Submitted by G. Kebla on Thu, 08/12/2022 - 09:12
8 December 2022 - The publication of the first edition of the Competitive Sustainability Index (CSI) was welcomed in Brussels today by Paolo Gentiloni, European Commissioner for the Economy, as a ground-breaking new approach to measuring the EU’s competitive sustainability performance, the EU’s strategy for global leadership in the sustainability transition.
Developed by the University of Cambridge Institute for Sustainability Leadership, Breakthrough Energy and Cambridge Econometrics, the Competitive Sustainability Index is the first index to develop metrics to measure competitiveness in the context of the transition to a smart, green, climate neutral economy, addressing immediate needs for resource resilience and energy security as well as social equity, stability, public legitimacy and material prosperity.
Incorporating newly available data from the ECB and Eurostat that draws on the EU Taxonomy to assess economic performance in all the key innovation ecosystems as well as the economy more widely, and endorsed in its theoretical framework and statistical coherence by a thorough audit by the JRC, the CSI offers the first holistic picture of how countries perform when environmental, social and governance (ESG) factors are also properly incorporated into economic strategy. It therefore has the potential to be used as a monitoring tool for the European Green Deal overall.
Key findings from the Competitive Sustainability Index include:
- The transition to climate neutrality is driving improved competitive performance through innovation across the EU. The case for investment in climate innovation is stronger than ever.
- Member State leaders in the different elements of the new CSI are also frequently the global ‘best in class’. While performance in the Index isn’t uniform, gaps can be addressed by countries forming clusters to co-develop innovative approaches.
- Stable, rights-based and publicly accountable governance is necessary to create the most successful innovative, sustainable and competitive EU economies.
- Strong competitive performance in the ‘green’ transition does not require compromise in the social dimension – indeed when linked to governance performance and innovation, this can underpin that success.
Key recommendations for policymakers emerging from this first edition of the CSI include:
- The EU should enhance and target investment and innovation through a stronger industrial strategy to significantly improve its performance on the six key ecosystems analysed if it is to retain its leadership in the global cleantech race to achieve a net zero emissions economy.
- In terms of the EU’s overall approach to the transition to sustainability, the institutional framework developed by the EU and the European Semester process is one that provides a strong basis for doing this, not least as it also seeks to integrate the two dimensions where the CSI indicates that performance is weaker.
- Allocating dedicated funding to ensure capacity building in critical areas of public administration could increase countries’ performance on governance framework conditions potentially resulting on enhanced competitive sustainability results. Having a public spending target for competitively sustainable R&I, enshrined in legally-binding EU law - such as a reformed Stability and Growth Pact - could ensure that competitively sustainable research and innovation (R&I) is deployed at the scale that is required.
- EU countries (in particular smaller ones) should leverage CSI data to pick a limited number of innovation ecosystems where they have the highest potential to lead in the near future, and prioritise R&I investments on those ecosystems. This approach should ideally be aligned with country’s ongoing ‘smart specialisation’ process.
The improved and more granular collection and analysis of taxonomy-related data by Eurostat and ECB will enable better performance assessment by the CSI but also other indices and processes. Rapid progress on the valuation of natural capital is also important for improved measurement of environmental performance.
The CSI demonstrates an integrated approach to measuring competitiveness in the transition to sustainability and offers a more holistic perspective than approaches that do not seek to do this and are therefore partial in their insights and conclusions. It will benefit from further scrutiny, use and application, as well as the development of metrics and data sources by others which will strengthen its approach and outputs. A second edition envisaged for 2023 and more thereafter will seek to incorporate changes that reflect this.
Welcoming the index, EU Commissioner for Economy Paolo Gentiloni said:
"The transition to a sustainable economy will reshape global competitiveness and will drive an economic strategy shift. Those who adapt faster to the new competitive sustainability paradigm will become the leaders of the new economy, and the EU aims to be a forerunner in this for that reason.
“The Competitive Sustainability Index is an excellent and helpful addition to the tool-box available to the EU and others in seeking to measure performance in a way that is innovative and integrates the different elements in a coherent way. It will be of much utility to the Commission and its Annual Sustainable Growth survey and to the development of the competitive sustainability approach. We welcome it and encourage others to use, test and develop it to our mutual benefit."
Clare Shine, Director and CEO, University of Cambridge Institute for Sustainability Leadership (CISL) said:
"Despite our achievements and those of the communities of like-minded individuals and organisations seeking to achieve a model of genuinely sustainable development, the urgency and complexity of the inter-connected challenges involved is greater than ever. The new Competitive Sustainability Index is an important contribution to our thought-leadership activities in the EU and beyond, so I am delighted to see it come to fruition. I am grateful not only to colleagues at CISL for their dedication and excellent work on it, but also to the partner organisations who supported it, notably Breakthrough Energy. Partnerships such as this are essential if we are to succeed in our efforts, and I am confident that we can and will build on this, as the CSI hopefully becomes a reference point and useful tool for further work in the months and years to come."
Ann Mettler, Breakthrough Energy, Vice President, Europe, said:
"New times call for new intellectual frameworks and policy paradigms. As policrises ripple through the world in general and Europe in particular, many concepts that have hitherto guided thinking and public debate seem oddly fatigued and out of touch with the realities of today. Competitive sustainability promises to answer the current policy void, providing a key barometer for how Europe can remain relevant, successful and prosperous in the years and decades to come. By zeroing in on leading countries and best practices, we hope the Competitive Sustainability Index can instil a race to the top. Pertinent data analytics are therefore key to charting a path towards a brighter, cleaner and more resilient future for all of us."
Jolita Butkeviciene, Director of the Joint Research Centre at the European Commission said:
“There is no doubt that we need a rapid transformation of our societies. The Competitive Sustainability Index can be a game changer for measuring EU’s sustainability transition. At the JRC, we looked into the reliability and statistical soundness of this index and our analysis confirms that the Competitive Sustainability Index is a well-designed and technically sound framework that can help to stimulate public interest and policy discussions on the multiple aspects that shape a country’s competitive sustainability.”
