Opinion of the European Economic and Social Committee on ‘The digital single market – trends and opportunities for SMEs’

(own-initiative opinion)

(2020/C 429/01)

Rapporteur:

Pedro ALMEIDA FREIRE

Plenary Assembly decision	30.3.2017
Legal basis	Rule 32(2) of the Rules of Procedure
	Own-initiative opinion
Section responsible	Single Market, Production and Consumption
Adopted in section	4.9.2020
Adopted at plenary	18.9.2020
Plenary session No	554
Outcome of vote (for/against/abstentions)	220/0/0

1.   Conclusions and recommendations

1.1.

The EESC pays particularly close attention to the impact of digital technology on European small and medium-sized enterprises (SMEs). In fact, 25 million SMEs form the backbone of the EU's economy. They employ around 100 million people, account for more than half of Europe's GDP and play a key role in creating value in every sector of the economy.

1.2.

In hearings that the EESC held in a few countries (Belgium, Germany, Portugal and Romania) selected in respect of the 2019 Digital Economy and Society Index (DESI), it noted that many European SMEs, in particular micro- and small enterprises (93 % of businesses in Europe) have been slow to adopt digital solutions. Those that have taken the plunge told the EESC that they faced a number of barriers hampering their operations.

1.3.

The EESC recommends that every effort be made to remove the main barrier, which is the lack of comprehensive high-quality broadband coverage across Europe.

1.4.

It noted that SMEs' digital technology training needs in areas such as cybersecurity, artificial intelligence and blockchain are crucial, if not urgent. The EESC therefore recommends that schools offer compulsory courses in digital technologies and that SMEs be able to access training in these tools. In addition, appropriate and affordable continuing training for the self-employed, SME managers and their employees needs to be further supported and promoted.

1.5.

The EESC calls for appropriate national tax coordination in this field, as in half of the countries where hearings were held the lack of such coordination entails proportionately higher costs for SMEs than for large companies and hinders cross-border business. Indeed, ensuring fair competition between SMEs and large companies is essential for the proper functioning of the internal market.

1.6.

The EESC would like to see differences in legislation and excessive regulation, standards and labelling eliminated, as these are major barriers to the digital and cross-border operation of SMEs, entailing costs for compliance, wages and external expertise, which hamper businesses' growth.

1.7.

The EESC considers that SMEs' access to financing is a priority in order to support the investments that these businesses make to adapt to the digital transformation of society, trade and consumption patterns and to the internationalisation of trade. It notes that the Enterprise Europe Network (EEN) is not sufficiently well known or used by European SMEs, or by the digital innovation hubs funded by the European Union. Enhanced dialogue and cooperation between the EEN and SME organisations would make the system more effective.

2.   Impact of digital technologies on SMEs

2.1.

When the 2020 Digital Economy and Society Index was published on 11 June 2020, the European Commission's Vice-President, Margrethe Vestager, stated that ‘The coronavirus crisis has demonstrated how crucial it is for citizens and businesses to be connected and to be able to interact with each other online’ (1).

2.2.

The European Commissioner for the Internal Market, Thierry Breton, pointed out that ‘The data we publish today [from the DESI] (2) shows that industry is using digital solutions now more than ever. We need to ensure this is also the case for small and medium businesses and that the most advanced digital technologies are deployed throughout the economy.’

2.3.

The EESC also pays particularly close attention to the impact of digital technology on SMEs. In fact, 25 million SMEs form the backbone of the EU's economy. They employ around 100 million people, account for more than half of Europe's GDP and play a key role in adding value in every sector of the economy (3).

2.4.

SMEs are deeply woven into Europe's economic and social fabric and are very diverse in terms of business models, size, age and entrepreneurs' profiles, and draw on a pool of diverse talent, of both women and men. They include the professions, although regulated professions that are subject to rules specific to their sphere of activity (such as pharmaceuticals, the judiciary, etc.) are not included as such in the definition of SMEs, micro-enterprises, middle-range industrial companies, traditional crafts businesses or high-tech start-ups.

2.5.

Recognising the impact of digital technologies on SMEs, the EESC agrees with the Commission's analysis and considers that the three pillars on which the Commission's SME Strategy for a Sustainable and Digital Europe (4) is based (capacity-building and support for the transition to sustainability and digitalisation; a reduced regulatory burden; and improved access to the market and to financing) are indeed priority areas. The EESC emphasises that SMEs need immediate financial support, because they have been hit very hard by the economic impact of the COVID-19 pandemic; as a result, their employees are more likely to lose their jobs. The EESC therefore regrets that the Recovery Plan for Europe, which is intended to repair the economic and social damage caused by the COVID-19 pandemic, and which was adopted by the extraordinary European Council; held from 17 to 21 July 2020, is limited to EUR 750 billion, and that the 27 Member States have curbed their ambitions, particularly in the digital sphere, in order to gain the endorsement of the so-called ‘frugal’ countries, as this will have an impact on financial support for the digitalisation of SMEs.

2.6.

The EESC notes that these pillars of the Commission’s strategy for SMEs to achieve a sustainable and digital Europe reflect the expectations expressed by SME representatives at hearings that the EESC held in four countries selected on the basis of the 2019 DESI (Belgium, Germany, Portugal and Romania) to assess the impact of digital technologies on SMEs, before this process was interrupted by the coronavirus crisis and the enforced lockdown. As a result, the EESC was unable to conduct hearings in Estonia or Ireland, which had been selected in view of their high rankings in the 2019 DESI.

3.   General comments

3.1.

Digitalisation is a growth factor for SMEs (craftspeople, traders, the professions, service providers, etc.). More than half of retail sales in Europe are impacted by the internet, be they online sales or shop sales following online research (so-called ‘ROPO’: Research Online, Purchase Offline) (5).

3.2.

The development of websites, social media, digital marketing and customer relationship management (CRM) software promotes the development of ‘digitised’ SMEs. Software suites and data analysis programmes also contribute to optimal business performance. In this regard, the EESC notes that training programmes should enable users, including SME managers, to be trained in the use of these tools.

3.3.

Digital technology can also disrupt and lead to upheaval. ‘Disruptive’ innovation is a process of market transformation set in train by digital challenges. The disruption changes a market by opening it up to as many people as possible and enables new players to capture (‘disrupt’) turnover within traditional value chains.

3.4.

For example, the relationship of trust and proximity between an SME and its customers could create the impression that the SME’s activities are immune to penetration by digital technology. However, experience shows that this close relationship with the customer is never guaranteed. After all, consumers are willing to turn to other offers if they are more practical and advantageous (6).

3.5.

In the digital economy, consumers' legal protection does not have any impact on their behaviour. An internet offer to a consumer accustomed to a paperless service, which is accessible and easy to use and which includes legal protection safeguarding their interests, despite being less convenient, will have no impact on their behaviour (7).

3.6.

The positive, even overblown, discourse on digital disruption often concerns large companies with sufficient resources to invest in R&I and marketing. But what this discourse fails to recognise is that digital disruption can, for example, affect some of the professions, which are by nature highly fragmented and often have no budget for R&I. They can only take advantage of the digital solutions available on the market rather than developing their own, and are therefore more vulnerable to the digitalisation of their activity.

3.7.

The digital space also puts paid to some of the illusions of SMEs. For example, the fact of providing smaller-scale services, in a limited geographical area where development potential is just as restricted, may create the illusion that they are unaffected by the changes being introduced by the digital age. However, reality demonstrates that the opposite is true. For example, the hospitality sector would appear to be a service that cannot be relocated. Yet booking platforms have been able to capture a significant share of the value of this market, to the extent that representatives of the catering and hospitality industry claim that they should have anticipated this and created their own platform to keep reservations under their control and not be so dependent on these operators outside their industry (8).

3.8.

Moreover, digital disruption leads to work being redistributed. To give a few examples from the professions: in accounting, the highly manual work of entering accounting data is increasingly being done by the clients themselves, which reduces the work of the accountants as well as their margins, not to mention the fact that competitors are now emerging who offer online accounting.

3.9.

The risk created by the redistribution of work in the notarial profession is, for example, lower, but part of a notary's activities can be carried out by others; thus start-ups are offering to draft legally valid wills for EUR 70 (9).

3.10.

The redistribution of work is also affecting the medical sector, with websites offering online appointment scheduling and telemedicine to cover poorly served areas.

3.11.

Commercial collaborative platforms may also be unaware of European and national legal requirements on matters such as mandatory company registration, compulsory insurance, health and safety, worker and consumer protection, etc., that must be respected.

3.12.

In the light of all these economic, social and societal upheavals, the challenges of digitalisation should, therefore, become a permanent feature in social dialogue.

3.13.

SMEs form a heterogeneous category of economic players, ranging from bakers and pharmacists to those working in the professions, which means that policy on capacity-building and on support for the digitalisation of SMEs must be inclusive and easily applicable by SMEs, without giving rise to disproportionate additional costs or slowing down their core business in order for them to comply with the rules.

3.14.

The needs of SMEs are not limited to smart and inclusive legislation, however; they also cover skills development and continuous training and are based on a new vision for businesses. Indeed, the digital transformation of SMEs also affects business organisation and culture. And yet, many SME managers are not making digital transformation a strategy for their company. Digital transformation is not just about digital tools and processes; it is a new way of creating value by adapting business models to the digital context, on which managers should take the initiative.

3.15.

Moreover, SMEs face many barriers in terms of access to financing, affordable training and support for internationalisation. The Enterprise Europe Network, which is devoted to innovation and the internationalisation of companies and provides SMEs with information, advice on European law and support, is not very well known among businesses. Digital innovation hubs funded by the European Union (such as the European Digital Innovation Hubs run by Innoviris in Brussels, for example (10)) also help to support the digitalisation of SMEs through training and funding, and to develop a digital entrepreneurial culture. Nevertheless, improvements in dialogue, analysis of SMEs' needs, and cooperation between the EEN and SME organisations would make the scheme more effective.

4.   Specific comments

4.1.

This opinion is partly based on the conclusions of hearings held between July 2019 and the first quarter of 2020 with the social partners, SME federations, consumer associations, public authorities and others in four Member States: Germany, Belgium, Portugal and Romania. Hearings could not be held in Estonia or Ireland, which had also been selected, due to the coronavirus crisis.

4.2.

The EESC points out that the purpose of the hearings in the aforementioned countries was to provide ‘grassroots’ evidence to support and feed into European action and policy on SMEs' take-up of digital technologies.

4.3.

In order to assess the impact of digital technology on SMEs, the EESC has selected the following from among the five DESI indicators (11): — the integration of digital technology by businesses, the latter including three indicators that the EESC considered relevant: the percentage of SMEs trading online, SMEs' turnover generated by e-commerce and the percentage of SMEs trading online and across borders.

4.4.

Among the countries selected by the EESC for the indicator mentioned above in respect of the 2019 DESI, Ireland and Estonia lead the way in e-commerce and the integration of commercial aspects of digital technology, followed by Belgium, which also ranks above average.

4.5.

Germany ranks at the average and Portugal below average. Romania is one of the countries lagging furthest behind.

4.6.

The majority of the hearings (Belgium, Germany, Portugal) reported disparate broadband network coverage, with urban areas having decent coverage, while rural and peripheral areas do not. 4G is not even available in some parts of one country (Portugal). And yet, shaping the digital future of Europe and its SMEs presupposes the development of large-scale digital solutions and the interoperability of essential digital infrastructure. Indeed, the EESC notes that connectivity is the key pillar of the digital transformation of SMEs.

4.7.

Training in digital technologies is a need identified by all those who spoke during the hearings. Education and vocational training in digital technologies are sorely lacking and prevent SMEs from being able to recruit competent staff in this field (Portugal and Romania). Training in digital issues for SME employees to become competent and up to date in areas such as cybersecurity, artificial intelligence and blockchain is crucial, if not urgent (Belgium). The current situation is characterised by a superficial knowledge of digital tools that will not suffice for much longer (Germany). Workers also need digital skills to keep their jobs and succeed in an increasingly digital and rapidly changing labour market (Germany). Digitalisation may even lead to fears of job losses in some highly automated sectors (Germany).

4.8.

SMEs are not sufficiently equipped or trained to manage the risks generated by malicious cyberactivity (Belgium and Germany). As a result, some traditional SMEs even question the value of developing an online business (Portugal). Those that have gone digital find it difficult to make use of the large data repositories available to larger companies and are reluctant to use advanced tools and applications based on artificial intelligence (AI), for example, which places them at a competitive disadvantage vis-à-vis larger companies (Germany). At the same time, SMEs across all sectors are highly exposed to cyber-threats and often have to rely on external experts, which generates additional costs.

4.9.

The lack of appropriate national tax coordination creates proportionately higher costs for SMEs than for large companies in half of the countries where hearings were held (Belgium, Portugal) and hinders cross-border activities.

4.10.

Differences in legislation and excessive regulation, standards and labelling are also barriers to the digital and cross-border operation of SMEs (Belgium and Portugal), as they generate compliance- and wage-related costs, to the extent that some SMEs are seeking to relocate (Belgium). For example, the entry into force of the General Data Protection Regulation has obliged SMEs to employ their staff in developing internal procedures for managing personal data, inform their customers, etc. Sometimes they have had to turn to external consultants, which has diverted them from their business development priority, generated costs and slowed down their core business (Belgium).

4.11.

The digital development of SMEs may also be hampered by the inertia of national legislators: training and education in digital technology and support for SMEs in their digital deployment are not considered strategic priorities (Romania).

4.12.

In view of the economic, social and societal risks generated by the digital revolution, all of the stakeholders heard in the countries concerned felt that it was essential for the social partners and SME representatives to be involved both in drawing up legislation that affected them and in social dialogue.

---

(1)  European Commission press release, 11 June 2020, Brussels.

(2)  Digital Economy and Society Index (DESI).

(3)  COM(2020) 103 final.

(4)  See footnote 3.

(5)  Forrester, European Cross-Channel Retail Sales Forecast, 2015 to 2020

https://www.forrester.com/report/European+CrossChannel+Retail+Sales+Forecast+2015+To+2020/-/E-RES115375

(6)  DVD rental shops, weakened by the rise of VOD and downloads, are proof of this fragility. The emergence of stakeholders such as Amazon, which offers a reliable and prompt home delivery service for an identical price on the basis of a catalogue, has led many consumers to favour online shopping — even though they still browse in bookshops in their free time.

(7)  Le numérique déroutant [Disruptive digitalisation], Bpifrance Le Lab Study, 19 February 2015.

(8)  Bpifrance Le Lab Study, mentioned above.

(9)  https://testamento.fr/fr/

(10)  Digital Europe Programme 2021-2027.

(11)  Connectivity, human capital, Internet use, digital technology integration and digital public services.

Opinion of the European Economic and Social Committee on ‘Effective and coordinated EU measures to combat tax fraud, tax avoidance, money laundering and tax havens’

(Own-initiative opinion)

(2020/C 429/02)

Rapporteur:

Javier DOZ ORRIT

Plenary assembly decision	20.2.2020
Legal basis	Rule 32(2) of the Rules of Procedure
	Own-initiative opinion
Section responsible	Economic and Monetary Union and Economic and Social Cohesion
Adopted in section	20.7.2020
Adopted at plenary	18.9.2020
Plenary session No	554
Outcome of vote (for/against/abstentions)	216/2/2

1.   Conclusions and recommendations

1.1.

In spite of the efforts made by the EU and many governments and the entry into force of major European directives (Anti-money Laundering and Counter Terrorist Financing Directive — AMLD; Anti-Tax Avoidance Directive — ATAD) (1), together with the OECD’s base erosion and profit shifting (BEPS) programme, the volume of tax fraud, tax evasion and money laundering, as well as tax avoidance, remains very high in proportion to the public finances of the European States.

1.2.

The EESC proposes launching a European pact to effectively combat tax fraud, evasion and avoidance and money laundering. The EESC calls on the European Commission to promote a political initiative involving national governments and the other European institutions in achieving this goal, fostering the consensus needed for this and involving civil society. Cooperation between Member States should be the main pillar of the pact.

1.3.

The EESC urges the European institutions and the Member States to provide the financial and human resources required for the effective implementation of existing European legislation and to agree on a commitment to adopt all necessary new legislative and administrative measures to effectively combat tax offences and bad practices, money laundering and the activities of tax havens. This requires permanent evaluation of the outcome of implementing each measure.

1.4.

The EESC considers the Member States’ commitment to putting an end to unfair and damaging forms of tax competition to be essential. This is also reflected in what the earlier EESC opinion on Taxation — qualified majority voting (2) has to say on the need to press ahead with the debate on the progressive shift from unanimity to qualified majority voting on tax matters.

1.5.

The active involvement of civil society is crucial to creating public feeling against tax crime and bad practices and in favour of fair taxation. Its cooperation will help to bring about and apply the pact. The involvement of employers and their organisations is very important for the latter’s success. It must be guaranteed that the legislative measures adopted do not have an undue impact on companies that fulfil their tax obligations by burdening them with excessive red tape. Effective and urgent action against tax offences and bad practices will generate additional public financial resources needed to help fund pandemic recovery plans, the green and digital transformation of the economy and the construction of the European Pillar of Social Rights.

1.6.

The digitalisation of the economy creates new challenges for tax authorities, as it can give rise new methods of aggressive tax planning, financial crimes and bad practices. However, the digitalisation of the economy, through more efficient administrative cooperation and data exchange, also creates new opportunities for tax authorities to combat such practices.

1.7.

Achieving better results in combating these crimes and bad practices requires closer political, administrative, police and judicial cooperation both directly between the Member States and between them and the EU, a more robust legal basis for this cooperation and adequate financial and human resources for the financial intelligence units (FIU), tax authorities, European supervisory bodies and other actors in this fight.

1.8.

The starting point to make measures more effective must be a shared vision of these offences and bad practices and how they tie in with economic and financial crime and political corruption, together with the necessary role that tax havens play in facilitating and concealing them. Eradicating criminal activity by tax havens should be a priority for the EU.

1.9.

While such a policy is necessary under all circumstances, the EESC is convinced that in the situation created by the COVID-19 (coronavirus) pandemic, it is crucial that it become a political and ethical priority for the Union, national governments and European civil society. At a time when such sizeable public financial resources are needed to tackle the health, economic and social consequences of the pandemic, it is intolerable that a significant amount of these resources should be unlawfully channelled towards the private benefit of a small number of people, to the direct detriment of the vast majority of workers, businesses, self-employed persons, employees and pensioners who comply with their tax obligations.

1.10.

The EESC supports the new action plan for a comprehensive Union policy on preventing money laundering and terrorist financing (3) presented by the European Commission on 7 May 2020. It believes that it should be implemented as a matter of urgency. The EESC backs the proposed measures to ensure effective implementation of the existing legal framework for combating money laundering and terrorism financing, the establishment of a single EU legal code, the creation of a European supervisory body and the other pillars out in the plan. The EU and Member States should maintain common positions in international forums such as the Financial Action Task Force (FATF, housed at the OECD), G20 and the UN. The EESC shares the Commission’s view that the measures taken should take account of European data protection legislation and ECJ case law on the matter and ensure that they entail the smallest possible administrative and financial burden for the Member States and the obliged entities.

1.11.

The EESC calls on the European Commission to assess the current list of non-cooperative jurisdictions and to consider the possibility of establishing additional criteria to ensure that all tax havens are included in that list. It also calls for sufficient measures to be put in place to prevent businesses or individuals from carrying out unjustified transactions with their financial institutions.

1.12.

The EESC welcomes the introduction of tax indicators into the European Semester, appeals to the Member States to comply with the relevant provisions in the Country-Specific Recommendations (CSR) and proposes that the European Commission also include a procedure for evaluating the efficiency, equity, sufficiency and proper functioning of tax systems in the Semester.

1.13.

The EESC calls for European directives to cover works of art and other high-value assets, in particular those placed in free ports and customs warehouses; for the progressive abolition of the schemes set up in certain Member States for citizenship or residence in exchange for investment; and for the lack of transparency involved in bearer shares to be brought to an end.

1.14.

The EESC considers that the provisions of the fifth Anti Money Laundering Directive (AMLD) on a centralised and public register of beneficial owners of companies and trusts should be applied to tax evasion. It further calls for appropriate procedures to be put in place to make it easier for SMEs to comply with registration requirements.

1.15.

The EESC supports a global solution on the corporate taxation of companies with a significant digital presence under the aegis of the OECD’s work, but if a solution is not reached by the end of 2020, the EU should resume its initiative for taxing large digitalised companies.

1.16.

The ATAD should be revised to include rules on tax treatment in relation to low-tax jurisdictions and on the repatriation of dividends or capital gains that have not been taxed abroad.

1.17.

National FIUs should be supported financially and technically and close cooperation should be promoted between them and between the tax authorities, as well as between national police forces and Europol, in the prosecution of tax and financial offences.

1.18.

The EESC calls on the Commission to carry out a study on the role of ‘letterbox companies’ in tax fraud, evasion and avoidance as well as money laundering and, in the light of its conclusions, to amend the ATAD, the Capital Requirements Directive and the Anti Money Laundering Directive in order to prevent offences being carried out and bad practices being facilitated through these directives.

1.19.

The EESC calls on the Commission and the Member States to explore the concept of minimum effective taxation of corporate profits, and its possible application.

1.20.

The EESC proposes that EU trade or economic agreements include, in keeping with WTO principles and rules, a chapter containing clauses against tax offences, money laundering and aggressive tax planning and for cooperation between tax authorities.

2.   Background

2.1.

The scale of tax fraud, tax evasion, tax avoidance and money laundering in Europe and across the world is very significant in macroeconomic terms. It clearly has a transnational dimension. Tax havens play a key role in enabling these practices by holding and channelling capital from large companies and personal fortunes that has evaded and avoided taxation, as well as money originating from political and economic corruption and organisations forming part of the criminal economy.

2.2.

There is no universally accepted definition of a tax haven, but in all cases, there is no or very little taxation, and opacity regarding customers and flows is the norm. They are identified by means of lists that define an uncooperative nature as the refusal to provide information to tax authorities and cooperate with judicial authorities. The recognised lists are that of the OECD (4) and the EU’s two lists: relating to money laundering and terrorist financing, and on tax evasion and avoidance (5). A monograph in F&D (IMF) estimates the private wealth hidden away in offshore financial centres at between USD 7 and 8,7 trillion (6) (between 8 % and 10 % of the world’s GDP).

2.3.

