Europe’s efforts to reduce carbon footprint requires Sustainable Leaders

Following the announcement of President Von der Leyen during her first State of the Union speech, the European Commission has explained in a communication how the target of reducing CO² emissions to 55% of the 1990 level within 2030 can be reached. Reaching this objective requires a horizontal and holistic approach to the different policy domains and economic sectors. To create innovative and sustainable business ecosystems, it’s about providing managers and workers with adequate transition and leadership skills. This article reviews the new EU climate law’s applications and highlights complementary measures to ensure effective implementation.

Advancing on the sustainability revolution, to make sure Europe can become the first carbon-neutral continent by 2050, is the main political priority of the current European Commission, which will soon celebrate its first year in power. The European Climate Law Regulation, tabled in March 2020, represents the “core” of the EU regulatory efforts to achieve this objective. The regulation sets a series of intermediary steps (and a precise timeline) to achieve the “irreversible and gradual reduction of greenhouse gas emissions” in Europe. To complement the legal provisions of the law, a communication was adopted on September 17^th setting the level of reduction of GHG emissions to 55% of 1990 levels (to be reached by 2030) and detailing how different policy domains can contribute to achieving this result.

The level of reduction proposed is higher than the one currently applying (set to 40% of 1990-levels).  The higher ambition translates into a projected increase in the costs of emission reduction of 90 bn€ per year (between 2021 and 2030). Compared with a 3-5°C warming scenario and its accelerating costs for business and society, see also the Global Risks Report 2020, this can be seen as a necessary investment in the future. Furthermore, an impact assessment released by the European Commission in the same occasion precises how these higher costs will be balanced by a reduction of expenses in other areas: attaining a 55% reduction in GHG emissions will bring to a reduction of health costs by at least 110€ bn and lower energy imports for more than 100 bn€ between 2021 and 2030.

To reach the objective, the communication identifies the two sectors in which “ambitious” measures are necessary – the industrial one (which includes the production of energy, construction and transportation) and the use of land, which mainly includes agriculture and other primary-sector activities – and details the direction in which these measures must go. The identified measures go in the right direction. An important factor to effectively succeed in the transition consists in strengthening the know-how of managing this transition: in businesses and public administrations alike.

Example – legislative changes for net zero   To achieve the emission goals, a list of legislative acts in the European Union will be submitted to revision : the regulation of the Emission Trading System needs to be expanded to new sectors (like maritime transport) in a way that takes into due account the “distributional impacts” of such changes (i.e., to ensure their fairness) the improvement of the legislation on land and forestry use to ensure that the net carbon-sink effect continues growing sustainably; an update of the energy efficiency legislation (which will include the launch of the so-called “Renovation Wave” for buildings) the provisions currently regulating the production and the use of renewable energies up to the reinforcement of emission standards for vehicles sector-specific initiatives will be complemented by integrating climate action both in the domain of its foreign policy (to transform the EU into a “positive example for the rest of the world”) and as a component of the strategy in every other internal policy domain. Examples: from taxation policy to social and employment policies, from structural funds to agriculture and rural development, their capacity to contribute to reaching emission-cutting goals and ensure a just transition will become a primary consideration of EU-policy makers.

Besides strengthening the political ambitions of the European Commission to deliver on the sustainability transition, this communication demonstrates clearly the necessity to intervene on multiple levels, due to the complexity of the interdependence of the different areas that are relevant to achieving climate neutrality. To be able to grasp this complexity and adopt the right systemic approach, all concerned actors who will be contributing to the implementation of these measures on the field need to develop the necessary competences.

Managers are in the frontline of successful transitions, as they drive change within the structures in which they operate. In order to do so, more attention shall be put on their needs for this transition, as well as the necessary training opportunities put in place. With its Sustainable Leadership Project, CEC European Managers is currently investigating what these needs are and what must be done to accelerate Sustainable Leadership development by managers in Europe.