The ‘innovation principle’ trap

A short summary briefing on the risks of the 'innovation principle' is available here.

This “principle” is the product of the European Risk Forum (ERF), a lobby platform for chemical, tobacco and fossil fuel corporations – the risky industries, which are invariably subject to health and environmental regulation. The biggest joint interest of these dirty industries is to keep their products on the market with the least possible restrictions and regulation. Using this “principle” these industries aim to ensure that “whenever legislation is under consideration its impact on innovation should be assessed and addressed”.

Documents released to Corporate Europe Observatory under Freedom of Information laws show that these industries are trying to use this principle to undermine EU laws on chemicals, novel foods, pesticides, nano-products and pharmaceuticals, amongst others, as well as legal principles of environmental and human health protection which are enshrined in the EU Treaty. The ERF, which is dominated by the chemical industry, has explicitly called for this principle to be invoked to make REACH, the EU chemicals legislation, more business-friendly. In addition, the concept is an attack on the Precautionary Principle by those who seek deregulation, displaying a cavalier attitude towards environmental hazards.

By calling it a “principle”, the impression is created that the concept has a legal basis of some kind. This is not the case. In fact the so-called “innovation principle” is an industry invention, and in no way comparable to legal principles enshrined in the EU Treaty, such as the precautionary principle, or the polluter-pays principle. As one lawyer observed, the ”innovation principle” is simply “a lobby product formulated by a think tank and promoted mainly by the companies that finance the think tank."

The creation of the “innovation principle” opens up new opportunities for corporations to use the impact assessment phase, which precedes the drafting of new or revised rules, to their advantage by claiming harm to innovation. Such a claim is easy to make when ‘innovation’ is not defined. While the ERF nowadays makes political statements that the Precautionary Principle is complementary and not in contradiction with the “innovation principle”, in the past they have said that the Precautionary Principle is “inconsistent with scientific approaches to policymaking and does not sufficiently take account of economic efficiency”.[fn]EPC Risk Forum; 2005[/fn]

A rapid rise in the EU system

The “innovation principle” has made its way into the EU system through strong pressure from corporate lobby groups. At one of the many lobby events to push it, the ERF summed up its achievements thus: “In 2013, the European Risk Forum, with the support of CEOs from twenty-two of the world's largest corporate investors in innovation, launched the Innovation Principle (IP). Actively supported by BussinessEurope and the European Roundtable of Industrialists, endorsed by the European Council and supported by successive EU presidencies, it has achieved significant prominence within the EU institutions” (emphasis added).

From its first official EU mention in a Commission document in 2015, the “innovation principle” was catapulted into Competitiveness Council conclusions under the Dutch Presidency in 2016. Professor Geert van Calster of the Catholic University of Leuven said in an interview with Dutch investigative media platform Follow the Money that he believed the innovation principle could undermine the precautionary principle. In his view, industry’s strategy was to make the “innovation principle” appear to be a given, a fait accompli. “The more documents you can get it included in, the more you can convince people that it really is a principle”, he said.

Continuing its rapid rise, the concept has recently been included for the first time in an EU legal text to be voted on by the European Parliament: the draft Horizon Europe regulation and programme. Horizon Europe lays out the rules for the EU’s research and innovation programme, which will succeed Horizon 2020.The adoption of the principle in Horizon Europe would risk favouring even more EU funds being spent on industry R&D, whereas civil society has demanded that this money (working budget: 100 billion euros from 2021to 2027, the third largest EU budget) fund research projects tackling broader societal needs.

Who is the European Risk Forum?

Seated a stone’s throw from the Commission and Council headquarters in Brussels, at Rue de la Loi 227, the ERF is a corporate lobby platform that calls itself a “non-for-profit think tank” that strives for “excellence in regulatory risk management”. Not suprisingly, its members consist of the most heavily regulated industries, whose products are harmful to human health or the environment: tobacco, chemicals, fossil fuels, plastics, pharmaceuticals, etc.