The IMF estimates that tax evasion costs governments around USD 3 trillion per year (7). According to the European Parliament (EP), the figure comes to EUR 825 billion in the EU (8), and the VAT gap — most of which is due to fraud — stands at around EUR 147 billion a year, EUR 50 billion of which is from cross-border ‘carousel fraud’ (9).

2.4.

Tax avoidance does not always involve a violation of the letter of the law, but it certainly does of the spirit. Tax havens receive around USD 600 billion a year due to corporate tax avoidance (10). The EU loses between EUR 160 and 190 billion per year (11). Tax avoidance through six Member States results in tax revenue losses of EUR 42,8 billion for the other twenty-two (12). F&D (IMF) claims that 40 % of global foreign direct investment (FDI) — some USD 15 trillion — is channelled to letterbox companies (companies with no economic activity), frequently in the form of holdings that pool operating subsidies. Most of them are located in five European countries (13).

2.5.

According to the UN, money laundering accounts for between 2 % and 5 % of the world’s GDP (14). Recent cases, such as those of Danske Bank (with an initial estimate of EUR 200 billion) (15) and Swedbank (EUR 37 billion) (16) reveal the weaknesses of the anti-money laundering system, despite the directives in force and the work of supervisory authorities.

2.6.

There are money laundering channels other than the financial sector: art, diamond and precious metal markets, free ports, customs warehouses and special economic zones, etc. Rapid technological developments are providing new channels in the form of virtual assets and blockchain. The same applies to methods of evasion and avoidance: dividend stripping and coupon washing through cum-ex transactions (EUR 55,2 billion), aggressive tax planning, secret agreements between States and multinational companies that substantially reduce their tax obligations or schemes to grant citizenship or residence to foreign nationals in exchange for investment. E-commerce, the platform economy and the digital economy in general create new threats that could facilitate tax offences and avoidance, as well as providing new opportunities for tracing and supervision.

2.7.

The Juncker Commission worked very hard to combat tax offences and avoidance: 26 legislative initiatives and 57 initiatives of all types. Two anti-money laundering and counter-terrorist financing directives stand out in particular: the fourth and fifth Anti Money Laundering Directive (2015 and 2018). The fifth Directive, whose implementation was completed in January 2020, improved the identification of holders and owners, exchanges of information and cooperation between FIUs, extended the scope of obliged entities and introduced monitoring of virtual currencies. The practical results are unsatisfactory: there are still many shortcomings and gaps, although the Commission is highly active within the scope of its limited powers (2019 assessment) (17). Very recently, the European Court of Auditors launched an audit to assess the effectiveness of anti-money laundering measures in the banking sector (18) and the European Commission referred three Member States to the Court of Justice of the European Union (ECJ) for failing to fully implement the 4th Anti Money Laundering Directive (19).

2.8.

On 7 May 2020, the European Commission presented a new action plan for a comprehensive Union policy on preventing money laundering and terrorist financing (20) and a Delegated Regulation (21) with the list of countries and jurisdictions that are not working together to achieve these ends. Based on the assessment of the divergences in the way the existing legislative framework is applied and of the ‘serious weaknesses in the enforcement of the rules’, and expressing a desire for ‘zero tolerance for illicit money within the European Union’, the plan is structured around six pillars: — ensuring the effective implementation of the existing framework, starting with the full transposition of the AML directives, — establishing a single EU rule book by means of an amended directive and a regulation, — establishing procedures and creating an EU-level supervisory body by means of a legislative proposal, — establishing a support and cooperation mechanism for FIUs and interconnecting national central registers of bank accounts, — enforcing criminal law provisions and improving the exchange of information, — strengthening the international dimension of the EU framework. Four legislative proposals will be presented in the first quarter of 2021 to develop these pillars.

2.9.

The second main area where the European Commission has taken action is tax avoidance, in relation to initiatives on digital taxation and the corporate tax base. Its strategy has targeted ‘effective taxation’ that would make multinationals pay the appropriate amount of tax where they generate value, in keeping with the OECD’s BEPS action plan, in particular by limiting the erosion of the corporate tax base through deductions from interest, royalties and other financial benefits. The main rule for this has been the ATAD (2016), amended in 2017 to include hybrid mismatches (ATAD 2) (22). Its results cannot yet be assessed. There has also been legislation to facilitate the resolution of disputes arising from double taxation (23). A new Regulation on controls on cash entering or leaving the EU was enacted in 2018 (24).

2.10.

The European Commission has taken account of tax avoidance in its legislative initiatives on digital taxation and on the corporate tax base. In 2018, it presented two directives: one relating to the taxation of companies with a significant digital presence and another on a tax on the revenues of large digital companies. In 2016, it proposed a further two on the common corporate tax base — CCTB — and the common consolidated corporate tax base — CCCTB. The latter is of great significance in combating tax avoidance. Parallel discussions at the OECD and opposition in some Member States have delayed the adoption of these Directives. To address this situation, the Commission presented a communication (2019), which proposes to launch a debate on adopting decisions on tax matters by qualified majority.

2.11.

Cooperation between the tax authorities and other Member State institutions through the automatic exchange of information (AEOI (25)) on tax, and transparency, are key. As many as six directives on administrative cooperation (DACs) have been adopted. From the first (2011/16/EU (26)) to the last ((EU) 2018/822 (27)), all of them have extended the obligation to disclose the names of the beneficial holders of accounts, financial assets and transactions, and all products, including insurance and dividends. Progress has been made with regard to requirements of AEOI on tax rulings and financial information relating to large companies, by country (country-by-country reporting, CBCR (28)). Directive (EU) 2019/1153 of the European Parliament and of the Council (29) regulates the use of financial and other information for the criminal prosecution of offences.

2.12.

The Juncker Commission tackled the secret agreements between some Member States and multinational companies by means of which these companies hardly pay any tax in these countries. It also introduced tax indicators into the European Semester. The latest CSR indicate that in some Member States the implementation of legislation is unsatisfactory with regard to aggressive tax planning or the identification of beneficial owners. There is clear room for improvement in cooperation between the Member States. Despite some progress, there is no widespread reduction in the levels of fraud, money laundering and avoidance, which in some cases — such as flows of capital to letterbox companies — are even increasing.

2.13.

In the last five years, the EESC has adopted 25 opinions on these issues. The EESC has generally supported the measures proposed by the Commission. Sometimes, it went further in its requirements, in line with the European Parliament’s position.

3.   General observations and recommendations

3.1.

The COVID-19 pandemic crisis — the most serious that Europe has faced since the end of the Second World War — must be at the heart of any economic and social considerations and proposals. With regard to this opinion, it seems clear that a drastic reduction in the economic volume of tax offences and avoidance would give States, and the EU itself, some of the financial resources required to deal with the health, economic and social impact of the pandemic. The EESC believes that involving the EU institutions, national governments and civil society in the adoption of all the measures needed to take long-lasting and effective action against tax offences and avoidance is now, more than ever, an undeniable political and moral imperative. It is also urgent.

3.2.

The main aim of the present opinion is to provide an overview and build on the views expressed in previous EESC opinions so as to formulate proposals on how to make the fight against these offences more effective. Attention needs to be paid to the links between the various tax offences and how they are connected to tax avoidance, by means of shared channels that flow towards tax havens.

3.3.

The EESC acknowledges the intention of the Commission and the European Parliament to promote initiatives against tax crimes, tax evasion and fiscal dumping, and regrets that some of the main initiatives, such as those affecting corporate tax, VAT fraud and aggressive tax planning, are being blocked or may be pared back by some Member States and by the lack of cooperation between them.

3.4.

The EESC proposes launching a European pact to effectively combat tax fraud, evasion and avoidance and money laundering. The EESC calls on the Commission to promote a political initiative involving national governments and the other European institutions in achieving this pact. Cooperation between the Member States must be one of the pillars of the pact.

3.5.

The effective implementation of the pact should give the EU and its Member States additional resources to those generated by growth to fund their plans for the recovery from the pandemic, the green and digital transformation of their economies, and the construction of a sound European Pillar of Social Rights. Taking respect for the tax sovereignty of the Member States as a basis, the EESC calls on the political leaders of the EU and on national governments — while demonstrating the responsibility and generosity required by our current tragic circumstances — to reach an agreement on the details of the pact that the EESC has proposed. In the EESC’s view, the development of the consensus to achieve the European Fiscal Pact against tax crime, tax avoidance, money laundering and terrorist financing should be based on: (a) the commitment of the Member States and the European institutions to take all necessary additional legislative and administrative measures to effectively combat these offences and bad practices; (b) bolstering the political will for cooperation between the Member States and with EU institutions, leading to the introduction of effective administrative, police and judicial cooperation procedures to achieve the pact’s objectives; (c) the Member States’ commitment to ending unfair tax competition and unblocking the relevant directives related to the pact’s objectives; and (d) the involvement of civil society organisations in the pact.

3.6.

The involvement of civil society organisations in such an agreement and in creating greater social awareness of tax issues is key. EU citizens are very keen for there to be sufficient resources for certain high-quality public services — particularly those of health and research at the moment — and adequate social protection systems. Companies that meet their tax obligations — the majority — want to see an end to tax evasion and avoidance by certain companies, which creates unfair competition with them.

3.7.

The EESC agrees with the European Parliament’s belief that ‘fair taxation and the determined fight against tax fraud, tax evasion, aggressive tax planning and money laundering have a central role to play in shaping a fair society and a strong economy while defending the social contract and the rule of law’ (30). Therefore, it is concerned by the extent of the tax gap that these crimes and bad practices generate in tax revenues, as well as by recent tax developments that have shifted the tax incidence to labour income and from the financial sector to the real economy, where SMEs are subject to greater tax pressure than are multinationals.

3.8.

The introduction of tax indicators in the European Semester country reports marked a step forward. However, the assessment of its results shows that the functioning of FIUs and AEOIs, and the cooperation between the tax authorities are unsatisfactory in some EU Member States, in terms of both money laundering and tax evasion and avoidance. The EESC suggests to the Commission that the tax indicators be given the same status as the other indicators in the European Semester and that a procedure be established to assess the efficiency, equity, sufficiency and proper functioning of tax systems.

3.9.

The EESC supports the new Action Plan for a comprehensive Union policy on preventing money laundering and terrorist financing and thinks it should be implemented urgently. It supports the creation of a European supervisory body that ensures maximum cooperation between Member States’ tax authorities and FIUs and that holds direct responsibility for monitoring and investigating obliged entities from all areas, and has sufficient human and technological resources to adapt to the continuous developments in crime. It calls on the Commission to consider, as the most appropriate formula for this, the creation of a European Agency to combat fiscal, economic and financial crime and money laundering and to monitor compliance with legislation and the effectiveness of administrative actions. The EESC thinks the EU needs to voice a single opinion in international forums such as the FATF (OECD), the G20 and the UN. The EESC believes that the Commission should help Member States by setting up training mechanisms such as a European tax academy, as proposed in its opinion on the Fiscalis programme (10/2018) (31).

3.10.

The anti-money laundering legal framework must allow access to information relating to account holders, and owners of companies and trusts, while complying with data protection rules and the relevant case-law of the ECJ. Professionals who are required to report suspected money laundering practices that they detect must be protected. The EESC is pleased that the action plan proposes a new whistle-blower protection system and requests that it be set up earlier than December 2021. The EESC shares the Commission’s view on the need to ensure that the measures adopted entail the smallest possible additional administrative and financial burden for the Member States and the obliged entities.

3.11.

The measures for supervising third countries included in the fifth Anti Money Laundering Directive will only be effective with a realistic list of high-risk countries. The EESC advocates a clear and transparent methodology and shorter evaluation periods. It believes that the new list, which only includes 20 countries and territories, should be approved as soon as possible and should include some other countries, such as those that have played a leading part in recent scandals. It regrets the obstacles put in place by some EU countries preventing access to information on transactions in tax havens.

3.12.

The Ecofin list (2017) of tax havens with regard to tax evasion and avoidance was updated in February 2020. Unlike other lists, this one has the advantage of including both those that do not accept AEOIs and those offering companies special tax systems. The fact that the European list rules out the existence of EU tax havens on principle is open to criticism. However, in the European Semester CSRs, the Commission pointed to certain Member States as undermining the tax bases of their EU partners. Although the threat of inclusion in the blacklist acts as a deterrent by affecting reputation, the sanctions are insufficiently effective.

3.13.

To ensure that the jurisdictions in the list undertake the required reforms, the EESC proposes that, after the next assessment, the Regulation be reformed to prohibit those that have not done so from carrying out financial transactions with the EU. The measures also need to affect companies avoiding paying tax. One effective measure would be to refuse to grant COVID-19 public aid to companies that carry out unjustified transactions with jurisdictions on the list, as has been approved by some Member States. The EESC calls for the possibility of excluding these companies from public procurement to be examined.

3.14.

Multinationals operate globally and under common management, but tax rules are adopted at national level without taking account of how they interact with the systems of other countries, in cases when the tax competition with them is not fair. Certain jurisdictions adopt tax systems that undermine the tax bases of other territories. This, together with a widespread fall in rates, has caused countries to engage in a race to the bottom on tax in order to attract FDI, and has given rise to numerous loopholes and legal imbalances. Many multinationals restructure their businesses in order to significantly reduce their tax bill. To this end, they resort to certain intra-group operations to artificially transfer a large part of expenditure to medium or high-tax territories, while profits are declared in low or zero-tax jurisdictions, where they have reached secret tax rulings with governments. The transfer of profits by large companies in the digital economy is particularly easy in this environment. The EESC hopes that applying BEPS standards and the ATAD will open the door to changing this situation. It is too early to evaluate the results. If these measures are to be effective, cooperation between all the Member States — the main objective of the European pact — is essential.

3.15.

The EU is vulnerable to tax avoidance (32). Mobility of capital, goods and people on the internal market contrasts with a lack of coordination on tax policies. Following the crisis in 2008, progress in economic governance focused on supervising expenditure. The situation has changed in the last few years, but coordination of fiscal policies remains insufficient. The introduction of tax indicators in the European Semester is a step forward that has served to highlight the harmful nature of some Member States’ tax systems.

3.16.

In 2009, the G20 launched a process of cooperation in order to tackle tax evasion and avoidance. The OECD approved a new global standard for the exchange of information — the Common Reporting Standard (CRS) — based on AEOI. Since January 2018, most jurisdictions in the international community have committed to implementing it. An overall assessment of compliance is pending.

3.17.

In the EU, AEOI is regulated by the DAC, which has been reformed several times to bring it into line with the CRS. The DAC has extended the obligation of AEOI to natural and legal persons and to the main types of revenues, but there are gaps that need to be addressed. The issue of information on the beneficial owner of assets and funds and of opaque intermediary vehicles (certain trusts, letterbox companies, foundations, etc.) remains unresolved, as the ‘Panama Papers’ scandal showed. The same goes for the anonymity of ‘bearer shares’, which have no publicly-known owner, and are still permitted in certain countries. The DAC’s scope should be extended to works of art and other high-value assets located in free ports and customs warehouses. The issue of citizenship or residence schemes offered by 19 Member States in exchange for investment, and which in many cases are used for tax offences, should also be resolved.

3.18.

The OECD’s BEPS Action Plan is the global initiative to combat tax base erosion and profit shifting. The progress reports for each of the 15 actions it sets out have a different legal nature. Some are best practices and others have the status of minimum standards, with the ability to oblige States to incorporate their content into company law. Some key issues, such as the taxation of the digitalised economy or the distribution of taxing rights by country, are pending resolution at global level. Some countries and civil society organisations have criticised the BEPS process and called for the reform of the international tax architecture to be transferred to the UN’s Committee of Experts on International Cooperation in Tax Matters. The EESC is of the view that the OECD has to complete its work and work alongside the UN Committee in order for its conclusions to be shared and rolled out.

3.19.

The ATAD is the centrepiece of the EU’s anti-avoidance tax strategy. They ensure that the Member States implement the BEPS reports in a coordinated way and strengthen their legal status by making compliance subject to CJEU oversight. In some cases, their anti-abuse rules go further than BEPS, as is the case for ‘exit taxes’, the rules on ‘controlled foreign companies’, anti-hybrid rules and the establishment of an anti-abuse general clause. However, investment clauses were not included due to the opposition of some countries, even though they were advocated by the Commission and a majority of Member States.

3.20.

The European Commission’s investigations into secret tax agreements signed by some large multinationals and the governments of some EU Member States highlighted the significance of the facilitated tax avoidance arrangements: tax rates ranging from 0,05 % to 2 % on profits transferred from other European countries. In response, the EU reformed the DAC to make mandatory the automatic communication of any cross-border tax ruling signed by a Member State.

3.21.

A more recent reform of the DAC extended the automatic exchange of basic information on large enterprises (33), on a country-by-country basis (CBCR (34)), following the requirements of BEPS Action 13. However, public access to this information is still not permitted. The European Commission has proposed a reform of the Accounting Directive 2013/34/EU of the European Parliament and of the Council (35) to allow for the publication of the Country-By-Country Reports. In the EESC’s view this should apply, at least, to companies receiving public aid.

3.22.

One very important proposal by the Commission in the area of business taxation is its proposal to harmonise the corporate tax base. In its first phase — CCTB — the tax base would be calculated on the basis of common rules. In the second — CCCTB — the profits and losses that individual subsidiaries of a company or multinational group have in each Member State would be consolidated across the EU. The resulting net balance would be split between the different countries in which the company was active, with taxation in each one based on a predetermined formula (assets, sales and employment). There is a hope that with this consolidation, a large part of aggressive tax planning operations would cease. The EESC agrees that taxation should be based on a weighted formula that takes into account the location of sales, employment and assets. The value of intellectual property rights, data and other intangible assets must be rigorously assessed.

3.23.

According to the Commission and the OECD, the difficulty of existing tax rules capturing revenues from new business models in the digital economy has in different situations and countries led to an under-taxation of digital companies compared to traditional businesses. The European Commission adopted two proposals (in March 2018) for directives for the taxation of the digital economy (36), in line with the OECD work to be completed by the end of 2020; one with an interim solution and the other with the definitive solution. The interim solution sets a 3 % rate on sales of digital services by large companies (and not on profits or where value is generated). It is blocked in the Council. The Commission now supports a global solution on the corporate taxation of companies under the aegis of the OECD’s work, but if a solution is not reached by the end of 2020, it will resume its initiative for taxing large digitalised companies.

3.24.

Both the European Commission and the EESC (37) have expressed their position on the need to launch a debate on the necessary conditions for a progressive shift from unanimity to qualified majority voting on tax matters. The time limits for this change may be shorter or longer depending on the Member States’ sensitivity to the tax area on which action is to be taken.

3.25.

The EESC believes that the huge challenges facing the EU and all of its Member States because of the COVID-19 pandemic are incompatible with any lax approach with regard to crimes that undermine economic growth and public finances. Similarly, it argues that cooperation and solidarity between the Member States, the EU institutions and sections of European civil society need to be strengthened.

4.   Specific observations and recommendations

4.1.

The EESC recommends extending the solution set out in the 5th Anti-Money Laundering Directive to the field of tax evasion, i.e. to oblige countries to establish a centralised and public register of beneficial owners of companies and trusts. A proper procedure should also be established to identify the beneficial owners who are behind companies based outside the EU. All such registers must operate properly and proportionately in order to facilitate the work of businesses that must comply with requirements. This applies in particular to SMEs, which should be offered support services.

4.2.

The need to identify the beneficial owners of all companies and trusts should be expanded to identifying the holders of bearer shares. The EESC calls on the Commission to examine the possibility of establishing a procedure to allow this, and, if it is not possible, to ban this practice at EU level.

4.3.

The remaining gaps in the text of the DAC must be closed in order to extend the AEOI to works of art and other high-value assets situated in free ports, customs warehouses and special economic zones.

4.4.

The Member States should be urged to phase out citizenship or residence schemes in exchange for investment that facilitate tax crimes. This is the position of the European Parliament and of the EESC, in its opinion SOC/618 (38). For as long as such schemes continue to exist, the necessary supervisory measures should be adopted to ensure that investors comply with their tax obligations.

4.5.

Measures agreed within the OECD and the Integrated Framework on Trade-Related Assistance should be introduced with regard to the allocation of tax revenue to market jurisdictions such as India and China. The ATAD must be revised to include rules on the fiscal treatment of low-tax jurisdictions, in particular the repatriation of dividends or capital gains from subsidiaries abroad, if they have not been taxed at a minimum level in another country.

4.6.

In accordance with the request included in the March 2019 European Parliament resolution (39), the EESC calls on the Commission and the Member States to explore the concept of minimum effective taxation of corporate profits, and its possible application.

4.7.

Cooperation between Member State tax authorities and supervisory bodies should be stepped up, particularly in the area of tax offences and money laundering, and more robust cooperation between Europol and national police forces should also be promoted.

4.8.

The national FIUs should be supported financially and technically to enable them to carry out their tasks effectively.

4.9.

The huge amount of capital flowing through letterbox companies based in the EU requires a strong response from its policy-makers. The EESC calls on the Commission to carry out a study on the role of letterbox companies in tax fraud, evasion and avoidance (following the application of ATAD 1 and 2) as well as money laundering and, in the light of its conclusions, to take all necessary measures to prevent such crimes and bad practices from being carried out through this type of company. The ATAD, the Capital Requirements Directive and the Anti Money Laundering Directive should be amended, if necessary.

4.10.

The EESC proposes that in the forthcoming EU trade, investment or economic partnership agreements, or in the review of existing ones, a tax chapter should be envisaged, in compliance with WTO principles and rules, including the results of the BEPS/OECD programme, as well as clauses on tackling tax fraud and evasion, aggressive tax planning and money laundering, and cooperation between tax administrations.

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(1)  From here onwards the acronyms are used in English.

(2)  OJ C 353, 18.10.2019, p. 90.

(3)  C(2020) 2800 final.

(4)  The FATF’s High-Risk Jurisdictions contains only two states (North Korea and Iran). The FATF’s Jurisdictions under Increased Monitoring includes 18 countries. Both were updated on 21 February 2020.

(5)  The list set out in the Commission Delegated Regulation (EU) 2020/855 of 7 May 2020 (OJ L 195, 19.6.2020, p. 1) contains 20 high-risk territories in relation to money laundering and terrorist financing. The revised list of non-cooperative jurisdictions concerning evasion and avoidance contains 12 jurisdictions, in addition to a further 20 which are subject to surveillance.

(6)  Lipton, D, Shining a Light, p. 4; and Shaxson, N, Tackling Tax Havens, p. 7, quoting Zucman, G. (2017). IMF, F&D, September 2019.

(7)  Bhatt, G.: Editor’s Letter. IMF. Ibidem, p. 2.

