top of page
Writer's pictureAndres De Miguel

The EU’s Green-Growth Conundrum



In a geopolitical landscape that is still struggling to accept the sacrifices it must make to preserve the climate, the European Commission’s environmental legislation is astoundingly ambitious.


After her first election win in 2019, Ursula von der Leyen was quick to establish herself and the European Commission as enthusiastic advocates for the global green transition. The Green Deal stood out as a landmark cry for hope at a time when other world leaders denied climate change’s very existence. Symbolically, a new taxonomy was created for identifying sustainable business ventures, and the obligation to disclose the environmental footprint of all investments was carved into EU law.


This unprecedented tenacity, however, has not been easy to sustain. The political conflict produced by the Green Deal’s impacts on European business encapsulates the bloc’s dilemma as it seeks to compete internationally without betraying its climate ideals.


Since the introduction of the Green Deal, over 70 new laws have been suggested by the European Commission. Regulations obligating firms to disclose the environmental impact of their investments requires an unprecedented overhaul of processes for data gathering to begin to quantify a term so nebulous as ‘sustainable’.


Should firms wish to go to the source for clarity on the matter, the European Commission’s legislation further obfuscates the issue. Definitions for sustainable assets contradict between different flagship articles of the Green Deal itself, and redundant obligatory disclosures cause further confusion.


To put this in real terms, a survey by the European Commission itself found that businesses were facing €2.3 billion in extra administrative costs from just 15 of the aforementioned regulations. Many firms, small and large, are forced to hire internal legal teams and ESG divisions to comply with the EU’s regulation, a weight made heavier by the stagnating European economy and falling exports.


This also comprises a serious political challenge to the EU, given the pressure to compete economically with China and the US, particularly given the growing threat they might be pulling too far out of reach. Confirming the EU’s monumental challenge in the search for growth Mario Draghi, the ex-Prime Minister of Italy and former President of the European Central Bank, emphasised in his much-awaited report that the EU would require €800bn in annual investments towards enhancing productivity, or risk falling further behind China and the US. This is an investment that would no doubt also have to pass through the EU’s web of climate regulation, in a way that would be very difficult to outline now or in the future.


Thus, the European Commission finds itself at an impasse. To double back on its commitment to the Sustainable Development Goals would be unacceptable, but the pressure from business to be free of onerous regulatory shackles proves more persuasive every day.


It is not just economic frustration that threatens the macro-policy goals of this European Commission, but the national leaders that are mobilising this discontent. Far right parties’ electoral gains across the EU, and within the European Parliament itself, point to a disconnect between the electorate and policymakers at the EU level, one that populist leaders across the continent have been very agile at converting into votes at the polls. Votes at the polls, which, if the conundrum of economic growth and green legislation is not reconciled, could end up shifting the EU’s political power balance away from progressive forces before their vision becomes properly established.


So as to avoid the allure of catastrophising the situation, imagine the possibility that the EU might be able to internally justify its position to both sides. In her outline of political guidelines for the next mandate, Ursula von der Leyen stated business should be governed by ‘less red tape and reporting’, echoing Mario Draghi’s demands to streamline climate legislation and facilitate greater investment in technologies. However, this does not necessarily entail the abandonment of climate policy. Legislation of this scale will take time to properly establish and define, meaning redundant legislation can be cut whilst still moving towards achieving net zero.


The European Commission's current headache epitomises, and in many ways is an omen of, the inevitable internal conflict liberal governments face, should they wish to tackle the threat of a dying planet while remaining palatable to an economically anxious electorate. For this reason, the manner in which the EU tackles this most pressing question will reverberate through climate policy discourse for decades to come. How can governments, subject to the global pressures of competitive free-market capitalism, reconcile the political requirement of growth, while sustaining a commitment to the planet’s future?



Image: Flickr/Thijs ter Haar

No image changes made.

Comentarios


bottom of page