When the public sector awards contracts, makes investments or adopts policies, there are always social and distributional implications. This also applies to EU programmes, regardless of whether these relate to cohesion policy, agricultural or investment programmes. If these effects should be precisely assessed and the allocation of EU funding should be linked to social criteria, this raises questions of content, interest policy as well as technical issues. It is time to sound out methods and discuss solutions.

Debate on social conditionality
With this in mind, the Belgian Council Presidency organised an event with the somewhat bulky title "Unlocking social conditionality: Extending a social "Do No Significant Harm (DNSH)" principle in investments (co-)funded by the EU". For example, investment funding could be linked to a company's compliance with social and labour law and to collective bargaining practices and compliance with them. The event was divided into three panels. To provide an overview of this interesting debate, some of the points raised are briefly outlined below.

What distributional effects are associated with the allocation of public funds?
Alex Van Steenbergen, Federaal Planbureau, Romina Boarini, Director of the OECD WISE Centre, and Maxime Cerutti, Business Europe, were represented on this panel. A method for the scientific evaluation of the distributional impact of political measures, the distributional impact assessment (DIA), was presented. This should contribute to greater transparency and help governments to increase the efficiency of public spending in the face of diminishing fiscal leeway. However, different methods and approaches of the member states constitute some difficulties, meaning that improved data exchange and closer cooperation would be necessary. The social partners should be involved in the design of the DIA.

Social mainstreaming in the EU budget: social taxonomy and other methods
Antje Schneeweiß, Platform for Sustainable Finance, Charlotte Hill, European Investment Bank, David Vidanes, Directorate-General Budget of the EU Commission, and Ian Begg, Professor at the LSE, were represented on this panel. The panellists discussed the design of a social taxonomy modelled on the already existing environmental taxonomy. The DNSH model used in the environmental taxonomy could also serve as a role model in the social area. Environmental sustainability in the sense of the taxonomy is only given if none of the six environmental objectives contained in it, for example climate protection or biodiversity, is significantly harmed. The Impact Framework set up by the European Investment Bank (EIB), considering the impact of EIB projects on the UN Sustainable Development Goals (SDGs), was also presented.  Social policy indicators should be developed to monitor EU funding possibly for the EU's upcoming Multiannual Financial Framework. Overall, quality assurance and control are particularly important, as there is a risk of social washing.

Opportunities and challenges of the DNSH principle
Finally, Romina Boarini, Thierry Philipponnat, Finance Watch, Ludovic Voet, European Trade Union Confederation, Paul Tang, Member of the European Parliament, and Francesco Corti, Advisor to the Belgian Deputy Prime Minister, discussed (social) investment in connection with the DNSH principle. A social taxonomy using a DNSH principle related to social goals would help to steer investments in a social, long-term sustainable and ultimately also economically reasonable direction. But first and foremost, this requires a social regulatory framework. Companies that practice aggressive tax avoidance, exploitation or anti-union behaviour could be excluded from public contracts. Finally, the great importance of the measurability of social objectives was emphasised. Further discussion is needed on possible conditionalities for EU funds and social clauses in public contracts.

Further information:
European Commission: Assessment of the distributional impact
European Commission: EU taxonomy for sustainable activities
European Commission: Implementing the European Pillar of Social Rights
Belgian Council Presidency: European Pillar of Social Rights, the La Hulpe Declaration  
AK EUROPA: Policy Brief, Comprehensive social investment - The key to a feminist and progressive Europe!
AK EUROPA: Social Taxonomy - Challenges and Opportunities