Over the past 40 years Europe has developed the most comprehensive, ambitious and binding environmental legislation existing anywhere today. And with good reason: these standards should be seen as a unique economic advantage.
Well-designed and well-implemented environmental legislation has improved the environment and quality of life, as well as driving innovation, job creation and growth in Europe. This is one of the main messages to come out of the latest edition of ‘The European environment – state and outlook’ (SOER 2015) report we published this month.
Coming at a time when Europe is still growing out of the economic crisis, and debating where to spend scarce resources to stimulate the economy, SOER 2015 illustrates that investing in strong environmental standards is the right choice.
In many parts of Europe, the local environment is arguably in as good a state today as it has been since the start of industrialisation. We breathe cleaner air and enjoy cleaner water. Almost a fifth of Europe’s land is now protected. Industrial pollution has decreased, we use material resources and energy more efficiently, and recycling rates are up. Since 1990, the European Union cut greenhouse gas emissions by about 20%, while the economy grew by more than 45%.
Apart from a better environment, there is also a solid economic case for strong environmental standards. The European environmental goods and services sector grew by more than 50% in size between 2000 and 2011. It has also been one of the few economic sectors that has flourished since the 2008 financial crisis, adding about 1.3 million jobs, generating export earnings and contributing to Europe’s economic competitiveness.
There are also clear indirect economic benefits, such as savings in healthcare costs and more productive ecosystems. Of course there might be a cost to business, but as environmental regulation often emphasises energy and resource efficiency, such standards may help to insulate businesses from two of the vulnerabilities of European industries and economies: large natural resource and energy dependencies, which represent a significant portion of the average production cost.
There are other strong reasons why businesses should be moving fast to reduce environmental impacts. The most recent World Economic Forum report on global risks to business also emphasises that the top risks for the next decade are less economic and more environmental, related especially to climate change impacts, water crises, the quality of biodiversity and ecosystems, and human-made environmental catastrophes. While many of these risks are global, Europe can have a strong negotiating position on these issues through its already credible and effective policy frameworks and processes.
Europe’s niche
The EU has given a strong signal that environmental protection will guide its economic development and prosperity over this century in its 7th Environment Action Programme ‘Living well within the limits of our planet’. In little more than a generation, this means fundamental decarbonization of the economy, stepping away from our linear mine-produce-use-throw-away model of production and consumption, protecting natural systems, and taking environmental health issues more seriously when decisions are made.
This will require fundamental changes in the systems of production and consumption that are the root cause of environmental problems – energy, food, transport, buildings and so on.
Such changes will mean that we will have to overcome the way we are locked in to unsustainable systems, for example with infrastructure that dictates the way we travel or produce and distribute food and energy.
To grasp the challenge of 2050, our report shows that public and private investments will need to be better focused towards a low carbon and circular economy. This will also require serious rethinking of systems, which directly or indirectly influence the choices made: finance and investment systems, tax and subsidy systems, R&D choices, and education. These changes will naturally have big implications and create opportunities for business.
Based on our report, we think Europe should feel confident about the future. Nowhere else on the planet have 28 countries agreed to such ambitious binding legislation, in areas ranging from hazardous chemicals to water quality, from greenhouse gases to waste management. And as environmental issues become more pressing around the world, this is one area where Europe can lead.
The ambition of a low carbon and circular economy, which improves people’s wellbeing, is creating real opportunities. Europe’s place in the world is changing, with less than 10% of the global population and major economic players rising in other parts of the world. But in this changing world, environmental innovation can become Europe’s niche.
This will require the courage and political will to move beyond the 20th century and fully embrace the challenge of the 21st century, of living well and within the limits of our planet.
