A society for a sustainable economy by cborn

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Pitch

Creating a society ready for a sustainable economy in the European Union.

Description

Executive summary

To have the opportunity to create an economy based upon sustainability, innovation and a value system that goes beyond the financial, our proposal hopes to ensure the EU has a society to enable it.  Funds, generated by progressive VAT reforms, will provide the capital for the creation of opportunities that facilitate necessary behavioural change for an emerging sustainable economy and construct an identity for the European Union as an attractive location for investors.  VAT reform will incentivise low carbon business practice and raise funds for societal development in the areas of education, employment, innovation and technology, culture, community and representation.  At the current time very little policy or research has concerned the creation of a society, and resulting work force, for the vision of a sustainable economy - this proposal aims to fulfill this role.  

Team

Camilla Born, undergraduate, final year, Geography student at the University of Edinburgh.  Power Shift UK coordinator for the UK Youth Climate Coalition.

Michael Green, undergraduate, Currently at Edinburgh University as international student from Northeastern University studying International Affairs and Environmental Studies.

Georgina Allen, undergraduate, Economics student at the University of Edinburgh.   

What 

The instigation of progressive VAT reform that will establish Europe as a preferable, competitive location for low carbon business investment.  The resultant funds will facilitate the development of a society ready for a sustainable economy that aims to reduce global carbon emissions to 350ppm.    

VAT based funding mechanism

This modelling is currently presented in a basic form due to the constraints of this proposal, however it seeks to communicate a valuable and legitimate ideology.  We propose using VAT as a device for rewarding businesses with low carbon production (henceforth referred to as low carbon businesses) and to incentivise businesses with high carbon production (henceforth referred to as high carbon businesses).  High carbon businesses would have to adapt and invest in a transition to a low carbon economy whilst raising funds to implement the proposals below.  The proposed would be an adaptation of current EU VAT mechanisms, increasing costs for high carbon businesses and lowering them for low carbon businesses.

For the purpose of this proposal businesses will be categorised as either low or high carbon, however we envision a more sophisticated categorisation mechanism.  A company will be put into either category depending on the amount of carbon emitted comparative to revenue; they will be certified in either category for a fixed period of time with the opportunity for reassessment on application or at the end of the term.  The tax changes will be implemented for all businesses, including SME as it will encourage start-ups and growing businesses to adopt low carbon practices to gain a competitive advantage.  The VAT mechanism will incentivise businesses at every level of the supply chain as well as encourage businesses to value environmental responsibility at consumer level within their supply chains.  Any imports into the EU will be taxed in the same way and businesses will be classified using the same criteria so as to not violate competition laws. 

Currently sovereign states set their own VAT guided by the EU minimum of 15%.  We do not propose to change this and will allow member-states to continue to manage VAT rates in light of the new charges or reductions.  Regardless of the natioanl level of VAT, there will be a 0.005% decrease on the VAT paid on items produced by low carbon businesses (C_L) and a 0.01% increase on items produced by high carbon businesses (C_H).  In turn the revenue will contribute to the proposed European fund. 

Total revenue from tax= (Revenue of C_H x 0.01)-(revenue of C_L x .005) 

For the range, rev C_H>rev C_L to rev C_H/2=rev C_L,  total revenue≥0

We recognise that this is a simplistic model and it should be interpreted as a mechanism subject to quantity change as opposed to a comprehensive model.  The model not only shows how funds would be generated but also exemplifies how we plan to bring about a change in business culture.  If a successful transition is made to a low carbon business model overheads will decrease and products/services will have a competitive advantage.  In addition further business success will be achieved as a result of the investment portfolio outlined below, which seeks to stimulate the market for low carbon products/services.  The tax not only raises funds and gives businesses a cost imperative to be low carbon, but it will also change the culture of businesses.  Consumers will have economic, as well as social, incentives to be low carbon consumers.

We see our funding mechanism as not just a means of generating revenue for sustainable endeavors but also as a tool which uses free-market economic theory to promote a system where emission-conscious business practices are rewarded. 