(8)  European Parliament resolution of 26 March 2019 on financial crimes, tax evasion and tax avoidance, point 24.

(9)  EP, Ibid, points 142 and 143.

(10)  Shaxson, N. Tackling Tax Havens. IMF, Ibid, p. 7.

(11)  EP, Ibid, point 19.

(12)  EP, Ibid, point 328.

(13)  Damgaard, J., Elkjaer, T. Johannesen, N. The Rise of Phantom Investments, pp. 11-13. IMF, F&D, September 2019.

(14)  UN: UNODC Money-Laundering and Globalization.

(15)  EP, Ibid, points 236 and 237.

(16)  EP, Ibid, point 235. Financial Times, 23 March 2020.

(17)  COM(2019) 360 final, 370 final, 371 final and 372 final of 24 July 2019. Of particular interest: COM(2019) 373 final — Report on the assessment of recent alleged money laundering cases involving EU credit institutions.

(18)  11 June 2020: https://www.eca.europa.eu/en/Pages/DocItem.aspx?did=53979

(19)  2 July 2020: https://ec.europa.eu/commission/presscorner/detail/en/IP_20_1228

(20)  C(2020) 2800.

(21)  Commission Delegated Regulation (EU) 2020/855 of 7 May 2020.

(22)  Council Directive (EU) 2016/1164 (ATAD) (OJ L 193, 19.7.2016, p. 1) entered into force on 1 January 2020 in Member States that did not have their own legislation (in 2024 in other Member States). Council Directive (EU) 2017/952 (ATAD 2) (OJ L 144, 7.6.2017, p. 1) will enter into force on 1 January 2022.

(23)  Council Directive (EU) 2017/1852 (OJ L 265, 14.10.2017, p. 1).

(24)  Regulation (EU) 2018/1672 of the European Parliament and of the Council (OJ L 284, 12.11.2018, p. 6).

(25)  Automatic exchange of information — AEOI.

(26)  Council Directive 2011/16/EU (OJ L 64, 11.3.2011, p. 1).

(27)  Council Directive (EU) 2018/822 (OJ L 139, 5.6.2018, p. 1).

(28)  Country by country reporting — CBCR.

(29)  OJ L 186, 11.7.2019, p. 122.

(30)  EP, Ibid, point 328.

(31)  EESC opinion on Fiscalis 2021-2027, ECO/470 (OJ C 62, 15.2.2019, p. 118).

(32)  Cobham A. and Garcia-Bernardo J., Time for the EU to close its own tax havens, Tax Justice Network, 4 April 2020.

(33)  The locations of its employees, sales, declared profits and taxes paid.

(34)  Country by country reporting — CBCR.

(35)  OJ L 182, 29.6.2013, p. 19.

(36)  COM(2018) 147 final, Proposal for a Council Directive laying down rules relating to the corporate taxation of a significant digital presence; and COM(2018) 148 final, Proposal for a Council Directive on the common system of a digital services tax on revenues resulting from the provision of certain digital services.

(37)  COM(2019) 8 final, Towards a more efficient and democratic decision making in EU tax policy.

(38)  EESC opinion on Investor citizenship and residence schemes in the European Union, SOC/618 (OJ C 47, 11.2.2020, p. 81).

(39)  EP, Ibid, points 78 to 85.

Opinion of the European Economic and Social Committee on ‘The rule of law and its impact on economic growth’

(Own-initiative opinion)

(2020/C 429/03)

Rapporteur:

Jukka AHTELA

Plenary Assembly decision	20.2.2020
Legal basis	Rule 32(2) of the Rules of Procedure
Section responsible	Economic and Monetary Union and Economic and Social Cohesion
Adopted in section	20.7.2020
Adopted at plenary	18.9.2020
Plenary session No	554
Outcome of vote (for/against/abstentions)	215/2/1

1.   Conclusions and recommendations

1.1.

The rule of law has come under pressure recently both within the EU and outside it. This development is worrisome as it has the potential to undermine respect for fundamental rights — as well as the other values set out in Article 2 TEU.

1.2.

The weakening of the rule of law will affect the functioning of society, fundamental rights, civil society, as well as the economy. The question therefore is where this kind of backsliding could lead the EU and the European economic and social model.

1.3.

To function well, the single market needs to rely on a transparent and stable legal framework that also covers the enforcement of common rules, as national courts must trust that courts in other Member States are equally committed to upholding the values on which the EU is founded.

1.4.

The separation of powers, and in particular an independent judiciary that has the power to review government behaviour, is key to investment and economic growth.

1.5.

The EESC calls on the European Commission to make efforts to measure the economic impact of the rule of law. This includes developing a solid system of measurement that takes the substantive part of the rule of law as well as the procedural part explicitly into account.

1.6.

Many countries have laws that are perfectly compatible with the rule of law but are imperfectly enforced. It is therefore important to focus on proper implementation.

1.7.

The EESC welcomes the efforts of the European Commission and other institutions to develop appropriate tools to defend EU values and promote a rule of law culture. However, the EESC considers that the effectiveness of existing tools, such as Article 7 TEU and the rule of law framework and infringement procedure, the annual EU Justice Scoreboard and the new Rule of Law Mechanism, could still be improved and should be complemented by measures focused on the rule of law, but geared more effectively towards economic considerations.

1.8.

In the European Semester, the Commission should accelerate highlighting the relevance of the rule of law as one of the key elements underpinning a competitive and sustainable economy. The EESC recommends that national follow-up review processes be created, which include representatives from civil society and the social partners, and that the overall involvement of CSOs and the social partners be increased throughout the Semester process.

1.9.

The EU’s annual rule of law review process should be made as open as possible to civil society. The findings and recommendations of the European Commission should be discussed publicly both at the national and the European level, and followed up by specific measures to address incidents and negative trends, including for the economy. Civil society, including the social partners, should be involved more closely and also be involved in the follow-up. The EESC has proposed an annual forum of civil society organisations, which would contribute to the review cycle with its diverse representation.

1.10.

Civil society organisations as well as the media play a crucial role in countries where governments are moving away from the rule of law. They enable the checks and balances that hold governments accountable. The EESC calls for increased financial and substantive support for organisations involved in defending and promoting the rule of law and fundamental rights.

1.11.

Membership of the EU is very valuable for all members as long as non-compliance with the basic rules is sanctioned. If no sanctions apply, the value of membership for all complying members is reduced.

1.12.

It seems that awareness regarding the crucial importance of the rule of law both as a fundamental value but also as being instrumental to economic growth is lacking among the public in many Member States. Therefore, the EESC calls for a permanent awareness-raising strategy to alert EU citizens to just how crucial the rule of law is.

2.   Introduction

2.1.

The rule of law is one of the values on which the European Union is built (Article 2 TEU) and is a precondition for achieving the other values that the Union aims to promote (1).

2.2.

However, the rule of law has come under pressure recently both within the Union and outside. This development is troublesome as it might mean less respect for the other values named in Article 2.

2.3.

This pressure has an impact on the functioning of and trust in the judiciary. Further implications are felt by civil society with the threat of the judiciary losing its role as a bulwark and guardian of fundamental rights.

2.4.

As the EESC noted in its opinion (2), ‘Respect for the rule of law also ensures legal certainty and a level playing field for business initiatives, innovation, investments and fair competition across the internal market for the benefit of consumers and citizens’.

2.5.

The question therefore is where this kind of backsliding could take the European economic and social model. The weakening of the rule of law might impact the functioning of society, fundamental rights, civil society and the economy.

2.6.

If not stopped, the threats to the rule of law and the overall deterioration of fundamental rights are likely to negatively affect the mutual trust that underpins the internal market and hence economic growth in the EU.

2.7.

In the Communication (3) on ‘Strengthening the rule of law within the Union’, the Commission refers to the work of the OECD on the importance of the rule of law to development and the overall business and investment climate. In this connection, the EESC has likewise underlined the need to give more consideration to economic aspects of the rule of law.

2.8.

Disregard for the rule of law hampers balanced economic and social development in line with the Sustainable Development Goals (SDGs), and the pursuit of the Union’s overarching goal ‘to promote peace, its values and the well-being of its peoples’ (Article 3 TEU). Promoting the rule of law is one of the targets of SDG 16.

2.9.

When dealing with rule of law deficiencies in the EU, the impact on economic growth has received less attention. Research focuses on the impact of state and public governance at large on economic growth, especially in developing countries. This opinion, therefore, focuses on the economic impact on the rule of law in the EU.

2.10.

The aim of this opinion is to help stakeholders understand that the European values enshrined in Article 2 TEU, in addition to their intrinsic value, also represent an economic value.

3.   Defining the rule of law

3.1.

At European level, the rule of law is a well-established principle enshrined in the Treaties and based on the case law of the Court of Justice of the European Union (CJEU), the European Court of Human Rights (ECHR), and the Council of Europe, as well as on the relevant work of the Venice Commission. The rule of law requires that all public powers act within the constraints laid down by law, in accordance with the values of democracy and fundamental rights, and under the control of independent and impartial courts (4).

3.2.

By specifying the individual components of the rule of law, substantive components can be separated from procedural ones. The most basic and central component of the rule of law is equality before the law, i.e. the notion that the law treats everybody the same and refers to the substance of the law.

3.3.

Procedural equality before the law is a necessary condition for achieving a high level of rule of law. Nevertheless, it is not sufficient as both substantive and procedural equality are needed. A number of procedural components are needed to make sure that the letter of the law is implemented. The separation of powers is key as it helps to ensure that the government also remains within the confines of the law. The judiciary will only be able to keep the executive power in check if both judges and prosecutors are independent from the other two branches of government.

3.4.

Moreover, a number of minimum standards in law enforcement need to be safeguarded: everybody has to enjoy fundamental rights, have the right to a fair trial, etc. Finally, law enforcement needs to be impartial, meaning that nobody is discriminated against and that the judiciary is free of corruption (5). According to Article 2 TEU, the rule of law and democracy go hand in hand as founding values.

4.   Why the rule of law is conducive to sustainable economic growth

4.1.

Sustainable economic growth is considered to be one of the most important indicators of the health of an economy. Increasing economic growth is associated with the increasing wealth of a country and its population. Moreover, a market economy is unable to function without basic rules and procedures, including rules regarding private ownership and the voluntary transfer of ownership (i.e. contract law). More generally speaking, a market economy will only thrive on the basis of stable and predictable rules, as exemplified by the internal market and the economic and monetary union (EMU) as the engines of the European economy.

4.2.

Economic growth implies that more goods and services become available on a per capita basis over time. The only means to achieve that is to increase productivity. This, in turn, presupposes investment in both capital and education (also called ‘human capital’). To establish a connection between the rule of law and economic growth, we thus need to ask how the rule of law can affect the general propensity to invest.

4.3.

Investment, in particular long-term investment, will only take place if potential investors expect the investment environment to remain predictable and favourable over many years. The rule of law plays a crucial role in a government’s ability to offer such a stable environment.

4.4.

An executive power that is not constrained by the other two branches of government — the legislative and the judiciary — could make many promises to potential investors regarding their freedom to set prices at will, not to be taxed highly (or at all), to transfer profits back to their country of origin, etc.

4.5.

However, an unconstrained government is incapable of making binding promises, i.e. entering into credible commitments. The separation of powers, and in particular an independent judiciary that has the power to review government behaviour and uphold private contracts is key to investment and economic growth.

4.6.

As well as the independence of the judiciary, its impartiality is also key. If judges can be bribed, i.e. they are not impartial, then, rather than being based on the principles of the rule of law, cases are decided in favour of the party that is able (and/or willing) to pay the higher bribe. Thus, corruption is incompatible with the rule of law.

4.7.

If judges discriminate against certain groups, then the law is not applied equally. Any kind of partiality will make the legal environment less certain, which is not only expected to lead to lower overall investment levels but also to fewer transactions. Partial courts will therefore slow down economic growth.

4.8.

The accessibility of courts is another key factor. If it takes years to reach a court decision, this might have a number of detrimental effects on the economy: contracting partners in breach of contract might use the court strategically if it is commonly known that a court decision will take a long time. Delayed justice — whether this involves delayed decision-making or late implementation — makes contracting less attractive, leading to fewer transactions and exactly the same effects as those caused by the lack of an independent judiciary, as described above.

5.   How to measure the rule of law

5.1.

To ascertain the rule of law’s effects on economic growth, it first needs to be measurable. However, this is not easy as it is a multidimensional concept and various difficult coding decisions need to be made, such as whether all dimensions should be given the same weight.

5.2.

Some of the early measures were driven by data availability rather than theoretically derived conjectures. Although there is a very high correlation between the substantial and procedural aspects of the rule of law (6), the substantive component, equality-before-the-law, does not figure in most of the better-known indicators of the rule of law. A solid system of measurement that takes the substantive part of the rule of law as well as the procedural part explicitly into account should therefore be developed by the Commission.

5.3.

Another important issue regarding measurement is the question of whether de jure provisions or their actual implementation are measured. Many countries have laws that are perfectly compatible with the rule of law but ineffective enforcement. It is therefore important to focus on implementation.

5.4.

The question of how best to use available measures is also important. On the one hand, aggregate measures can be useful for getting a first impression of what is going on in a particular country. On the other hand, if ‘actionable’ advice is sought, i.e. analyses that can have direct policy implications, aggregate measures are not very helpful.

5.5.

Despite the difficulty involved, the EESC recommends that the European Commission explore the possibility of measuring the economic impact of the rule of law both in the Member States and in the candidate countries, and possibly link this to the rule of law review cycle.

6.   What do the existing data say?

6.1.

Cross-country studies analysing the effects of the rule of law on economic growth have shown that, on average, countries adhering more to the rule of law grow faster than countries adhering less (7). This does not mean that individual non-rule-of-law-abiding countries cannot achieve high levels of economic growth. These are called ‘outliers’ by economists. Such cases are possible and do occur but will not occur with high frequency.

6.2.

In estimating the effects of the rule of law on economic growth, the respective income levels also need to be taken into consideration. All other things being equal, countries already enjoying a high per capita income level tend to find it more challenging to achieve high growth rates than countries starting from a lower level. This is an indication of the so-called ‘convergence effect’.

6.3.

Aggregate measures of the rule of law are not very helpful for identifying specific transmission channels through which it could affect economic growth. This is why the focus here is on a limited number of the core components of the rule of law in this section.

6.4.

It was already shown above that an independent judiciary seems to be crucial for ensuring that governments remain within their constitutionally defined constraints.

6.5.

Analysing the effects of de jure and de facto indicators of judicial independence separately, it turns out that de jure provisions do not have any effect on economic growth. De facto provisions, on the other hand, are strongly correlated with faster economic growth (8). Improving de facto levels of judicial independence has an economic payoff: countries that have done so have received an extra dividend, i.e. they have experienced faster growth (9).

6.6.

It has been shown that judicial independence and judicial accountability are complementary, rather than competing with each other (10). A number of judicial guarantees, such as the right to counsel, limit the discretionary leeway of judges. As such, they can be interpreted as ensuring judicial accountability. Interestingly, it has been shown that some such guarantees are not only conducive to judicial accountability and, in turn, the rule of law, but also to economic growth. This is the case with regard to the timeliness of court decisions, with written — as opposed to oral — procedures and with the right to counsel (11).

6.7.

Corruption is not only a crime, it is also incompatible with the rule of law. However, measuring corruption is fraught with difficulties. Since the payer and the recipient of the bribe usually have no incentive to signal that a bribe was involved, objective data are impossible to gather. Most literature has relied on so-called ‘corruption perceptions’, i.e. the subjective evaluation of how widespread corruption is in a particular country or in a specific public service.

6.8.

Although proving that corruption is detrimental to economic growth remains difficult, by now a host of studies point in that direction. For instance, it has been shown that it reduces investment (12). Corruption also has other distortive effects: for example, it could lead to higher military budgets (13). It also affects the structure of public spending, with the focus moving away from important public services such as health and education towards less productive activities (14). The OECD summarises a recent study as: ‘… it is clear that corruption has a direct impact on the cost of a project both for the private and public sectors. Its indirect effects include damaging public institutions, impairing citizens’ trust in their government thereby lowering incentives for innovation, and increasing social inequality. But they also increase the cost of doing business, a tax on economic activities, that then is translated to the ultimate users or consumers of the projects’ (15).

6.9.

Prosecutors that are both independent and accountable are conducive to high rule of law levels because crimes will be prosecuted independently from political pressure, the particular identity of a criminal suspect and other similar factors. It has been shown that prosecutors that are actually independent are associated with lower corruption levels (16). Given that corruption is detrimental to growth this can, therefore, be interpreted as indirect evidence that independent prosecutors — as one component of the rule of law — are conducive to economic growth.

6.10.

Finally, let us look at judicial efficiency, remembering the oft-quoted saying that justice delayed is justice denied. One of the most impressive studies in the area focuses on India (17). Differences in court delays are regressed on measures of output in agriculture, industry and the service sector. It shows that judicial delays have a negative effect on output growth in all three sectors of the economy.

7.   Possible policy implications

Existing EU tools

7.1.

The EESC has called for the tools at the EU’s disposal to be enhanced to counter backsliding with regard to fundamental EU values (18). The EESC welcomes the efforts of the European Commission and other institutions to develop appropriate tools to defend EU values and promote a rule of law culture. However, the EESC considers that the existing tools, such as Article 7 TEU and the Rule of Law Framework, the infringement procedure, the annual EU Justice Scoreboard and the new Rule of Law Mechanism could still be improved and should be complemented by measures focused on the rule of law but geared more effectively towards economic considerations.

7.2.

In the European Semester, the European Commission considered the relevance of the rule of law to the business environment in its drive to promote growth-enhancing structural reforms in areas such as effective justice systems and the fight against corruption. Currently, input to the EU Justice Scoreboard originates mainly from those supplying justice services such as the ministries of justice, associations of judges, judicial councils, etc. Curiously absent are those demanding judicial services who might offer valuable suggestions on how to improve the various justice systems. Civil society organisations (CSOs), as well as the social partners, could assume an important role in mediating information. The EESC urges the Commission to accelerate highlighting the relevance of the rule of law as one of the key elements underpinning a competitive and sustainable economy. Rule of law indicators should be incorporated in a more visible way and include issues such as legal certainty and access to remedies for businesses and workers. Efforts should be made to improve the follow-up procedure with a view to better implementation of recommendations. The EESC recommends that national follow-up review processes be created, including representatives from civil society and the social partners, and that the overall involvement of CSOs and the social partners be increased throughout the Semester process.

7.3.

The EU’s annual rule of law review process should be made as open as possible to ensure that the findings and recommendations of the European Commission are discussed publicly both at the national and the European level, and followed up by specific measures to address incidents and negative trends. The European Commission should increase involvement of CSOs as they are often the first to suffer when the rule of law is threatened and can therefore serve as a fire alarm (19). The European Commission should also take measures regarding reprisals against civil society organisations due to participation in the process. The EESC has proposed an annual forum of civil society organisations which would contribute to the review cycle. It stands ready to contribute to this process and to ensure broad representation of civil society organisations, including those representing socio-economic interests such as the social partners.

7.4.

The EESC already welcomed the Commission’s proposal to protect the Union’s budget in case of generalised deficiencies as regards the rule of law in the Member States. In this regard, the EESC supported the proposal to make receipt of EU funds by the Member States conditional upon respect for the principle of the rule of law and thought that this conditionality could be extended to the other principles linked to the rule of law set out in the EU Treaties (20).

Possible further policy responses

7.5.

Given that a high level of rule of law is a fundamental value of the EU and in addition has positive effects on economic growth, it is imperative that the EU take measures to safeguard the rule of law.

7.6.

The Court of Justice of the European Union (CJEU) has issued a number of landmark decisions in defence of judicial independence lately. As well as the legal reasons given by the court, there are also economic justifications as to why action by the EU institutions is warranted. To function well, the single market needs to rely on a transparent and stable legal framework that also covers the enforcement of common rules, as national courts must trust that courts from other Member States are equally committed to upholding the values on which the EU is founded.

7.7.

The concept of a single European judicial area is important for business as it allows court decisions made in one Member State to be applied in another. For this project to succeed, it is crucial that all courts within the European Union be independent. If that cannot be guaranteed anymore, the single European judicial area will not only remain incomplete but will also be in decline. The Commission needs to ensure that the principle of judicial independence is upheld in all Member States in order to make the idea of a single European judicial area and free movement of judicial decisions a reality.

7.8.

Every nation state wants to be credible and investor-friendly, offering credible commitments to potential investors. EU membership provides clear benefits to all Member States as it enables all Member States, irrespective of their economic or political history, to make commitments that are more credible. In that sense, membership of the EU can be very valuable for all members as long as non-compliance with the basic rules is sanctioned. Without sanctions, the value of membership for all complying members will be reduced.

7.9.

In other words, non-complying Member States create negative externalities for complying Member States. This is because every time a Member State government does not deliver according to the promises it made by joining the EU and such non-compliance remains unsanctioned, the credibility of EU law will suffer in all Member States. Hence, the value of being a Member State of the EU would be reduced, as in time it would no longer be a signal of credibility. Insistence on compliance with the basic values of the EU is, therefore, fully justified.

7.10.

Many decisions are directly relevant for all citizens of EU Member States. If the voting rights of Member States that are governed by would-be autocrats systematically breaching the principle of the rule of law are not suspended, then these would-be autocrats will be allowed to participate in decision-making that directly affects all EU citizens. This has aptly been called Europe’s ‘other democratic deficit’ (21).

7.11.

In other words, another justification for intervention by the EU is negative externalities created by would-be autocratic governments that extend not only beyond their nation state’s borders, but impact every citizen of EU Member States. In sum, interventions with the aim of upholding or re-establishing respect for the rule of law are fully justified.

7.12.

One means of supporting and promoting the rule of law is to support civil society organisations and the media. The ability of citizens to create associations, meet and express themselves freely, as well as media freedom, are key elements of the rule of law as part of the checks and balances to hold governments accountable. A shrinking civic space also impacts the ability of companies and workers to establish themselves, associate freely, and innovate. Civil society organisations are also an important economic player, contributing to almost a third of employment in the EU (22), and providing services that are fundamental to economic growth, such as in the field of education, health and social protection. The EESC reiterates its call for active EU support of the social partners and civil society organisations in the EU, and notably the development of an EU fund offering financial support for litigation cases relating to violations of democracy, the rule of law and fundamental rights, targeted at civil society organisations (23).

7.13.

