written by Giulia Faedo, Sustainable Finance Expert – Luxemburg.
The European Union has already laid important foundations to bring the countries of the Union towards a sustainable and zero-emission economy in order to strengthen the competitiveness of the European economy and is accelerating its policies to achieve sustainability objectives during the Covid-19 crisis, including: the Green Deal (new growth strategy for the EU), the European Climate Law (aimed at making the zero emissions target in 2050 a binding target for all EU countries) the Sure, (European temporary support tool to mitigate unemployment risks in the pandemic emergency) and the much discussed recovery fund, Next Generation EU.
While there is still disagreement on fund figures and their distribution among the various countries, there is full agreement on the fact that the fund does not want to save a system but transform it, focusing on the green and digitization.
“Backsliding into business as usual because it is faster, it is easier, and it is what we know, just isn’t an option. Of course it is more difficult to do something we don’t know yet, but it would be wrong and a disservice to next generations if we just did what we knew out of convenience”. The words of the vice president of the European Commission, Frans Timmermans, are clear as he speaks of the Green Deal as a necessity that has become a priority and as a growth strategy for the European continent.
Timmermans recent speech in Cernobbio was just as frank when he specified that the funds provided by the European Union for economic recovery must be invested at least for 30% in sustainable economy and to tackle climate change.
He also specified that such a huge package of resources for reforming EU countries will perhaps never arise again and that the Commission will be firm and clear in checking that EU members are going in the right direction, alongside explaining how the national plans will have to foresee investments in technological adaptation as well as in sustainable growth for society and the environment.
More recently, Ursula von der Leyen, president of the European Commission, has suggested raising environmental investments to 37% and increasing the emission reduction target from 40% to 55% for 2030, in order to reach 2050 with zero emissions at European level.
Similar tones were also used by Italian vice president of the European Investment Bank, Dario Scannapieco, during his hearing at the (Italian Edit.) Chamber of Deputies last September 1st, on the identification of priorities in the use of the recovery fund. “We must act immediately on growth if we want to restart Italy; there is no more time available and this requires discontinuity with respect to the past.”
Scannapieco recalled that in the last 30 years Italy has never managed to grow more than 2% per year (with the exception of the year 2000 for technical reasons).
From 2000 to 2009, Italy had an average growth of 0.4%. The vice president provided worrying data on the decline in the Italian investment / GDP ratio and on average values which are lower than the average of other European countries. Aiming for the country’s recovery and growth, its investments in research, development and human capital have a strong potential to contribute to future growth.
The hearing talked about the sad and consolidated position of Italy among the last European countries in terms of spending capacity of European structural and investment funds often with races and bank projects made to spend money and which have very little impact on the economic framework or effectiveness of it.
Scannapieco identifies poor planning as the main reason for this inability to spend. He cites data and reports from the Italian Court of Auditors which show that a more effective use of resources is closely linked to an effective improvement in planning and management capacity at central and regional level.
Finally, similar to Timmermans, the Italian vice president of the EIB defines the recovery fund as a unique opportunity to support growth and thus bring the debt / GDP ratio back on a path of greater sustainability. Italy has historically proven to bring out the best of itself during periods of greatest crisis and has again demonstrated this by fighting against an unknown, unpredictable and dangerous enemy such as the Covid-19 virus.
These policies are providing precious and unique resources to enable Italy to recover, start again and aim for a more sustainable future. Italy needs to use them well. Those who remain in the past with models that don’t work and cannot be recreated will not survive the economic challenge ahead.
There are learnings to be had from a devastating pandemic that violently broke a system and forced everyone out of their comfort zone. The crisis pushed Italy towards greater digitization, forcing them to adapt to teleworking and distance education, requiring new behaviours and new ways of thinking and producing.
Mary Robinson, president of Ireland from 1990 to 1997, suggests four important lessons we can learn from the pandemic.
The first is that collective behaviour matters. Social distancing has been and remains our defence weapon against the virus.
The second lesson is that governments matter and proudly highlighted the success of governments with women at the helm. Governments that quickly made drastic decisions in consultation with the scientific community have been able, better than others, to contain the spread of the virus and safeguard health systems.
The third lesson is that science matters and is worth listening to.
Finally, the fourth lesson is that compassion and empathy help us to unite and to fight inequalities as it becomes more and more evident that disparities and inequalities weaken humanity as a whole.
Giulia Faedo is a sustainable finance expert with international experience in various industry sectors. She is currently in charge of the integration of sustainability in a Luxembourg financial institution. She explains “There is no shared definition of integrating sustainability into an organization and its business, nor a consolidated recipe for achieving it. The first fundamental step is the creation of a common language given the variety of terms often used interchangeably. Integration is the result of multiple actions and multiple tools combined, and we always have to remember that each organization is made up of people”. “I find the meeting and dialogue between the environment, society and the economy stimulating, their understanding and mutual respect to achieve and safeguard a sustainable development”.