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Priorities to Restore and Accelerate SDG Progress in Europe and Globally

Part 2

The EU, its institutions and member states played a key role in the adoption of the 2030 Agenda, the SDGs and the Paris Climate Agreement. From the outset, the EU and its member states led the call for an integrated, universal agenda that would build upon the outcome of the United Nations Conference on Sustainable Development in Rio de Janeiro (2012) while continuing the focus of the eight Millennium Development Goals (MDGs) on ending extreme poverty in all its forms, adding critical issues of environmental sustainability, social inclusion, economic development and governance challenges (European Commission, 2015). Article 11 of the Treaty on the Functioning of the European Union stipulates that ‘Environmental protection requirements must be integrated into the definition and implementation of the Union’s policies and activities, in particular with a view to promoting sustainable development’ (European Union, 2007). The SDGs are an expression of both European and global values of solidarity, equality, human dignity and the rule of law (among others).

The President of the European Commission, Ursula von der Leyen, showed remarkable commitment to the SDGs when taking office in 2019. The Commission has since published a Reflection Paper (European Commission, 2019) and Staff Working Document (European Commission, 2020) on the goals. With the launch of the European Green Deal in 2019, Europe became the first continent to commit to achieving climate neutrality by mid-century, and three years later, 129 countries have established net-zero climate targets, representing 88% of current total greenhouse gas emissions (Figure 2.1). It is becoming very difficult for countries to show up at international summits and conferences without a net-zero target. This speaks to the EU’s capacity to steer the rest of the world towards raising SDG and climate ambitions.

Figure 2.1 | Overview of net zero targets by country and target year

Figure 2.1 | Overview of net zero targets by country and target year

Source: Net Zero Tracker (2022); Climate Watch (2022). Published in FABLE, 2022.

The SDGs have been integrated into various EU policy processes – notably the European Semester (the lead process for macroeconomic coordination) and the Better Regulation policy. In addition, other EU organisations such as Eurostat, the EEA and the JRC have been mobilized to review and track progress towards the Goals. Besides the European Commission, both the Council of the European Union and the European Parliament have repeatedly stressed their commitment to the SDGs. All 27 EU member states have presented at least one voluntary national review to the United Nations, and in 2023 the first EU-wide voluntary national review will be presented.

Yet the EU still lacks clarity on how it plans to achieve the SDGs. In June 2022, the European Parliament published a resolution calling for the Commission to adopt a new high-level EU 2030 Agenda implementation strategy (European Parliament, 2022a). While the Green Deal covers the climate and biodiversity dimensions of the SDGs quite well, it focuses less on social dimensions. In its annual SDG report, Eurostat has identified politically agreed targets for only 22 of 101 indicators, primarily focusing on climate change, energy consumption, employment and education – leaving major SDG indicators lacking agreed EU targets. An initial mapping of the nine Green Deal pillars against the SDGs found, as was expected, stronger linkages to climate and biodiversity SDGs (SDGs 12 through 15) than to socio-economic goals, notably SDG 5 (Gender equality) (Koundouri and Sachs, 2021). Using text mining and deep-learning techniques, a review of 22 major European Commission policy documents published since the European Green Deal was approved in 2020 – including the climate law and circular economy action plan as well as the smart mobility and ‘farm to fork’ strategies – found that only limited focus was given to SDG 1 (No poverty), SDG 4 (Quality education) and SDG 5 (Gender equality) (Koundouri et al., 2022). In its recent report on the performance of the EU budget, the European Court of Auditors found that out of the EU’s five horizontal policy priorities (climate, biodiversity, gender, SDGs, and digital) the SDGs, although referred to in all programmes, were the least mentioned objective, after gender. With climate, biodiversity and gender being core SDG issues by themselves, also this result speaks to the lesser recognition of the social dimension of the SDGs in EU policies (European Court of Auditors 2022).

As emphasized by the SDSN, the European Parliament and other organizations, the EU needs to develop an integrated and comprehensive approach to implementing the SDGs and must communicate clearly on them. It can build on the 2020 Staff Working Document and the Council of the EU Conclusions published on 22 June 2021. The SDGs can be the right compass to reduce the complexity of EU’s policies and instruments for sustainable development and engage with citizen and scientists to define pathways at various levels. The concept of key SDG transformations can help provide a more operational narrative and pathway to achieve the SDGs. SDSN and partners have identified Six Transformations that the EU needs to implement in parallel to achieve the SDGs. Some of these transformations are well covered in the European Green Deal, others are covered at least partly in other policy documents. Put together and amended, these transformations could form the core of an EU SDG implementation strategy around which policy action can be organized.