There are many reasons why the rule of law should be defended, both from within Member States and by the EU institutions. It seems that the general public in many Member States needs to be made more aware of the crucial importance of the rule of law as both a fundamental value and a vital ingredient to economic growth. One indirect way to defend the rule of law could therefore be to raise awareness of just how crucial it is among the general public in the various Member States. The EESC has already called for an awareness-raising campaign in the form of a deliberate communication strategy (24). The EU needs to invest in information campaigns to promote the rule of law and urgently take measures to support free media.

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(1)  The position is shared by the Commission and explicitly stated in its rule of law framework (IP/14/237).

(2)  OJ C 62, 15.2.2019, p. 173.

(3)  COM(2019) 343 final.

(4)  Academic literature often differentiates between ‘thick’ and ‘thin’ varieties. Møller, J. (2018). The advantages of a thin view in Handbook on the Rule of Law, Edward Elgar Publishing, pp. 21-33 and Bedner, A. (2018) The promise of a thick view in Handbook on the Rule of Law, Edward Elgar Publishing, pp. 34-47.

(5)  Voigt, S. (2012) How to measure the rule of law, Kyklos, 65(2), pp. 262-284.

(6)  Gutmann, J., & Voigt, S. (2018) The rule of law: Measurement and deep roots, European Journal of Political Economy, 54, pp. 68-82.

(7)  This causal relationship is one of the central points of a subdiscipline called Institutional Economics. An advanced textbook treatment is Acemoglu, D. (2008) Introduction to Modern Economic Growth, Princeton University Press; a textbook catering to the non-specialist is Voigt, S. (2019) Institutional Economics — An Introduction, Cambridge University Press.

(8)  Feld, L. P., & Voigt, S. (2003) Economic growth and judicial independence: cross-country evidence using a new set of indicators, European Journal of Political Economy, 19(3), pp. 497-527.

(9)  Voigt, S., Gutmann, J., & Feld, L. P. (2015) Economic growth and judicial independence, a dozen years on: Cross-country evidence using an updated set of indicators, European Journal of Political Economy, 38, pp. 197-211.

(10)  Voigt, S. (2008) The economic effects of judicial accountability: cross-country evidence, European Journal of Law and Economics, 25(2), pp. 95-123.

(11)  Hayo, B., & Voigt, S. (2014) The relevance of judicial procedure for economic growth, CESifo Economic Studies, 60(3), pp. 490-524.

(12)  Mauro, P. (1995) Corruption and growth, The quarterly journal of economics, 110(3), pp. 681-712.

(13)  Gupta, S., De Mello, L., & Sharan, R. (2001) Corruption and military spending, European Journal of Political Economy, 17(4), pp. 749-777.

(14)  Mauro, P. (1998) Corruption and the composition of government expenditure, Journal of Public Economics, 69(2), pp. 263-279.

(15)  Organisation for Economic Co-operation and Development (2015) Consequences of Corruption at the Sector Level and Implications for Economic Growth and Development, Paris: OECD Publishing.

(16)  Van Aaken, A., Feld, L. P., & Voigt, S. (2010) Do independent prosecutors deter political corruption? An empirical evaluation across seventy-eight countries, American Law and Economics Review, 12(1), pp. 204-244.

(17)  Chemin, Matthieu (2009) Do judiciaries matter for development? Evidence from India, Journal of Comparative Economics 37: pp. 230-250.

(18)  OJ C 282, 20.8.2019, p. 39.

(19)  The comparison between police patrolling and fire alarms in monitoring agents was proposed in McCubbins, M. D., & Schwartz, T. (1984) Congressional oversight overlooked: Police patrols versus fire alarms, American journal of political science, pp. 165-179.

(20)  OJ C 440, 6.12.2018, p. 106.

(21)  Kelemen, R. D. (2017) Europe’s other democratic deficit: National authoritarianism in Europe’s Democratic Union. Government and opposition, 52(2), pp. 211-238.

(22)  Working paper No 13/2016 The Size and Scope of the European Third Sector, p. 8.

(23)  OJ C 62, 15.2.2019, p. 178.

(24)  OJ C 282, 20.8.2019, p. 39, recommendations 1.11.

Opinion of the European Economic and Social Committee on ‘The protection of unaccompanied minors in Europe’

(own-initiative opinion)

(2020/C 429/04)

Rapporteur:

Ozlem Yildirim (FR-II)

Plenary Assembly decision	20.2.2020
Legal basis	Rule 32(2) of the Rules of Procedure
	Own-initiative opinion
Section responsible	Employment, Social Affairs and Citizenship
Adopted in section	9.7.2020
Adopted at plenary	18.9.2020
Plenary session No	554
Outcome of vote (for/against/abstentions)	215/1/5

1.   Recommendations and comments

1.1.

The EESC recommends, as it has previously, that the principle of ‘the best interests of the child’ should take precedence over all other national and international law.

1.2.

We call on the European Union to develop a coherent and uniform approach to protecting unaccompanied foreign minors in Europe.

1.3.

We are seriously concerned about the situation of unaccompanied minors, who are one of the most vulnerable migrant groups and therefore at greater risk of their fundamental rights being infringed.

1.4.

The EESC reiterates its request to the Member States to ensure that undocumented migrant children are protected first and foremost as children, under national child protection systems.

1.5.

We call on the Member States to prevent any form of violence against migrant children by creating safe, legal and official migration paths.

1.6.

Once again (1) we would point out that detention of children, regardless of their administrative status, is absolutely prohibited. We condemn this practice in the strongest terms: it violates the International Convention on the Rights of the Child.

1.7.

To provide effective protection for unaccompanied minors, the EESC urges Member States to allocate the necessary resources to public services and to provide appropriate facilities, for instance through special training and enhancing the capacities of child protection professionals.

1.8.

The Committee urges the European Commission to draw up a Directive on the protection of unaccompanied minors that would serve the best interests of the child.

1.9.

The EESC points out that every unaccompanied minor must be supported by a qualified guardian who is assigned as soon as possible and remains in this role until the child comes of age. The guardian must be informed of any decision taken concerning the child and provide support for as long as the child's case is being processed. The guardian should always be able to act in the best interests of the child and should not have a conflict of interest with the national child protection services.

1.10.

The EESC notes that in accordance with the ‘presumption of minority’ principle, a young person who presents themselves as a minor must be considered a minor until a final court ruling has been delivered.

1.11.

We call on the Member States to evaluate minority based on a body of evidence, consisting principally of the declarations by the person in question, civil status documents presented, interviews with the person conducted by qualified professionals and, where appropriate, verification of the authenticity of civil status documents.

1.12.

Given that bone tests are not really reliable, the EESC calls for them to simply be stopped. Methods we know to be approximate should not be employed just because no reliable verification method is available.

1.13.

Given the difficulty of covering all the issues and rules relevant to unaccompanied minors in the present opinion, the EESC intends to conduct a series of follow-up studies on specific sub-themes.

2.   Background

2.1.

An unaccompanied foreign minor is defined as ‘a minor who arrives on the territory of the Member States unaccompanied by an adult responsible for him or her whether by law or by the practice of the Member State concerned, and for as long as he or she is not effectively taken into the care of such a person; it includes a minor who is left unaccompanied after he or she has entered the territory of the Member States’ (2).

2.2.

There are unaccompanied minors in all the EU Member States, but in 2019 60 % of all registered unaccompanied minors were registered in just four countries (Greece, Germany, Belgium and the Netherlands). In 2019, a total of 13 800 asylum-seekers who had sought international protection in the 27 EU Member States were classed as unaccompanied minors. Unaccompanied minors made up 7 % of all asylum-seekers aged under 18 in the EU. Most of these (85 %) were boys. Two thirds of them (9 200) were aged 16 or 17, 22 % (3 100) were aged 14 or 15, and lastly 11 % (1 500) were under 14 (3).

2.3.

Migrant children are one of the most vulnerable groups in society. Without parents, which in itself exposes them to great uncertainty and danger, unaccompanied minors have very often had a long and chaotic journey that has been traumatic and entailed violence. They continue to be exposed to multiple dangers and are particularly vulnerable to criminal networks engaged in sexual exploitation and child labour.

2.4.

The EESC recommends, as it has previously, that the principle of ‘the best interests of the child’ should take precedence over all other national and international law (4).

2.5.

We believe that the various and complicated situations faced by unaccompanied minors call for multidisciplinary (legal/psychological/medical/social) approaches that are comprehensive and holistic.

2.6.

The 1989 United Nations Convention on the Rights of the Child (UNCRC) provides the general framework for child protection in Europe. However, neither this instrument, nor the European Convention on Human Rights (1950), nor the European Convention on the Exercise of Children's Rights (1996) lay down specific provisions applying directly to unaccompanied children.

2.7.

It was not until 26 June 1997 that the Council of Europe adopted the first legal instrument specifically addressing the issue of unaccompanied minors, but this is a non-binding resolution. Although there are EU legal acts which mention unaccompanied minors, e.g. the Return Directive or Directive 2003/9/EC (5), no specific EU-level legislation has been drawn up.

2.8.

Consequently, in the absence of a precise legal framework, the Member States face considerable difficulties when it comes to managing the problem of unaccompanied minors in a concerted and coherent way. Thus the situation of unaccompanied minors varies widely between Member States in terms of the laws governing their treatment and procedures to which they are subject (e.g. to determine age, or on guardians or rights).

2.9.

Thus the legal framework for unaccompanied minors must be strengthened by the Member States, and the EESC urges the European Commission to draw up a Directive on the protection of unaccompanied minors that would serve the best interests of the child. This is particularly clear given the deplorable situation of many unaccompanied minors, which children's rights organisations across Europe have decried.

3.   General comments

3.1.

The EESC is seriously concerned about the situation of unaccompanied minors, who are one of the most vulnerable migrant groups and therefore more at risk of their freedoms and fundamental rights being infringed.

3.2.

Under the UNCRC, countries must treat undocumented children in the same way as all children, without making any distinction (6). But in practice the EESC notes that there is a tension between national legal provisions governing immigration control and child protection laws. The EESC reiterates its request to the Member States to ensure that undocumented migrant children are protected first and foremost as children, under national child protection systems (7).

3.3.

The EESC urges the Member States to prevent all forms of violence against migrant children by creating safe, legal and official migration paths, including flexible, rapid and efficient procedures, through family reunification, increasing quotas for resettlement of migrants, or granting humanitarian visas, which will strengthen guarantees for children and their family members.

3.4.

The EESC calls on the Member States to put in place specific and effective procedures to regularise such children's residence status and to seek a permanent solution for unaccompanied minors that guarantees their best interests.

3.5.

The Committee points out that detention of children is absolutely prohibited, regardless of their administrative status. It strongly condemns this practice, which is an outright breach of the UNCRC (Article 3). The EESC notes (8) that detention can have a very serious impact on a child's health and development, regardless of the duration. Detention is always contrary to the best interests of the child (9).

3.6.

The EESC calls on the Member States to pass national legislation prohibiting the detention of unaccompanied children and promoting the development of alternatives that reflect their particular vulnerability, such as placing them with foster families or in supervised accommodation where they live independently.

3.7.

The EESC notes the importance of upholding a child's right to be involved in decisions that concern them.

3.8.

The EESC recommends that Member States provide legal safeguards to ensure that unaccompanied minors have access to international protection procedures and guarantee that information appropriate to their age is provided. A good way of doing this would be to set up specialised asylum units to help migrant children and transmit age-appropriate information to them in their mother tongue, incorporating gender considerations and the cross-cultural dimension into national processes.

3.9.

To protect unaccompanied minors from all forms of exploitation, the EESC asks all Member States to grant children who have been subject to exploitation and violence the status of victims of human trafficking and to issue them a residence permit. The EESC also believes that decisions on unaccompanied minors must be treated as urgent.

3.10.

Unaccompanied minors should never be subject to criminal proceedings for reasons solely related to their immigration status or where their involvement in criminal activity is the result of exploitation.

3.11.

To provide effective protection for unaccompanied minors, the EESC urges Member States and the European Union to allocate the necessary resources to public services and to provide appropriate facilities, for instance through special training and enhancing the capacities of child protection officials. This training should be set up at European level.

3.12.

Protection of unaccompanied minors does not stop at Europe's borders. The EESC would encourage the EU and the Member States to prioritise the needs and rights of this group in their foreign policy instruments and external action, especially when concluding cooperation programmes or agreements.

3.13.

The EESC points out that every unaccompanied minor must be supported by a qualified guardian who is assigned as soon as possible and remains in this role until the child comes of age. The guardian must be informed of any decision taken concerning the child and provide support throughout the entire process. They should always be able to act in the best interests of the child and should not have a conflict of interest with the national child protection services.

3.14.

As the EESC has already pointed out, although EU law recognises the importance of legal guardianship, it does not define the duties of a legal guardian. The legal guardian should be an accredited representative who has experience with minors and a knowledge of national law on the rights of foreign nationals and child protection legislation. The guardian should have the authority to represent the child in all decision-making processes (10), subject to the child's consent (11). The Belgian procedure for appointing guardians could serve as a model (12).

3.15.

The EESC points out that unaccompanied children need not just legal assistance but also access to social protection and to reception facilities and temporary accommodation of an acceptable standard. Reception arrangements must be adapted to the child's vulnerability, with the involvement of specialist youth professionals, the option of a physical or psychological health check, and access to healthcare.

3.16.

Unaccompanied minors must also have access to education with due regard for their preferences and, where applicable, those of their guardian. Erasmus and Erasmus+ could also facilitate that access for unaccompanied minors and people who arrived as unaccompanied minors but have now reached the age of majority.

3.17.

The EESC stresses the importance of every child being provided with information on their rights that is adapted to their age, based on the UN Convention, so as to ensure that unaccompanied children without adequate guardianship can request protection.

4.   Specific comments

4.1.

Article 1 of the UNCRC defines a child as any person below the age of 18. The particular legal status of children means that they enjoy a set of rights that must be guaranteed by the States Parties to the convention. The right to protection is dependent on minority status, which poses the practical question in all the Member States of determining the migrant's age.

4.2.

The EESC notes that under the ‘presumption of minority’ principle, a young person who presents themselves as a minor must be considered a minor until a final court ruling has been delivered on the matter. They must therefore be offered immediate protection in decent conditions that are compatible with their particular vulnerability.

4.3.

The Committee also points out that third-country civil status documents submitted by the young person to prove that they are a minor must be presumed to be valid and must be the first pieces of evidence to be considered when deciding whether or not the person is a minor. Only a formal challenge to the authenticity of the civil status documents submitted should allow that presumption of validity to be overturned.

4.4.

The EESC points out that under Article 8 of the UNCRC, ‘Where a child is illegally deprived of some or all of the elements of his or her identity, States Parties shall provide appropriate assistance and protection, with a view to re-establishing speedily his or her identity’ (13).

4.5.

In principle there should only be a procedure to assess a migrant's age if they do not have official administrative documents proving their age or in case of serious doubt (14).

4.6.

The EESC again notes that the Member States use different methods for evaluating the age of unaccompanied minors, and that none of those methods has been proven reliable.

4.7.

The EESC asks the Member States to assess age based on a body of evidence, starting with declarations by the person concerned, civil status documents presented, interviews with the person, and if appropriate verifying the authenticity of the civil status documents. The Committee emphasises that a medical opinion on the person's age should not be given except in cases of continuing doubt and as a last resort.

4.8.

The EESC believes that in view of their particular vulnerability, unaccompanied minors should always be given the benefit of the doubt.

4.9.

The EESC notes that the scientific reliability of bone maturity tests, used in many countries, is highly contested by international experts and organisations (15). This practice is also criticised for breaching children's right to privacy and for its potential health risks (radiation exposure) and the wide margin of error.

4.10.

Given that such tests are not really reliable, the EESC calls on the Member States to just stop them. We do not think that methods known to be approximate should be employed just because no reliable verification method is available.

4.11.

The EESC urges the Member States to protect unaccompanied minors by giving them the time and proper means to prove their identity, for example through diplomatic cooperation (subject to the child's agreement and provided this does not put them in danger) or by providing prima facie evidence such as psychosocial assessments, to confirm that the person is a minor.

4.12.

As a last resort, in the absence of documentary evidence and in the case of serious doubt about the person's age, we would suggest that age be evaluated on the basis of a multidisciplinary approach led by independent professionals with appropriate expertise and knowledge about the person's cultural and ethnic origins. The procedures used in England could serve as a model.

4.13.

The EESC calls on the Member States to set up a European supervisory commission to devise a standard holistic age assessment procedure for all the Member States and to oversee age assessment protocols and practices.

4.14.

Such procedures are unlikely to be effective unless their conclusions are substantiated and it is possible to quickly lodge an appeal against them with suspensory effect.

5.   Comments with specific reference to COVID-19

5.1.

The COVID-19 pandemic will certainly increase the risks faced by unaccompanied minors, whose state of health is often already fragile. They may be unable to comply with the lockdown measures, have inadequate access to food, hygiene facilities and water, lack appropriate information about personal protective measures and precautions they should take, and find it difficult to access healthcare.

5.2.

The EESC calls on all the European institutions to do whatever is necessary to ensure that the rights of all children guaranteed under international treaties are upheld during the COVID-19 health emergency and that they are protected and their dignity respected during the economic crisis that is looming.

5.3.

The EESC welcomes the recent relocation of unaccompanied minors from Greece to Luxembourg, Portugal, France, Finland and Germany, and urges the Member States to prioritise and continue moving minors living in unacceptable conditions, including in Greece, as a matter of urgency (16).

---

(1)  See EESC opinion on the Proposal for a Directive of the European Parliament and of the Council on Combating the sexual abuse, sexual exploitation of children and child pornography, repealing Framework Decision 2004/68/JAI (OJ C 48, 15.2.2011, p. 138).

(2)  Article 2 of Directive 2011/95/EU of the European Parliament and of the Council of 13 December 2011 (OJ L 337, 20.12.2011, p. 9).

(3)  https://ec.europa.eu/eurostat/documents/2995521/10774042/3-28042020-AP-FR.pdf/a5951a9e-fe8f-ef1a-64f1-cdedfc925eb2

(4)  See the United Nations Convention on the Rights of the Child, the European Convention on the Exercise of Children's Rights, and the EESC opinion of 15 October 2014 on International protection of unaccompanied minors (OJ C 12, 15.1.2015, p. 69).

(5)  Directive 2008/115/EC of 16 December 2008 (OJ L 348, 24.12.2008, p. 98) states: ‘Before deciding to issue a return decision in respect of an unaccompanied minor, assistance by appropriate bodies other than the authorities enforcing return shall be granted with due consideration being given to the best interests of the child’. Council Directive 2003/9/EC of 27 January 2003 (OJ L 31, 6.2.2003, p. 18) defines key terms, including the term ‘unaccompanied minor’.

(6)  Article 2, UNCRC.

(7)  EESC opinion on International protection of unaccompanied minors (OJ C 12, 15.1.2015, p. 69).

(8)  See A study of immigration detention practices and the use of alternatives to immigration detention of children, PACE Committee on Migration, Refugees and Displaced Persons, 2017.

(9)  The European Network of Ombudspersons for Children (ENOC), Position Statement on Ending detention of children for immigration purposes, adopted by the 23rd ENOC, 27 September 2019.

(10)  See La protection des mineurs migrants non accompagnés en Europe [‘Protecting the rights of unaccompanied migrant children’], Nisrine Eba Nguema, 2015; https://doi.org/10.4000/revdh.1147

(11)  1996 Hague Convention.

(12)  Belgium has set up a fast-track system for appointing legal guardians. All unaccompanied minors are assigned a guardian, which may be an individual (following a selection procedure and training of the person concerned), who will support them through all the procedures: see https://justice.belgium.be/fr/themes_et_dossiers/enfants_et_jeunes/mineurs_etrangers_non_accompagne. As the legal representative responsible for monitoring the general well-being of the minor, the guardian is the person on whom the child can rely to ensure they develop the necessary skills to be an active member of society: https://justice.belgium.be/fr/themes_et_dossiers/enfants_et_jeunes/mineurs_etrangers_non_accompagne/tuteur/missions_du_tuteur

(13)  See also Article 24 of the 1966 International Covenant on Civil and Political Rights (ICCPR) and Article 7 UNCRC.

(14)  Both the UN High Commissioner for Human Rights and the Parliamentary Assembly of the Council of Europe have stated (in July 2010 and on 15 April 2011, respectively) that an age assessment should only be carried out in cases of doubt.

(15)  The scientific reliability of such tests has been questioned for example by the European Parliament (in a resolution of 12 September) and in recommendations of the Committee on the Rights of the Child of 12 June 2009. Both the Belgian Register of Physicians and the French Medical Association have challenged the reliability of these tests (the former in an opinion of 20 February 2010). The French Defender of Rights (constitutional rights ombudsman) has condemned the use of bone maturity tests (26 February 2016). See also the report of the Belgian Plateforme Mineurs en Exil [Unaccompanied Minors Platform] on ‘L'estimation de l'âge des MENA en question: problématique, analyse et recommandations’ [‘Estimating the age of unaccompanied minors: problems, analysis and recommendations’], September 2017.

(16)  See https://www.unhcr.org/news/press/2020/4/5e9707ed4/un-agencies-welcome-first-relocation-unaccompanied-children-greece.html and https://www.eepa.be/?p=3856

Opinion of the European Economic and Social Committee on ‘Public procurement as a tool to create value and dignity in work in cleaning and facility services’

(own-initiative opinion)

(2020/C 429/05)

Rapporteur:	Diego DUTTO
Co-rapporteur:	Nicola KONSTANTINOU

Plenary Assembly decision	20.2.2020
Legal basis	Rule 32(2) of the Rules of Procedure
	Own-initiative opinion
Body responsible	Consultative Commission on Industrial Change (CCMI)
Adopted in CCMI	2.9.2020
Adopted at plenary	18.9.2020
Plenary session No	554
Outcome of vote (for/against/abstentions)	192/7/18

1.   Conclusions and recommendations

1.1

The European Commission (EC), the European Parliament and the Member States must develop the necessary support instruments to promote the use of strategic public procurement to advance the systematic use of sustainable, transparent, ambitious and enforceable strategic criteria to ensure higher social and quality standards in public procurement.

1.2

To ensure that the focus of cleaning services is put on quality and not on price, the principle of transparency must be upheld for both client and contractor. Contract specifications have to be defined and itemised, including frequency, time, occupational health and safety (OSH) and financial costs of cleaning (1). Assessing the application of these criteria during the entire contract life is key for the evaluation of the quality of the cleaning services provided.

1.3

The social partners should be involved in the training and professionalisation of public buyers as stipulated in the EC recommendation of 3 October 2017 (2).

