Opinion of the European Economic and Social Committee – What EU policies are needed for enterprises/business to become competitive in a fair, sustainable, stronger and more resilient way to realise the European Green Deal (exploratory opinion)
Date: 2024-09-18
Institutions: European Economic and Social Committee
Subjects: EU environmental policy, EU growth strategy, EU policy, competitiveness, digitisation, entrepreneurship, green economy, innovation, investment, social dialogue








C_202406873EN.000101.fmx.xml












Official Journal of the European Union


EN
C series













C/2024/6873


28.11.2024






Opinion of the European Economic and Social Committee

What EU policies are needed for enterprises/business to become competitive in a fair, sustainable, stronger and more resilient way to realise the European Green Deal


(exploratory opinion)

(C/2024/6873)


Rapporteur: 
Felipe MEDINA






Referral


Hungarian Presidency of the Council, 14.3.2024




Legal basis


Article 304 of the Treaty on the Functioning of the European Union




Section responsible


Single Market, Production and Consumption




Adopted in section


5.9.2024




Adopted at plenary


18.9.2024




Plenary session No


590




Outcome of vote
(for/against/abstentions)


212/1/6




1.   Conclusions and recommendations









1.1.


The Green Deal is the flagship project of the last Commission, introduced to tackle the threat of the climate emergency. Its implementation poses challenges and opportunities for companies and citizens, not only intra-EU, but also for our trading partners. Without ensuring businesses’ capacity to comply with and benefit from this transition, it will simply not be feasible. For this reason, the European Economic and Social Committee (EESC) welcomes the Hungarian presidency’s interest in an issue that needs to be improved: strengthening the green and just transition with business competitiveness. Refining the implications of implementing the Green Deal requires our utmost attention to make sure it is deployed effectively, with strong support from the EESC.












1.2.


Companies need much more certainty, global agreement, guidance, sophisticated accountability methods and, ultimately, support from legislators. They have proven to have the will, but tight timelines and unwieldy levies are hampering that willingness. There is still a long way to go to reach the final objectives of decarbonisation and transition to a more sustainable economy set out by the Commission in its original Green Deal formulation.












1.3.


The EESC welcomes and supports the Council proposal to create a European Competitiveness Deal (1) aimed at enhancing our economic performance and fostering a more integrated and efficient single market and leaving no one behind. There is an urgent need for public funds to be strategically allocated towards goals that are jointly agreed on by European policy-makers and civil society. This initiative must be closely interlinked with the industrial strategy.












1.4.


Considering the volatile context that we are dealing with – at global level – this may be a time to make sure that the means of implementation are suitable for our companies and citizens and enable them to deal with the Green Deal’s ambition to make the EU economy more competitive. To this end, a structured and permanent dialogue with civil society is greatly needed, and the EESC can play a vital role in providing leverage for civil society demands.












1.5.


The Member States need EU-level support and civil society input to assist companies through guidance, benchmarking and shared learning capacities to adopt and execute the structural reforms coming from the Green Deal: bolstering employment rates, enhancing access to skills and labour, promoting flexibility and efficiency in labour markets. This is a prerequisite for companies’ ability to comply. Timing is important and differences in the speed of application among Member States should be avoided.












1.6.


The EESC considers it important to identify the policies that are needed from the perspective of companies, dividing them in two separate considerations: 1) common principles on which forthcoming policies will need to be based to prevent past mistakes recurring; 2) topics on which policies may focus to improve companies’ capacities to implement the provisions of the Green Deal and the competitiveness deal.












1.7.


The EESC encourages policy-makers to take a collaborative approach and leave no one behind, as it is essential to address the common challenges and leverage the strengths of the different regions. This approach will depend largely on our capacity to communicate the costs of not carrying out this transition, which will be much more far-reaching, as well as the cost of failing to implement the transition properly, as explored below in the section on lessons to be learned from the Green Deal.












1.8.


Developing common global standards is key to making sure that the aim of steering money into green investments is achieved. The EU must assertively and effectively take a partnership approach in order for our trading partners to commit to comply with our social, economic and environmental standards. Otherwise, our efforts will be utterly in vain.




2.   General comments









2.1.


