EU industrial strategy and EU SME Strategy

Story

09 April 2020

By Platform

Competitive sustainability

Competitive sustainability is set to be one of the guiding principles in industrial development in Europe for the future. Competitive sustainability for the companies is the assumption that while improving their environmental performance they keep or enhance their competitiveness. In order to make the transition, industry needs to undergo a fundamental transformation.

This leitmotiv underpins the EU Industrial Strategy and the EU SME Strategy launched by the European Commission on 11th March, 2020 as a part of the Industry Package. These two strategies followed closely the European Green Deal (2019) and the Circular Economy Action Plan (2020) which set the direction and drew the attention to the important role that industry needs to play in the transition towards a more circular and more just and sustainable society.

EU Industrial Strategy: industry needs to undergo a fundamental transformation

The Industrial Strategy acknowledges that the transformation process of the European economy will ‘require new technologies and investments’. Innovation will also have to remain at the heart of European industry in order to allow the creation of new products, markets and business models while keeping the European competitive advantage and global lead in social, labour and environmental standards.

To allow European industry to become greener and more circular, industry will need a secure supply of clean and affordable energy and raw materials. What is more, in order to stimulate the uptake of clean technologies, decision-makers on all levels should create lead markets in clean technologies.

Part of the European industry has started the transformation gradually moving from a business model relying entirely on sales of products to a model whereby the sale of fewer products is complemented by the offer of services attached to the product. This process is known as a shift to product-service systems or servitisation providing additional revenues for manufacturers while reducing the overall number of sold products. To discuss the issue of new circular business models the Interreg Europe Policy Learning Platform organized a webinar on Circular Business Models.

The transition will also be associated with serious challenges. For example, certain energy-intensive sectors (such as electricity production, cement production, etc.) and lagging regions (such as the ones relying heavily on coal) need to make a more radical transformation with the goal of reaching a climate-neutral future.

Incorporating circularity across the economy is the way ahead in industrial transformation, meaning a radical change in the ways products are designed, used and disposed of. Experience has shown that there is a strong business case in the transformation with a high potential for job creation and improvement of the financial bottomline of individual companies. The example of Zero Waste Scotland (Interreg Europe RETRACE project) illustrates how Scotland has been exploiting the benefits of this transformation through a massive support to Scottish businesses in their transformation to the circular economy.

In addition, both the EU Industrial Strategy and the Circular Economy Action Plan (CEAP) underline the importance of a new sustainable product policy framework focusing on high-impact product groups including initiatives on the common charger, circular electronics, batteries and the textiles sector.

How the SME Strategy contributes to a climate-neutral economy

The SME Strategy emphasizes the fact that the transition to a climate-neutral economy ‘requires the full mobilisation of industry’. Capacity-building and support for the transition to sustainability and digitalisation is one of its three pillars. As some SMEs struggle with the transition to new more sustainable and circular business models, the Enterprise Europe Network (EEN) will provide dedicated Sustainability Advisors and other sustainability services. In the field of eco-innovations and in relation to the Green Deal priorities the EC will provide 300 MEUR in 2020 to innovative high-potential SMEs and start-ups as part of the wider piloting of the European Innovation Council (EIC).

Why are these two strategies important for regions and cities?

Regional and local authorities are key to enabling the transition of the economy to a more sustainable path. The EU strategies will be given an operational framework with the publication of more detailed legislation and guidance by the Commission. This will enable regions and cities to mirror such initiatives at local level, thus providing even more legitimacy to the already implemented regional policy frameworks that strive for sustainability of the local economic ecosystem.

Across Europe, regions and cities already deploy awareness raising and capacity building networks and tools for industry and SMEs. They facilitate circular business models such as industrial symbiosis. In 2019, the Policy Learning Platform organized a workshop on ‘Opportunities for the uptake of industrial symbiosis in European regions’. Also, Green Public Procurement (GPP) is one of the tools for triggering an offer of greener products and services by industry.

Industrial transformation and transition are at the heart of a number of Interreg Europe projects approaching the topic from different perspectives: