Adapting a business to Europe’s green agenda

Epson’s strategy for sustainable, eco-efficient growth

 Adapting a business to Europe’s green agenda

2015 was a watershed year for sustainability policy globally and in Europe. It not only saw the signing of the landmark Paris Agreement, but the launch of the UN’s sustainable development goals1. Europe’s sustainability agenda has been further invigorated by these international developments.

This means that businesses in Europe will need to stay compliant with an expanding range of European sustainability policy, however, great opportunities will also be created for agile businesses as a result of the changing market dynamics.

This article provides a break-down of some of the major current EU sustainability initiatives that will affect the way businesses compete in the single market over the coming decades.

Europe and the changing goalposts

Europe’s sustainability goals seek to meet “the needs of present generations2 without jeopardising the ability of future generations to meet their own needs.”

When Jean-Claude Juncker became President of the European Commission in 2014, he listed 10 priorities, the third of which was entitled ‘energy union and climate3’. The EU's strategy comprises five closely related, mutually reinforcing dimensions:

  • supply security
  • a fully integrated internal market
  • energy efficiency
  • climate action
  • research and innovation

By promoting and rewarding this culture throughout the EU, he aims to deliver three significant targets by 2030:

  • a 40% cut in greenhouse gas emissions from 1990 levels
  • at least a 27% share of renewable energy consumption
  • at least 27% energy savings compared with the business-as-usual scenario

These targets may seem ambitious, but there is an increasingly influential push to aim higher4. That push for greater efficiency and stricter goals will define the future of the European landscape.

Energy efficiency trends in the EU

Energy efficiency is the headline act of sustainability policy. It is the most notable and most quantifiable in impact. The EU set itself a 20% energy saving5 goal by 2020, a goal which a 2015 progress report suggests will fall short by up to 2%. If the EU is to achieve the more ambitious goal of 27% savings by 2030, then a greater focus on efficiency will be vital.

There is already a drive to reduce energy intensity of buildings, currently accounting for around 40% of the energy consumption in the EU. Public bodies lead the way, committing to renovate 3%6 of government building stock annually, and all new building stock in the EU must be nearly energy neutral7 by the end of 2020.

At the forefront of energy saving is an increasing focus on energy audits mandated in the EU’s Energy Efficiency Directive8. With an implementation deadline of December 2015 for the first stage of the scheme, we are already beginning to see the growing impact of energy efficiency in business competitiveness.

Of course a wider smart energy policy9 does not just benefit efficiency, but aims to deliver sustainability and energy security for an EU which spends more than €1 billion per day10 on imported energy. Diversification of energy supply (including renewables) and increased interconnectivity is thus set to grow in importance in the coming years. 

A circular landscape

Eco-design and the energy efficiency of products is an area of sustainability delivering significant success, with expected energy savings11 for Europe of 175 million tonnes of oil equivalent (Mtoe) by 2020. The expansion of the scheme to cover a greater range of products in future is likely. This scheme also gives us an insight into an increasingly important area of focus - the life-cycle of products.

The EU’s plan for a ‘circular economy’12 is an ambitious step towards moderating the full life-cycle impact of our consumption, from production to waste.

Among the stated goals are:

  • Recycling 65% of municipal waste by 2030
  • Recycling 75% of packaging waste by 2030
  • Promotion of economic instruments to discourage landfilling

Businesses need to be increasingly aware of the full life-cycle analysis of sustainable practice. Although still in its infancy, the economic value of this initiative to the EU is projected to reach €1.8 trillion by 203013, demonstrating that sustainability policy provides opportunities as well as obligations for the private sector.

Businesses will also need to be more transparent. Sustainable practice will increasingly mean empowering citizens to make their own choices, based on product performance data and perceived organisational practice. Public tenders in the EU will also become increasingly strict in their efficiency and sustainability requirements as we progress towards the 2030 goals.

The future of EU carbon markets

The EU’s carbon market is a market-driven system for reducing carbon emissions by big business. However the scheme has been dogged by perceptions of backhanded trading undermining true organisational change, with sensationalised stories14 of malpractice rising to prominence in more sceptical areas of the press. More recently the market has been challenged by low carbon prices as a result of economic downturn. There’s little doubt, however, that the world’s largest carbon market is delivering15 greener business.

We will see significant reform16 in the market in the near future due to low production levels and resultant surplus of emissions in the wake of the financial downturn. We can expect to see moves to reduce the current surplus and better improve the system’s ability to react to widespread market changes.

Creating a sustainable business model

The European Union’s policy frameworks provide companies with a clear guideline as to the future sustainability obligations within the single market. It is now the obligation of businesses to implement reforms in order to play their role in protecting jobs, the environment and society.

However, companies that want to remain competitive in the long term, should not just view these policies as another regulatory compliance issue, but as an opportunity.

The EU policies have been drawn up in such a way as to ensure that the sustainability performance of your products and your company will become an increasingly important ‘buying criteria’ for public tenders and private buyers alike.

To thrive in the new world businesses need to adapt to these market development look for opportunities to create new products, services and communications that will comply with EU rules and win over consumers.

Footnotes

1www.un.org/sustainabledevelopment/sustainable-development-goals/

2ec.europa.eu/environment/eussd/

3ec.europa.eu/priorities/energy-union-and-climate_en

4www.theguardian.com/environment/2016/mar/07/eu-open-to-increasing-2030-carbon-target-says-top-climate-negotiator

5ec.europa.eu/energy/en/topics/energy-efficiency

6ec.europa.eu/energy/en/topics/energy-efficiency/buildings

7ec.europa.eu/energy/en/topics/energy-efficiency/buildings/nearly-zero-energy-buildings

8ec.europa.eu/energy/en/topics/energy-efficiency/energy-efficiency-directive

9ec.europa.eu/energy/en/topics/energy-strategy

10ec.europa.eu/energy/en/topics/imports-and-secure-supplies

11ec.europa.eu/energy/en/topics/energy-efficiency/energy-efficient-products

12ec.europa.eu/environment/circular-economy/index_en.htm

13www.mckinsey.com/business-functions/sustainability-and-resource-productivity/our-insights/europes-circular-economy-opportunity

14www.telegraph.co.uk/finance/newsbysector/energy/6912667/Carousel-frauds-plague-European-carbon-trading-markets.html

15www.theguardian.com/sustainable-business/2015/jul/15/eu-carbon-trading-system-made-business-greener

16ec.europa.eu/clima/policies/ets/reform/index_en.htm