How can the EU Green Deal redefine sustainable growth globally?

Authors

Ludovic Deprez

EY Belgium Financial Accounting Advisory Services Director

Someone who enjoys/lives 8 days in a week in order to get a perfect balance between work, family, sport & party.

Leen Defoer

EY Belgium Assurance Leader

Committed to delivering globally consistent and high-quality audits. Promoting D&I. Connecting people. Enjoying quality time and holidays with my husband and daughter. Foodie and hobby cook.

4 minute read 13 Jan 2020

The circular economy will help the EU boost its competitiveness and change the world for better.

The EU Green Deal is one of the most ambitious priorities of the new European Commission (EC). This package of measures has far-reaching implications, not only for European consumers and businesses, but also for suppliers and markets globally. If implemented successfully, it will enable Europe to play a leading role in redefining how the world achieves sustainable economic growth in the future.

The Green Deal can help the EU redefine sustainable growth globally by:

  • Demonstrating the power of long-term thinking
    If the EU can achieve its goal of making Europe a carbon-neutral continent by 2050, it will be able to show the rest of the world what is possible when policy makers take courageous action and put far-reaching legislative measures in place.
  • Fuelling the development of new technologies
    By investing in disruptive innovation, the EU Member States will be able to develop the clean technologies that will facilitate sustainable manufacturing and consumption of goods. Europe already has a strong reputation in this area – for example, it was instrumental in the development of renewable energy, which is now widely used all over the world.
  • Building a new, green economy
    The EU is a large and wealthy economy, which is home to around 513 million people and 27 million businesses across the current 28 Member States. If European consumers and businesses use their purchasing power to select greener products, they will be able to influence industries in other continents by effectively demanding that they adopt more sustainable manufacturing processes.

As part of its Green Deal, the EU is aiming to become a world leader in the circular economy and clean technologies. This strategy provides the EU with some major opportunities to help change the world for the better while making Europe more competitive. Let’s not forget that Europe is already on track to achieve its “green” ambitions; according to our Europe Attractiveness Survey 2019 (pdf), CleanTech and Energy & Utilities ranked as the second and third business sectors which will drive Europe’s growth in the coming years.

A new economic model

The use of the word “economy” is essential in discussing the idea behind the circular economy which is to completely reshape the way in which we produce and consume goods. The objective is to constrain material consumption, extraction and loss while simultaneously generating growth. If we fail, we will never be able to achieve a sustainable economy in Europe – or effect change in the rest of the world.

Of course, the circular economy is a long-term project that will only be achieved through sustained efforts. To make it a reality, action must start today. When it comes to driving sustainable use of resources, the EU has rightly set its sights on resource-intensive and high-impact sectors such as construction, electronics, plastics and textiles. There is also focus on microplastics and single-use plastics, which contribute to the mountain of plastic waste that exists today. For a true circular economy to exist, however, sustainable resource use cannot only be seen as a priority for certain sectors. It needs to be enshrined in every industry, and every sector.

Chemical recycling

Fortunately, new technologies and other innovations are allowing us to the challenge the prevailing “take-make-dispose” model that is so harmful to our environment and detrimental to business competitiveness. The market today has tools and techniques that enable us to recycle materials and repair and refurbish goods. We can also use plant-based packaging as an alternative to fossil-fuel based plastic. Going forward, chemical recycling has the potential to be an environmental game-changer that generates billions of euros in business revenues by processing plastics that are currently difficult to recycle.

Reduce, reuse, recycle

The European businesses that will generate the most value from operating sustainably in future are those that redesign their business models firmly around the principle of ‘reduce, reuse, recycle’. They can do this by moving from primarily manufacturing-based business models to ‘as a service’ business models. An obvious example here is the ‘car as a service’ model, when consumers pay a monthly subscription to access a vehicle rather than purchase their own car outright. Other examples include ‘clothing as a service’, ‘heat as a service’ and ‘lighting as a service’.

Embracing the “as a service” model

Aside from their environmental benefits of reducing waste and energy consumption, ‘as a service’ models are beneficial for both businesses and consumers. Whereas products are fleeting – people buy them, consume them and may purchase them from a competitor next time – services are enduring. By offering a service, businesses can personalize what they offer and therefore better engage and retain their customers.

If the EU is to redefine the whole concept of sustainable growth and help transform how the rest of the world does business, it needs to encourage European businesses to be disruptive. That means supporting them to invest in the kind of radical technological innovations that will completely overturn the business and consumer practices that are commonplace today. Fostering development of digital tools and technology must be a spearhead of EU policy for the circular economy and disruptive innovation. It is through high-tech, green solutions that European businesses will be able to expand into new markets and to gain and retain market share in today’s ultra-competitive world.

Summary

As part of its Green Deal, the EU is aiming to become a world leader in the circular economy and clean technologies. This strategy provides the EU with some major opportunities to help change the world for the better while making Europe more competitive. 

About this article

Authors

Ludovic Deprez

EY Belgium Financial Accounting Advisory Services Director

Someone who enjoys/lives 8 days in a week in order to get a perfect balance between work, family, sport & party.

Leen Defoer

EY Belgium Assurance Leader

Committed to delivering globally consistent and high-quality audits. Promoting D&I. Connecting people. Enjoying quality time and holidays with my husband and daughter. Foodie and hobby cook.