A future-fit recovery? - A sectoral analysis of practices for promoting systemic change in the NRRPs based on the Recovery Index for ...
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A future-fit recovery? A sectoral analysis of practices for promoting systemic change in the NRRPs based on the Recovery Index for Transformative Change (RITC) ZOE-Institute for future-fit economies Transformation Report #1 — 06/2021
Imprint Authors Elizabeth Dirth, Jonathan Barth, William Davies, Max Gründahl, Jakob Hafele, Emmet Kiberd, Lydia Korinek, Christiny Miller. Analysis Team Elizabeth Dirth, Jonathan Barth, William Davies, Rebekah Diski, Max Gründahl, Jakob Hafele, Simon Hill, Emmet Kiberd, Lydia Korinek, Chaitanya Kumar, Tiffany Lam, Christiny Miller Please cite as Dirth, E., Barth, J., Davies, W., Gründahl, M., Hafele, J., Korinek, L., Kiberd, E., Miller, C., (2021) A future-fit recovery? A sectoral analysis of practices for promoting systemic change in the NRRPs based on the Recovery Index for Transformative Change (RITC). ZOE-Institute for future-fit economies: Bonn. Transparency This work was made possible thanks to the financial support from the MAVA Foundation. Layout and design concept Drees + Riggers Cover photo Andreas Kind / unsplash.com Copyright © ZOE-Institute for future-fit economies, 2021 The views expressed in this document are those of the authors and do not represent the official position of ZOE-Institute for future-fit economies. This publication and its contents may be reproduced as long as the reference source is cited.
A future-fit recovery?
A sectoral analysis of good and bad practices for
promoting systemic change in the NRRPs based
on the Recovery Index for Transformative Change
(RITC)
Executive summary
The EUR 672.5 bn Recovery and Resilience Facility (RRF) is a once-in-a-genera-
tion opportunity for EU Member States to channel new funding towards reshap-
ing 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, this report presents a novel should be methodology to
assess the systemic scope of the NRRPs and help policymakers in the assess-
ment 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 comprehen-
sive picture about the kind of future that is promoted through investments and
reforms in the NRRPs using a sectorial lens that also links to the flagships of
the European Semester.
3Transformative 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 transi-
tion 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 exam-
ines 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 deliver-
ing the kind of deep transformation needed for Europe to thrive.
The assessment of the NRRPs through the RITC revealed three common short-
comings across the plans:
1. A general lack of rigorous application of the DNSH principle which often over-
looks the risks to biodiversity in particular.
2. 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.
3. 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 improve-
ments to comply with the guidance from the Commission and to contribute to
overarching strategic goals like realising the European Green Deal or the Sustain-
able 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.
4Transformation Report #1 A future-fit recovery?
Introduction The NRRPs submitted to the European Commission
by each EU Member State represent an important
A year into the pandemic, there is global recogni- opportunity to channel new funding towards reshap-
tion that the recovery process should not just be ing economic sectors and restoring ecosystems, for-
focussed on a return to business as usual. Unprec- ests and land, while simultaneously creating jobs for
edented public health and economic crises have resilient societies and contributing to a healthy and
revealed substantial shortcomings in the way our just economic recovery3. These plans outline invest-
economies are run and highlighted and exacerbated ments and reforms for recovering from the pandem-
pre-existing inequalities. While the European Union ic, and together paint a picture of what the future of
(EU) grapples with these challenges, the scale of Europe looks like.
Member States’ collective response to the pandem-
ic shows both the potentials and risks for rapid and The European Commission set out mandatory crite-
large scale transformation in the face of a crisis. In ria to assess NRRPs’ green credentials, namely the
parrallel to the pandemic, climate change, acceler- Do No Significant Harm (DNSH) principle. This frame-
ating biodiversity loss and increasing social polari- work represents a big step forward in efforts to intro-
sation within the EU pose a substantial challenge duce greater scrutiny for investment in general, and
to our current societal and economic systems1. The public investment specifically. It facilitates large-
recovery process to the pandemic offers an oppor- scale funding going towards climate objectives and
tunity to not just tackle the public health crisis, but was introduced to limit environmentally-damaging
also work towards transitioning the economy to one activities and impacts of investments and reforms.
