annual activity report - european commission · 2016. 6. 27. · since the state of biodiversity...

2013

Annual Activity Report

DG Environment

env_aar_2013_final of 88

Table of Contents

INTRODUCTION 3

THE DG IN BRIEF ........................................................................................................................................ 3

THE YEAR IN BRIEF ...................................................................................................................................... 4

EXECUTIVE SUMMARY 5

KEY PERFORMANCE INDICATORS ................................................................................................................... 5

POLICY HIGHLIGHTS OF THE YEAR .................................................................................................................. 6

KEY CONCLUSIONS ON RESOURCE MANAGEMENT AND INTERNAL CONTROL EFFECTIVENESS ..................................... 8

INFORMATION TO THE COMMISSIONER .......................................................................................................... 8

1. POLICY ACHIEVEMENTS 9

1.1 ACHIEVEMENT OF GENERAL AND SPECIFIC OBJECTIVES ................................................................................ 9

ABB ACTIVITY 07 03 ...................................................................................................................... 15

ABB ACTIVITY 07 02 ...................................................................................................................... 27

1.2 SPECIFIC EFFORTS TO IMPROVE 'ECONOMY' AND 'EFFICIENCY' OF SPENDING AND NON-SPENDING ACTIVITIES ..... 30

EXAMPLE 1 ................................................................................................................................... 30

EXAMPLE 2 ................................................................................................................................... 30

2. MANAGEMENT OF RESOURCES 31

2.1 MANAGEMENT OF HUMAN AND FINANCIAL RESOURCES BY DG ENVIRONMENT ............................................. 31

2.2 BUDGET IMPLEMENTATION TASKS ENTRUSTED TO OTHER SERVICES AND ENTITIES .......................................... 42

2.3 ASSESSMENT OF AUDIT RESULTS AND FOLLOW UP OF AUDIT RECOMMENDATIONS ......................................... 42

3. ASSESSMENT OF THE EFFECTIVENESS OF THE INTERNAL CONTROL SYSTEMS 44

4. MANAGEMENT ASSURANCE 49

4.1 REVIEW OF THE ELEMENTS SUPPORTING ASSURANCE AND POSSIBLE RESERVATIONS ....................................... 49

4.2 RESERVATIONS AND OVERALL CONCLUSION ON ASSURANCE ....................................................................... 50

DECLARATION OF ASSURANCE 51

ANNEX 1 STATEMENT OF THE RESOURCES DIRECTOR 52

ANNEX 2 HUMAN AND FINANCIAL RESOURCES 53

ANNEX 3 DRAFT ANNUAL ACCOUNTS AND FINANCIAL REPORTS 54

ANNEX 4 MATERIALITY CRITERIA 72

ANNEX 5 INTERNAL CONTROL TEMPLATE(S) FOR BUDGET IMPLEMENTATION (ICT) 73

ANNEX 6 AAR OF THE EXECUTIVE AGENCY FOR COMPETITIVENESS AND INNOVATION (PROVIDED SEPARATELY) 86

ANNEX 7 PERFORMANCE INFORMATION INCLUDED IN EVALUATIONS 87


INTRODUCTION

The DG in brief

DG Environment has approximately 500 staff members. It is organised in six directorates which are, in turn, divided into thematic units. It shares a resources directorate of around 90 people with DG Climate Action. In 2013 the DG reorganised to respond better to Europe 2020 and place a greater emphasis on the implementation of EU environmental legislation and policy.

The activities of DG Environment are framed by the Treaties on the European Union and on the Functioning of the European Union1. They established that the EU environmental policy shall aim at a high level of protection; to preserve, protect and improve the quality of the environment; protect human health; promote prudent and rational utilisation of natural resources; and promote measures at international level to address regional or global environmental problems.

DG Environment deals mainly with policy development and implementation where its work is guided by multiannual Environment Action Programmes. In doing so, the DG relies on many sources of environmental data, in particular from the European Environment Agency (EEA), the Commission’s Joint Research Centre (JRC) and broad-based public consultations.

Where necessary, the DG initiates proposals for adoption by the Commission and consideration by the Council and the European Parliament following input from various stakeholders and a rigorous impact assessment. Upon their conclusion, the DG co-operates with Member States to ensure that the legislation is transposed and applied across the EU in a uniform fashion. In some cases, it works directly on the implementation of agreed laws. Where feasible, the DG explores the use of voluntary instruments for the purpose of reaching EU environmental objectives.

The Treaties enable the EU to participate in international environmental agreements together with Member States and give the Commission a strong coordinating and representation responsibility. DG Environment represents the EU at a wide-range of environmental meetings in international fora such as the United Nations and in other multilateral environmental agreements.

DG Environment is also responsible for the LIFE programme, with a budget of approximately €300 million a year which represents 80% of the financial resources of the DG. LIFE finances projects that contribute to environmental protection in the EU. The DG’s tasks cover organizing annual calls for proposals and ensuring that projects are implemented as agreed. As of 2014, part of the LIFE management will be delegated from DG Environment to an executive agency2. While LIFE funding focuses on small scale projects to catalyse broader actions, contribute to policy development and support its implementation, DG Environment also provides input to other Commission services so that environmental considerations are mainstreamed into other EU spending instruments such as EMFF, ERDF, EAFRD3 which provide most of the EU funds necessary for the protection of the environment.

1 Articles 3 and 17 of the Treaty on the European Union and Articles 11, 49, 191-193, 208 and 209 of the Treaty on the Functioning of the European Union 2 Executive Agency for Small and Medium Enterprises (EASME) 3 European Maritime and Fisheries Fund (EMFF), European Regional Development Fund (ERDF), European Agricultural Fund for Rural Development (EAFRD)


The year in brief

In 2013, DG Environment's key activities included:

Adoption of proposals by the Commission to improve air quality and coastal zone management, the latter together with DG MARE, to address the emerging problem of invasive alien species and the growing issue of disposing of plastic bags;

Concluding inter-institutional discussions on a number of files including a new Environment Action Programme (7thEAP), new LIFE financial programme, environmental impact assessment, ship recycling and priority chemical substances in water;

Helping Member States to implement existing legislation and commitments;

Contributing toward greening the EU Semester process and the new Multi annual Financial Framework;

Concluding international negotiations to reduce mercury emissions and, together with DG DEVCO, building on the positive outcome from the 2012 Rio+20 Conference for a transition to a global green economy and to improve global environmental governance.

As in 2012, the residual error rate for activities financed through DG Environment budget remained below 2%.

More details on main policy achievements in 2013 are presented in the subsequent sections.


EXECUTIVE SUMMARY

The Annual Activity Report is a management report of the Director-General of DG Environment to the College of Commissioners. It is the main instrument of management accountability within the Commission and constitutes the basis on which the Commission takes its responsibility for the management of resources and the achievement of objectives.

Key Performance Indicators

The following key performance indicators help measure progress towards the achievement of DG Environment's objectives while recognising that external factors often outside the DG’s control also play a role:

− Resource productivity, as a proxy for greening the economy, sustainable competitiveness and reducing environmental impacts of resource use

− Common birds population, as a proxy for wide-ranging pressures on ecosystems and the services they provide for the quality of life

− Exposure of urban population to air pollution and the quality of EU waters, both of which are important for public health and the environment

− Residual error rate to reflect the degree of legality and regularity compliance.

Result/Impact indicator Trend Target Latest known results as per Annual Activity Report

KPI1: Resource productivity: GDP (€) per Domestic Material Consumption (DMC, kg)

Steady increase

indicating decoupling economic

growth from resource use

KPI2: Common birds population, index 1980=100

Reverse or halt the decline

KPI 3: Percentage of urban population resident in areas in which daily PM10 concentration exceeds daily limit value

0% by 2020


KPI 4: Percentage of surface water bodies in good ecological status or with good ecological potential

100% by 2015 unless exemption

applies

43% in 2009

KPI 5: Residual error rate

Below 2% 2012: 1.6% 2013: 1.7%

Policy highlights of the year

Significant progress has been made to provide the EU with a modern framework to better protect the environment and to manage natural resources. However, the potential of instruments and policies in place has yet to fully materialise while some crucial gaps remain to be closed.

Resource Efficiency

In particular, more remains to be done to address persistent barriers to the efficient use of resources and to provide the right incentives and targeted policy support. To implement the Resource Efficiency Roadmap, DG Environment worked with Member States, including through the EU semester process, on better waste management practices, the greening of tax systems and the phasing out of environmentally harmful subsidies to address the root causes of resource inefficiencies as well as promoting the exchange of good practice on national policies in the field of resource efficiency. The multi-stakeholder European Resource Efficiency Platform issued the first set of recommendations. This was complemented by the work to lay down the foundations for a single market in green products. The DG also started an ex-post evaluation of certain parts of EU waste legislation to make sure it is fit for purpose and can contribute to a more circular economy, and worked intensively to ensure the environmental integrity of extraction of unconventional hydrocarbons, such as shale gas, using high volume hydraulic fracturing in the EU.

Biodiversity

Efforts on biodiversity were guided by the EU 2020 Biodiversity Strategy and the delivery of the 2012 international commitments made under the Convention on Biological Diversity in Hyderabad, India. Besides the management and restoration of the Natura 2000 network, addressing the problem of invasive species and examining the potential of green infrastructure were high on the agenda. Combined efforts across Member States and economic sectors have already translated into some improvements but more efforts are needed if the damage made to ecosystems is to be reversed, as illustrated by the common birds population index which is a proxy for biodiversity and the integrity of ecosystems. Since the state of biodiversity reflects changes in the quality of water, air, soil and the fragmentation of habitats, stepping up efforts in those areas becomes imperative.

Water

EU water policy has helped to improve the status of EU water resources thereby protecting human health. The quality of bathing sites in the EU is a good example. However, European waters are still far from reaching the required good ecological status. The latest assessments show that diffuse pollution and hydromorphological pressures are the biggest obstacles in this regard. More efforts are needed to reduce emissions of nitrate, phosphorus and pesticides in agriculture, and to address changes to water bodies due, for example, to dams for hydropower and navigation, draining land for agriculture or embankments for flood protection. Moreover, more and faster progress is needed in wastewater treatment and in addressing chemicals released to water. Steps are being taken through the 2012 Water Blueprint to address these pressures.


Air

A thorough review of the EU air policy showed it has delivered benefits. Emissions from power plants, industry and transport have been reduced over the last decade, reflected in reduced emissions of certain pollutants such as sulphur dioxide. However, in many parts of Europe persistent problems remain with exposure to particulate matter and ground level ozone, which are the air pollutants with a strong transboundary dimension and are damaging to human health. In 2013, the Commission responded to these findings by adopting proposals to further reduce air pollution.

International

Multilateral, bilateral and regional relations with countries outside the EU are becoming increasingly important for addressing environmental challenges and securing well-being of EU citizens. DG Environment was pivotal in concluding a new international convention on mercury, a toxic metal that can travel long distances and accumulates in fish around the globe. Further steps were also taken to build on the achievements of the Rio+20 Conference of 2012, with a view to finding an international approach to the dual challenge of fighting global poverty and striving for sustainable development.

Integration, Financing

The LIFE programme, with a budget of approximately €300 million a year, funds projects which offer new avenues to solving environmental problems. In its implementation, DG Environment worked to promote sound financial management through actions within the DG and the programme’s beneficiaries. The evaluation of LIFE+ found the programme to be effective and well managed on balance, although with some scope for improvement. Building on LIFE+, the EU institutions agreed on a new LIFE instrument that will run until 2020.

As in previous years, DG Environment worked together with other Commission services to ensure that environmental considerations are an integral part of their policies. Crucial in this respect was the input to the inter-institutional discussions on the Multiannual Financial Framework, in particular on agricultural, fisheries, cohesion and research funding instruments. Whether the environmental potential of these funds is maximised will now depend on how they are implemented in Member States. Furthermore, the objective of avoiding environmental harm was integrated into the new regional state aid guidelines, and draft guidelines on environmental and energy aid for 2014-2020 were developed which include a section on aid to promote resource efficiency.

DG Environment's objectives and indicators

The sections below assess progress achieved in relation to the DG’s objectives and describe in more detail the key activities of the past year. It should be noted that measurable changes in environmental impacts as a result of regulatory or other action at EU level take some time to become apparent, also depending on the speed of implementation at national, regional and local level as well as other factors outside the Commission’s control. Furthermore, indicators from the 2013 Management Plan for which regularly updated data are not available or not available in a suitable form, which are output-related, or which overlap with other indicators have been omitted.


Key conclusions on resource management and internal control effectiveness

DG Environment conducts its operations in compliance with the applicable laws and regulations, with high professional and ethical standards.

The Commission has adopted a set of internal control standards, based on international good practice, that support the achievement of policy and operational objectives. The Director-General has put in place the organisational structure and processes necessary for the achievement of policy objectives, with due regard to the principles of sound financial management, the internal control standards and the risks associated with the environment in which it operates.

DG Environment has set up internal control processes that aim to ensure the adequate management of the risks relating to the legality and regularity of transactions, taking into account the multiannual character of programmes as well as the nature of the payments concerned. The central objective is to ensure that the final amount at risk related to payments authorised does not exceed the materiality threshold of 2%. DG Environment confirms that in 2013 this objective is met and that no reservation is necessary.

In conclusion, management has reasonable assurance that, overall, suitable controls are in place and working as intended; risks are being appropriately monitored and mitigated; and necessary improvements and reinforcements are being implemented. The Director General, in his capacity as Authorising Officer by Delegation has signed the Declaration of Assurance.

Information to the Commissioner

The main elements of this report and assurance declaration have been brought to the attention of Commissioner Potočnik, responsible for Environment.


1. POLICY ACHIEVEMENTS

1.1 Achievement of general and specific objectives

Policy Area: Environment Spending programme Non-spending

General Objective 1 To contribute to a high level of quality of life and well-being for citizens, by aiming to secure an environment where the level of pollution does not give rise to harmful effects either on human health or on the environment and by supporting the development of a greener and more resource efficient economy4

The EU has one of the most comprehensive and modern legislative frameworks for environmental protection in the world which, over the past decades, has led to significant reductions of emissions of pollutants to air, water and soil. Despite this progress, environmental challenges remain in many areas. Our material and natural resources such as air, water or fertile soils are still under pressure exacerbated by intensive use of resources that our economic system continues to encourage, and opportunities to make the environment more resilient to systemic risks and change need yet to be fully taken up. These are important contributors to quality of life, from public health perspective because of exposure to environmental risks to equitable access to clean environment and benefits of nature and, equally important, business and employment opportunities that the green, resource efficient economy brings about.

Impact indicator 1: Resource productivity: GDP (€) per Domestic Material Consumption (DMC, kg) → proxy for greening the economy, sustainable competitiveness and reducing environmental impacts of resource use Source: Eurostat, 2012

Target (continuous) Current situation

Steady increase indicating decoupling economic growth from resource use

Impact indicator 2: Common birds population

index 1980=100

proxy for the state of biodiversity and the integrity of ecosystems; reflects wide-ranging pressures coming e.g., from agriculture, fisheries, energy and transport sectors

Source: Data from EBCC/RSPB/Birdlife International/Statistics Netherlands, 2012

Target (2020) Current situation

Reverse or halt the decline

4 Some indicators presented in the 2013 Management Plan are not reproduced in order to simplify and focus the message and/or because up-to-date information is not available or not available in a suitable form, or where more appropriate indicators exist or remain to be developed (Natural ecological capital, Water Exploitation Index, Land take in the EU, Premature mortality and illness due to chemicals)


Impact indicator 3: Exposure to air pollution (PM10): Percentage of urban population resident in areas in which daily PM10 concentration exceeds daily limit value (50 µg PM10/m³ 24 hour average) over the period of a calendar year

Source: EEA 2013


0 % exceedances of daily limit values more than 35 times per calendar year.

Impact indicator 4: Exposure to air pollution (ozone): Percentage of urban population resident in areas in which ozone concentrations exceed the target value (120 µg O3/m³ as daily maximum of 8 hour mean)

Source: EEA 2013


0 % exceedences more than 25 days per calendar year, averaged over three years

2013 saw the conclusion of negotiations on a new Environment Action Programme (7EAP)5 which will guide environment policy until 2020.

Drawing on a number of strategic initiatives6, the programme identifies three priority objectives for the period to: protect nature and strengthen ecological resilience; boost sustainable, resource-efficient growth, and address environment-related threats to health.

It also sets out a framework to support the achievement of these objectives through, inter alia, better implementation of EU environment law, state of the art science, securing the necessary investments in support of environment policy, and improving the way that environmental concerns and requirements are reflected in other policies. The programme also aims to boost efforts to help EU cities become more sustainable and improve the EU's capacity to meet regional and global environment challenges.

5 Decision No 1386/2013/EU 6 including the Resource Efficiency Roadmap, the 2020 Biodiversity Strategy and the Implementation Communication


General Objective 2: To ensure a high level of environmental protection by promoting measures at international level to deal with regional or worldwide environmental problems7

The growing number of countries joining Multilateral Environmental Agreements demonstrates an increasing world-wide recognition of environmental challenges and sharing of EU concerns as well as proposed solutions.

Impact indicator 5: Degree of ratification of major multilateral environmental agreements (Number of parties) As a proxy for assessing the extent to which the global community shares major EU environmental concerns Source: UNEP Global Environment Outlook GEO5, 2012

8

Target (continuous) Current situation

High level of ratification of MEAs

Of the Conventions presented, EU signatory or party to: Basel (Hazardous waste), CBD (Biological diversity), Kyoto (climate), Ozone, Rotterdam (Prior Informed Consent), Stockholm (POPs), UNCCD (desertification), UNFCCCC (climate change)

Impact indicator 2: Level of progress towards a "greener", resource efficient global economy as inter alia reflected by clear policy commitments at the multilateral level Source: DG Environment, 2014

Target Current situation

Successful development of Sustainable Development Goals, part of the overall post 2015 development framework, resulting in a shift towards a more resource efficient economy

Following the Rio+20 outcome document "The Future We Want" (June 2012) the UN has agreed a roadmap towards a post 2015 development agenda that brings together the poverty eradication and sustainable development objectives. A set of Sustainable Development Goals is being elaborated and the High Level Political Forum on sustainable development has had its inaugural session.

Eradicating poverty and ensuring that prosperity and well-being are sustainable are two of the most pressing challenges facing the world.

Further to the 2012 Rio+20 Conference for a transition to a global green economy and to improve global environmental governance, in 2013 the Commission came forward with a Communication 'A Decent Life for All: Ending Poverty and Giving the World a Sustainable Future'9 outlining some key actions so that the dual challenge of fighting global poverty and striving for sustainable development can be tackled in unison. The document provided input for an EU position and to feed the debate at the UN and worldwide. The EU played a major role in the upgrading and strengthening of the UN's environmental programme (UNEP) which, in the future, will be governed by a UN Environment Assembly with universal participation. It supported the replacement of the Commission for Sustainable Development by the High Level Political Forum, which should be a more effective channel for steering global policy on sustainable development.

7 Some indicators presented in the 2013 Management Plan are not reproduced to simplify and focus the message and/or because up-to-date information is not available or not available in a suitable form, or where more appropriate indicators exist or remain to be developed (Protected areas, Total change in forest area). Illegal logging worldwide is now presented under Specific Objective 'Global Environmental Affairs' where it is more suitable. 8 http://www.unep.org/geo/pdfs/geo5/GEO5_report_full_en.pdf 9 COM(2013) 92

http://www.unep.org/geo/pdfs/geo5/GEO5_report_full_en.pdf


In 2013 the EU was a key player in negotiations to reduce global emissions from mercury by raising international standards to the level already prevailing in the EU. The resulting Minamata Convention was the first new multilateral environmental agreement signed for more than ten years. The Convention is yet to be ratified by the EU10.

10

COM(2013) 325


General Objective 3: To preserve, protect and improve the quality of the environment by promoting and supporting the implementation of environmental legislation and the integration of environmental protection requirements into the definition and implementation of other EU policies11 and activities, with a view to promoting sustainable development

Integrating environmental considerations into other policy areas is key to ensuring a comprehensive approach to achieving policy objectives. Over the last years much work has been done to promote this approach. The success of this also manifests itself through the percentage of EU structural and agricultural funds dedicated to environmentally beneficial projects and activities. Equally important is ensuring timely and consistent implementation of policy and legislative commitments, which remains problematic in some areas.

Impact indicator 1: Effectiveness of application of EU environment legislation: Number of open infringement cases

12 of EU

environmental law

Source: DG Environment, 2013


Effective and uniform implementation of EU environmental legislation as translated into the decrease in the number of open infringement cases

Impact indicator 2: "Green" spending (direct environment and environment friendly) within Cohesion Policy (total of 345 bln €) and Trans-European Transport Network (TEN T) (total of 7.2 bln €)

13 (%)

Source: DG REGIO Infoview; TEN-T Executive Agency


Increase

For 2007-2013 period: Cohesion Policy-Direct Environment+Risks - 14.2% Cohesion Policy-Indirect Env+Clean Energies - 15.8% TEN Transport - 94%

Impact indicator 3: Proportion of CAP rural development spending specifically targeted on the environment

Source: DG Environment estim.


Increase

Approximately 50% of the rural development budget goes on measures of benefit to the environment.

Impact indicator 4: Fish catches from stocks outside safe biological limits: managed by the EU in the North-East Atlantic

14

(% of total catches per year) Source: ICES, 2012


0% of catches outside safe biological limits in all areas in which EU fishing fleets operate

11 Environmental protection requirements must be integrated into the definition and implementation of the Union policies and activities, in particular with a view to promoting sustainable development (Article 11 TFEU) 12 This means the Commission sent an official letter of formal notice to the Member State 13 This figure excludes the European Regional Development Fund and the Cohesion Fund 14 It is considered that a stock is within safe biological limits if its current biomass is above the Maximum Sustainable Yield (MSY) level advocated by the Common Fisheries Policy and Marine Strategy Framework Directive (MSFD), which ensures a high probability that the stock will be able to replenish itself.


Impact indicator 5: Environmental taxation: share of environmental and labour taxes in total tax revenue (%) Source: Taxation trends in the European union 2013, ESTAT and TAXUD


Shift from labour to environmental taxation Increase the share of environmental taxes in total tax revenue

Opportunities to integrate environmental considerations have been built into the first and second pillar of the new Common Agriculture Policy for the period 2014-2020. This reform earmarks agricultural funds to improve the state of the environment.

Maintaining fish stocks within safe biological limits is important for the sustainability of both stocks and the marine environment and the situation is improving, albeit slowly, for example 88% of stocks in the Mediterranean and Black Seas are still overfished.

Shifting the taxation burden onto environmentally harmful activities and away from labour is good for competitiveness and promotes economic growth. Environmental taxation was included in Country Specific Recommendations for 11 Member States15, two of which referred to the need to phase out environmentally harmful subsidies. An inventory on fossil fuel subsidies in Member States was also established completing the work done by the OECD.

In addition, resource efficiency concerns have been integrated to some degree into the state aid modernisation process. The new draft environment and energy aid guidelines include, for the first time, a specific chapter allowing aid for promoting resource efficiency while the objective of avoiding environmental harm was integrated into the new regional aid guidelines.

15 http://ec.europa.eu/europe2020/making-it-happen/country-specific-recommendations/index_en.htm

http://ec.europa.eu/europe2020/making-it-happen/country-specific-recommendations/index_en.htm


ABB activity 07 03

ABB activity: 07 03 Development and implementation of EU environmental policy and legislation Spending programme

Non-spending

Specific Objective 1: Green economy & resource efficiency

To support the development of a greener and more resource efficient economy; to bring about more sustainable production and consumption patterns, to improve waste management and to ensure that the consumption of renewable and non-renewable resources does not exceed the carrying capacity of the environment; to foster eco-innovation and stimulate the development and the uptake of environmental technologies.16

Progress has been made towards decoupling of economic growth from resource use and bringing about a greener and more efficient economy. However, there are still significant barriers ranging from the lack of awareness of businesses and customers to difficulties with access to finance for innovative businesses and efficiency improvements.

Turning waste into a resource is a key building block of the resource efficient, green economy. EU waste policies, in particular legally binding targets, have been an important driver to improve waste management practices contributing to reducing negative impacts on environment and EU import-dependency. However, waste generation remains significant and only part of the total waste is recovered.

Result indicator 1: Total waste generated, EU28 (kg/person) Source: Eurostat 2013


Reduce

*2006 data for EU27 only

Result indicator 2: Municipal waste generation (kg per person) and treatment (%) Source: Eurostat 2011

Target /Milestone Current situation

Reduce generation Increase recycling and composting

Reduce landfilling (towards virtual

elimination)

50% recycling by 2020

16 Some indicators presented in the 2013 Management Plan are not reproduced to simplify and focus the message and/or because up-to-date information is not available or not available in a suitable form, or where more appropriate indicators exist or remain to be developed (Clean Technologies Venture Capital Investment in Europe, Firms Implementing Eco-innovation Solutions, Annual Value of all Removed Environmentally Harmful Subsidies, Packaging material, Green Public Procurement).


In 2013, work focused on implementing and building on the 2011 Roadmap to a Resource Efficient Europe17.

Two new pieces of EU waste legislation were adopted: a regulation18 to reduce the negative impacts linked to the recycling of EU-flagged ships (see also page 29) and an amendment to the Batteries Directive19 that, inter alia, bans the use of cadmium and mercury in certain types of batteries.

A Green Paper on a European Strategy on Plastic Waste20 launched a debate how to make plastic products more sustainable throughout their life cycle and reduce the impact of plastic waste on the environment. Plastic has become an unavoidable material in modern world but its durability can make its disposal problematic. Once in the environment, particularly in the marine environment, plastic waste can persist for hundreds of years. The Green Paper underlined the potential economic gains of higher recycling rates for plastic waste. To encourage change, better framework conditions are needed to support eco-design and environmental innovation, with waste prevention and recycling factored in to the design of plastic products.

As a part of the solution to the above problem, the Commission came forward with a proposal21 requiring Member States to take action to reduce the use of lightweight plastic bags. Every year billions of plastic bags end up as litter in Europe and it is estimated that proper action could reduce overall consumption by as much as 80 per cent.