1.4

The EC and Member States should take the initiative to fight undeclared work and to further improve employment conditions in the cleaning industry. Strengthened regulation and stronger enforcement mechanisms such as wage criteria and sectoral collective bargaining can contribute to fair competition, higher social standards and quality employment.

1.5

The EESC calls on the EC, the EP, the Member States and regional and local authorities to use daytime cleaning in all public procurement wherever possible.

1.6

Ensuring fair competition can be achieved by focusing on quality aspects and respect for the jurisprudence of the ECJ and national rules concerning the possibility of making respect for collective agreements a condition for awarding public contracts. Member States, together with social partners and according to national practices, should promote the coverage of collective agreements in the national cleaning industry at the sectoral level and ensure that they are enforced.

1.7

The sector’s workforce is predominantly composed of women and non-EU nationals. They may therefore be more directly affected by the purchasing policies of public administrations. Thus, the EESC believes that in addition to collective agreements, additional safeguards should be developed to uphold the principles of non-discrimination and equal treatment of workers. The EESC suggests introducing additional points, in tender award criteria rewarding forms of integration such as dedicated training courses, family support services such as after-school assistance for minors and other forms of corporate welfare with a social content.

1.8

The EESC recommends, when revising the 2014 EU Procurement Directives, that the costs of mandatory security and training be shown outside the area of competitive pricing, as an incompressible and verifiable element of the breakdown of the costs that make up the tender.

1.9

The EESC recommends that sustainability conditions, labour rights and generally applicable collective bargaining agreements be respected (by holding the contracting authority, the main contractor and the sub-contractors responsible, each for their immediate contractual partner) throughout the subcontracting chain and during the entire execution of the contracts.

1.10

The EESC calls on the Member States, if they do not already do so, to pay special attention to and effectively check respect for all statutory and contractual obligations and OSH aspects concerning social, environmental and sustainability aspects in the execution phase of public tenders in the cleaning industry.

1.10.1

With respect to the obligations incumbent upon Member States, contracting authorities and the EC established by Articles 83-85 of Directive 2014/24/EU of the European Parliament and of the Council (3), the EESC asks all these public bodies to make the corresponding data available without further delay, ensuring in particular that the award criteria and their relative weighting for cleaning contracts are provided. The EC is asked to financially support the sectoral social partners’ follow-up projects and research into the issue of public procurement in cleaning and facility services.

1.11

The EC should strengthen the legislative architecture and bargaining capacity of the social partners at national level, including by allocating funding for capacity-building actions especially in South-Eastern, Central and Eastern European countries (4).

1.12

The EESC recommends that, in the revision of the 2014 European Procurement Directives, for labour intensive services such as cleaning services, EU directives on public procurement should ask or require the Member States to exclude the use of the lowest price criterion for the award of tenders, to set a ceiling of 30 % on the score to be awarded to the price compared to the score to be awarded to quality and to ensure, by means of specific social clauses, the employment stability of staff employed under the tender, albeit in accordance with the ‘TUPE’ Directive (2001/23/EC (5)) and interpreted by EU case law, the company’s work arrangements and in compliance with collective bargaining.

1.13

The EESC calls on the contracting authorities to use their own cost estimates for cleaning services, by consulting specialised sectoral tools such as the Best Value Guide and national examples to adequately assess the sector’s market, as well as setting aside part of these services for reserved contracts as stipulated by Article 20 of Directive 2014/24/EU, as transposed by the Member States into their own codes on public procurement.

1.14

The EC should encourage Member States to start an accreditation process or qualification system for contractors who wish to be considered for public cleaning contracts. This process should be supervised by an evaluation committee made up of a number of different stakeholders, including trade unions and a representative of sector contractors.

1.15

As the risk of COVID-19 still exists, the risk of contagion from COVID-19, or any other such disease, requires workers and the public to be protected. The EESC recommends that the EC and the Member States draw up binding protocols on OSH at work with the help of the social partners.

1.16

The EESC further calls on the Member States to take action and engage with the social partners to discuss practical temporary solutions for a quick return to fair and quality-oriented procurement practices.

1.17

In light of the COVID-19 crisis, the EESC recommends that the Member States advance the training and professionalisation of cleaning staff. Financial resources should be made available so that public authorities and contracting companies can invest in training and skills. Workers employed in cleaning and sanitation services should be encouraged to gain professional qualifications, laying the groundwork for improved job opportunities for vulnerable individuals.

1.18

The EESC advocates that the EU institutions, the Member States and local and regional authorities adopt a comprehensive approach to the purchasing of cleaning services. Such an approach does not envisage a trade-off between environmental and labour conditions, but advances social cohesion, labour standards, gender equality and the environmental goals proposed by the EC’s Green Deal.

2.   General comments

2.1

The main purpose of this opinion is to propose recommendations for using public procurement to enhance good quality employment and dignity at work in cleaning and facility services.

2.2

Many of these recommendations are general in scope and can be applied across all sectors of the economy. This is particularly the case for labour-intensive service sectors such as private security and catering.

3.   Background and context

3.1

‘Every year, over 250 000 public authorities in the EU spend around 14 % of GDP (around EUR 2 trillion per year) on the purchase of services, works and supplies.’ (6). Services such as cleaning make up the main part of public procurement. In 2017, the award value for services reached EUR 250 billion (7).

3.2

Public procurement can support investment in the real economy, ensure and create good quality jobs and promote inclusion and better conditions for disabled and disadvantaged people as well as migrant workers (8). It can also encourage demand for innovative products, pursue industrial policy objectives and promote the transition to a resource and energy efficient circular economy (9).

3.3

In reference to EU Procurement Directive 2014/24/EU, the use of the ‘Economically Most Advantageous Tender’ (EMAT) criteria should incorporate all strategic criteria addressed in point 3.2 above. As the rules remain vague, the majority of public contracts continue to be awarded to the lowest bidder, sometimes even to an abnormally low tender (ALT) (10).

3.4

The Public Procurement Directives are not being utilised to their full potential and application diverges between the Member States. Consequently, a public authority must decide on its priorities (11).

3.5

This is first a political and then a technical issue. The decision of which services to purchase and which award criteria to use with which relative weighting is part of the political decision-making process. Such decisions set the frame and the fundamental parameters for the award procedure. Failing to take workers’, environmental and social rights into consideration would create an unequal playing field.

4.   The COVID-19 crisis, the cleaning services industry and public procurement

4.1

The COVID-19 pandemic has underlined the fundamental value of cleaners’ work as a common public good. Contracting companies need to meet requirements of qualification, efficiency and specialisation. In their joint statement of 22 April 2020, the EU social partners EFCI and UNI Europa highlight the crucial role of the cleaning industry and its workers in preventing the spread of the virus (12).

4.2

In 2018, there were 4,11 million cleaners in the EU working across 283 506 companies. There has been a steady increase in turnover since the mid-2010s. At the same time, turnover per company reached EUR 393 000 in 2017. According to EFCI, ‘the average turnover per employee reached almost EUR 30 000’. Turnover per employee amounts to EUR 27 400 and workers earn a yearly average wage of EUR 12 200. The European cleaning industry has a large part of its workforce working on a part-time basis. Moreover, in a labour-intensive sector such as this, companies’ margins do not exceed 3 %. Contracting companies incurred additional expenditure due to the COVID-19 pandemic, through the needto protect both their clients’ interests and their own workers. The proportion of part-time workers, women and immigrant workers is particularly high. The percentage of women employees is always over 50 % (except in Denmark), with peaks of over 80 % in Lithuania, Luxembourg, Portugal and the UK (13). Across the EU, 30 % of cleaners are immigrants (60 % in Belgium).

4.3

Barriers to entry in the cleaning and facility services market are low to non-existent. Cleaning services are labour-intensive, with nearly 80 % of companies’ revenue accounting for labour costs and very tight margins for cleaning contractors. Thus, public or private, clients’ purchasing decision lead to downward pressure on prices, undermining social standards and the dignity of cleaning work.

4.4

During and subsequent to the COVID-19 crisis, cleaning and facility services can only ensure value and achieve high standards of quality employment if cleaners are sufficiently qualified and have the right technical equipment and there is a clear definition of the rights and obligations of employers and employees. This could require public authorities to pay a higher price for cleaning services. Indeed, due to the suspension of activities during the COVID-19 crisis, many business services providers faced severe cash-flow problems and sustained increased costs to implement the health and safety measures required to protect both workers and clients. These financial problems are exacerbated by bad contracting practices, from public and private buyers. In order to support companies in continuing to ensure the health and safety of their cleaning agents as well as maintaining and enhancing the quality of their employment conditions, the EESC calls on public and private buyers to ensure a quick return to efficient public procurement, fair contracting practices and better consideration of quality criteria (14). Cleaners often work in dangerous and hazardous circumstances that can put their own health at risk (15). Although some workers prefer to work part-time, some workers wish to work longer hours or full-time. It can sometimes, however, be difficult for employers to offer full-time contracts. Furthermore, despite the social partners’ commitment to daytime cleaning, cleaning services are frequently provided by workers who work alone during the night. This is often due to the requirements of the client. Such employment practices contribute to cleaners’ labour remaining invisible (16), under-valued and unrecognised (17). Unfortunately, zero-hour contracts still exist in some Member States. Public authorities bear responsibility insofar as they continue to manage the contract, monitor it and assess quality. The aim should be to increase the opportunities for workers to work during the day, in a single shift and be employed on full-time contracts to improve quality of life.

4.5

Using the lowest price as the only award criterion for public contracts undermines quality service provision and contributes to the deterioration of working conditions, to quality shading (lower quality) and to shirking (lower effort) (18). As cleaning is a heterogeneous task and not easily quantifiable, quality is difficult to assess both during the process and afterwards. That is why it is important to base quality on outcome and across the whole lifecycle rather than process.

4.6

The expression ‘lowest price’ has disappeared from the text of Directive 2014/24/EU, but the award based on ‘price only’ is allowed (Article 67.2 last paragraph). This means that some contracting authorities continue to award contracts to the lowest tender, and sometimes even to ALT. Countries wishing to use the EMAT criterion for labour intensive services will need to go one step further by directing administrations towards effective use of this criterion by defining a ceiling on the weight of the price and using formulas that to not exasperate the price differences between offers. To this end, specific training for the professionalisation of procurement officers is required. In addition, the next review of the directives should introduce mandatory rules for (a) the identification of possible ALT by setting a difference of 20 % from the next lowest tender for triggering the obligation to check, (b) a thorough check on whether the tenderer has objective and plausible reasons for their low tender and (c) the exclusion of such tenders if the tenderer did not provide such reasons.

4.7

Thus, the crisis is an opportunity for cleaning companies and their workers to enhance the value and fundamental importance of cleaning vis-à-vis the public and its direct clients. The Best Value Guide (19), developed by the EU cleaning industry’s social partners in 2017, can steer public and private organisations awarding contracts for cleaning services towards contracts offering the best value. Similar tools have been developed by some national social partners.

4.8

Digitalisation is creating opportunities and challenges for low-skilled workers in this sector, and the EU social partners believe that technologies can be used to enhance the recognition of the value of cleaners’ work, the relevance of cleaning at large, and create extra value for buyers of cleaning services (20). EFCI’s SK-Clean project will map the changing skills needs of the sector and become a tool to work towards increased professionalisation of cleaners (21).

4.9

The new context generated by the COVID-19 emergency requires that competent authorities ensure the dissemination of information on how to use PPE as well as the provision of appropriate PPE to protect workers and individuals. Businesses require financial support to cover the rising additional costs of organisational measures, risk assessments, analysis and the distribution of PPE to the workforce (22). Meanwhile, investments by contracting companies are fundamental to being able to offer their clients cleaning solutions which are innovative and more effective due to being based on chemical and biological research.

5.   Public procurement and the Green Deal

5.1

The Green Deal proposes that public procurement can be used to reduce carbon emissions. A comprehensive approach is needed however.

5.2

The cleaning sector can contribute to a green transition and circular economy with green labels for green cleaning products, soap, toilet paper, paper towels and good waste sorting. This is also the aim of the Ecolabels for cleaning services (23) and cleaning products (24), even if their efficiency in practice is not evident. If the use of green products and procedures is not accepted by the client, it may result in cost increases which would create higher pressure on all cost elements. This might also lead to worsening social, labour and OSH conditions. In addition, all of this might also lead to more restricted access to procurement opportunities for SMEs (25). That is why a comprehensive approach to public procurement is needed.

5.3

Research suggests that the environmental criteria are too weak to actually incentivise suppliers to undertake changes (26). Private service contractors who are committed to the environment are prevented from using their full potential if contracting authorities are unwilling to pay the additional costs. Thus, it requires greater professionalisation of purchasers.

6.   Social and quality considerations in public procurement

6.1

Article 18(2) of Directive 2014/24/EU states that ‘Member States should guarantee that the performance of public contracts economic operators comply with applicable obligations in the fields of environmental, social and labour law established by Union law, national law, collective agreements or by the international environmental, social and labour law provisions listed in Annex X.’

6.2

The EC’s Buying Social Guide of October 2010 sets out various social considerations for contracting authorities such as the prohibition of child and forced labour, OSH requirements, minimum wage obligations, social security requirements and more generally decent work standards (27). As these are statutory obligations they have to be respected, whether they are mentioned in contract performance clauses or not.

6.3

According to recital 98 of Directive 2014/24/EU, the conditions for the performance of the contract may also be intended to facilitate the implementation of measures to promote equality between women and men at work and the reconciliation of work and private life.

6.4

In order to avoid labour costs being used as the main element of competition among bidders, all bidders (including subcontractors) must respect minimum standards established locally by law or by binding and generally applicable collective agreements regarding labour costs and standard clauses in public contracts. Binding and generally applicable sectoral collective agreements can ensure a level playing field.

6.5

While tools such as the Best Value Guide can alleviate in-work poverty and contribute to social cohesion in EU Member States, it does not strengthen the social partners at sectoral level or contribute to their capacity to establish binding sectoral collective bargaining systems. The Member States, which have competence in this area, will have to tighten up the rules on the application of collective bargaining in procurement.

6.6

Public institutions such as kindergartens, schools, care homes and hospitals have become brands and compete with other institutions for clients. In this competition, ‘cleanliness’ and quality in cleaning are thus considered a distinguishing factor, directly contributing to user-satisfaction and competitiveness.

6.7

The lack of use of quality and social considerations in public procurement also has negative implications for labour turnover, which represents a triple loss situation for employers, clients and workers (28).

6.8

Promotion of education and training in the workplace ensure superior quality and workers’ rights in public procurement. Vocational Education Training, certification and official recognition of qualifications contribute to the recognition of the sector. The recognition of their importance in the tendering process would enhance their valorisation and allow for better understanding of the costs they entail for companies, which need to be sufficiently recognised both in the price and in wages. Responsibility for training workers lies with the cleaning company; accepting the lowest bid generates the risk that companies will not be able to afford to invest in training and safety (or in machinery, innovation and related training) other than the minimum required by law.

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(1)  http://www.europeancleaningjournal.com/magazine/articles/latest-news/managing-quality-in-german-contract-cleaning

(2)  https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32017H1805&from=EN Commission Recommendation (EU) 2017/1805 (OJ L 259, 7.10.2017, p. 28).

(3)  OJ L 94, 28.3.2014, p. 65.

(4)  https://www.eurofound.europa.eu/publications/report/2019/representativeness-of-the-european-social-partner-organisations-industrial-cleaning-sector#tab-01

(5)  Council Directive 2001/23/EC (OJ L 82, 22.3.2001, p. 16).

(6)  https://ec.europa.eu/growth/single-market/public-procurement_en

(7)  https://www.europarl.europa.eu/RegData/etudes/STUD/2018/631048/IPOL_STU(2018)631048_EN.pdf, p. 14.

(8)  https://ec.europa.eu/info/policies/public-procurement/support-tools-public-buyers/social-procurement_en

(9)  The EC provides a series of support tools for public buyers, not only the one on social procurement, and all of these aspects should be taken into consideration: https://ec.europa.eu/info/policies/public-procurement/support-tools-public-buyers_en

(10)  This is addressed in the 2014 EU Directive on Public Procurement, Article 69.

(11)  Jeremy Prassl, The Future of EU Labour Law.

(12)  Joint Statement on the COVID-19 impact on the Industrial Cleaning and Facility Services sector and the necessary measures to protect it, https://www.uni-europa.org/2020/04/22/joint-statement-on-the-covid-19-impact-to-the-industrial-cleaning-and-facility-services-sector-and-the-necessary-measures-to-protect-it/

(13)  Eurofund (2019) Representativeness Study for the Industrial Cleaning Sector, p. 19: https://www.eurofound.europa.eu/sites/default/files/ef_publication/field_ef_document/ef19012en.pdf

(14)  http://servicealliance.eu/wp-content/uploads/2020/05/EBSA-Statement_Contracting-recommendations-during-COVID_13-5-2020.pdf

(15)  Bergfeld, Mark (2020) The Insanity of Making Sick People work, Jacobin Magazine: https://jacobinmag.com/2020/03/coronavirus-workers-rights-health-care-cleaners-gig-economy

(16)  Bergfeld, Mark & Ylitalo, Jaana — Putting Europe’s invisible precariat in the spotlight, Social Europe, 18 April 2019, https://www.socialeurope.eu/europes-invisible-precariat

(17)  When Creativity Meets Value Creation. A Case Study on Daytime Cleaning: Volume VIII: Ergonomics and Human Factors in Manufacturing, Agriculture, Building and Construction, Sustaina.

(18)  Evidence from Public Administration Review, Vol. 79, Iss. 2, pp. 193–202.

(19)  http://www.cleaningbestvalue.eu/

(20)  See EFCI: https://www.efci.eu/wp-content/uploads/2019/02/Digital-transition-in-cleaning-industry-in-FR.pdf https://www.efci.eu/wp-content/uploads/2019/10/2019-10-29_Joint-statement-on-digitalisation-EFCI-UNI-Europa-29.10.2019.pdf & https://www.efci.eu/wp-content/uploads/2019/10/2019-10-29_Joint-statement-on-digitalisation-EFCI-UNI-Europa-29.10.2019.pdf

(21)  SK-Clean Project.

(22)  UNI-CoeSS statement: https://www.uni-europa.org/2020/05/08/private-secruity-joint-declaration-ensuring-business-continuity-and-protection-of-workers-in-the-covid-19-pandemic/

(23)  https://ec.europa.eu/environment/ecolabel/documents/Cleaning_Services_Factsheet_Final.pdf and http://www.ecolabelindex.com/ecolabel/cleaning-industry-management-standard-cims

(24)  http://www.ecolabelindex.com/ecolabels/?st=category,cleaning

(25)  Sofia Lundberg & Per-Olov Marklund (2016) Influence of Green Public Procurement on Bids and Prices, https://www.nhh.no/globalassets/departments/business-and-management-science/seminars/2016-spring/120516.pdf

(26)  Sofia Lundberg & Per-Olov Marklund (2016) Influence of Green Public Procurement on Bids and Prices, https://www.nhh.no/globalassets/departments/business-and-management-science/seminars/2016-spring/120516.pdf

(27)  Buying social (fn.43), p. 47.

(28)  Market Exposure and the Labour Process: The Contradictory Dynamics in Managing Subcontracted Services Work. REFERENCES.

Opinion of the European Economic and Social Committee on ‘Digital Mining in Europe: New solutions for the sustainable production of raw materials’

(own-initiative opinion)

(2020/C 429/06)

Rapporteur:	Marian KRZAKLEWSKI
Co-rapporteur:	Hilde VAN LAERE

Plenary Assembly decision	20.2.2020
Legal basis	Rule 32(2) of the Rules of Procedure Own-initiative opinion
Body responsible	CCMI
Adopted in section	2.9.2020
Adopted at plenary	18.9.2020
Plenary session No	554
Outcome of vote (for/against/abstentions)	213/0/4

1.   Conclusions and recommendations

1.1.

The digitalisation of the EU raw materials sector is a singular opportunity to enhance the resilience of European industrial supply chains, to improve the environmental performance of the minerals sector and to increase transparency and dialogues with citizens and communities affected by mining activities.

1.2.

Mining companies which started the digital transformation have seen improvements in safety, sustainability, productivity and margins. But the combination of enhanced connectivity, mobility, machine learning and autonomous operations raises ethical, social and regulatory questions that should be thought through by policymakers beforehand.

1.3.

The EESC acknowledges that the digital transformation of the mining sector requires an ambitious effort to enact legal and regulatory changes, and that such effort should be made under the umbrella of supranational organisations/at international law level.

1.4.

The EESC points out the importance of having a global, comprehensive minerals intelligence network structure to underpin the digital transformation and informed decision-making at the EU level. The EESC acknowledges the effort of the Joint Research Centre (JRC) in setting and maintaining an European raw materials information system.

1.5.

The EESC considers that the digital transformation of the EU raw materials sector should be accompanied by data protection measures, and recognises the need for strictly enforced regimes to protect sensitive data.

1.6.

The EESC recommends the development of an EU regulatory roadmap addressing the challenges created by the digital transformation of the raw materials sector, dealing with topics such as cybersecurity, artificial intelligence, automation, multi-level governance and sea and space mining.

1.7.

The EESC recommends the definition and adoption of EU standards for the collection of data on mineral resources, and urges Member States to periodically collect and share comprehensive and verified data on the extraction, processing and recycling of raw materials with the JRC. This is important in assisting with the implementation of the EU Circular Economy Action Plan.

1.8.

The EESC recommends setting up adequate social support measures designed to minimise the negative impacts that digital transformation will have on the mining workforce and to helping mining communities transition their economies to prevent the deepening of existing social inequalities between individuals and population groups.

1.9.

The EESC recommends developing and supporting EU-based cloud infrastructure, in order to increase the level of security of 5G applications, cloud computing and Industrial Internet of Things platforms.

1.10.

The EESC considers that the digitalisation of the mineral raw materials industry is crucial to tackle the economic crisis caused by the COVID-19 pandemic and to foster the implementation of the European Green Deal and the EU Recovery Plan. In this context, it is paramount to stimulate investments in the digitalisation of the extraction and processing of primary (mining) and secondary (recycling) mineral raw materials.

1.11.

The EESC calls on the European Commission to ensure that the social partners in the extractive sector are involved and consulted by the European institutions in the policy-making process and on any EU initiative affecting the mineral raw materials sector.

2.   Introduction

2.1.