The small group of ERF members are all multinational corporations from these risky sectors: tobacco (BAT, Philip Morris), oil (Chevron), chemicals and pesticides (Dow, Bayer/Monsanto and BASF) as well as business lobby associations including producers of chemicals (CEFIC and its German counterpart VCI (Verband der Chemischen Industrie)), veterinary pharma (Animal Health Europe), metals (the Nickel Institute), oil (Fuels Europe) and PlasticsEurope. Other sectors also join its meetings from time to time, such as the food industry (including Danone, Unilever and FoodDrinkEurope).

However in September 2018, just after Corporate Europe Observatory submitted Freedom of Information requests to the European Commission, the ERF quietly published a vastly changed membership list on its website: the tobacco companies were removed, and seven new members appear to have joined, some representing new sectors like biotech (EuropaBio) and the perfume industry (IFRA, the International Fragrance Association). Tobacco lobbying is nowadays considered so evidently perverse that the industry’s interaction with decision makers has become restricted, if not banned, by the UN WHO anti-tobacco agreement which the EU is a signatory to. [See box ‘The tobacco connection’]

On its website, the European Risk Forum claims to offer a “unique set of benefits” to its members, including the opportunity to “contribute to shaping the rules and procedures used by the EU’s institutions to determine how regulatory decisions are made”, as well as regular involvement “in formal and informal dialogue with senior officials and experts who work in EU institutions”.

The ERF’s activities typically focus on issues that are not sector-specific, ie that are of interest to all these heavily regulated industries. These include, for instance, TTIP and regulatory cooperation, impact assessments, and issues like “societal acceptance of new technologies and associated hazards” or “demand stigmatisation”.

The ERF explains its relevance on these transversal issues thus: it “provides valuable long-term policy context for short-term sector-specific advocacy campaigns. For example, advocacy arguments based on the need for regulators to adhere to ‘horizontal’ procedural standards and rules, can often form a valuable part of a wider issue-based campaign.” Arguing for an impact assessment approach based on the “innovation principle” would be a case in point.

In the past however, the ERF has been found to support specific lobby campaigns. Le Monde revealed in 2016 that the ERF provided funding support for a small group of industry-linked scientists like Daniel Dietrich and Alan Boobis, who helped the chemical industry to undermine strong EU action against hormone-disrupting chemicals.

The European Risk Forum is ‘hosted’ by a lobby firm called Foresight International Policy and Regulatory Advisers (FIPRA), which was founded in 2000. Dirk Hudig is FIPRA International Partner and has been part of the firm since 2001; he is also, simultaneously, the Chair of the European Risk Forum. Hudig worked previously as a lobbyist for the chemical industry and as Secretary General of UNICE (now BusinessEurope). The ERF officially employs only one staff member, whose desk is located in the FIPRA offices.

However, the ERF is not listed as a client of FIPRA. Hudig explained to Corporate Europe Observatory that there is no financial connection between the two. In the EU Transparency Register, the ERF claims to spend a maximum of 100,000 euro on lobbying. However, considering the number of lobbying activities undertaken by the ERF, the real figure must be much higher, meaning that the balance of the costs are likely covered by its individual members. After a complaint was filed by Corporate Europe Observatory to the EU Transparency Register in September 2018, FIPRA updated its submission to the Register, declaring itself a member of ERF, and adding that “Fipra offers pro-bono support to the ERF”.

Ceci n’est pas un principe...

The ERF launched the “innovation principle” in 2013, also the year when TTIP negotiations were launched. The ERF argued that the “innovation principle” should be applied to ensure that “whenever policy or regulatory decisions are under consideration the impact on innovation should be assessed and addressed”.

The concept was squarely placed in the field of the EU’s so-called “Better Regulation” agenda, which is often understood to be the place where regulations that are seen as burdensome by industry can get blocked, revised or otherwise derailed.