2.1 Internal Priorities: Six SDG Transformations

As underlined by the SDSN for some years, the SDG transformations concept can help provide a narrative that is operational and easy to communicate, build on synergies and trade-offs across goals and targets (Sachs et al., 2019). Prior editions of the Europe Sustainable Development Report have proposed six SDG transformations for Europe (Box 3). Some of these are addressed, or partly addressed, by the European Green Deal, while others may be covered through different policy documents (SDSN and IEEP, 2020). The social and economic SDGs also need clear targets and milestones. The 2030 target of reducing the number of people at risk of poverty or social exclusion by at least 15 million goes in the right direction, and the same applies to recent targets adopted to boost skills and employment in the EU.

Box 3. Six SDG Transformations for Europe

The 17 SDGs and their 169 targets describe goals to be achieved by 2030, but they do not identify how the EU and its member states might organize themselves to achieve these targets. Several groups have proposed broadly consistent sets of six transformations that together could achieve the SDGs. These include The World in 2050 (TWI2050, 2018), Sachs et al. (2019), and the UN independent group of scientists, appointed by the Secretary-General (2019). At member states level, Germany is working with a similar set of six transformations and has established an inter-ministerial ‘transformations team’ as part of its efforts to implement the SDGs.

In the 2020 Europe Sustainable Development Report we proposed six ‘SDG Transformations’ that align well with the EU’s signature policy initiatives including the Green Deal. These six SDG Transformations can help the EU map out an operational strategy that addresses key synergies and trade-offs and reduces complexity by focusing on these six priority areas, supporting stakeholder engagement around each transformation. These Transformations are important tools for strengthening policy coherence across EU instruments and among member states.

The six Transformations are presented below, along with their links to the eight ‘transformative policies’ of the European Green Deal.

1. Education, Skills, Decent Work, and Innovation: Ensure top-quality education, including lifelong learning, for all Europeans and strengthen innovation in strategic technologies and industries. [Partly covered in EGD 2.2.3]

2. Sustainable Energy: Promote energy efficiency, achieve zero-carbon power generation, decarbonise industry and create new jobs. [Covered by EGD 2.1.1 and 2.1.2]

3. Sustainable Communities, Mobility and Housing: Strengthen cities and other communities by promoting sustainable and smart mobility, renovating housing, ensuring sustainable building standards and supporting new jobs. [Partly covered by EGD 2.1.4 and 2.1.5]

4. Sustainable Food Production, Healthy Diets, and Biodiversity Protection: Ensure sustainable agriculture and ocean use, promote healthier diets and behaviours, and protect and restore biodiversity and ecosystems with decent incomes for farmers and fishermen. [Covered by EGD 2.1.6 and 2.1.7]

5. Clean and Circular Economy with Zero Pollution: Curb pollution, reduce material consumption and minimise the environmental impact of European industry and consumers. [Covered by EGD 2.1.3 and 2.1.8]

6. The Digital Transformation: Build cutting-edge digital infrastructure, strengthen innovation, and protect citizen’s rights to their data and European democracy. [Not covered by EGD]

While public health remains primarily the responsibility of individual member states (which is why ‘health’ is not included within the proposed six SDG transformations), measures adopted in the MFF and EU4Health work program should strengthen the European Health Union and its ability to complement national health policies. The Recovery and Resilience Facility targets an estimated €40 billion to health actions, including towards workforce training and accelerating the digitization of health systems.

At the member states level, in autumn 2022, Germany announced its creation of inter-ministerial transformation teams to accelerate SDG implementation. This strategy is structured around six transformations and five policy levers, including international partnerships and cooperation, (Federal Government of Germany, 2022). The approach explicitly builds inter alia on the framework proposed by the SDSN.

Previous editions of the Europe Sustainable Development Report have detailed key priorities and tools that could be leveraged to advance each of these six SDG Transformations. In the following section we briefly present the main objectives of each transformation and consider how short-term and long-term actions might be reconciled. We also explore potential opportunities to leapfrog on shifting narratives and rising awareness (about the need to accelerate the energy transition, for instance).

