Summary and recommendations
According to Commission Vice-President Frans Timmermans, in charge of reforming Expert Groups, the new rules he introduced in May 2016 mean we now have “a single set of rules and principles aimed at increasing transparency, avoiding conflicts of interest and ensuring a balanced representation of interests”. The deadline for their implementation was 31st December 2016, to ensure all departments – Directorates General (DGs) – had enough time to put them into practice. So in theory, the European Commission's house should be in order.
However, this is not the first time Vice-President Timmermans has said one thing and done another on Expert Groups. Therefore the results of Corporate Europe Observatory's preliminary study, which took ten advisory groups (new and old) to assess the implementation of the new rules, should come as no surprise.
The groups chosen are of particular political relevance and hot issues in Brussels: regulating emissions and the future of the car industry; climate change and meeting UN climate targets; regulating finance and how to make the Capital Markets Union (CMU) 'greener'; security and defence research; and tackling tax dodging.
The groups sampled in no way represent a comprehensive and exhaustive study. But the findings show that while some improvements have been made on transparency and ensuring lobbyists giving advice are in the transparency register, big problems remain with the issues of corporate dominance and conflicts of interest:
Corporate dominance: half the groups examined remain dominated by corporate interests. Looking at all stakeholders across all groups, 70 per cent represent corporate interests compared to less than 15 per cent for NGOs and just over 2 per cent for trade unions. The worst groups had more than 80 per cent corporate representation.
Conflicts of interest: despite a new policy of filling out and publishing declarations of interest, fewer than half of experts appointed in a personal capacity – i.e. to act independently – were free of conflicts. Transparency remains a big problem, and there is no apparent willingness and/or resources to act on enforcing conflicts.
Open calls for applications: the situation remains the same as before, with open calls for application being used by most DGs in most cases – but exceptions continue, with groups being created without a satisfactory call for applications (n.b. this was permitted under the previous rules, and is still permitted under the current ones).
Transparency: the insistence on group members being in the lobby transparency register – with a hyperlink in the Expert Group register – has helped ensure 97 per cent of relevant members are now signed up. However it remains difficult to identify which interests sit in a specific group and what the balance is; availability of documents is a mixed bag with good and bad examples.
It appears that Timmermans claim of “increasing transparency, avoiding conflicts of interest and ensuring a balanced representation of interests” has not materialised, and based on this preliminary research, big business remains as comfortably sat in the driving seat as ever when it comes to shaping EU legislation.
If enacted, the measures endorsed by the European Parliament would reduce corporate dominance, reduce conflicts of interest, and ensure resources are committed to fully implementing the rules; measures which appear more necessary than ever.
Corporate Europe Observatory recommends:
New 'guidelines for implementation' of Expert Groups for all DGs, incorporating the European Parliament's suggestions (e.g. a published definition of balance with a complaints mechanism; weighting of voting to ensure interests are balanced; extra resources for public interest groups; sanctions applied to those found not respecting the conflict of interest policy; greater resources for implementation and enforcement; an evaluation by the Commission);
A comprehensive study to be undertaken by the Parliament's Budget Control Committee (whose report with recommendations was overwhelmingly voted through today) to see what the situation is like across all groups;
A regular update from the Commission itself on how the new rules are (or are not) being implemented, and an action plan with milestones as to how it intends to ensure full implementation of guidelines.
But the far more fundamental question remains: should the same industries trying to weaken and avoid regulations be the ones involved in writing them? Tobacco lobbyists are not allowed to be involved in creating public health policy thanks to a World Health Organisation decision (Article 5.3) that recognises how damaging this is to the public interest. Should tax dodgers and their advisors craft tax policy? The car industry emissions regulations? Big polluters climate policy? Big banks financial controls? The Commission is sorely lacking internal expertise, but it needs to think long and hard about where it looks externally and what role to give clear vested interests when the public interest is at stake.
A first glance: how the rules are implemented
Groups investigated, and why:*
Groups were chosen primarily based on their political importance, but there was also a need to include groups that have been created since the new rules have been introduced and implemented (May 2016 and January 2017 respectively). Three groups are focused on tax dodging, as in our last comprehensive study, DG Taxation and Customs Union (DG TAXUD) was the worst performer, particularly on balance (almost 80 per cent of stakeholders studied represented corporate interests, with only 3 per cent representing SMEs and 1 per cent from trade unions).
