Challenging change
Competition is vital for business, but current laws could be hampering – or even discouraging – collective efforts to go green. How could competition law work better to help achieve net zero, and what is being done about it across Europe?
In the aftermath of the collusion of several car manufacturers to prevent the adoption of emission-reducing technologies, the Competition and Markets Authority is preparing to advise the UK government on how competition law can better support sustainability goals. Across Europe, awareness of the limitations – and potentially counteractive effect – of current competition law is growing.
“At CISL we bring groups of companies together to identify and help us find solutions to shared challenges for business and finance,” says Nick Villiers, Director of the Centre for Sustainable Finance at the University of Cambridge’s Institute for Sustainability Leadership (CISL). “The challenge of moving to a sustainable economy requires systemic change, which in turn requires firms to work collaboratively. However, we’re very conscious of working within the bounds of current competition law.
“When we convene groups of firms, we always reference competition law and the need to avoid sharing commercially sensitive information, but our focus is instead on developing insights and solutions for all market participants. The need to maintain competition between firms, and therefore provide choice to customers, is important but must be balanced with the need to collaborate on system-level solutions to limit global temperature rises and deliver the UN’s Sustainable Development Goals.
Villiers references the publishing of draft guidelines on sustainability agreements [link: https://www.acm.nl/en/publications/draft-guidelines-sustainability-agreements] by the Netherlands Authority for Consumers and Markets (ACM), which has suggested a refresh of current laws to encourage the consideration of any sustainability benefits to wider society.
“It advocates that companies and financial institutions coming together to find shared solutions to these global challenges, which is something we should be encouraging, rather than preventing,” says Villiers.
“Good design can be very complicated to achieve, especially when things are changing fast,” said Margrethe Vestager, the European Commissioner for Competition, at the State Aid High Level Forum of EU Member States.
“For example, when there is a need to add new features or update systems. Right now, the world is changing fast. We are in a health crisis. And we do have to add new features and update systems. COVID has sped up our digital transition. Climate change becomes more pressing by the day. And we are at a crucial point in steering our recovery out of the current economic crisis.
“We have a lot on our plate to ensure that competition policy works seamlessly to support a green and digital recovery.”