Although the concept of the circular economy is technically neither synonymous with sustainability nor with combating climate change, both reducing the human impact on the environment and reducing greenhouse gas emissions are important goals of the circular economy and the Green Transition alike. The latter is, at its core, a response to the realisation that climate change and environmental degradation pose unprecedented challenges to humanity – existential threats even. Rather than seeing environmental protection and the reduction of greenhouse gas emissions merely as costs and barriers to economic development, the Green Transition is an attempt to turn these challenges into economic opportunities.

The strategy to deliver this transition is the European Green Deal, whose main environmental goal is to make Europe climate neutral by 2050. Currently, industry accounts for around 20% of the EU’s total greenhouse gas emissions and only 12% of its used materials stem from recycling. Accordingly, European industry has a major impact on the environment. Consequentially, the Green Transition is one of the two main pillars of the European Industrial Strategy and the twin challenges that it’s addressing – next to the digital transition.

Not only does a such a massive transition of a whole industry take a long time and a lot of effort, the COVID-19 pandemic strongly negatively affected the EU economy in the past two years. However, the crisis’ impact varied significantly across different ecosystems and companies, further underlying the need to transition towards sustainable projects and activities. Such projects and activities are more resilient against climate and environmental shocks, and companies pursuing sustainability and digitalisation are more likely to be among tomorrow’s leaders.

Based on this realisation, a number of initiatives and actions have been launched, which altogether illustrate the interactions between the Green Transition and Industrial Strategy:

• A common understanding of what is sustainable was needed, which led to the EU taxonomy for sustainable activities;
• Investment in research and innovation is key for the EU industry’s twin transition and future competitiveness. A benchmark of these can be found in the EU industrial R&D investment scoreboards;
• Common Industrial Technologies Roadmaps were initiated in the framework of the new European Research Area strategy to accelerate innovation and the twin transitions; and
• Finally, the European Skills Agenda aims to support in the up- and reskilling of the European workforce that are needed in the Green and Digital transitions.