Industrial policy: sustainability must go hand in hand with competitiveness and strategic autonomy

The EU needs to reassess the priorities of its industrial policy in light of the pandemic and the conflict on Europe's eastern border: this is what emerged from a conference hosted by the European Economic and Social Committee (EESC) on 4 March 2022.

The Conference, entitled "A sustainable future for European industry", was held in cooperation with the European Commission and the French presidency of the Council of the European Union.

Opening the Conference, EESC President Christa Schweng stressed the need for a cooperative approach to shaping EU industrial policy: "We must work in partnership with industry, public authorities, the social partners and all relevant stakeholders when building a sustainable future for European industry. In doing so, we must leave nobody behind".

While the EU and its Member States are still dealing with the aftermath of the COVID-19 crisis, the dramatic events in Ukraine have shocked the continent, exacerbating the need to look into and address strategic dependencies in each industrial sector. Most speakers saw the conflict as one more strong argument to keep pushing for green objectives, although some felt that the circumstances called for a rethink of our green goals, and even envisaged a return to coal in Europe.

Competitive industries

"New emerging factors, such as inflation, debt, defence, and energy, are completely changing the industrial strategy that we need to pursue. We now need to rethink the objectives of the transition. Strategic autonomy and defence must be our new imperative," urged MEP Carlo Calenda, former Italian Minister for Economic Development.

The Executive Vice-President of the European Commission, Margrethe Vestager, said "We must recognise that a crisis, regardless of its nature, can cause major supply or demand shocks that affect our industries and can fragment the Single Market. In strategic areas ranging from technology to food and health, Europe's industrial policy must find the ways and means to reduce one-sided reliance on others. Concretely, this means deepening and completing our Single Market, as well as strengthening its resilience in times of crisis. It also means protecting our Single Market against external influence, whether in the form of distortive foreign subsidies or coercion attempts by foreign governments."

Sustainable Industries

The transition to sustainable energy consumption and production represents an opportunity for Europe to modernise its industrial foundations. "We need a comprehensive transition in our industrial operations, which will require significant investment and time. The successes of the battery industry have proven that stakeholders are able to act very quickly if policymakers launch supporting projects in a timely manner," says Thomas Courbe, Director-General for Enterprise at the French Ministry of the Economy, Finance and the Recovery.

Fair Industries

The green and digital transition must foster fair and socially just job creation conditions, in line with the principle of leaving no-one behind. The goal should be to reduce greenhouse gas emissions as much as possible at the lowest possible socioeconomic cost, explained Sandra Parthie, EESC rapporteur on Updating the new industrial strategy and director of the Brussels office of the German Economic Institute. "Skills are the key factor for enabling people to benefit from this transition; shortages in value chains and of skilled workers are undermining Europe’s ability to recover rapidly from the pandemic and become truly resilient", she said.

Industry is central to our economies because it generates wealth, creates jobs, and fuels our welfare systems. Therefore, a sustainable industrial strategy should capitalise on regional specialisation and recognise the importance of local businesses. According to Eddy van Hijum, rapporteur for the European Committee of the Regions on the SME Strategy, "in order to truly become more resilient, we need to address the impact that recent developments have on our local businesses and deliver a strategy that works for them."

United Industries

In these times of growing geopolitical tensions, it is important to encourage the development of a cohesive vision of the European Union and its industries. According to Thierry Breton, European Commissioner for the Internal Market, we should strive for "A Europe that invests in cutting-edge products and technologies to remain competitive and generate quality jobs. A Europe that leads the markets of the future. And a Europe that is a "factory" that equips itself not only to meet its own needs but also to conquer world markets."

Margrethe Vestager closed the conference by stressing that "Unity is the child of discussion; it comes from dialogue. It is not something that can be imposed on one another. We have made a fundamental, strategic choice to create a sustainable future where no one is left behind and we will not waver. This kind of positive change will require everyone to play their part."

Background

This conference is the culmination of a series of webinars on a new EU industrial strategy that the EESC organised between June 2021 and February 2022 to help shape EU industrial policy for the future. Each webinar was hosted by a different thematic section looking at industrial policy issues from different angles.

Key findings from these webinars include the following:

• Economic operators often perceive sustainability requirements as a complication and a burden rather than as new opportunities. To remedy this, we should develop a discourse that is easier to understand, a kind of 'sustainability grammar'.
• Corporate behaviour must change. Not only do we need to integrate sustainability into the corporate governance and risk management of financial companies; it also needs to become part of how we deal with financial exposure.
• With fewer than half of Europeans having basic digital skills, we need a skills revolution to enable a smooth transition to a digital and green economy, but more importantly to ensure that no one is left behind.
• The choice of indicators is crucial, as it can predict or exclude an outcome. Some social indicators, such as age or the skills profile of the workforce in the different ecosystems, are essential to anticipate future change, but also to build an inclusive recovery.
• The supply of primary raw materials must be one of the solutions to building European resilience by combining social dialogue with environmentally friendly practices.
• Global supply chains should be more resilient, diversified and responsible. Trade will have to play a key role in promoting sustainable economic recovery, and enabling companies to rebuild and reorganise their damaged value chains.