The Commission also took stock22 of the implementation of EU waste legislation during the period 2007 to 2009. The report concluded it was to a large extent properly transposed into national legislation although differences between Member States remain. The level of implementation of WEEE23 and packaging legislation was found on the whole to be satisfactory, with a few countries missing some targets. No major problems were identified regarding waste oils and sewage sludge. However, the application of the waste management hierarchy remains challenging and there is still a high dependence on landfilling in a number of Member States.

The Commission also took the first steps towards creating a properly functioning EU market for green products24, an essential element for a green economy, by developing EU-wide methods to measure the environmental performance of products and organisations and principles for communicating them.

Finally, preparatory work was undertaken on a package of measures to help take forward the transition to a circular economy and on how to improve the resource efficiency of the food chain and building sectors; the planning of the two latter initiatives was realigned to 2014.

17 COM(2011) 571 18 Regulation (EU) No 1257/2013 19 Directive 2013/56/EU 20 COM(2013) 123 21 COM(2013) 761 22 COM(2013) 6 23 Electric and Electronic Waste 24 COM(2013) 196


Specific Objective 2: Nature & Biodiversity

To protect, conserve, restore and develop the functioning of eco-systems, natural habitats, wild flora and fauna with the aim of halting desertification and the loss of biodiversity, including diversity of genetic resources; to ensure that the real value of eco-systems and their capacity to make the EU more resilient to climate change is recognized25.

Progress in maintaining biodiversity and ecosystem resilience has been mixed so far and part of EU ecosystems continue to be degraded or used unsustainably. The conservation status of EU species and habitats remains challenged by fragmentation as well as change and intensification of land use while more than a quarter of the EU’s territory is affected by soil erosion. Soil contamination and sealing are also persistent problems.

Result indicator 1: Conservation status of species and habitats of European importance (% in conservation categories) Source: Report under the Habitats Directive COM(2009) 358; data concerns 2001-2006 period

26


Improve conservation status

Result indicator 2: Changes in land cover per type of ecosystem (percentage change) Source: Land cover change between 1990 and 2006, EEA 2010


Stop or reverse negative changes

occurring in land cover

In 2013, the work in this area included the adoption of a Strategy on Green Infrastructure27 to use natural rather than engineering based solutions to make ecosystems more resilient.

The Commission also addressed the threat to the natural environment coming from species alien to Europe's natural environment. There are currently over 12 000 such species in Europe; about 15% of them invasive. These species can seriously damage ecosystems and cause extinctions of species needed to maintain the balance of the natural environment. The proposed legislation28 is targeted to focus on the most serious threats at the EU level which will help improve the effectiveness of national measures and achieve results in the most cost-effective way.

25 Some indicators presented in the 2013 Management Plan are not reproduced to simplify and focus the message and/or because up-to-date information is not available or not available in a suitable form, or where more appropriate indicators exist or remain to be developed (Red List Status of European Species, Designated area under Natura 2000). 26The next (second) assessment of conservation status for the 2007-2012 period will be available in 2014/2015; see also: http://ec.europa.eu/environment/nature/knowledge/rep_habitats/index_en.htm 27 COM(2013) 249 28 COM(2013) 620

http://ec.europa.eu/environment/nature/knowledge/rep_habitats/index_en.htm


Another important contribution was a Strategy29 responding to the challenges facing forests and the forest sector. Covering more than 40% of EU land area, forests are a key resource for improving quality of life and job creation, in particular in rural areas. However, they are subject to multiple pressures from climate change and increased competition for forest products and services which poses a significant challenge for maintaining forest ecosystems in good condition. The area covered by forests in Europe has increased since 1990 as a result of afforestation programmes, natural succession of vegetation and abandonment of farming. This is in contrast to the global situation where the forest area continues to decline.

29 COM(2013) 659


Specific Objective 3: Environmental quality, chemicals & industrial emissions

To contribute to a high level of quality of life and social well-being for citizens where the quality of environmental media does not give rise to harmful effects on human health and the environment30

EU policies improved the quality of environmental media although the progress has been uneven across Member States.

Result indicator 1: Trends for selected air pollutant emissions: sulphur oxides (SOx); nitrogen oxides (NOx); non-methane volatile organic compounds (NMVOC); ammonia (NH3); particulate matter (PM10)*; (thousands of tons) Source: Data from EEA, 2012


See the box to the right

*Total of national emission ceilings pursuant to the NEC Directive (million tonnes) ** Set by TS on Air Pollution (compared to emissions in 2000; indicative target)

Result indicator 2: Percentage of surface water bodies in good ecological status or with good ecological potential (as defined by the Water Framework Directive)

Source: COM(2012) 670


100% of water bodies to which justified exemptions do not apply

2012: 43% (for 21 MS which reported their River Basin Management Plans)

Result indicator 3: Nitrate concentrations in ground- and surface waters: percentage of sampling points with concentration greater than 50 mg nitrate/ L Source: COM(2013)683


Reduction of nitrate concentrations in waters; no sampling points above 50 mg nitrates per L

Ground waters: 15% (2004-2007); 14,4% (2008-2011)

Surface waters: 3% (2004-2007); 2,4 % (2008-2011)

30 Some indicators presented in the 2013 Management Plan are not reproduced to simplify and focus the message and/or because up-to-date information is not available or not available in a suitable form, or where more appropriate indicators exist or remain to be developed (Urban Waste Management Treatment, Progress in Dealing with Biocides, Number on Substances of Very High Concern on REACH Candidate List, REACH authorisations, evaluations, restrictions of substances of very high concern).


Result indicator 4: Bathing water quality: Compliance of EU coastal and inland bathing waters with mandatory standards of the Bathing Water Directive (% of all bathing waters)

Source: Data from EEA, 2012


100% waters compliant i.e. in "good/ sufficient" quality

Result indicator 5: Environmentally harmful chemicals by toxicity class (from most to least dangerous) as a percentage of total production (mln t/y)

31

Source: Eurostat, 2013


A shift away from the two most dangerous classes of toxic chemicals towards less harmful chemicals

The 2013 review32 of EU air policy showed that the combination of targets and legislation has delivered benefits. The acid rain ("acidification") problem has been broadly solved in the EU, thanks to a substantial reduction in emissions. EU air policy has stimulated innovation in pollution abatement and radically improved the environmental performance of key economic sectors. The health impacts from particulate matter – the main cause of death from air pollution – fell by around 20% between 2000 and 2010. However, EU air quality standards and targets are breached in many regions and cities, and public health suffers accordingly, with costs to health care and the economy.

The Commission responded to these findings with a clean air package33 which updates existing legislation and further reduces harmful emissions from industry, traffic, energy plants and agriculture. The package also includes support measures to help cut air pollution, with a focus on improving air quality in cities, supporting research and innovation, and promoting international cooperation.

In parallel, the Commission adopted conclusions on Best Available Techniques34, which will ensure continued reduction of emissions from industry to air and water in the future.

A report on the European Pollutant Release and Transfer Register (E-PRTR) Regulation35 found that it had contributed to greater transparency on the types and quantities of industrial emissions and environmental monitoring. Also, an implementation report found the Directive on major-accident hazards involving dangerous substances36 to be working well. Over the past ten years, while the

31 Includes chemicals covered by biocides and REACH legislation 32 http://ec.europa.eu/environment/air/review_air_policy.htm 33 COM(2013) 918, COM(2013)919, COM(2013)920, COM(2013)917 34 See: http://eippcb.jrc.ec.europa.eu/reference/ 35 COM(2013) 111 36 C(2013) 4035

http://ec.europa.eu/environment/air/review_air_policy.htm

http://eippcb.jrc.ec.europa.eu/reference/


frequency of major accidents has reduced, there was a significant decrease in the number of fatalities and injuries reported.

EU water policy has successfully contributed to water protection over the past three decades as exemplified by the high quality of bathing waters. Pollution from urban, industrial and agricultural sources has been regulated and this has brought about significant improvements, particularly by reducing an excess of nutrients. However, EU waters are still far from reaching the 2015 target of good quality, and regional problems remain, particularly in the intensively farmed regions, and the impact of some chemicals on water quality needs to be further addressed.

The implementation of the 2012 Water Blueprint37 included, among others, work on urban wastewater treatment, follow-up work with Member States to improve their River Basin Management Plans, and agreement on a work programme for the Common Implementation Strategy of the Water Framework Directive. The negotiations on a revised Directive on Priority Chemical Substances in water came to a conclusion. This legislation should ensure better protection of the environment and human health against chemical pollutants, more information to the public about progress in water quality and an improved knowledge base for future reviews of the legislation.

A report38 on the implementation of the Nitrates Directive concluded that it has contributed to reducing ammonia and nitrous oxide emissions thanks to better agricultural practices, although not uniformly. Reinforced action by Member States is needed to make further progress. The latest figures39 for wastewater treatment in Europe, another important contributor of water quality, showed improvements in collection and treatment, thanks in part to EU funding although big differences still remain between the EU-15 and EU-12 Member States. The lack of compliance in a number of big cities remains area of concern.

Human and economic activities are increasing in marine waters and coastal areas but too little coordination can lead to competition for space and pressure on valuable resources. Recognising this problem, the Commission launched a proposal40 to improve the planning of maritime activities at sea and the management of coastal areas. It should also help preserve unique and diverse coastlines and ecosystems that offer invaluable habitats for plants and animals.

Considerable effort was dedicated to ensuring that EU chemical legislation, with its cornerstone REACH Regulation, continues to deliver results. More than 10,000 substances are currently registered under REACH providing a wealth of safety information with a deadline for small volume substances in 2013. The REACH candidate list of substances of very high concern (SVHC) continued to grow and a number of highly dangerous substances were restricted in their uses. Furthermore, the implementation of the new Biocides Regulation started in 2013 and work continued towards the revision of the Endocrine Disruptors Strategy.

37 COM(2012)673 38 COM(2013) 683 39 COM(2013) 574 40 COM(2013) 133


Specific Objective 4: Compliance & awareness-raising

To promote compliance, strengthen effective policy implementation and enforcement in the EU, inter alia through the definition of coherent implementation priorities and innovative approaches; to ensure that EU environment policy is based on the principles of 'better regulation'; to promote awareness-raising, access to information, and transparency in relation to EU environment policies; to promote the participation of interested parties and the public at large, including non-government organisations, in the environment policy-making and implementation41.

Public opinion polls showing consistently that EU citizens consider the environment to be an important personal concern. Nevertheless, compliance with environmental legislation is a continuous challenge.

Result indicator 1: Media outreach (in millions) Source: DG Environment, 2013


Increase

Result indicator 2: Attitude of European citizens towards environment and other issues (latest data) Source: DG Environment, 2014


High level of awareness and public support for EU environmental policy making

Driving behavioural change in citizens towards more environmentally friendly lifestyles and consumption habits, with more than 20% of citizens implementing changes in their lifestyle

% of European citizens who: 2007 2008 2011 2013

consider that protecting the environment is important to them personally

94% 96% 95%

consider that EU environmental legislation is necessary to protect the environment

82% 81%

favour environmental decision making at the EU level

67% 64%

are willing to pay more for environmentally friendly products

69% 75% 72% 77%

agree that the efficient use of natural resources can boost economic growth in the EU

83%

consider that they are well informed about environmental issues

55% 60%

Source: Eurobarometer surveys (2007, 2008, 2011); next Special Eurobarometer scheduled for 2014

Throughout the year, DG Environment promoted the timely and correct transposition and implementation of environmental law, including meetings with Member States, handling complaints and investigations. For example, the DG organised a high level seminar to help Member States lagging behind in sustainable waste management practices and launched a pilot initiative in the urban waste water sector to help establish national systems for information on the implementation of EU law. In

41 Some indicators presented in the 2013 Management Plan are not reproduced to simplify and focus the message and/or because up-to-date information is not available or not available in a suitable form, or where more appropriate indicators exist or remain to be developed (Replies to Petitions, Contribution made by LIFE to policy development, Municipalities taking part in participative schemes, Subscribers to 'Science Environment Policy News Alert Service'). Evolution of infringements cases is now reported only under General Objective 3.


parallel, DG Environment was preparing for the revision of the EU framework on inspections at national and EU level and to revive discussions on access to justice in environmental matters.

The DG provided input to the inter-institutional discussions on the Multiannual Financial Framework (MFF) to mainstream environmental considerations into its component parts. Work has already started to help Member States take up the opportunities of the new Framework, particularly through their rural development plans and prioritising green elements in EU Cohesion and Structural Funds.

Discussions between co-legislators on a review of the EIA Directive concluded42. The updated Directive raises quality standards to better protect human health and the environment. Governments will have to take these standards into account in order to make informed decisions. It will also require impact assessments to take account of new environmental factors, such as biodiversity and climate change, assessment methods will be clearer, public participation via a central web portal will be facilitated, and rules to prevent conflicts of interest and restrict recourse to exemptions will be strengthened.

