Sustainability: now is the time to collaborate and shape future policies
For a long time, the issue of business sustainability was not a priority for the Dutch government. Because sustainability was seen as more of a private-sector reputational challenge (that was closely related to corporate responsibility), Dutch policymakers did not consider companies’ sustainability efforts as a fertile area for public policy.
However, times have changed. In 2015, the Paris Climate Agreement was signed, which brought a new sense of urgency to the debate. In 2019, the Dutch Supreme Court ruled that the government has an active obligation to combat climate change from a human rights perspective. Ever since, the topic has remained high on the political agenda, and discussions regarding sustainability have become an aspect of almost every policy area.
Moreover, since the new European Commission sees climate action as its flagship, the issue is dominating the EU agenda as well. The EU hopes to become the front-runner in global climate policy action, committing itself to climate-neutrality by 2050. The Green Deal that was launched last year covers every sector, and puts sustainability and climate policies on the forefront of every policy area. Economically, the Green Deal is seen as a growth strategy centered around the transition to a clean and circular economy. On the 16th of September, president Ursula Von der Leyen in her State of the Union Speech officially called for a reduction target of at least 55 percent to 2030; a significant increase from the current target of 40 percent.
Hence, it is necessary for Dutch companies to be aware of the plans and ambitions of national as well as European policy makers. They need to not only be well-informed of these efforts, but also to take the opportunity to have a say in future policies geared towards a sustainable economy.
Europe’s regulatory powers vs. the Dutch “polder model”
The European legislation for plastics that was introduced last year is a first example of how a new sense of urgency has resulted in very fast regulatory action on a continent-wide level. Here, the case of plastic soup in the ocean led to an exceptionally fast commitment to completely phase out the ten plastic products that are most found on beaches and in seas – thus compelling the industry to rapidly switch to sustainable alternatives. This spells big changes for the business sector: Sustainability is no longer a “nice to have,” but has evolved into a regular business aspect that should be taken into account in nearly every business decision.
Greater awareness of the market aspects of sustainability has changed the interactions between business and policy makers. Clear regulatory frameworks are more important than ever to ensure a fair and level playing field for industries. At the same time, the government needs to engage the business sector for input and support. The practice of creating plans together – the “polder model” – is a key one for the Dutch government, and has historically ensured support from the sector via a “bottom-up” model of government regulation (rather than a top-down approach). This is how the Dutch climate agreement was launched last year: through round tables that allowed various stakeholders to have their say on the way climate policies should be shaped in every sector.
Green recovery after COVID-19
Nevertheless, the coronavirus crisis has made sustainability a more prominent point of discussion than ever before. On the one hand, some stakeholders think that the crisis means that ambitious climate targets should wait, and that companies should be given more time to implement changes. At the same time, there is a loud group of stakeholders arguing that sustainability is more important than ever: in this view, green recovery plans should be made to ensure emissions are cut after the coronavirus threat lifts. The remarkable fact, though, is that these pro-green statements are no longer coming only from NGOs and climate activists.
Indeed, eight Dutch multinationals, united as the Dutch Sustainable Growth Coalition (DSGC), recently urged the Dutch government to make sustainability the cornerstone of its recovery plans, stating that “their enterprises are fully committed to embed sustainability as a leading principle in their business models” in the Green Recovery Business Statement. This statement was signed by leading companies like Unilever, Shell, KLM, and AkzoNobel. They underline the need for an investment schedule based on the SDGs and the Paris Climate Agreement, to ensure an economic recovery that centers sustainability in the short and long terms. According to the signatories, only clear objectives and roadmaps will provide companies with the confidence to invest in green, net-zero emission solutions.
A long-term vision is crucial
The Dutch government, however, still seems to be searching for its role and vision regarding sustainability, which in some cases results in short-term focused and constantly changing policy choices. This is due to the fact that climate is still a sensitive topic lacking consensus among leading politicians. Many in the business sector, by contrast, would prefer to see clear choices made by the government – the better to provide companies with a steady long-term perspective on investments, specifically in the area of Dutch ambitions and targets. Recently, Roger Miesen, CEO of RWE, warned that companies are reluctant to invest in Dutch energy capacity because of unsteady climate policies regarding the mix of energy: last period we saw the government investing first in new coal power stations, then deciding to limit gas production, choosing for biomass, and recently suggesting to consider nuclear energy. As a result of this uncertainty, the Netherlands could run the risk of not meeting its climate targets.
Across the board, national considerations have led to significant differences in long-term priority choices between European countries. These differences are a threat to companies operating in a global world, as well as for the attractiveness of Europe as a business environment. To maintain the competitiveness of Europe as a whole, a common vision is preferred; cooperation and integration and a common European effort should be prioritized in policy choices.
How can business leaders shape the road to sustainable recovery?
The public and private sectors need to collaborate now more than ever to provide clear solutions in the transition to a climate-neutral society. Only together are we able to move to a clean and sustainable economy: investing in sustainable competences, innovations, and knowledge is needed to make that transition. Government has to make the right choices to provide the right business environment: choices geared toward creating clear, long term perspective and targets, as well as a fair and level playing field. A European approach should be rooted in that perspective – and geared toward standing strong as one united continent that is making the right strategic choices.
For all of these reasons, it is crucial for companies to be aware of the dynamics in politics, and of relevant insights in policymakers’ considerations that are touching upon their business operations. Every opportunity should be taken to provide policy makers with essential expertise and knowledge. Because the choices that are made today regarding climate policies and sustainability requirements will have more consequences than before for every business sector.