Investment portfolio

Education:

·      Awareness projects to disseminate information to the European public.

·      School age education in problem solving, group collaboration and communication, instilling an understanding of stewardship and community.

·      Training opportunities for the general public, from the use of new technologies, to the skills needed for utilisation of local resources.  

A diverse approach is needed to cater for the broad European demographic.  Awareness projects would communicate the links and relationships between modern society and ecologically stable development, in a bid to expose inefficiency and spark innovative solutions.  Additionally, working with school-aged children would help prepare younger generations to deal with future challenges.  At present our young people are educated in a context of standardisation, uniformity and individualism, which is not conducive to an innovative future.  New educational tools would encourage group collaboration, creativity and problem solving.  Training would also be made available to the public in order that they can take advantage of the new opportunities brought about by ‘green’ economic development, as well as to aid the creation of new initiatives.  This form of training will help to facilitate a fair transition to a new economy, disseminating knowledge widely and not simply reserving it for a privileged few. 

Employment:

·      A future jobs program that trains unemployed (old and young) in the skills needed to support new sustainable initiatives.

·      A subsidised apprenticeship programme for developing sustainable businesses.

These initiatives reframe the job market in favour of sustainability by investing in, developing and nurturing the working population.   Training programmes would be adapted in line with current innovations but would equip the workforce for a sustainable economy.  This training would cross a range of sectors from administration to manufacturing; from learning about ethical business practice to having the skills to create components needed in the renewables industry.  Ensuring that training is adaptable to different demographics is of paramount importance and must be treated sensitively, especially when adapting the skills of older generations to new emerging markets.  A subsidised apprenticeship scheme would provide a further incentive for sustainable business investment in the EU.  The scheme would help to reduce employment overheads, allowing the sector to grow more rapidly and attract a dynamic, young, workforce who would start their careers with a sense of stewardship and understanding of sustainability.  

Innovation and technology: 

·      A forum for public participation in innovative business practice.

·      Micro-finance grant program for sustainable social enterprise.  

·      EU-wide campaign, including new labelling legislation, raise awareness on supply chain impact and highlight opportunity in the market.

We must look beyond large banks and corporations for innovation and the development of new technologies for a low carbon society.  Using a multi-platform approach we can engage with a diverse cross-section, from business leaders to consumers, to create a unified objective for business development.  A forum for public participation would provide a market research opportunity for investors, promote collaboration to develop best business practice and broaden the talent pool.  Direct investment in sustainable social enterprise will also help promote investment in local people, environments and services, responding to demand for profit making, sustainable products/services and developing communities.  Accompanying these programs would be an EU-wide campaign complete with a new labelling mechanism that details the products environmental impact.  The campaign would have two key benefits: firstly it would educate the consumer and stimulate the low carbon market and secondly it would promote development of low carbon products.  The labelling programme would be rolled out as part of a collaborative process where EU officials work with companies to understand the labelling process, highlighting places for improvement, whilst developing cost-efficient ways to reduce environmental impact.    

Culture:

·      Adaptation grants for European Cultural sites in line with sustainability objectives.

·      Reassessment of EU cultural policy to reduce unsustainable valuation and maintenance practices.

Cultural heritage practices are often sidelined when considering sustainable development.  However, culture is well understood to be a key tool for communicating ideologies both nationally and internationally.  Adaptations would be site-specific but could include improving energy efficiency, switching energy source or using new products and management systems.  Alongside these measures, policy would be implemented to prevent unsustainable valuation and management practices, often both economic and envrionmentally costly.  These would help generate impetus and opportunity for change.   

Community:

·      Rehabilitation of ecological disaster zones with community participation.

·   Endorsement (financial and otherwise) of cradle-to-cradle and social enterprise business models.