But what sort of “principle” is it? It is definitely not a legal principle. As Oscar Alarik, a lawyer at the Swedish Society for the Conservation of Nature explains: "Usually important principles in European law will not be inserted in legal texts until they are well covered in international law, preceded by important declarations in international meetings in the UN context and covered in length in legal academic reports and debate. Another important way that EU legal principles are formulated is in the development of European Court of Justice court law.

The ”innovation principle” lacks all this background, it is simply a lobby product formulated by a think tank and promoted mainly by the companies that finance the think tank."
– Oscar Alarik, lawyer

‘Innovation’ has not been defined either. A 2017 paper by academics from the Catholic University of Leuven provides critical comments on the conception of the “innovation principle”. In their opinion, “the real challenge with the innovation principle, as devised by the ERF, is that it is not a qualified principle – focusing as it does exclusively on jobs, growth and competitiveness. This is out of sync and out of balance with EU primary and secondary law, which safeguards consumers and environmental needs alongside the need to foster jobs and growth.”

Indeed, through an “innovation impact assessment,” any type of new or revised legislation or other types of policies, could potentially be affected. In lobby documents obtained by Corporate Europe Observatory, industry has spelt out to decisionmakers what their real target is when promoting this principle: EU legislation on chemicals (REACH), pesticides, novel foods, nano-products and pharmaceuticals, amongst others.

For instance on 10 March 2015, the ERF had a meeting with DG Research, in which they complained that “some legislation e.g. REACH, deliberately 'stigmatises' certain product groups. This kind of legislation should trigger the Innovation Principle since it can be a major barrier to innovation.” On another occasion, Tony Bastcok, Vice-President of chemical lobby group CEFIC called REACH “a monster [that] continues to devour innovation in Europe”!

How to insert a business-friendly ‘principle’ into the EU system in just a few steps

In October 2013, just a few months after the TTIP negotiations beween the EU and the US commenced, twelve CEOs of multinational companies signed a letter to the presidents of the three EU institutions, expressing their deep concern about “the negative impact of recent developments in risk management and regulatory policy on the innovation environment in Europe”.

This was followed by another letter from the ERF, signed by 22 CEOs of multinationals in November 2014 to the freshly installed Commission President Jean-Claude Juncker, demanding the adoption of the “innovation principle”. They wrote: “Your strong political leadership is required for innovation to thrive in Europe, combined with concrete steps, including positioning the Innovation Principle as an overarching priority for the new Commission’s mandate and work programme.” This letter was also signed by CEOs from companies that are not members of the ERF, including Novartis, DSM, Statoil and Yara.

On 22 June 2015 a joint position was published by the European Risk Forum, the European Roundtable of Industrialists, and overarching business lobby group BusinessEurope. The framing of the paper is clear: “The EU is lagging behind major competitors in its ability to invest in research and turn these investments into marketable products and services.”

Therefore, the paper states that “the European business community believes that EU institutions now need to incorporate the Innovation Principle as an integral component of the policy-making process.” This would mean that EU policy and legislative initiatives should be “systematically evaluated against an innovation checklist”, and that better access should be granted to stakeholders through routine consultations during the shaping of new rules.

On the very same day, 22 June, Research Commissioner Moedas gave a speech in which he wholeheartedly endorsed the “innovation principle” when he asked: “How do we make sure that regulation is based on an innovation principle as well as a precautionary principle?

DG Research was quick to insert the “innovation principle” into a Staff Working Document just a few months later.[fn]Date of publishing is December 2015, but the draft was already available in September.[/fn] The only source mentioned for it, in a footnote, is the joint position paper by the three business lobby groups. In an email from an ERF lobbyist to DG Research, the Commission was congratulated for its “pioneering contribution”.

This was music to the ears of the Dutch Permanent Representation in Brussels, who were preparing for the Dutch Presidency of the EU (January - June 2016), and wanted to make innovation a central theme in their Presidency. Following Freedom of Information requests, the Dutch permanent representation offered to meet with Corporate Europe Observatory, and prepared a reconstruction on paper for Corporate Europe Observatory documenting the process through which the “innovation principle” was incorporated into the Council conclusions.