The EU is facing technological, societal and environmental challenges related to the supply of raw materials that underpin its industrial activity and the quality of life for its population. The EU produces less than 5 % of world production of mineral raw materials (1), and EU industry represents approximately 20 % of the global consumption of mineral raw materials (2). The EU dependency on imports is particularly high for rare metals and elements required for high-tech applications and for the green energy transition outlined in the European Green Deal (COM/2019/640). This substantiates the Raw Materials Initiative launched by the Commission in 2008 (COM/2008/699) and its successive efforts to assess the criticality of supply and list critical raw materials (the last list was published in 2017 (3); the updated list is part of the Commission's Communication on Critical Raw Materials (4).

2.2.

Technological advances that boost the efficient use of materials and resources, and pushes towards waste reduction and recycling, in line with the EU Circular Economy Action Plan (COM/2015/0614 recently updated by COM/2020/98), are woefully insufficient to underpin societal needs and global population growth. In these circumstances, primary raw materials (5) will continue to play an essential role in the economy.

2.3.

At the same time, public opposition to mining projects in many EU countries is increasing, and the industry's efforts to reduce its environmental footprint have not changed its (bad) reputation. Negative environmental impacts, lack of transparency and dialogue, and shortcomings on the distribution of economic benefits at the local level are features commonly attributed to the mining industry (6).

2.4.

More recently, rising resource nationalism in raw material-producing countries and the COVID-19 pandemic have shaken EU industry's reliance on global supply chains. The EU governments and many industrial producers realised that the import dependency on raw materials could wreck the EU manufacturing industry (the raw materials sector provides about 350 000 jobs within the EU, but there are more than 30 million jobs in downstream manufacturing industries that depend on reliable and unhindered access to mineral raw materials (7)).

2.5.

Technological and communication advances have been pushing forward the integration of digital technologies into all business areas, fundamentally changing how companies operate and deliver value to customers. This is a unique opportunity for the EU mining sector: mining companies which leverage digital tools can reach new levels of performance across the value chain, with long-lasting positive effects on the socio-economic, environmental and social dimensions.

2.6.

The digitalisation of the EU raw materials sector is a unique opportunity to enhance the resilience of supply chains, address radically different input economics and boost the operational, social and environmental excellence of the sector, advancing the concept of ‘digital mine’.

3.   General comments

3.1.

Digitalisation in the raw materials production refers to the use of information technologies improving the acquisition, organisation and communication of data with the aim of enhancing the performance of production facilities in terms of technical, environmental and societal indicators.

3.2.

Digital technologies harness all the available knowledge and enable continuous improvements as well as step-change innovations. An accurate understanding of interactions throughout production steps, inside and across value-chains and workforces enables resource-efficient production, equipment monitoring and maintenance, monitoring of health conditions and risk prevention, and emergency preparedness and response, among many other aspects.

3.3.

The digital transformation is identified in the ‘Technologies for primary and secondary raw materials production’ Priority Area of the European Innovation Partnership (EIP) on Raw Materials (COM/2014/297), in line with the EC's communication on A New Industrial Strategy for Europe. It defines raw materials as one of the key enablers for a globally competitive, green and digital Europe.

3.4.

The EESC appreciates the role of the European Innovation Council and the European Institute of Innovation and Technology, which aim to boost the output of new services and products by European institutions. Initiatives involving raw materials underpin a significant proportion of these and interlink with other targets such as the energy and mobility transitions, advanced manufacturing, security, food and health. In particular, they also relate to the digital advance of technological solutions.

3.5.

The EESC supports the activities of the EU research group in creating a certification method for raw materials. This will be a push towards sustainable mining of minerals and metals, needed to underpin Europe's clean energy transition.

3.6.

Identifying opportunities created by the digital transformation for the EU mining sector is a crucial part of the EESC's recommended approach to digital strategy. The identified opportunities should be assessed in terms of their potential value to organisations and society, and feasibility of implementation.

3.7.   Social considerations

3.7.1.

The digital transformation is already affecting traditional roles in the mining workforce, with the emergence of functions such as new technology specialists, data analysts and scientists, big data specialists, artificial intelligence (AI) and machine learning specialists and systems engineers, among others. As a consequence, routine tasks associated with roles such as plant operators, management and organisation analysts and extraction workers are expected to decline (8).

3.7.2.

Due to the digitalisation of the sector and its transformation, employees must undergo appropriate training to be able to meet the challenges of Industry 4.0 and future technological changes.

3.7.3.

Changes in the nature and composition of the workforce, alongside the implementation of a ‘work anywhere and anytime’ model enabled by the digital transformation will have a significant impact on traditional mining communities in Europe. This calls for a proactive approach based on inclusive social dialogues to help communities understand their underlying capacities and support the transition of their economies toward new areas.

3.7.4.

The EESC believes that, faced with the challenges posed by the digitalisation of the mining sector and the threats to the sector caused by COVID-19, the European Commission should support the current demands of the social partners in the mining sector at European level through the existing Sectoral social dialogue — Extractive industries.

3.7.5.

The EESC calls on the Commission to ensure that the social partners in the extractive sector are involved and consulted by the European institutions in the policy-making process and on any EU initiative affecting the sector.

3.7.6.

The EESC therefore believes that there is a need for the Commission, together with the social partners in the Sectoral Dialogue Committee, to set up as soon as possible at European and national level a network of Sector Councils for Skills and Employment in the extractive industries.

4.   Breakthrough concepts and solutions for sustainable exploration, mining and/or processing

—

Ground-breaking concepts and solutions for exploring, extracting and recycling mineral raw materials are necessary to enhance Europe's position on the global stage. New approaches and technologies are expected to facilitate Europe's access to sustainably produced raw materials, while also gaining the trust of society in clean and safe extraction and processing methods.

—

Knowledge on geological endowments, mineral deposits and their exploitation is disparate and variable, and the complexity of material cycles, policies, market trends, technological trends, environmental issues and societal impacts requires the combination of many fields of expertise to harness the benefits of digitalisation.

4.1.   Methods and tools for mineral intelligence

4.1.1.   Establishing a geoscience data hub for Europe

4.1.1.1.

The availability, accessibility and recoverability of minerals, metals, energy and other subsurface resources are more than ever a crucial issue in contemporary society. The European Parliament, the EC and several EU initiatives in policy areas, e.g. the Raw Materials Initiative (9), the Groundwater Directive (10) and the Carbon Capture and Storage Directive (11) need access to relevant subsurface data.

4.1.1.2.

The Joint Research Centre of the European Commission is currently developing a raw materials information system including economic, socio-economic and environmental dimensions — the RMIS 2.0 (12). However, the information provided is incomplete and does not cover all the EU 27 Member States with the same level of detail.

4.1.1.3.

Today, data are only partially available and most of the time are not harmonised and thus are not comparable between countries. There is a need for standardisation of data formats and the development of algorithms able to serve as a bridge between different data systems.

4.1.1.4.

In the EESC's view, the integration of a comprehensive mineral intelligence network structure, using harmonised reliable data, within the JRC RMIS is paramount; it would provide the EC and Member States access to information and knowledge to support the sustainable use of the EU subsurface in addressing Europe's challenges.

4.1.1.5.

The EESC urges all EU Members States to collect and share raw materials information data to feed the JRC RMIS periodically. To prevent misrepresentations and errors, the EESC considers that the data provided to the JRC should be screened for accuracy before being included in the RMIS. The JRC should be funded to maintain and regularly update this information system.

4.1.2.   Process simulation

4.1.2.1.

Emissions, reclamation, water resource protection, etc. can all be subject to simulations: these can involve multiple parallel simulations using different assumptions on boundary conditions and starting points to give probability estimates of different outcomes that could be used for control and to support decision-making.

4.1.2.2.

Developments on computational techniques for process simulation and the availability of big data (data sets with sizes beyond the ability of common software tools to capture, curate, manage, and process within a tolerable elapsed time) boosted the accuracy of simulations that represent causal relationships between controlled inputs and corresponding outputs. Process simulations can prove especially relevant in environmental and safety assessments and could facilitate transparency and dialogues in permitting processes.

4.1.3.   Remote sensing

4.1.3.1.

The use of remote sensing data made available by, for example, the Copernicus programme, encompassing spatial data analytics and integration with geographic information systems (GIS) software can be a valuable input into advanced simulations and the creation of ‘digital twins’, that allow quick responses to changes and reliable decision-making. The combination of remote sensing data with field data collected by sensors and drones is increasingly common in the mining sector. Land and underwater surveying using drones, for estimating stockpiles and waste dumps, are routinely made in many mining operations.

4.1.3.2.

The integration of remote sensing data with field data (from local sensors) in GIS software can be used to monitor groundwater levels, landmass movements, surface water contamination and many other real-time environmental data. If made public and protected against manipulation (e.g. by technologies such as blockchain), this data could boost trust in the mining sector and facilitate dialogues with stakeholders. Long-established data and information management practices in developed countries with a strong mining sector, such as Canada or South Africa, could be considered and serve as examples.

4.1.4.   Virtual Reality

4.1.4.1.

Virtual reality is becoming routinely used by many companies in the interpretation of 3D models of their mines. What may be more significant in the future is Augmented Reality in which geologists or engineers, while in the mine, can use a device to see the model superimposed on their view of the geology or the mine itself. This provides an advanced and powerful means of validating models as well as checking on the progress of mine development.

4.1.4.2.

Virtual reality is increasingly being used by universities and training centres to immerse students and trainees in ‘real-life’ mining contexts. The possibility of running educational simulations designed to facilitate the construction of practical knowledge in areas such as response to accidents is one of the main advantages of this technology.

5.   The ‘smart mine’

—	Digitalisation is the catalyst that helps mining operations become ‘smarter’ by leveraging digital tools and processes that make operations instrumented, interconnected and intelligent.

—	Mines will be, through digital transformation, designed differently for automation from inception with methods tailored and scaled to the orebody and variation in execution reduced by automation.

—

The digital transformation will help eliminate fatalities and injuries from mining environments. It can result in a step-change in capital intensity and operating costs, provide access to resources from mineral deposits that could not previously be mined, and generate a lower environmental footprint through selective mining.

5.1.   Intelligent mining prediction

5.1.1.

Prediction means, among other things, forecast of environmental parameters in which miners work, with particular emphasis on hazards. Effective prediction systems already being used by the mining industry include predictive maintenance, to prioritise preventive action over repairs, by collecting data on machine use and process parameters.

5.1.2.

Prediction can play a significant role in the safety of mine operations. The capture and integration of monitoring field data and equipment data can provide an accurate picture of the operations environment to be screened by process analysis tools. This would become a relevant enhancement of working conditions, especially for underground mines. The EESC believes that digitalisation can effectively contribute to the safety of mining operations and that a smart mine should include prediction systems.

5.2.   Internet of Things

5.2.1.

The development of standards and building blocks for an Industrial Internet of Things (IIoT) platform for the mining industry could boost the connection of cyber and physical systems in EU mines, in order to improve decision-making processes.

5.2.2.

The IIoT platform should address health and safety aspects, environmental performance, resource efficiency and real-time coordination of operations. The design and promotion of an EU IIoT platform for the mining sector should be prioritised.

5.2.3.

To avoid cybersecurity risks, the EESC suggests that the building blocks of the IIoT platform should be designed for local Intranets of Things, connected either through physical data transfer or through secure firewalls to the internet.

5.3.   Blockchain technology. Supply chain transparency

5.3.1.

Blockchain is an innovative solution that prevents data manipulation. Using blockchain in the mineral raw materials supply chain has the potential to improve supply chain transparency and traceability as well as reduce administrative costs. The EESC points out that blockchain technology facilitates compliance with the EU Regulation on Responsible Sourcing of Minerals (Regulation (EU) 2017/821 of the European Parliament and of the Council of 17 May 2017 (13)).

5.3.2.

Other applications of blockchain include the collection and dissemination of environmental data. By enhancing the confidence in the data, blockchain could facilitate public outreach and engagement in the vicinity of mining communities.

5.4.   5G networks and cloud computing

5.4.1.

Cloud storage of raw data is rapidly becoming impractical (and is actually unnecessary) as the volume of data increases to terabytes and more. Today, the speeds of data transfer limit its usefulness. However, the adoption of 5G networks will change this, allowing the rapid transmission, processing and cost-efficient storage and retrieval of big data.

5.4.2.

There is a severe risk in using cloud storage: if a mining company uses a commercial cloud storage service, the level of security it can achieve is entirely a function of the trust it places in the service provider. Many providers use cloud servers located outside the EU, and this can jeopardise the system security. The EESC believes that the adoption of 5G in the EU should be accompanied by incentives to increase the offer of EU-based cloud providers.

5.5.   Cybersecurity

5.5.1.

The EESC is in favour of strictly enforced regimes preventing sensitive data from leaving security boundaries. Cybersecurity can be significantly enhanced by not connecting mine systems to the internet. The smart technologies can all be used in the ‘smart mine’, including an Intranet of Things — just not made accessible from outside. Anything that needs to be connected to corporate HQ or the outside world should be transferred securely from the mine network to a separate server that is connected to the outside world.

5.6.   Artificial intelligence

5.6.1.

Artificial intelligence covers a range of different technologies, including so-called deep-learning systems. So far it has found niche applications in areas such as image processing (such as for mineral exploration), and neural-network systems for mineral identification and classification. Other practical applications for the mining sector include analytics and machine learning algorithms being used in process simulations and prediction systems.

5.7.   Integrated automation

5.7.1.

The technology of driverless vehicles is being developed rapidly by actors unconnected to the mining industry (such as Tesla or Google). Still, because mines are controlled environments, it can quickly be deployed in mines as new capabilities are introduced. Other forms of automation may also be deployed rapidly, but usually take the form of remote human-controlled (and computer-assisted) operations rather than fully autonomous operations. Because of liability concerns (and prospective regulations), it is questionable whether development of full automation of all mining processes will be economically viable in the short-medium term.

6.   Building sustainable and responsible strategic partnerships with third countries

—	The EU criticality assessment shows that greater diversification of critical raw materials imports from third countries is essential.

—	There is a need for enhanced strategic economic diplomacy at the EU level to diversify access to resources based on sustainable sourcing of raw materials.

6.1.   Research and innovation

6.1.1.

The EU research and innovation framework programmes already foster international cooperation with third countries in calls linked to mineral raw materials. However, a more prescriptive approach to further collaboration with resource-rich and technologically advanced countries on the digital transformation of mining (such as Australia, Canada, Japan, South Africa and the United States) would be instrumental in building connections that would favour EU economic diplomacy. The EESC recommends the adoption of such prescriptive approach in the coming Horizon framework.

6.1.2.

Education should also be used as an instrument to support EU economic diplomacy on raw materials topics. Internationally recognised education programmes, made in Europe, delivering ground-breaking and innovative educational contents focused on mine digitalisation topics could become an effective instrument of EU economic diplomacy.

7.   New frontiers

7.1.   Recovery of metals and minerals from sea resources

7.1.1.

There is much research on technological solutions for the extraction and processing of minerals and metals from sea resources, including seawater brines, and/or from the seabed. The EESC considers that the mining of minerals and metals from the sea should undergo a strict assessment of the corresponding environmental impacts.

7.2.   Use of space resources

7.2.1.

By 2025, the European Space Agency is planning the extraction of resources that can help sustain lunar stays and research. Potential lunar resources encompass processable materials such as volatiles and minerals (for construction, radiation and micrometeoroid protection), along with geological structures such as lava tubes that together might enable lunar habitation.

7.2.2.

Space mining raises legal questions to which there is currently no clear answer, as the scarce body of international law applicable to outer space activities lags behind the advances in technology fuelling the space industry. The EESC considers that the EU should fill this gap and take the lead to define a stable and internationally accepted legal framework that ensures a fair, secure, responsible and sustainable use of space.

8.   Beyond the COVID-19 crisis

8.1.

The COVID-19 global pandemic is highlighting the importance of digital transformation. In these times of increasing instability and unpredictability, mining operations worldwide have had to grapple with the threat of total shutdowns or a reduced workforce, the likelihood of which continues to rise as the coronavirus spreads.

8.2.

The EESC believes that, considering the challenges posed by the digitalisation and the threats to the mineral raw materials industry caused by the COVID-19 pandemic, the European Commission should promote comprehensive dialogues among social partners through the existing sectoral social dialogues (extractive industries) mechanism.

8.3.

What will be a major question going forward is how the mining companies use and engage with digital technologies, which have become intertwined with how many companies are dealing with the pandemic. Entire labour forces are having to work virtually and embrace new technologies, while social distancing orders mean that remote monitoring of operations has never been more necessary.

8.4.

The EU and the Member States must support the digital transformation of the EU mining sector actively. This is a crucial step to increase the resilience of the EU industry and the raw materials value chain. Mines using digital technologies, including integrated automation, cognitive network and use of real-time analytics are more efficient, clean and safe. Reduced environmental footprints and safer environments are easier to obtain in ‘smart mines’, and this is crucial to get the social licence to operate in Europe.

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(1)  Agricultural (e.g. potash) and energy minerals (e.g. uranium and coal) are not included in this assessment.

(2)  For additional information see Eunomia, 2015. Study on the Competitiveness of the EU Primary and Secondary Mineral Raw Materials Sectors (available at http://www.euromines.org/files/news/ec-report-study-competitiveness-eu-primary-and-secondary-mineral-raw-materials-sectors/study-competitiveness-eu-primary-and-secondary-mrms-april2015.pdf) and the 2018 EU Raw Materials Scoreboard, published by the European Commission (available at https://op.europa.eu/en/publication-detail/-/publication/117c8d9b-e3d3-11e8-b690-01aa75ed71a1).

(3)  COM(2017) 490 final.

(4)  COM(2020) 474.

(5)  Primary raw materials refers to materials (minerals/metals) that are extracted from the ground and processed. Secondary raw materials refers to materials that are obtained through recycling processes.

(6)  Nevertheless, the mining industry has the support of mining communities and regions across Europe.

(7)  For more information on the raw materials value added and jobs see the 2018 EU Raw Materials Scoreboard (available at LINK).

(8)  McKinsey Global Institute, 2018. Skill Shift, Automation and the Future of the Workforce. Discussion Paper. McKinsey Global Institute, McKinsey & Company. https://www.mckinsey.com/featured-insights/future-of-work/skill-shift-automation-and-the-future-of-the-workforce (Accessed 3 June 2019).

(9)  Communication from the Commission to the European Parliament and the Council — The raw materials initiative: meeting our critical needs for growth and jobs in Europe (SEC(2008) 2741) / COM/2008/0699 final.

(10)  Directive 2006/118/EC of the European Parliament and of the Council of 12 December 2006 on the protection of groundwater against pollution and deterioration (OJ L 372, 27.12.2006, p. 19).

(11)  Directive 2009/31/EC of the European Parliament and of the Council of 23 April 2009 on the geological storage of carbon dioxide and amending Council Directive 85/337/EEC, European Parliament and Council Directives 2000/60/EC, 2001/80/EC, 2004/35/EC, 2006/12/EC, 2008/1/EC and Regulation (EC) No 1013/2006 (OJ L 140, 5.6.2009, p. 114).

(12)  See https://rmis.jrc.ec.europa.eu/

(13)  OJ L 130, 19.5.2017, p. 1.

Opinion of the European Economic and Social Committee on ‘Towards structured youth engagement on climate and sustainability in the EU decision-making process’

(own-initiative opinion)

(2020/C 429/07)

Rapporteur:

Cillian LOHAN (IE-III)

Plenary Assembly decision	20.2.2020
Legal basis	Rule 32(2) of the Rules of Procedure Own-initiative opinion
Section responsible	Agriculture, Rural Development and the Environment
Adopted in section	8.7.2020
Adopted at plenary	18.9.2020
Plenary session No	554
Outcome of vote (for/against/abstentions)	216/0/2

1.   Conclusions and recommendations

1.1.

The intergenerational aspect of climate and sustainable development policies and implementation mechanisms needs to be reflected in strong meaningful youth engagement at all stages of EU decision-making processes, from the drafting of legislative proposals and initiatives through to implementation, monitoring and follow-up.

1.2.

Implementation of the Sustainable Development Goals through the European Green Deal requires a new approach to a more inclusive multi-stakeholder governance model that would put young people at the heart of the engagement process and go way beyond ad hoc meetings and mere calls for consultation.

1.3.

The EESC proposes the establishment of Youth Climate and Sustainability Round Tables to be hosted by the EESC in collaboration with the European Commission and the European Parliament.

1.4.

It also proposes the inclusion of a youth delegate in the official EU delegation to UNFCCC COP meetings. In addition, the EESC proposes including a youth delegate as an additional member of the EESC delegation which holds observer status at such events.

1.5.

The EESC will endeavour to amplify the voices of young people and youth organisations through considered inclusion in opinions relating to climate and sustainability, by proactively seeking input from youth representatives and continued invitations to them as speakers at EESC events; it will also request that the same opportunities to be heard are granted to youth representatives in the other EU institutions, for example at the European Parliament.

2.   Introduction

2.1.

The UN 2030 Agenda for Sustainable Development and 17 Sustainable Development Goals (SDGs) (1) represent a turning point in the way the international community has decided to tackle global issues by bringing together economic, environmental and social dimensions in an integrated manner. The Agenda 2030 is a people-centred project designed to leave no group behind and intergenerational equity is a concept inherent to sustainability. The young generation should not be left to deal with the consequences of unsustainable policies they have not contributed to shaping.

2.2.

The world today is facing a climate emergency. The response of governments to the climate crisis thus far has not been sufficient and the world is not on track to meet the objective of the Paris Agreement and the SDGs. Civil society has been calling forcefully for more ambitious and urgent climate action. The most dramatic demonstration of these calls are the youth climate strikes.

2.3.

The first half of 2020 has been defined by the global pandemic induced by COVID-19. The unprecedented response to this virus will have a lasting impact on short- and medium-term economic forecasts. The design of the financial response packages cannot be ignored. As the youth of today enter the workforce they will continue to experience the financial impact of COVID-19. In addition, young people will continue feeling the impact of COVID-19 on their mental health, education and overall participation in society. The Sustainable Development approach of balancing financial, societal and environmental needs is even more relevant in this context.

2.4.

The financial support announced for the economic recovery will place a burden on future generations. There should be fairness in how resources and opportunities are used between generations. The support given to sectors in post-COVID plans should take into consideration the demands of young people with regard to climate and their right to a healthier, more sustainable future.

2.5.

The Recovery Plan for Europe (2), as announced by Commission President von der Leyen, has reflected the need to ensure that the economic recovery should be founded on the principles of the EU Green Deal, and deliver for both climate and sustainability. The recovery programme has the potential to be a transformative stimulus package.

2.6.

