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A System Change Compass Implementing the European Green Deal in a Time of Recovery October 2020

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A System Change Compass Implementing the European Green Deal in a Time of Recovery October 2020 A System Change Compass implementing the European Green Deal in a time of recovery october 2020 Co-authored by Funded by In collaboration with A System Change Compass - Implementing the European Green Deal in a time of recovery Climate neutrality by 2050 is our binding This report clearly reaffirms the powerful commitment to the European people. guidance that the European Green Deal “ It is our promise for a fair, resilient and “ can and is giving to EU policy making green economy – a promise we and specifically to the economic must uphold through the successful recovery efforts. It documents a huge implementation of the European range of initiatives and actions that Green Deal. I am inspired by A System “ can bring the Green Deal to life and Change Compass and feel confident charts a way forward to build on this its unique and practical approach will direction. By bringing together the enable us to deliver the EGD – now. latest insights and discussions The Club“ of Rome and SYSTEMIQ have provided Pascal Canfin, MEP, Chair of the a powerful new framework for business Environment, Public Health and Food and policymakers to consider. Safety committee Harry Verhaar, Chair, Corporate Leaders Group Europe The European Trade Union Confederation supports the idea of “ having a System Change Compass to As we recover from Covid-19, we implement the European Green deal in must build back better and continue a time of recovery. A green and social “ to act with ambition and urgency on recovery has the potential to create addressing climate and environmental new quality jobs while ensuring that we pressures. This inspiring report recognises reduce our GHG emissions and remain the important role the financial sector within the limited resource boundaries has to deliver the European Green of our planet. To achieve a just transition Deal. Public financial institutions like the that is fair for all and protect most European Investment Bank can make a vulnerable, it will be essential to have significant contribution to the transition strong social foundations“ as well as to carbon neutrality and to making our an inclusive governance where trade economies greener, climate resilient unions, workers and civil society are at and more inclusive. Guided by its the table. Climate Bank Roadmap 2021-25, the EIB Group will align its financing activities Luca Visentini, General Secretary, with the principles and goals of the European Trade Union Confederation Paris Agreement by the end of 2020. It will also further develop its financing and advisory offer in order to address green investment gaps – in the“ EU as well as outside – and to mobilise private capital in support of the objectives of the European Green Deal. Werner Hoyer, President of the European Investment Bank A System Change Compass - Implementing the European Green Deal in a time of recovery Foreword by Ursula von der Leyen, President of the European Commission The European Union is undertaking an unprecedented effort: a green and digital transformation. The European Green Deal and the NextGenerationEU recovery and resilience facility will shape the social, economic, and ecological architecture of the continent for decades to come. To use their potential to the fullest and to build the Europe we all want to live in, we must adopt a systemic approach. We introduced the European Green Deal as Europe’s new growth strategy – one that aims to transform the EU into a fair and prosperous society, with a modern, resource-efficient and competitive economy that emits zero net emissions of greenhouse gases in 2050 and achieves economic growth decoupled from resource use. Recent extreme weather events and the coronavirus pandemic have exposed the greatest challenges of our time: to keep ourselves and our planet, but also our economy, healthy. This report provides guidance for a systemic realisation of the European Green Deal by addressing the real drivers of resource use and environmental pressures. It examines what our future industrial landscape could look like and how we may rebuild our economy through future-fit industries. It takes societal needs as a reference point for all economic activities, embraces resource productivity as a source of future competitiveness, and provides a framework for progress on the European Green Deal. Implementation of the European Green Deal and the coronavirus recovery are two sides of the same coin. Europe has the potential to emerge from the current crisis to become a fairer, more prosperous, more sustainable and more resilient society. People in Europe are rightly calling for progress on the European Green Deal. The need to act on this challenge is overwhelming and urgent. This report will give us welcome counsel on how best to act. i A System Change Compass - Implementing the European Green Deal in a time of recovery Preface With the European Green Deal (EGD), the European The report is centred on a System Change Compass: Commission showed unprecedented leadership for this describes the transformations required to change necessary change at a European level. The EGD also sets the drivers of our socio-economic system. It focuses on the ambition for the rest of the world. While that ambition is economic development as the main driver of increasing clear, its implementation remains uncertain. natural resource extraction and consumption. Linked to the Compass are 30 necessary policy orientations at the system The effects of climate change and the overexploitation level. These orientations are not prescriptively detailed; they of natural capital are well known, and well addressed by offer guidance, indicating the direction to follow. the EGD: this report touches on them only briefly. Instead, we focus on the drivers and pressures that lead to these Additionally, we introduce a new system-based environmental challenges, and on solutions and required logic founded on societal needs – unlike the sectors changes to the current economic operating model. conventionally used to describe the economy. We outline We examine the system change that the authors see as 8 economic ecosystems, following the example of necessary to deliver the ambitious EGD vision, together with ecological ecosystems and functioning within the safe a convincing and consistent answer to the current health- operating space of our planetary boundaries. The economic related crisis. ecosystems are designed to deliver specific resource- intensive societal needs (healthy food, built environment, This report does not claim to address all questions related to intermodal mobility and consumer goods) or to support multiple system changes, such as those arising from global that delivery (nature-based, energy, circular materials, and commitments to the Sustainable Development Goals or information and processing). Each has subsystems: a non- the Paris climate agreement, yet it still contributes to their exhaustive list of economic opportunities consistent with the implementation. According to the International Resource Compass orientations and based on an economy founded Panel, trade-offs among various SDGs are unavoidable; on societal needs. the most efficient strategy to mitigate them and resolve the environmental and developmental challenges is through Our actions now will define the future of our society. We sustainable consumption and production. This report is must decide whether we accept a future of inequality, thus based on a natural resource perspective. The way exploitation and environmental degradation, or choose a we treat resources largely determines economic results, future that ensures human survival and creates well-being as well as environmental and health outcomes. They link and dignity for all. The EGD is a brave call to action, but it the economy and competitiveness on the one hand, and is no longer enough to simply act. We must do so quickly, climate change, biodiversity loss, pollution and health systemically and together. This report aims to achieve impacts on the other. We also acknowledge that the EGD’s exactly that. We hope you will find it inspiring and useful. success depends on other systemic challenges – around essential social, cultural or political changes. Martin R. Stuchtey Sandrine Dixson-Declève Janez Potočnik Co-Founder of SYSTEMIQ and former Co-President of The Club of Rome, Co-Chair of the International Resource Director of the McKinsey Center for Business Chair of Economic and Societal Impact Panel, Member of The Club of Rome, and Environment of Research and Innovation (ESIR) expert SYSTEMIQ Partner, and former European group, Ambassador of the Energy Transition Commissioner for Science & Research and Commission for Europe for the Environment ii A System Change Compass - Implementing the European Green Deal in a time of recovery Authors, contributors and acknowledgments This report is co-authored by SYSTEMIQ and The Club of Rome. It has been funded by the SUN Institute Environment & Sustainability and was drafted in collaboration with the MAVA Foundation. The team that developed this report comprised: Matthias Ballweg, Christina Bukow, Faustine Delasalle, Sandrine Dixson-Declève, Bertram Kloss, Isabel Lewren, Julia Metzner, Julia Okatz, Milan Petit, Katharina Pollich, Janez Potočnik, Anna Schwarzmann, Martin R. Stuchtey, Adrien Vincent The authors have benefited from the insight and contributions of the following individuals and institutions. We are thankful for their support, critical feedback and helpful discussions that have improved the report. From The Club of Rome
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