Op-ed written and signed by the Directors of 10 European sustainability think tanks, members of the Think Sustainable Europe network, coordinated by IEEP, as a reply to Ursula von der Leyen’s political guidelines, as well as to the three key areas outlined in the Strategic Agenda of the European Council published in June.

An edited and shorter version of this op-ed was published on the Sustainable Views website and is accessible at this link.

According to the Strategic Agenda of the European Council published in June, the new EU mandate will focus on competitiveness and security. This is understandable if the aim is to convince European citizens and economic players that the EU can provide protection and strength at a time of geopolitical and economic turbulence. But this should not replace a political project and a long-term vision of Europe, and what’s in it for its citizens and well-being. This is why social and environmental sustainability objectives should be brought back into the political debate.

In her political guidelines presented to the European Parliament in mid-July, President Ursula von der Leyen seemed to reflect on some of these concerns by announcing that the European Commission would “significantly increase its funding for a just transition across the next long-term budget”. However, she also made it clear that competitiveness would be a key priority of the Clean Industrial Deal, which will replace the European Green Deal in the future.

As sustainability think tanks, we have contributed to the design, negotiation and first stages of implementation of the ambitious European Green Deal. Despite the multiple crisis caused by the pandemic, the Russian invasion of Ukraine and the consequent increase in costs of living, the green transition has also provided a robust horizon for the transformation of the EU’s economy as it aligned well with the objectives of security of supply and strategic autonomy in a resource scarce continent.

So far, the European Green Deal has been a catalyzer of economic transformation by providing a clear direction to all innovators and entrepreneurs across the continent, and a signal to the EU’s partners and competitors around the globe.

But it would be a mistake to consider it only as a result of a specific moment in 2019, when climate and environment were high on the agenda during the previous EU elections. Environmental and social sustainability has been important to the Member States for decades, and it has been a long-term objective for their policies and public investments.

With a new legislature, based on the 2024 EP election results, comes also a new political balance. But many elements plead for continuity. While many citizens support the objectives of energy and climate transition, others are also worried of being economically constrained and losing their autonomy and sovereignty over key decisions that concern them directly.

As expressed in numerous demonstrations across Europe last spring, what matters to the citizens is the method for the transition and the fairness in effort sharing.

In this context, the European Council agreed in June on three major priorities in its Strategic Agenda: competitiveness and prosperity; security and power; and freedom, democracy and the social model. The environmental transition is not one of them, but it underlies and pervades all of them.

As sustainability think tanks, we argue that there is an economic, political and strategic justification to that, and not just an environmental one, given the structural and long-term nature of the competitive advantage that the EU could gain from environmental and social sustainability. This will be particularly apparent in the possible tensions and deeply political debates that will probably take place on three structural ambiguities that are key in the Strategic Agenda:

• Long-term competitiveness and the definition of new European industrial policies

Some governments are arguing in favor of industrial policies that would reindustrialize or restore the EU’s competitiveness. However, it remains unclear what such policies should be and how they could be financed. Rather than relying purely on the relaxation of state aid rules that would favor mainly Member States with substantial fiscal capacity and pose enormous challenges to the internal cohesion of the EU, there are also alternative industrial policies, including support to innovation, demand side policies, a mix of regulation and subsidies, etc. To achieve these goals, clear social, economic and environmental objectives should be set for policies aiming at a sustainable transformation.

• International partnerships for shared prosperity and security

As a reply to the US Inflation Reduction Act (IRA) and Chinese industrial policies, the EU appears to be shifting away from a very liberal trade agenda to a much more protectionist approach, pushed by its citizens and entrepreneurs that feel directly the competition from other regions in their jobs or in their business accounts.

While the European defense industry is gaining increasing political support in many Member States, and concerns of strategic autonomy and security of supply are extremely important, there is still ample room to define how the EU wants to connect to the rest of the world. Europe is now dependent on both raw materials and technologies coming from other regions. Therefore, it would seem appropriate to build partnerships with other regions, rather than to focus on decoupling.