The year also saw the final evaluation of the LIFE+43 which ran from 2007 to 2013. The evaluation found the programme effective and well managed on balance although with some scope for improvement. The programme played a significant role in increasing awareness, good governance and public participation in the implementation of EU environment policy and legislation. It was noted that grants to support NGOs in the environmental policy arena fulfil a useful purpose in promoting and supporting the policy debate; that the expenditure on public procurement is appropriate and responds to the needs of the policy cycle; and that external monitoring was working well. However, the evaluation also showed that administrative burden costs for LIFE+ beneficiaries are slightly higher than for other similar programmes. In conclusion, the evaluation found that, in particular in view of the uneven and inadequate implementation of EU environment policy, there is still a need for a dedicated financial instrument to support environmental policy.

The uniqueness of LIFE+ is based on the exclusive environmental focus of its projects rather than the scale of its budget. The programme's demonstrative and replication nature supports the search for novel avenues to solving environmental problems, both at policy development and implementation stage. For example, thanks to LIFE Nature projects the population of the world's most endangered feline species, the Iberian lynx, has tripled in Spain and the way is being paved for its reintroduction in Portugal thanks to a combination of replicable best practice methods. Under the environmental strand of LIFE, projects such as Icarre 9544 have demonstrated the potential of true cradle to cradle production methods, which are intended for replication in the car industry. Although its administrative burdens are slightly higher than that of other similar programmes, this is linked to financial and technical reporting requirements e.g. on indicators, necessary to ensure a low error rate and to enable the Commission to follow up on the performance of the programme, and this is recognised by beneficiaries.

Both LIFE Nature and LIFE Environment projects promote the Europe 2020 Strategy. The former contributes to halting and, where possible, reversing biodiversity loss. For example, 13.000 ha of land have been permanently secured for nature conservation. The latter contributes to a resource efficient, climate friendly economy, offering in particular SMEs an opportunity to test new techniques and methodologies before introducing them in the production chain.

Building on this experience, the EU institutions agreed a new LIFE instrument45 that will run until 2020.

The topics listed in the new programme will focus LIFE intervention on the main priority areas in line with

the 7th Environmental Action Plan. The sub-programme for Environment now focuses on only five

42 See: http://ec.europa.eu/environment/eia/review.htm 43 COM(2013) 478 44 http://icarre95-programmelife.com/ 45 Regulation (EU) No 1293/2013

http://ec.europa.eu/environment/eia/review.htm

http://icarre95-programmelife.com/


thematic priorities. By adding a Sub-programme for climate action, the climate component to the

Europe2020 Strategy is further boosted.

The programme introduces novel features to help increase the link with EU environment and climate policies as well as to integrate environmental and climate concerns into other EU policies. Integrated Projects, covering six themes (nature, air, water and waste, climate change mitigation, and

adaptation) and limited to the implementation of Union plans and strategies, will allow LIFE to be used as a catalyst to lever other funds (public or private) to support large scale projects in order to improve the implementation of EU environment and climate policy. The possibility to earmark money for preparatory actions, capacity building as well as technical assistance to prepare integrated projects will increase its efficiency. Finally, the potential to use innovative financial instruments such as loans, guarantees or equity under the Programme, in partnership with the private sector as well as with Financial Institution (EIB, EIF), will allow up-scaling the ambitions of the Programme and thus increasing its role as a catalyst to face growing environmental and climate challenges.

The Regulation and the LIFE multiannual work programme for 2014-201746 contain indicators that will help to ensure follow-up in view of the relevant Europe 2020 objectives. They also respond to the conclusions and recommendations of the European Court of Auditors in its Special Report No 15 2013 regarding the LIFE+ sub-programme on Environment.

Awareness raising campaigns/events were carried out on a number of issues. The "Generation Awake!" campaign47, aiming at helping Europeans to make smarter and more sustainable consumption choices, continued its focus on water48. The 2013 edition of Green Week49 - the EU's largest annual environmental conference – was dedicated to air quality ("Cleaner air for all") and its results fed into the air policy review. Bristol was awarded the 2015 European Green Capital title which recognizes cities at the forefront of environmentally-friendly urban living50. Hundreds of European towns and cities participated in the European Mobility Week. The 2013 edition, under the "Clean air – It’s your move!" slogan, aimed to raise awareness about the impact of transport on local air quality and encourage citizens to change their day-to-day mobility behaviour.

46 http://ec.europa.eu/environment/life/about/documents/mawp2014.pdf 47 https://www.facebook.com/GenerationAwake 48 http://imagineallthewater.eu/. 49 http://ec.europa.eu/environment/archives/greenweek2013 50 http://www.europeangreencapital.eu/

http://ec.europa.eu/environment/life/about/documents/mawp2014.pdf

https://www.facebook.com/GenerationAwake

http://imagineallthewater.eu/

http://ec.europa.eu/environment/archives/greenweek2013

http://www.europeangreencapital.eu/


Specific objective 5: Development of the knowledge base to support policy making and implementation

To generate and facilitate exchange of environmental data and information and develop the knowledge base to support policy-making and implementation51

Environmental pressures are increasingly global and systemic in nature which requires a more extensive knowledge base to understand better the drivers and barriers, to justify the cost of action and inaction, and to develop reliable indicators to measure progress.

Over time different mechanisms have been developed to strengthen the knowledge base for environmental policy and to provide policy-makers and the wider public with regular, timely and credible information on the state of the environment. The five-yearly European Environment State and Outlook Reports (SOER)52 from the European Environment Agency provide essential information on the current state and future prospects for environment. The implementation of the 'Infrastructure for Spatial Information in the European Community' (INSPIRE) Directive and the development of the Shared Environmental Information System (SEIS) also contribute to improved environmental information systems.

Result indicator 1: Availability of key information and assessments on past and future changes in the state of the environment, pressure on the environment and policy responses, e.g. the Core Set of Indicators and five yearly state and outlook reports published by the European Environment Agency

Source: EEA, 2013


Increased volume and quality assured environmental information generated and used in accordance with general principles of the Shared Environmental Information System (SEIS) and INSPIRE compliant

EEA core set of indicators and other indicator sets and underpinning data are available via web-based platforms as part of SEIS

Maintain EEA website annual up-time of at least 98%

Core set of indicators used widely by EEA and European Commission e.g. in Management Plans.

Increased use of data and maps underpinning EEA’s assessments.

Up-time of EEA website in 2011 above 99%.

Result indicator 2: Access to key environmental information and assessments: number of total visits on EEA website (mln) and webpages viewed by engaged visitors (thousands)

Engaged visitor: visit duration at least 3 minutes, at least 3 pages and at least 3 visits within 2 weeks

Source: EEA, 2013


Increased use of EEA information and assessments accessed via EEA website

51 This objective is implemented mainly through the European Environment Agency - EEA, the Joint Research Centre, the RTD Framework Programmes and GMES. 52 http://www.eea.europa.eu/soer

http://www.eea.europa.eu/soer


Result indicator 3: National delivery of annual Eionet priority data flows (i.e. information from MSs to EEA):

Number of Member States reaching a reporting level that is higher than 90 %

Source: EEA, 2013


Increase mid-2012: 14 Member States 2013: 14 Member States

With support from the European Environment Agency and the Commission's Joint Research Centre, DG Environment worked continuously on improving and refining the knowledge base. Environmental concerns have been integrated into Horizon 2020, the new research and innovation programme of the EU, and in particular into its first Work Programme for 2014-2015.

The 2008 SEIS Communication set out principles for the better management of environmental data and information. The SEIS Implementation Outlook53 published in 2013 took stock of the achievements so far in streamlining environmental reporting and of the systems for monitoring, reporting and information-gathering that had evolved over the past decade. It identified the quality of data and information and data flows as one of the most important issues that must be tackled for the an effective management of environmental information.

A consultation was also launched on the experiences with the 2007 INSPIRE Directive which is a pan-European platform to help governments, citizens and businesses share geographic, social-economic and environmental data. To ensure that the spatial data infrastructures of the Member States are compatible and usable in an EU and transboundary context the Commission amended the Directive's Implementing Rules to deal with the interoperability of spatial data sets and services published54.

53 SWD(2013) 18 54 Commission Regulation (EU) No 1253/2013


ABB activity 07 02

ABB activity: 07 02 Global environmental affairs Spending programme Non-spending

Specific Objective: To pursue ambitious environment policies at international level; To promote and support improvements in the environment in the candidate and potential candidate countries for accession to the EU, as well as in the European Neighbourhood countries; To strengthen cooperation on environmental issues with our main trading partners; To strengthen international governance and ensure the integration of environmental requirements into all external policy areas, particularly development and trade policy55

The EU has a significant level of influence in promoting effective international environmental governance, most recently exemplified by the successful outcome of CBD COP 11 and sustained EU support to the negotiations for a multilateral binding instrument on mercury. The strong international leadership in the field was also reflected in a variety of bilateral and regional relations with countries outside the EU. However, meeting the Lisbon Treaty obligations to represent the EU in international negotiations remains a challenge. At the same time, progress has been made in translating international commitments into EU policies and legislation.

Result indicator 1: EU participation in Multilateral Environmental Agreements: - MEAs the EU is a signatory or a party to (number, cumulative) - Amendments, new agreements, protocols (number per year) Source: DG Environment


The EU joining Conventions to which it is not yet a party Sustained EU participation in MEAs so that EU concerns are reflected worldwide

Year 2006 2008 2010 2011 2012 2013

Conventions N/A 47 48 48 48 48

Amendments, new agreements, protocols

4 5 5 5 2 0

Result indicator 2: Level of EU influence on decisions taken by Multilateral Environment Agreements (MEAs) and processes Source: DG Environment


Decisions taken in international meetings are in line with EU positions

Progress has been made on multilateral processes (e.g. emerging support for green economy as one of the instruments towards sustainable development, progress on governance and on various policy areas relevant to sustainable development at Rio+20, a holistic approach to poverty eradication and sustainable development in preparation for the Summit on the post 2015 framework, work on improving financial mechanisms as well as synergies between various conventions and processes, in particular in the chemicals and waste cluster) but difficulties remain in finding consensus on strong and coherent implementation, as well as on financial matters in times of economic crisis.

55 Some indicators presented in the 2013 Management Plan are not reproduced to simplify and focus the message and/or because up-to-date information is not available or not available in a suitable form, or where more appropriate indicators exist or remain to be developed (Status of relations with Potential Candidates and Candidate Countries, Intensity of Dialogue with Strategic Partners, Support by DCI/EDE programmes to environmental protection).


Result indicator 3: Progress along pre-accession path for candidate countries and potential candidates (implementation of the Stabilisation and Association Agreements) Source: DG Environment


Alignment with EU environment legislation and of sustainable development goals by candidate countries and potential candidates

Enlargement countries are making gradual progress towards transposition and implementation of the EU acquis. However, institutions are generally weak, technical capacity is limited, finance is insufficient and stakeholder involvement is limited. New impetus for enlargement came with recent decisions of the European Council to open negotiations with Montenegro and Serbia and to negotiate a Stabilisation and Association Agreement with Kosovo. To complement support at national level, the Environment and Climate Regional Accession Network (ECRAN) will assist countries in moving closer to the implementation of EU policy

56.

Result indicator 4: Status of negotiations on environmental chapter of trade agreements between the EU and third countries or regions

Source: DG Environment and DG TRADE 2013


A chapter on environment is introduced in all bilateral or regional trade agreements

Negotiations on

environmental chapter

concluded57

Negotiations on

environmental chapter

ongoing

Negotiations on

environmental chapter to start

in 2015

Korea USA Tunisia

Singapore Canada Egypt (possibly)

Ukraine Japan Jordan (possibly)

Central America India

Colombia Mercosur

Peru ACP regions

Georgia Vietnam

Moldova Thailand

Armenia Malaysia

Morocco

indicator 5: Number of significant timber exporting countries with which EU has signed agreement to prevent illegal logging (Voluntary Partnership Agreements) → as a means to reducing to negligible levels trade in timber products related to illegal logging

58

Source: DG Environment 2013


Increased number of ratified VPAs

VPAs ratified to date: 5 VPAs concluded to date: 6 VPAs currently under negotiation: 9

Significant timber exporting countries (globally): 20

New legislation to counter the trade in illegal timber entered into force in 2013. It prohibits the placing of illegally harvested timber on the European market in an effort to tackle the problem of illegal logging across the world. This will be reinforced by a Voluntary Partnership Agreement (VPA) that the EU signed with Indonesia. Under this framework, only verified legal timber and timber products will be exported to the EU. Indonesia is the first Asian country to conclude such an agreement, and by far the largest Asian timber exporter to the EU. The agreement is yet to be ratified by the parties59. (Other Asian countries currently engaged in FLEGT VPA negotiations include Malaysia, Vietnam, Laos and Thailand.)

56 ECRAN is financed from a regional IPA programme subdelegated to ENV 57 Armenia, Georgia, Moldova, Morocco, Jordan, Egypt, and Tunisia are also partner countries in the European Neighbourhood 58 among others stimulated by entry into force of the EU Timber Regulation (EUTR) 59 COM(2013) 433


Major progress was achieved at the 16th CoP of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) through adoption of several measures to ensure that trade in a number of marine and timber species is sustainable and to avoid conflicts of interest in the scientific advisory bodies of the Convention. Covering about 35,000 species CITES aims to ensure that international trade in specimens of wild animals and plants does not threaten their survival. In 2013 the so-called Gaborone amendment entered into force, enabling the EU to launch the process to join the CITES Convention60.