In Part 3, ten experts share their views on priorities to advance the six SDG Transformations.

Transformation 1. ‘Education, skills, decent work, and innovation

To achieve the SDGs, the EU needs to ensure top-quality education, including lifelong learning, for all Europeans and strengthen innovation in strategic technologies and industries. EU countries must increase investments in innovation, educational quality and the development of skills for lifelong learning, including digital skills for all. Critical instruments include the European Education Area, Horizon Europe, and the Green Deal EU missions. This Transformation is only partly covered in EGD 2.2.3 ("Mobilising research and fostering innovation"), however other policy instruments including the European Education Area aim to advance this transformation at the EU level.

Transformation 1 is important to build public support and strengthen the EU’s resilience. In a context of high inflation and rising interest rates, as well as likely recession in many European countries in 2023, particular attention must be given to addressing inequalities within European countries, and to targeting the most vulnerable while boosting education and skills for sustainable development.

The ‘leave no one behind’ (LNOB) Index presented in this report reveals that vulnerable groups are being disproportionately affected by multiple crises, which has increased poverty in some European countries. The LNOB Index shows persisting gaps in access to and quality of key services within and across countries, especially in relation to education systems. In addition to gaps in access to pre-primary education and lifelong learning, there are also gaps in learning outcomes in maths and science across EU member states and within countries, with worse performance linked to lower socioeconomic status. According to major international studies, few 15-year-old students are able to make the distinction between a fact and an opinion – less than 10% in France, for instance (OECD, 2019). These are problematic challenges, especially as STEM education is key for the twin green and digital transformations. The ability to navigate an information-rich environment is crucial for sustainable development and peace to flourish in a post-truth, social-media era. The effective functioning of Europe’s democracies and institutions, which are at the core of the sustainable development transition, depends on their capacity to provide equal opportunities and boost education and skills for all.

Transformation 2. Sustainable Energy

The EU should double down on efforts to decarbonise industry, boost energy efficiency, achieve zero-carbon power generation, and create new jobs. A central pillar of the Green Deal, sustainable energy actions focus on mobility, buildings and industry, and decarbonizing power generation and transmission. The bulk of the decarbonization will result from a mix of energy-efficiency measures and smart grids that use clean, zero-carbon fuels. Success will require clear trajectories and roadmaps, as is recognized by the European Climate Law. This Transformation is very well covered by the EGD.

To a large extent, the EU’s responses to recent crises have clarified the way forward on Transformation 2: accelerate the European Green Deal through a massive scale-up of renewable energy and integrated, digital power grids. Together, the Green Deal and the European Climate Law have established a clear pathway towards decarbonizing the Union’s energy system: cut greenhouse gas emissions by 55% by 2030 (and even 57% as announced during COP 27) and achieve net-zero emissions by 2050. The energy crisis is largely due to increased fossil fuel prices and supply bottlenecks, which makes it crucial that Europe doubles down on its investments in renewable energy (mainly solar, wind, geothermal and hydropower) and energy efficiency measures, as highlighted in the Commission’s REPowerEU Plan.

According to the European Environment Agency (EEA), the prospects of meeting the EU target of 32% renewable energy by 2030 remain uncertain (Figure 2.2). There are persisting differences across EU member states in the uptake of renewable energy (Figure 2.3). Yet the European Commission has in fact proposed amending the Renewable Energy Directive and raising the 2030 target to 40%, towards achieving climate neutrality by 2050 (EEA, 2022). Interestingly, in the face of the current energy crisis, even fragmented institutions and parliaments have managed to reach consensus on the need to double down on efforts to roll out renewable energy (Time News, 2022).

Figure 2.2 | Progress towards renewable energy source targets for EU-27

Figure 2.2 | Progress towards renewable energy source targets for EU-27

Source: European Environment Agency (EEA), 2022

Figure 2.3 | Progress towards renewable energy source targets, by country

Figure 2.3 | Progress towards renewable energy source targets, by country

Source: European Environment Agency (EEA), 2022

Collective borrowing to finance the Recovery and Resilience Facility in response to COVID-19, along with the EU-wide vaccine strategy, demonstrated that the EU and its member states can work together and act decisively to boost their resilience. The EU action plan to digitize its energy system (presented by the European Commission in October 2022) and its strong support for other energy transition initiatives focusing on introducing integrated and smart grids throughout the EU are welcome steps (European Commission, 2022). A mix of different types of renewable energy combined with integrated and digital power grids can support a clean, efficient and reliable energy transformation in the EU – one that addresses the base-load issue and promotes the Union’s strategic interests and security. Measures that delay or go against decarbonization of the energy system in the EU weaken its position internationally and, possibly, hamper global efforts to achieve the SDGs and meet the goals of the Paris Climate Agreement.

