quality employment. To this end an appropriate framework for following-up and monitoring the new parameters of the collaborative economy should be designed in cooperation with stakeholders (business organisations, trade unions, consumer associations, etc.).

1.10.

Finally, in order to tackle the transition to a new economy with significant systemic consequences, it is recommended that the EESC create a permanent horizontal structure to analyse these emerging phenomena, interweaving its efforts with those of the European Commission, the Committee of the Regions and the European Parliament.

2.1.

Social culture, consumption patterns and the ways of meeting consumers’ needs are undergoing a period of profound change. Consumption is being overhauled and rationalised from a more inclusive perspective; issues of pricing are interwoven with the environmental and social footprint of products and services, all of which is influenced still further by the disruptive effect of the internet and social networks.

2.2.

The possession of goods for personal use, hard currency and on-site, fixed and salaried jobs, will give way to virtual exchanges, shared access, digital money and greater flexibility of the workforce.

2.3.

In the transition towards new forms of production and consumption, certain sectors of economic activity have been swept up in a powerful tsunami resulting from the incursion of new actors. Some of these actors are motivated by cooperation and a sense of commitment to their community, while others are simply driven by the opportunity to do business (and do not always respect the idea of a level playing field).

2.4.

As many voices have called for a new planning framework (3) for collaborative consumption (that encourages the use of digital technology to tap into decentralised excess capacity, rather than creating new monopolistic centralised systems), the European Commission has decided to launch A European agenda for the collaborative economy having observed that the EU’s national and local authorities have been addressing the situation via a patchwork of different regulatory measures. This is because collaborative consumption comes in different forms depending on the sector in question.

2.5.

The disjointed approach of these new business models generates insecurity (economic, regulatory, workforce-related) and uncertainty (regarding questions of trust, new digital tools such as blockchains, security networks and privacy) between incumbent operators, new service providers and consumers, restricting innovation, job creation and growth.

2.6.

As a result, the Commission has published the following guidance for market operators and public authorities of the various Member States:

3.1.

The Commission is causing confusion by placing digital platforms and the sharing economy in the same basket, without taking on board the idea that the collaborative economy and the common interest may be linked, based on a recognition of its positive externalities with regard to putting values such as cooperation and solidarity into practice.

3.2.

In its Communication, the Commission misses what should be its main objective, failing to respond to the legitimate expectations of relevant stakeholders — defining a model and parameters within a clear and transparent legal framework in which the multiple forms of the collaborative economy can develop and operate in the European area, be supported and implemented and gain credibility and trust.

3.3.

For its part, the digital economy model presents four specific characteristics: relocation of activities, the central role of digital platforms, the importance of networks and the mass exploitation of data (4). Despite belonging to a different sphere, it intersects with the collaborative economy as they often operate in similar spheres: crowd-based networks; blurring lines between private and working life, stable and casual labour, self-employment and employment; etc.

3.4.

In order to make it easier to establish these conceptual limits, the EESC recommends that the European Commission incorporate the notion of the ‘non-reciprocal prosocial behaviour’ of the collaborative economy, which clearly differentiates not-for-profit shared use and provides a space to interact for the purpose of consumption, production, financing and knowledge sharing.

3.5.

In short, the collaborative economy model implies not only economic but also social and environmental change. The Communication indicates this by referring to sustainability and the transition to a circular economy, or when describing social markets as a niche of the collaborative economy.

3.6.

Ignoring these circumstances means addressing the current significance of collaborative initiatives in a partial way. The same applies if the analysis is limited to the exchange of services or to collaborative platforms, without taking into account aspects such as recirculation and exchange of goods, optimisation of the use of assets, or networking.

3.7.

Regarding issues related to uncertainty in applying legal frameworks for regulating collaborative economy initiatives, although the difficulties that the Communication raises are genuine, so is the intention to ‘normalise’ and ‘adjust’ a new economic model to ‘traditional assessment criteria’. This may require an effort to establish new criteria and standards in its legal, labour and tax treatment, especially regarding transition towards a new production and consumption model and redefining the actors involved.

3.8.

Likewise, a new, more inclusive economy that generates social cohesion is only possible if every person is provided with the digital and financial skills to access and make use of it. Furthermore, public policies should ensure full access for the people that are most vulnerable to digital exclusion, particularly those with disabilities.

3.9.

Finally, the EESC cannot overlook the following elements that were not covered in the Commission’s Communication:

4.1.1.

The EESC understands that under existing EU legislation, particularly the Services Directive and the e-Commerce Directive, Member States need to boost access to collaborative markets (as a more varied range of products stimulates consumption), establishing — where necessary — constraints that are exclusively motivated by public interest, which would need to be duly justified. A conflict of laws can be expected because a sharing economy creates new ways of providing familiar services that have traditionally been highly regulated.

4.1.2.

It is worth noting that because the collaborative economy is a melting pot of initiatives unrestricted by place or time, they should be subjected to open and delocalised treatment. This means that any limitation based on restrictive territorial criteria can result in tax and social competition that distorts their positive effects.

4.1.3.

Therefore, far more than simply making a transnational case for market access, the collaborative economy must be seen as an expression of empowerment for citizens (human capital gains) that should be paralleled by two basic issues: firstly, a principle of harmonisation that may avoid disparities in treatment which could generate new market asymmetries; and secondly, the need to make progress with shared regulatory practices (5) (models: peer regulation, self-regulatory organisations, and delegated regulation through data).

4.1.4.

Like the Commission, the EESC supports more flexible service and market regulation (new definitions of sharing economy labour) and therefore calls for an assessment in each Member State of justifications for the applicable legislation with regard to the collaborative economy and proportionality, in accordance with public interest objectives (regulation aimed at addressing market failure, facilitating the fostering of trust), taking into consideration the specific characteristics of different business models and access to quality and security of instruments.

4.1.5.

Likewise, the EESC highlights the fact that while the specificities of the model generate tools assessing the rating and reputation of suppliers that satisfy the public interest objective of reducing risk to consumers associated with information asymmetries, they can also lead to ‘adverse selection’ and ‘moral hazard’. In this respect, public authorities and digital platform managers must ensure the quality and reliability of information, assessments and collaborative platform ratings, making use of independent monitoring authorities.

4.1.6.