that is low-carbon, resource-light and that restores A rigorous, thorough, and evidence-based DNSH
nature while creating high social welfare and cohe- would be a radical shift in how the EU approaches
sion at the same time. public investment. However, as our analysis shows,
the application of this principle did not reach its tran-
The economic recovery from the pandemic provides formative potential. More strict adherence to the
a unique opportunity to rebuild the EU economy so principle of DNSH is needed for systemic change.
that it becomes fit for the future and people and
nature can thrive. Creating an economy that equal- To achieve the necessary systemic change to address
ly addresses economic, social and environmental the overlapping and intersecting challenges the EU is
challenges requires policymakers to think of long- currently facing, plans also need to take a systemic
term solutions in a systemic manner2. It requires a approach. This means not only rigorous environmen-
novel and integrated assessment of policy impacts tal DNSH assessment, but also this level of scrutiny
to boost out-of-the-box solutions and public policy for social objectives and interconnected challenges.
innovation. To do that we have developed the Recovery Index
for Transformative Change (RITC) that aims to sup-
It is in this context that we have undertaken an anal- port policymakers in looking at the NRRPs through a
ysis of the National Resilience and Recovery Plans systemic lens.
(NRRPs) across the EU to understand how far Mem-
ber States commited to innovative systemic solu- The RITC aims to assess the extent to which the
tions and what still needs to be done to achieve sus- measures found in Member States’ NRRPs make use
tainable prosperity in Europe. of the innovative potential for policy design, root-
1 European Commission. (2019). Communication from the Commission to the European Parliament, The European Council,
the Council, The European Economic and Social Committee and the Com-mittee of Regions. The European Green Deal.
https://ec.europa.eu/info/sites/default/files/european-green-deal-communication_en.pdf
2 ZOE. Institute for future-fit economies. (2021). Towards a resilience donut: Recommendations for operationalising
and mainstreaming resilience. https://zoe-institut.de/en/publication/3636/
3 For more information about the NRRPs and Resilience and Recovery Facility which funds the NRRPs, please see
https://zoe-institut.de/en/publication/systemic-change-for-a-resilient-europe/
5Transformation Report #1 A future-fit recovery?
ed in the DNSH, and deliver the kind of transforma- Methodology
tive change required. Through the RITC analysis, we
also provide recommendations on how NRRPs might The framework of the RITC examines the potentials
better contribute to an environmentally and socially and risks of investments and reforms to help or hin-
just transition. This index differs from other assess- der transformation. The RITC consists of four sets
ments of the NRRPs like the Green Recovery Track- of indicators: three at the “component level” (where
ers and the Greenness of Stimulus Index by looking a collection of investments and reforms are cate-
at the whole plans, and not just climate measures, by gorised under one banner), and the last set look-
taking a deeper look at the transformative potential ing more holistically at the entire plan and the pol-
(and risks) of investments and reforms in the plans icy coherence between the various components. At
as well as a holistic view of the plans and the policy the component level, we examined characteristics
coherence between elements within 4. We look not which contribute to the width and depth of trans-
only at level of funding, but at the design of instru- formative change.
ments and measures. It is designed to complement
these other indexes that take a sector-specific view The width of change refers to the cross-cutting reach
of the investment reforms (e. g., whether they reduce of a policy measure which contributes towards mul-
waste, reduce carbon emissions, provide jobs etc.)5. tiple objectives at the same time. In this sense, sys-
temic change is about steering the transformational
This report summarizes the analysis from the RITC. journey towards an ambitious European Green Deal.
