The EUR 672.5 bn Recovery and Resilience Facility (RRF) is a once-in-a-generation opportunity for EU Member States to channel new funding towards reshaping economic sectors, supporting communities and restoring ecosystems while simultaneously creating jobs for resilient societies and contributing to a healthy and just economic recovery. To access EU funds for their pandemic recovery, Member States submitted National Recovery and Resilience Plans (NRRPs) to the European Commission that outline reforms and investments for recovering from the pandemic.
The disbursement of funds within the NRRPs depends on a variety of conditions. For example, reforms and investments have to meet the Do No Significant Harm (DNSH) principle, 37% of investments must be spent on climate and measures should be in line with the recommendations from the European Semester and the EU flagship projects. These conditions provide an effective and innovative approach to policy design. They are an important first step to make the case for what a recovery can look like; that is not about returning to business as usual, but about promoting the profound changes the EU needs to thrive. However, it remains an open question whether the ambitious guidelines by the Commission effectively translated into systemic measures that address the root causes of the EU’s persistent social and environmental challenges together.
Against this background, a new report by the Institute for future-fit economies (ZOE) based in Bonn, presents a novel methodology to assess the systemic scope of the NRRPs and help policymakers in the assessment of measures within the plans: the Recovery Index for Transformative Change (RITC).
On the one hand, our assessment examines the potentials and risks of investments and reforms of individual NRRPs that either promote or hinder transformative change. On the other, our analysis paints a comprehensive picture about the kind of future that is promoted through investments and reforms in the NRRPs using a sectoral lens that also links to the flagships of the European Semester.
Transformative change in our analysis is structured into two clusters: The width of change refers to the potentials and risks of the policies to enable a just transition and at the same time ensure the protection of the natural world; the depth of change refers to the structural aspects of a systemic change. The latter examines whether the plans address the root causes of current ecological and societal problems.
The unique value of our analysis lies in drawing special attention to whether interconnected problems are recognised in the NRRPs and addressed as such, rather than siloed solutions. We assessed whether reforms and investments are cross-cutting and facilitate systemic change towards a regenerative, distributive and resilient economy, rather than stabilising the status quo. Our assessment through the RITC shows that while each of the 13 NRRPs has its strengths and weaknesses, overall none fulfill all the criteria needed for delivering the kind of deep transformation needed for Europe to thrive. The assessment of the NRRPs through the RITC revealed three common shortcomings across the plans:
- A general lack of rigorous application of the DNSH principle which often overlooks the risks to biodiversity in particular.
- In addition to supporting industries affected by the pandemic, the recovery needs to create jobs in those regions that are most affected by the digital and green transition. This will be important to decrease social polarisation in the recovery process.
- The lack of a longer-term, overarching vision of the future to be built in this process.
In many cases, our assessment revealed that the plans contain some missed opportunities, notably when it comes to translating solutions to social and environmental problems into new investments. In addition, the analysis found that the plans mainly focus on investment and renewal. Strategies are lacking on how to phase-out current entrenched unsustainable practices and policies, for example through environmental taxes, social and environmental safeguards or regulations.
This report provides a detailed breakdown of the RITC’s analysis of the plans by sector. It offers specific examples of measures which take a transformative approach. In addition, it explains why and how some measures need improvements to comply with the guidance from the Commission and to contribute to overarching strategic goals like realising the European Green Deal or the Sustainable Development Goals. This sectoral analysis of the NRRPs not only connects to measuring contributions to the flagships, but it also illustrates emerging trends for the EU as a whole and thus provides insights on what kind of future we can expect from the plans and what more needs to be done.
Source: ZOE. Institute for future-fit economies gUG, 09 June 2021