report parliamentary committee draft, 16 January 2024

On discharge in respect of the implementation of the budget of the European Chemicals Agency for the financial year 2022

Document CONT-PR-753516 · (2023/2148(DEC))

Committee on Budgetary Control · Rapporteur: Petri Sarvamaa

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This is a draft report by the Committee on Budgetary Control on granting discharge to the European Chemicals Agency for its 2022 budget. It proposes to grant discharge and approve the closure of the accounts, and sets out observations on the Agency's budget, performance, staff, transparency and other matters. The observations note the Agency's 2022 budget of EUR 114 777 691, its budget implementation rates, and its performance in delivering its work programme. They also raise challenges such as an inefficient authorisation system and a low number of draft assessment reports for biocidal active substances. The report commends the Agency's efficiency gains, staff policy and conflict-of-interest and anti-fraud measures, and notes its cyber security, e-procurement and environmental management efforts. It also highlights the Agency's work on phasing out animal testing.

Position. The rapporteur proposes that Parliament grant the Executive Director of the European Chemicals Agency discharge for the 2022 budget and approve the closure of the Agency's accounts, and sets out observations in an accompanying resolution.

Key points

Parliament grants the Executive Director of the European Chemicals Agency discharge for the implementation of the Agency's 2022 budget, or postpones that decision.
Parliament approves the closure of the Agency's accounts for 2022, or postpones that closure.
The Agency's final 2022 budget was EUR 114 777 691, an increase of 5,83 % compared to 2021, funded mainly by collected fees and the Union contribution.
The Court of Auditors obtained reasonable assurance that the Agency's annual accounts are reliable and the underlying transactions legal and regular.
No issues requiring corrective action were reported for the Agency's procurement sector or internal control systems in 2022, nor were there outstanding corrective actions from previous years.
Budget implementation rates were 98,61 % for current year commitment appropriations and 85,06 % for payment appropriations.
Parliament insists on a Commission proposal to strengthen the Agency's governance and increase the sustainability of its financing model, given uncertainty over fee amounts and timing.
The Agency implemented 93 % of its work programme, achieving 151 of 162 specific actions and outputs planned for 2022.
Challenges in 2022 included an inefficient authorisation system with many hexavalent chromium applications, a lack of experienced committee members, and few draft assessment reports for biocidal active substances from member states.
Parliament commends the Agency's efficiency strategy, notes a roughly 25 % reduction in IT infrastructure usage, and welcomes its cooperation with EUSPA and EFSA.
The establishment plan was 98,07 % executed with 458 temporary agents appointed out of 467 authorised; the Agency also employed contract agents, interims, consultants and seconded national experts.
Parliament welcomes the Agency's diversity action plan, conflict-of-interest policy revision, new electronic declaration tool, anti-fraud strategy and whistleblower guidelines, and notes its cyber security, e-procurement and EMAS measures and work on animal testing alternatives.

Who is affected

The European Chemicals Agency and its Executive Director, who would receive discharge and account closure for the 2022 budget.
The chemical industry, which pays fees that fund the Agency and faces uncertainty over fee amounts and timing.
Member states, whose contribution is needed for some actions and which submit draft assessment reports for biocidal active substances.
Agency staff, who are affected by diversity and inclusion measures, internal mobility, mentoring and anti-fraud training.

Figures and deadlines

EUR 114 777 691 — the Agency's final budget for the financial year 2022.
5,83 % — the increase in the Agency's 2022 budget compared to 2021.
98,61 % — the budget implementation rate of current year commitment appropriations in 2022.
85,06 % — the current year payment appropriations execution rate in 2022.
93 % — the share of the Agency's work programme implemented in 2022.
151 of 162 — the specific actions and outputs achieved out of those planned for 2022.
98,07 % — the execution rate of the establishment plan on 31 December 2022.
458 out of 467 — temporary agents appointed out of those authorised under the Union budget.

