Setting the scene
On 31 May, the Regulatory Scrutiny Board (RSB) held its 5th Annual Conference, showcasing its work throughout 2022 in its Annual Report. Its achievements in holding the European Commission (EC) to account ahead of publication of impact assessments, fitness checks and evaluations is impressive – a negative opinion tends to be reacted to by the EC with changes and clarifications to its work, ahead of final publication. Two negative opinions tend to make the EC blush – it happens.
For those unsure of what the RSB is, it is the EC’s internal quality control body established seven years ago, which must act independently of internal and external influence. And herein lies the crux of what is currently being fought out in Brussels: its independence is being questioned and, with it, the actual power it has over an EU institution which does have incredible powers, i.e the EC’s unique mandate to make legislative proposals.
The Ombudsman’s investigation of the RSB, following a complaint made in March 2023, will surely lead to calls for revisions to the RSB’s ways of working. However, the threat to some businesses is more imminent: the Ombudsman has requested a wealth of information from the EC on who RSB members have met with, going back to January 2021. Emily O’Reilly, the European Ombudsman, has already confirmed that findings and information supplied may be made public in due course, meaning that if your business has been in contact with the RSB after January 2021 on any EU legislative files – your business risks being publicly shamed sometime after 30 June 2023.
Take-aways for business
While we await a possible review of the future operations of the RSB, pending the Ombudsman’s findings later this year, businesses would be wise to consider the following:
- Looking back: In light of the ongoing Ombudsman investigation, have there been instances of contact by your business with the RSB – through written submissions or meetings with members of the RSB – since 1 January 2021? If so, reputational management should be foreseen in the coming months to limit the potential for negative coverage.
- Now: If there are ongoing files to be addressed via the RSB, urgently reconsider whether to do so or not. Outreach on pertinent points to the RSB on a unilateral basis is now very risky; if deemed crucial, better to do so as a coalition and in a public manner.
- Going forward: In reaching out to the RSB, what are the reputational risks of becoming embroiled in the ongoing Ombudsman investigation? In respect of specific EU files, it would be advisable to limit contact with the RSB and maintain more traditional outreach targets and audiences, where transparency rules are already established and which protect both policymakers and your business; namely the EC, EP and member states.
Why the investigation into the independence of the Regulatory Scrutiny Board?
Over the course of 2022 and 2023, significant attention has been on the EC’s proposal on Corporate Sustainability Due Diligence Directive (CS3D). Being a horizontal proposal, it has inevitably been unable to satisfy all stakeholders. Those representing the environmental, social and governance (ESG) organisations call for a wider scope to catch more companies within its grasp. Businesses have called for proportionality in the text, so as not to hinder unnecessarily the operations of EU businesses – particularly SMEs – within the internal market.
Before the legislative proposal for the CS3D was published, the RSB gave its opinion on the impact assessment supporting the proposal: two negative opinions were given in the second half of 2021, meaning that despite shortcomings in the first draft impact assessment having been addressed by the EC, they were not sufficient for the RSB to be satisfied of its robustness.
In March 2023, Corporate Europe Observatory, a non-profit that claims to hold those in power to account, submitted a complaint to the European Ombudsman, formalising a complaint already raised with Commission President von der Leyen in July 2022. The complaint alleges the RSB lacks independence, having met with – and therefore been influenced by – business contrary to its mandate of independence.
Reputational damage by association?
The complaint has culminated in the EC having to respond to the Ombudsman by 30 June 2023, to defend the RSB on a much wider basis than merely how the lead-up to the negative opinions on the CS3D came about – and were influenced. When eventually published, the findings could make for very uncomfortable reading for some stakeholders; businesses and federations alike.
The Ombudsman requires the EC to provide a lot of potentially sensitive material:
- All declarations of interest of RSB members since the RSB was established;
- All documents concerning disclosures of potential conflicts of interest by RSB members with respect to particular reports on which the RSB was working;
- Documents (including emails, invitations, agendas, minutes etc.) related to all meetings of the RSB with think-tanks, institutions in non-EU countries and other stakeholders from 2021 onwards;
- Written contributions on individual files provided by interest representatives and the response of the RSB, if it made any, from 2021 onwards;
- Documents concerning the assessment of the extension of RSB members’ mandates;
- The CVs of all RSB members since the RSB was established.
Alongside the request for information, the EU Ombudsman asks for answers to pertinent questions about how the RSB operates and deals with (written) submissions by stakeholders.