During the meeting, a Dutch official from the Permanent Representation explained that fostering innovation was a top priority for the Dutch Presidency. He stressed the importance of innovation for growth and jobs as well as in dealing with societal challenges and realizing the Sustainable Development Goals (SDGs). The “innovation principle” was seen as a tool to that end and a close cooperation with ERF evolved. There was no apparent concern about the motives of the ERF to promote it, nor were there attempts to qualify the "innovation principle" as promoting the SDGs.

In November 2015 the three lobby groups BusinessEurope, the ERF and the ERT met with the Dutch Permanent Representation and mentioned the “innovation principle”. It was then decided to organise a joint conference at the permanent representation’s offices, titled ‘A Better Framework for Innovation’. This conference took place on 26 January 2016, with high-level speakers including Research Commissioner Moedas. Both the Commissioner and the Heads of cabinet were invited to a pre-conference dinner the evening before, to “bring together senior executives of supporting companies to debate some of the key policy issues around a single table in a more informal setting.”

At the business conference on 26 January, Commissioner Moedas stated that “REFIT is only part of the answer to this principle as originally proposed by Business Europe. My suggestion is the following: Let's work on a broader definition of the innovation principle to include the creation of an environment favourable to initiative by all actors in the innovation eco-system”.

Another Dutchman in the Brussels’ bubble, Director-General of Research at the Commission Robert Jan Smits, was closely involved in the push for the “innovation principle” under the Dutch Presidency. In the run up to their presidency, according to an interview with Follow the Money, he regularly brainstormed with the Dutch Secretary of State for Education at the time, Sander Dekker. Dekker was very interested in the “innovation principle”, so “it was a good occasion to embed the principle. Thanks to Sander we managed to put it onto the political agenda”.

Upon the announcement of his departure from the European Commission, Smits stressed in an interview with Nature in February 2018 that one of his achievements was to have “promoted the concept of the ‘innovation principle’ to stand alongside the precautionary principle as an aid to risk assessment”. According to him, this meant that “all future Commission policies must balance the requirement for the EU to innovate against the need for it to protect citizens from possible dangers”.

Documents obtained by Corporate Europe Observatory show that throughout the Dutch Presidency an intense level of cooperation was maintained with business lobby groups. For example, on 27 January 2016, at an informal Council meeting in Amsterdam, along with companies like PepsiCo, the Director General of BusinessEurope Marcus Beyrer was invited to provide feedback from the joint conference held days earlier in Brussels. Subsequently, on 3 March 2016, Dutch prime minister Rutte was a guest speaker at the annual BusinessEurope event, where he praised the “innovation principle”.

After it became clear at a Council Working Group on 1 April that member states were not very familiar with the concept of the “innovation principle”, the lobby groups organised a breakfast event on 7 April for attachés. The Dutch permanent representation was invited to highlight the goals for the draft Council Conclusions at this breakfast event. In their view this event was “instrumental” in providing clarification to officials from member states.

At the May 26-27 Competitiveness Council meeting, the “innovation principle” was adopted in the Council conclusions – a breakthrough in its official recognition. There was debate between certain countries on whether to include wording to clarify that the call for the “innovation principle” did not undermine the authority of the Precautionary Principle, with some opposing such wording.

According to the Dutch permanent representation, mentioning the Precautionary Principle in the main text alongside the “innovation principle”, would have actually devalued the first. Therefore the solution found was a peculiar footnote added to the Council conclusions, stating: “the Council recalls the Precautionary Principle”.

Throughout this period, however, the Dutch Parliament was kept fully in the dark about the Dutch government’s plans to support an “innovation principle” and were presented with a fait accompli when the Dutch Minister sent them a letter after the Council conclusions including the so-called principle had been adopted.