In view of the increased level of wildlife trafficking, DG Environment began preparations for a review of the EU approach, in particular through engagement and cooperation with other concerned services, in particular those in charge of the fight against organized crime, development support and external action.

The year saw the finalisation of the inter-institutional discussions on the proposal for a Regulation on access to genetic resources and the fair and equitable sharing of benefits from their utilization (ABS) in the Union. This will allow the EU to fulfil international commitments agreed in the framework of the UN Convention on Biodiversity in October 2010 in Nagoya, Japan.

A new Ship Recycling Regulation61 has also been agreed by the co-legislators. Up to now legislation was regularly circumvented and most European ships were dismantled in Asia in poor facilities, causing significant environmental pollution at a high cost to human health. The new regulation, putting into effect the rules of the 2009 Hong Kong Convention for the safe and environmentally sound recycling of ships, will make it possible to legally recycle EU ships outside the OECD, but only in facilities that meet minimum environmentally requirements.

Furthermore, the Commission took action62 to tackle the problem of illegal waste shipments. Around 25 % of waste shipments sent from the EU to developing countries in Africa and Asia are thought to contravene international regulations. When it arrives, that waste is often dumped or mismanaged, causing serious negative impacts on human health and the environment. Legislation was proposed to strengthen national inspections of waste shipments to ensure that all Member States have similar levels of control.

Work also continued on bilateral and regional relations with countries outside the EU, the enlargement process with the candidate countries and potential candidates, the environmental dimension of European Neighbourhood Policy and development cooperation, and with the EU's developed-country trading partners.

60 http://ec.europa.eu/environment/cites/gaborone_en.htm 61 http://ec.europa.eu/environment/waste/ships/index.htm 62 COM(2013) 516

http://ec.europa.eu/environment/cites/gaborone_en.htm

http://ec.europa.eu/environment/waste/ships/index.htm


1.2 Specific efforts to improve 'economy' and 'efficiency' of spending and non-spending activities

According to the financial regulation (art 30), the principle of economy required that the resources used by the institution in the pursuit of its activities shall be made available in due time, in appropriate quantity and quality and for the best price. The principle of efficiency concerns the best relationship between resources employed and results achieved.

The respect of these principles is continuously pursued through the implementation of internal procedures and predefined practices. These procedures ensure that activities are executed in an efficient manner (e.g. the different workflows contribute to the efficient cooperation between staff, units, etc…) and according to the principle of economy (e.g. the procurement rules ensure procurement in optimal conditions).

DG Environment is continuously fine-tuning its internal arrangements in order to improve the efficiency and economy of its operations. The following two initiatives show how these principles are implemented in our DG:

Example 1

In order to make the best use of available resources and to ensure that the structure of the DG better reflected its objectives, the DG undertook a reorganisation in June 2013. New geographically focused units were formed to respond better to Europe 2020 and the implementation of its underlying policies. This will improve the knowledge of circumstances in Member States, helping to better identify obstacles to implementing environmental legislation, to target possible support from EU funding, and to strengthen input to the EU semester process. Bringing together the strategy, inter-institutional and communication functions will deliver further synergies.

Example 2

Under the new LIFE programme the management of technical projects, entailing a large number of standardised operations, has been externalised to an executive agency63. This will allow the Commission to focus on policy making and promoting synergies between the two strands of LIFE (environment and climate) and with Horizon 2020. Delegation to an agency focused exclusively on project management will increase the potential to identify efficiency gains and simplification opportunities.

63 Executive Agency for Small and Medium Size Enterprises


2. MANAGEMENT OF RESOURCES

Assurance is an objective examination of evidence for the purpose of providing an assessment of the effectiveness of risk management, control and governance processes. This examination is carried out by management, which monitors the functioning of the internal control systems on a continuous basis, and by internal and external auditors. Its results are explicitly documented and reported to the Director-General.

This section reports on the control results and other relevant elements that support management's assurance on the achievement of the internal control objectives64. It is structured in three separate sections: (1) the DG’s assessment of its own activities for the management of its resources; (2) the assessment of the activities carried out by other entities to which the DG has entrusted budget implementation tasks; and (3) the assessment of the results of internal and external audits, including the implementation of audit recommendations.

2.1 Management of human and financial resources by DG Environment

This section reports on and assesses the elements identified by management that support the assurance on the achievement of the internal control objectives. Annex 5 outlines the main risks together with the control processes aimed to mitigate them and the indicators used to measure the performance of the control systems.

FINANCIAL OVERVIEW

The budget of DG Environment is implemented through direct centralised management. The 2013 commitment appropriations amount to EUR 439.1 million, of which "LIFE+" represents almost 75%. The table below gives an overview of the budget implementation at 31/12/2013:

Financial overview DG Environment:

Expenditure € M Commitment Appropriation

s 2013

Committed 31/12/2013

2013 Payments Appropriations

Payments authorised in

2013

Administrative expenditure (budget line 070102) 3.6 3.6 4.3 3.3

LIFE+ and LIFE II, LIFE III completion +other 324.8 318.1 231.9 227.8

LIFE NGO 9.0 9.0 8.8 8.8

LIFE/MEA support expenditure 17.3 17.1 28.2 13.8

Contributions EEA (070309) 42.7 41.7 42.7 41.7

ECHA (070360,070370) 8.6 8.6 8.6 8.6

Multilateral Env. Agreements/MEA (01070404,07) 2.1 2.0 2.0 2.0

Preparatory Actions & Pilot Projects (070312-72) 5.5 5.5 6.0 4.4

Co-delegations CIP/EIP + Maritime 3.2 3.1 2.8 2.2

Cross-subdelegation CLIMA (071201) 5.5 5.5 0.0 0.3

Cross-subdelegation DEVCO/ENRTP (210101,04) 11.7 11.7 0.0 19.9

Cross-subdelegation ELARG/IPA (220207,260150) 5.2 5.2 2.7 2.7

TOTAL (rounded) 439.1 431.1 338.0 335.6

64 Effectiveness, efficiency and economy of operations; reliability of reporting; safeguarding of assets and information; prevention, detection, correction and follow-up of fraud and irregularities; and adequate management of the risks relating to the legality and regularity of the underlying transactions, taking into account the multiannual character of programmes as well as the nature of the payments (FR Art 32).


The consumption of commitment and payment appropriations is very satisfactory with implementation rates of 98.19% and 99.29% respectively at year end. The voted payment appropriations were increased by amending budgets of €13 million (mainly LIFE programmes) and by €9 million earmarked appropriations related to reimbursed recovery orders. These additional funds were effectively implemented.

OPERATIONAL STRUCTURE AND FINANCIAL CIRCUITS

At year-end 2013, DG Environment had 583 staff members and contractual agents65. The DG is structured around six Directorates, which receive various administrative and financial support services from the Shared Resource Directorate:

High-level organisation chart DG Environment:

As shown in the table below, the major part of the budget (LIFE action grants) is implemented by the DG through a fully decentralised financial circuit. The operating grants to NGOs and the remaining operational budget are implemented through partly decentralised circuits involving the finance Unit of the Shared Resources Directorate (SRD2) and the operational units.

Overview of financial circuits for payments authorised in 2013:

Financial circuit Expenditure EUR million

Decentralised LIFE action grants (174.4 million) and the main part of "LIFE

support expenditure" 212.3

Partly centralised LIFE operating grants to NGOs; Procurement contracts;

Contributions to EEA, ECHA, MEA; Preparatory actions and action plans; Co-and cross delegations from other DGs

121.0

Centralised Administrative expenditure budget line 07010201 (not including

co-delegation to PMO) 0.7

Sub-delegations given to other DGs

Co and cross sub-delegations to ESTAT, JRC, DIGIT, ENTR 1.5

Total 335.6

65 Including SRD staff, of which 75% is "attributed" to DG Environment and 25% to DG CLIMA.

Director-General

Deputy Director-

General

A. Green Economy

Policy development

and implementation

B. Natural Capital

Policy development

and implementation

Quality of Life, Water

& Air

Policy development

and implementation

D. Implementation,

Governance and

Semester

Implementation EU

environmental acquis

and its integration

into other EU policies

E Global & Regional

Challenges, LIFE

Bilateral and

multilateral action,

external relations…

LIFE programmes

F. Strategy

Coordination,

promotion and

evaluation of

environmental

policies

SRD - Shared

Resource Directorate

(ENV/CLIMA)

HR, internal control,

budget and finance,

logistics,

doc.management,

publications


MANAGEMENT PARTNERS: AGENCIES AND CROSS SUB-DELEGATIONS

European Environment Agency (EEA) in Copenhagen: Regulatory agency as per Article 185 of the Financial Regulation. It provides information and data on key policy areas. It has its own Financial Regulation, is the subject to a specific discharge procedure, and issues its own Annual Activity Report. DG Environment represents the Commission on the EEA Management Board and is consulted on certain key documents (such as the annual work programme) in accordance with standard arrangements for regulatory agencies and the Regulation establishing the EEA66. The Management Board has forty members, including two Commission representatives (ENV, RTD)67 and one observer (CLIMA). There are annual meetings between DG Environment and the EEA at senior level to ensure coordination of activities. Information on planned calls for tender is exchanged on an annual basis to prevent duplication of actions. In 2013, DG Environment paid EUR 41.7 million in subsidies to the EEA. This amount is fixed by the Budgetary Authority.

European Chemicals Agency (ECHA) in Helsinki: Regulatory agency as per Article 185 of the Financial Regulation. It is the driving force among regulatory authorities in implementing the EU's chemicals legislation for the benefit of human health and the environment as well as for innovation and competitiveness. ECHA helps companies to comply with the legislation, advances the safe use of chemicals, provides information on chemicals and addresses chemicals of concern. In 2013, DG Environment paid EUR 8.6 million in subsidies to the ECHA for registration of biocides and PIC. This amount was fixed by the Budgetary Authority.

Executive Agency for Competitiveness and Innovation in Brussels (EACI): Since 2007 DG ENV shares joint responsibility with DGs ENTR, MOVE and ENER for the Executive Agency for Competitiveness and Innovation (EACI). In 2008, it was agreed to delegate tasks to the EACI for the Entrepreneurship and Innovation Programme (EIP) eco-innovation pilot and market replication projects. DG Environment participated in the Steering Committee of the EACI, approved the management plan, the Annual Activity Report and the accounts, and received quarterly activity reports. DG Environment managed directly commitment appropriations under the CIP/EIP programme of EUR 2.4 million (co-delegation), mainly support measures and support to networks. In 2014 EACI has been renamed the Executive Agency for Small and Medium-sized Enterprise (EASME) and will also take over management of many aspects of the LIFE programme.

Cross sub-delegations: DG Environment is managing a number of actions under cross sub-delegation agreements with DG DEVCO (ENRTP - Environment and Sustainable Management of Natural Resources including Energy) for EUR 11.7 million, DG ELARG (IPA - Instrument for Pre-Accession Assistance) for EUR 5.2 million, DG CLIMA for EUR 5.5 million, and DG ENTR for EUR 0.2 million. Reporting on the implementation of these sub-delegations is included in the Annual Activity Reports of the delegating Directorates Generals based on input from DG Environment.

CONTROL STRATEGY SUPPORTING MANAGEMENT'S ASSESSMENT

The Standing Instructions68 provide that the assessment by management should cover the DG's significant budget areas. Considering that more than 90% of the payments authorised in 2013 relate to ABB activity 0703 Development and implementation of Union environmental policy and legislation and 0701 support and management expenditure (see table below), the assessment and the cost benefit analysis concentrate on those expenditures. The control strategies for grants and procurement under ABB activity 0703 are further explained in the Internal Control Templates in Annex 5.

66 Council Regulation (EEC) No 1210/90 67 JRC and ESTAT are substitutes 68 ARES(2012)1240233


Payments under other ABB activities authorised in 2013 concern: contributions to Multinational Environmental Agreements (MEA) and co/cross delegations. Most of this expenditure is implemented through subsidies and grants. The control strategy is the same as for grants made under ABB activity 0703.

Overview of payments authorised in 2013 per budget line/ABB:

Domain Budget line/ABB Type of expenditure EUR million %

LIFE+ and LIFE II, LIFE III completion 070307 (070303-04) Action grants 201.8 60.1%

LIFE NGO 070307 Operating grants 8.8 2.6%

LIFE Other expenditure 070307 Proc. (25.5) Grants (0.6) 26.1 7.8%

LIFE/MEA support expenditure 07010401-04 Procurement 13.6 4.1%

Contributions EEA* 070309 Subsidies 41.7 12.4%

Contributions ECHA* 070360-70 Subsidies 8.6 2.5%

Contributions MEA 070201 Subsidies 2.0 0.6%

Prep. actions and pilot projects 0703 (mainly) Proc. (2.7) Grants (1.7) 4.4 1.3%

Co-delegations CIP/EIP + Maritime 020201 Proc. (0.6) Grants (1.6) 2.2 0.7%

Cross-delegation CLIMA 071201 Procurement 0.3 0.1%

Cross-delegation DEVCO/ENRTP 0210401, 21010401 Proc. (0.4) Grants (19.5) 19.9 5.9%

Cross-delegation ELARG/IPA 0220207, 22010401 Procurement 2.7 0.8%

Other management expenditure 07010201 Procurement 3.5 1.1%

TOTAL 335.6 100.0%

* Contributions defined by the Budgetary Authority

Control effectiveness as regards legality and regularity

DG Environment has set up internal control processes aimed to ensure the adequate management of the risks relating to the legality and regularity of the underlying transactions, taking into account the multiannual character of programmes as well as the nature of the payments concerned. The control objective is to ensure that the final amount at risk related to payments authorised in 2013 does not exceed 2%.