Box 1: which groups chosen
The struggle against corporate dominance
The European Commission’s advisory groups, formally called Expert Groups, provide input from stakeholders in areas where the Commission lacks internal expertise, meaning they are found across all Directorates-General (DGs). They play a vital role in shaping Commission thinking around new policies and legislation, be it regulation on diesel emissions or how to tackle tax havens. However, research by groups like ALTER-EU, a coalition of over 200 civil society groups in which CEO is a steering committee member, has shown that many of the Commission’s Expert Groups are consistently dominated by big business interests, meaning the voices of other stakeholders, such as small- and medium-sized enterprises (SMEs), trade unions, consumer groups or NGOs, are largely unrepresented and unheard.
The struggle to end corporate dominance of Expert Groups has been at the core of civil society and Parliamentary campaigns for many years and a key reason the new rules were introduced. However according to the Commission, the way to achieve “a balanced representation of interests” has been more transparency, including open calls for applications. But they have failed to even define balance, such as between economic and non-economic interests (as DG Agriculture and Rural Affairs originally proposed, but later withdrew under pressure from the agribusiness lobby). As a result, the continued corporate dominance within the groups examined is not surprising:
5 out of 10 groups have more than 50 percent of the seats filled by stakeholders representing corporate interests. N.B. three groups were part of the research project 'Horizon 2020' (H2020) and were supposed to be exclusively for independent experts, not 'representatives of an interest' (i.e. lobbyists). Therefore excluding the three H2020 groups means in reality 5 out of 7 (rather than 10) groups examined are dominated by corporate interests, more than 70 per cent.
Looking at all stakeholders assessed, 70 per cent represent corporate interests while only 13 per cent represent NGOs and 2.5 per cent represent trade unions.
The worst groups involve the car industry (RDE-LDV has 78 per cent corporate membership while GEAR2030's working group has 84 per cent – see box 2) and the finance industry (the High Level Group on Sustainable Finance has more than 80 per cent of members representing the financial industry).
Some groups are not dominated by corporate interests: at the time of writing, the REFIT Platform and the Platform for Tax Good Governance both have less than 50% corporate membership.
Box 2: Car industry in the driving seat
Two of the least balanced groups involve the car industry. Both the Real Driving Emissions – Light Duty Vehicles (RDE-LDV) and GEAR2030 were heavily imbalanced towards the corporate sector, resulting in serious real-world impacts.
The reasons for over-representation of the corporate sector in advisory groups are cultural, ideological and structural. The Commission has a chronic shortage of in-house expertise, making it rely on external support, yet big business has infinitely greater resources than civil society to follow and participate in Expert Groups , making their numerical superiority unsurprising. However, a long-standing ideological conviction that puts European business interests first as a way to ensure competitiveness and growth and jobs has meant many DGs create legislation hand-in-hand with business for over 20 years; a culture that is difficult to break. However, neither the creation nor implementation of the new rules have done anything to address these deep-rooted problems.
Despite Timmermans' claims, the rules have not ensured a balanced representation of interests with corporate dominance remaining the norm. The consequences are dire: the car industry – which has clearly put profit before public health – continues to set the agenda for car regulations, while tax-dodgers – which have no interest in ensuring they pay their fair share so governments can afford decent public health, education, housing, and transport – continue to dominate tax policy. The real world impact for people across Europe is devastating, and one of the reasons there is dramatically declining trust in the European institutions.
Box 3: Tax-dodgers still 'advising' on tax avoidance?
