The European Green Deal is a holistic approach to delivering transformational change and leading the transition towards a new paradigm.
On 11th December 2019 the European Commission unveiled its vision for delivering transformative policies on eliminating pollution, climate, energy, mobility, sustainable industry and circular economy, natural capital, environmentally friendly food, a just transition, sustainable investment, greening of public budgets, R&D, innovation and education.
- 2050 climate neutrality: and increased ambition for the 2020s. The Commission is proposing the first European Climate Law by March 2020 to put climate neutrality into law and a plan to increase the EU’s greenhouse gas emission reduction target for 2030 to at least 50% and towards 55% in a responsible way. Contingent on different levels of ambition worldwide and the EUs increased ambition, the Commission will propose a carbon border adjustment mechanism, for selected sectors, to reduce the risk of carbon leakage.
- A sustainable industry for a circular economy: delivered through the adoption of an industrial strategy and a new circular economy action plan by March 2020. Principles for stainable products and performance, including measures to improve the energy efficiency and circular economy performance of the information and communication technology sector.
- Sustainable investment: adopting the taxonomy for classifying environmentally sustainable activities, embedding sustainability into corporate governance, increasing disclosure on climate and environmental data so that investors are better informed on the sustainability of their investments and reviewing the Non-Financial Reporting Directive to maximise transparency. We expect the Commission to step up its regulatory and non-regulatory efforts to tackle false green claims and reduce the risk of 'green washing'.
A rewiring of the economy towards sustainability is upon us. The 2020s is set to be a defining decade for the adoption of policies and regulation to transform economic development.
Business will have to play a very active role to capitalise on opportunities in resource efficiency, energy sources, new products and services, new markets and resilient operations and value chains.
Some of the proposed policies will take time to crystallise, yet businesses can prepare by considering:
- Evaluate current business models in light of sustainability and towards a new growth strategy.
- Sustainability requires the involvement of multiple business functions, which include executive management, finance and risk management.
- Integrate climate risk into the organisation's overall risk management.
- Establish adequate governance mechanisms and differentiate between the board's oversight and management's role and responsibilities.
- Prepare for increasing demands for disclosures, including climate-related financial disclosures.
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