Transformation 3. Sustainable communities, mobility and housing

This Transformation emphasizes the importance of strengthening cities and other communities by promoting sustainable and smart mobility, renovating housing, ensuring sustainable building standards and supporting new jobs. The SDGs and the objectives of the European Green Deal both have a strong territorial dimension. Communities across Europe – be they large metropolises, cities, small towns, villages or rural settlements – all need to become more liveable and require sustainable mobility and housing. The role of subnational entities, including cities and regions, is crucial to achieving the SDGs and ensuring a fair transition. Stakeholder engagement and consultation processes at the subnational level can support the development of effective solutions and transformations and greater adherence by populations. This Transformation is partly covered by the EGD.

Building smart, inclusive and green cities requires managing important trade-offs: spatial planning that considers both the core city and its neighbouring municipalities is key to boosting sustainable mobility and housing. For many years, the OECD and the European Committee of the Regions (CoR), in partnership with regional and local leaders, have leveraged the SDGs as a tool to address short- and long-term policy challenges at the subnational level. The recent OECD-CoR survey found that 40% of the cities and regions surveyed used the SDGs for policymaking before the pandemic and for the COVID-19 recovery. Cities are notably at the centre of two important SDG targets: mobility and housing. Promoting sustainable mobility and low-carbon transport – by introducing congestion charges to reduce car dependence, for instance – requires careful assessment of the impacts such policies might have on the most vulnerable, and requires that accessible, quality and affordable public transport alternatives are in place. In most advanced economies, households spend from a tenth to a third of their disposable income on housing. Constructing sustainable homes based on waste recycling, sharing the costs of building social housing with real-estate developers, revising building codes and urban and regional spatial development regulations are just some of the tools that urban and regional planners can leverage to achieve long-term sustainable urbanisation and land use. Bonn (Germany) and the region of Flanders (Belgium) provide good examples of how major mobility and housing trade-offs have been addressed at the subnational level.

Transformation 4. Sustainable Food Production, Healthy Diets, and Biodiversity Protection

This Transformation calls for sustainable agriculture and ocean use, healthier diets and behaviours, and to protect and restore biodiversity and ecosystems with decent incomes for farmers and fishermen. The EU’s ‘farm-to-fork’ strategy recognizes that sustainable food production, healthy diets and biodiversity protection can only be addressed together. Siloed policies and instruments will not succeed. This transformation covers the EU’s common agricultural policy, the goal of assuring healthy food for all, the common fisheries policy, the biodiversity strategy, the EU forest strategy, and the promotion of reductions in greenhouse-gas emissions. It includes building resilience through the European Climate Law; developing a ‘long-term vision for rural areas’ through the proposed Rural Pact and Rural Action Plan supported by a zero-pollution action plan for water, air and soil; and assuring deforestation-free value chains. This is covered by EGD 2.1.6 and 2.1.7 and addressed through many other policy instruments. Last year’s Europe Sustainable Development Report included a dedicated chapter which discussed progress and challenges in implementing major transformations of food and land systems in the EU (Lafortune et al., 2021).

The transformation of food and land systems in the EU is probably the most complex of all transformations, but the implementation of policies and instruments that have already been adopted should not be delayed because of geopolitical tensions. Food systems are responsible for about a third of global anthropogenic greenhouse gas emissions, and they generate other major climate and biodiversity impacts as well (Crippa et al., 2021). Current diets are a major driver of rising healthcare costs in the EU, through rising obesity rates and chronic conditions (FABLE, 2021). To achieve the SDGs the EU must move forward with implementing its ambitious supply- and demand-side measures to transform food systems and diets. The EU has adopted a package of ambitious policies to transform its food system – notably via the Green Deal and its farm-to-fork and biodiversity strategies – and will likely soon adopt a nature restoration law. To the extent possible, derogations to respond to the consequences of the war in Ukraine and increased food prices should be temporary (including those adopted in July 2022 on crop rotation and the maintenance of non-productive features on arable land). National Common Agricultural Policy (CAP) strategic plans should align with the EU’s biodiversity and sustainability targets. According to Birdlife Europe and the European Environmental Bureau, however, CAP strategic plans alone are unlikely to achieve the EU biodiversity target of 10% of EU land being under strict protection, notably due to insufficient protection of wetlands and peatlands (EEB, 2022)