The Directorate General for Taxation and Customs Union (DG TAXUD) was ranked as the worst DG when ALTER-EU assessed all Expert Groups created in the year September 2012-September 2013. Almost 80 per cent of their new members represented corporate interests, while 93 per cent of members sitting in a personal capacity – i.e. there to give independent advice – were in fact corporate representatives. Since then, and despite multiple tax scandals – Offshore Leaks, SwissLeaks, Luxleaks, Panama Papers and so on – the Commission has continued to appoint tax-dodgers and their advisers to its Expert Groups to tackle the problem. Transparency has improved since 2013, and lobbyists no longer sit in groups in a personal capacity, but the three groups looked at still display many of the same problems:
See CEO previous research on the group
See CEO previous research on the group
Two fundamental problems remain: the obvious one is the conflict on interest when foxes are being put in charge of then hen house when it comes to tackling tax avoidance; the second – less talked about – is the Expert Groups' mandate. Given the endemic nature of tax evasion and avoidance, as well as mounting public pressure, tackling them should be at the top of Expert Groups' agendas, yet a look at their mandates shows that “avoiding extra burden” on banks or “avoiding double taxation” of companies is what drives the groups, an agenda for and by industry.
No lobbyists sitting in groups in a personal capacity
Previously there were many cases when lobbyists were allowed to sit in Expert Groups as independent experts (in a 'personal capacity'). The fight to ensure lobbyists can no longer do this has been a long one, so having a conflicts of interest policy is a big victory.
Theoretically, the public should now be able to assess whether individuals sitting in a personal capacity are as independent as they appear, or whether their other interests “may compromise or be reasonably perceived as compromising the individual's capacity to act independently and in the public interest” [taken from the new rules].ii
However, while the 10 groups had 34 individuals nominated in a personal capacity (as part of EDPI, PASAG, REFIT Platform), it is almost impossible to know anything about these individuals's affiliations besides their names. Beyond publishing a declaration of interest (DOI), there is no extra information given: no organisation, rarely a professional title, and no CV to help verify whether the individual has links to industry.
According to CEO's investigations, only 47 per cent of the individuals examined were free of conflicts of interest, a worrying figure as the Commission is supposed to be checking for conflicts itself. Some individuals didn't even have declarations of interest publishediii (a clear breach of the rules), while for 15 per cent it couldn't be determined if a conflict existed or not due to lack of information in the declarations of interest.
A big question remains over whether the Commission checks the DOIs or verifies them against external sources. According to Corporate Europe Observatory, almost 40 per cent of individuals had some sort of conflict of interest – belonging to an organisation who could benefit from their presence.iv Some individuals even flagged them but were appointed in a personal capacity anyway (eg the President of big business lobby group the World Council for Sustainable Development – which is not even in the lobby register). The new rules define a conflict of interest as the “degree to which an interest may be reasonably expected to influence the individual [member]'s advice”,v but there are no verifiable criteria, which may explain the high number of members with conflicts.
The conflict of interest policy is not being enforced and is not helping to prevent lobbyists or others with an interest serving in a personal capacity. At a minimum, CVs need to be published alongside DOIs, as well as resources invested into vetting candidates (based on objectively verifiable criteria), excluding those with a conflict of interest and sanctioning those who have not disclosed relevant information.
There still remains the bigger 'conflict of interest' question, beyond that of the individual, of whether actors who are actively lobbying against the goals of an Expert Group mandate (eg tackling tax avoidance) should even be allowed in a group.
Open calls as standard
Open and public calls for Expert Group membership has been the default procedure for some time, and continues to be so. This is positive, if not new. On the Commission website, there is a portal for current groups with open calls for applications, and others have a rolling call – open to all members. However, despite Timmermans' claims this would lead to more balanced representation of interests, this has not been the case, and there appears to be little awareness when judging the interests sought and the interests recruited that corporate dominance is problematic and to be avoided.
Improving transparency has been a big theme of the current Commission, with both Vice-President Timmermans and President Juncker stressing its importance in increasing trust and accountability. So what's changed?
The link between membership of an expert group and membership of the lobby transparency register is working in 97 per cent percent of cases, which is a huge improvement. However, there are still organisations sitting in expert groups who are not registered, particularly in the High-Level Group on Sustainable Financevi (something which is not supposed to be allowed).
Transparency of the Expert Group register – which is supposed to provide information on members, minutes, agendas, and deliberations – is varied: some groups put all information in the register, others put it on a dedicated page with links to the register, and others don't put information in the register or on an easy to navigate webpage. The group on sustainable transport even failed to publish some of its members in the register. In short, there is no consistency.