Legal basis. Article 319 of the Treaty on the Functioning of the European Union

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Full text

1. proposal for a european parliament decision 16 paragraphs

(2023/2148(DEC))

The European Parliament,

–having regard to the final annual accounts of the European Chemicals Agency for the financial year 2022,

–having regard to the Court of Auditors’ annual report on EU agencies for the financial year 2022, together with the agencies’ replies,

–having regard to the statement of assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions provided by the Court of Auditors for the financial year 2022, pursuant to Article 287 of the Treaty on the Functioning of the European Union,

–having regard to the Council’s recommendation of … February 2024 on discharge to be given to the Agency in respect of the implementation of the budget for the financial year 2022 (00000/2024 – C90267/2024),

–having regard to Article 319 of the Treaty on the Functioning of the European Union,

–having regard to Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012, and in particular Article 70 thereof,

–having regard to Regulation (EC) No 1907/2006 of the European Parliament and of the Council of 18 December 2006 concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), establishing a European Chemicals Agency, amending Directive 1999/45/EC and repealing Council Regulation (EEC) No 793/93 and Commission Regulation (EC) No 1488/94 as well as Council Directive 76/769/EEC and Commission Directives 91/155/EEC, 93/67/EEC, 93/105/EC and 2000/21/EC, and in particular Article 97 thereof,

–having regard to Commission Delegated Regulation (EU) 2019/715 of 18 December 2018 on the framework financial regulation for the bodies set up under the TFEU and Euratom Treaty and referred to in Article 70 of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council, and in particular Article 105 thereof,

–having regard to Rule 100 of and Annex V to its Rules of Procedure,

–having regard to the opinion of the Committee on the Environment, Public Health and Food Safety,

–having regard to the report of the Committee on Budgetary Control (A90000/2024),

1.Grants the Executive Director of the European Chemicals Agency discharge in respect of the implementation of the Agency’s budget for the financial year 2022 / Postpones its decision on granting the Executive Director of the European Chemicals Agency discharge in respect of the implementation of the Agency’s budget for the financial year 2022;

2.Sets out its observations in the resolution below;

3.Instructs its President to forward this decision, and the resolution forming an integral part of it, to the Executive Director of the European Chemicals Agency, the Council, the Commission and the Court of Auditors, and to arrange for their publication in the Official Journal of the European Union (L series).

2. proposal for a european parliament decision 16 paragraphs

on the closure of the accounts of the European Chemicals Agency for the financial year 2022

(2023/2148(DEC))

The European Parliament,

–having regard to the final annual accounts of the European Chemicals Agency for the financial year 2022,

–having regard to the Court of Auditors’ annual report on EU agencies for the financial year 2022, together with the agencies’ replies,

–having regard to Article 319 of the Treaty on the Functioning of the European Union,

–having regard to Rule 100 of and Annex V to its Rules of Procedure,

–having regard to the opinion of the Committee on the Environment, Public Health and Food Safety,

–having regard to the report of the Committee on Budgetary Control (A90000/2024),

1.Approves the closure of the accounts of the European Chemicals Agency for the financial year 2022 / Postpones the closure of the accounts of the European Chemicals Agency for the financial year 2022;

2.Instructs its President to forward this decision to the Executive Director of the European Chemicals Agency, the Council, the Commission and the Court of Auditors, and to arrange for its publication in the Official Journal of the European Union (L series).

3. motion for a european parliament resolution 42 paragraphs

with observations forming an integral part of the decision on discharge in respect of the implementation of the budget of the European Chemicals Agency for the financial year 2022

(2023/2148(DEC))

The European Parliament,

–having regard to its decision on discharge in respect of the implementation of the budget of the European Chemicals Agency for the financial year 2022,

–having regard to Rule 100 of and Annex V to its Rules of Procedure,

–having regard to the opinion of the Committee on the Environment, Public Health and Food Safety,

–having regard to the report of the Committee on Budgetary Control (A90000/2024),

A. whereas, according to its statement of revenue and expenditure, the final budget of the European Chemicals Agency (the ‘Agency’) for the financial year 2022 was EUR 114 777 691 representing an increase of 5,83 % compared to 2021; whereas the budget of the Agency is funded from mainly two sources of revenue, namely, collected fees and the contribution from the general budget of the Union;

B. whereas the Court of Auditors (the ‘Court’) in its report on the annual accounts of the Agency for the financial year 2022 (the ‘Court's report’), states that it has obtained reasonable assurance that the Agency’s annual accounts are reliable and that the underlying transactions are legal and regular;

C. whereas with regard to the Agency’s procurement sector, no issues requiring corrective actions were reported for 2022, nor are there ongoing or outstanding corrective actions from previous years’ audits and assessments;