The EESC is of the view that the establishment of thresholds for distinguishing, sector by sector, the provision of professional services from that of non-professional services, could lead to the development of a useful methodology for overcoming the fragmentation of EU markets. However, this may not be as effective as anticipated when it comes to integrating non-professional activities between peers.

4.2.1.

The EESC understands that maintaining the current intermediaries liability regime (6) is fundamental to the development of the European Union’s digital economy.

4.2.2.

With a view to reinforcing credibility and confidence, which is crucial to the development of the collaborative economy, the EESC joins the Commission’s communication in calling for the adoption of restrictive voluntary measures to combat illegal online content, by means of related or underlying activities, without relinquishing the benefits of exemption from liability.

4.2.3.

However, the EESC reiterates the desirability of addressing collaborative activity in-depth, independently of the central value that is attributed to digital platforms, in order not to distance it too far from the citizen-based spirit that inspires it.

4.3.1.

In a new context in which lines between producer and consumer are blurred (‘empowered people makers, co-creators, crowd funders, peers, customers’), the EESC calls for a system guaranteeing consumers’ rights. However, given the collaborative economy’s specific characteristics, the range of initiatives on offer should not be restricted.

4.3.2.

Therefore, the multilateral relations formed as a result should incorporate those arising from the emergence of prosumers (the most important economic inputs of the collaborative economy, which must be protected, secured and focused), which are set to play a highly significant role in the collaborative economy, as are processes to create shared value, especially from the perspective of the circular economy and functionality.

4.3.3.

The EESC has always advocated a level playing field. In accordance with the principles guiding unfair trading practices, the factors that must be taken into account with a view to identifying consumers and traders in a non-restrictive way (7) are: frequency of services, profit-making, and volume of business.

4.3.4.

The EESC endorses this approach, but warns that it will be necessary to revise its view as well as the timeliness of other factors when applying criteria for an appropriate categorisation. It does not however seek to be exhaustive, given the complexity and variability with which the collaborative economy can express itself and the difficulty involved in outlining its future (a model that should be independent, portable, universal, and supportive of innovation).

4.3.5.

The EESC reiterates that the most useful way of improving consumer confidence is to increase peer-to-peer service credibility and confidence (a ‘safe harbour’ for specific collaborative economy platforms allowing benefits, training, insurance and other forms of protection) by means of appropriate online assessment services (8), external certificates (quality labelling) and a new system of ‘civil arbitration’. This argument is closely related to the confidence and reputation of the collaborative economy’s harmonious development in a new economic, social and environmental system of coordinates.

4.4.1.

In the context of the European Pillar of Social Rights, the EESC unequivocally endorses the revision of the legal acquis in order to ensure fair working conditions and adequate social protection, based on the — cumulative — criteria of subordination of the person offering the service, the nature of the work, and the salary.

4.4.2.

More specifically, with due regard for national competences, a legal framework should be established for workers that precisely specifies the relevant employment statuses: a decent wage and the right to take part in collective negotiations, protection against arbitrariness, the right to log out in order to keep digital working time within the bounds of decency, etc.

4.4.3.

Moreover, the EESC advocates a more in-depth analysis of those work patterns of the collaborative economy that are related to non-reciprocal pro-social behaviour.

4.4.4.

The collaborative economy’s unique nature as a catalyst for job creation should be addressed in a similar way in all Member States so that the policies enacted do not undermine collaborative practice and are more entrepreneurial in incubation, independence, and infrastructure.

4.5.1.

The EESC, conscious of the risks of aggressive tax planning and financial secrecy in the digital economy field, advocates strengthening a system for monitoring trade flows via digital platforms, because these can trace the product or service and facilitate tax income. The example of carpooling platforms in Estonia constitutes an example that could be replicated in the other Member States.

4.5.2.

The adjustment of taxes, in particular VAT, to collaborative economy models will entail significant revisions. Likewise digital platforms — whose profits are largely linked to the sale of individuals’ data to businesses — must be fully liable for corporation tax in the location in which their business takes place, in order to avoid tax competition between Member States.

4.5.3.

The EESC, aware of the importance of good tax governance, advocates the creation of ad hoc instruments (one-stop shops and online information exchanges) as well as measures aimed at administrative simplification, harmonisation, transparency and cooperation between tax administrations.

4.6.1.

The monitoring activities proposed in the Communication are appropriate to the objective being pursued. In particular, the EESC calls for dialogue to be strengthened between stakeholders (trade unions, business organisations, consumer associations, etc.) in order to identify best practices and develop self-regulatory and co-regulatory initiatives that address the collaborative economy’s new parameters (9) at European level (e.g. in the accommodation, transportation, commercial real estate, health care provision and energy distribution sectors).

10.3.2017   

EN

Official Journal of the European Union

C 75/40

Rapporteur working alone:

Elżbieta SZADZIŃSKA

1.1.

The European Economic and Social Committee welcomes the EU’s 2017 annual work programme on European standardisation, which forms part of a comprehensive standardisation package.

1.2.

The Commission’s proposed annual plan follows on from, and adds to, the measures outlined in the 2016 plan, on which the Committee has already commented in earlier opinions (1).

1.3.

The Committee reiterates the importance of standards for making the single market more competitive and developing innovative products and services, and for increasing their quality and safety for the benefit of consumers, workers, businesses and the environment.

1.4.

As the representative of organised civil society, the Committee supports such a standardisation system which meets the needs both of society and the economy.

1.5.

The Committee points out once again that ensuring the pluralism of European standardisation systems by including the organisations referred to in Annex III of Regulation (EU) No 1025/2012 guarantees greater transparency and access to this system. The participation of society representatives in the standardisation system must not be limited to the EU level. These stakeholders should be involved in national standardisation systems too.

1.6.

Standards are developed in support of EU legislations and policies (‘new legislative approach’ related standards, Energy Union, etc.), In addition, the development of digitalisation in industry, the supply chain and services means that ICT standards and standards for services are key to conducting business in different sectors of the economy. The Commission recognised in this connection that measures in both of these areas will be a priority and this is welcomed by the Committee.

1.7.

At the same time, the Committee points out that competitiveness of SMEs should be supported by involving them in the process of drafting and implementing standards, and by adopting appropriate educational measures to raise awareness of the benefits of standards.

1.8.

