Understanding the Environmental Impact of Global Trade Policies: Challenges and Opportunities

The €750 billion investment plan, known as Next Generation EU and approved by European leaders last July, primarily aims to steer the European Union towards a sustainable economy that encompasses environmental, economic, and social aspects. Hence, at the core of the project lies sustainability, with the goal of creating a more equitable future. In this regard, approximately 37% of the measures implemented by various member states will be directed towards environmental transition, aligning with the European Green Deal's objective of achieving climate neutrality by 2050. Therefore, the impact of global trade policies on the environment is a crucial factor in determining whether a more sustainable future is attainable or not.

As a result, various nations, research institutions, and businesses are directing investments into a range of technologies. These include synthetic fuels, batteries (to enhance efficiency and disposal), electrification, resource recovery from waste, methane, nuclear energy, hydrogen, biofuels, CO2 capture, energy efficiency, and circular economy initiatives. Notably, companies like Enel X serve as exemplars of advanced business models, actively promoting energy circularity within their supply chains. Italy, being no exception, is urged to prioritize green investments. These may involve decarbonizing the energy sector, reducing harmful emissions, fostering more sustainable transportation options, and championing a circular economy approach. This approach emphasizes resource reduction, reuse, recycling, and recovery. In this regard, the Directive 2014/95/EU of the European Parliament and of the Council, adopted on October 22, 2014, finds widespread consensus. It mandates large companies and public-interest entities within the European Union to disclose non-financial and diversity information in their management reports. The primary objectives of this directive are to promote transparency, corporate social responsibility, and the integration of environmental, social, and governance (ESG) considerations into business practices. To date, industrial and commercial activities have a significant impact on the environment due to greenhouse gas emissions, air and water pollution, waste generation, and other activities, constituting approximately 53% of the major contributors to air pollution.

Thanks to the new energy policies, however, we are increasingly moving towards an unprecedented energy transformation, an internal revolution on industrial, economic, and social levels. Moreover, it is expected that more effective communication on climate issues - such as that recently initiated with the new EU policies - may lead companies to gain greater awareness and understanding of environmental issues. This could facilitate more accurate management of climate-related risks and opportunities. It could also enhance decision-making processes, attract a broader base of investors with potentially lower capital costs, and promote a more constructive dialogue with the stakeholders, contributing to better corporate reputation and maintaining public trust.

Translated by Iuliana Cindrea

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