Big changes ahead for businesses and consumers around the world
Do you believe it’s time for governments around the world to take climate change more seriously? Then take heart and read on! The European Union’s ambitious climate change programme, the European Green Deal, is underway and ramping up fast. As you’ll see below, it has huge implications for businesses (and consumers) in Australia and New Zealand and right around the world.
First climate-neutral continent by 2050
You may have heard the Green Deal dubbed ‘the European carbon border tax’. In fact, it’s so much more. Replace that tagline with ‘first climate-neutral economic bloc by 2050’ and you’re closer to understanding the Green Deal’s ambitions and impact.
That’s right: the European Union’s 27 member states want to become the world’s first climate-neutral continent. The aim’s an ambitious one: members plan to reduce carbon emissions by 55% by 2030 (compared with 1990 levels), and without offsetting overseas. (Planting trees in a third world country does little to change consumer or producer behaviour in Munich, Athens or Prague.)
Major supply and demand side changes
The programme to meet this 2030 aim is an ambitious one too. Pricing mechanisms, financial regulation and consumer protection legislation will tackle emissions from different angles.
For example, on the supply (production) side, legislation will force producers to disclose the full environmental costs of producing their products, and to significantly reduce these impacts. On the demand side, consumers and investors will have the information they need to make decisions that take more account of environmental factors.
A third industrial revolution
These changes are part of what the EU is calling ‘a third industrial revolution’ which ’decouples economic growth from resource use’. Accompanying these changes, environmental and social programmes aim to address energy poverty, reduce dependence on external energy sources, create jobs and growth, and improve health and wellbeing. The impacts of the changes are recognised too, with transition funding of more than NZ 5 trillion from the EU institutions alone.
What the Green Deal means down under
So why take notice of the Green Deal in Australia and New Zealand? For several reasons. Firstly, the EU is home to many of the world’s largest global businesses and plays a leading role in global financial markets. Decisions made at the continent’s boardroom tables have impacts round the globe.
Secondly, the Green Deal involves constitutional Climate Law that binds EU members and governments over time. In other words, European nations are taking climate change seriously.
Thirdly, the Green Deal touches many more than the EU’s 27 member states. With global supply chains more interconnected than ever, the programme will affect businesses in every trading nation across the globe, and particularly export-led nations like Australia and New Zealand.
Some (of many!) things to think about
Is your business a subsidiary of a company headquartered in the EU? Then expect to be asked to contribute local data to your company’s environmental and financial reports in coming years.
Do you export products to the EU? Then you’ll likely need to disclose your product’s carbon tally and the proportion of recycled content in your product.
Does your business export food products? Then expect to include information about those products’ environmental footprints (including carbon, water, and biodiversity) on your product labelling. If you use food products as raw materials, you’ll have this information available to guide your decisions.
Do your products contain batteries? If yes, can the batteries be replaced so consumers can keep using your product? And do the batteries contain recycled materials? They’ll need to. This is ‘circular economy’ thinking in action.
Do you claim that your product is ‘environmentally made’? Then you’ll need to prove this, with a Life Cycle Assessment (LCA) of your product’s environmental footprint.
Time to start planning!
The Green Deal recognises that member states need to make major changes – and urgently. New Zealand and Australian businesses do too. So, if concepts like product LCA, Cradle to Cradle assessments, circular economy thinking and sustainability reporting are new to you, now’s the time to start planning – and adapting your products to suit.