“Green business” in modern European political economy

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Modern global challenges affected national socio-economic development through numerous directions: e.g. digitalisation (and other outcomes of the 4th industrial revolution), sustainability requirements, climate mitigation efforts and “green growth” agendas; the latter have ignited fundamental reforms in political economies, as well as in European and national guidance’s systems. Almost all spheres of socio-economic development in the European continent and in the EU member states, in particular, were subject to cardinal transition’s reforms; the corporate sector have been affected too.   

Among existing triple priorities in the European growth model: i.e. green, digital and socio-economic resilience’s measure, the so-called “green business” is occupying a vital place. These entrepreneurship priorities jointly contribute to a more general trend –so-called “green transition” – with the objectives of competitive sustainability, fair and inclusive growth for the benefit of nature and environmental protection.
The European Commission underlined that the member states’ economy already in the process of “undergoing unprecedented transformations” reflecting major trends linked to the geopolitical and security spheres aimed at reinforcing long-term sustainable growth patterns by working closely with all public and private sectors in the member states. In this regard, the Commission has provided the states with key-supporting investments to assist reforms required to achieve EU-wide common new objectives.
It has to be noted from the outset that the notion “green business” is depicted from similar terms used in the EU’s political economy, such as “green growth” and “green transition”, as well as generally used “green” agendas in the new facets of socio-economic development.

European Growth Model is described in the Commission’s press release (2 March, 2022) in: https://economy-finance.ec.europa.eu/economic-and-fiscal-governance/european-growth-model_en

There is definitely a need for a thorough analysis of the EU-wide and national governance facilities in budgets and financing to activate existing (the European Single Market and Capital Markets Union, etc.) and new business opportunities offered to SMEs and start-ups to improve the efficiency of sustainable funds allocation in the member states. Additional financing plays a key role when it comes to lifting barriers linked to implementation and application of all recent (mainly during 2019-23) EU legal executive measures to support “green business” transformation along sustainable-type finances, trade, taxation and competition facets.
However, the term “green business” used in the paper shall not be misleading: although it has become a kind of “buzzword” in political, economic and corporate discourse, the term’s “green” aspect just reflects complex sustainability, digital, climate and environmental (to name a few) consequences in modern corporate strategies’ transformations. Eco-entrepreneurs in the “green sector” are already active in such spheres as for example energy efficiency, circular economy, sustainable growth, “green” taxation and trade, etc.
Interesting enough, that “going green” is increasingly becoming a recent global trend because of its potential benefits to society, environment, economy and wellbeing; this trend has also penetrated some scientific spheres and disciplines.

Akinsemoly A. The Principles of Green and Sustainability Science (2020). Springer Publ. – 407 pp. ISBN: 978-981-15-2493-6. DOI-https://doi.org/10.1007/978-981-15-2493-6. Source: https://link.springer.com/chapter/10.1007/978-981-15-2493-6_1

“Green transition” and structural changes
One of the main directions in European perspective industrial growth is the EU-wide “green industrial plan” which enhances the competitiveness of Europe’s net-zero industry and business and aims at accelerating transition to climate neutrality. Most optimal way to do so is by creating a more supportive environment for scaling up the EU’s manufacturing capacity for the net-zero technologies and products required to meet European ambitious climate targets.
As soon as almost all countries have started to invest massively in green growth and innovation, along already quite evident positive consequences for global environment, these efforts are facing numerous difficulties in “green transition”. The EU institutions are taking active measures to secure level playing field both globally and regionally: it means getting better at nurturing European business and industry – from hydrogen to chemicals, from biotech to nanotech – as the goals of the new industrial plan for Europe, which was announced in February 2023.

On Industrial Plan’s four pillars in: https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal/green-deal-industrial-plan_en

The European governance in modern member states’ socio-economy transformation relies on two equally important pillars: structural investments and sustainable reforms; implementation of ambitious and mutually reinforcing investments and reforms are instrumental in delivering the “green transition”. On the one hand, investment is pivotal for national resilient and sustainable growth, while being a prerequisite for an accelerated green and digital transition. On the other hand, states’ political economy’s structures and the regulatory framework are required to facilitate and support new directions in the socio-economic transformation to be conducive to investment. Reforms are required at all levels: e.g. removing existing investment barriers, improving product and labour market’s functioning, as well as modifying human consumption patterns and strengthening socio-economic resilience.

Reference to Commission communication on “green, digital and resilient economy” (March 2022). In: https://economy-finance.ec.europa.eu/system/files/2022-03/com_2022_83_1_en_act_part1_v5_0.pdf

Modest results
Presently, at the mid-term in the sustainable development goals (so-called SDGs to be implemented by 2030) which were adopted at the end of 2015 at the UN General Assembly by about 200 states, the progress is rather modest. It is not only that the 17 ambitious SDGs are numerous in approaches: from ending extreme poverty and combating inequality to addressing climate changes’ emergency, to health care, to air and water quality and so on and so forth. The main reason is that they are not that easy to accomplish. Though progress towards SDGs is monitored around the world, as well by the EU institutions and the member states governance; however, half-way to the final, the process is far from being optimal and in some SDGs the situation is even reversing.
Some analysis acknowledged that using modern digital “applications” and new technologies could have definite positive effects on SDGs implementation through the “green growth” development patterns by large and small companies, by economic sectors in general, as well as by industries and policy-makers. Thus, a couple of years ago the “Global survey on Sustainability and SDGs” (2020) acknowledged that the SDGs were rather unknown globally, including “very mild” SDG-awareness in socio-economic sectors: 50% globally and 56% in the EU. This is the reason that presently, the SDGs are still “rarely addressed in classical business studies and research fields of economics”, the global survey acknowledged: among various SDGs, most positive attitude has been attributed to such goals as SDG-12 “Responsible consumption and production”, SDG 13 “Climate actions” and SDG-4 “Quality education” with the most important SDG-17 “Partnerships for the goals”.