The Green Deal has been the flagship project of the last Commission, being a response from the EU to one of the most pressing challenges – climate change and decarbonisation – on which Europe wants to take the lead at global level and develop a growth strategy aiming to transform the EU into a fairer, resource-efficient and competitive economy. The EESC welcomes this initiative.












2.2.


The Green Deal consists of a set of legislative and non-legislative initiatives in different areas.




The EESC has noted that during the last four years the European Commission has progressively launched initiatives for discussion with a very tight and pressing timetable. However, since the beginning, significant progress has been made by approving several legislative initiatives very fast, but some overlapping crises (covid recovery, energy prices, inflation) have influenced the process.








2.3.


The EESC recognises that this complex legislative process impacts on companies and citizens, especially in terms of i) costs of implementation and the high social impact, which are sometimes unaffordable for many companies and citizens; ii) insufficiently concrete implementation and realisation of the measures due to their broad scope; iii) timing and inflexibility: to ensure the effective roll-out of the Green Deal, it is important to build capacity to ensure adequate support and facilitate the work to be done, thus avoiding contradictory implementation and overlapping provisions, as well as providing the necessary means to comply, reducing bureaucracy and ensuring coherence between different regulations. If this is properly done, the Green Deal can give the EU a considerable competitive advantage.












2.4.


The EESC notes that one of the dossiers with particular relevance for companies, workers and consumers is the one regarding reporting obligations and taxonomy. Several new directives and regulations will radically change the method and content of companies’ disclosure obligations, thus having huge implications for investors and consumers. This complex set of files will also affect third-country companies, and the lack of consistency between reporting standards is a concern for businesses.




3.   Lessons to be learned after four years of the Green Deal

Even if the Green Deal is still unfinished in some areas, as it is a long-term project, there are some assessments we can make that can help us in the next phase. Among the comments that can be made after these five years since its announcement, we can include the following:








3.1.



Impact assessment. The Green Deal has more than ambitious and creditable objectives. The EESC believes that they should have been better discussed and agreed beforehand with civil society, thereby avoiding difficulties that have now arisen. The lack of a previous impact assessment has been one of the major pitfalls. A sound, critical analysis in economic, environmental and social terms of the different initiatives, and how to avoid or reduce the negative impacts, has not always been sufficiently taken into consideration.












3.2.



Timing. In recent years there has been a considerable output of legislative files from the EU institutions, making it very hard not only to follow up the legislation, but also to apply it at national and regional level, in the case of both the public authorities and the private sector.












3.3.



Ambition. In some cases, the calendar and the requirements to achieve the established objectives have put its effective application in danger, to the detriment of business. For example, a level playing field needs to be ensured when setting reduction targets for packaging waste materials, including plastic. Large recycling objectives should be accompanied by investments in infrastructure and recycling technologies. Similarly, the deployment of renewable energies requires sufficient infrastructure. A prior competitiveness check (2) for each legislative proposal, in line with the SDGs, and ensuring that competitors both inside and outside the EU adhere to the highest environmental and social standards, would help to evaluate the economic, social and environmental impact as well as rural proofing, and also assess the appropriate method and time for development and implementation (3) (4).












3.4.



Technology. Technological solutions are not always available, so it is necessary to increase R&D investment as well as labour skills that are still lacking. Mr Letta’s report (5) highlights this major issue by stating that the EU has not developed a sufficiently robust industry to benefit from the new wave of innovation, thus resulting in a dependence on foreign technologies. Moreover, he calls for a fifth freedom: enhancing research, innovation and education in the single market. Accordingly, the EESC believes its absence hampers the EU’s strategic autonomy and economic security and benefits global competitors capitalising on this opportunity.












3.5.



Skills. Changes are so big and complex that they should have been accompanied by awareness campaigns, social pedagogy and social dialogue between entrepreneurial and trade unions. Educational and technical skills, especially in the environmental pillar, are still necessary and a prerequisite for success. Moreover, considering that new jobs will surge from the green transition, research, education, training and investment in up-skilling workers remains an imperative need to reap the benefits of technology and digitalisation and to respond to demographic challenges.












3.6.



