European Green Deal: What it means for your business — Part 1

Opportunities and risks for doing business in and outside of Europe.

7 min readJan 27, 2020

You may have heard of it in the last few weeks: the European Green Deal. The European Commission's ambitious plan to transform Europe into the world’s first climate-neutral continent by 2050. The goal is for the European Union’s economy to become sustainable by turning climate challenges into opportunities and making the transition inclusive for all stakeholders.

President Ursula von der Leyen:

“The European Green Deal is our new growth strategy — for a growth that gives back more than it takes. It shows how to transform our way of living and working, of producing and consuming so that we live healthier and make our businesses innovative. … By showing the rest of the world how to be sustainable and competitive, we can convince other countries to move with us.”

But what does this mean?

All beautiful words, but what does this Green Deal mean for you, the individual, the entrepreneur, the leader, the CEO, the company, and the investor operating in Europe and outside Europe?

Well, new policies will cover all sectors of the economy, notably transport, energy, agriculture, buildings, and additionally industries such as steel, cement, ICT, textiles, and chemicals. However, all businesses from every sector will have to keep a close eye on new policies and laws when manufacturing for, and doing business in, Europe. No stone will be left unturned, and every EU regulation will be reviewed to align them to the climate goals.

So, what’s the plan?

Currently, the European Green Deal is said to be an initial roadmap, which means many regulations and laws will still have to be put forward and approved. It currently consists of around 50 planned policies, centered around eight interlinked pillars and aligned with the United Nation’s Sustainable Development Goals for 2030.

The various elements of the European Green Deal

Businesses will play a vital role on the road to a sustainable future for the EU. In this two-part series, we’ll give an overview of the most important plans and expected policies for companies to take into account when doing business as we advance.

Let’s break it down

1. A climate-neutral Europe by 2050

The overarching goal of the European Green Deal is to reach net-zero greenhouse gas emissions by 2050. The EU commission knows this doesn’t happen by hoping governments and businesses will just follow. A so-called “climate law” will be presented in March 2020.

Almost certainly, reforms to ensure efficient pricing of carbon will be enforced across the economy. A carbon border adjustment mechanism will be proposed to reduce the risk of carbon leakage from countries (and continents) with lower ambitions for emission reduction. This would ensure that the price of imports into the European Union reflect more accurately their carbon content.

Take action: Doing a test on climate neutrality for all corporate investments, starting now, is advised. First, quantify the emissions that are being produced in your business supply chain. This will help you find pain points and calculate your carbon footprint. You will then have a foundation needed to assess what steps to take in the wake of the European Green Deal’s 50 planned policies and how to prepare for them.

2. Circular economy

Mobilizing businesses and governments for a circular economy is billed as one of the essential pillars of the European Green Deal. It will account for half of the emission reduction goal for 2050. Industries that currently produce much waste are mainly targeted, such as the textiles, plastics, electronics, transport, food, and construction sectors.

Some ideas pitched are new EU criteria on the recyclability of products, as well as introducing a minimum percentage of recycled materials going into the manufacturing of new products. For the first time, ecodesign policies also include requirements to make products easier to recycle with minimum repairability specifications to extend their lifetime. Economic instruments such as environmental taxation, green tax reforms, and improved waste management are also on the agenda.

Take action: Businesses will be forced to invest in clean, safe, non-toxic, and sustainable cycles as reliable and verifiable information will play an important part in enabling consumers to make sustainable decisions. It is no longer enough to make green claims (also called greenwashing), as the European Commission will step up to tackle unsubstantiated statements. Your stakeholders will demand clearer and comparable targets to guide their investments.

3. Building and renovating

The efficient renovation of buildings is recognized as an important factor in achieving ambitious climate and energy targets. Many existing buildings are old and do not fit in future climate policies. The construction and demolition sectors are not the only ones affected by future policies under the EU Green Deal. The EGD aims to spark a renovation wave to modernize buildings and increase public funding to develop new solutions.

While increasing renovation rates is a challenge, the Green Deal states that renovation lowers energy bills and can reduce energy poverty. It can also boost the construction sector and is an opportunity to support SMEs and local jobs. The EU commission will rigorously enforce the legislation related to the energy performance of buildings.

Take action: This impacts us all. Technically, we all work in, live in, and own buildings. Construction companies and those producing building materials have the opportunity to be a leader in the creation of new processes and value chains. Building owners can prepare already by making small upgrades. Businesses all over the world need to get into the conversation with their contractors and building owners. These changes do not only prepare you for the future; they can already result in cost savings and more employee engagement, for example.

4. Zero pollution

In 2021 a zero pollution action plan for air, water, and soil will be adopted in the EU. It will draw from lessons learned from the evaluation of the current air quality legislation. The commission will present a chemicals strategy for sustainability after a deep dive into existing policies. This will help protect citizens and the environment against hazardous chemicals and encourage innovation to develop safe and sustainable alternatives.

To cut harmful pollution, industrial pollution policies will need to be tightened and adequately enforced. Environmental agencies call for a higher “green tax,” making heavy polluters pay more and taking on the aviation and shipping industries.

Take action: It can take over ten years to get an idea from lab to market, so the time really is now. Innovation is key to a company’s survival. The transition to a climate-neutral EU will generate a range of opportunities and risks that only innovative businesses will be able to withstand. Use your organization’s capital to help the EU to climate neutrality and get ahead of the curve.

Use your organisation’s capital to help the EU to climate neutrality and get ahead of the curve. Only innovative businesses will withstand the transition to a climate neutral Europe.

5. Preserving and restoring ecosystems and biodiversity

Also presented in March will be a biodiversity strategy as part of the zero pollution goal. A sustainable ‘blue economy’ will have to play a central role in alleviating the multiple demands on the EU’s land resources and tackling climate change, which means the oceans' role in mitigating and adapting to climate change is increasingly recognized.

This will include ways to manage maritime space more sustainably, notably to help tap into offshore renewable energy's growing potential. The Commission will also take a zero-tolerance approach to illegal, unreported, and unregulated fishing.

Take action: More than 90% of biodiversity loss and water stress come from resource extraction and processing of materials, fuels, and food. Mainly focused on carbon, forest restoration and preservation is one of the main objectives named. New labeling provisions will be put forward to promote the importing of deforestation-free agricultural products, for example.

In the next article, we will explore the three remaining pillars and summarise the initial steps your business can take to get ready for the green policies that will be implemented in Europe.

Keep in mind that this proposed deal is not here to make it harder to do business. It is here to make sure that we are prepared for a necessary future to survive.

Businesses are and should be at the forefront of this amazing opportunity and lead the change.

Update: Read part 2 of this article here.

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