David Boyd, UN Special Rapporteur on human rights and the environment made an appeal in mid-April, saying countries must not use the COVID-19 pandemic as an excuse to weaken environmental protection and enforcement, after several governments announced plans to lower environmental standards or reduce other related measures like monitoring and enforcing environmental requirements (3).

2.7.

In light of the global environmental crisis that predates COVID-19, these actions are irrational and irresponsible and jeopardise the rights of vulnerable and marginalised people. Such policy decisions are likely to result in accelerated deterioration of the environment and have a negative impact on a wide range of human rights, including the right to life, health, water, culture and food, as well as the right to live in a healthy environment. COVID-19 has highlighted the importance of having a safe, clean and sustainable natural environment.

2.8.

As the SDGs are now to be implemented via the European Green Deal, this should in principle open the debate on a paradigm shift towards a more participatory model of multi-stakeholder governance for sustainable development. Young people should be part of this new governance model and should be enabled to engage in the decision-making process at EU level in a structured and formal way going beyond mere consultation and ad hoc meetings.

2.9.

Youth organisations play an important role in this context, as they represent the interests of millions of young people in Europe and globally through their wide networks. They are key actors in ensuring that young people are not only present in institutions, but are also enabled to contribute to the decision-making process in a meaningful way.

2.10.

Youth organisations can play multiple other roles. Youth work and non-formal learning have a positive impact on sustainable development, as its purpose is to build empowered young individuals that actively contribute to our society. Youth organisations can also help to amplify youth voices to collectively push for sustainable development at local, national, regional and global level and to hold governments and institutions to account on their commitments.

2.11.

Quality youth participation and representation mechanisms create an opportunity for a partnership between policy makers, young people and youth organisations to shape decisions that impact young people’s lives. It is important to take this opportunity to also ensure the stability and resilience of our democracies for which participation of all groups of society in decision-making processes is a prerequisite.

2.12.

All aspects of policy need to consider the impact on youth and their perspectives, including for future generations. From climate change investment to Farm to Fork, the role of youth is especially important when considering social aspects and future-proofing policies.

2.13.

This opinion will look into the possibilities to engage with young people in a formal way at institutional level. It will provide the building blocks for a new structured approach to youth engagement at EU level. Lastly, the opinion will also propose recommendations to the EESC on how to better integrate young people into its working processes, in order to help voice their message and thus make the EESC’s message fairer in an intergenerational context.

3.   The link between climate change and the need for youth engagement

3.1.

Young people have the right to have a say on matters that concern them. The right to participate is anchored in the UN Sustainable Development 2030 Agenda, which acknowledges youth as ‘critical agents of change’, as set out in the Sustainable Development Goals.

3.2.

No other issue has mobilised more young people around the world in the last years than climate change. Young people aged 15 to 24 represent 16 % of the world population and will reach 1,3 billion people by 2030. The decisions on climate change and other environmental issues taken by political leaders today will affect generations to come. This principle is known as intergenerational equity.

3.3.

Young people possess the energy, creativity and motivation to challenge current unsustainable models. Social change led by young people extends beyond generational, cultural and geographical boundaries. Less bound by ideological and institutional structures, young people have demonstrated the ability to think outside the box and develop innovative solutions for society as a whole.

3.4.

Since climate change disrupts the basic necessities of life — shelter, food and water — it is regarded as the biggest global human health threat of the twenty-first century. Children and young people are amongst the most vulnerable when it comes to climate change impacts, with the World Health Organisation estimating that children will suffer more than 80 % of the illnesses, injuries and deaths attributable to it. Children are also more susceptible to indirect effects of climate change, such as food shortages, intergroup conflict, economic dislocation and migration. The vulnerability of children has been highlighted by the COVID-19 pandemic, as their exposure as a dependent group has been clearly identified.

3.5.

Moreover, the psychosocial impacts of climate change arise not only from directly experiencing its effects but also from vicarious experience and knowledge of the threat it poses for the future. There is clear evidence of widespread emotional reactions to climate change, even in high-income countries that are not yet suffering its direct effects. Surveys have found that many young people experience fear, sadness, anger and a sense of powerlessness.

3.6.

Furthermore, the climate crisis causes the breakdown of our economic and social support structures. Young people must grapple with serious economic, social, cultural, political and environmental problems inherited from previous generations. Young people are disproportionately affected by economic crises and subsequent austerity measures. The most disadvantaged among young people experience precariousness and prolonged poverty. They face additional obstacles, such as difficult living conditions and barriers to jobs opportunities, due to their socio-economic background, sexual orientation, gender identity and gender expression, ethnicity or race, migratory status, disability and/or other status.

4.   Learning from existing structures and processes

4.1.

Over the last eighteen months, we have seen children and young people from all over the world striking and using their voices to demand change. Some are inspired by well-known activists at a global or national level; others are inspired by each other; others can no longer tolerate the continuing support for a ‘growth at all costs’ society or use of public money to support unsustainable practices, for example fossil fuel subsidies and other harmful subsidies. Since the FridaysForFuture movement began in August 2018, 13 million joined climate strikes in 228 countries (4).

Youth engagement at national level

4.2.

Some EU countries have since created mechanisms to include the voice of youth representatives in policy-making on climate. The Youth Climate Council in Denmark is an independent youth-led advisory board to the climate minister. It gathers input from young people all over the country and formulates tangible policy proposals to the minister. The proposals are then included in the policy processes to give young people a channel for directly influencing the development of climate policies. Moreover, local level Youth Climate Councils exist in some cities in Denmark (5).

4.3.

Many young entrepreneurs think of the ecological and social aspects of their activities right from the start. Business practices aiming to reduce environmental impact should be supported at national level, for instance, by tax exemptions and encouraged as positive trends mobilising young entrepreneurs’ energy to create sustainable business models.

4.4.

Initiatives like the Green Students’ Parliaments in Hungary, which provide proposals on environmental matters to city administrations, are important, as they not only educate but also provide an opportunity for schools to strengthen links with city residents and between schools and parents.

Youth engagement at European level

4.5.

The EU Youth Dialogue is an EU participatory process enabling young people to engage with decision-makers on a given topic by bringing their ideas and proposals on youth policy-related topics in the EU. It supports the implementation of the EU Youth Strategy 2019-2027 and is organised into an 18-month work cycle.

4.6.

The Council of Europe Advisory Council on Youth is the non-governmental partner in the co-management structure which establishes the standards and work priorities of the Council of Europe’s youth sector and makes recommendations for future priorities, programmes and budgets. It is made up of 30 representatives from youth NGOs and networks in Europe and its main task is to advise the Committee of Ministers on all questions relating to young people. It promotes a co-management system in decision-making processes at all levels as good practice for youth participation, democracy and inclusion.

Youth engagement at UN level

4.7.

At UN level, the Major Group for Children and Youth (UN MGCY) is the UN General Assembly-mandated, official, formal and self-organised mechanism for young people to meaningfully engage in the UN. UN MGCY has working and coordination structures responsible for different aspects of its work, as well as several formal mandated positions.

4.8.

On climate, YOUNGO is the official youth constituency at the United Nations Framework Convention on Climate Change (UNFCCC). YOUNGO is made up of organisations and individuals who identify as young. It is not an organisation, but rather a unified open formal engagement mechanism for groups and/or individuals to provide an input into UNFCCC processes in a frequent, formalised, democratic and inclusive manner.

4.9.

The need for greater involvement of young people was recognised in September at the Youth Climate Summit in New York on 21 September. The Kwon-Gesh Pledge, which calls on young people to hold their governments and leaders accountable, has been endorsed by over 50 countries since the Summit took place.

4.10.

The UN Youth Strategy 2030 aims to address the needs, build the agency and advance the rights of young people, and to ensure their engagement and participation in the implementation, review and follow-up of the 2030 Agenda for Sustainable Development as well as other relevant global agendas and frameworks.

Learning from other platforms

4.11.

The MSP on Sustainable Development Goals set up by the Commission in 2017, in which the EESC took an active part, played an important role, but also left much room for improvement in terms of resources for its work, frequency of meetings, ownership of the agenda setting, opportunities for extended debate and engagement amongst members and facilitation of more regular, transparent and accessible public consultations.

4.12.

The European Circular Economy Stakeholder Platform (ECESP), which is run jointly by the EESC and the European Commission, provides a space for a wide-ranging group of stakeholders to exchange good practices and ideas and create valuable networks. Giving ownership of the platform to stakeholders is the main difference with the MSP on SDGs and is a good practice to follow in setting up other structured engagement mechanisms.

5.   Vision for meaningful youth engagement

Principles

5.1.

It is clear that youth organisations do not want to create new engagement mechanisms for processes that they do not deem meaningful in the first place. The climate crisis has deeper roots and proposing solutions to it means asking fundamental questions about what society we want to live in in the future and what vision of the economy we want to create to sustain our climate-neutral society. ‘If the goal is to change the underlying system, not the climate, it may be necessary to do more than just educate young people about climate change and encourage youth activism. Instead, it may be time to recognise the many facets, forms, spaces, and expressions of youth dissent’ (6). Therefore, the horizontal issues that are closely linked with effective climate policy, such as monetary issues, should also facilitate youth engagement.

5.2.

For the engagement to be meaningful, young people should be included throughout the entire institutional process: preparatory phases, implementation, follow-up and evaluation of the initiatives and policy processes. Many consultation channels already set the frame and lead to power imbalances. It is important that young people have ownership over their own engagement and are able to co-create the agenda with institutional stakeholders.

5.3.

As a starting point, it would be beneficial to identify obstacles to young people’s participation, which could be legal or administrative in nature or due to lack of awareness or lack of access to information regarding youth participation and representation mechanisms. Social, economic and cultural obstacles hindering young people’s participation should also be addressed. The role of informal social and cultural conversations and information exchanges should not be underestimated, for example within peer groups or within families. Participation should be clearly understood to be for everyone.

5.4.

It goes without saying that resources are needed to provide support to build necessary knowledge and skills and ensure equal opportunities for meaningful participation, as well as for young people who are taking part in youth participation and representation mechanisms. Governments and relevant institutions should provide sufficient, structural, reliable and sustainable resources and necessary political support for youth organisations to engage in youth participation and representation mechanisms.

5.5.

The youth climate movement and its activists have a right to have their voices heard in the decision-making processes that will have an impact on their lives. This is also a clear component of the intergenerational aspect of Climate Justice.

5.6.

The EU must continue to lead the way in innovative engagement with stakeholders. As the institutional home of civil society, the EESC is a natural conduit and partner for delivering on structured engagement.

Tangible proposal

5.7.

At European level, the EESC has repeatedly stated (7) that structured involvement of civil society is necessary, and a clear mandate for civil society’s participation in the development, implementation and monitoring of policies and strategies aiming to achieve climate neutrality should be provided. The EU currently has an opportunity to create engagement mechanisms via a European Climate Pact. The youth engagement mechanism on climate and sustainability should be an integral part of this Pact, facilitated by youth organisations.

5.8.

The EU decision-makers should create a space for regular and meaningful dialogue with young people on policy proposals and strategies in the area of climate and sustainability. Youth Climate and Sustainability Round Tables facilitated by the First Executive Vice-President of the European Commission should take place twice a year in Brussels.

5.9.

These Youth Climate and Sustainability Round Tables should be hosted by the EESC in cooperation with the European Commission and the European Parliament.

5.10.

Young people’s input to the Round Tables should be collated and formally sent to the EP and EC with both institutions providing a written response, which would outline which proposals can and cannot be implemented and why. The Round Tables must not become a ‘talking shop’ but rather demonstrate meaningful engagement and responses from policy makers.

5.11.

In addition to meeting with the European Commission and the European Parliament, the relevant presidencies could also be invited. This will ensure that young people can enter into dialogue with the Council of the EU. The Round Tables could be timed to match the presidencies’ rotation so that young people can have a genuine impact on the presidency agenda.

5.12.

To create a channel of communication with young people, a ‘Youth Climate and Sustainability Dialogue mailing list’ should be created and managed by the Youth Climate and Sustainability Round Table facilitators, building on the example of the UN youth constituencies’ organisation. The mailing list would be open to all young climate stakeholders and facilitate good communication and information-sharing amongst the group and with the institutions.

5.13.

The EU decision-makers should ensure high-quality involvement of youth organisations in the development, implementation and follow-up of different mechanisms for structured youth engagement on climate and sustainability in the EU decision-making processes. It will help create engagement that fosters young people’s creativity and ideas while at the same time making sure that these ideas are translated into policies.

6.   Practical implementation of the vision by all EU institutions

EU institutions

6.1.

Dozens of dedicated youth delegates from around the world participate in the annual climate conferences to make recommendations, urge on delegates, track progress, organise and attend side events and build their networks. Adding a Youth Delegate to the EU Climate Delegation for UNFCCC COPs would demonstrate that the EU institutions are serious about engaging with young people in a meaningful manner.

6.2.

The Aarhus Convention, to which the European Union is a Party, should be fully enforced, granting opportunities for young people and youth organisations and supporting their access to justice before the Court of Justice of the EU with a view to safeguarding their right to receive environmental information from public authorities or the right to participate in environmental decision-making (8).

6.3.

Young people and youth organisations should be involved in the EU’s continuing response to the COVID-19 crisis and working towards fundamental change in our social, economic and political systems, with sustainable development principles at the heart thereof. The over EUR 500 bn response package announced in April 2020 needs to ensure that these principles are at the core of its deployment. This is a once-in-a-generation opportunity to redress systemic inequalities and transition away from unsustainable practices.

6.4.

It is important that youth organisations benefit from capacity-building efforts that help them navigate regulatory and administrative environments. Providing capacity-building, political and financial support, as well as facilitating networking and connections, will empower young people and facilitate their engagement in the decision-making processes.

The EESC

6.5.

The EESC should lead by example by including the EU youth delegate in its UNFCCC COP delegation, which has observer status within the EU delegation. This youth delegate would be included in EESC bilateral meetings and side events. They could communicate on the process and outcomes with youth organisations and networks, including the Youth Climate and Sustainability Round Table network. They would benefit from secretariat support provided by the EESC for these missions.

6.6.

The EESC could commit to engaging with a youth representative on each EESC opinion relating to climate and sustainability. This person would provide the rapporteur with a contribution on the views of young people and would be invited to present input at a hearing, study group meeting or section meeting, as appropriate. The youth representative could be selected by the EESC rapporteur based on a recommendation from the Youth Climate and Sustainability Dialogue facilitators. This role could be described as an informal shadow-rapporteur-type arrangement.

6.7.

The EESC has already started providing opportunities for youth representatives to regularly speak at public events focusing on climate and sustainability. In the next term, this practice should be extended to all public events that concern future-oriented issues and that would benefit from youth input.

6.8.

The European Youth Climate Summit hosted jointly by the EESC with the European Parliament could become a yearly event for young people. This event can help enhance youth advocacy, contribute to capacity building and empowerment of young people and build connections between the EU institutions, which would be crucial for meaningful, structured and lasting engagement of young people in the EU decision-making process.

6.9.

The EESC asks that the European Parliament also establish a formal consultation process with youth representatives when drafting their positions on policy proposals relating to climate and sustainability.

6.10.

The EESC could future-proof its membership to ensure sufficient representation of youth organisations at the EESC and also ensure experience and knowledge is shared with youth branches of member organisations. Many EESC member organisations have youth divisions — more members should be actively encouraged to engage with potential future members from such sections of their organisations. The EESC continues to use the excellent Your Europe Your Say event to ensure youth engagement, and despite being postponed this year due to COVID-19, it will continue next year with a focus on climate and sustainability.

7.   Embracing a positive vision for the future

7.1.

The worst consequences of the climate crisis are still a number of years away for most Europeans. The COVID-19 pandemic gives us a practical example of what can happen when scientists and experts are ignored. It has also shown that creating policy based on accurate science can be effective in dealing with a crisis. This lesson must be applied to the climate crisis: we still have time to avert some of the worst consequences and to prepare for the rest.

7.2.

The design and implementation of recovery from the economic impact of the pandemic must keep climate action and sustainability commitments at the forefront of policy. The UN Agenda 2030 and the Paris Agreement form the backbone of international multilateralism in dealing with these issues, and the European Green Deal must be strengthened to deliver the sustainable carbon-neutral future society that will honour intergenerational commitments.

7.3.

The youth movement has demonstrated great adaptability during the pandemic lockdown. Their message has resonated through online mobilisation and innovative ways of spreading their message using all forms of communications from policy asks to humour. This innovative and ambitious approach to designing our future needs to be recognised and included.

7.4.

A positive vision of the future has been glimpsed during the otherwise awful impact of COVID-19. The lowest paid workers in our economy have been recognised as essential. Our workforces are more flexible than anyone realised. Connecting with family and our immediate communities has been hugely rewarding and valuable. Appreciating the health and well-being benefits of having access to nature has been highlighted. We have an opportunity now to ensure that we take the positive lessons learned and apply them as essential elements of the new normal.

---

(1)  UN sustainable development goals.

(2)  European Commission: Europe’s moment: Repair and Prepare for the Next Generation COM(2020) 456 final and accompanying document The EU budget powering the recovery plan for Europe.

(3)  https://news.un.org/en/story/2020/04/1061772

(4)  Source: Fridays for future: strike statistics.

(5)  Source: UN Youth Climate Council.

(6)  Source: Ecology and Society: Exploring youth activism on climate change: dutiful, disruptive, and dangerous dissent.

(7)  Ref: EESC opinion on Boosting climate actions by non-state actors: An EU framework for encouraging more and better actions (OJ C 227, 28.6.2018, p. 35) and EESC opinion on the European Climate Pact (OJ C 364, 28.10.2020, p. 67)).

(8)  EESC Opinion on access to justice at national level related to measures implementing EU environmental law (OJ C 129, 11.4.2018, p. 65).

Opinion of the European Economic and Social Committee on ‘Towards an EU strategy on sustainable consumption’

(own-initiative opinion)

(2020/C 429/08)

Rapporteur:

Peter SCHMIDT

Plenary Assembly decision	20.2.2020
Legal basis	Rule 32(2) of the Rules of Procedure
	Own-initiative opinion
Section responsible	Section for Agriculture, Rural Development and the Environment
Adopted in section	8.7.2020
Adopted at plenary	18.9.2020
Plenary session No	554
Outcome of vote (for/against/abstentions)	212/2/5

1.   Conclusions and recommendations

1.1.

The COVID-19 pandemic has exposed the fragility of supply chains. Rebuilding the economy after the crisis will be an opportunity to rethink our society and develop a new model of prosperity. It is no longer a choice, but a necessity, to shift priorities towards more sustainable modes of production, distribution and consumption and to make all actors in supply chains more resilient to crises. The resilience of farmers that grow our food, or workers that produce our clothes is equally important as the resilience of importing companies, manufacturers, wholesalers, SMEs or retail chains in Europe.

1.2.

The EESC calls for a comprehensive EU strategy on sustainable consumption. The most sustainable choice should be the easiest choice for citizens. This requires a systemic change in the way we produce and consume. In particular, the responsibility of producers (1) to address unsustainable consumption needs to be better acknowledged. As markets will not deliver sustainable outcomes automatically, a strategy is necessary to create the regulatory context and strategic direction both for the private sector (including through circular and sustainable business models) and for public authorities (e.g. through public procurement).

1.3.

The social dimension must be fully integrated in the strategy along with the economic and environmental dimensions, to achieve a much-needed policy coherence for sustainable development. For too long the EU has concentrated on market-based solutions and neglected the citizens' and workers' dimension. Improvement of working conditions, minimum wages, social protection, investment in public services, inclusive governance, fair taxation, etc. should be included as sustainability criteria. This would contribute to making our production and consumption systems fairer and more sustainable in the long run. It would also contribute to the implementation of the UN Agenda 2030.

1.4.

An EU strategy on sustainable consumption should pay particular attention to the impact on vulnerable populations and low-income households, which have been — and will continue to be — particularly hit by the current crisis, while also looking at the impact on vulnerable actors in supply chains, including farmers and workers. Sustainable products and services should be made accessible and affordable to all.

1.5.

In the short and medium-term, all relevant policy tools (e.g. public procurement, labelling, taxation, etc.) should be better coordinated and geared towards this vision. A more harmonised approach is necessary to overcome the current fragmentation of EU policies and the silo approach.

1.6.

In the context of the post-COVID recovery, the EESC calls on the Commission, the Parliament and Member States to work closely with the EESC on developing a substantial and coordinated programme of integrated policies that will help Europe ‘build back better’ and create the conditions for a comprehensive EU strategy for sustainable consumption. The EESC recommends the following specific actions for implementation: — Introduce product norms and bans fostering sustainability, i.e. those promoting product longevity and sustainability — Prohibit Unfair Trading Practices (UTPs) — Improve the competition rules for collective initiatives that promote sustainability in supply chains — Make social and environmental clauses in trade agreements enforceable — Improve corporate accountability and increase the awareness of companies on the environmental (e.g. EMAS) and social aspects — Introduce tax shifts from labour to resource use — Promote fair and green public procurement, with minimum mandatory criteria — Improve transparency by introducing mandatory labelling rules on origin, sustainability and the social dimension — Encourage bottom-up initiatives and pilot interventions — Address advertisement and marketing — Promote education on sustainable consumption.

2.   Introduction

2.1.

The COVID-19 pandemic has exposed the fragility of supply chains and the need for an urgent and systemic transformation. Underinvestment in the health and care sectors, over-reliance on global supply chains and economic systems dependent on linear processes of production and consumption incompatible with planetary boundaries have jeopardised the capacity of governments to take quick and decisive action to protect public health. It is no longer a choice, but a necessity, to shift priorities towards more sustainable modes of production, distribution and consumption and to make all actors in the supply chains more resilient to crises (2). The pandemic has brought social protection, public services, low-skilled workers, occupational health and safety as well as working conditions to the centre of the media and policy debate.

2.2.

The EU has fully committed itself to the UN 2030 Agenda and its 17 Sustainable Development Goals (SDGs). Yet the implementation of SDG 12 on sustainable consumption and production is still challenging in Europe (3), while being instrumental to the realisation of the Agenda 2030 as a whole. In fact, the ways in which most people consume today — large volumes at a high rate, along a linear trajectory and with significant wastage (take-make-dispose) — are not sustainable. Moreover, citizens have primarily been cast as individual consumers, which has put the burden of responsibility on people for their choices, without providing them with accessible or affordable alternatives.

2.3.