It provides an overview of the potentials and risks of For policies to be systemic, the reaction to any kind of
13 Member States to deliver transformative change challenge – be it from COVID-19, social polarisation,
through their NRRPs. It offers specific examples of digitalisation, environmental degradation or demo-
measures which take a transformative approach, graphic change – should contribute to the creation
as well as explaining why and how some measures of a thriving Europe that is both sustainable and fair 6.
need improvements to build a resilient economy. In The RITC assesses the width of change through four
this way we illustrate specific ways in which coun- indicators for the protection and enhancement of the
tries are delivering a systemic transformation, and Natural World and five indicators which address the
also specific ways in which measures need to be social dimensions of a Just Transition as illustrated
improved. We break down this analysis by sector, in the table below.
rather than country, as no country had a plan with-
out weaknesses or risks. In addition to this summary The depth of change explores whether the interven-
report, country profiles for each Member State that tions tackle the “root causes” of a challenge, wheth-
we analysed will be available on the ZOE institute er this be environmental or social. Systemic poli-
website. cies are creative solutions to problems (such as bio-
diversity loss or social inequality) which change the
underlying mental models, norms, relationships,
financials flows and policies in a way that the symp-
toms no longer occur, rather than fighting the symp-
4 Vivid Economics. (2021). Can’t see the wood nor the trees: Nature is largely missing from the National Re-covery and
Resilience Plans.
5 See for example: Bankwatch & Euronatur. (2021). Building Back Biodiversity: How EU Member States fail to spend the recov-
ery fund for nature. https://www.euronatur.org/aktuell/detail/news/missed-opportunities-for-biodiversity-conservation/
Or: Vivid Economics. (2021). Can’t see the wood nor the trees: Nature is largely missing from the National Recovery and
Resilience Plans.
6 ZOE. Institute for future-fit economies. (2021). Systemic change for a resilient Europe: Sustainable transformation through
the NRRPs. https://zoe-institut.de/en/publication/systemic-change-for-a-resilient-europe/
6Transformation Report #1 A future-fit recovery?
toms themselves7. In this sense, systemic change Assessment Process
means “changing the formal and explicit (policies,
practices, resource flows), as well as informal and Each plan was divided into eleven sectors across the
semi-implicit (power dynamics, relationships and themes that were most prevalent in countries’ plans:
connections) and implicit (mental models) institu-
tions of today’s economies 8.” • administrative & fiscal reform;
• social policy, education & employment;
Using these two characteristics as a frame, compo- • mobility;
nents received a positive score for their ability to • energy;
contribute positively to the indicator or a negative • biodiversity, bioeconomy & agriculture;
score for potential risks and harmful lock-ins. Where • digitalisation;
there was both positive and negative in one com- • innovation & business & industrial policy;
ponent, these could cancel each other out for a 0. • built environment & material use;
For Width, components are ranked for each criteri- • health;
on either 1 for “strong potential” or 0 if “not strong • culture & tourism;
potential”, and either -1 for “strong risk” or 0 if “not • and sea & marine issues.
strong risk”. For Depth, components are ranked for
each criterion on a scale of -1 to 3 (-1 = Negative The plans were assessed at the component level
effect, 0 = None, 1 = Low, 2 = Moderate, 3 = High). rather than by each individual measure. Since each
If there was not enough information to have some country had a different number of components and
kind of indication of the direction, the component interventions, scores were averaged according to
was assessed with a 0 for that factor. Therefore, our each indicator. After the component-level assess-
scoring is relatively conservative. ment of the plans, each plan was then reviewed
holistically to ensure consistency across sectoral
At the whole-plan level, the plan was reviewed for assessments. In addition, we conducted a whole-
the way in which the Member State managed the plan level assessment regarding the overall coher-
coherence across the plan and between different ence between components and the coverage of key
components and assessed the coverage of key inter- indicators intervention areas needed for systemic
vention areas needed for systemic change covered in change.
the literature9.
As with any methodology, there are some limita-
A more detailed description of the methodology and tions to this approach. The plans had varying lev-
process behind this assessment will be published els of detail in their components, making it hard to
after this report on the the project site. How the indi- assess in some cases where very little detail was
cators can be used to inform a sectoral assessment available. In addition, some countries completed
can be found in our sectoral analysis below. the DNSH assessment more thoroughly and clearly
than others, making it hard to understand what actu-
al impact some measures would have on the natural
world: in some cases the anticipated impact on the
7 ZOE. Institute for future-fit economies. (2021). Systemic change for a resilient Europe: Sustainable transfor-mation through
the NRRPs. https://zoe-institut.de/en/publication/systemic-change-for-a-resilient-europe/
8 Barth J. and Abrar R., Coscieme L., Dimmelmeier A., Hafele J., Kumar C., Mewes S., Nuesse I., Pendleton A. & Trebeck K.
