Balance of ethics, tech and enforcement needed for better European legislation

Set against the backdrop of the European Union facing numerous challenges ranging from the green transition, digitalization to the strengthening of European strategic autonomy, a star-studded line-up of speakers addressed Better Regulation – Defining a Progressive Approach, jointly organised by the European Justice Forum and FIPRA International for the second year running.

To tackle these core issues, a consensus seemed to emerge on the fact that new approaches to law-making and regulation are needed. These range from the macro to micro-level and are the essential building blocks to deal with future challenges of regulation in a more and more interlinked, fast moving and highly innovative environment.

Maroš Šefčovič, Vice-President for Interinstitutional Relations and Foresight, European Commission, said at the event: “We form stronger relationships with stakeholders, building trust and engagement, and using ethical principles to create better European legislation. We use the same approach of communication and cooperation with the Member States when it comes to our enforcement strategy. These include guidance and support for effective transposition.” 

“The result is that 90% of infringement cases are solved without the need to go to court,” Šefčovič added. 

Several important questions were raised during the course of the discussions such as:

• What levers do governments have to change the organization culture of international companies?
• Do incentives work and where should they stop?

Speakers agreed there was a need for building common ground for ethical business practice, focussing on outcomes and driving transparency and trust.

“The basic idea is to say let’s regulate through ethical culture, rather than through deterrence. Let’s have a problem-solving approach, rather than the linear approach of identifying breaches,” said Professor Christopher Hodges of Justice Systems, Centre for Socio-Legal Studies at the University of Oxford.

“When you have a business and regulator committed to ethical business practices, the relationship between the two is ethical business regulation. Then, we need lots of regulators and businesses involved to maximize effectiveness,” Hodges stated.

Ben Alcott, International Director at the UK Civil Aviation Authority, said it was vital to maintain and build further trust with existing and new players whilst avoiding regulatory capture. “We need to be able to regulate the future, not just today. Our approach is based on organizational performance and not just reactions to business risks. We design oversight relative to companies’ performance in managing risks. In this way, we support delivery of best regulation principles,” he said.

Ultimately, better regulation is not a technical debate — it’s about culture, ethics and values, pointed out Veronica Gaffey, Chair of the Regulatory Scrutiny Board (RSB) at the European Commission.

“We have to make sure that evaluations, impact assessments and the regulations themselves are proportionate. For me, the most important thing is that we have clarity and narrative so that we can communicate to citizens what we want to do and why,” said Gaffey.

Moya Stevenson, Chairwoman of European Justice Forum, said that the need of the hour was a holistic approach covering the entire process from dispute identification, out-of-court dispute resolution, up to in-court dispute settlement or judgment. 

“The goal is to ensure that the legal system in Europe protects both consumers and businesses alike, and that those with a legitimate grievance can have access to justice and attain actual delivery of justice,” said Stevenson.

Robert Madelin, Chairman & Chief Strategist, FIPRA International, highlighted that by integrating culture, ethics and trust issues into decision making, we empower local regulators to adjust to local realities.

“It must be framed such that businesses are incentivized, rewarded and encouraged to be accountable through data and be transparent to the rest of us in Europe. Indicators and metrics for non-financial impacts need to become better understood and respected. And audit processes must be fit for purpose,” Madelin added.

The challenge remains to design the necessary processes and frameworks. FIPRA stands ready to support clients in this regard.

(Written by Rahul Venkit)