The European Union released its “Competitiveness Compass,” a roadmap centered around the creation of European economic growth opportunities, this past week. The Compass, created by the European Commission, emphasizes the crucial role of sustainability in prosperous economic growth, especially as further development occurs in the industrial and technological sectors. The US has similar aspirations of domestic growth but is rolling back regulations meant to protect the environment and worker, all but guaranteeing the concentration of these anticipated gains in the hands of the ultrawealthy.
Why It Matters
Economic Resiliency: The EU has renewed its commitment to a resilient, sustainable economy during a period of global political turmoil and following several years of economic hardship in the region.
European Economic Development: Europe is open for business, implementing specific plans to simplify operational red tape, reduce intra-European barrier, and increase domestic investment without compromising sustainability standards.
US Missteps: Despite the US’s status as the globe’s second highest pollute, the Trump administration’s aggressively pro-business agenda is poised to roll-back a staggering amount of environmental regulations in a bid to spur unchecked growth built on the back of fossil fuels, risking dire climate ramifications for a few points of GDP growth.
Details
Europe has affirmed the widely held belief that sustainability is crucial to equitable economic growth with the Competitiveness Compass. At its core, the Compass seeks to grow European industry and increase domestic opportunities; pro-business agenda has no inherently ties to sustainability which makes the Compass so significant due to its prioritization of climate efforts.
When plans to review reporting and disclosure guidelines were first announced, there were concerns that the EU may deprioritize climate efforts, but this is not the case. Instead, they have simplified sustainable finance and due diligence regulations by over 25% (35% for small- or medium-sized enterprises) to encourage investors to redirect funds into the Eurozone.
The Competitiveness Compass focuses on three core areas: Innovation, Decarbonization, and Resilience. The EU is investing in technological progress, covering AI, biotech, and more. Simultaneously, measures are being proposed to lower energy prices and encourage decarbonization in the grid, particularly in energy intensive sectors. The EU is also taking steps to reduce external dependence, both in trade and energy.
While the EU remains uncompromised in its climate goals, the Trump administration has kicked climate concerns to the curb. Throughout the entirety of his political career, Trump has been a staunch advocate for fossil fuels and has conflated climate goals with the economic hardships of the average American. Trump’s self-proclaimed “pro-business” policies have been less-than-successful thus far as the US stock market lost over $1 trillion in market capitalization this past week. This crash is largely unrelated to climate concerns but highlights the reality that the US will face for the next 4 years: decoupling economic plans from sustainability does not solve anything.
The Competitiveness Compass is a step in the right direction for the EU; reducing the reporting burden on businesses while still prioritizing sustainability is progress. While the Compass doesn’t mandate climate action or response, cementing economic growth and climate awareness as two core components of the Eurozone’s future will help to increase transparency and reduce climate impact. Sustainability has been left behind in the US, and the Compass has positioned the EU to hopefully pick up some of the global slack.
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