At a time when the European Union is preparing the foundations of its next Multiannual Financial Framework, the Commission’s new communication on the European Pillar of Social Rights is, hopefully, not just an institutional signal but a necessary recalibration to counterbalance a narrative increasingly skewed towards militarisation. Personally I think that Malta, too, should take note of this development while drafting its Vision 2050 strategy aligning with the UNSDGs. A long-term economic direction for a small and open economy like ours cannot be decoupled from Europe’s vision and fiscal architecture, especially if we are approaching a structural shift where we might pay more than we receive.
The EU’s social pillar’s content must be used to include or upgrade both our national governance choices and how we strategically engage at European level and the rest of the world. Needless to say, this information must be understood from an institutional perspective. It must not serve as a smokescreen for the quiet expansion of defence budgets. And we have yet to see how social spending compares to the growing defence envelope. The distinction between Europe’s social compact and its emerging defence posture must remain visibly clear. Certainly, both are legitimate, and both require funding. However, mixing one with the other would be intellectually dishonest and politically rushed.
The communication tries to reassert what makes the Union’s model distinct. Unlike the US, the EU was not built on unfettered capitalism but regulated capitalism. Also, the EU is not a continent that guarantees stability through surveillance and political suppression, although under von der Leyen’s leadership, we edged closer to the latter scenario. The European model only functions when economic competitiveness is grounded in social cohesion, when investment respects human rights, and when fiscal tools reflect a sense of collective responsibility and not just GDP ratios. True, GDP figures are important to avoid EDPs, but we must dig further to understand realities on the ground. We are ultimately speaking about the responsible use of taxpayers’ money, and respect for human beings.
The European Pillar of Social Rights was always meant to be more than a shelf of beautifully articulated declarations for the tune of the left in the European Parliament. Certainly, this communication lays the groundwork for reinforcing the Union’s social economy. And yet, for the past years, the “S” in ESG was made redundant. Climate action, under the “E”, became the flagship. Social cohesion, labour rights, minimum income and affordable housing barely made it into mainstream policymaking, except as side references. Now that the climate narrative is increasingly shot down at the political level, especially due to Trump’s ideological return, and institutionally due to the rise of the far right in the European Parliament, there is a real risk, that the entire ESG architecture fails.
The European Green Deal has been systematically amputated, including the disclosure requirements. One file after the other was completely diluted. Reporting obligations are being watered down, often at the request of France and Germany. What was once framed as Europe’s green ambition is now reduced to damage control, in part to expedite closure of the Omnibus regulation. Von der Leyen, once determined to make Europe a global climate champion, now appears to backtrack and concede to internal pressure. This is not simply a communications error, which creates uncertainty, it is a policy void. Gladly, into that void lands this new Social Pillar communication, just in time to gain the political goodwill of the S&D group in Parliament.
Indeed, it is a well-timed strategic move by von der Leyen’s Cabinet. Nevertheless, it must be taken seriously. Otherwise, it will be a mess. Social cohesion cannot be framed as a complement or offered as a consolation prize for the S&D. It must be financially analysed, structurally embedded to avoid ambiguities in the annual budgets, and legally protected. The next MFF must not treat the Social Pillar as an annex but as a flagship of European priorities. Surely, without binding commitments and verification mechanisms, social promises will remain rhetorical, and aspirations, as I know well from my experience in Brussels, rarely survive political transitions.
The EU cannot declare a commitment to social rights while its own funds are used to entrench illiberalism. Hungary is the clearest example. Structural and cohesion funds, which were meant to reduce disparities, have, in some cases, enabled the opposite. State capture, ideological control, and judicial manipulation have been funded through EU money. The EU Commission is soft in implementing oversight on rule of law, civic inclusion and human rights. Undoubtedly, the Social Pillar must evolve into a validation framework and effectively act, as a firewall that blocks access to tyrant governments whose EU values they disregard and deliberately suppress.
The Social Pillar Action Plan must not just be a policy checklist. It must be a blueprint that allows the EU to regulate, redistribute and reform based on values. And without enforcement, the “S” in ESG will remain just a cosmetic document. Civil society, trade unions, and banking stakeholders are increasingly vocal, in part due to regulations, and the operationalisation of the prudential banking frameworks. Certainly, financial actors are demanding clarity, not ambiguity, on how social governance will be measured and reported. This requires proper legal definitions which can help build a social taxonomy.
The challenge now is to ensure this translates into real budgetary decisions. I have already seen internal documents trying to blend defence projects into the social narrative. However, this should be rejected. If the EU wants credible security, it must fund it explicitly. If it wants social cohesion, it must fund it separately and transparently. These are no black-and-white choices. But allowing one to eclipse the other only fuels cynicism and erodes legitimacy from within. The next phase of EU funding must reflect this equilibrium. We need a recalibrated model that reflects how European taxpayers’ money can translate into visible, equitable outcomes across the continent.
Certainly, I was encouraged to see that the CEO of Malta’s Housing Authority was chosen as a national expert on affordable housing within the EU Commission’s new advisory board. Malta can contribute to the Union’s social portfolio, especially in welfare and housing. Surely, experts ensure that every euro spent respects access, equality and non-discrimination, thereby pre-empting these socio-economic risks with proper regulation. Because if we do not, populists will. And the cost of that miscalculation is already visible across European institutions.
Indeed, Malta cannot afford to be passive. As a consistent beneficiary of EU funds, we have a responsibility in engaging on such matters. The new Social Pillar offers a chance to structure long-term investments around core European values. It is a good sign that the Commission is finally repositioning its agenda after wasting a year. However, positioning is not performance, and this legislative term, which is marked by a fragmented Parliament and a weaker political centre, will surely test whether ESG survives as a meaningful framework or becomes an empty acronym.
As already stated in my preceding articles, the EU does not need to look at other continents. We already have a model that works. However, it only works if the three letters, E, S & G, are equally weighted. The E must not be amputated for electoral convenience. The S must not be rhetorical. And the G must not mean accountability only for the small and exemptions for the powerful. The European Social Pillar, if implemented with courage, could be the flagship that recalibrates the EU’s governance around people by providing economic fairness. But that will only happen if the financial instruments, legal frameworks and political messaging are aligned. Otherwise, the EU will not only lose its social contract but risks losing its credibility, as a global actor in sustainable finance and diplomacy.
