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The European Green Deal and a post Covid-19 prosperity

Two sides of the same coin

Photos by Jr Korpa on Unsplash

- The Green Deal’s economic policy approach is the most convincing competitive strategy for the European Union -

Some arguments include:

  • Europe depends on imports for most of its critical raw materials. Just a month ago, the European Commission published its updated analysis of 30 scarce and economically important raw materials, and found that the EU is between 75% and 100% reliant on imports for most metals. This makes the European Union extremely vulnerable.
  • Resource prices are increasing in the long term and volatile in the short term.
  • Material costs are rising as a share of the manufacturing industry’s overall input costs. Data from the German manufacturing industry for 1993–2011 shows material costs increasing from 37% to 47%, while labour costs fell from 27% to 17%.
  • Social considerations are among the core European values and we should value and protect them. If we need to save costs — which we are constantly told we do — we can and should save them in material inputs, freeing up budget to ensure a fairly paid, well-skilled, healthy labour force and society, in general. This is also politically favourable: natural resources will not go onto the streets and protest.
  • Setting framework conditions for fair competition in the Single Market and at international level
  • Accelerating the transition to a climate-neutral and circular economy
  • Harvesting the benefits of digitalisation

- The Green Deal provides convincing answers to the questions Covid-19 raises about the effects of globalisation -

Covid-19 puts the effects of globalisation in the spotlight. President Macron has already said that it “will change the nature of globalisation”, while Internal Market Commissioner Thierry Breton pointed out the need for “a radical paradigm shift in our approach”. But this question should be approached carefully. Many of globalisation’s effects have been positive; some have improved the quality of life for people in the least developed countries. Nonetheless, many political voices are talking about reducing dependency and increasing self-sufficiency.

- Both the Green Deal and the Covid-19 recovery call for inter-generational solidarity and agreement -

One of the main reasons we need the Green Deal is that we are putting future generations into debt through the depletion of natural capital: we are privatising the profits and socialising the costs. This is best explained by the Inclusive Wealth Index, published in the UN’s Inclusive Wealth Report in 2018. Between 1992 and 2014, Production Capital per person almost doubled, Human Capital per person increased slightly, while Natural Capital per person fell almost 40%. During that time, production capital more or less tracked the growth in GDP per person. This shows that the growth in GDP over the past decades has come at the expense of depleting natural capital. And that not all growth which we record by measuring GDP is actually ‘good’ growth.

- Until Covid-19, the urgency around the Green Deal and climate finance was missing -

Covid-19 and the economic consequences of the lockdown are obviously urgent issues and are being treated as such. But the Covid-19 reaction clearly reveals something else: that while accepting the need to fight against climate change, we have never treated it as really urgent. The financial support so rapidly deployed or promised to counter the pandemic is on a different scale from our efforts at greening the economy and tackling climate change.

- The challenges raised by Covid-19, and those that the Green Deal seeks to address, require a new approach to governance, especially at global level -

Covid-19 has spared almost no one. It is obvious that a better coordinated approach globally, and in the European Union, could have provided more efficient answers and saved lives. Challenges of a global nature can only be efficiently addressed by joining forces and cooperating better. The same is true of the Green Deal challenges, particularly as they relate to climate change. The only way to address them is by deeper, stronger cooperation. The European Commission is well aware of this. The Green Deal states:

- As we slowly build a recovery, the Green Deal must remain the compass -

The UN Environment Programme (UNEP) International Resource Panel recently released Building Resilient Societies After the Covid-19 Pandemic. Key Messages from the IRP. It explains the benefits of sustainable management of natural resources, including the smarter use of materials, such as biomass, fossil fuels, metal ores and non-metallic minerals. As the study shows, sustainable management:

  • reduces the rate at which natural resources are depleted
  • brings economic development opportunities, including reduced material supply dependencies and economic diversification towards circular economy business models and jobs
  • means lower levels of input, which help to reduce waste flows and emissions, and reduce costs for producers and consumers
  • limits the environmental impacts of resource extraction in agriculture, forestry, fishing, mining and quarrying
  • stimulates innovation, the creation of new industries, and furthers economic competitiveness, which allows countries with developed infrastructure to leapfrog into economic models where growth is fully decoupled from resource use

- Creating minimum conditions for an effective, synchronised post-Covid-19 and European Green Deal approach -

The health and economic effects of Covid-19 in the European Union will be asymmetrical for countries and for economic sectors. Without strong solidarity, we risk a further rise in dangerous extremism, more undermining of the core values that are the basis of the European Union… and potentially even the loss of the Union itself. The fertile ground for mistrust and extreme behaviour was neatly captured by Corrado Biroli:

- The European Green Deal and the post-COVID-19 recovery: two sides of the same coin -

The ‘two sides of the same coin’ approach is impossible without the clear understanding and support of those holding the coins. Increasingly, the financial sector seems to understand better than other sectors that the Green Deal direction is necessary.

  • “We believe that sustainability should be our new standard for investing.”
  • “In the near future — and sooner than most anticipate — there will be a significant reallocation of capital. Our investment conviction is that sustainability- and climate-integrated portfolios can provide better risk-adjusted returns to investors.”
  • “Over time, companies and countries that do not respond to stakeholders and address sustainability risks will encounter growing scepticism from the markets and, in turn, a higher cost of capital.”



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