The European Union is doing too little to ensure an end to environmental pollution of air and soil. Transitioning to a net-zero emissions economy requires not only substantial government subsidies but also large private investments.
The EU is not doing enough to ensure sufficient funding flows to sustainable activities, according to a conclusion from the European Court of Auditors (ECA). The auditors criticize the lack of measures to address the consequences of pollution.
"The EU’s action on sustainable finance will only fully take effect once additional measures are taken to price in the environmental and social costs of unsustainable activities," said Eva Lindström, the member of the European Court of Auditors responsible for the report.
"Unsustainable business practices are still too profitable. The Commission has done a lot to make this lack of sustainability transparent, but this underlying problem still needs to be addressed."
The primary cause cited is that the costs of cleaning up environmental pollution are not sufficiently reflected in product prices. Many economic activities remain carbon-intensive.
To achieve a 55% reduction in greenhouse gas emissions by 2030, the European Commission estimates that the energy system alone will require an additional annual investment of approximately 350 billion euros.
Experts have estimated that the transition to net-zero emissions requires annual investment expenditures of about 1 trillion euros. So far, EU budgets have provided more than 200 billion euros per year. This demonstrates the scale of the investment gap and shows that government funds alone will not be sufficient to achieve the aforementioned objectives.