The TTIP negotiations currently being conducted by the Commission and the completed CETA negotiations show that standardisation, on account of the various systems involved, is a major point of discussion. According to the Committee, therefore, stakeholders need to be informed about the differences between the standardisation systems of the negotiating parties and the potential risks and benefits arising from these differences should be highlighted.

1.9.

The Committee supports the proposal to establish an interinstitutional dialogue on standardisation — a view it has already expressed in an earlier opinion (2).

1.10.

The Committee also welcomes the Commission proposal to carry out research into the impact of standards on the economy and society.

2.1.

In line with Regulation (EU) No 1025/2012, the Commission communication sets out the EU’s 2017 annual work programme on European standardisation.

2.2.

The annual programme is part of a comprehensive package, including the Commission communication on European standards for the 21st century, a staff working document on service standardisation and the communication on the Article 24 report on the implementation of the regulation.

2.3.

The 2017 work programme on standardisation adds to the measures outlined in the 2016 programme, most of which are at the implementation stage.

2.4.

The strategic priorities for European standardisation in 2017 are as follows:

2.5.

To enhance the evidence base of the annual governance cycle on EU standardisation policy, the Commission will also:

3.1.

The Committee welcomes the next annual work programme on standardisation since applying standards to production and services helps increase competitiveness in the single market — a view it has already expressed on several occasions.

3.2.

The Committee takes a positive view of the fact that the measures outlined in the Commission’s previous annual plan will continue, ensuring continuity and enabling the priorities of the single market strategy to be met.

3.2.1.

The 2017 annual work programme sets out in more detail, and adds to, the priorities already being implemented. The objective here is to adapt the European standardisation system to the changing international situation and challenges in the global market.

4.1.

At a time of rapid development in information technology, it is essential to draw up appropriate standards to ensure interoperability and security in cyberspace.

4.1.1.

Technologies such as 5G communications, cloud computing, the internet of things (IoT) and big data technologies are used in the following areas: e-health, smart energy, smart cities, advanced technologies and smart factories, and networked and automated vehicles, and they require standards for cybersecurity, risk management and monitoring guidelines for supervisory bodies and regulators.

4.1.2.

The level of security, data protection and access to the internet of things still need to be improved. Standardisation in this area may be a precondition for the interoperability of the IoT and for ensuring cybersecurity, data protection and accessibility for consumers.

4.2.

The Committee welcomes the fact that the Commission will ask European standardisation organisations to carry out a check of existing appropriate standards before requesting for new standards for services to be developed.

4.2.1.

At the same time, the Committee considers that, for the purpose of future work, it is good practice to notify stakeholders of the Commission mandates on which work is still being carried out and which mandates have been completed or suspended.

4.2.2.

When assessing existing standards, it is important to take into account whether they meet the specific needs of vulnerable groups, such as people with disabilities. One example might be standards relating to the electronic signature, which do not meet the needs of consumers with disabilities. In this case, recommending that a new standard be drafted would be justified.

4.2.3.

When new standardisation processes are initiated, the specific needs of vulnerable groups, such as people with disabilities, must be taken into account, where relevant, as part of the definition of the terms for the standardisation process. A new procedure should be adopted allowing accessibility experts and disability organisations to participate without cost in standardisation processes where relevant.

4.3.

The Committee has underlined on several occasions the considerable impact of standards on the quality of products and services in the single market. It therefore welcomes the Commission’s plans to improve development of standards for services by monitoring national standards and market requirements and identifying areas where there is a need for new standards.

4.3.1.

The Committee agrees with the Commission’s suggestion that national standardisation bodies deciding on whether to develop a national service standard should consider the European dimension and whether it might be better to develop a European standard. This could help remove barriers and potential conflicts in the area of services.

4.4.

The ever increasing reach of online services, both private and public (hospitals, care institutions, smart transport, etc.) requires technical solutions to ensure greater anonymity for consumers and to limit the risk of their data being processed excessively.

4.5.

Future work on standardisation should help improve quality, accessibility and safety of transport services, and limit the environmental pollution caused by transport.

4.6.

In the energy field, the Commission’s work will be aimed at linking up infrastructure, diversifying energy sources, limiting use of energy and promoting climate-friendly technologies.

4.6.1.

The Committee agrees that drawing up uniform standards for smart energy networks will improve the interoperability of the network, and that optimising all elements of that network will contribute to lower costs and increased effectiveness while helping to integrate distributed energy sources, including renewable energy. This will allow end users to make full use of smart energy systems.

4.7.

The Committee welcomes the fact that the Commission document raises the issue of the biodegradability of plastic packaging, production of sustainable chemicals using secondary materials and the methods for assessing the risks of substances not included in the relevant lists but used to produce plastic products intended to come into contact with food.

4.7.1.

Taking into account the high risks involved, standards concerning the above areas should include strict requirements to protect both consumer health and the environment.

5.1.

The Commission encourages European standardisation organisations to promote international and European standards across the world, as a way of supporting European industry and facilitating market access.

5.2.

At a time when the CETA agreement negotiated with Canada is proving controversial in Member States, and with the TTIP negotiations still ongoing, the role played by standards in world trade needs to be continually stressed.

5.2.1.

Apart from delivering the benefit of removing technical barriers to trade, dialogue with non-European partners (China, India, etc.) should contribute to the roll-out of the European standardisation model, exchange of information between European and national standardisation organisations and implementation of ISO and IEC standards, and in sectors where international standardisation is insufficient or lacking, to the development and implementation of European standards.

6.1.

The Committee supports the idea of linking standardisation closely with scientific research and converting knowledge into standards.

6.2.

Dialogue between research institutions and the technical committees CEN and Cenelec and ETSI as part of the Horizon 2020 programme should boost innovativeness.

10.3.2017   

EN

Official Journal of the European Union

C 75/44

Rapporteur-general:

Daniel MAREELS

1.1.

In the circumstances and subject to the conditions set out below, the EESC can accept the Commission’s proposal that the date of application of the PRIIPs (1) Regulation be deferred by one year until 1 January 2018.

1.2.

The PRIIPs Regulation contains measures that aim to provide better protection for retail customers and investors and to rebuild consumer trust in the financial services industry by increasing transparency in the retail investment market. In particular, it requires manufacturers of packaged retail and insurance-based investment products (PRIIPs) to produce a KID (2).

1.3.