METHOD FOR ESTIMATING THE "AMOUNT AT RISK"

DG Environment's estimation of the amount at risk is mainly based on ex-post audits performed in 2013 (Monetary-Unit Sampling). However, to obtain additional assurance, the results of ex-post audits have been complemented with an analytical review of on-site monitoring visits of LIFE projects performed in 2012-2013.

The ex-post audit team sampled 35 of the 105 LIFE grants for which final payment was made throughout 2012. 32 grants were audited69, which represents audit coverage of about 1/3 of the number of projects closed in 2012 and 50 % of the total value of those grants. The sample is based on a random selection through the MUS methodology. The 2013 detected error rate of 2.32% is therefore a reliable estimate.

It should be noted that - due to the long duration of LIFE projects (5-6 years) – the number of final

69 The ECA audited one of the 32 projects. Their recommendations were implemented by the ex-post audit.


payments related to the new generation of LIFE projects (LIFE+) is still very low. Consequently, the sample contains a majority of projects related to the old generation of LIFE projects (LIFE III): 19 of the 32 projects. Because of this time-lag, the estimated error rate related to payments made in 2012 is probably slightly overstated (i.e. the improvements made in the control environment in recent years are probably not fully reflected in the ex-post results).

Concerning the on-site monitoring of LIFE projects, the current monitoring system of time-sheets was launched in 2010 as part of the 2009 reservation action plan. Most on-site visits are performed by external contractors, but staff from DG Environment participate in at least one of the annual visits during the lifetime of the project. The monitoring visits serve many purposes, one of which is to verify a small sample of time-sheets (time-sheet errors representing around 50% of errors found by ex-post audits).

Analysis of ex-posts audit results showed that half of the error found related to unreliable or missing time sheets in the beneficiaries or partners premises. A monitoring system of time-sheets by the monitoring team was then launched in 2010 as part of the 2009 reservation action plan. . In order to monitor the overall improvement of time-sheet recording over time, the results of each visit are systematically recorded in a monitoring database and analysed. For AAR assurance purposes, the results of the analytical review performed by DG Environment at the beginning of 2014 have been compared with the results of the analytical review made in the previous year.

It should be pointed out that the analytical reviews are not based on statistical sampling and that "time-sheet errors" detected in monitoring visits would not necessarily have resulted in recommended recovery in case of an ex-post audit. Nevertheless – considering the large number of projects visited - it gives a fairly reliable indication of the quality of time-recording.

Hence, if the "monitoring error rate" (which is based on on-going projects) is decreasing, it seems reasonable to assume that this improvement will be reflected – to some extent - in the results of future ex-post audits (which are based on closed projects/final payments). Within this context, it should be noted that the duration of a LIFE project is around 5-6 years. Consequently, the results of ex-post controls may not fully reflect recent improvements in the control environment.

With the 2014 audit plan, DG Environment will pursue a multi-annual approach for ex-post audits related to LIFE+ projects in order to obtain more reliable numbers for those types of actions. The cumulative results would somewhat improve the confidence level.

ESTIMATION OF THE "AMOUNT AT RISK"

In line with the AAR Standing Instructions, the amount at risk and materiality level has been calculated as follows (materiality criteria in Annex 4):

m € or %

Calculation step Result Explanation

1. Detected ex-post error rate LIFE

grants 2.3%

Recommended recovery (EUR 836,730) compared to

final payments made per the audited sample (EUR

53.611.490)

2. Deduction: recovery orders 0

As most audit reports were issued at the end of the

year, only EUR 6.559 of recovery orders related to the

projects audited in 2013 had been issued or cashed at

31/12/2013

3. Residual error rate LIFE grants 2.3% Detected error rate minus recovery orders


4. Amount at risk LIFE grants 4.9

Residual error rate multiplied by the total LIFE grant

payments authorised in 2013 (EUR 210.6 million, of

which "LIFE+" 201.8 and "LIFE III and LIFE II" 8.8)

5. Amount at risk related to other

payments under ABB Activity 0703 0.03

(a) Procurement: LIFE "other expenditure" (EUR 25.5

million) and preparatory actions and pilot projects (EUR

2.7 million) The risk of payment-related errors is

considered insignificant. The risk of errors related to

the selection and award process deemed to be low in

the light of the existing control systems (in any case,

such errors should no longer be added to the amount

at risk, but could result in a reservation on reputational

grounds if very significant).

(b) Subsidies: Subsidies to EEA (41.7 million) and ECHA and PIC (8.6 million). These are low risk transactions and the error rate is estimated to zero.

(c) Preparatory actions and pilot projects paid through grants (EUR 1.7 million). The amount at risk has been calculated using the same error rate as for LIFE grants (2.3%).

Total Amount at risk: EUR 1.7 million * 2.3 % = EUR 0.03 million.

6. Deduction: subsequent events -

Events that may take place after the closure of the

reporting year (e.g. formal corrections commitments

received from beneficiaries) which are entered into the

accounting system before signature of the AAR.

7. Final amount at risk for ABB Activity

0703 4.93

The final amount at risk (4.93 million) divided by the

total payments under ABB activity 0703 in 2013 (291.3

million) gives an estimated error rate of 1.69 %

rounded to 1.7% which is under the materiality level of

2%

Conclusion:

For LIFE projects in 2013, the "detected error rate" remains stable at 2,3%. . The action plans launched in previous years to reduce the error rate are effective (e.g. improved application guidelines, strengthened on-site monitoring of LIFE projects, better guidance on the use of time-sheets, etc.).

The "representative estimated error rate" in relation to payments authorized in 2013 under ABB activity 0703 is below the materiality threshold of 2% (1.7%).

In order to confirm the trend of stabilisation of the error rate at a tolerable level, an analytical review of on-site monitoring visits was performed. A comparison of the analysis made by DG Environment in 2014 (based on visits to 729 projects) with the analysis made in 2013 (based on a sample of 726 projects visited) shows that the percentage of positive results (whereby time-sheet results follow the EC requirements) increased from 52.6% in 2012 to 62.8% in 2013. However there was a small increase in the percentage of projects where serious time-sheet errors were found (up from 2.3% in 2012 to 4.9% in 2013).

Within this context, it should be noted that the majority of ex-post controls performed in 2013 relate to the old generation of projects (LIFE III). Consequently, it is likely that the ex-post error rate only to some


extent reflects the recent improvements in the control environment. It therefore seems reasonable to assume that the detected error rate of 2.3% - and hence the materiality level of 1.7% - are slightly overstated. The number of monitoring visits and ex-post audits is stable and consistent with the corresponding numbers and controls in 2012.

Considering the points above, DG Environment is confident that the likely "amount at risk" in relation to payments authorised in 2013 under ABB activity 0703 is below the materiality threshold of 2%. Therefore no reservation is necessary.

KEY CONTROL INDICATORS

The assessment by management is based on the results of key controls performed in 2013, notably ex-ante controls, on-site monitoring of LIFE projects and ex-post audits. The table below shows the most relevant quantitative control indicators for 2013 compared to 2012:

Key control indicators for 2013 and 2012:

1. Input indicators (resources devoted) 2013 2012

Ex-ante financial initiation procurement (FTE) 4.5 4.2

Ex-ante financial verification procurement (FTE) 2 1.9

Ex-post control internal staff (FTE) 4 4

Ex-post control outsourced (value of finalised audits, EUR) 99,000 160,000

Ex-ante financial initiation LIFE grants (FTE) 6.1 6.2

Ex-ante financial initiation other grants (FTE) 3 3

Ex-ante financial verification LIFE grants (FTE) 0.4 0.4

Ex-ante financial verification other grants (FTE) 1 1

LIFE on-site monitoring internal staff (FTE) 2 2

LIFE on-site monitoring outsourced (budget in EUR) 800,000 1,200,000

SIAC (FTE) 3 3

2. Output indicators (controls during project implementation) 2013 2012

LIFE grants ex-ante: rejected/corrected/suspended transactions

compared to total numbers of transactions 8.5% 13.2%

Other (incl. Procurement): rejected/corrected/suspended transactions

compared to total numbers of transactions 9.8% 6.4%

Procurement: number of procurement files reviewed by ENVAC 27 16

Procurement: number of negative opinions by ENVAC 1 0

Number of exceptions registered (ICS 8) 3 9

LIFE grants: number of on-site monitoring visits of projects 729 726

LIFE grants: number of ex-post audit reports issued (MUS + Risk-based) 40 37

3. Results of ex-post controls 2013 2012

Ex-post "detected error rate" 2.3% 2.3 %

Recovery orders issued / Recommended recovery (1-year time lag 70

) On 2012 audits:

20%

On 2011 audits:

29.54%

4. Payment delays 2013 2012

Number of payments exceeding legal deadlines

178/1421=12.5

%

138/1359=10.2%

70 This indicator shows the value of recovery orders actually issued compared to recommended recovery. Because the issuance of recovery

orders may be lengthy, the indicator shows the situation after 12 months. For example, the recommended recovery following the 2012 ex-post

audit amounts to € 1,521,000.22; as of 31/12/2013, these recommendations have resulted in recovery orders of € 304,722.89 (20%).


Remarks:

Ex-ante controls (procurement): The available control resources remained stable in 2013; however there has been more emphasis and effort on ex-ante controls. The number of rejected/adjusted commitments following the ex-ante verification increased compared to 2012; the slightly increased number of detected errors that needed correction was a result of the introduction of new initiators in the procurement team. The reviews performed by the Environment Advisory Committee (ENVAC) are highly important; their number almost doubled compared to 2012. While negative opinions are rare, in 2013 ENVAC rejected a file with a request for a new evaluation. A number of procurement files were adjusted based on ENVAC’s recommendations, while controls contributed to other material adjustments for a number of files concerning both procurement and administrative budget expenditure (conferences, etc).

Ex-ante controls (LIFE grants): In 2013 the proportion of payments where there was an adjustment following ex-ante verification has decreased to 8.5% from 13.2% in 2012.

Ex-post controls: The control resources are stable. A contract with an external contractor was signed to perform 18 audits in 2013. It should be noted that the value of recovery orders actually issued compared to the recommended recovery is rather low. This is due to delayed issuance of recovery orders and to decisions by the Authorising Officer by Sub-delegation to reduce the recommended recovery after having obtained additional information from the beneficiaries. The cost of outsourced audits has significantly decreased due to a combination of factors – a reduced number of contracts and a decreased cost for contracts of comparable size.

Exception reporting: The number of reported cases remains low. The analysis of the reported cases does not point to any weaknesses in the internal control system.

Payment delays: In 2013, 12.5% of all DG ENV's payments were paid late in comparison with legal deadlines (i.e. those recorded in ABAC), which are those which were in force at the time the commitment was made and the grant agreement signed. In monetary terms, late payments represented 9.1% of all payments. The main "source" of payment delays in DG ENV in 2013 remain payments related to LIFE action grants. An internal working group has worked on resolving the identified bottleneck which has caused the payment delays. Following recommendations for the procurement workflows, the number of delayed payments has been decreasing.

Control efficiency and cost-effectiveness

The principle of efficiency concerns the best relationship between resources employed and results achieved. The principle of economy requires that the resources used by the institution in the pursuit of its activities shall be made available in due time, in appropriate quantity and quality and at the best price. This section outlines the indicators used to monitor the efficiency of the control systems, including an overall assessment of the costs and benefits of controls.

Procurement – Cost of Controls

Cost of controls

FTE Officials Total

n € €

Procurement procedures/launch of calls

1

132,000

Financial operations (ex-ante)

5.5

726,000

Supervisory checks (ex-post)

1

132,000 -

Overall cost of controls

7.5

990,000


The number of FTEs associated with exercising controls has been established and the overall cost of controls for procurement is € 990,000.

All the efforts identified above to control procurement procedures over their whole lifecycle contributed towards achieving an error-free procurement cycle in 2013. In 2013 no calls for tender were cancelled, there was mitigating action (through negotiated procedures and re-programming) for 3 calls that were initially unsuccessful, while there was a tender modification for one call, with an extension of the deadline.

The costs of these controls are matched against benefits that are derived from:

savings during the ex-ante phase (where the full amount dedicated to a call not having been consumed, the balance becomes available for re-use), and

the supervisory/ex-post checks performed during the running life of the contract on payments (resulting in a reduction of the amount paid)

Apart from these quantifiable benefits, the control of procurement procedures means that the DG has avoided reputational costs and damages, and has not faced any legal action and complaints to the Ombudsman, while the controllers have made every effort to implement the anti-fraud action in the DG.