The European Trade Union Confederation (ETUC), IndustriAll Europe and UNI Europa, alliances of European trade unions, however, expressed serious concerns about the “innovation principle”, warning that it “could be used as a torpedo to sink any regulation before it even reaches the democratic debate” and could further weaken the precautionary principle.

Ulrich Eckelmann, General Secretary of IndustriAll Europe commented: “Innovation is not a reason to prevent or delay legislation. Society has discovered to its cost that innovation is not automatically good because it is new. Why not a quality jobs principle, or a social justice principle, or an equality principle? They really are good principles, unlike innovation.”  

A reference to the industry-invented “principle” was repeated in Council conclusions under the next EU presidencies(such as Malta in 2017 and Austria in 2018). The Malta and Bulgaria Presidencies which followed the Dutch one co-organised events with the European Risk Forum, another demonstration of continued privileged access.

On 20 June 2017, an ERF event was held “under the patronage of the Maltese Presidency”. In an invitation email to a high-level DG Reseach official, the ERF wrote that “the problems of junk science” were a motivation to hold the event. This is an old trick. Decades ago, the tobacco industry began to call independent science which showed the harm caused by their products “junk science”, and referred to its own sponsored studies as “sound science”; this kind of language has caught on, and is now used by other industries in the business of producing risky products, such as the pesticides industry.

On 20 February 2018, an ERF event was held “with the support of Bulgarian Presidency of the EU and SAPEA”. SAPEA stands for Science for Policy by European Academies, and five European academy networks are attached to it. It is highly surprising, to say the least, that European academies would associate themselves with a lobby group for the chemical and tobacco industries.

Fabricating a legal basis for the “innovation principle”

Shortly after the Competitiveness Council came to its conclusions, the Commission’s in-house think tank, the European Political Strategy Center (EPSC), published a Strategic Note on the “innovation principle”. This Note, published in June 2016 and titled ‘Towards an Innovation Principle Endorsed by Better Regulation’, uses almost exactly the same description of what the purported principle should entail as the ERF’s: “An innovation principle means ensuring that whenever policy is developed, the impact on innovation is fully assessed”. However, in the EPSC Strategic Note, there is no reference to the industry origin of the concept whatsoever.

Innovation principle: copied from industry and inserted into the EU system

The Strategic Note lists several articles in the EU Treaty that mention innovation or that call for the promotion of technological advance, as well as to the EU Charter of Fundamental Rights which promotes the “freedom of sciences”. One could argue that these articles would actually make the “innovation principle” superfluous. But, according to the EPSC note, these references could provide the legal grounds for “an implicit Treaty-based innovation principle”.

The Note even goes so far as to suggest that the EU Treaty could at some point include an explicit Treaty-based “innovation principle”. The Strategic Note contains a list of “Treaty-based principles to be balanced with the Innovation Principle”. The list includes the promotion of consumer interests (Art 169 TFEU), a high level of human health (Art 35 CFR), environment protection (Art 11 TFEU), and of course, the Precautionary Principle.

How exactly the EPSC Strategic Note came about remains quite a mystery. EPSC told Corporate Europe Observatory that it does not possess a single document or email that mentions the “innovation principle”, apart from the Strategic Note itself. Questions from Corporate Europe Observatory as to how the Note’s apparent immaculate conception came about have remained unanswered. Nobody at EPSC was available to answer our questions since “the two colleagues who initiated the editorial process of this note have left the Commission several months ago”.[fn]Personal communication, 15 November 2018[/fn] In an interview with Follow the Money, Director-General for Research Robert Jan Smits revealed that the request to the EPSC for the Note came from DG Research.

Almost as an after-thought, the EPSC Strategic Note observes that the “innovation principle” will gain acceptance only when conceived in a comprehensive manner. “If it focuses exclusively on competitiveness, that is, on reducing costs to industry without considering social and environmental costs, it risks yielding less regulation instead of better regulation”. A nice political statement, but it is not at all clear how this will this be taken up in the implementation of the “innovation principle”.