The Parliament and Council’s adoption of the EU Due Diligence Regulation and its transposal into national law should help make large companies operating in the EU more accountable for negative impacts generated through food and other supply chains. SMEs and farmers need support to learn the ‘grammar’ of sustainability and to integrate sustainability principles at the management level. An EU-wide front-of-pack nutrition labelling scheme could also help address both excesses and deficiencies in EU diets. Finally, the EU must curb its exports of toxic pesticides (which damage health and soils abroad), involve farmers from developing countries in regulatory processes, and mitigate global food insecurity and shortages (especially in Africa) by developing alternative overland routes that Ukraine can use to export its agricultural products.

Finding ways to better measure the economic value of European natural capital is also an important priority. Traditional measures such as GDP fail to capture natural benefits like pollination, regulation, and nature’s ability to mitigate disasters. This inability to account for the total economic value of ecosystems, added to the vicious cycle of overproduction and overexploitation, has led to the degradation of ecosystem services, jeopardizing current and future growth and prosperity (see the contribution by Phoebe Koundouri in Part 3 of the present report). Natural capital should not only be addressed in policy decisions but should also be a crucial factor in financial decisions and the appraisal of private-sector investments and environmental, social and governance (ESG) strategies. To reverse or prevent further degradation, incorporating the economic value of ecosystem services into mainstream public and private decision-making is pivotal.

The next revision to the Systems of National Accounts (SNA) rules – used to calculate GDP – is due by 2025. It is to be hoped that it can better reflect the value of natural capital and other SDGs (Masood, 2022). (SNA revisions are published only once every 15 years, which makes 2025 an important milestone.) UNECE and other European groups of experts on national accounts can play an important role. Eurostat’s ‘environmental accounts’, compiled to complement traditional national accounts, are already an advanced tool to measure the interaction between economic, household and environmental factors (Eurostat, 2021).

Transformation 5. Clean and circular economy with zero pollution

This Transformation requires curbing pollution, reducing material consumption, and minimizing the environmental impact of European industry and consumers. The ‘circular economy action plan’ makes it clear that the use of materials such as biomass, fossil fuels, metals and minerals, along with associated water generation, is projected to continue to increase in the EU in the short term. The ecological impact of material extraction depends on the local context of extraction, the type of materials extracted, and the technologies used. The action plan emphasizes the need for faster action, with a particular focus on key product value chains (electronics and ICT, batteries and vehicles, packaging, plastics and textiles, buildings and construction, along with food, water and nutrients). These efforts must integrate with the Green Deal’s ‘zero-pollution vision for a toxic-free environment’. This transformation is well covered by the EGD.

Geopolitical tensions, disrupted supply chains and rising inflation in Europe and other regions have recalibrated public debate in this area, which was until recently overwhelmingly dominated by production-side measures aimed at improving energy efficiency.

In her State of the Union address on 14 September 2022, Ursula von der Leyen spoke forcefully of the need to develop ‘measures for member states to reduce their overall electricity consumption’ (von der Leyen, 2022), echoing French President Emmanuel Macron’s repeated calls for ‘sobriété énergétique’ (‘energy sobriety’). On 6 October, France unveiled an action plan to cut its energy consumption by 10% over two years, while Sweden has announced its intention to become the first country in the world to set a target on consumption-based emissions – pollution generated overseas to make products for import (Morgan, 2022). Overall, 40% of the EU’s total CO₂ footprint is generated abroad.

Transitioning towards more responsible consumption and the circular economy (including recycling electronic waste) can help the EU to reduce its global footprint embodied in its supply chains (mineral, food, construction and other). More EU-wide consumption-based targets might be needed alongside ambitious instruments to track and curb negative spillovers embodied in trade. Innovation – for instance, in clean hydrogen and energy storage – may also help reduce the consumption footprint of raw material extraction and other industries.