These measures will develop local groups and bring the benefits of the low carbon economy to local communities.  Communities would work collaboratively to plan and execute rehabilitation projects which were designed to create environmentally beneficial spaces, such as community gardens or local renewable energy projects.  In addition, investment, training and support workshops would be made available for the development of cradle-to-cradle and social enterprise projects, in order to reshape local consumption practices and provide income for community investment.  

Representation: 

·      EU wide policy to limit corporate lobbying and increase public dialogue.

·      Youth representation in all EU level decision-making.

·      Global knowledge share forum to develop a world wide sustainable economy.

To ensure the success of any EU-wide programme, issues surrounding representation must be addressed.  Currently there is no mandatory lobbying disclosure in the EU.  Many corporate lobbyists target this vulnerable body who have significantly less interaction with their constituents than national governments.  A lobbying register would be created in the first instance and resulting policy would follow.  In addition youth representation will help develop a new representational structure for the EU, raising ambitions and ensuring the long-term success of a sustainable economy.  Lastly, to guarantee European success politically, socially and economically we must strengthen the international context.  A knowledge share forum will help to develop the products and systems needed for a sustainable economy and improve international dialogue surrounding this topic.

Why: Rationale for the proposal

At the current time very little policy or research is concerned with the creation of a society and resulting work force for the vision of a sustainable economy.  To create an economy based upon sustainability, innovation and a value system that goes beyond the financial, we must ensure we have a society to enable it.  VAT reform not only provides the capital for the creation of opportunities that facilitate necessary behavioural change for the developing economy but also presents an identity for the European Union that shows it as an attractive location for investors, as a world leader in climate change mitigation and adaptation.  

The benefit of using VAT is that it affects businesses at every level of the supply chain, providing an incentive to reduce their carbon footprint at each level of production.  In addition it encourage businesses at the consumer level to use low carbon suppliers in order to get low carbon status themselves, ultimately increasing the competitiveness of low carbon products.  Accordingly, products/services can use their status as a low carbon business as a marketing tool to engage with their consumers.  The credibility of the proposed VAT mechanism is also strengthened by the response to the EU’s ‘Green VAT Strategy’ where 521 voted in favour, 50 against and 58 abstentions (European Parliament, 2011). 

The funds created through VAT reform seek to reduce the carbon emissions of carbon intensive industry and raise funds for societal development in the areas of education, employment, innovation and technology, culture, community and representation.  Education is a key mechanism for reconfiguring attitudes and the EU must take responsibility for educating its population across the spectrum.  Educational techniques will incorporate learning across practical, academic and research platforms to facilitate 'vision creation', as well as practical adaptation for the developing economy.  Furthermore the proposed employment strategies will help to facilitate a smooth transition between vision and development, creating a reality that provides a desirable opportunity for corporate investment.  Skilling-up the European population is a worthwhile investment that will help sustain high levels of employment in transitioning economies and attract foreign direct investment from international companies.

For the development of a new economy, innovation and technology development are required to shape vision and direction.  Bringing these development opportunities into public discourse it will aid the integration of sustainable business into the community.  Businesses will be able to benefit by acquiring local knowledge and ideas that give competitive advantage to their target markets, whilst communities benefit by being able to source community appropriate technologies, services and commodities.  By combining this approach with a campaign to raise awareness on supply chain impact the EU would raise the profile, and ultimate success, of sustainable businesses.

A true commitment to a sustainable future must not solely be evident in the social and business spheres but must also be present in any cultural means of communication.  Europe is well known for its culturally rich past and its cultural landmarks require reframing to tell the narrative of the new Europe built upon sustainability.  This policy would prevent the devaluation of landmarks, increase opportunity for retrofitting and visually signpost the message of the new Europe across the continent.  Similarly the ecological landscape would be rehabilitated, both benefiting local communities and helping to communicate the message of environmental stewardship.  The importance of community interaction is vital to the success of commodities and services in the market, to create opportunities for sound investment businesses built on social enterprise and other sustainable models will be endorsed as part of the programme. 

