As a European, it can be tempting to fall into a false sense of superiority when
it comes to sustainability. Maybe it’s the green public
transport
in our cities, or the lack of shock-jock climate-change deniers on our TV
screens; but in general, we tend to feel like we’re among the leaders when it
comes to tackling the climate crisis.
This sense of leadership occasionally spills over into the business world. Take
the EU’s Corporate Sustainability Reporting
Directive
(CSRD) for example — which requires larger companies to report
environmental, social and governance (ESG) data from next January. According to
the Wall Street Journal,
from 2025 this would affect nearly 10,500 foreign companies that have an EU
stock listing or generate more than €150 million worth of revenue within the
bloc. Of these, nearly a third are US-based corporations.
These regulations, which include requirements for companies to publish credible
transition plans aligned with limiting global warming to 1.5oC, have inspired
comparable measures in the United States. The Securities and Exchange
Commission (SEC) is due to adopt new
regulations
that similarly require companies to publish net-zero transition plans, as well
as disclosing information on greenhouse gas emissions throughout their value
chains, as found in the CSRD.
Yet, while Europe might justifiably feel ahead of the curve when it comes to
environmental reporting and regulation, the US has the edge on actively
incentivising a ‘green’ transition. The generous support package for critical
green infrastructure offered by President Biden’s Inflation Reduction
Act
(IRA) in 2022 caught EU leaders off guard, prompting the bloc to loosen
state-aid rules for its own clean-energy sector under the terms of the EU’s
Green Deal Industrial
Plan.
Herein lies the fundamental difference in approach between the US and Europe:
The former supports sustainable innovation through financial incentives, while
the latter leads on boosting standards and building frameworks for cooperation.
At a consumer level, businesses know that sustainability matters to both
markets. Within my own industry of packaging, research shows that the majority
of shoppers in both Europe and North America strongly consider the
environmental impact of the products they buy and are increasingly willing to
pay more for sustainable
packaging.
As our operations in North America continue to grow rapidly,
Elopak has witnessed in microcosm the sustainability
benefits that stand to be gained from marrying together US innovation and
efficiency with European standards.
The increased availability of technology and capital in the US has allowed us to
sell state-of-the-art carton-filling machines to our US customers — boosting
energy and general efficiency while improving our offering. In the US even more
so than Europe, it pays to be sustainable.
At the same time, we remain aligned with standards at our European operations by
continuing to source 100 percent renewable electricity across our North American
plants — a commitment
we made in 2015 as part of the RE100 initiative. This sets Elopak apart in a
country like the United States — where fossil-fuel
energy
is still relatively affordable and renewable energy forms a much smaller part of
the electricity mix than in many European nations.
Elopak’s model for sustainable business benefits from the nexus of European
experience with American ingenuity. This approach continues to bear fruit — with
revenue from our North American market driving overall growth and profitability.
In fact, we’re due to open a new plant in the United States in 2025
to capitalise on our growth momentum and increasing market share.
At an international level, we have seen the debate over issues such as the IRA
transform from arguments about protectionism into constructive discussions over
state aid and frameworks for further integrating US and EU supply chains and
sustainability ambitions. Negotiators are working towards an agreement in
principle to make European
minerals
eligible for US tax credits, boosting cooperation on electric-vehicle battery
production. Likewise, the IRA has spurred the UK government to draw up similar
plans to support industries such as clean energy.
Businesses should similarly search for common ground, recognising that the US’s
preoccupation with growth can help deliver on ESG targets; or that European
idealism can be appealing to customers and consumers alike. This is particularly
important for businesses that don’t have the advantage of operating on both
sides of the pond and might otherwise miss out on examples of transatlantic best
practice.
Like their respective governments, US and European companies must learn from one
another. A recent McKinsey
study
in the US illustrated the growing need for corporations to blend the two
distinct approaches, finding a “clear and material link between ESG-related
claims and consumer spending.” Despite global inflationary pressures, consumer
trends only show rising concern for sustainable consumption. Even regional
businesses will need to balance this need to hold themselves to higher standards
while delivering efficiency and value for money to their supply-chain partners.
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Thomas Körmendi is CEO of Elopak — a global supplier of carton-based packaging solutions. Elopak has been carbon neutral since 2016 and was awarded with a platinum sustainability rating from Ecovadis in 2021.
Published Dec 6, 2023 11am EST / 8am PST / 4pm GMT / 5pm CET