(2020). Building a resilient economy. Analysing options for systemic change to transform the world’s economic and financial
systems after the pandemic. ZOE-Institute for future-fit economies: Bonn.
9 Barth J. and Abrar R., Coscieme L., Dimmelmeier A., Hafele J., Kumar C., Mewes S., Nuesse I., Pendleton A. & Trebeck K.
(2020). Building a resilient economy. Analysing options for systemic change to transform the world’s economic and financial
systems after the pandemic. ZOE-Institute for future-fit economies: Bonn.
7Transformation Report #1 A future-fit recovery?
Width of Change Depth of Change
Just Transition (-5 – +5) Natural World (-4 – +4) Sytemic Change10 (-4 – +12)
Social Protection for Workers & Biodiversity Conservation Mental Models
Communities Most Affected by Measures which conserve the abun- Habits of thought – ingrained beliefs,
Transition dance and diversity of different species expectations and taken-for-granted
Policies to support vital “social of flora and fauna in a given place (e. g., ways of operating that influence
infrastructure”: a range of public rewilding projects, national parks, thoughts, discourse and behaviour
services and facilities that meet protected natural areas)
local needs and enable a good
quality of life (e.g., education,
health & social care)
Resilient Local Economies Nature-Based Solutions Relationships & Connections
Should be locally specific, create Solutions to natural, semi-natural, novel Quality of connections and interchange
economic diversity, meet local & urban ecosystems which address between systemic actors, especially
needs and provide community societal challenges effectively and among those with differing histories and
stability (e. g., utilities, food supply, adaptively, providing human wellbeing & viewpoints
transport networks) biodiversity benefits (e. g., reforestation
to prevent flooding, green walls & roofs
for energy savings)
Jobs for Resilient Societies Connecting People with Nature Power Dynamics
Jobs which are necessary for Policies in this area should remedy poor The distribution of decision-making
strong and resilient societies which individual behaviours and social habits power, authority, and both formal and
don’t harm the environment (e. g., towards nature (e. g., polluting actions) informal influence among individuals
social and health care, education, and create stronger connections and organisations
arts, green agriculture, renewable between people and nature (e. g.,
energy) increasing access to green spaces,
educational programmes built around
understanding the natural world)
Social Dialogue & Civic Engagement Climate Change Action Policies, Practices, Resource Flows
Should give citizens a say in the Responses to climate change may take Policies: Governmental, institutional and
decisions that affect their lives the form of mitigation (e. g., reducing organisational rules, regulations, and
and communities, especially the emissions of greenhouse gases) priorities that guide the entity’s own and
citizens who have been historically and adaptation measures (reducing others’ actions
marginalised, allowing people to societies’ vulnerability to the effects of Practices: Established procedures of
participate in civic society (e. g., climate change) institutions, networks, and other entities
citizen assemblies and participatory in the pursuit of social and environmen-
budgeting) tal objectives, as well as the methods,
guidelines, or informal shared habits
Equity, Diversity & Inclusion that structure their work
Recognising and addressing the Resource flows: The allocation and
power imbalances resulting from distribution of tangible and intangible
historical legacies and ongoing assets like money, people, knowledge
impacts of structural inequalities and information
(e. g., racism, sexism, ableism)
Table 1: Component Level Indicators
10 Kania, J., Kramer, M. & Senge, P. (2018). The Water of Systems Change. FSG. https://www.fsg.org/publications/
water_of_systems_change#download-area
8Transformation Report #1 A future-fit recovery?
natural world from our assessment was greater than ples of good practice, and opportunities for improve-
indicated in the DNSH assessment 11. In addition, like ment across each sector covered in the plan. Country
with all frameworks, there is always an element of profiles will be available on the ZOE Institute web-
subjectivity in the qualitative assessment of docu- site following publication of this report, and further
ments. We worked to counter this by having a hori- analysis of each of these plans can be download-
zontal (by sector) and vertical (by country) approach ed there as well. In the graphic below, the scores
to the assessment process. In addition, every com- of each country are visualised. Here, how countries
ponent was reviewed by at least two people. score against natural world and just transition crite-
ria can be seen on the axes, and the size of the bub-
Finally, on the outcomes of our analysis: our ble related to the contribution to systemic change
approach does not facilitate a straightforward rank- and the overall transformative potential of the plan.