The former European Commission tried to define a derisking rather than a decoupling strategy towards China, taking into account the inevitable interdependence between the two blocs. Currently, there is no consensus between Member States on what would be the best type of trade relationships with China, USA, or Asian, African and Latin American partners. The question remains: what kind of balance can be struck between protectionism and free trade in the EU institutions?

We need a much deeper understanding of the nature of partnerships that we intend to propose to third regions. Beyond solidarity with least developed countries, there is a real economic and politico-strategic argument in favor of building transcontinental industrial partnerships at the scale of green industrial ecosystems. Similarly, we should build mutual rather than unilateral technological dependencies, diversify these dependencies, and offer a long-term political and economic horizon for these partnerships between other regions and Europe.

This would really differentiate Europe compared to other global economic powers, including the USA. Even if the USA were to develop a Green Marshal Plan to complement the IRA and disseminate these new technologies, Europe needs to do things differently and integrate third countries as co-innovators from the onset. And even if China will be disseminating its technologies for many years, the added-value and long-term interest of EU players is to provide alternative angles to innovation (such as business and financing models, the role of public services, to name a few) in such industrial partnerships.

Last but not least, the EU should insist on maintaining proper due diligence on social rights, environmental impacts and governance. Which brings us to the third priority and challenge that would require further debate.

• Social model and rights-based approaches as a source of competitiveness?

The Strategic Agenda insists that social resilience is key to European security. While it has been severely weakened, the EU’s social model remains an important element of its economic differentiation. Due diligence and rights-based approaches also ensure that green innovations are both environmentally and socially sustainable. This is currently a particularly contentious issue. Not because some governments in certain Member States are challenging the democratic and rights-based values of the Union itself, but because many economic players who had invested themselves in transparency and reporting of their environmental, social and governance impacts, are afraid that the compulsory reporting regulations (such as the corporate social responsibility directive, and corporate sustainability due diligence) or the rule to protect whistleblowers can be the source of high administrative and transaction costs, as well as long procedures, and hence a burden that reduces EU competitiveness with respect to other economic powers.

When looking at the long-term competitiveness and stability of investments in specific territories, the reverse argument could be made and sweep away these fears. Examples of this can stem from the experience of European international development players in third countries, where the EU’s framework on social, environmental and rights-based due diligence may require additional steps for projects to be validated but will have the co-benefit of reducing risks, thereby ensuring long-lasting and sustainable investments.

In Europe itself, there are many examples of infrastructure or manufacturing investment projects that after having undergone consultative procedures, are guaranteed more political stability locally and therefore also more economic viability.

These are only examples, and by no means an exhaustive list of advantages related to the social model and right-based approaches. But they should be taken into account when discussing the future of the European industrial policy.

As sustainability think tanks, we call for a more holistic approach by promoting also the social and environmental aspects of the Clean Industrial Deal. To reach this goal, we need further dialogue between the Member States and between different sectors, if we intend to find feasible solutions to these key issues.

Signed by the following directors of Think Sustainable Europe, the European network of sustainability think tanks:

Eero Yrjö-Koskinen, Institute for European Environmental Policy (IEEP), Belgium

Sébastien Treyer, Institute for Sustainable Development and International Relations (IDDRI), France

Nathalie Bernasconi-Osterwalder, IISD Europe, Switzerland

Ioli Christopoulou, The Green Tank, Greece

Vit Dostál, Association for International Affairs (AMO), Czech Republic

Christoph Heinrich, Ecologic Institute, Germany

András Kéri, Energiaklub Climate Policy Institute, Hungary

Alexander Müller, TMG Think Tank for Sustainability, Germany

Måns Nilsson, Stockholm Environment Institute (SEI), Sweden

Maria José Sanz, Basque Centre for Climate Change (BC3), Spain

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About Think Sustainable Europe

Think Sustainable Europe is the first and only established European network of think tanks on sustainability, providing policymakers across the Europe with sound, science-based analysis and recommendations and with the mission to increase the ambition on the European Green Deal implementation.