Procurement - Direct Management

Benefits of controls

Prevented Detected Corrected Total

€ € € €

Procurement procedures/launch of calls

-

Financial operations (ex-ante)

3,338,734

2,892,000

6,230,734

Supervisory checks (ex-post)

247,833

1,400,000

1,647,833

Overall cost of controls

3,338,734

3,139,833

1,400,000

7,878,567

The prevented errors (benefits) relate to funds that have been re-allocated for use in 2013 and early 2014. The detected errors relate to procurement files that led to a new evaluation, the use of a bank guarantee, and to credit notes issued in favour of DG Environment. The corrected errors (benefits) relate to non-eligible expenditure corrected prior to payments which led to de-commitments.


Grants - Direct Management (Costs of controls)

In order to estimate the cost of controls regarding grants under direct management by the LIFE units, we have identified all technical staff allocated time, as well as the costs of initiation and verification associated with the exercise of controls. In addition, we have considered the relevant costs in associated with the exercise of controls in the central financial unit. To this breakdown (please refer to the table below), we add the cost of external evaluation when new project proposals are being evaluated and revised, as well as time allocated by the monitoring team.

Cost of controls

FTE Officials

FTE

CA

Other

(external)

inputs Total

n € n € € €

Stages 1 and 2 - Evaluation, selection,

contracting

5.5 726,000 500,000 1,226,000

Stage 3 - Monitoring and execution (fin circuits)

10.6 1,399,200 769,104 2,168,304

Total ex-ante =

16.1 2,125,200 1,269,104 3,394,304

Stage 4 - Ex-post controls and recoveries

4 528,000 99,000

Total ex-post

4 528,000

99,000 627,000

Total costs =

20.1 4,021,304

Grants - Direct Management (Benefits of controls)

Both cost pools per above are matched against the benefits of controls derived during the revision phase of new project proposals. We have identified an amount of € 27,000,000 of project proposals that, if there had not been a rigorous revision phase, would have been allocated to actions that are not eligible. We not only benefit from the saving of money that would have been wrongly allocated but we also reinvest it immediately in actions that are eligible and necessary, which makes the programme more effective. Finally, we have added non-eligible expenditures due to irregularities, credit notes issued due to errors, and recovery orders due to irregularities.

Benefits of controls

Prevented Detected Corrected Total

€ € € €

Stages 1 and 2 - Evaluation, selection, contracting

27,000,000

27,000,000

Stage 3 - Monitoring and execution (fin circuits)

3,156,728

3,156,728

Total ex-ante =

30,156,728

Stage 4 - Ex-post controls and recoveries

non-

quant.

Total ex-post

1,567,339

1,567,339

Total costs =

31,724,067


OVERALL CONCLUSION ON THE COSTS AND BENEFITS OF CONTROLS:

DG Environment quantifies the costs of the resources and inputs required for carrying out the controls described in annex 5 and estimates, in so far as possible, their benefits in terms of the amount of errors and irregularities prevented, detected and corrected by these controls.

Overall, during the reporting year the controls carried out by DG Environment for the management of the budget appropriations were cost effective, as the estimated quantifiable benefits exceeded the cost by a ratio of 8 to 1.

In addition, there are a number of non-quantifiable benefits resulting from the controls operated during the programming phase control stage, aimed to ensure that the financed projects contributed to the achievement of the policy objectives, and from the deterrent effect of ex-post controls. Furthermore, DG Environment considers that the necessity of these controls is undeniable, as the totality of the appropriations would be at risk in case they would not be in place.

Fraud prevention and detection

DG Environment has developed its anti-fraud strategy as foreseen in the Commission’s overall anti-fraud strategy71. In line with the Commission's new Anti-Fraud Strategy (CAFS)72, DG Environment has elaborated a tailored anti-fraud strategy, the implementation of which started in 2013 and will continue in 2014. The Anti-Fraud Strategy is built around the following anti-fraud objectives: (i) ensuring an effective internal organisation for implementing anti-fraud measures; (ii) maintaining a high level of ethics and fraud awareness within the DG; (iii) strengthening fraud detection in ex-ante and ex-post controls; (iv) increasing the use of IT to detect potential fraud; and (v) ensuring an effective fraud-proofing of new legislation.

The following actions have already been implemented:

Objective 1: A manual of procedures was issued in April 2013.

Objective 2: In coordination with OLAF, specific anti-fraud awareness training was delivered at the end of 2013. 55% of LIFE project managers, 64% of financial initiators, and 75% of ex-post auditors have been trained.

Objective 3: Following consultation with OLAF, training sessions with LIFE monitors and with the relevant staff in the LIFE and Finance Units were held. As a result, guidance on the most appropriate Red Flags for use in the various funding programmes and procurement actions were identified. These are now the property of the relevant Heads of Unit who have informed staff of how to use the Red Flag documents. Staff have also been advised of preventive measures and the use of on-line information tools, e.g. to detect plagiarism or false contact details.

DG Environment will ensure the continued implementation of Objectives 4 and 5 throughout 2014.

During the reporting year, 2 cases were transmitted to OLAF/IDOC73 for investigation. In addition, during the same period, OLAF has initiated 2 cases which concern the activities of DG Environment based on other sources of information.

In conclusion, the anti-fraud measures already in place – notably the controls performed through ex-ante and ex-post controls – did not identify any cases of fraud or potential fraud in 2013.

71 COM(2011) 376 24.06.2011. 72 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and the Court of Auditors on the Commission Anti-Fraud Strategy, COM(2011) 376; Communication to the Commission: Commission internal action plan for the implementations of the Commission Anti-Fraud Strategy, SEC(2011) 787. 73 Investigation and Disciplinary Office (IDOC) is to ensure compliance by (former) officials and other agents with their obligations as laid down in the Staff Regulations (SR) by conducting administrative inquiries and disciplinary procedures in a fair, transparent and timely manner.


2.2 Budget implementation tasks entrusted to other services and entities

This section reports on and assesses the elements that give assurance that internal control objectives have been met as regards budget implementation tasks carried out by other Commission services or by entrusted entities distinct from the Commission.

Cross-sub-delegations

DG Environment has entrusted parts of its budget to PMO and to other DGs through cross-delegations (DGs MOVE, DIGIT, EMPL). In all these cases, the DG's supervision arrangements are based on a memorandum of understanding with delegated DGs and defined reporting obligations. All delegated AODs have given assurance in their reports on the correct use of funds.

DG

Commitments Payments

MOVE 115,520 -

DIGIT 155,854 20,971

EMPL 93,768 19,974

JRC 350,000 -

Total: 715,142 40,945

PMO 2,867,567 1,976,840

Executive Agencies

EACI executes the market replication part of the Competitiveness and Innovation Programme. DG Environment participates in the steering committee of the agency and receives a quarterly report.

In its own AAR, EACI has given assurance on the use of the corresponding resources.

CONCLUSION ON INDIRECT MANAGEMENT

For the 2013 reporting year, the cross-delegated AODs and Executive Agency have reported reasonable assurance on the delegated budget managed by them on our behalf. They have signalled no serious control issues.

2.3 Assessment of audit results and follow up of audit recommendations

This section reports on and assesses the observations and conclusions reported by auditors which could have a material impact on the achievement of the internal control objectives, and therefore on assurance, together with any management measures taken in response to the audit recommendations. A summary of the audit work by the European Court of Auditors (ECA), the Internal Audit Service (IAS) and the Shared Internal Audit Capacity (SIAC) as set out below. The audits performed in 2013 do not indicate any significant weaknesses in DG Environment's internal control system.

ECA

DAS 2013: Following ECA's detailed audit on accounting, all ECA's comments and suggestions regarding the 2013 cut-off were implemented.

The Court published Special Report 15/2013 : "Has the environment component of the LIFE programme been effective?". The Court found that the programme was not sufficiently well designed and implemented. The Commission replied that in its proposal for a new LIFE programme it has taken steps to improve the design of its environment component.


IAS

There are no specific on-going audits of DG ENV by IAS. IAS performed an audit on LIFE+ grant management, which confirms that all recommendations issued in the 2011 audit have been effectively implemented. Furthermore, DG ENV has been involved in two cross cutting audits from IAS.

In June 2013, the IAS concluded a follow-up audit on risk management processes in the Commission. IAS invited DG ENV to establish a permanent oversight structure of risks and to continue the work of the Risk Steering Committee (RSC). This has been recognised by DG ENV which has transformed the RSC into a permanent body.

IAS also concluded in June 2013 that all risks identified in the audit "a limited review of the performance of coordination with the EU decentralised agencies" have been satisfactorily addressed.

SIAC

Furthermore, in 2013 the Shared Internal Audit Capability (SIAC) carried out a total of three audit and two audit follow-up assignments regarding Ex-ante controls in LIFE action grants, Ex-ante controls in LIFE operating grants, Ex-post controls in LIFE grants, ABAC Access Rights and Payments. This was done in accordance with its multiannual audit planning, which covers DG Environment's management processes, governance and the state of the internal controls. There were no critical recommendations issued by the SIAC. The very important recommendations related to weaknesses in documentation of procedures in the ex-ante controls of the LIFE action grants; weaknesses in the wording of 'Guide to Applicants' and unclear methodology regarding presentation of the beneficiaries' financial data in ex-ante controls in LIFE+ operating grants; weaknesses in the selection of grants to be audited and in management of recoveries stemming from ex-post audits of grants. Action plans to address these very important recommendations have been prepared and are being implemented. As regards the implementation of recommendations issued in the previous years, i.e. regarding Internal and External Communication, the relevant action plans are being implemented as planned. Consequently, the current state-of-play does not lead to assurance-related concerns. Consequently, the SIAC expressed the opinion that the internal control system in place in DG Environment provided reasonable assurance regarding the achievement of the business objectives set up for the processes audited.


3. ASSESSMENT OF THE EFFECTIVENESS OF THE INTERNAL CONTROL SYSTEMS

The Commission has adopted a set of internal control standards, based on international good practice, aimed to ensure the achievement of policy and operational objectives. In addition, as regards financial management, compliance with these standards is a compulsory requirement.

DG Environment has put in place the organisational structure and internal control systems suited to the achievement of the policy and control objectives, in accordance with the standards and having due regard to the risks associated with the environment in which it operates.

Below is a summary of the actions taken to implement the four Internal Control Standards that were prioritised in 2013, including a conclusion on their effectiveness:

ICS 2 – Ethical and organisational values

In 2013 DG ENV aimed to develop measures to provide staff with a comprehensive framework for ethics and anti-fraud measures. Key actions in 2013 have included the following:

Interactive seminars on ethics and integrity, using case studies as well as theory, were offered to all staff in the DG, covering conflicts of interest, gifts and hospitality, non-disclosure and external activities. The seminars were well received, provoked much reflection and discussion, and promoted awareness in the DG of obligations and good behaviour.

In line with the Commission's Anti-Fraud Strategy (CAFS)74, DG Environment has elaborated a tailored anti-fraud strategy, whose implementation has commenced in 2013 and its continued implementation will be ensured in 2014.

The following actions have already been implemented:

o Objective 1: A manual of procedures was issued in April 2013;

o Objective 2: In coordination with OLAF, specific anti-fraud awareness training was delivered at the end of 2013. 55% of LIFE project managers, 64% of financial initiators, and 75% of ex-post auditors have been trained;

o Objective 3: Following consultation with OLAF, training sessions with LIFE monitors and with the relevant staff in the LIFE and Finance Units were held. Specific follow-up sessions on how to identify "red flags" were organised in November and December 2013. In coordination with OLAF, specific anti-fraud awareness training was delivered at the end of 2013. As a result, guidance on the most appropriate Red Flags for use in the various funding programmes and procurement actions were identified. Staff have also been advised of preventive measures and the use of on-line information tools, so as to detect plagiarism or false contact details.

The implementation of ICS 2 is considered effective. Although ICS 2 is not a selected priority for 2014, it remains, however, a priority for DG Environment to continue the promotion of awareness, obligations and good ethical behaviour. The continuation of the implementation of the Anti-fraud Strategy also remains a priority.

74 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and the Court of Auditors on the Commission Anti-Fraud Strategy, COM(2011) 376; Communication to the Commission: Commission internal action plan for the implementations of the Commission Anti-Fraud Strategy, SEC(2011) 787.


ICS 3 - Staff allocation and mobility

This standard was selected as a priority in the light of continuing staff reductions in the Commission, which will increase the need for effective staff allocation and mobility. In 2013, senior management received regular briefings on the state of the human resources deployment and transfers in the DG. This facilitated the need for any corrective actions or initiatives aimed at addressing specific problems.

Key actions in 2013 have included the following:

In order to make the best use of available resources and to ensure that objectives were better reflected, DG Environment undertook a reorganisation on 1st June 2013. In the context of this reorganisation, 7 members of the management staff of the DG (1 Director and 6 Heads of Unit) took on new tasks. New geographically focused units were formed. This will improve the knowledge of circumstances in Member States, helping to better identify obstacles to implementing environmental legislation, to target possible support from EU funding, and to strengthen input to the EU semester process. Bringing together the strategy, inter-institutional and communication functions will deliver further synergies.

Effective use of resources also involves keeping the vacancy rate as low as possible. In this respect, DG ENV is consistently lower than the Commission average. The average vacancy rate was at the end of 2013 4.2% compared to a Commission average of 6.4%.

