Climate action and competitiveness are compatible!

In this article published in L’Opinion  (open in a new tab) last December, Cédric Baecher, Sustainability Partner at Wavestone, and Maher Chebbo, Managing Director of Univers Europe (Digital Renewables), respond to those who question the compatibility between European environmental ambitions and the imperatives of economic performance.

In his latest Report, Mario Draghi reminds us of the urgent need for the European economy to accelerate growth and employment and increase its investment effort (800 billion Euros per year) to maintain its position. With a GDP (2023) of 16,970 billion Euros, the EU remains the world’s second-largest economy after the United States, closely followed by China. But the gap in real economic weight between the two leaders is widening, from 17% in 2002 to 30% in 2023.

Some have not hesitated to seize on this to question the ambition of the Green Deal, which aims to create a cleaner, healthier and climate-neutral Europe. Some have even questioned the compatibility between environmental ambitions and the imperatives of economic performance.

Risky dual governance

The division of powers taking shape within the newly installed European Commission appears both promising and risky. Vice-president Teresa Ribera, committed to the ecological cause (and a former kingpin of the Paris Agreement), is in charge of “clean transition” and competition. Stéphane Séjourné inherits industry and the implementation of the Green Deal.

We could be delighted that Europe intends to have it both ways, reflecting a laudable desire to move the Green Deal towards greater integration of industrial and competitiveness issues, in the spirit of the Draghi Report.

However, we may also fear the effects of complex governance and overlapping competencies, which could lead to operational and leadership difficulties.

While the support of economic players for the EU’s political project (and its vision of the future of our competitiveness) remains an essential prerequisite, some decision-makers are expressing their fear that heavier sustainability regulations will weigh too heavily on growth and profitability. Indeed, some sectors have already called for what appears to be a dismantling of the Green Deal.
However, Europe is laying the foundations for its future economic dynamism. Contrary to the criticisms often levelled at national governments for their lack of long-term vision, the EU has made a bold choice in taking global leadership in sustainable transition.

Asserting European leadership in Sustainability

The Green Deal is accompanied by strict regulations, but it creates a new framework in which companies that know how to invest strategically can take advantage to differentiate themselves. The investments needed to adapt sectors to climate change, such as those in storage batteries, building connectivity and energy efficiency, will create new economic opportunities. Digital technology and artificial intelligence will play a key role in decarbonization and reducing energy intensity.

It’s all about giving Europe a head start, against a backdrop of increasing global competition. Multinational companies know that it is in their interest to adapt to the new European situation, also in anticipation of the future application of the CSRD principle of extra-territoriality. As the head of a major US business federation put it on the sidelines of the COP16 biodiversity conference in Cali: “We didn’t expect Europe to move so fast and so hard on transition: our companies will of course adapt to the new rules of the game, to ensure the continuity of their transnational operations”.

Putting an end to regulatory bashing

For European companies, the key to success lies in synergies, building alliances and encouraging all positive energies, rather than in sterile criticism, regulation-bashing or “name and shame”.

Our collective success depends on the ongoing collaboration between public and private players and civil society. Europe can draw on major assets, including a long-standing tradition and strong expertise in collaborative innovation and the co-financing of cutting-edge industrial projects. It has always been a driving force in efforts to standardize sustainable development technologies and regulations.

It’s up to us to continue writing our history, to assume our vision of tomorrow’s economy, reconciling prosperity and responsibility, and to assert our leadership by becoming the reference continent, capable of identifying, leveraging and disseminating new models for sustainable transformation.