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The European Green Deal is the new economic growth strategy of the European Union. The core objective of the Green Deal is to fight efficiently against climate change by providing a new, sustainable growth strategy. The goal of the strategy is to transform the European Union into a modern, resourceefficient and competitive economy. In order to reach its goals, the Green Deal has several tools, measures and strategies which support the reduction and total elimination of the emission of greenhouses gases; the green and digital transformation in line with economic growth; and ensures that no country would be left behind

The effect of the implementation of European Green Deal on businesses by using strategic foresight

Tartalom

The European Green Deal is the new economic growth strategy of the European Union Thecore objective of the Green Deal is to fight efficiently against climate change by providing anew, sustainable growth strategy The goal of the strategy is to transform the European Union into a modern, resource-efficient and competitive economy In order to reach its goals, the Green Deal has several tools, measures and strategies which support the reduction and total elimination of the emission of greenhouses gases; the green and digital transformation

in line with economic growth; and ensures that no country would be left behind

(Ec.Europa.Eu,2019) It is out of question that such an extensive transformation of the

economy of 27 countries affects all the sectors of those Ambitious goals come with

ambitious financial needs The transformation of Europe from an economy based on the use

of fossil fuels and natural resources to a sustainable economy using renewable energy sources and taking a special attention to create environmentally-respectful product cycles with the reuse of materials and wastes, to create a sustainable agriculture, construction sector and transportation, moreover to reduce pollution requires comprehensive strategical and financial implementation plans Going further, the outbreak of the COVID-19 pandemic poses other economic, financial and societal challenges to the European countries On the one hand, the pandemic destabilized the global economy and shown that urgent measures are needed in order to improve the resilience of the economies On the other hand, the pandemic is an opportunity to direct the economy to a sustainable and inclusive growth, as António Guterres, UN Secretary General highlighted in his speech on the 11 th Petersburg Climate Dialogue in April (UN.org, 2020)

In order to reach its purposes, the Green Deal offers a coherent financial system There arefunds, grants, loans, taxation aligned with the climate objectives of the European Union (Eur-lex.europa.eu 2020) The recently proposed Multiannual Financial Framework (MFF) and the NextGeneration EU both aim to support EU member states to be more resilient and

to recover and rebuild after the COVID-19 pandemic via green and digital transition

Since the Kyoto Protocol has entered into force (2005), this pressure is increasing,

increasing discussion has emerged concerning the effects of climate change on economies

Overview of literatures

In order to find relevant articles and papers on the influence of climate change policies on businesses my literature review search is based on a defined literature selection process The review of the literatures is based on the following databases:

• EBSCO Academis Search Complete

• Emerald Premier

• Jstor - Business and Economics

• Science Direct Journals

• Scopus

• ProQuest Central

The advantage of the use of the listed six scientific database is the covering of a large number of publications, moreover it is more transparent and more advanced than by using for example Google Scholar In order to narrow the scope of the search I defined the

timeline, keywords, type, language and access type In the mentioned databases it is

possible to narrow the search by using context search in the title, abstract and

author-specified keywords - in the case of the latter Emerald Premier is an exception

Time frame

The applied search term regarding the timeline of publications is between 2005 and present

It is defined based on three main criteria First, the issue of climate change has started to emerge in the early 19th century, however first the Kyoto Protocol contained legally binding greenhouse gas reduction targets, which has entered into force in 2005 Second, the thesis research focuses on the economy of the European Union, thus it is more relevant to define a search term after 2004 - the year of the fifth enlargement including 11 countries Third, due tothe fast pace of technological developments, the world is changing rapidly, the time indicator

of the search should be narrow, in this case 15 years period is applied The effect of climate policies induced changes for businesses highly affect the techonologies they use for their production or service

Document type and language

The mentioned six databases offers advanced search including the document type and language as well The research focus on academic articles in English language I used the full text option and documents I have access to

Keywords

The proper keyword setting is the core of the search As this search concers the effect of European Green Deal policy in the European Union on companies, first the following

keywords were used

Green Deal AND Europe OR EU OR European Union AND business OR corporations OR organizations

As the EU’s Green Deal has introduced first in the end of the year 2019 just a small amount

of data available and as the implementation of the actions, strategies and other regulations has not entered into force yet, relatively low amount of data available in this field This suggestion is shown in the number of search results, altogether with the use of the six databases sixteen articles were found, but not all of them are relevant, six out of the fifteen articles are used in the literature review

Second, as Green Deal is a collection of climate and environmental policies, strategies and other regulations the combination of keywords is used as follows:

1 Climate policy in Title AND Europe OR EU OR European Union AND business OR corporations OR organizations

2 Environmental policy in Title AND Europe OR EU OR European Union AND business

OR corporations OR organizations

For the first scenario, the search returned 227 articles with the characterize of climate policy, however not all of them are relevant in the exact research, but a much greater sample could

be used In the case of the second scenario the result of the search is 170 articles

Altogether, the sample contained 413 articles However, not all provide information about climate policy and its impact on businesses, even it was in the initial sample Out of the 413 articles, 52 articles are selected which are connected to the theme of climate policy and its impact on businesses So, the final sample comprises 52 papers

Table 1 demonstrates the year of publication and the number of papers in the sample Withinthe 15-year time frame most of the relevant articles were published between 2015-2020 It can be concluded that this topic is quite emerging in the academic discource in recent years and the results also refer to the small number of samples found

1 Table number of publications according to years

Table 2 shows the geographical distribution of the sample, based on the origin of the authorsand the geographical coverage of the research and data collected The diagram shows that

in the case of the ⅔ of the used articles the origin of authors is Europe and more than the ⅔

of the researches cover European countries or the European Union

1 Figure Publications by continents - research

2 Figure Publications by continents - first author

According to the search results, published articles in the sample cover three dominant topics with respect to climate policy and its impact on businesses This review focuses on the three dominant topics refer to:

• Green innovation (n=33) - which deals with employment and green jobs, green

supply chains and the formation of green business models

• GHG (n=14) - this area covers topics such as carbon or green tax, the carbon border

adjustment mechanism and the problem of carbon leakage

• Circular economy (n=5) - it covers the implementation of the circular economy

All the three topics include publications that analyze the topic from different perspectives and

by using different data and methodology Each section is analyzed according to the literaturecollected in the topics

Green innovation

Within this section three main subtopics can be distinguished related to green innovation

First, companies' willingness and motivation to invest in green innovation techniques

(n=14) Environmental regulations, climate policies have an impact on the market actors It is debated that these regulations of sustainable development determine whether, to what extentand how affect the competitive performance of companies The effect of environmental regulations on the competitiveness, innovation ability of companies highly depends on the design of the regulation The research of Testa, F et al grouped environmental regulations: direct regulations, such as technology-based standards, limits to emission, environmental regulations The research concluded by using a regression analysis that direct regulation has

a positive effect on the increase of investments for innovation (Testa, F et al, 2011) Testa et

al reached the conclusion that voluntary, market driven instruments have a positive effect on

a firm’s innovation This conclusion could be found in other papers as well (Lundgren et al, 2015) The other group of environmental regulations based on Testa el tal is the different types of economic instruments, such as taxes According to the empirical analysis it

concluded that the introduction of economic instruments rather negatively affects the

innovation willingness of companies These instruments generate costs, increasing the variable cost per unit of companies and higher costs has a negative effect on the business performance of firms (Testa, F et al, 2011) The last group of regulations are soft

instruments, such as green public procurement and environmental management systems The empirical model emphasised the positive effect of soft instruments, however also

highlighted the fact that there is little evidence that these instruments are translated into tangible business performance improvements (Testa, F et al, 2011) The study published in

2019 concluded similarly as the 2011 research of Testa, F et al The more stringent the environmental regulation the more negative its effect on the growth of the firm Although stringent environmental policies have a negative effect on the competitive performance of firms, the adaptation of green technologies is positively associated with the growth of

companies (Colombelli, A., 2019)

The research of Robinson, S & Stubberud, H.A made analysed the difference in green innovation ability between small, medium and large companies The paper reached the conclusion by quantitative analysis that large businesses main motivation in green innovation

is the benefits the companies can gain, such as cost savings on materials and energy Large businesses value more the economic benefits of innovations than the reduction of their environmental impact In the case of small businesses the direct benefits from environmentalinnovation and the green awareness and environmental protection are equally important (Robinson, S & Stubberud, H.A 2015)

Another perspective is based on not the size of companies, but the level of the firm’s energy consumption The research of Stucki, T 2019 analysed low, medium and large energy consumption The article has the findings based on data from Austria, Switzerland and Germany by using regression analysis, that companies with low or medium energy

consumption level are less likely to invest in green technologies, as the profit opportunity is low or marginal as well The green investment increases productivity for large businesses, thus those firms are more likely to invest in green technologies on their own initiative Policy interventions and subsidies can increase the attractiveness of green innovations(Stucki, T., 2019.) The implementation of green technologies, the study of Simionescu measures the effect of the innovation in renewable energy sources on the country’s GDP and

competitiveness, according to the GCI report It concluded that energy consumption from renewable sources positively affects the economic growth of a country and could be a driver

of economic competitiveness It is also concluded by the quantitative analysis that the impact

of renewable sources on GCI is lower than the impact on GDP (Simionescu, M et al, 2020)Schmidt, T et al emphasis the importance of long-term emission reduction targets and corporate innovation activities This study also argued for the stringent policy is an important factor in directing technological change (Schmidt, T et al, 2012)