ing of the plans from best to worst, because coun-
tries have different starting points, different levels As was explained in the methodology section, we
of national funding, and different funding available divided the components into sectors. In Table 2,
to them through the Resilience and Recovery Facil- these sectors have been mapped against the pillars
ity. We instead present the visualisation in Figure 1 and flagships to clearly illustrate how this aligns with
to show the multiple dimensions of our analysis and the strategic guidance.
how plans can offer strong potential in some areas
while showing less potential or even risks in other
areas. In this way we highlight strong and weak ele-
ments across the 13 plans we assessed, as well as Sectoral Analysis
country profiles. The core of our analysis is qualita-
tive, broken down by sectors, and this breakdown can In the following sectoral analysis of the plans, we
be found in Table 1. outline what an ideal scenario looks like, reflecting
across the plans we analysed, and include specific
examples which stand out as either good practice ()
or that need improvement or adjustments (). In
Overarching results the following table, our sector breakdown is aligned
with the corresponding EU Pillars and Flagships. In
In our analysis we found that none of the countries we the analysis below, we clustered together biodiver-
assessed have submitted a National Resilience and sity with culture and sea and marine as they were
Recovery Plan which fully delivers the kind of deep often interconnected in the plans.
transformation needed to redirect Europe towards a
sustainable future. We observed three common prob-
lems across all plans: a general lack of rigorous appli- None of the countries we
cation of the DNSH principle; the lack of longer term,
overarching vision and an eye for what kind of future is
assessed have submitted
being built; and finally the lack of integration of differ- a National Resilience and
ent ways of working (such as integrating gender equal-
ity or participatory practices across all measures). Recovery Plan which fully
In the following section, you can find an overview of delivers the kind of deep
the scoring of all countries. We do not rank coun-
tries, as countries submitted plans of vastly differ-
transformation needed to
ent length and level of detail and also had differenc- redirect Europe towards a
es in funding available. Many of these are touched
on in the Sector Analysis, where we discuss exam- sustainable future.
11 This issue is discussed in more detail in the Reflection Section.
9Transformation Report #1 A future-fit recovery?
max 4
Natural World Score
1,0
France
Slovenia
0,9
Spain
Austria
0,8
Denmark
0,7
0,6
Belgium
Slovakia
0,5
0,4
Italy Portugal
0,3
Romania Poland
Latvia
0,2
0,1
Germany
Just Transition Score
min -5 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9 1,0 1,1 1,2 1,3 1,4 1,5 max 5
min -4 The possible scale of just transition was -5 to 5 and the
possible scale of natural world was -4 to 4.
Just transition score illustrates how well the plans met
our criteria for a just transition in their recovery.
Natural world score illustrates how well the plans met our
criteria for protecting the natural world in their recovery.
The diameter of the yellow circle illustrates how well the
plans delivered systemic change.
Figure 1: Overall comparison of country scores
10Transformation Report #1 A future-fit recovery?
The graph below shows an excerpt of the country profile for the Italian NRRP.
The dashboard illustrates at a glance that the plan, like all the others in this
assessment, had strengths and weaknesses. With regard to the width of
change, the proposed measures offer relatively strong opportunities in areas
such as sustainable agriculture and circular economy, but there are significant
risks connected to intermodality and integrated logistics.
M1C1 – digitalisation, innovation and
security in the public admin
M1C2 – digitalisation, innovation and
competitiveness in the production sytem
M1C3 – Tourism and culture 4.0
M2C1 – Sustainable agriculture
and circular economy
M2C2 – Energy transition
and sustainable mobility
M2C3 – Energy efficiency and
building requalification
M2C4 – Protection of land
and water resources
M3C1 – Investments in the railway
network
M3C2 –Intermodality and
integrated logistics
M4C1 – Enhancing the delivery of education
services: from kindergartens to universities
M4C2 – From research to enterprise
M5C1 – Employment policies
M5C2 – Social infrastructure,
families, community and third sector
M5C3 – Special interventions for
territorial cohesion
M6C1 – Proximity networks, facilities and
telemedicine for territorial health care
M6C2 – Innovation, research and digi-
talisation of the national health service
-5 -4 -3 -2 -1 0 1 2 3 4 5
Natural World Potential Natural World Risk
Just Transition Potential Just Transition Risk
Figure 2: Italy RRP dashboard overview
11Transformation Report #1 A future-fit recovery?
by broader societal transitions, such as the sustain-
Social Policy, Education and ability transition. It is crucial that all of this involves
Employment not just financial support, but also community struc-
tures and lifelong learning and training opportunities.
