5.2.2. Treaty on the Functioning of the European Union

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The Treaty on the Functioning of the European Union is functional and legislative, specifying the competences, procedures, and legal bases for action; it gives sustainability legal instrumentality while defining and describing the mechanism for implementation (particularly Articles 11, 191–193). It advances a regulatory notion of sustainability: it is procedural and substantive obligations. It incorporates sustainability as legal into policymaking and legislative practice through the use of the horizontal integration clause (Article 11), and particularly through the precautionary principle (Article 191).

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Article 11. Environmental protection requirements must be integrated into the definition and implementation of the Union’s policies and activities, in particular with a view to promoting sustainable development.

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This horizontal integration clause is a cornerstone of EU sustainability law. It imposes an obligation to mainstream environmental considerations across all EU policy areas, from agriculture and energy to transport and competition. Case law of the CJEU (e.g. Commission v Germany, C-301/95) has interpreted Article 11 (and its predecessors) as requiring that environmental concerns be balanced and weighed alongside other objectives in policy design and implementation.1 It emphasised the duty to integrate environmental considerations into state aid assessments. Article 11 TFEU mirrors the cross-cutting logic of SDG 13 (Climate Action) and SDG 9 (Industry, Innovation and Infrastructure).

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Despite the horizontal integration clause, environmental objectives are frequently subordinated to the imperatives of economic growth and market integration. The internal market logic often trumps environmental considerations, as seen in the CJEU’s proportionality analysis. Environmental goals are treated as balancing factors, not foundational constraints. The application of proportionality, especially in internal market cases, frequently tilts in favour of economic freedoms, reducing the transformative potential of Article 11.

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Article 119, however, already includes an additional economic dimension: such activities by the Member States and the Union are subject to the following guiding principles: stable prices, sound public finances and monetary conditions, and a sustainable balance of payments; later, Article 140 refers to the sustainability of the public finances.2 The 13th Protocol on the convergence criteria states that the price stability criterion means that a Member State has achieved sustainable price stability and an inflation rate that is no more than 1½ percentage points above the average inflation rate of the three best-performing Member States in terms of price stability over a period of one year preceding the examination.3

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Protocol (No 13) on the Convergence Criteria
Article 1 The criterion on price stability referred to in the first indent of Article 140(1) of the Treaty on the Functioning of the European Union shall mean that a Member State has a price performance that is sustainable and an average rate of inflation, observed over a period of one year before the examination, that does not exceed by more than 1 ½ percentage points that of, at most, the three best performing Member States in terms of price stability. Inflation shall be measured by means of the consumer price index on a comparable basis taking into account differences in national definitions.
Article 2 The criterion on the government budgetary position referred to in the second indent of Article 140(1) of the said Treaty shall mean that at the time of the examination the Member State is not the subject of a Council decision under Article 126(6) of the said Treaty that an excessive deficit exists.
Article 3 The criterion on participation in the Exchange Rate mechanism of the European Monetary System referred to in the third indent of Article 140(1) of the said Treaty shall mean that a Member State has respected the normal fluctuation margins provided for by the exchange-rate mechanism on the European Monetary System without severe tensions for at least the last two years before the examination. In particular, the Member State shall not have devalued its currency’s bilateral central rate against the euro on its own initiative for the same period.
Article 4 The criterion on the convergence of interest rates referred to in the fourth indent of Article 140(1) of the said Treaty shall mean that, observed over a period of one year before the examination, a Member State has had an average nominal long-term interest rate that does not exceed by more than two percentage points that of, at most, the three best performing Member States in terms of price stability. Interest rates shall be measured on the basis of long-term government bonds or comparable securities, taking into account differences in national definitions.

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The TFEU creates the legal frameworks for harmonisation and subsidiarity of environmental policy (Articles 191–193), while still privileging diversity in National ecological standards within an otherwise EU-wide coherence.
 