The EESC has previously called for the EU to propose a new vision of prosperity for people and planet based on the principles of environmental sustainability, the right to a decent life and the protection of social values (4). A systemic EU approach to sustainable consumption is one of the essential building blocks of the EESC's strategic vision of a sustainable, wellbeing economy leaving no one behind.

2.4.

The political momentum is high for the EU to take decisive steps towards this vision. The European Green — and Social — Deal has huge potential to rebuild the economy after the COVID-19 crisis on a more sustainable basis, contribute to creating a new prosperity model and ensure a just transition (5).

2.5.

In particular, the new Circular Economy Action Plan (CEAP) includes a specific action on empowering consumers for the green transition and several initiatives that could help manifest the responsibility of regulators and companies. The CEAP should widen the scope of the 2018 ‘New Deal for Consumers’, which was mainly focused on protection and enforcement rather than empowerment. The implementation of the Farm to Fork and Biodiversity strategies is also doubly important as the COVID-19 crisis has made it more urgent than ever to increase the resilience and sustainability of EU and global food systems. The upcoming 8th Environment Action Programme should be an opportunity to address sustainable consumption more decisively.

2.6.

This opinion will contribute to the reflection on the post-COVID-19 recovery by providing concrete recommendations for a comprehensive EU strategy on sustainable consumption, as part of the European Green Deal and as a complement to the new CEAP.

3.   Challenges — analysis of the current situation

3.1.

Europe is still far from living within the boundaries of the planet. Different studies applying different methodologies to assess the EU's consumption patterns arrive at this same conclusion (6), including a recent report by the European Environment Agency (EEA) and the Swiss Federal Office for the Environment (FOEN) (7).

3.2.

Consumption of products and services is a direct and indirect driver of pressures such as land-use change, emissions and the release of toxic chemicals into the environment, in turn generating a range of environmental impacts, including climate change, freshwater depletion and pollution, and loss of biodiversity. This ‘ecological footprint’ of consumption is high in Europe; in fact it is one of the highest in the world. Data suggest that we would need almost three Earths to sustain the global economy if everyone on the planet consumed like the average European (8) , (9).

3.3.

To maintain its high consumption levels, Europe is dependent on resources extracted elsewhere. Europe is thereby, to an increasing degree, externalising its pressures on key environmental issues onto other parts of the world (10). On the whole, this model is no longer compatible with a safe and sustainable future (11).

3.4.

While exporting the EU's environmental footprint through trade cannot be considered sustainable, it also needs to be recognised that trade with the EU plays an important role in the socio-economic development of many countries, in particular LDCs. In fact, the EU actively promotes trade as a tool to foster sustainability globally and within trade partner countries. Principles of fairness, circularity and more sustainable consumption therefore need to be carefully aligned with trade, creating opportunities for both the EU and its trade partners (12).

3.5.

Current European consumption patterns also raise several questions regarding social equity. While parts of Europe have some of the highest material footprints in the world (13), other regions in Europe are not able to afford a standard of living that is generally considered acceptable. The level of material deprivation varies hugely across the EU, as does the level of economic strain (14). Consumption is thereby closely linked to political agendas on, e.g. nutrition, poverty and inequality (15). More sustainable consumption in Europe as a whole may entail an increase in resource use for some, and a decrease in resource use by others — overall a better balance of access to resources and strengthened resource justice (16).

3.6.

Unsustainable consumption is driven by a complex interplay between a range of different factors. The dominant business model is linear, with most companies' growth still based on more people buying more stuff. The effective lifetime of many consumer products is shrinking (17), while repairing them is becoming increasingly (often intentionally) difficult (18). Alternatives to the linear take-make-dispose economic model, such as those based on material circularity, servicing or sharing, could contribute to a reduction in overall material consumption but remain peripheral and are often not able to compete with linear solutions under current conditions (19). In fact, secondary (reused/remanufactured/recycled) products are often sold in addition to primary (new) products, resulting in environmental impacts from both the primary and secondary production (20). Promoting circularity without promoting wider systemic changes in production (in particular product design), consumption and waste prevention would therefore only be addressing part of the problem. Consumers should benefit from a true ‘right to repair’.

3.7.

Price is one of the most important determinants and drivers of demand (21) and as long as the price of products and services does not reflect more accurately their true costs, an overall shift to sustainable consumption patterns will not be possible. The economic costs of environmental and social externalities of production and consumption are currently usually borne by tax payers and by future generations, not by the companies who market the products and services in question. Products and services offering alternative solutions with lower impacts are still often more expensive and cumbersome to access, despite proven impacts of less negative externalities by more sustainable consumption options, such as organic and Fair Trade products (22).

3.8.

Meanwhile, increased attention is being paid to true-cost accounting methods and studies have proliferated since economist Pigou coined the term ‘externality’ costs (23). The EC published in 2008 a strategy on the internalisation of external costs (24), identifying taxation, tolls (or user charges) and, in certain circumstances, emissions trading, as the main economic instruments for internalising external costs. However, the long-term trend in Europe is that revenue from ‘environmental’ taxes as a share of total tax revenue is decreasing (25).

3.9.

Another challenge is posed by the currently dominant interpretation of competition law, adopting a very narrow concept of consumer welfare, which prioritises cheap shelf prices for the consumer over the sustainability of products and how they have been produced. In 2013, the Dutch competition authority (ACM), in the ‘Energy Agreement’ case, ruled that a multi-stakeholder Energy Agreement for Sustainable Growth with employers, trade unions, environmental organisations and others for energy conservation, boosting energy from renewable sources and job creation, was not in line with competition law requirements. In 2014, ACM, in the ‘Chicken of Tomorrow’ case, found that a multi-stakeholder agreement to increase the welfare of chicken, such as less antibiotics and more space, and additional environmental measures, was restricting competition.

3.10.

The Commisson guidelines on Article 101(3) state that the objective of Article 101 is to protect competition ‘as a means of enhancing consumer welfare and of ensuring an efficient allocation of resources’, without any indication on whether or how non-economic considerations can be taken into account. Many operators would like to step up their sustainability projects but investments are too high to take them on by themselves. Competition law guidelines should provide more clarity to operators on how to engage in sustainability cooperation.

3.11.

A recent study by the Fairtrade Foundation presents evidence that ‘an unclear legal landscape around potential collaboration in relation to low farm-gate prices restrict[s] progress towards working collaboratively to secure living wages and incomes across supply chains.’ The report notes ‘further clarity from competition authorities on how a pre-competitive collaboration on the issue of low farm-gate prices would be assessed under competition law would greatly aid progress’ (26).

3.12.

An obstacle to a coherent approach to sustainable consumption is the current fragmentation of EU policies. E.g. regarding the implementation of the 2014 EU Public Procurement Directive (27), several Commission DGs work separately on providing guidance documents to contracting authorities (‘Buying Green’ Handbook by DG Environment (28), ‘Buying Social’ led by DG GROW (29) — in the process of being updated) while there is a separate EC notice ‘Guidance on Innovation Procurement’ (30). This can be highly confusing for contracting authorities in the EU that wish to take an integrated approach to sustainable procurement, as laid down in SDG 12.3.

4.   Vision — Towards a comprehensive EU strategy on sustainable consumption

4.1.

Policies addressing the sustainability of production processes (e.g. ecodesign), products and services, and dealing with materials that become waste, have long been a cornerstone of EU policy and there is a relatively well-established policy framework in place. However, this approach is no longer enough to achieve the scale of change required in the time available — more attention needs to be paid to the role of consumption in pursuing sustainable development.

4.2.

EU-level policies targeting consumption have so far focused on citizens' roles as consumers and on using information-based policy tools to try to influence consumers' behaviour. Key examples include product eco-labelling, awareness-raising campaigns and voluntary green public procurement criteria.

4.3.

These policy tools have had a limited effect on unsustainable consumption. In fact, there is little evidence to suggest that improved information about products' environmental performance, such as eco-labels, result in real-life changes in purchasing behaviour, let alone at the scale required. This is due to various rebound effects, subconscious routines and habits (31). Our choices as consumers (be they household, private-sector or public) remain largely driven by price and convenience (32). However, it is important to highlight that the responsibility for such choices in the existing system does not lie with consumers, but rather with producers (33). It is the capitalist logic and the imbalance of power in the supply chain that lead to a ‘race to the bottom’, prioritising price over sustainability.

4.4.

It is also problematic to hold citizens responsible for delivering more sustainable consumption, while most products and services do not reveal their true costs and market and societal levers remain set on encouraging increased material consumption. The responsibility of the private and public sectors to address unsustainable consumption needs to be better acknowledged and tools adopted to help ensure — in a balanced and transparent manner — that the healthier, more sustainable and safer choice is the easier and more affordable choice for citizens. The EC should continue supporting civil society-led pan-European campaigns on sustainable consumption, focusing not only on individual decisions by consumers.

4.5.

Part of the reason for the nature of EU-level policy to date is the balance of policy responsibilities between the EU and its Member States. Policy tools that can be used to try to regulate demand, such as taxes, largely fall under Member State competence. Nevertheless, the EU has a central role in ensuring that Europe lives within the boundaries of the planet and has several means by which to act on unsustainable consumption. Some Member States could also benefit from further guidance (toolkit) from the EU.

4.6.

Single approaches, e.g. fair or circular, are important but not sufficient to achieve sustainability. Furthermore, there is a risk that developing policy responses to unsustainable consumption in isolation of each other may create unforeseen issues down the line. A comprehensive and coordinated approach is necessary, reflecting the complexity of the issue at hand and delivering a coherent contribution from diverse policy areas, ranging from research, innovation, sectoral and industrial policies to education, welfare, trade and employment (34). Importantly, an EU strategy needs to complement — not compromise — ambitious regulatory interventions where these are necessary.

4.7.

An EU-level strategy on sustainable consumption should provide an ambitious framework for Member States and for the private sector to address both household consumption and public-sector consumption. Markets will not deliver sustainable outcomes automatically. A strategy is necessary to create the regulatory context and strategic direction that is conducive to ambitious front-runner initiatives both for products and for services (as the service economy is not necessarily sustainable).

4.8.

An EU strategy would also resonate with the requests from European consumers for the EU to ensure structural changes and the creation of new infrastructures to allow consumers to adopt more sustainable lifestyles (35).

4.9.

Mainstreaming the role of consumption at EU level may also help avoid rebound effects and other unforeseen effects of revised and/or new policy and support a longer-term cultural shift in how we view the concept of sufficiency and the role of consumption in achieving Agenda 2030.

4.10.

An EU strategy on sustainable consumption should include targets for an absolute reduction of the material footprint of European consumption. EU-level targets can provide direction, momentum and coherence both for other governance levels and for private and public innovators to help deliver the wellbeing economy (36).

4.11.

Further, the justice aspect of resource use is crucial and one that has long been overlooked in EU policy (37). A strategy on sustainable consumption must be a people-centred strategy, aimed at making sustainable consumer choices accessible, affordable and appealing to all. The strategy should pay particular attention to the impact on vulnerable populations and low-income households. High-spending social groups should also be addressed accordingly.

4.12.

Workers and farmers have a key role to play in promoting sustainable consumption as they are both consumers at the end of the chain but also producers at the start of the supply chain. It is essential that sustainable consumption policies therefore include a balanced approach to sharing value in and across the value chain, such as promoting living wages for workers and living income for farmers, both in the EU and in the Global South, rather than exclusively aiming to obtain short-term cheap prices for consumers. Workers, trade unions, farmers' groups and civil society organisations can also have a key role to play in monitoring compliance of sustainability and human rights standards in global value chains.

4.13.

Retail can also play an important role in fostering sustainable consumption by nudging consumers towards healthier and more sustainable choices. Within this sector, the consumer co-operative business model is particularly worth noting because of its specific entrepreneurial form, which puts the figure of the consumer-member at the core of its business and democratic governance structure.

4.14.

An EU strategy should include initiatives to ensure transparent and reliable information flows to support sustainable consumption, making use of the opportunities created by new and emerging digital solutions. This could also support companies who are willing to innovate but currently lack metrics and data to allow for a reliable assessment of the ecological and social impacts of everyday consumption. SMEs, start-ups and cooperatives, which are essential innovators and pilot platforms, are facing this challenge in particular. Notably, the EU also has an important role in the harmonisation and verification of green claims made on the internal market. Currently, the high volume of such claims, with various degrees of evidence to support them, is creating confusion and possibly eroding consumer confidence in the legitimacy of any of these claims. The EESC therefore welcomes the Commission's ambition, under the implementation of the new CEAP, to make a legislative proposal aiming to ensure that companies substantiate their environmental claims.

4.15.

An EU-level strategy on sustainable consumption should acknowledge and foster synergies with other policy areas. E.g. 45 % of Europe's total carbon emissions come from how we make and use products, and how we produce food (38). Food systems can be the source of restoration and enhanced resilience, if food is grown, processed and consumed differently. This almost certainly means feeding cattle as appropriate to the species, and consumers eating a balanced diet with less meat, which has both climate and health gains (39). Consumption and demand play a crucial role in our ability to reduce greenhouse gas emissions. Similarly, the main challenge for addressing biodiversity loss and ecosystem degradation in Europe is our multiple-planet lifestyle (40). The EESC also repeats its call for a recognition of the rights of nature to ensure parity with the rights of individuals and of corporations (41).

5.   From Vision to Implementation — Opportunities for action at EU and Member-State level

5.1.

In the context of the post-COVID recovery, the EESC calls on the Commission, the Parliament and Member States to work closely with the EESC on developing a substantial and coordinated programme of integrated policies that will help Europe ‘build back better’ and create the conditions for a comprehensive EU strategy for sustainable consumption. Green recovery plans should kick-start the necessary systemic change in the mobility, nutrition, housing, leisure, energy systems and high-impact product groups (42), looking at the impact of EU consumption both in the EU and in the Global South. The following proposals are offered as the starting point for this exercise.

5.2.    Legal or regulatory instruments

5.2.1.

Introduce product norms (regulation) and product bans (prohibitions) fostering sustainability, i.e. those promoting product longevity. The EESC was a forerunner and already called for a total ban on planned obsolescence in its 2013 opinion (43) on product lifetimes and consumer information, and in later opinions. It highlighted that it would be useful to establish a system that guarantees a minimum lifetime for purchased products. A recent report prepared by the EP IMCO Committee goes in the same direction (44). In this context, the implications of increasing E-commerce, e.g. during the COVID crisis, should also be looked at.

5.2.2.

Prohibit Unfair Trading Practices (UTPs), not only in food supply chains, as done by the new Directive against UTPs in food supply (45) chains, but also in other sectors, such as textiles, counting with high widespread UTPs, aggravated by the COVID-19 crisis (46). The EESC calls for a balanced implementation of the UTP Directive to avoid protecting large brand manufacturers that are misusing their bargaining power to generate generous profit margins.

5.2.3.

Competition law. Allow collective bargaining between suppliers and buyers on the price (and delivery conditions) of essential commodities, specifically at the interfaces which display great differences in the concentration levels of successive elements in the value chain (e.g. fragmented suppliers vs. concentrated buyers). In the on-going revision by the EC of the Horizontal Agreement Guidelines, a section on sustainability sectoral agreements should be reintroduced, following the model set forth in the section on environmental agreements in the former 2001 Guidelines (47), and adapting them to the current context, including consideration being given to the European Green Deal, the Paris Agreement and SDG 12.

5.2.4.

Trade rules. Make social and environmental clauses in trade agreements enforceable, with sanctions (such as targeted increased tariffs aimed at strategic sectors, excluding sectors where imposition of tariffs could lead to increased poverty in LDCs) in case of non-compliance.

5.2.5.

Corporate accountability. Mandatory duty of vigilance for purchasers along their whole supply chain (creates an obligation) for sustainable supply chains as part of ensuring corporate accountability. Rather than a ‘check list’ approach, companies should review their purchasing practices, as advised by the OECD (48), and be bound by more stringent laws on lobbying control. Action should be taken against greenwashing.

5.2.6.

Mandatory usage of a standard tool to track and trace information regarding the operations performed along the value chain — who, when, where, under what social and environmental conditions (gives the technical means to fulfil the obligation). Civil society and trade unions should be involved in the development and monitoring of environmental and social standards.

5.3.    Economic and financial instruments

5.3.1.

Tax shift from labour to resource use. Use the on-going revision of the VAT Regulation to provide clear criteria on how Member States can introduce reduced VAT rates for sustainably produced products and for services that can reduce the negative impacts of consumption, such as repair or sharing services. Promote measures to prevent fiscal competition and a ‘race to the bottom’ among Member States and fairer taxation of the most profitable sectors and capital.

5.3.2.

Polluter pays principle (PPP). The EC has started to take the approach of internalising external effects more seriously, e.g. acknowledging that renewable energies are disadvantaged as long as the external costs of fossil resources are not fully reflected in the market price or trying to implement the PPP into the transport sector. It should be acknowledged meanwhile that these approaches are reconciling the ecological with the economic dimension of sustainability, but they do not incorporate the social dimension (49).

5.3.3.

Fair and green public procurement (GPP). SDG target 12.7 mentions the importance of coming up with actions plans on sustainable PP. Various national actions on the UN guiding principles on Human Rights plans refer to PP, and several good practices exist at national level. E.g. Denmark has seen the transition in their public kitchens towards a high level of organic produce, where budget constraints are taken into account. ICLEI is currently promoting an initiative to push for mandatory, progressive sustainable food procurement in all European schools and kindergartens. In the new CEAP, the EC announced that public buyers will be encouraged to take part in the upcoming ‘Public Buyers for Climate and Environment’ initiative, which will bring together buyers committed to implementing GPP. The EESC calls on the EC to include broader sustainability criteria, such as social and fair trade considerations. The EESC also supports the EC's plans to propose minimum mandatory GPP criteria and targets in sectoral legislation, and phase in compulsory reporting to monitor the uptake of GPP.

5.3.4.

Development cooperation policies supporting small-scale farming, SMEs and consumer cooperatives.

5.4.    Voluntary or information-based instrument

5.4.1.

Product labelling can help pull the sustainability efforts of certain companies upwards, but labels should never be used as an excuse not to regulate behaviours and practices that are not acceptable. E.g. one of the options being considered by the EC as a follow-up to the EU communication on stepping up EU action to protect and restore the world's forests is putting in place a deforestation-free label. However, this could lead to the perception that the EU is actually tolerating products on the EU market that are not forest-friendly, which would be highly confusing. The EESC calls on the EC to develop further existing labels of environmental excellence that cover the whole life cycle, such as the EU Ecolabel, and extend them to cover the social dimension. In particular, implementing a clear labelling system on the origin and means of production would facilitate consumers' choices (50).

5.4.2.

Bottom-up initiatives and multi-level governance. Decentralising the action at the local level through trusted actors, such as city administrations and associations, is an effective way to design local actions, getting closer to citizens and engaging them in a meaningful way. There is a growing number of local authorities that have serious sustainability strategies, which the EC incentivises through awards such as the European Green Capital, the Green City Accord or the EU Cities for Fair and Ethical Trade City Award. These patterns and trends are likely to be influenced by the current responses to the COVID-19 crisis. Pilot interventions in real-life contexts can be very instrumental in informing the design and implementation of the EU strategy on sustainable consumption and should therefore be supported.

5.4.3.

Advertisement and marketing. The role of advertising and marketing should also be addressed, with a view to moving away from its highly consumerist orientation and focusing on product durability and new use possibilities, while forbidding misleading advertising.

5.4.4.

Education. Proposals should be put forward to incorporate education on sustainable consumption into school curricula from an early age and to encourage private-sector education initiatives (e.g. those promoted by consumer cooperatives), to foster citizen engagement and cultural change.

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(1)  Producers are responsible across sectors, but the specific situation of farmers must be recognised.

(2)  EESC Resolution on post-COVID recovery.

(3)  Eurostat, Sustainable development in the EU, 2020.

(4)  OJ C 106, 31.3.2020, p. 1.

(5)  OJ C 47, 11.2.2020, p. 30.

(6)  EEA SOER 2020.

(7)  EEA.

(8)  Global Footprint Network.

(9)  Vandermaesen, T. et al. (2019) EU overshoot day — Living beyond nature's limits. WWF.

(10)  SOER 2020.

(11)  Steffen, W. et al., 2015.

(12)  Kettunen, M., Gionfra, S. and Monteville, M. (2019). EU circular economy and trade, IEEP Brussels/London.

(13)  EEA.

(14)  Eurostat.

(15)  UNECE (2018).

(16)  Rijnhout L., Stoczkiewicz M., Bolger M. (2018). Necessities for a Resource Efficient Europe.

(17)  EEA (2018) Waste prevention in Europe.

(18)  EEB (2019) Cool products don't cost the earth.

(19)  OECD (2019).

(20)  Zink, T. and Geyer, R. (2017).

(21)  Eurobarometer, food safety, June 2019.

(22)  The external costs of banana production.

(23)  Pigou, A. C. (1920). The Economics of Welfare.

(24)  EC Strategy for the internalisation of external costs, COM(2008) 435 final.

(25)  Eurostat.

(26)  Competition Policy and Sustainability: A study of industry attitudes towards multi-stakeholder collaboration in the UK grocery sector — Fairtrade Foundation. London, UK; April 2019.

(27)  Directive 2014/24/EU.

(28)  EC Buying Green Handbook.

(29)  EC Buying Social.

(30)  EC notice — Guidance on Innovative Procurement (2018).

(31)  I.e. concrete behavioural changes, as opposed to people's stated willingness to change behaviour (research on the latter has been summarised by LE Europe et al. (2018).

(32)  LE Europe, VVA Europe, Ipsos, ConPolicy and Trinomics (2018).

(33)  See footnote 1.

(34)  EEA.

(35)  BEUC (2020).

(36)  OJ C 106, 31.3.2020, p. 1.

(37)  Rijnhout, Stoczkiewicz, Bolger (2018).

(38)  Ellen MacArthur Foundation (2019).

(39)  OJ C 190, 5.6.2019, p. 9.

(40)  Gerritsen, E. and Underwood, E. (2019) What the Green Deal means for Europe's biodiversity. Allen, B. and Charveriat, C. (2018)

A meaty challenge. IEEP, Brussels.

(41)  OJ C 81, 2.3.2018, p. 22.

(42)  IEEP & FEPS.

(43)  OJ C 67, 6.3.2014, p. 23.

(44)  IMCO report.

(45)  OJ C 440, 6.12.2018, p. 165.

(46)  Reports by OECD, civil society and trade unions.

(47)  OJ C 3, 6.1.2001, p. 2.

(48)  OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector.

(49)  OJ C 47, 11.2.2020, p. 30.

(50)  OJ C 190, 5.6.2019, p. 9.