The deferral was requested by the European Parliament and a majority of Member States, after a Commission ‘delegated act’ (3) on PRIIPs was rejected by the European Parliament on 14 September 2016. The aim of the delegated act was to lay down regulatory technical standards for KIDs for PRIIPs, on the basis of the drafts developed by the European Supervisory Authorities.

1.4.

The EESC has previously adopted an opinion (4) welcoming the development of PRIIPs and highlighting the importance of this legislation, which for the first time regulates all types of complex financial product and ensures they are comparable, regardless of the type of manufacturer — bank, insurer or investment company.

1.5.

In that opinion, the Committee also called for the creation of a single financial market with clear, accurate, straightforward and comparable information, and for a uniform, simplified and standardised information system that would ensure that such information is comparable and comprehensible, increasing market transparency and efficiency (5).

1.6.

The Committee takes the view that, if the application of the regulation had not been deferred, the main objectives set in this field (see above and below) could have been compromised, which would have been extremely unfortunate. The Committee agrees that the increased transparency provided by the PRIIPs Regulation and the harmonisation of the information provision requirements will benefit the internal market in financial services by creating a level playing field among different products and distribution channels. The regulation will therefore not only benefit retail customers and investors, but also help to restore consumer confidence in the financial services sector. Furthermore, the rejection of the delegated act less than four months before the texts entered into application would have led to legal uncertainty and major implementation problems for market operators.

1.7.

With regard to the choice of a period of one year, the Committee considers this to be acceptable for the same reasons, all the more so given that its entry into force will now coincide with that of the new MiFID II package. The Committee would stress, however, that this deferral must remain a one-off exception and that the intervening period must be used to adopt and publish the definitive delegated act as soon as possible. It is, after all, important to provide clarity and certainty as soon as possible, both for market operators and for retail customers and investors.

1.8.

In the Committee’s view, this must not jeopardise the objectives and achievements of the PRIIPs Regulation. Any amendments made to the delegated act therefore need to fit into that framework. All the more so since the review of the PRIIPs Regulation will be carried out after only one year and any issues can be raised at that time, in the light of the initial implementation and supervisory experiences. The aforementioned amendments should, from the outset, effectively contribute to increasing consumer trust. At the same time they should remain consistent with the rules to be laid down in the future MiFID package.

2.1.

Regulation (EU) No 1286/2014 of the European Parliament and of the Council (6) (the PRIIPs Regulation) introduced measures to improve transparency in the retail investment market. More specifically, it requires manufacturers of PRIIPs to draw up KIDs.

2.2.

The regulation gives the European Supervisory Authorities (7) (ESAs) the power to prepare regulatory technical standards (RTSs) detailing the elements of the KID.

2.3.

After the ESAs had sent their joint draft of the aforementioned standards to the Commission, the latter adopted the delegated act effectively implementing the RTSs at the end of June 2016.

2.4.

In its resolution of 14 September 2016, the European Parliament raised objections to the delegated act adopted by the Commission (8). The EP called on the Commission to review the provisions relating to multi-option PRIIPs, performance scenarios and comprehension alert.

2.5.

Moreover, the European Parliament and a large majority of Member States asked for the date of application of the regulation to be deferred.

2.6.

The current proposal for a regulation proposes deferring the date of application of the regulation by one year, to 1 January 2018.

3.1.

Overall, the PRIIPs Regulation serves to improve protection for retail customers and investors, particularly those who invest in PRIIPs. The proposed increase in transparency and the harmonisation of the information provision requirements will also benefit the internal market in financial services by creating a level playing field among different products and distribution channels. This will also further restore consumer confidence in the financial services industry.

3.2.

In order to fulfil these objectives, the regulation requires that PRIIPs manufacturers comply with a uniform set of product disclosure requirements and that retail customers and investors receive the KID on the offered PRIIPs. This should enable retail investors to better understand the economic nature and risks of a particular product and to compare different offers.

3.3.

In its original form, the regulation is intended to enter into application at the end of 2016. In principle, the same date also applies to the ‘implementing measures’ adopted by the Commission by delegated act in the middle of this year, based on the ESAs’ draft RTSs. The RTSs specify the presentation and content of the KID, the standardised format of the KID, the methodology underpinning the presentation of risk and reward and the calculation of costs, as well as the conditions and the minimum frequency for reviewing the information contained in the KID and the conditions on fulfilling the requirement to provide the KID to retail investors.

3.4.

While the Council raised no objections to the Commission’s delegated act during the scrutiny period, the EP rejected the text in a resolution on 14 September 2016 (9).

3.5.

Although the PRIIPs Regulation is directly applicable as of the end of 2016 and the production of a KID is not linked to the adoption of the delegated act, the EP at the same time requested that its application date be postponed. A large majority of Member States also made the same request for deferral, pointing out that the absence of technical standards would hinder the smooth application of the regulation.

3.6.

In these circumstances, the EESC can endorse the principle of deferring the date of application of the regulation. There would otherwise be a risk of the main objectives set (see above and below) not, or not fully, being achieved. Furthermore, the delegated act was rejected less than four months before the texts would have entered into application, which would have led to legal uncertainty and major implementation problems for market operators.

3.7.

Moreover, the EESC points to its previous opinion on PRIIPs, in which it welcomed the proposals made and the approach taken (10). In that opinion, the Committee highlighted the importance of this legislation, which for the first time regulates all types of complex financial product and ensures they are comparable, regardless of the type of manufacturer — bank, insurer or investment company.

3.8.

The Committee also called in this connection for the creation of a single financial market with clear, accurate, straightforward and comparable information (11), and stated that a uniform, simplified and standardised information system would ensure that such information is comparable and comprehensible, increasing market transparency and efficiency (12). The Committee would now add that the future RTSs should, from the outset, effectively contribute to increasing consumer trust. Thus, it needs to be clear to consumers which products are complex, they should be able to make informed decisions, and there should be a focus on cost and return. In order to avoid inconsistencies, account should be taken of the rules that will be laid down in the future provisions of the MiFID Regulation (13).

3.9.

The Committee also considers the choice of a period of one year to be acceptable, on condition that the deferral remains a one-off exception and that the intervening period is used to adopt and publish the definitive delegated act. This should be done in the shortest possible time in order to provide clarity and certainty for market operators, retail customers and investors as soon as possible.

3.10.