Transparency of membership is the biggest hurdle: in the Expert Group register it remains incredibly difficult to see who someone is working for if they are there as an individual (ie independent or representing a stakeholder interest, rather than a specific organisation), while being able to see if big business dominates a group – i.e. how many NGOs, business groups, trade unions etc. – remains very difficult (and is not helped by inconsistent labelling eg a corporate interest labelled as an NGO).
The link to the lobby register is a positive step, but should not stop the Expert Group register being improved in terms of usability, in order to display important information in one place. Different DGs have different practices, and this needs to be made uniform for the public to be able to access it.
This study is not intended to be comprehensive, but rather an initial take on how the new rules are being implemented. From our findings it appears that some of the positive changes are being introduced, but not fully implemented and not enforced. This may be due to lack of resources. However, while transparency has improved and this must be seen as a positive step, transparency in and of itself does not challenge the undue influence of big business over policy making.
The European Parliament Budget Control Committee's report - which was voted on today with a huge majority - has proposed solutions to many of these problems:
To tackle corporate dominance, there should be a clear definition of what balance of interests is being sought, and a complaint mechanism if this definition is contested; where balance cannot be achieved, weighted voting can ensure de-facto balance.
Funding for public interest groups to take part
Sanctions should be applied to those found not respecting the conflict of interest policy.
Greater resources (staff time) should be provided to ensure the implementation and enforcement of the new rules.
An evaluation by the Commission of progress, before 1 June 2017.
These points should be included in a new set of guidelines to all Commission departments, to help them better implement the rules and begin to restore public confidence in European policy making. Another step to ensure this happens is for the Commission to produce an evaluation that its policies are being implemented at the DG level, and milestones of which improvements will be completed when. Regular State of Plays could do this, as used happened when the Parliament froze the Expert Group budgets in 2012 to ensure promised reforms were being implemented. However, to ensure independence, a more comprehensive study is also needed from the European Parliament's Budget Control Committee, who already produced a meta-study in 2015 of all Expert Groups which provided the empirical evidence not produced by the Commission.
As things stand, the new rules have not led to the hoped-for improvements, but the measures put forward by Parliament can make an immediate impact. The European Ombudsman is also due to pass her final judgement on how the new rules meet her recommendations. However, a far more fundamental question remains unanswered: should the same industries trying to weaken and avoid regulations be the ones involved in writing them? Tobacco lobbyists are not allowed to be involved in creating public health policy thanks to a World Health Organisation decision (Article 5.3) that recognises how damaging this is to the public interest. Should tax dodgers and their advisors craft tax policy? The car industry emissions regulations? Big polluters climate policy? Big banks financial controls? The Commission is sorely lacking internal expertise, but it needs to think long and hard about where it looks externally and what role to give clear vested interests when the public interest is at stake.
*For urgent details on each group and how the new rules have been implemented, as well as the data behind the study, contact Corporate Europe Observatory – all data will follow shortly
i While 51 out of 61 members are direct corporate representatives, a further three organisations (AustriaTech, the Institutional Investors on Climate Group and the VTT Technical Research Centre) all depend on corporations for financing.
ii Commission Decision of 30.5.2016 establishing horizontal rules on the creation and operation of Commission expert groups, http://ec.europa.eu/transparency/regexpert/PDF/C_2016_3301_F1_COMMISSION_DECISION_EN.pdf
iii No member of the Horizon 2020 Commission Expert Group to assist the Commission with the interim evaluation of the H2020 Societal Challenge 4 "Smart, Green and Integrated Transport" had a declaration of interest published in the register.
iv Some individuals worked for corporations and others for research organisations that could benefit from the research spending at stake.
v Commission Decision of 30.5.2016 establishing horizontal rules on the creation and operation of Commission expert groups, http://ec.europa.eu/transparency/regexpert/PDF/C_2016_3301_F1_COMMISSION_DECISION_EN.pdf
vi Joint Transfer Pricing Forum: the Prysmian Group; Sustainable Finance: 2 Degree Investment Initiative, DEKA Investment, Nordic Investment Bank