Building a different kind of growth in Europe – how business and policy-makers can work together

On the 7th of March, in my capacity as Senior Adviser to Xynteo’s ‘Europe Delivers’ programme, I had the pleasure of chairing a roundtable in Brussels, bringing together business and policy leaders to discuss how to work better together to promote action around the four Europe Delivers’ ‘Grand Challenges’, and catalyse a new, more vibrant, more sustainable and more incusive kind of growth for Europe (see report here).

Here are the key points we took away from the rich conversation.

Business and policy makers must collaborate to mainstream and achieve the SDGs’

While the SDGs set the framework for a global agenda for change, they do not outline what economic transformations may be needed in order achieve them. Said El Kadraoui, Advisor at the European Political Strategy Centre, highlighted how business and policy leaders need to look at harnessing a combination of instruments alongside the SDGs and focus on horizontal enablers such as trade, finance, and governance to drive a new growth model (see the Commission’s Reflection paper: Towards a Sustainable Europe by 2030).

From a policy perspective, representatives from the Finnish and Romanian Presidencies outlined their commitment to a transformative agenda that links the SDGs to Europe’s long-term climate strategy as well as management of shorter-term priorities such as migration. A significant aspect of this agenda is shifting the direction of capital towards low-carbon and sustainable projects through the EU budget - the Multiannual Financial Framework (MFF) – as well as different EU financial initiatives such as the Capital Markets Union and the EU’s Sustainable Finance Package proposal. But business needs frameworks to understand how to measure their contribution to the SDGs and how these investments yield commercial as well as societal returns.

We need sustainability - in its broadest sense - across all our systems, from finance to governance, to meet the SDGs and our sustainability goals.

The convergence of issues demands a holistic approach

Recent events from the “Gilet Jaunes” to #ClimateStrike show that environmental, social, labour, and market issues need to be looked at together, rather than in isolation. The continued protests in France show how fragile today’s socio-political systems are and the difficulty of promoting environmental measures in the midst of deep social malaise. We were reminded in the meeting that the European Union was created on a social foundation. The European Coal and Steel community emerged from the need to revolutionise the industrial basin of Europe and its social structures. It contains important lessons for Europe’s 21st century challenges just as do the examples from current business leaders who recognise their impact and responsibility here and are acting accordingly - reflecting the simple truth that markets are undermined by volatility, uncertainty and conflict.

For example, private and public sector leaders in the energy sector can learn from this experience to implement climate change solutions that also directly respond to the social crisis.

We need a vision that unites the environmental agenda with the social agenda.

It is vital we get the future of work right

The fourth industrial revolution, through digitalisation and AI, offers huge potential for growth in Europe by increasing productivity, as have previous revolutions. Well managed, Industry 4.0 can both create new meaningful work and support the low-carbon transition. However, as labour markets change, job losses are inevitable, even if the net employment impact is positive. Without investments in those sectors experiencing transition, life-long learning and protections for gig workers, digitisation and automation threaten to further polarise the labour market between high-skilled, high-paid jobs and low-skilled, poorly paid, insecure jobs at the very time that other inequalities and divisions are already undermining Europe’s social fabric. The future of work also bring risks linked to a growing dependency on data and digital solutions rather than human engagement thus requiring greater reflection on a proper human optimisation strategy.

We need to create a future of work that is aspirational and inclusive to build confidence and excitement in the future, by aligning public and private investment in education and training and ensuring protection for vulnerable sectors and regions.

 Ensuring a “Just Transition” is vital to achieving the low-carbon economy

If we are to ensure a smooth transition to a sustainable economy, people should not have to choose between a decent job and fighting climate change. The European Trade Union Confederation (ETUC) emphasized the importance of ensuring that the transition towards a greener low carbon economy is “just”. 

As explained by a representative at the roundtable, trade unions and people must feel that they are an active part of the transition – that means offering proper training, skills enhancement and job opportunities. A €4.5 bn EU Just Transition Fund is being negotiated to support workers in high-carbon sectors that will be most hit by decarbonisation. Special attention must be paid to member states dependent on high carbon resources and that lack the energy or financial resources to transition.

We need to ensure that all European citizens are optimistic, in particular in our Eastern and Southern regions, about what the journey to a low-carbon economy will mean for them.

Value-chains are strategic levers for economic change

Understanding the growing interconnection of systems but also businesses is extremely important if we are to develop 21st century business models and enabling policy. Today, 60-70% of trade is through value-chains. The intricate webs created by supply chains mean that the impacts of a business are displaced geographically and temporally, meaning that attempt to tackle environmental and social externalities cannot only focus on the direct impacts of a given business.

Competition isn’t between individual companies anymore, it’s between ecosystems of companies. In addition, with the convergence of climate and eco system tipping points companies dependant on natural resources know full well that the only way forward is to urgently create more resilient value chains in the short term and build in risks so as to ensure long term survival.

We need regulation and policies - including trade policies - that promote better environmental and social systems-thinking and performance across the full value chain and business eco system.

Leadership in sustainability can be a competitive advantage both for European companies and the European economy as a whole

Europe can embody low-carbon leadership and transformation whilst creating a positive commercial environment for businesses to transition. The European elections are a perfect time to remind the main political groups and Member States that progressive sustainability leadership will both grow and protect Europe’s economy – as long as we bring together all stakeholders to have the necessary difficult conversations. European business shouldn’t be disadvantaged in its home market by its commitment to higher environmental standards.

We need to bring trade, competition, economic  and climate policies together.

I look forward to building on this conversation and turning these reflections into practical solutions to Europe’s Grand challenges!