D. whereas with regard to the Agency’s internal control systems, no issues requiring corrective actions were reported for 2022, nor are there ongoing or outstanding corrective actions from previous years’ audits and assessments;

Budget and financial management

1. Notes with satisfaction that budget monitoring efforts during the financial year 2022 resulted in a budget implementation rate of current year commitment appropriations of 98,61 %, representing a slight decrease of 0,23 % compared to 2021 and that the current year payment appropriations execution rate was 85,06 %, representing a decrease of 1,17 % in comparison to 2021;

2. Recalls that the Agency is financed through fees paid by industry and by an EU balancing contribution, in accordance with Regulation (No 1907/2006), Regulation (EC) No 1272/2008 and Regulation (EU) No 528/2012; highlights that due to the one-off nature of the fees and their dependence on strategic decisions of the chemical industry players, there is high uncertainty as to their amount and timing; insists on the need for a Commission’s proposal to strengthen the governance of the European Chemicals Agency and increase the sustainability of its financing model;

Performance

3.Notes that the Agency implemented 93 % of the Work Programme and achieved 151 of the 162 specific actions and outputs planned for 2022, with 8 actions still 'in progress' as planned; notes furthermore that the three “not completed” actions would have required Member States’ contribution or the work-stream was de-prioritised or the work-stream being de-prioritized;

4.Notes that the Agency focused on delivering its core tasks and on supporting the European Commission to implement its Chemicals Strategy for Sustainability in line with the direction set out by the Management Board in the Strategic Plan 2019-2023 and in its review conducted in 2021;

5.Draws attention to some of the challenges the Agency faced in 2022, including an inefficient authorisation system, identified in 2021, with a growing number of applications for hexavalent chromium set to continue into 2023, straining the opinion-making capacity of scientific committees and a lack of experienced members; notes furthermore there was also a low number of draft assessment reports for biocidal active substances submitted by Member States, which hinders the completion of evaluations by the end of 2024 as mandated by the Biocidal Products Regulation; highlights that in line with the Active Substances Action Plan, the Agency has made efforts over the past years to support the Member States to make further progress;

Efficiency and gains

6. Commends the Agency for its strategy for efficiency gains, which seeks to achieve added value through performance-based governance and for the development of the new tools to support the Planning and reporting, that are more user-friendly, provide better reporting capabilities and save time for the whole staff; notes that the reporting dimensions have been revised to better reflect the Agency’s Work Programme and allowing better linking of the Agency level objectives and those of individual staff members;

7. Notes that in 2022, the Agency also started an infrastructure capacity optimisation exercise to minimise any excess capacity in the IT infrastructure, the results from the second half of the year show, that the Agency was able to reduce the usage (both CPU i.e. processors and RAM i.e. memory) by roughly 25 %; welcomes the effort on the optimisation exercise and encourages the Agency to continue its efforts in this regard;

8. Observes that the Agency continues to share its internal audit capability with the EU Agency for the Space Programme (EUSPA, formerly European Global Navigation Satellite Systems Agency); notes that the Agency and EFSA maintain regular contacts at working and senior management level, where cooperation opportunities are routinely assessed (by conducting a detailed review of the work programmes) and exploited;

9. Notes furthermore that the Agency continued its strategic cooperation with EFSA on providing the data format IUCLID as a service, delivered from its Cloud Services, for EFSA’s work under the Plant Protection Products Regulation and as a result, economies of scale were achieved by building on existing IT platforms;

Staff policy

10. Notes that, on 31 December 2022, the establishment plan was 98,07 % executed, with 458 temporary agents appointed out of 467 temporary agents authorised under the Union budget (same number of authorised posts as in 2021); notes that in addition 128 contract agents 48 interims, five consultants and 2 seconded national experts worked for the Agency in 2022;

11.Welcomes that the Agency has put in effect an action plan to implement the objectives of its Charter on Diversity and Inclusion adopted in 2022, aiming to achieve gender balance in the management team among other inclusion measures; acknowledges that achieving results in this area takes time; however notes that the gender balance within the Agency’s senior and middle management has slightly decreased with 76 % positions occupied by men (82 % in 2021) and 24 % by women (18 % in 2021); notes that gender balance in the staff overall is 261 men (45 %) and 317 women (55 %);

