Advance Copy of Draft of Competitiveness Compass: Will It Replace the EU Green Deal?

3E has obtained an advanced draft of the Competitiveness Compass, an ambitious, five-year framework from the European Commission that targets the European Union's global marketability shortfalls and supply chain vulnerabilities while continuing to drive sustainability success. The draft is scheduled for release on 29 January 2025.

The draft emphasizes the EU's urgency in continuing to be a global leader in innovation and competitiveness should U.S. support and partnership be impacted by actions and stated desired outcomes from the Trump administration.

Indicators, such as the U.S.'s proposed withdrawal from the Paris Agreement, World Health Organization (WHO), and the OECD Global Tax Deal, appear to reinforce U.S. President Donald Trump's “America First” policy, causing some to speculate the timing of the release of the draft appears to be in response to those changes.

The Competitiveness Compass focuses on three critical areas to rejuvenate the EU economy:

• Closing the Innovation Gap: A slew of initiatives, including an AI Continent Strategy, Quantum Act & Strategy, and European Research Area Act, aim to position Europe at the forefront of emerging technologies. The initiative introduces targeted measures to foster start-ups, scale-ups, and investments in high-impact sectors like clean tech, life sciences, and advanced materials.

• Accelerating Decarbonization: Through the Clean Industrial Deal and an Affordable Energy Action Plan, the EU hopes to lower energy costs and promote green manufacturing. A proposed Circular Economy Act will encourage recycling, reduce waste, and create a thriving market for reusable materials.

• Reducing Dependencies and Strengthening Security: A new platform for joint purchasing of critical raw materials and revised public procurement rules is positioned to reduce Europe’s reliance on concentrated supply chains. The EU will also bolster economic security through strategic trade agreements and a proposed White Paper on the Future of European Defense.

Reforms and Simplification

The proposed Competitive Compass promises to simplify the EU’s regulatory framework whilst prioritizing speed and flexibility. Coordinating policies at an EU and national level rather than pursuing goals separately, is also noted as a priority. These stated priorities could be in reference to the ever-weaving web that is the EU Green Deal.

The European Commission is setting its sights on transforming the Single Market into a more efficient and business-friendly environment, with plans to stretch across industries. At the heart of this effort is the proposed Simplification Omnibus, an initiative designed to iron out the wrinkles of sustainable finance reporting, due diligence measures, and taxonomy requirements. By aligning data standards to the needs of real investors and prioritizing realistic timelines, the proposal aims to provide regulatory relief for companies of all sizes.

Arguably the most innovative facet of the draft is the creation of a new company category: small mid-caps. This category is meant for about 31,000 companies that are too large to be considered SMEs, but too small to navigate complex regulations that were created with corporations in mind. The EC hopes this new category will unlock potential for these companies and enable them to thrive in a more competitive market.

Also of note is the appointment of the first ever Commissioner for Implementation and Simplification. This role will focus on consolidating regulatory frameworks and taking more real-world experiences into account. Businesses stand to benefit from an ambitious target of reductions in reporting burdens: a 25% decrease across the board, with a 35% reduction for SMEs. Along with the introduction of a new role, the EC is introducing their Competitiveness Coordination Tool. The purpose of the tool is to harmonize EU and national-level policies, enhancing efficiency and impact.

Finally, the compass prioritizes investments of over €750 billion annually through 2030, combining public and private resources to fund projects in technology, infrastructure, and defense. The commission has also proposed a European Savings and Investment Union to unlock venture capital and equity financing, addressing chronic underinvestment in innovation.

We will update this article if/as more information becomes available and will link to the draft once it is released by the EC.

—

Editor's Note: 3E is expanding news coverage to provide customers with insights into topics that enable a safer, more sustainable world by protecting people, safeguarding products, and helping businesses grow. Breaking News articles keep you up-to-date with news as it's happening.