“One trillion in green bonds” was the promise made by Paolo Gentiloni, in his role as EU Commissioner for the Economy, during a European Parliament hearing on Friday, 4 October. His words confirm his support for the European Green Deal, launched by European Commission president Ursula von der Leyen in order to re-trigger economic growth in the EU. Europe is currently struggling, caught in the crossfire between the two giants that are America and China, but still has a lot of aces up its sleeves, if it can combine social and environmental sustainability, digital economy and competitiveness, exploiting the values and cultures with which EU countries are especially well-endowed.
That trillion in green bonds, in Gentiloni’s view, is the foundation of a major shift in economic policy that concerns the EU as much as its individual member states. It is an incentive for both public and private investments, triggering a significant transition towards a more “civil” and “just” economy.
In his speech, Gentiloni also mentioned another essential innovation: excluding environmental investments from the computation of the deficit-GDP ratio according to the Maastricht parameters. An ambitious project that has, so far, been rejected by the more hard-line EU countries, obsessed with balancing their budgets (and rightly fearing that loosening budget constraints would encourage incontinent, unproductive spending in unbalanced countries like Italy). But the project that may nevertheless be viable, now that the EU is suffering the consequences – social and political included – of its slow growth. Indeed, there is a growing awareness (even among key players like Germany and France) that economic development requires high-quality public investment, according to virtuous neo-Keynesian principles. And sustainability is the most suitable playing field: the very core of that “change in paradigm” championed by a growing section of the public, from “Generation Greta” to the church, and from the large and medium companies (as discussed in last week’s blog) to consumers themselves (70% of young people surveyed by SWG, on behalf of consulting firm Ernst & Young Italia, would like “a new model of doing business” that prioritises sustainability, according to La Repubblica on 5 October).
Even the current Italian government (the “Conte II Cabinet”) appears a bit more open to the EU and to these issues, in contrast with the belligerent anti-EU stance of Salvini’s sovereigntist Lega party.
“Revamping public investments to support private ones in the area of environmental sustainability” was among the points mentioned in Rome by Minister of the Economy Roberto Gualtieri, during the presentation of the 2019 report by ASVIS, the Italian Alliance for Sustainable Development. Chaired by Pierluigi Stefanini, led by Enrico Giovannini and supported by numerous corporate foundations, this association deserves more attention, as do other bodies dedicated to sustainability and solidarity in the business world, such as Symbola, Sodalitas and Anima. Gualtieri too spoke of green bonds, expressing “confidence that they will be well received by the market” and promising that a “climate committee” will soon be established within CIPE (Italy’s governmental committee for economic development).
Truth to be told, the budget act currently in the works doesn’t say much about resources. But the strategic guidelines are clear and unmistakable. Tying sustainability with the revitalisation of projects for innovation and Industry 4.0. As Gualtieri notes, €135 billion has already been allocated, in addition to the €9 billion share of the €50 billion called for in the EU’s green new deal and the “€40 billion over three years to support corporate investments”, which will be aimed towards circular economy.
However, in its 170-page report centred around the UN’s 17 Sustainable Development Goals or SDGs, ASVIS makes it clear that vague political promises are not enough (the previous Conte cabinet, supported by Lega and the Five Star Movement, also waxed lyrical about the environment but failed to deliver any tangible results). The report explains how the world, Italy included, “is still not on the right path towards sustainable development.” While Italy has improved in nine of the SDGs, including innovation and responsible consumption/production models (thanks to the good work by the country’s best companies), it has got worse in six of them, specifically those pertaining to poverty, sustainable food and agriculture (which could instead be a strength for the Made in Italy market), clean water and sanitation, energy, sea conditions and land ecosystems (and considering the excessive land consumption in our country, we really should embrace initiatives like the one by architect Stefano Boeri, which calls for planting 3 million trees in Milan – one for every inhabitant – and which has been welcomed enthusiastically by the city’s administration). In other words, we need to do more. And the challenge also impinges on the business world (as we’ll see in a bit).
A key strategy could be to add the principle of sustainable development to Italy’s constitution. That would be a difficult task, but it could be made easier with the support of young people and those pro-active businesses that are increasingly aware of the need to combine profit and shareholders’ interests with a respect for the values and demands of people and communities (so-called stakeholder value).
Proof of this economic, moral and civic tension can also be found in the report read last Thursday by Assolombarda president Carlo Bonomi, in his speech at the association’s general assembly, held in a packed La Scala theatre in the presence of the president of the Republic Sergio Mattarella, the president of the Senate Casellati, prime minister Conte and three other ministers. Bonomi, who named the event “The Business of Serving Italy”, introduced his idea for the “Production Chain of the Future” centred on work, young people, women, technology and sustainability. “Our keyword is sustainability.” He spoke of “generational” sustainability, asking for corporate tax breaks to allow younger, newly hired employees to shadow more experienced ones, “in order to pass down skills and expertise.”
His second main point: greater social sustainability, asking unions to redefine industrial relations, from contracts to welfare, with a commitment “to pay young new employees more than the minimum wage” (something which Assolombarda has insisted upon for some time).
Third point: environmental sustainability, with a clear and pragmatic idea: “The recent UN and EU resolutions to fight climate change are excellent and most welcome. But they must be accompanied by a vision founded on real expertise.” How? Here’s an example: “Aside from energy, the number one problem in Italy is that we are unable to properly complete the urban and industrial waste treatment cycle, because our country lacks the necessary facilities to safely process waste”. Another area where green bonds might be useful! Safety, cleanliness and quality of life in our cities. And in this regard, too, Italian companies are prepared to do their part.