Moreover, by opting for a period of one year, the entry into force of the PRIIPs Regulation will again coincide with the entry into force of the MiFID II Regulation (14) which will also benefit consumers. The entry into force of MiFID II was previously also deferred by one year (15) — a deferral that was approved by the Committee (16).

3.11.

This must not jeopardise the abovementioned objectives, which the Committee endorses. Any amendments made to the delegated act therefore need to fit into the current PRIIPs framework.

3.12.

As regards the other elements, and insofar as may be necessary, it would seem more appropriate to await the review of the PRIIPs Regulation, which, owing to this proposed postponement, will now happen only one year after the regulation comes into effect (17). It will be possible at that stage to take account of the initial implementation and supervisory experiences.

‘A.

whereas it is essential that consumer information on investment products is comparable in order to promote a level playing field in the market no matter what type of financial intermediary manufactures or markets them;

B.

whereas it would be misleading to investors to remove credit risk from the calculation of risk categorisation of insurance products;

C.

whereas the treatment of multi-option products still needs to be clarified, in particular in relation to the explicit exemption granted to UCITS funds under Regulation (EU) No 1286/2014;

D.

whereas the delegated act as adopted by the Commission contains flaws in the methodology for the calculation of future performance scenarios and does not therefore fulfil the requirement under Regulation (EU) No 1286/2014 to provide information which is “accurate, fair, clear and not misleading” and, in particular, does not show for some PRIIPs, even in the adverse scenario, and even for products which have regularly led to losses over the recommended minimum holding period, that investors could lose money;

E.

whereas the lack of detailed guidance in the delegated regulation on the “comprehension alert” creates a serious risk of inconsistent implementation of this element in the key information document across the single market;

F.

whereas Parliament remains of the view that further standardisation of when the comprehension alert will be used should be introduced as an additional RTS mandate;

G.

whereas, left unchanged, there is a risk that the rules set out in the delegated regulation go against the spirit and aim of the legislation, which is to provide clear, comparable, understandable and non-misleading information on PRIIPs to retail investors;

H.

whereas in the letter of 30 June 2016 sent to the Commission by the Chair of the Committee on Economic and Monetary Affairs, Parliament’s negotiating team asked the Commission to assess whether the implementation of Regulation (EU) No 1286/2014 should be delayed;’.

10.3.2017   

EN

Official Journal of the European Union

C 75/48

Rapporteur:

Giuseppe GUERINI

Co-rapporteur:

Michael IKRATH

1.1.

The European Economic and Social Committee (EESC) welcomes the efforts of the European Commission and Member States in recent years to overcome economic stagnation. At the same time, it cannot but urge the EU institutions to show more determination in the establishment and implementation of a comprehensive strategy for financing the real economy.

1.2.

The EESC believes that it is important to ensure that European investment primarily benefits the real economy that is characterised by innovativeness, growth and social responsibility.

1.3.

Small and medium-sized enterprises (SMEs) are the backbone of the European economy. Ensuring satisfactory access to financing for SMEs and fast-growing companies is therefore a crucial precondition both for the development of these companies and for innovation, economic growth, employment, safeguarding Europe’s competitiveness and assuming social responsibility. Loans are the main source of funding for SMEs in the EU. In the light of the need to develop new areas of growth and ensure that Europe is an innovation leader, it is necessary to develop new methods of financing to support start-ups, innovative SMEs and fast-growing enterprises (scale-ups).

1.4.

The EESC calls for the development of the European venture capital funds (EuVECA) and the European social entrepreneurship funds (EuSEF) and points out that investor protection must be guaranteed.

1.5.

The EESC is therefore convinced that the traditional debt financing of the companies mentioned in point 1.2 needs to be complemented by alternative methods of financing, such as venture capital, crowdfunding, private equity, etc. The EU therefore needs to adopt concrete and consistent measures, on the one hand to enable banks once again to perform their core task of financing the real economy, and on the other to substantially improve the opportunities for equity and capital market funding and to gradually reduce the existing barriers to this in the process of building a capital markets union.

1.6.

The EESC therefore welcomes and supports the European Commission’s initiative to anticipate the review of the Regulations on European venture capital funds and European social entrepreneurship funds.

1.7.

The EESC believes that the instrument of a regulation can reduce the danger of different interpretations at national level, thus promoting the establishment of a capital markets union. It also calls for the existing differences of interpretation at national level to be eliminated.

1.8.

The EESC also calls on the European Union to commit to strengthening synergies between the objectives of the Europe 2020 strategy, such as the digital single market and the energy union/COP 21, and the UN’s 17 Sustainable Development Goals, in order to provide long-term investments with high impact. The deepening of economic integration to ensure the EU’s global competitiveness must also have top priority in all investment strategies.

1.9.

The EESC notes that parts of the financial sector, rather than investing in the real economy, prefer alternative investment objectives. These are often aimed at maximising return on investment (ROI) and associated with a high level of speculative risk. The capital adequacy requirements applicable to European banks, which clearly favour investment in government bonds rather than loans to companies, also contribute to this. It should also be noted that the EU legislation has so far done alarmingly little to regulate purely speculative financial enterprises (hedge funds, shadow banks). The EESC therefore recommends that the EU institutions strongly promote productive investment in the real economy and discourage high-risk financial speculation. A current example of this trend: at this year’s IMF meeting in Washington the financing of the green economy — green finance — was a central theme. The Chinese recognised this new field early on and promoted it during their G20 presidency. The EU is therefore urged, also in the framework of the EuVECA/EuSEF, to adopt measures to promote and strengthen the financing of the green economy (in the wake of COP 21) in order to forestall financial speculation in this area (1).

1.10.

In the specific case of the present Regulation, the EESC points out that at EU level there are now a large number of substantial financing sources, such as InnovFin under Horizon 2020, COSME and EaSI, to list only the main sources, alongside ESIF and EFSI. The EESC therefore expects there to be close coordination in connection with the new direction of EuVECA and EuSEF. It should be ensured that the hitherto very restrictive access criteria, as well as other restrictive conditions, are significantly relaxed by the Commission in order to enable the funds to achieve their objectives much more effectively. A high degree of flexibility should be the guiding principle.

1.11.

The EESC hopes that the review will also lead to changes in the credit rules of the Basel III Accord, with the SME supporting factor being complemented by the introduction of a new social enterprise supporting factor. In this way investments in social enterprises would be given a lower credit-risk weighting when calculating minimum capital requirements.