Transformation 6. The Digital Transformation

To achieve the SDGs, the EU must invest in cutting-edge digital infrastructure, strengthen innovation, and protect European democracy and its citizen’s rights to their data. The EU and European companies must become leaders in the digital revolution if the region is to maintain its high living standards. As emphasized in the Recovery and Resilience Facility, this will require substantial investments in technology innovation and digital infrastructure. The Commission has identified critical needs, but more specificity and more ambitious targets will be required to realise the Digital Transformation, compete internationally in the digital era, promote sustainable digitization and protect EU citizens. This Transformation is not covered in the EGD, but is covered in other EU policies including the strategy adopted in 2020 for “Shaping Europe’s Digital Future”.

The Recovery and Resilience Facility rightly recognizes the importance of the digital revolution. Each national RRF plan must devote a minimum of 20% of expenditure to the digital transformation. We live in an era of unprecedented and accelerating innovation, particularly in digital technologies such as artificial intelligence, bioinformatics, big data, quantum computing, novel communication technologies, new platform business models or low-cost remote sensing. These hold the potential to combine prosperity with low environmental impacts: through smart grids, car-sharing, 3D printing, blockchain, dematerialization, home offices and new circular economy models. Currently, however, US and Chinese technology companies dominate many aspects of the digital transformation. Europe’s Digital Decade and Compass, presented in March 2021, include targets to be achieved by 2030 on digital skills, connectivity, the production of semi-conductors, quantum computing, edge and cloud, as well as e-health and digital identity. These need to be rolled out across all member states to boost convergence in productivity and living standards. New technologies, R&D and innovation can help the EU increase its strategic autonomy and achieve sustainable development. While the comprehensiveness and comparability of international R&D budgets remains a challenge, according to the OECD, the total expenditure (current and capital) on R&D carried out by all companies, research institutes, university and government laboratories in the EU is well below the levels achieved in the United States and China (OECD, 2022a).

New technologies can also exacerbate inequalities, harm political systems and social cohesion, and undermine governments’ abilities to mobilize tax revenues. The EU can build on its global leadership in setting rules for the digital transformation, including the General Data Protection Regulation. With the rise of cybersecurity threats, the EU’s Network and Information Security Directive (Nis2) must be updated and expanded: the EU should move to a far more pro-active approach to preventing and responding to cybersecurity threats and attacks, including on important public infrastructure. The Digital Markets Act and Digital Services Act also aim to provide a safer digital space and combat online misinformation. During its Presidency of the EU Council, Czechia rightly emphasized the need for a multilateral agreement on digital taxation which would include the United States. The Internet is responsible for up to 3.8% of global greenhouse gases, and the data centres that house hardware and software to run cloud applications worldwide consume as much as 2% of global energy demand. Digital technologies also pose other environmental impacts, such as their water use and e-waste. These impacts must be curbed to achieve sustainable digitization. Further work is also needed to better understand the full distributive impacts of sharing technologies, e-commerce models, AI, crypto currencies and blockchain, as well as their impacts on the future of work and future social models and policies.

2.2 Green Deal/SDG Diplomacy

The SDGs express European values of social market economy and environmental sustainability. Promoting them internationally should be a key pillar of European diplomacy and international partnerships. In an increasingly multipolar world, where multilateralism is under unprecedented pressure, European partnership, diplomacy and soft power will be vital to uphold the values incorporated in the SDGs. Without the EU’s leadership, the SDGs cannot be achieved. New frameworks for sustainable development finance and new forms of global partnerships, that work across and beyond North and South in an increasingly reciprocal way and that include technology and knowledge transfers, are crucial for concerted SDG actions and to strengthen multilateralism.

As shown in previous editions of the Europe SDR, Green Deal/SDG Diplomacy should be organized around five key dimensions: 1) EU leadership for the SDGs in the international conventions (including UNFCCC and CBD); 2) the EU’s SDG leadership in multilateral forums (UNGA, HLPF, G7, G20); 3) bilateral forums with key partners (trade agreements and relationships of particular importance with the African Union, China and the US, among others); 4) Large international infrastructure and investment projects for sustainable development (including EU’s Global Gateway, the US Build Back Better World, and China’s Belt and Road Initiatives); and 5) EU regulatory leadership (cooperating with other countries on regulatory standards in support of the SDGs.