Source: Global Sustainability Survey (2020) prepared by KPMG in:

European guidance
One of the major EU-wide guidance’s instrument, the NextGenerationEU program, NGEU includes the Recovery and Resilience Facility, RRF and the EU yearly and long-term budgets; the latter also provides support for the European temporary measures to mitigate unemployment risks in an emergency (so-called SURE program); additionally, there is Coronavirus Recovery Investment Initiative, CRII aimed at softening the impacts of the post-pandemic calamities and providing additional boost to corporate recovery and resilience.
Oriented towards national growth in the EU states, the RRF contributes to resilience by supporting reforms and investments through grants and loans; this mechanism is meant as a temporary instrument, however, due to focus on sustainability, green growth and sustainable investments its impacts will be long-lasting. Major share of private and public investments in the states are presently aimed at financing new transitional patterns and enhancing resilience; but, at the same time, the states’ political objectives shall ensure a gradual reduction of public debt.

Vital EU-guidance instrument, the European “green deal” (started to operate in 2019) sets out the roadmap for making the member states’ economy sustainable in a “fair and inclusive manner”, by tackling climate and environment-related issues. In line with the Paris Agreement, the EU has committed to reducing greenhouse gas emissions, GHG by at least 55% in 2030, compared to levels in 1990. In an effort to mobilise all policies and align current rules with the European Green Deal objectives, the Commission has proposed the EU-wide “fit-for-55” package aimed at revising relevant policy, economy and business strategies.

More in: Communication on The European Green Deal, COM (2019) 640 final. See also European Parliament resolution of 15 January 2020, and European Council conclusions of 11 December 2020. In addition, the EU has committed to climate neutrality by 2050. Additional sources: Regulation 2021/1119 establishing the framework for achieving climate neutrality (OJ L 243, 9.7.2021, p. 1); and Commission Communication on ‘Fit for 55’: Delivering the EU’s 2030 Climate Target, COM (2021) 550 final in: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52021DC0550

The Commission has also identified a number of additional actions needed in order to meet the environmental objectives of the European Green Deal, including the protection of biodiversity and ecosystems, tackling pollution and decoupling economic growth from resource use.

Additional “communication-type” information is available in, e.g.: Communications on EU Soil Strategy for 2030, COM (2021) 699 final; Communication on New EU Forest Strategy for 2030, COM (2021) 572 final; Communication on EU Biodiversity Strategy for 2030, COM (2020) 380 final; Communication on A new Circular Economy Action Plan, COM (2020) 98 final; and Communication on EU Action Plan: towards zero pollution for air, water, and soil, COM (2021) 400 final. Besides, more information is in the “Green transition as a complex European growth strategy”, in: https://www.integrin.dk/2023/04/28/green-transition-as-a-complex-european-growth-strategy/. General reference: https://commission.europa.eu/document/41514677-9598-4d89-a572-abe21cb037f4_en

European “green transition” offers the general governance for the corporate sector to take leading positions in emerging green business and technology directions. Thus, building on this opportunity, the green transition is becoming a catalyst to modernise EU industry. Two possible opportunities are reflected in the EU-wide research analysis of European strategic autonomy (adopted in 2021) with a “continued pursuit” for the member states’ renewable energy technology leadership, sustainability and the implementation of circular economy’s paradigm. These and other measures would also reduce corporate dependency on imports of critical materials and resources.

Reference to: Cagnin, C., Muench, S., Scapolo, F., Störmer, E., Vesnic-Alujevic, L. Shaping and securing the EU’s open strategic autonomy by 2040 and beyond. Publications Office of the European Union, Luxembourg, 2021, ISBN 978-92-76-41020-1, doi:10.2760/414963, EUR 30802 EN, JRC125994. In: https://rmis.jrc.ec.europa.eu/uploads/library/open_strategic_autonomy_2040_online_1.pdf

Quite remarkable is the Commission President’s recent acknowledgement of the European “green business” concept: “We need an enabling business environment, a workforce with the right skills and access to raw materials for industrial needs”. Besides, the Commission President underlined that not only European competitiveness depends on it but businesses are the “backbone of European power”; therefore, the EU has to assist the states in removing obstacles to the work of SMEs as these companies “must be at the centre of present transformations”.

Commission President State of the Union address-2022 in: https://state-of-the-union.ec.europa.eu/system/files/2022-09/SOTEU%202022_Brochure_EN.pdf ; doi: 10.2775/940894.


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