1.12.

In order to expand participation in such investment funds, the EESC proposes the establishment of ‘funds of funds’. This could increase the involvement of non-institutional investors — including interest groups — by setting up guarantee funds supported by public money and managed at European level. Such funds should support investment in businesses and institutions with a strong social dimension.

1.13.

The EESC considers it equally important to create an environment in which the financing objectives of social investment funds, such as social enterprises (SEs) and social sector organisations (SSOs), can develop. This will require the removal of barriers that make it extremely difficult for these actors to operate in a ‘level playing field’ market environment. There is a particular need for innovative instruments that enable the public sector to engage in socially orientated initiatives in association with SEs/SSOs.

1.14.

The EESC, in line with its opinion TEN/584, e-seniors, a potential 25 % of the European population, calls for the ‘Silver Economy’s’ access to financing to be made easier in connection with the EuVECA and the EusSEF. This will also have a positive impact on the budgets of the Member States, as pressure on the pensions system will be relieved by active older people starting up their own businesses. A new value chain will develop, which will open up new sources of revenue for the State. This also applies to women (2) as entrepreneurs and founders of start-ups, social entrepreneurs, etc.

2.1.

The proposal pursues the objective of coordinating the EuVECA and EuSEF funds with the measures already adopted at EU level to stimulate an economic upturn (e.g. Investment Plan for Europe, Action Plan on Building a Capital Markets Union, European Fund for Strategic Investments).

2.2.

The Commission believes that access to venture capital and social entrepreneurship capital is key to financing the growth of EU start-ups, innovative SMEs and social enterprises.

2.3.

However, with regard to its venture capital market, the EU is falling further behind the USA rather than closing the gap.

2.4.

The Commission is therefore amending the framework of the EuVECA and the EuSEF even before the planned review (2017) to ensure that they — in coordination with other measures — do more to support venture capital and social investment throughout the EU.

2.5.

The proposed amendment focuses on the following provisions: (i) the way the funds invest in assets; (ii) the way the managers run the funds; (iii) how the two Regulations interact with other existing fund laws; and (iv) the requirements funds comply with to benefit from the passport across borders.

2.6.

The Commission proposal is based on Article 114 TFEU and follows an extensive impact assessment (3).

3.1.

The EESC welcomes the European Commission’s initiative to anticipate the review of the regulations on European venture capital funds (EuVECA) and European social entrepreneurship funds (EuSEF); as early as 2012, when the first suggestions to bring them in were made, it expressed its approval in opinions on European Venture Capital Funds (4) and European Social Entrepreneurship Funds (5), particularly in view of the EU action plan on building a capital markets union (6).

3.2.

The EESC endorses and supports the endeavour to enhance the financing of new businesses. The target group consists of innovative SMEs, especially start-ups and one-person businesses, and not just in the initial phases, but mainly in the second and third growth phases. SMEs that have the potential to grow rapidly but are too small for the capital market and do not meet the criteria for loans should be a particular focal point. It is just as important to focus on businesses with social objectives and sustainable business models (social entrepreneurs).

3.3.

The EESC is of the opinion that the EU institutions and the Member States must take measures to develop instruments providing capital, investment and financing for business activities as a complement to bank loans. Meanwhile, we have to recognise that many European banks — particularly regional banks such as cooperatives and savings banks in the Member States — have adopted measures to support new businesses and are among the most important lenders to social entrepreneurs and innovative start-ups (7).

3.4.

However, it should be noted that in many cases SMEs, and also social entrepreneurs and start-ups, have limited capital. For this reason, they are unable to meet the creditworthiness criteria — which CRR/CRD IV in particular have made radically more stringent — for bank loans. Basel IV risks making this unsatisfactory situation even worse.

3.5.

In this context, the EESC believes that, while updating the EuVECA and EuSEF regulations is a useful step, it is not the only necessary measure. As well as improving these regulations, further steps are needed to create a more dynamic investment culture that is oriented towards all business forms currently present on the market. This will strengthen entrepreneurship while also helping to bring about the EU’s social pillar.

3.6.

It is unfortunately evident that a section of the financial world has absolutely no interest in sustainably financing the real economy, instead only investing in ways that allow an immediate and high rate of return. This is often done in a very short space of time, such as between the purchase and resale of a business. The EU institutions have done little to limit the impact of these kinds of purely speculative investment funds/banks (hedge funds, shadow banks) and to subject them to robust regulations.

3.7.

The EU institutions should make investment in the entrepreneurial activities of the real economy — and not only in financial instruments — increasingly attractive, by means of tax incentives, for example, and put forward an ambitious development agenda.

3.8.

The EESC agrees with the Commission’s view that further development of the EuVECA and EuSEF funds will give innovative enterprises and social entrepreneurs — as well as SMEs more generally — access to bank loans and will enable financing by means of loans and venture capital to be combined, exerting a positive leverage effect. The EESC recommends developing a ‘European way of venture capital funding’.

3.9.

Furthermore, analysis of the European venture capital funds shows that 8 of the 11 most active funds are supported by public funds or at least count on the significant involvement of public bodies. Each Member State acts differently in this regard. The EESC therefore recommends that key European projects, such as the action plans for the digital single market and the energy union as well as establishing the EU social pillar, should be taken into consideration when setting a direction for the funds.

3.10.

The new direction for the EuVECA and EuSEF measures must be rapidly brought into line with the following instruments: a) the European Investment Fund; b) the initiative for a capital markets union; c) the European Fund for Strategic Investments (which is becoming ever more important but should perhaps be taken more into consideration by national economic and banking systems, which are not yet harnessing its full potential).

3.11.

The proposed review of the EuVECA and EuSEF regulations contributes to achieving a central EU policy goal: improving SMEs’ and social enterprises’ opportunities to access loans. The EESC is therefore convinced that the credit regulations in this regard set out in the Basel III Accord — which are enacted within the EU by means of a directive (CRD IV) and a regulation (CRR) — must be revised: alongside the ‘SME supporting factor’, an additional ‘social enterprise supporting factor’ should be included in the CRR so as to drastically reduce the capital requirements for credit risk with regard to financial involvement in social enterprises. The coefficients involved are easily calculated and do not represent an expense for Member States’ public finances. The EESC considers this to be essential, as SMEs are the backbone of the EU economy and safeguard the EU’s global competitiveness. As such, they are key to growth and employment.