12.Observes that the Agency made use of more internal mobility to respond to the evolving needs for scientific-technical and administrative expertise in its work; notes that this offered career enhancement opportunities and thereby contributed to motivating the Agency staff and maintaining a culture of high performance, continuous improvement and responsiveness; welcomes that to motivate employees and build skill sets, it also introduced new initiatives including mentoring and coaching;

Prevention and management of conflicts of interest and transparency

13. Notes that based on a thorough risk assessment of its activities, the Agency has identified the processes and sub-processes that require conflicts of interest to be managed; notes furthermore that in all of these processes, a review of the annual declarations of interest is performed by the process owner each time a task is assigned to a staff member, while for some sensitive processes this is complemented with a case-specific declaration of no interest by the staff member;

14. Welcomes that to improve the post-employment Conflict of Interest practice, the Agency’s Conflict of Interest policy was last revised by the Management Board in June 2023; notes that the introduced changes strengthen the systematic monitoring of compliance with post-employment duties by former Agency staff members, in line with the recommendations of the European Court of Auditors and observations of the Discharge authority in previous years;

15. Takes note that the Agency publishes in its website the meetings held by its senior management with interest group representatives;

16. Welcomes that during 2022, the Agency introduced a new electronic tool for collecting and reviewing the annual declarations of interest of the external experts contributing to the Agency’s work, providing further assurance to the process;

17. Notes with satisfaction that the Agency Anti-Fraud Strategy was last revised by the its Management Board in December 2022 and focuses on maintaining and further developing the anti fraud culture in the Agency and regularly reviewing key policies and procedures; notes that the strategy strengthens the internal anticorruption mechanism by specifying the roles and responsibilities for fraud prevention and the means and resources which are engaged in tackling fraud; welcomes that all the Agency’s staff participated in an anti-fraud training in 2022; notes with satisfaction that the Agency has guidelines in place for whistleblowers so that the Agency’s employees can notify about any activity which goes against the public interest;

18. Recalls that the decision-making processes of the Agency are designed to be clear, open and to ensure a balanced outcome based on a reasoned scientific approach; notes that information on the intentions of the Agency and the Member States for example, to look into substances or create dossiers is available online, so companies have access to the data they need to make informed business decisions; notes furthermore that accredited stakeholder organisations may participate in scientific meetings as observers, except where confidential business information requires sessions to be closed; notes furthermore that the reflections, opinions and conclusions of the Agency’s scientific committees are recorded in opinions and minutes and these are published online;

Other comments

19. Welcomes that in 2022 the Agency adopted a cyber security policy and performed an IT-wide risk assessment exercise; notes furthermore that the Agency has introduced possibility for biometric authentication and improved visibility for security operations centre as well as conducted failover testing between datacentres;

20. Notes with satisfaction that in 2022, the Agency joined PPMT (the European Commission’s Public Procurement Management Tool) trial phase in order to test this e-procurement tool (before its complete on boarding in 2023); takes note that the Agency had already on boarded in the past other e-procurement tools such as eTendering or eSubmission and in parallel, it renewed in 2022 its subscription to Cloudia – the e-procurement platform of Hansel (central purchasing body for Finnish public authorities) so that all administrative procurement ran through Hansel are fully digitalised;

21. Takes note that Eco-Management and Audit Scheme (EMAS) and 14001 Agency’s certificates were successfully renewed in 2022; notes with satisfaction from the Court’s report that the Authority is among the agencies that issue an annual environmental statement;

22. Highlights the fact that the Agency has continued its efforts to phase out animal testing in Europe to the extent possible under the current regulatory framework; notes that ECHA promotes alternatives to animal testing in three ways: focusing on groups of substances through a separate strategy, investing in international activities that promote alternatives and new approach methodologies, and making the data Agency holds available; notes in addition that the Agency is collaborating with the Commission and other stakeholders to support the Commission in developing a roadmap towards the full replacement of animal testing for chemicals;

° °

23.Refers, for other observations of a cross-cutting nature accompanying its decision on discharge, to its resolution of ... on the performance, financial management and control of the agencies.

On discharge in respect of the implementation of the budget of the European Chemicals Agency for the financial year 2022

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Key points

Who is affected

Figures and deadlines

Full text

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