A System Change Compass - charting the path to the European Green Deal

David Newman, Managing Director of BBIA, considers the key messages of the new report 'A System Change Compass: Implementing the European Green Deal in a time of recovery', co-authored by SYSTEMIQ and the Club of Rome.

While it may seem clear what the objectives of the European Green Deal (EGD) are for the EU to become carbon-neutral by 2050 and to decouple economic growth from resource use, how we achieve these is open both to debate and to fierce opposition.

A new research report by SYSTEMIQ and the Club of Rome lays down the pathways we need to walk in order to reach the ambitions of the EGD. It asks key questions for the decision-makers looking to implement the EGD to consider: how do we get to a sustainable society and what are the metrics we use to measure that?

The report provides a compass to help us navigate the debate and assess the measures that need to be taken to reach the goals of the EGD. As such, it serves as a useful tool for all economies investing in the future of their societies in a world still shocked by the impact of the COVID-19 pandemic.

Among lead authors is Dr Janez Potocnik, Co-Chair of the International Resource Panel, member of the Club of Rome, SYSTEMIQ partner, and former EU Commissioner for Science and Research and for the Environment.

The key premises which underpin the report are as follows:

“First, our global and tightly coupled human-ecological system is failing”. While we have enjoyed 50 years of economic growth, wealth has been poorly distributed and the resource crunch predicted in 1972 by the Club of Rome is finally here. Our survival as a species is in question due to the impact of humans on the ecological balance.

“Second, deep transformational change is needed, and we now know that when faced with an emergency, people and societies can make change work”. The pandemic has proven change can happen quickly and the EGD sets out that plan and a transformational vision of our future.

“Third, we recognise that we struggle to bring this transformational vision to life.” Opponents argue for business-as-usual or delays, and even supporters fight about which sector, action or policy is more or less important. Meanwhile, as we argue, the need for change increases daily as our predicament worsens.

The report calls for joined-up thinking to tackle both the ecological breakdown and the economic crisis as two sides of the same coin, welcoming the leadership of the EU to resolve these issues.

The report creates a new tool – a compass – for decision-makers in the EU, at three levels:

  • shared policy orientations at the overall system level

  • systemic orientations for each individual economic ecosystem that delivers societal needs

  • a shared target picture and roadmap for Europe’s next industrial backbone and champion industries.

The compass is predicated upon 10 principles that support the EGD and the UN Sustainable Development Goals (SDGs) and these lead us to complementary considerations we need to challenge in order to make systemic change.

System change compassAt a foundational level, the report sets out 30 overall policy considerations that are required as a checklist for policymakers to overcome their challenges. These include redefining natural resource use by aligning current legal and financial systems with circular and carbon-free principles, and redefining consumption by educating consumers and providing them with information to empower them to make informed choices.

Then, its analysis looks at the economic backbone of future European industrial development within the boundaries of European ecosystems.

Finally, the report highlights 50+ industrial champion sectors that represent specific, investable and job-creating opportunities for long-term prosperity in Europe.

The 10 'redefining' principles
The 10 'redefining' principles
Pictured is a graphic which looks at how we need to redefine our 10 principles and recognises how difficult that debate is going to be. Much of what the report calls for will be anathema to those opposing a fairer, more open and democratic society. The report recognises that without establishing these guiding principles, the subsequent debate will be extremely difficult.

These 10 high-level overarching principles translate into 30 system-level policy choices for decision-makers. One that is particularly dear to my heart is around incentives: we invest perversely in promoting climate change rather than in combating it. Globally, pro-fossil fuel direct production subsidies are between two and four times those given to renewable energies. This is absurd if we believe climate change threatens our societies.

A System Change looks at which economic ecosystems those 30 policy orientations would best support and comes up with a shortlist of eight economic ecosystems. Four of these directly meet a specific societal need (healthy food, intermodal mobility, built environment, consumer goods) and four are supporting economic ecosystems (nature-based, energy, circular materials, information and processing).

From here, the work then focuses upon which industrial and economic systems within each of the eight economic ecosystems should be subject to policy and fiscal stimulus and comes up with around 50 interconnected champion industries – or champions – that the EU can grow as engines of long-term prosperity while meeting EGD/SDG goals.

The list of 50 champions is too long for this article, which serves as a stimulus to read more.

To give you a taste, see the champions for healthy food.

Champions for healthy food
Some of the 50 champion industries
In this way, the report maps out the targets and the policies needed to implement real change and to position the “European economy alongside true societal needs while respecting the safe operating space of planetary boundaries”.

Such a roadmap is a useful tool for policymakers everywhere. The time for talk finished long ago, and, as I make clear in my little book on these issues – Everything is Connected: Understanding a Complicated World – the key to getting these challenges lined up and progressed for the future of humanity is moving the political system to spend our money wisely on regeneration rather than on ecological destruction.

The EGD has realised this and this report lays down how to achieve those goals. It is well worth the read.