Investments and reforms related to social policy,
education and employment are a key pillar of the All the plans contain, in one form or another, meas-
recovery and resilience process. These measures ures to improve skills, strengthening qualifications
are essential to maintaining social support systems of workers and unemployed people as well as (re)
necessary for building community and econom- training programmes. In particular, many of the
ic resilience. Investments should resource, expand, plans include reforms and investments for improved
or develop social support systems for vulnerable and expanded vocational training, dual education
populations, disadvantaged groups and those most or apprenticeships, reduced school drop-out and
affected by the transition. They should work towards improved early childhood education, including Spain,
inclusive education, and expanding access, particu- Slovakia, Poland, Romania, Germany, Italy, France,
larly to digital tools and resources, needed for mod- Portugal and Slovenia. Some Member States, such
ern education practices. They should also expand as France, Spain, Italy and Germany, also use these
support structures for those out of work, and par- programmes to counteract youth unemployment
ticularly build additional support systems and meas- and strengthen social inclusion and regional cohe-
ures for those whose employment will be impacted sion, as well as cooperation with the business sector.
Sector Corresponding EU Pillar Corresponding EU Flagship
Energy Green transition Power up
Mobility Green transition Recharge and refuel
Built environment & material Green transition Renovate
use
Biodiversity, bioeconomy, Green transition / Smart, sustain-
agriculture able and inclusive growth
Digitalisation Digital transformation Connect, scale-up
Administrative & fiscal Health, economic, social and Modernise
reform institutional resilience / Digital
transformation
Health Health, economic, social and Modernise
institutional resilience
Innovation, business & Smart, sustainable and inclusive Scale-up
industrial policy growth
Social policy, education & Health, economic, social and Reskill and upskill
employment institutional resilience / Policies
for the next generation, children,
youth
Culture & tourism Smart, sustainable and inclusive
growth
Sea & marine Green transition
Table 2: Sectoral analysis and corresponding EU frameworks
12Transformation Report #1 A future-fit recovery?
This multi-dimensional approach is good practice for Belgium: Digibanks to strengthen social
addressing multiple aspects of social challenges. inclusion and digitalisation
In particular, the Slovenian plan offers an example The Belgian project “Digibank” in Flanders offers a
of this interconnected approach in their education good example in the way that it aims to reduce the
measures and reforms: They aim to strengthen skills risk of digital exclusion and ensure the participation
for the digital and green transition, successfully inte- of vulnerable groups in the transition to digitalisa-
grate young people into technologically advanced tion. In doing so, it has three objectives: a) the mate-
environments, provide an inclusive education infra- rial provision of laptops and other digital devices; b)
structure and strengthen the transition from edu- the strengthening of digital skills, both personal and
cation to the labour market. However, only the Ger- technical (e. g. repairing computer equipment); c)
man plan includes strong measures to tackle long- support through better digital access to key servic-
term unemployment, and this is an area that could es through so-called physical hubs12. Moreover, the
be improved on across all plans. project takes a bottom-up approach. Digibank part-
nerships are to be established as innovative collab-
The expansion and the improvement of social ser- orations between different partners such as govern-
vices, reforms and investments to strengthen long- ments, businesses, educational institutions and civ-
term care and to prevent institutionalisation of elder- il society organisations. The Belgian plan also has
ly people through community-based services are for specific programmes to improve equal opportunities
example outlined in the Austrian and Belgian plans. for disabled people through measures to improve
accessibility and employment programmes aimed at
Social housing is another recurring factor in many the inclusion of disabled people. This is also present
NRRPs (France, Portugal, Latvia, Spain, Slovenia, in the plans from Romania, Slovakia, Portugal, Latvia,
Poland, Romania). For example, the Slovenian plan France, and Slovenia.