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TITLE XX - ENVIRONMENT
Article 191. 1. Union policy on the environment shall contribute to pursuit of the following objectives:

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  • - preserving, protecting and improving the quality of the environment,
  • - protecting human health,
  • - prudent and rational utilisation of natural resources,
  • - promoting measures at international level to deal with regional or worldwide environmental problems, and in particular combating climate change.
2. Union policy on the environment shall aim at a high level of protection taking into account the diversity of situations in the various regions of the Union. […]
3. In preparing its policy on the environment, the Union shall take account of:

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  • - available scientific and technical data,
  • - environmental conditions in the various regions of the Union,
  • - the potential benefits and costs of action or lack of action,
  • - the economic and social development of the Union as a whole and the balanced development of its regions. […]

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This article describes the main objectives of EU environmental policy that include: (i) preservation, protection and improvement of environmental quality; (ii) protection of human health; (iii) prudent and rational use of natural resources; (iv) promoting measures to combat climate change at an international level. Article 191 also incorporates the precautionary, prevention, rectification-at-source, and ‘polluter pays’ principles, which provide legal backing for a series of EU environmental legislation. It describes that environmental policy will, at a minimum, be based upon high levels of protection while acknowledging regional diversity and enhancing international cooperation — legitimising (potentially) the EU’s role in global climate and sustainability governance (e.g. Paris Agreement, SDGs). In Janecek v Freistaat Bayern (C-237/07) the ECJ held that individuals have standing to demand action when air quality standards are violated, in this way giving effect to the objectives outlined in Article 191 TFEU.4 It supports SDG 3 (Good Health and Well-being) and SDG 15 (Life on Land), especially via pollution prevention and protecting ecosystems.

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Article 192. 1. The European Parliament and the Council, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee and the Committee of the Regions, shall decide what action is to be taken by the Union in order to achieve the objectives referred to in Article 191. […]
Article 193. The protective measures adopted pursuant to Article 192 shall not prevent any Member State from maintaining or introducing more stringent protective measures. Such measures must be compatible with the Treaties. They shall be notified to the Commission.

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Article 192 provides the EU with a legal basis to adopt legislation in environmental matters through the ordinary legislative procedure, and special procedures on taxation, planning, land use, and energy. Article 193 provides a Member State with the ability to take measures which are stricter in nature than the EU minimum harmonisation rules in environmental law. Decisions on Package Waste Article 193 of the TFEU were made in Commission v Germany (C-141/02),5 where Germany adopted regulations on packaging waste. The Court allowed the Member States, subject to the EU principles on proportionality and non-discrimination, to have stricter regulations. The environmental competences Articles 191-193 are fragmented and sectoral, and they lack a systemic legal framework that could potentially streamline climate, biodiversity, energy, and social justice under the one concept of sustainability. The absence of a climate article in the TFEU at a time of existential climate crisis reflects this limitation. Compared to constitutional innovations in national systems e.g. Germany’s Article 20a or the 2022 constitutional amendment in Italy, the TFEU seems doctrinally conservative and slow to respond.

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Amendments should be made to the TFEU to include a specific article on climate, one that would establish climate neutrality and resilience as constitutional principles. Third, the EU should introduce a Sustainability Compliance Mechanism to guarantee the full realisation of Article 11 in all policy areas. Fourth, creating an intergenerational stewardship body - such as a European Commissioner or Ombudsperson for Future Generations - could guarantee continuity of systematic guardianship over long-term sustainability objectives.
 
1 Case C-301/95 Commission of the European Communities v Federal Republic of Germany. Judgment of the Court (Sixth Chamber) of 22 October 1998.
2

Zetzsche, D. A., Anker-Sørensen, L. (2022). Regulating sustainable finance in the dark. European Business Organisation Law Review, 23(1) 47-85. DOI: https://doi.org/10.1007/s40804-021-00237-9;

Ahlström, H., Monciardini, D. (2022). The regulatory dynamics of sustainability finance: Paradoxical success and limitations of EU reforms. Journal of Business Ethics, 177(1) 193-212. DOI: https://doi.org/10.1007/s10551-021-04763-x

3

Ballabriga, F. C., Martinez-Mongay, C. (2005). Sustainability of EU public finances. European Economy - Economic Papers 2008 – 2015, Vol. 225. (Brussels:European Commission, Directorate -General for Economic and Financial Affairs). URL: https://ec.europa.eu/economy_finance/publications/pages/publication672_en.pdf (accessed 29 October 2024);

Onofrei, M. et al. (2020). The implication of fiscal principles and rules on promoting sustainable public finances in the EU countries. Sustainability, 12(7). 2772. URL: https://doi.org/10.3390/su12072772 (accessed 29 October 2024).

4 Case C-237/07 Dieter Janecek v Freistaat Bayern. Judgment of the Court (Second Chamber) of 25 July 2008.
5 Case C-141/02 P Commission of the European Communities v T-Mobile Austria GmbH. Judgment of the Court (Grand Chamber) of 22 February 2005.
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