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What is The Green Transition?
The Basics

What is The Green Transition?

The Basics is a series exploring the concepts and individuals essential to purposeful business.

6 minute read

3rd May 2022

By now, most of us have accepted that in order to fight climate change, something’s got to give in the way we live, govern, consume, spend and create. Currently, the majority of our lives revolve around carbon – it’s a staple part of everything from our transportation systems to our basic food and shelter needs. 

You don’t have to be a climate scientist to see that if we could remove the carbon from these fundamental aspects of our lives, we’d be doing a lot better at tackling climate change. Enter: the green transition. 

What is the green transition? 

The green transition is a general concept of moving from a carbon based economy to a more sustainable economy. Many organisations, countries and businesses are pursuing a green transition in order to align with the global decarbonisation goals of 2030 and 2050, but there are also formal policies in place to facilitate a move away from carbon.

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One of the biggest is the EU’s European Green Deal. Formulated in 2019 as a response to the increasing threat of climate change, the deal is the EU’s new growth strategy. It’s designed to ensure a future that is green, resource-efficient and competitive enough to keep up with the rest of the world while combating environmental threats. 

One of the other biggest policy proposals around the green transition is the Green New Deal in the US. First conceived in 2006 by a designated task force, it then became a feature on the rostra of several Green Party Presidential candidates before being reinvigorated and placed back in the political mainstream by Alexandria Ocasio Cortez in 2018

Although the Green New Deal began as an abstract representation of political ideology and commitment to combating climate change, the Deal now has detailed objectives and structure. 

So what does the green transition aim to do exactly?

The end goal is to transform environmental challenges and climate related difficulties into prosperous opportunities that benefit everyone in society – a ‘just transition’. The EU’s policy specifically outlines boosting the economy with new green technologies, creating a sustainable industry and transport sector and cutting pollution across Europe. 

The EU also cites one of their main aims as becoming climate neutral by 2050 – essentially reducing carbon emissions as much as possible, and compensating for any remaining emissions. 

Other green transitions, like the Green New Deal, differ slightly in the semantics (they include guaranteeing a family-sustaining wage and retirement security, adequate medical care and high levels of education to all people in the US amongst other things), but their broad aims remain the same: guaranteeing a safe and green future for planet and people.

Do they actually work? 

Rolling out complex and often expensive projects and policy changes across 195 countries is no mean feat. The central EU Commission alone has to deal with 27 individual state members, who they support to design and implement the changes needed to transform from carbon-heavy to green. 

Green transitions often take the form of a complex and bureaucratic machine, but the idea is that with enough of the small cogs turning, they’ll make significant headway in the fight against climate change. 

Although the green transitions, in their many forms, can appear rigorous and far reaching, they also attract a lot of criticism. 

For some, it’s because the policies and suggestions don’t go far enough. The UK’s policy around transitioning to a green economy came under fire last year, with the head of politics at thinktank Green Alliance commenting that “there’s an embarrassing lack of progress at home from the UK government […] every major strategy has been indefinitely delayed or ditched. Businesses and communities are being held back from switching to clean alternatives and supporting a green recovery.”

The green transition is fundamentally underpinned by the aim of transforming our economy from one that relies on fossil fuels to one that is circular, sustainable and decarbonised. 

For others, the suggestions and ideas contained within the policies are too unrealistic and far-fetched. Obama’s former science advisor, John P. Holdren, commented that the 2030 goal included in the US’s Green New Deal is too optimistic: “As a technologist studying this problem for 50 years, I don’t think we can [become carbon neutral by 2030],” he said. “There’s hope we could do it by 2045 or 2050 if we get going now,” he added.

There’s also the issue of inclusivity and fairness. In a green transition, many of the people who could be hit the hardest are lower income demographics who still rely on cheap fossil fuel-powered resources rather than being financially able to invest in more expensive green technologies. 

What can businesses do? 

Businesses are a huge part of the green transition – perhaps even the biggest. The green transition is fundamentally underpinned by the aim of transforming our economy from one that relies on fossil fuels to one that is circular, sustainable and decarbonised. 

A lot of the decisions and changes needed to facilitate that transition lie in the hands of industry and business leaders.

A lot of the decisions and changes needed to facilitate that transition lie in the hands of industry and business leaders. On top of that, many governmental green transition policies provide funding and support to businesses who pursue a green transition. For example, the EU pledged 1 trillion euros to invest in sustainable businesses and clean industries. 

Andreas Rasche, Associate Dean for the Copenhagen Business School points out that businesses must take meaningful action: “It’s not like 10 years ago – corporations can’t just pay lip service to sustainability, so-called greenwashing. Nowadays stakeholders will be looking for the actions behind their words.”

Rasche is also optimistic about the power that business has to drive a green transition and create a better future for all stakeholders: “I see companies internally making progress, learning and improving. We need more leaders to take this seriously. Only then can we hope to make our big ambitions a reality.”

How can businesses thrive in the green transition?

  • Reduce costs by reducing emissions. This is beneficial for businesses across all parts of the economy, but particularly for the oil, gas, agriculture, transport, manufacturing and energy sectors.
  • Produce goods and services that will feed green capital expenditure. There’s a huge amount of growth potential here, especially for B2B companies, with capital expenditure into low carbon assets potentially reaching £40-50 trillion in the 2021-2030 period
  • Help to enable other aspects of the value chain to decarbonise. Many sectors will be in increasing need of green solutions for their business structures, especially as customer expectations continue to shift and fossil fuel prices rise. 

Further reading