Social impact: while there have been a few occasions where the Green Deal has included measures to mitigate the social impact of its legislation – as in the case of the Social Climate Fund, linked exclusively to transport and households – the EU lacks a dedicated and comprehensive strategy to integrate the social dimension into the green and just transition, seizing opportunities for business competitiveness (generating and financing new skills and jobs) and mitigating the risks of poverty and exclusion of the most vulnerable citizens. A means for businesses to become competitive in a fair, sustainable, stronger and more resilient way is to make progress on the Just Transition Policy Framework, as called for by the EESC (6).












3.7.



Financing. Even if the legislative changes came with specific public financing, additional and tailored resources are needed to adapt the economic model to the decarbonisation process. Companies must redirect their capital to sustainable activities, as they are already doing. This financial shift should be a central focus of the Green Deal, providing companies with increased legal and economic certainty and guidance. The establishment of an EU investment fund, integrated into the next Multiannual Financial Framework and dedicated to investment projects of strategic European interest, while also targeting the regions and sectors most affected by the transition, could be helpful for this purpose and further leverage private investment (7).












3.8.



Geo-political context. Major geopolitical crises, such as the Russian invasion of Ukraine, have revealed some unexpected economic consequences and an absence of stocks (e.g. gas or grain), as well as the need for a common and comprehensive approach. These disruptions will also continue playing a role in the deployment of the Green Deal and should incentivise the acceleration of the green transition. This highlights the need for greater strategic autonomy of supply in energy and materials as well as the need to strengthen the EU’s position in the green transition in the international arena.












3.9.



Economic impact. The economic impact of implementing the Green Deal on companies is not always sufficiently considered. As EU regulation can lead to significant additional costs for businesses, the EESC points to the need to streamline European green regulation, particularly with a view to easing the administrative burden on SMEs (8) and to apply the same high standards to non-European companies. Moreover, regional and national regulatory developments often legislate in advance or adopt stricter measures, further fragmenting the EU single market. To address this, Mr Letta calls for the creation of an independent EU authority to ensure regulatory coherence. He highlights that European businesses need a comprehensive solution to effectively meet their obligations.




4.   Competitiveness and social dialogue at the heart of the green transition: the Europe of job creation and skills









4.1.


European companies support the EU’s climate agenda and are committed to improving their production processes, adapting their business and working models, creating new professional profiles and developing innovative technologies to be more efficient, as well as more environmentally sustainable, helping to achieve the ambitious objectives set by the European Union. The European Green Deal must thus be accompanied by a truly coherent European industrial strategy (9) that guarantees the competitiveness of European companies and recognises their role as facilitators of practical solutions to achieve social, environmental and climate objectives, ensuring a just transition to deliver economic prosperity for all and address the overlapping crises. This requires:












4.1.1.


developing policies aimed at preserving and strengthening European industry, accelerating industrial permitting, without hindering transparency, and making supply chains more resilient by diversifying sources of energy, raw materials and intermediate goods and increasing European capacities, including by revising the rules governing the global EU trade infrastructure;












4.1.2.


a European Competitiveness Deal paired with a new unified single market strategy is crucial. We must create a single market that directs public funds towards strategic objectives, established collaboratively by European policymakers and civil society. The EESC agrees with Mr Letta’s report, which highlights that the EU cannot sustain its global leadership without increased resource allocation. Achieving this requires bolstering our administrative capacities;












4.1.3.


working to ensure energy and food security and supply in the EU, addressing the cost differential between the EU and its main competitors and encouraging investment in clean energy (10);












4.1.4.


promoting a new sustainable and multimodal mobility model based on the principle of technological neutrality and improving market conditions for circular material flows, as well as accessibility for people with disabilities and the elderly;












4.1.5.


adopting a comprehensive and coherent approach in EU water policies and ensuring cost-effective biodiversity conservation and restoration measures in balance with social and economic interests;












4.2.