As emphasized at UNGA in September 2022 and at COP27 in November 2022, the global dialogue must be strengthened by addressing injustices related to climate change vulnerability and boosting SDG financing. Globally, $17 trillion was mobilized for COVID-19 recovery efforts, primarily in rich countries (Beyer et al. 2021). Meanwhile low-income countries and lower-middle-income countries (LICs and LMICs) face major fiscal-space issues due to their limited or non-existent access to markets. As demonstrated by the massive floods in Pakistan in 2022, these countries are also increasingly being affected by the effects of climate change. Poor countries and emerging markets will be hit hard by macroeconomic policies in the U.S. and other advanced economies. The need to scale-up and identify better ways to finance the human capital and physical infrastructure required to achieve the SDGs and to identify financing flows and mechanisms to address climate injustice is increasingly being recognized by world leaders at international summits and conferences.

The EU and its member states must lead international efforts to finance the SDGs globally in the run up to the Heads of States Summit in 2023 and the 2024 Summit of the Future. In one step in the right direction, at COP 27 in November this year, President Macron of France and Prime Minister Mottley of Barbados launched the formation of a ‘high-level group of wise minds’, tasked with developing proposals (by spring 2023) for innovative financing solutions that could reform the international financial system to better address the impacts of climate change. Debt relief, Increased taxes on fossil fuels and a dedicated ‘global climate impact fund’ to cover adaptation costs and the costs of losses and damages in the Global South should all be on the table (J. D. Sachs et al., 2022). While some, albeit not all, European countries have delivered their share to the $100 billion that rich countries promised in 2009 to finance climate actions in developing countries, this has not been the case for other major advanced economies: including Australia, Canada and the United States (Colenbrander et al., 2022). The EU and member states should champion these discussions on climate justice and the SDG Stimulus, bringing these up systematically in multilateral and bilateral exchanges, including in the G20.

The Council’s conclusions on climate finance, adopted on 4 October 2022, stress the need to scale up climate support for developing countries, notably via the deliberations on the New Collective Quantified Goal on Climate Finance taking place until 2024. They specifically highlight ‘the importance of integrating climate action within the broader development planning and national financing frameworks of recipient countries, in support of the achievement of specific national targets related to Sustainable Development Goals’. The new EU High Level Expert Group on scaling up sustainable finance in low- and middle-income countries, established earlier this year, can help identify private financing flows to support the external dimension of the Green Deal and a green, just and resilient recovery in partner countries. Their conclusions are also expected by spring 2023, in time for the SDG Summit.

In general, multilateral development banks (MDBs) – including the World Bank, the European Investment Bank and other regional banks – can support long-term investments in developing countries. The European Investment Bank (one of the largest MDBs) has already developed a methodology to track and report the SDG impact of its projects (EIB, 2022). By borrowing large sums from international capital markets at reasonable rates, MDBs can expand lending to developing countries on favourable terms (long maturities with low interest rates) (Sachs et al. 2022). The G20 must work with the MDBs on strategies to increase their lending capacities and annual flows, which will mainly involve providing more paid-in capital, but could include increasing the leverage of their balance sheets.

Large infrastructure projects led by the EU (such as the Global Gateway), the US (Build Back Better World) and China (Belt and Road initiative) should work together to support access to digital infrastructure and cleaner energy and production systems in Africa and around the world. Rather than perceiving multipolarity as a threat, Europe should value it as an opportunity. New EU partnerships with Kazakhstan, Egypt and Namibia on renewable hydrogen, established at COP27 as part of the Global Gateway programme, may demonstrate the value of these new forms of alliances for sustainable development.

Early lessons, notably from the Just Energy Transition Partnership between South Africa and Germany, France, the United Kingdom, the United States and the EU (launched in 2021 at COP26 in Glasgow), suggest that the success of such pledges to support difficult transitions abroad may depend on the scale and type of financing mobilized (grants versus loans) and on policy coherence ("reciprocity") within the EU: so that the EU is not perceived as ‘offering a pill it doesn’t want to swallow’1. This emphasizes the importance for the success of SDG/Green Deal Diplomacy of not delaying implementation of the Green Deal in the EU.