3.12.

It should be remembered that it is frequently not just social economy enterprises, but also various SMEs that display strong links to the local community and might be interested in investing in social amenities or in community energy supply using renewable energy sources, for example (8). The current regulations governing the EuVECA and EuSEF funds only allow the involvement of professional investors. However, if efforts are to be made to further expand investment, the EESC is of the view that the range of potentially interested investors should be broadened.

3.13.

Notwithstanding the need to ensure appropriate investor protection, motivated non-institutional investors could be permitted to participate in this fund. Alternative methods to raise capital such as crowdfunding — methods that are often completely informal and do not have clear rules — are already on the rise. It could therefore be appealing to give some opportunity to non-institutional investors to participate in the EuVECA and EuSEF funds. The possibility of organising non-institutional investors in homogeneous groups might even be considered.

3.14.

The attention paid to medium-sized enterprises (up to 499 employees) is also welcome; they must not be neglected so that their growth — which is often due to the development of businesses that originally started as SMEs — can be consolidated and even, if possible, further enhanced.

3.15.

The principle of subsidiarity is duly respected in the proposal; thus measures at EU level (as opposed to national level) via the EuVECA and EuSEF funds are welcome so as to create a harmonised framework at European level without overly constraining Member States’ freedom as regards their general approach to the issue of venture capital. In this context, the EESC welcomes the approach of adopting a regulation. A more harmonised framework could help to prevent the concentration of venture capital in a small number of Member States and could contribute to a broader geographical spread and a more marked effect. Investment in the form of venture capital currently constitutes only 0,1 % of the EU’s GDP and is concentrated in a small number of Member States.

3.16.

Allowing alternative investment fund managers (under Directive 2011/61/EU) access to EuVECA and EuSEF funds seems to be an appropriate solution to ensure that these funds are used and are effective by linking in with existing provisions at European level.

3.17.

The qualitative and quantitative expansion of enterprises’ opportunities to access the funds is therefore fully in line with the Commission’s general approach to strengthening the two funds.

3.18.

The decision to retain a minimum investment threshold for access to the funds also makes sense, although mechanisms to widen participation should be promoted: one conceivable suggestion would be to enable the creation of ‘funds-of-funds’ — a possibility that is also raised in the European Commission’s analysis that accompanies the proposal to review these regulations.

3.19.

The proposed reduction of administrative costs for registration is very welcome, especially in so far as this aims to remove bureaucratic obstacles to the full implementation of the measures promoted by the Commission so that potentially interested investors are not deterred by the entry costs. They should be able to focus on the development potential of the businesses that are being granted access to venture capital, and not on the cost of accessing an over-complicated system.

3.20.

Technical regulation in terms of own funds that investors must possess in order to be granted access to the funds is rightly given over to a technical body such as the ESMA. It is best placed to guarantee a high standard of regulation in a very technical field. The EESC expects that this secondary implementing regulation can come about in dialogue with stakeholders and with the involvement of the social partners, giving them the opportunity to make observations and comments on a provisional version of the text, including with regard to the simplification of occasionally excessive rules.

3.21.

The EuVECA and EuSEF funds could have a particularly important role to play in terms of orienting and organising investments in the areas of innovation, social innovation and environmental sustainability, in line with the European Commission’s current priorities. In this regard, the introduction of ‘guarantee funds’ — supported by public funds and ideally managed at European level — to promote investment in areas that are highly valuable in social, employment or environmental terms could be extremely useful. Finally, the EESC stresses that the European Commission must support comprehensive measures to promote the development of an overarching and holistic strategy. The sum of the individual measures is no longer sufficient to improve the competitiveness of the European economies in an increasingly complex global environment.

10.3.2017   

EN

Official Journal of the European Union

C 75/53

Rapporteur:

Petru Sorin DANDEA

1.1.

The EESC endorses and supports the Commission’s proposal to extend the current European statistical programme (ESP) to cover the 2018-2020 period.

1.2.

The EESC considers that the preferred policy option chosen by the Commission responds best to calls by data users and will also contribute to the development of statistical products useful to policymakers, who would thus have enhanced statistical support when framing policies for the European Semester.

1.3.

The EESC considers that improving existing products and developing new ones is necessary to measure the EU’s progress on the 17 goals and 169 targets of the UN sustainable development strategy and must be a priority for the European statistical system (ESS).

1.4.

The EESC reiterates a proposal put forward previously (1) and recommends that the Commission seize the opportunity provided by this regulation to introduce measures to develop statistical research at EU and Member State level enabling the economic value of volunteering to be evaluated. The EESC considers that the methodological approach should be based on the International Labour Organisation’s Manual on the measurement of volunteer work.

1.5.

The EESC considers that the new statistical products proposed by the Commission measuring globalisation should include statistical surveys measuring the positive or negative effects on the single market, such as the impact of relocations on the EU labour market or pressure of unfair competition based on cheap labour and non-compliance with International Labour Organisation (ILO) standards on employment relationships, particularly in the European industrial and services sector.

1.6.

The EESC endorses the Commission proposal to begin exploratory work on a future EU social survey. This survey should also include data on the suitability of social security systems and their sustainability in the new demographic situation.

1.7.

Given the increase in migration flows, the EESC recommends that shortcomings in statistical surveys on migration and asylum be identified swiftly and redressed. The programme on the integration of migration statistics needs to be implemented fully, in cooperation with national statistics institutions.

1.8.

The EESC recommends that Member States step up investment in developing the ESS so that it can cope with the growing demand for statistics, which it must also be able to develop and disseminate swiftly.

1.9.

The EESC reiterates the proposal put forward in previous opinions (2), calling for Eurostat as well as national statistical institutions to have the best possible human, financial and IT resources, because this is essential to fulfilling the increasingly demanding tasks inherent in providing high-quality statistical information in an ever shorter time frame.

1.10.

The EESC points out that the efforts made by the Commission and the ESS to improve the quality of statistics and to develop new statistical products must not result in an excessive increase in the administrative burden on data providers, households or businesses.

1.11.

Since the social partners and civil society organisations can make a key contribution to improving statistical products so that they respond more effectively to calls for data, the EESC endorses the Commission proposal regarding the regular dialogue which should take place between data users and the ESS.