Updated guidance was issued for DG ENV in relation to the completion of job descriptions (JDs) in the DG following the reorganisation of the DG in June. Accurate JDs are an essential tool for the DG to have an accurate reflection of the work carried out by each unit and are used by the central services for the screening exercise.

However, the case should be noted of two Heads of Unit who have occupied the same position for more than 7 years (it is stressed that neither of these posts include sensitive functions, so the non-compliance relates to the general rules on mobility, not to the rules on sensitive functions). Derogations up to the end of 2013 were granted under Article 12(4) of the Commission Decision on middle management (C(2008)5028) to enable these Heads of Unit to stay on position for more than 7 years. A proposal for mobility was made in both cases but it was not possible to finalise it by the due date. The matter remains under discussion and should be finalised in the coming months.

Given this last non-compliance, the implementation of ICS 3 is considered partly effective.

Given the environment of constant or reducing staff resources combined with heavy workloads, ICS 3 will remain a priority standard in 2014. Measures to optimize staff allocation and ensure a flexible and dynamic organisation will continue.

ICS 8 - Processes and procedures

Under this standard the DG committed itself to make specific efforts to increase the user-friendliness of processes and procedures (manuals, guidance documents, etc.) and to further develop management reporting.

DG Environment's tracking of exceptions and derogations from existing rules and procedures is aligned with the instructions received from DG BUDG. The objectives are to re-enforce the consistent application of the reporting requirements, to adequately assess serious cases and to keep the number of exceptions and derogations at the lowest possible level. Documentation of and adaptation of procedures were updated, where necessary.

The DG has continued its actions to speed up payments, notably by strengthening senior management supervision with a monitoring dashboard which is presented six times a year to


management. The dashboard provides not only a snapshot of current execution rates on payments and commitments; it also shows progress on audits, recovery orders and calls for tenders. This dashboard has by management been recognised as a valuable monitoring working tool. Furthermore, the work of an internal working group, established in 2012, with a view to analysing the various reasons for payment delays will remain a priority for DG Environment.


DG ENV's Internal Control Dashboard including key indicators for payment delays, audit results, etc. has been further developed with success. It is regularly reviewed based on feedback from its users.

Update of financial checklists with particular reference to the revised Financial Regulation.

In-house training sessions with particular reference to the revised Financial Regulation are held regularly for DG ENV staff. Specific training sessions on identification of "red flags" have been organised.

The following specific training sessions were organised:

o "First in a series of "lessons learned" seminars in relation to recently completed legislative proposals and the lessons for future processes

o Workshop with the EEA on the process of incorporating their findings on the state of the environment into DG Environment's policy process

o Review of financial procedures workshop

o DG ENV Away Day, dialogue between staff and the Director General on the procedures and processes in place and how to improve them.

o Sessions with units and individuals on document management tools and processes.

HR reports have been made available to Senior Management at intervals throughout the year. Future reports will be provided on the basis of the new HR dashboard which provides key indicators on HR issues for DG ENV and provides a comparison with the Commission average. This report is available every 2 months.

The implementation of ICS 8 in 2013 is considered effective. However, in some domains, more could be done to improve user-friendliness. Also, certain procedures need to be updated following the revision of the Financial Regulation. According to the ICS management survey, a majority of management consider that the main operational and financial procedures are effective and efficient and adequately documented. ICS 8 will therefore retain management's full attention in 2014 although it is not carried forward as a priority standard in 2014.

ICS 12 – Information and communication

The main action to improve communication in 2013 was the implementation of the audit recommendations issued by SIAC in May 2012 - the recommendations mainly concerned the need to clarify roles and responsibilities and strengthen the strategic planning of communication. The local library services have been discontinued at the end of 2013. A big effort was put in place in order to minimize the impact of this closure on colleagues within the DG by virtualizing a maximum of the supressed services and redistributing other activities to different teams.



External Communication:

• The DG undertook a reorganisation in June 2013 which included changes to bring together strategy, inter-institutional and communication functions. This will deliver new synergies and ensure that the policy priorities of the DG are better reflected in communication activities

Internal Communication:

Drafting, discussion and adoption of a comprehensive Internal Communication Strategy and related Best Practice document.

Preliminary analysis and preparatory work for the migration of the Intranet to myIntracomm (beginning of the migration is planned for March 2014) with a view to making it more participatory and focused on clear communication priorities.

The DG ENV annual team event focused on visits to local environmental projects and sites as a means of demonstrating the real outcomes of policies. It enabled staff to discuss the impacts of their measures and evaluate better the inter-linkages between different policies. To promote internal communication the event also included a discussion with the Director General on how the DG is operating, and how its processes could be improved.

Political achievements and progress with on-going work were also tackled by specific initiatives such as debriefings by the Director General to all the staff after relevant European Environment Councils.

The implementation of ICS 12 in 2013 is considered effective. ICS 12 remains a priority standard in 2014. The results of the ICS management survey suggest that internal and external communication could be further improved.

THE ANNUAL ASSESSMENT OF THE INTERNAL CONTROL STANDARDS:

The assessment of the sixteen standards did not identify any significant control weaknesses. While there is, however, scope for improvement in some areas, DG Environment is confident that its internal control system as a whole – covering both financial and non-financial activities – is effective. It has the necessary procedures, staff skills and experience to identify and manage the main operational, financial and legal/regulatory risks.

This conclusion is based on a thorough review of all available information, in particular:

a) The annual assessment of the Internal Control Standards: The assessment of the sixteen standards did not identify any significant control weaknesses but pointed out some areas where improvements can be made: Concerning "mission and values" (ICS 1-2), various actions will be taken in 2014 to further strengthen the awareness of ethical issues. The successful implementation of the Anti-Fraud Strategy will continue in 2014. As regards "human resources" (ICS 3-4), it should be noted that substantial efforts were made in 2013 to optimize staff allocation and staff development. However, given the environment of constant or reducing staff resources combined with heavy workloads, these efforts will have to continue in 2014. Furthermore, increased transparency, mobility opportunities, and targeted training will continue to be focus areas in 2014. In the domains of "planning and risk management" (ICS 5-6) and "operations and control activities" (ICS 7-11), only a few improvements will be necessary in 2014. The most important ones are to continue to ensure that procedures are user-friendly and efficient and that the risk management process is effective in identifying and addressing the main risks. Concerning "information and financial reporting" (ICS 12-13), the implementation of the internal audit recommendations on communication will continue in 2014. The focus will remain on both


the external and internal communication domains. Finally, as regards the standards relating to "evaluation and audit" (ICS 14-16), some supplementary actions may be necessary to raise staff's awareness of the internal control standards as well as ensure the audit recommendations are followed up properly.

b) The annual declarations by the Authorising Officers by Sub-delegation: In this declaration, each AOS confirms that the [commitments and] payments authorised by them in 2013 are legal and regular and that the corresponding funds have been used for their intended purpose and in accordance with the principle of sound financial management. The AOS declarations do not indicate any significant weaknesses in the control system, but a few AOS raised some concern over heavy workloads and the impact it could have on the timeliness of controls (e.g. risk of payment delays due to constraint control resources).

c) The reporting of exceptions and non-compliance events (ICS 8): The analysis of the three cases reported in 2013 does not show any weaknesses in the internal control system. In 2013, the procedures for reporting of exceptions and non-compliance events were aligned with the updated guidelines of DG BUDG.

d) Information obtained from the SRD monitoring dashboard: This tool was implemented in 2012 and has become an effective means of reinforcing senior management supervision (ICS 9). It is based on a set of control indicators covering, for example, budget implementation, payment delays, recovery orders, implementation of audit recommendations, etc. The monitoring results - which are discussed at Directorate level on a regular basis - do not indicate any significant weaknesses in the internal control system. However, while improvements have been made, the dashboard shows that compliance with payment delays remains a challenge. It also suggests that improvements could be made with regard to the recovery of illegible expenditure identified by ex-post controls.

e) The DG's risk register (ICS 6): The risk management process has become a mature and well established process in DG Environment. The majority of participants in the management survey on the Internal Control Standards consider that risk management in DG Environment is effective. As a follow-up to the IAS audit on "Risk Management Processes in the Commission", DG ENV has transformed the Risk Steering Committee into a permanent body.

f) The risk review took place in the context of preparations for the 2014 DG ENV Management Plan. Directorates were asked to review their existing risks in the light of mitigation plans put in place and to reflect on any new risks related to actions foreseen for 2014. In addition, DG ENV reflected on the causes of identified risks and the need for a more focused approach. As a result, it was felt that the risk management process would benefit from a distinction between those risks falling within the Commission's remit and those where responsibility is shared among many external actors.

g) In 2013, the management of all "critical" and "very important" risks in the DG's risk register progressed according to plan. No critical or very important risks materialized in 2013.

h) OLAF fraud cases: Two recent cases have been sent to OLAF after ex-post audits were completed.

i) The European Ombudsman: No new financial cases have been notified by the Ombudsman in 2013. A case was closed by the Ombudsman in February 2013 on a refusal of the Commission to pay the costs incurred by the complainant due to the absence of time sheets. The Ombudsman concluded that the Commission has based its position on assumptions which find no support in undeniable facts and demonstrated an unreasonable understanding of fair treatment.

j) Review of sensitive functions: The process in place to identify and manage sensitive functions is effective. A review was carried out in December 2013. Two existing functions were confirmed as


sensitive, but no new functions were identified. The two Heads of Unit that currently carry out sensitive functions are not due for mobility before the end of 2014. Therefore the rules have been properly applied. In cases where changes to the responsibilities occur to the functions, the Resources Director will carry out a risk assessment in collaboration with the Directorate/Unit concerned.

k) ECA, IAS and SIAC audit reports

l) Ex-post controls and on-site monitoring of LIFE projects

In conclusion, the internal control standards are effectively implemented with the exception of standard 3 which is partly implemented. However, given the environment of constant or reducing staff resources combined with heavy workloads, ICS 3 will remain a priority standard in 2014 and measures to optimize staff allocation and ensure a flexible and dynamic organisation will continue.

The implementation of the internal audit recommendations (SIAC) on communication will continue and other efforts launched to improve internal and external communication will be consolidated. The results of the ICS management survey also suggest that internal and external communication could be further improved. Therefore, ICS 12 will also remain a prioritized standard in 2014.

4. MANAGEMENT ASSURANCE

This section reviews the assessment of the elements reported in Parts 2 and 3 and draw conclusions supporting of the declaration of assurance and namely, whether it should be qualified with reservations.

4.1 Review of the elements supporting assurance and possible reservations

DG Environment has performed the necessary checks and verifications to ensure that all significant budget areas delegated to the AOD have been covered, and that the information provided is reliable. No significant information has been omitted.

While all checks and verifications contribute to the AOD's assurance, it is to a large extent based on the results of ex-post controls and on-site monitoring of LIFE projects. These results clearly indicate that the measures taken in recent years to decrease the error rate (notably the improved guidance to beneficiaries and the extensive on-site monitoring of LIFE projects) are effective. Thanks to these efforts – which will continue in 2014 and beyond - the likely "amount at risk" in relation to transactions authorised in 2013 is below the materiality threshold of 2%.

Additional assurance is obtained from the mandatory controls of all commitments and payments and from the annual declarations by the Authorising Officers by Sub-delegation, whereby they confirm that that all transactions authorised by them in 2013 are legal and regular and in compliance with the principle of sound financial management. It should be noted that the number of "exceptions" and "non-compliance events" reported in 2013 remains low.

The audit work performed by ECA, IAS and SIAC in 2013 did not identify any significant weaknesses in DG Environment's internal control system. SIAC's annual opinion on the state of control in DG Environment provides additional assurance that the internal control system in place is effective. Concerning the true and fair view of the accounting records and reporting, it should be noted that the audits performed by ECA and SIAC in 2013 in this field did not identify any significant issues.

Finally, DG Environment has received assurance from the Authorising Officers in EMPL, DIGIT, and MOVE regarding the cross sub-delegations with them. Within this context, it should be noted that the sub-delegated amounts are immaterial.


Considering the points above, no reservation is warranted for 2013. No subsequent events have occurred that would alter this opinion.

4.2 Reservations and overall conclusion on assurance (if applicable)

Not applicable.


DECLARATION OF ASSURANCE

I, the undersigned, Karl Falkenberg

Director-General of DG Environment

In my capacity as authorising officer by delegation

Declare that the information contained in this report gives a true and fair view75.

State that I have reasonable assurance that the resources assigned to the activities described in

this report have been used for their intended purpose and in accordance with the principles of

sound financial management, and that the control procedures put in place give the necessary

guarantees concerning the legality and regularity of the underlying transactions.

This reasonable assurance is based on my own judgement and on the information at my

disposal, such as the results of the self-assessment, ex-post controls, the work of the internal

audit capability, the observations of the Internal Audit Service and the lessons learnt from the

reports of the Court of Auditors for years prior to the year of this declaration.

Confirm that I am not aware of anything not reported here which could harm the interests of the

institution.

Brussels, 28 March 2014

(Signed)

Karl FALKENBERG

75 True and fair in this context means a reliable, complete and correct view on the state of affairs in the service

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