The Innovation Principle requires that the innovation dimension is considered when preparing and implementing EU legislation, while upholding Europe’s rigorous standards to meet societal needs. It is anchored in the EU Better Regulation Guidelines and Toolbox notably in Tool #22 Research and Innovation. This Toolbox set out the principles that the Commission follows when preparing new initiatives and proposals and when managing and evaluating existing legislation.
Managed by the Directorate-General for Research and Innovation, Tool 22 guides Commission services in analysing the interaction between the EU legislation and innovation during impact assessment. It also outlines design considerations and measures that can be used to make legislative proposals more forward-looking and innovation-friendly.
Innovation Principle in the policy-making cycle
The Innovation Principle should be integrated across all three phases of the policy-making cycle.
1st phase: agenda-setting
The Commission should consider whether its planned legislative acts can have possible impacts on innovation. If relevant, the planning of the stakeholder consultation and ex ante impact assessment should foresee innovation as one of the areas of analysis. The scope and depth of the analysis should be proportionate to the importance and type of initiative and the magnitude of expected impacts.
In addition, Commission services should assess whether emerging technologies can have an effect on EU rules, as this may affect legislative acts. This is done through foresight by, for example, scanning the horizon for emerging changes, analysing megatrends and developing multiple scenarios about the future.
2nd phase: ex ante impact assessment and drafting of EU legislation
New EU legislative initiatives should respond to the needs of innovative companies and society. This means providing data and evidence in impact assessments, consulting stakeholders and identifying current obstacles impeding the development of new products, services and technologies.
Public consultation- Include specific questions on innovation, emerging technologies, and impact on companies.
- Be aware of possible biases (e.g. lack of new companies among respondents).
Potential impactImpact on innovation can happen at company level and in various phases from research to commercialisation. They can also be measured at national and EU-level.
Legislative choiceLegislative design impacts innovation pathways, thus:
- Try to obtain room for sunset clauses, outcome-oriented legislation; top runner approach or test of alternatives.
- Consider other flexibility options in the design of the initiative, for example, regulatory sandboxes.
More suggestions are available in Tool #22 and the practical guide on "How to apply the impact assessment tool on research and innovation".
3rd phase: implementation
Commission services can use evaluations to check about any negative effects of EU legislation on innovation. Evaluations and fitness checks should assess the economic, social, and environmental impacts of EU interventions - expected or unexpected - with, where relevant, particular emphasis on those impacts identified in a previous impact assessment. This can include impacts on innovation when relevant.
In addition, if legal provisions exist, regulatory sandboxes can enable experimentation and feed the lessons learned into the revision of EU legislative acts.
Regulatory Sandboxes and experimental tools
As outlined in the Better Regulation Guidelines Tool #69 Emerging methods and policy instruments, regulatory sandboxes are a relatively new policy instrument to experiment with innovation in a regulatory setting. The novelty of this experimentation tool is that innovations are tested in real world conditions, under an experimentation or derogation clause provided for in the regulation and with the aim of regulatory learning. These regulatory experiments are always supervised by the competent authority.
Regulatory sandboxes are used mainly at national and nowadays also EU level – recent EU examples include the European AI Act, the Interoperable Europe Act and the Net-Zero Industry Act. The first regulatory sandbox is the EU pilot regime for market infrastructures based on distributed ledger technology (DLT) that allows market participants to experiment with the use of DLT for the trading and settlement of financial instruments.
Innovation Deals
In 2016-2020, the Commission offered Innovation Deals to gain an in-depth understanding of how an EU rule or regulation works in practice. The Innovation Deals were voluntary cooperation agreements between the EU, innovators, civil society as well as national, regional and local authorities. In case an EU rule or regulation was at odds with innovation, Innovation Deals aimed to find tailor-made solutions. Two Innovation Deals were completed in this period:
- From E-mobility to recycling: the virtuous loop of electric vehicle. This Innovation Deal analysed whether existing EU law hampers the recycling or reuse of propulsion batteries for electric vehicles.
- Sustainable wastewater treatment, combining anaerobic membrane technology and water reuse.
The outcomes of these Innovation Deals were reported in the 2019 evaluation of the Innovation Principle.
Renewed EU focus on innovation-friendly policies
In 2024, the Draghi report highlighted that Europe has many talented researchers and entrepreneurs. Still, we are failing to translate innovation into commercialisation. Innovative companies that want to scale up in Europe are hindered at every stage by inconsistent and restrictive regulations.
In response, the Commission’s Communication on the EU Startup and Scaleup Strategy committed to putting forward proposals to reduce regulatory burdens in strategic sectors and a European Innovation Act, which will outline a standard legal definition and basic principles for regulatory sandboxes.
Shortly after, the Commission’s Life Sciences Strategy also recognised that Life science innovators must sometimes navigate complex regulatory frameworks. Innovators are often faced with the need to follow both EU and national legislation, which are not sufficiently innovation-friendly, future-proof, or provide clear paths to market access. The risk of losing competitiveness to other regions is exceptionally high in sectors such as medical devices and clinical research. The strategy proposes to ensure smooth and rapid market access for life science innovations through more innovation-friendly regulation, the use of the innovation principle, regulatory sandboxes, and better mobilisation of private and public investments.
The Commission has also proposed a Biotech Act to support innovation and increase Europe's biotechnology potential. The Act will incentivise companies to conduct research and production within Europe, accelerate clinical trial authorisations across countries, and fast-track the development of cutting-edge new therapies using AI, data, and regulatory sandboxes. Furthermore, it will simplify EU regulations, reducing costs and burdens for companies.
Read more:
- In 2023, the Commission adopted a Staff Working Document on forms of experimentation, focusing regulatory sandboxes, testbeds and living labs.
- In 2020, the Council adopted conclusions on regulatory sandboxes and experimentation clauses as tools for an innovation-friendly, future-proof and resilient regulatory framework that masters disruptive challenges in the digital age.
- In 2019, the innovation principle was evaluated.
- In 2016, the Staff working document on better regulations for innovation-driven investment at EU level first introduced the outline of the concept of an Innovation Principle.
For more information, please contact RTD-Innovation-Principle
ec [dot] europa [dot] eu (RTD-Innovation-Principle[at]ec[dot]europa[dot]eu)