The EU must lead on multilateral Green Deal and SDG Diplomacy, collaborating with Brazil, China and India as well as Africa, notably within the G20. But global alliances around the SDGs will be stillborn if they are forged solely from within the EU and G7. Instead, the EU and its member states should work together to strengthen and reform more diverse and universal formats, such as the G20 and the UN. As members of both the G20 and the G7, the EU, France, Germany and Italy should form a dedicated ‘Team Europe for the SDGs’ that can work closely with the incoming presidencies of both groups to get the SDG agenda back on track (2023, G20 India and G7 Japan; 2024, G20 Brazil and G7 Italy; 2025, G20 South Africa and G7 Canada). The recent commitments by the G20 Summit in Bali, Indonesia in November 2022 to achieve and finance the SDGs provide a good starting point for concrete and jointly designed next steps. Ensuring adequate representation of developing countries, including in Africa, at the G20 should remain a priority. The EU should join others in proposing and pushing through a full membership of the African Union in the G20, turning it into a G21. Open dialogue and collaboration with China in areas ranging from the production and distribution of medical supplies and vaccines to infrastructure projects in Eurasia or cooperation in Africa will be critical. For demographic and economic reasons, but also to achieve global climate objectives, strengthening the alliance with India is also of utmost importance, notably via the adoption of a free-trade agreement in 2023. The same applies to Brazil, especially after the results of its recent federal election, where there will be a necessary focus on saving the Amazon rainforest and progressing on the ratification of the EU-MERCOSUR trade agreement. Finally, the EU must also play a significant role both in the development of a global pandemic treaty and at the 2023 pandemic and universal health coverage summit, building on lessons learned from the COVID-19 pandemic to better prevent and respond to future pandemics, notably via One Health approaches.

2.3 International spillovers and policy coherence

To maintain its international legitimacy and credibility the EU must lead efforts to restore and protect the global commons and address negative international spillovers. The International Spillover Index presented in Part 1 underlines the negative impacts generated by EU countries, and other rich countries, through unsustainable supply chains and illicit financial flows.

In its June 2022 SDG resolution, the European Parliament pointed out that ‘many EU internal policies not only contribute to the implementation of the SDGs, but also have a very high ecological, social and economic spillover impact on developing countries and vulnerable groups and populations’. It called on the European Commission to prepare a communication on policy coherence before the end of its mandate, to include quantitative and qualitative indicators (European Parliament, 2022b).

Deglobalization and protectionism would be a profoundly counterproductive response to curb negative spillovers embodied in trade and consumption. Trade is a significant source of income and employment in low- and middle-income countries, and deglobalization is inflationary. A sound, ambitious global response should build on partnerships and prioritize concerted efforts, led by rich countries and the G20, to improve living standards in poorer countries and invest in clean technologies and infrastructure to achieve the SDGs and climate goals (as discussed in section 2.2).

Besides international partnerships, the EU needs a coherent package of policies to curb negative consumption-based spillovers, supported by a clear communication strategy. Measures and policies to strengthen sustainability in EU trade agreements and corporate due diligence should be part of this package – notably through the recently adopted Corporate Sustainability Reporting Directive (CSRD) and the forthcoming EU Due Diligence Regulation. Public management practices and procedures, particularly public procurement and regulatory impact assessments, should also be leveraged to prevent unintended consequences of domestic policies. If well designed, carbon border adjustment mechanisms and import bans – like the one adopted by the EU in September 2022 to tackle imported deforestation –may also help. Consumption-based targets, diet and energy efficiency measures, and innovation can help curb spillovers in the food, minerals and other supply chains. All of these measures must be supported by strong enforcement mechanisms and comprehensive data systems at EU, national, industry and corporate levels. We commend Eurostat for including a full chapter on spillovers and transboundary impacts in its annual SDG monitoring report.

By communicating clearly on the package of financial and policy levers mobilized to curb negative spillovers, and by not delaying implementation of the Green Deal at home, the EU can invest in its SDG credibility, increase its steering effect for sustainable development, and rally other countries around its foundational values.


The Europe Sustainable Development Report 2022 is the fourth edition of our independent quantitative report on the progress of the European Union and its member states towards Sustainable Development Goals (SDGs). The report was prepared by teams of independent experts at the Sustainable Development Solutions Network (SDSN) and SDSN Europe.

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Lafortune, G., Fuller, G., Bermont-Diaz, L., Kloke-Lesch, A., Koundouri, P., Riccaboni, A. (2022). Achieving the SDGs: Europe’s Compass in a Multipolar World. Europe Sustainable Development Report 2022. SDSN and SDSN Europe. France: Paris.

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