Improving public representation in this sphere is the final but perhaps most important element of this proposal.  To ensure public participation and support there must be a sense of ownership in the creation of a new economy.  It would be impractical to eliminate the voice of the corporate lobbyists but limitations must be set and forums for public dialogue widened.  In addition youth representation is also essential to guarantee the longevity of a sustainable economy.  External representation also requires consideration to encourage knowledge share across the globe, in order to reduce worldwide emissions and build beneficial, international, business networks for the new global economy.

The investment portfolio above attempts to provide suggestions for measuring the success of the proposed approaches.  However we implore the EU to think beyond the traditional quantitative measure.  This proposal in part carries resonance due to its objectives to stimulate the economy through a more qualitative approach, by creating a society ready for a new economy.  To tackle a challenge as substantial and all encompassing as climate change we must look beyond traditional statistical and financial modelling to explore holistic economic, social and environmental development.  A reliance of traditional measures is unlikely to reap positive returns in the short term and we must consider impact on a new scale to tackle this issue effectively and efficiently.  

How: Feasibility of proposal

The policy framework derived from this proposal aims to create more direct public participation in the democratic process toward the creation of a sustainable economy. This proposal only begins to touch on necessary steps forward, but views them as essential to the development of a Europe with a truly sustainable economy that will ultimately include an overhaul of energy and trade systems.

We see our funding mechanism not just as a means of generating revenue for sustainable endeavours, but also as a tool that uses free market economic theory to promote a system where emission conscious business practice is rewarded.  By putting a cost on carbon use in production, we reframe it from its current conceptualisation as an external cost, into a strategic opportunity for cost saving and profiling.  

 The EU is already in the process of considering green VAT reform, but our mechanism takes the concept one stage further.  Adding an additional penalty to carbon intensive business does carry risk, however by providing a counter balance through incentive tax and opportunity resulting from the proposed programmes, we argue that the EU would raise it’s economic potential.  The EU will fashion itself as an attractive location for investment in emerging sustainable markets, aiding the protection of their economic future.  However, it is also important to recognise that this proposal is not a device to maintain the status quo.  Bold and decisive action must be taken by bodies like the EU to prevent the globe from slipping into environmental disaster. 

The EU is well placed to carry out the portfolio of investment outlined in this proposal.  Furthermore many of the suggested approaches support other EU aims and objectives, which in turn enhance their benefits.  A potential stumbling block may arise if member-states feel that their sovereignty is jeopardised as a result of the programme.  However through appropriate messaging and a flexible approach, especially in light of the EU negotiating as a group within the UNFCCC, problems are anticipated to be minimal.  Confident leadership will be required to prioritise this programme, due to what may be seen as its lack of immediacy, this is a long-term vision that will prosper in response to commitment and perseverance. 

This proposal seeks to create a society that will reduce carbon emissions to 350ppm.  Due to the nature of this proposal and current modelling measures it is not possible to accurately predict an exact climatic response.  Yet, it is widely known that behavioural change is a vital tool for responding to climate change.  This proposal should not be discounted on these grounds; through its multi-platform approach it attempts to reach workers, businesses, communities and members of the general public to create a real, substantive shift in behaviour.  Again, we implore the EU and other world leaders to think beyond the statistical measure and consider the importance of behavioural change in tackling the climate crisis.  

Vision of the future under this proposal 

This proposal aims to establish a long-term vision of the future that facilitates a cleaner, fairer, future for generations to come.  We envision that the measures taken will create a platform for an economy that helps to reduce worldwide carbon emissions, as well as providing attractive business opportunities to internal and external investors.  Further steps will need to be taken to rescue the globe from climatic crisis, from global trade reform to a comprehensive shift to renewable energy, amongst others.  This proposal is just the beginning; it provides the opportunity to grow this ‘vision for the future’.

The sustainable economy in the European Union will become an economy, renowned for its utilisation of renewable energy and innovative practices, celebrated for its commitment to zero waste practices and distinguished by a value system that goes beyond the financial.