A strong advocate for the “innovation principle” was also Commission President Juncker’s special adviser Robert Madelin, someone with a long career in the EU bureaucracy. He wrote a report for the EPSC on innovation, at the same time as the Strategic Note. Only three months later, Robert Madelin went through the revolving doors and joined lobby firm FIPRA, which runs the ERF, and is now its international chairman.

DG Research tried to encourage further discourse on the issue among academics, by issuing a research funding call titled ‘Taking stock of the application of the precautionary principle in Research & Innovation’. The framing of the problem in the call is telling: “the application of the precautionary principle has become controversial, with some stakeholders advocating an Innovation Principle”. The funding call asked consortia to help find “a balanced approach” between the two, and to “develop new tools or approaches” for both.

The implementation: an imaginary principle becomes operational

In February 2017 DG Research set up an internal, dedicated ‘Innovation Principle Task Force’, which set out to implement the “innovation principle”. They developed a so-called Research & Innovation Tool, tool #21 in the ‘Better Regulation Toolbox’, which was published in July 2017. When compared with the “innovation checklist” published by Business Europe, ERT and ERF in June 2015, it is clear that the Commission’s Research & Innovation Tool contains substantial overlap. For instance, both documents focus on the need to reduce the cost of compliance for industry (including the need to keep Member States from “gold-plating” EU legislation), stress the need for more flexibility in rules, propose to consider ‘sunset clauses’ on legislation, and advocate more consultation with “stakeholders” (ie, industry).

The DG Research 2018 Work Programme lists the screening of future policy and legislative initiatives “to identify those where the innovation principle could be implemented.”

Furthermore, attemps are also being made to introduce the concept at national level. Germany recently included it in its newly published Hightech Strategy. But two attemps to include it in national laws, in Germany and France, have failed.

The ERF keeps close tabs on this implementation phase; in November 2017 it organised yet another event, this time on the implementation of the “innovation principle”. In an email exchange with DG Research official Mr Metthey, the ERF invited him to share his “insights and reporting” on the steps the Commission had undertaken to make the “innovation principle” “operational”. At this meeting, a large number of chemical, pesticide and plastics lobbyists were present, as well as British American Tobacco (BAT), representatives of the Bulgarian, German and Dutch goverments, the Commission, and a group called Sense about Science.

At one point in this meeting, it was the turn of the pesticide industry to present on the challenges they face in regulation. Their focus was on the “incompatibility” of policies or regulations: those that promote the “innovation principle” on the one hand, and those that are “black-listing substances considered innovative (as per the nr of existing patents) or indispensable/useful” on the other. Evidently, it is old products like glyphosate-based herbicides that are seen as “indispensible” by its producers. So now, the so-called “innovation principle” comes to the rescue for those old and much-criticised products too.

Wake up call for the Parliament

The chemical, tobacco and fossil fuel industries, using the European Risk Forum, handed the EU institutions a business-friendly “innovation principle” on a silver platter. The European Commission and the Council adopted it wholesale, uncritically and without much regard for the consequences. A splendid example of corporate capture, an industry that is known for its risky products has created for itself another instrument to manipulate EU laws at a very early stage, through the impact assessment phase.

As evidenced in this report, the European Risk Forum and its allies have had a high level of privileged access to decision makers in this process. Even though the ERF removed the tobacco companies from its membership list once attention was drawn to it, the report shows how the tobacco industry can, despite being banned from lobbying, still exert influence via such platforms.

The European Parliament has the opportunity to reject the “innovation principle” in next week’s plenary session in Strasbourg, as it is mentioned twice in the draft Horizon Europe, the EU research budget and policy which the Parliament must approve. Members of the European Parliament should have been informed about the original inventors of the imaginary principle and their motivations, which have faded into the background as the EU institutions absorbed and reinforced it. They would be well advised to vote to reject the so-called “innovation principle”.