The EESC is committed to strengthening social dialogue and the capacities of the social partners, an essential element in tackling the transformations and challenges currently faced by the EU, with strong repercussions on the functioning of its labour market. The shortages of labour and skills required by the changes in the productive fabric, including those related to the digital transition, call for multi-faceted responses and the involvement of all actors concerned. To ensure that the EU can continue to be the best place to live and work, the EESC proposes to:












4.2.1.


strengthen the role of social dialogue and collective bargaining at European and national level to find flexible solutions tailored to the realities of labour markets through a Just Transition Policy Framework;












4.2.2.


promote labour mobility between Member States by improving the recognition of qualifications and establishing safe and orderly migration policies to attract talent from third countries. Migrant talent must be connected to the needs of companies;












4.2.3.


develop career guidance systems to support lifelong learning processes, strengthen training in skills related to the twin transition and make STEM (11) disciplines more attractive;












4.2.4.


adopt proactive strategies to build and sustain public support for the EU’s efforts on a green, sustainable and competitive transition through effective public communication campaigns and establishing new measures to support jobs, taking advantage of their strategic value and ensuring continuity solutions for the most vulnerable citizens.




5.   A regulatory framework for competitiveness and innovation for an efficient green transition









5.1.


The EESC thinks that the new institutional cycle should start with a new regulatory spirit that promotes investment and professional development based on new knowledge and skills. This will require a holistic vision that fosters more efficient and effective implementation of regulation, avoids inconsistencies, overlaps and contradictions between objectives, unnecessary complexity and superfluous reporting obligations. Thus, it is urgent to apply the competitiveness check (12) and the fundamentals of Better Regulation (13) throughout the legislative process, according to which the principle of proportionality and reducing administrative burden are key, to address the current implementation problems and speed up the transition. To this end, the EESC proposes the following objectives:












5.1.1.


focus on the proper implementation of the prolific legislation adopted in the last cycle, ensuring transparency and legal certainty and avoiding gold-plating, as well as making the reduction target for reporting burdens a reality;












5.1.2.


strengthen the European Commission’s role in ensuring compliance with European legislation by streamlining and increasing the transparency of infringement procedures, and emphasising market surveillance for the single market’s proper functioning;












5.1.3.


improve the quality of impact assessments and transparency in the drafting of delegated acts, as well as ensure the proper application of an adequate competitiveness check on all new legislation, and the ‘one-in-one-out’ principle, and ‘two out’, when possible. Impact assessments may be developed dynamically, by considering the substantial changes during the drafting phase by the Council and EP – Mr Letta’s report suggests having ‘dynamic impact assessments’, adapting the evaluation process to the procedure so that civil society is properly informed about the evolution of the text;












5.1.4.


make the single market the centre of European integration, taking steps towards removing persistent barriers to the four freedoms (14) of the single market and securing cross-border transport operations;












5.1.5.


safeguard the European standardisation model to ensure market-relevant European principles, always aligned with international standards and in defence of our social and environmental commitments in terms of well-being and prosperity;












5.1.6.


maximise the potential of public procurement to achieve European objectives and ensure that public procurement legislation does not lead to prices going downward;












5.1.7.


strengthen the complementarity and coherence between industrial policy and competition policy (15) ensuring that the framework for state aid control guarantees the streamlining, proper allocation and fairness of public support, and promote instruments designed with a European perspective;












5.2.


EU institutions must prioritise overcoming administrative and financial obstacles that European companies face by:






—


establishing a stable regulatory framework and a reliable environment conducive to fostering greater public and private investment in research and innovation;










—


encouraging legislation that promotes technological neutrality, and ensuring that the innovation principle is applied when proposing new rules, as well as encouraging the use of sandboxes and pilot projects;










—


introducing additional incentives for investments in innovative business models that foster well-being and prosperity, facilitating the participation of enterprises.








6.   An economic and fiscal environment conducive to investment and digitalisation for a stable green transition









6.1.


The EESC considers that the recent agreement on new fiscal rules and the EU debt issued to finance the Next Generation EU funds can be the basis for consolidation and stabilisation of the EU economic environment. The EESC highlights that the coming years are crucial to ensure that the right measures are taken to encourage long-term investment and facilitate firms’ access to such finance, making the best use of Europe’s saving potential and facilitating investment in Europe. To this end, the EESC advocates:












6.1.1.


completing the Banking Union and making progress in deepening the Capital Markets Union, creating a stable and predictable environment and ensuring the proper implementation of the new economic governance framework;












6.1.2.


providing a Multiannual Financial Framework, including new own resources to enable the necessary investments to be undertaken, and ensure the efficient implementation of Next Generation EU funds;












6.1.3.


assessing thoughtfully public expenditure, guaranteeing that there is a notable level of coherence between our objectives and public and private financing. Furthermore, improving the EU’s public borrowing capacity would provide a means to this end;












6.1.4.


in a context of fiscal consolidation, taking advantage of European public resources and catalytic instruments to close the investment gap between EU regions.