The role of state subsidies is an important tool to spur innovation in green technologies In addition, the innovation inertia of firms is crucial for innovation The voluntary, innovation inertia is a driving factor in innovation for firms, even if there is a lack of government

subsidies supporting firms’ innovations willingness The study of Li, Q et al pointed to the importance of regional differences Governments could either direct subsidies to more

developed regions in order to increase the high-level output of the innovation, or concentrate

to less developed regions within the country to direct firms to innovate However, in the latter case firms probably would innovate to receive the subsidies from the government (Li, Q., 2020)The study of Phillippe, B raises the attention that not only private but state-owned enterprises have a significant role in the reduction of CO2 emission as well (Phillippe, B.,2019)

Second, the support of new, green business models (n=10) The business model of firms

influences the strategic positioning of it, affecting the characteristics of the company’s

customers, and the base of the competitive advantage Green business models offer a highervalue proposition to ecological and social values than to economic values The research of Quintás et al identified nine voluntary practices for greening business models and support the generation of environmental value in the transition These are energy and environmental audits, product life cycle with ecological design, eco-labeling, best available techniques, recycling, reuse of sub-products and wastes, use wastes and recycled materials to generate energy, cogeneration and trigeneration (power saving techniques) and finally, the adoption of renewable energy systems (Quintás, M.A et al, 2019)

The transition of businesses to the green business models influencing their export

performance as well argued by the research of Bıçakcıoğlu, N et al (Bıçakcıoğlu, N et al,

2019)

SMEs have a significant role in decarbonisation of the society The quantitative research of Quintás M.A et al concluded that SMEs not widely use decarbonisation in their business models Stringent policies might influence more the environmental awareness of businesses.Regarding the adoption of the nine practices, the research findings show that only a few percent of SMEs adopt any of the practices The reason behind it may come from the size of the companies and that they are highly dependent on a small number of customers

(Quintás, M.A et al, 2019)

According to the study of Hsueh L large companies are more likely to transform their

business models to green business models Going further, the research shows that those multinational companies who interface with consumers on a regular basis are more likely to introduce green business models The sample of the study was the Global 500 companies (Hsueh, L., 2016.)

The pressure from customers is acknowledged as a driving force of the transition to green business models The request of customers has a significant importance for companies to

decide in the implementation of both external and internal low-carbon supply chain

management practices (Damert, M et al, 2018.)

The role of intermediary organisations in the formation of green and sustainable businesses could be crucial and highly supportive The study of Matschoss, K draws the attention to the role of intermediaries, such as facilitators, brokers Intermediaries connecting actors They could bring actors together who otherwise might not cooperate, or connect local initiatives to infrastructure and energy related technological innovations

(Matschoss, K and Heiskanen, E., 2017.)

Third, environmental regulations affect employment as well (n=9) The green innovation as

previously discussed affects the competitiveness of companies, but not only the

competitiveness Green innovation brings the formation of new types of jobs, green jobs on the one hand, on the other hand, as it was mentioned above, stringent policy instrument effects on the costs of companies, which may influence the number of employees of the company A 2016 research demonstrated the connectedness of green innovation and

employment (Kunapatarawong, R and Martínez-Ros, E., 2016.) The quantitative analysis shows that if companies receive subsidies for green innovations they tend to affect

employment more positively Moreover, it was found that firms introducing green innovation voluntarily the relationship between green investment and employment is more positive compared to firms who introduce green investments due to the regulations

(Kunapatarawong, R and Martínez-Ros, E., 2016.)

Green jobs are the results of environmental solutions Most of the green jobs occur in the sectors of renewable energy sources, the construction sector, waste, restoration and

conservation of biological diversity, green infrastructure and green transportation The definition of green jobs is diverse among countries, as countries identify their own rules and requirements on green jobs The common is that green professions contribute to the

reduction of the negative impact of climate change and they emerged due to the climate related regulations and policies Green jobs are usually new professions, for example in the renewable energy sources sector green professions are consultants and researchers, qualitycontrol, maintenance technicians (Stoyanova, Z., 2017.) Based on the research of

Stoyanova, Z., the sectors of green transport, eco-industries, waste management and renewable energy sources are the leading sectors of creating green jobs Waste

management and renewable energy sources sector are expected to create more than 2,5 million green jobs in 2020 According to the calculation, the renewable energy sector would create more than 6 million jobs in a year in 2050