What the New EU Sustainability Policies Mean for Businesses

Right now, the EU climate targets are to cut down emissions by 55% by 2030 and be fully climate neutral by 2050. Currently, the Climate Action Tracker rates the EU’s climate action as insufficient, meaning that the EU is not doing enough to reach these objectives or putting in the effort to support developing countries in their own endeavours to reach these objectives. 

On June 7th 2021, a new draft on sustainable guidelines for climate action, energy use, and environmental protection was created with intent to adopt them by January 1st 2022. These guidelines are an extension to the previous 2014-2020 guidelines which were set to expire at the end of 2020. 

“The European Commission has stated the need for a ‘350 billion euro annual investment’ to meet the 2030 targets.”

The European Commission has stated the need for a “350 billion euro annual investment” to meet the 2030 targets. These new guidelines broaden the original policies in order to simplify the rules to provide “flexibility for new technologies”, create “compatibility and consistency” for member states, and to help member states “achieve their energy and climate objectives at lower costs”. This should have benefits to taxpayers and keep the single market competition strong and consistent. Moreover, according to the Commission, state aid will not be given to anything involving the “most polluting fossil fuels” and public funding will be allocated to “truly green” initiatives.

The Current State of Climate Policies

First and foremost, the current actions of the EU are not enough and, according to the Climate Action Tracker, not consistent with the Paris Agreement. Their efforts are rated as insufficient and there is a dire need for them to increase action against climate change. 

“There have been major steps they [The EU] have taken for environmental protection.”

Before we address the issues with the EU’s climate action policy, there have been major steps they have taken for environmental protection. These being the Paris Climate Accords and the European Green Deal which are helping member states of the EU and international allies to better combat climate change together. These agreements have also been backed with concrete policy and finance, which demonstrates both ability and desire to help the climate on the EU’s part. Finally, European Climate Law has now made targets for emissions reductions and climate neutrality a binding goal. 

“Right now, the Climate Action Tracker, estimates that the EU will be unable to go beyond the 55% emissions reductions but it could be achieved through policy change.”

The EU needs to dedicate more finances to climate action as it is not meeting its contributions. Right now, the Climate Action Tracker, estimates that the EU will be unable to go beyond the 55% emissions reductions but it could be achieved through policy change. These changes come in the form of the increase of renewable energy – coal use must be phased out faster – whilst more energy efficient initiatives happen simultaneously. There is also a need for the EU member states to actually implement these policies into their communities.

There are four main sections that the Climate Action Tracker has measured the EU against: policies and actions (almost sufficient), domestic target (almost sufficient), fair share target (insufficient), climate finance (insufficient).

  1. Policies and Actions – The EU was able to reduce emissions by 36% in 2020. However, policy implementation by EU member states has not been effective. There must be a concrete plan created in order to get rid of coal. 

  2. Domestic Target – The current targets set up by the EU are good, and the Paris Agreement could be met if kept to, however there is no evidence for any reductions in emissions passed 55%.

  3. Fair Share Target – Measured against the fair share allocations for each nation, there is vital need for improvement to meet the Paris Agreement. Two solutions have been suggested: an improvement to internal emissions targets and better financial support for developing countries emissions reductions. According to Climate Action Tracker, if each nation followed the EU example “warming would reach 3°C”.

  4. Climate Finance – The EU contributions are currently too low. There must be more international funding and a better phase out plan for fossil fuels.

The EU’s rating on meeting climate targets is insufficient. Source: https://climateactiontracker.org/countries/eu/.

Introducing the New Policies

So what exactly are these new guidelines and what do they mean for your business? We’ve broken them down below for you, but you can also access the official document here.

  1. Certification of Carbon Removals – create a new business model that will reward land managers for sustainable practices.

  2. Zero-Emissions Mobility – set up rules for transportation and logistics in order to move towards zero-emissions mobility and follow up on the zero pollution plan, which would improve quality of water and air. There will also be restrictions set in place in order to manage microplastics, biodegradables, labeling, and packaging which will benefit the environment. 

  3. Greener and Sustainable Agriculture – new rules on pesticides, encourage biodiversity, and implement farm to fork strategies.

  4. Circular Economy – strengthen owner’s rights to repair products instead of replacing them to extend the life of products, create a sustainable product policy.

  5. International Transition into a Green Society  – finance for less developed countries and carbon trading for housing and transport.

  6. Renewable Energy – wider spread use of renewable energy, support and guidance for implementation of renewable energy.

Effects on Businesses

According to the CBI, there are plenty of benefits for businesses but these do not come without obstacles. We are expecting that there will be a larger implementation of renewable energy, better energy efficiency, increase of waste reduction, and policies to lower emissions. Businesses will need to adopt these rules to comply with the European Climate Law and their goals for the member states which are binding. 

It is clear that there will be support for those using renewable energy as the EU has promised to release a “communication on solar energy, which will focus on specific applications and address existing barriers.” There will also be more financial spending going towards green initiatives and sustainable practices. 

The new measures under the Circular Economy Action Plan (CEAP) are working to put sustainable products in the forefront of production within the EU as well as encourage consumers to purchase sustainably. There is also a focus on producing less waste while introducing a reuse method within the production sectors. The CEAP also wants to make global efforts to ensure that a circular works for all nations, businesses, and people. 

There will now be higher standards for production, with both social and environmental sustainability in mind. There will also be a higher demand for information on production of goods, and an increased cost to make the transition to a greener economy and production cycle. 

One of the major negative side effects of these new guidelines is the lack of consistent information on policy change, as well as an increased cost for more sustainable practices and an increased competition within the EU market for EU products. However, these rules will bring benefits to businesses in the long run. There will be a better international market with better cooperation. There will be support for smaller businesses to help them make the transition to a sustainable way of production. The EU will provide tools and guides on sustainable production, practice and policy which will give businesses the opportunity to improve themselves.

The new policies bring many greener initiatives for businesses and although it means great change, it also means great hope for the future. With more sustainable practices we can ensure protection for our earth and a cleaner, better environment.

Written by Quinn Donovan. Photo by Guillaume Périgois.

Quinn Donovan