Mainstreaming and expenditure tracking

The European Commission pursues several policy objectives through the EU budget. Such objectives stem from

  • Commission policies
  • political priorities
  • international agreements

Some of these are pursued through one or more dedicated budgetary programmes, for examples the common agricultural policy, student exchanges, or research.

The Commission has also decided to mainstream other policy objectives. This means that policies such as climate, biodiversity and gender are considered in the design, preparation, implementation and evaluation of each programme. Instead of having a dedicated programme, these priorities will be integrated into the design of all its spending policies horizontally.

Often, the Commission is required to provide an answer to the question of how much money it is spending on specific policy objectives. While that question is easy to answer for dedicated programmes, it is more complex for policy priorities or for priorities to which more than one programme is contributing. Finding and calculating the relevant spending is called expenditure tracking.

Currently, the Commission is tracking expenditure linked to

  • climate
  • biodiversity
  • clean air
  • migration

For gender equality and the Sustainable Development Goals (SDGs), the Commission is already providing qualitative information in the framework of the Draft Budget. A more robust methodology is in development to provide better tracking.

The implementation of policy mainstreaming in budgetary policies automatically implies double counting of expenditure. This is not an error but a feature of mainstreaming. A Euro spent through the common agricultural policy to provide support to farmers planting hedges and tree rows in their fields helps agriculture, biodiversity and climate. This should be reflected in the amount from the EU budget spent on each topic.

Contributing to multiple priorities at the same time is inherent to the idea of meaningful and well-designed mainstreaming. Such overlap demonstrates the efficiency of EU budgetary spending where resources contribute to a number of political objectives at the same time. That means however, that expenditures on horizontal priorities cannot simply be added up.

Green methodology

A comprehensive methodology is the first step towards proper tracking. Without it, programmes cannot properly report on their contributions.

The methodology for climate, biodiversity and clean air is based on the EU Climate markers. These are policy markers to monitor and report on the development finance flows, based on the Organisation for Economic Co-operation and Development (OECD) Rio markers that were designed in 1998 to target the themes of the Rio Conventions. The EU markers are designed to quantify expenditure contributing to climate, biodiversity and clean air objectives.

Given the range of implementing procedures (e.g. centrally managed, shared management, financial instruments, programmable actions), the approach to implementation varies across programmes and the methodology is refined to reflect the specific implementation modes.

The markers are assigned with the following overall approach:

  • 100% for expenditure expected to contribute principally to the objectives [parity with OECD Rio marker 2]
  • 40% for expenditure expected to contribute significantly to the objectives [parity with OECD Rio marker 1]
  • 0% for expenditure not contributing to the objectives

This methodology is independently applied to track climate, biodiversity and clean air expenditure in a wide range of programmes. Each methodology applies the coefficient at different levels of granularity.

See also the European Parliament's study on Documenting climate mainstreaming in the EU budget (July 2020) 

Climate

The 2021-2027 Multiannual Financial Framework (MFF) and NextGenerationEU include an overall 30% climate target based on the Rio marker methodology.

Climate tracking is the most advanced of the policy objectives for which the Commission is already calculating budgetary mainstreaming across the EU budget:

  • specific ex-ante expenditure targets are set in the legal bases of many EU programmes
  • an adjustment mechanism to safeguard the target is in place, which guarantees the achievement of the overall target
  • tracking of the climate contribution in provided for in the accounting system
  • dedicated reporting will be prepared starting in 2021

Biodiversity

Biodiversity mainstreaming is more complex to track than climate, as it is newly established and fewer programmes have biodiversity objectives.

The Commission is already tracking biodiversity expenditure in a number of programmes on the basis of the Rio markers, but no target exists. The Interinstitutional Agreement of December 2020 sets out that the Commission, European Parliament and Council should work toward a target of 7.5% of annual spending for biodiversity objectives in 2024, and 10% in 2026 and 2027.

More information on Biodiversity financing

Gender

The Interinstitutional Agreement includes a commitment to develop gender tracking across the EU budget. The methodology is to be developed for the budgetary year 2023, to be rolled out by 2024 for all relevant programmes. Work is already ongoing.

Sustainable Development Goals

The Commission is committed to working towards the UN's Sustainable Development Goals. The 17 SDGs cover all major policy areas, so virtually all EU policies and most of the spending programmes contribute to at least one SDG.

The Commission has started exploratory work on developing a tracking system allowing the tracking of expenditure through the structure of the SDGs.

Sectoral tracking

The Commission is already tracking a number of other objectives:

  • COVID-19: as from May 2020, the Commission has started tracking expenditure for the programmes it manages directly. Information from the Member States on the programmes they manage will be added ex post.
  • Clean air: the Directive on National Emission Ceilings (NEC Directive 2016/2284) creates an obligation for the Commission to report every four years, starting from 2020, on “the uptake of Union funds for clean air”. A methodology has already been developed for the 2014-2020 MFF and reporting is done in the programme statements attached to the annual draft budget and the NEC Directive report.
  • Digital: in the State of the Union address of September 2020, President von der Leyen committed to spending 20% of the recovery effort on the digital transition.
  • Migration: due to the sharp increase of migration-related expenditure since 2015, the European Parliament and Council asked for more transparency on migration expenditure in the current MFF. Rio markers are assigned to expenditure in relevant programmes and a report is published yearly.

While continuing these practices, the development of a broad-based tracking system as described above could bring these more ad-hoc measures into a single tracking system.