6.2.


After a period marked by a high volume of legislative production, companies face a horizon of uncertainty about implementation and compatibility in a context of fierce competition to lead this transition. The integration of digital technologies is essential for achieving sustainability goals. To fulfil the objectives of the Digital Decade and to strengthen the EU’s competitiveness on the global stage beyond regulation, the EESC thinks that Europe must:












6.2.1.


deepen the digital single market to enable European businesses to realise its full potential and focus on the implementation of the new regulatory framework in the digital domain;












6.2.2.


maximise the impact of financial resources, both public and private, earmarked for the digital transition;












6.2.3.


ensure data interoperability and reuse, foster the development of data spaces and ensure that AI regulation positions the EU as a place to invest and develop this technology in an ethical and safe way;












6.2.4.


strengthen cybersecurity capacities in the public and private spheres, implementing and developing the legislation adopted in the last term.






Brussels, 18 September 2024.


The President


of the European Economic and Social Committee

Oliver RÖPKE
               





(1)  
            Council of the European Union, A competitive European industry driving our green, digital and resilient future, Council conclusions, 24 May 2024.

(2)  Better Regulation toolbox – Appendix I on Competitiveness check.

(3)  Opinion of the European Economic and Social Committee on Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: ‘Fit for 55’: delivering the EU’s 2030 Climate Target on the way to climate neutrality [COM(2021) 550 final] (
OJ C 275, 18.7.2022, p. 101).

(4)  Opinion to the European Economic and Social Committee – Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions Securing our future Europe’s 2040 climate target and the path to climate neutrality by 2050 building a sustainable, just and prosperous society (COM(2024) 63 final) (OJ C, C/2024/4667, 9.8.2024, ELI: http://data.europa.eu/eli/C/2024/4667/oj).

(5)  Enrico Letta, 
Much more than a market
, April 2024.

(6)  Opinion of the European Economic and Social Committee on ‘Advancing the EU’s just transition policy framework: what measures are necessary?’ (OJ C, C/2024/1576, 5.3.2024, ELI: http://data.europa.eu/eli/C/2024/1576/oj).

(7)  Opinion of the European Economic and Social Committee on Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: ‘Fit for 55’: delivering the EU’s 2030 Climate Target on the way to climate neutrality [COM(2021) 550 final] (
OJ C 275, 18.7.2022, p. 101).

(8)  Opinion to the European Economic and Social Committee – Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions Securing our future Europe’s 2040 climate target and the path to climate neutrality by 2050 building a sustainable, just and prosperous society (COM(2024) 63 final) (OJ C, C/2024/4667, 9.8.2024, ELI: http://data.europa.eu/eli/C/2024/4667/oj).

(9)  Opinion of the European Economic and Social Committee on ‘Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions — A New Industrial Strategy for Europe’ (COM(2020) 102 final) (
OJ C 364, 28.10.2020, p. 108).

(10)  See the EESC’s definition of competitiveness relating to food systems (
OJ C 194, 12.5.2022, p. 72): to deliver food for consumers at prices that include extra costs for criteria such as sustainability, animal welfare, food safety and nutritional value, but also a fair return for farmers, and at the same time, maintains its position as the preferred choice for the vast majority of consumers.

(11)  Science, technology, engineering, and mathematics.

(12)  
            Better Regulation toolbox – Appendix I on Competitiveness check.

(13)  
            Better Regulation Toolbox.

(14)  
            The single market ensures the free movement of goods, services, capital and people.

(15)  Opinion of the European Economic and Social Committee (a) Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – The single market at 30 (COM(2023) 162 final) (b) Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – Long-term competitiveness of the EU: looking beyond 2030 (COM(2023) 168 final) (OJ C, C/2024/4056, 12.7.2024, ELI: http://data.europa.eu/eli/C/2024/4056/oj).


ELI: http://data.europa.eu/eli/C/2024/6873/oj
ISSN 1977-091X (electronic edition)