How Will EU Competitiveness Compass Impact Sustainability?

The European Commission says that Europe has not kept pace with other major economies over the last two decades due to a “persistent gap in productivity growth”.
It has launched its Competitiveness Compass, aiming to provide a strategic and clear framework for its work in reversing this trend.
The framework has three core areas for action:
- Innovation
- Decarbonisation
- Security
President of the European Commission Ursula von der Leyen says: “Europe has everything it needs to succeed in the race to the top. But, at the same time, we must fix our weaknesses to regain competitiveness.
“The Competitiveness Compass transforms the excellent recommendations of the Draghi report into a roadmap. So now we have a plan. We have the political will.
“What matters is speed and unity. The world is not waiting for us. All member states agree on this. So, let's turn this consensus into action.”
The Draghi Report
The Draghi Report was produced by Mario Draghi, former European Central Bank President, in 2024.
It focuses on the future of European competitiveness and its findings are the foundation of the Competitiveness Compass.
“The EU is entering the first period in its recent history in which growth will not be supported by rising populations,” the report says.
“If Europe cannot become more productive, we will be forced to choose. We will not be able to become, at once, a leader in new technologies, a beacon of climate responsibility and an independent player on the world stage.”
The Compass aims to translate the findings of this report into action through its three core areas for action.
What the Competitiveness Compass proposes
The Compass’ three pillars are complemented by five 'enablers' to underpin competitiveness across all sectors:
- Simplification – reducing the regulatory and administrative burden
- Lowering barriers to the single market – using a Horizontal Single Market Strategy to modernise governance framework and remove barriers
- Financing competitiveness – a European Savings and Investments Union to create new savings and investment products
- Promoting skills and quality jobs – building a Union of Skills focussed on investment, adult and lifelong learning, future-proof skills creation, fair mobility and attracting talent from abroad
- Better coordination of policies at EU and national level – introducing a Competitiveness Coordination Tool to ensure implementation of policy objectives and a Competitiveness Fund to replace multiple existing EU financial instruments.
“With the Compass, the Commission presents its economic doctrine for the next five years,” explains Stéphane Séjourné, Executive Vice-President for Prosperity and Industrial Strategy at the European Commission.
“This doctrine is simple and can be summed up in one key word: competitiveness. Competitiveness in every euro that we will spend and in every initiative we will propose.
“From this ambition comes a threefold work programme: simplify, invest and accelerate on our economic priorities.
“The compass must signal a change of mindset for Europe and Europeans. It makes Europe more predictable, while maintaining the course of our European model – decarbonised, social and respectful of our values.
The sustainability implications of the Competitiveness Compass
With decarbonisation at its core, the Compass will have a big impact on the European sustainability landscape.
Christina Deligianni, EU Climate Pact Ambassador for the European Commission and Green Investments Expert at CINEA, says: “It is great to see the first flagship initiative of the new European Commission building on the Draghi Report and giving clear framework for the way forward on many fields of its work.
“The EU remains committed to achieving a 90% reduction in emissions by 2040, with full decarbonisation by 2050.
“A well-integrated approach linking industrial, economic and trade policies will ensure that climate action strengthens competitiveness.”
“The Compass confirms the EU's planned competitiveness-driven approach to decarbonisation which will be laid out in the upcoming Clean Industrial Deal,” Andreas Rasche, Professor and Associate Dean at Copenhagen Business School, wrote on social media.
“The Compass contains promising ideas on the demand side (e.g. encourage and incentivise demand for low-carbon products) and the supply side (e.g. support state aid for clean technologies).”
Gwenaelle Avice Huet, Executive Vice President of Europe Operations and Member of the Executive Committee at Schneider Electric, says: “The way forward is clear: to keep driving momentum, we need to accelerate innovation and digitalisation.
“Now is the time to come together with united policy and simplified processes to clear the barriers to green growth.”
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