2.1.

The European Commission’s proposal for a regulation (3) amends Regulation (EU) No 99/2013 of the European Parliament and of the Council on the European statistical programme 2013-2017, by extending it to 2018-2020.

2.2.

Regulation (EC) No 223/2009 stipulates that the European statistical programme must provide the framework for the development, production and dissemination of European statistics for a period corresponding to the multiannual financial framework. Regulation (EU) No 99/2013 covers only the period from 2013 to 2017, whilst the multiannual financial framework runs until 2020. Consequently, the European statistical programme must be extended until 2020.

2.3.

The objective of the proposal is to extend the ESP to cover the 2018-2020 period and provide the financial support that the ESS needs in order to be able to:

2.4.

Having carried out an impact assessment and consulted stakeholders (4), the Commission has chosen a preferred policy option from the five initially drawn up. The chosen option 2c would have the most favourable impact on timeliness, with new actions focusing on enhanced timeliness for statistics on inequality, poverty and material deprivation, and for energy and environmental data.

2.5.

The budget allocated for the extension of the programme (2018-2020) is EUR 218,1 million.

3.1.

Given that the European statistical programme needs to be aligned with the multiannual financial framework, the EESC endorses and supports the Commission’s proposal to extend the current ESP to cover the 2018-2020 period.

3.2.

The preferred policy option chosen by the Commission should align statistical indicators more closely with the Commission’s 10 political priorities by improving current statistical instruments and developing new products. The EESC considers that this option responds best to calls by data users and will also contribute to the development of statistical products useful to policymakers, who would thus have enhanced statistical support when framing policies for the European Semester.

3.3.

The EESC endorses the initiative to include surveys measuring progress on the UN Sustainable Development Goals in the new statistical products. Improving existing products and developing new ones is necessary to measure the EU’s progress on the 17 goals and 169 targets of the UN sustainable development strategy and must be a priority for the European Statistical System.

3.4.

For a long time, GDP (gross domestic product) was the statistical indicator used at global level to measure development. The Commission recognised the limitations of this indicator when it came to correctly evaluating social or environmental development in a communication (5) in 2009. The EESC reiterates the proposals put forward in opinions (6) both at that time and subsequently, considering them to be highly pertinent to the Commission’s proposal for a regulation.

3.5.

The EESC reiterates a proposal put forward previously (7) and recommends that the Commission seize the opportunity provided by this regulation to introduce measures to develop statistical research at EU and Member State level enabling the economic value of volunteering to be evaluated. The methodological approach should be based on the ILO’s Manual on the measurement of volunteer work, which defines and describes this concept, highlighting three fundamental characteristics. Volunteer work is defined as work which is: productive, unpaid, not compulsory and not beneficial to the volunteer’s own household.

3.6.

National accounts must take greater account of social and environmental indicators. The EESC urges the Commission to keep up its efforts in this area under the 2018-2020 ESP.

3.7.

With regard to the new statistical products measuring globalisation, the EESC considers that these should include statistical surveys measuring the positive or negative effects on the single market, such as the impact of relocations on the EU labour market or pressure of unfair competition based on cheap labour and non-compliance with International Labour Organisation (ILO) standards on employment relationships, particularly in the European industrial and services sector.

3.8.

The EESC considers that data users may become more confident as Member State governments implement the recommendation (8) drawn up by the ESGAB (European Statistical Governance Advisory Board) on establishing CoCS (Commitments on Confidence in Statistics).

3.9.

The EESC endorses the Commission proposal to begin exploratory work on a future EU social survey. Given Europe’s ageing population, this survey should also include data on the suitability of social security systems and their sustainability in the new demographic situation. Shortcomings in statistical surveys on migration and asylum should also be identified swiftly and redressed.

3.10.

The EESC reiterates the proposal put forward in previous opinions (9), calling for Eurostat as well as national statistical institutions to have the best possible human, financial and IT resources, because this is essential to fulfilling the increasingly demanding tasks inherent in providing high-quality statistical information in an ever shorter time frame. The EESC recommends that Member States step up investment in developing the ESS so that it can cope with the growing demand for statistics, which it must also be able to develop and disseminate swiftly.

3.11.

The EESC points out that the efforts made by the Commission and the ESS to improve the quality of statistics and to develop new statistical products must not result in a significant increase in the administrative burden on data providers, households or businesses.

3.12.

The EESC endorses the Commission proposal regarding the regular dialogue which should take place between data users and the ESS. Civil society organisations can make a key contribution to improving statistical products so that they respond more effectively to calls for data. In its annual report for 2016, the ESGAB made a proposal to this effect.

10.3.2017   

EN

Official Journal of the European Union

C 75/57

Rapporteur:

Alberto MAZZOLA

1.1.

The European Economic and Social Committee strongly endorses the Commission’s initiative to extend the duration and increase the financing of the European Fund for Strategic Investment (EFSI) and agrees with its purpose and its importance for ensuring stability and certainty for investors and project promoters. The Committee is also in favour of extending EFSI timescales and funding to include an even longer-term outlook, to make sure that intervention is systematic and uninterrupted.

1.2.

The EESC welcomes the positive results of the first year of the EFSI in immediately mobilising the value of investment forecasted and judges in particular the SME ‘investment window’ a success. The Committee’s Single Market Observatory should undertake constant monitoring of EFSI deployment for SMEs using impact indicators.

1.3.

In the Committee’s view, EFSI 2.0 should aim for ever greater involvement of private capital, topping the 62 % achieved in the first year. In that respect the Committee proposes to carefully consider the extension of its scope to other branches of finance in addition to banks: the bond market and insurance and pension funds. European and international insurance and pension funds could play a crucial part in investments.

1.4.

The EESC stresses the importance of keeping a market-driven emphasis, seriously considering the employment and social impact of the EFSI, reinforcing the additionality of the EFSI vis-à-vis other EU instruments and normal EIB business. The EESC regrets that the EFSI does not ensure that funds will be invested in countries with greatest needs. It calls for the EFSI to ensure geographically balanced coverage across the EU, taking on board the overall economic activity of each country, the creation of new jobs and the initiative’s demand- and market-driven character, without setting quotas in advance and maintaining enough flexibility among the sectors in which it is used.