aims to increase the stock of public rental housing
while facilitating access to housing for young, elder- Spain: Establishment of a mechanism for
ly and disadvantaged people by making non-profit internal flexibility, stability in the employment
rental housing available through public tenders. and transition support
The Spanish plan provides a mechanism to protect
Our analysis reveals that delete all plans are using employment, prioritise a reduction in working hours
this opportunity to deepen active labour market pol- to stabilise labour relations in the face of economic
icies. However, this can be both a risk and an oppo- shocks, and promote investment and human capital
runity. Some good examples include cases where in the context of structural change caused by eco-
NRRPs include reforms to adapt the legal framework nomic crises. The aim is to provide companies with
to the pandemic-related changes in working pat- permanent alternatives to lay-offs. In addition to a
terns and to improve the protection of workers, such reduction in working hours, there is discussion of
as remote working or more flexible working hours (as increasing investment in worker training during peri-
in Spain and Poland). In addition, expanded train- ods of lower activity. A system for retraining workers
ing is another positive example of active labour mar- is also to be introduced, specifically to serve com-
ket policies being strengthened across all plans. In panies affected by green and digital transitions that
particular Italy and France are investing in mentor- entail permanent adjustments to the workforce.
ing, councelling and career guidance; Portugal, Lat-
via, Slovenia, France and Belgium included employ- Poland: Labour and Retirement
ment programmes for people with disabilities. How- Poland’s component on “Solutions for prolonged
ever, this can also deliver negative social outcomes, employment of people at middle age and older
as seen in the Polish example below. (50+)”, is an example of active labour market poli-
12 Cabinet du Secrétaire d’Etat à la Relance et aux Investissements Stratégiques, en charge de la Politique Scien-
tifique. (2021). Plan National Pour la Reprise et la Réslience. https://ec.europa.eu/info/business-economy-euro/
recovery-coronavirus/recovery-and-resilience-facility_en
13Transformation Report #1 A future-fit recovery?
cies delivering negative social outcomes. This com- There were no plans which incorporated adequate
ponent promotes the development of competencies biodiversity and nature protections into their mobil-
of workers approaching retirement age and foresees ity infrastructure projects. This kind of cross-cut-
income tax reductions for people who have reached ting, integrated assessment of impact should have
retirement age but choose to continue their employ- been done through the DNSH process, but was large-
ment 13. However, the envisaged gradual extension ly insufficient. While there are some examples of this,
of the retirement age risks exacerbating inequalities as referenced below, this has not been systematical-
and is insufficient with regard to the goal of ensuring ly integrated into infrastructure development.
a dignified life for the ageing population. It can espe-
cially give raise to future calls to decrease pensions In addition, many plans focused too heavily on the
as people can continue to work. Similarly, the Roma- transition to low-emission or zero-emission cars,
nian NRRP aims towards an extension of careers to and not enough on expanding the network, access
ensure pension insurance contributions, although to the network, and incentives in favour of public
the details are lacking. transport. This large investment into car transpor-
tation limits the future potential of public or active
travel to become a cultural norm and an accessible
infrastructure and mobility option. Plans needed to
incorporate reforms for phasing out reliance on indi-
vidual car travel. An example of such disincentive is
Mobility present in Poland with the creation of clean trans-
port zones in urban areas.
Best practice in the mobility sector would incorpo-
rate social objectives (inclusive of health, communi- Austria: Public transport incentives
ty cohesion, inclusion and equality), environmental The mobility component of the Austrian plan
objectives (inclusive of climate and nature) and eco- approaches mobility strategically by orienting meas-
nomic objectives (specifically around local econom- ures and reforms around emissions reduction goals,
ic resilience building). New infrastructure should not while also targeting specific measures which insti-
only be focused on enhancing and expanding pub- gate a mobility transition. Overarching reforms, such
lic transport, as seen in Italy and Austria, but also as the Mobility Master Plan, represent strong guid-
making it more accessible for disadvantaged groups, ance and a vision which also include well-estab-
improving active travel infrastructure, as in Roma- lished frameworks for behavioural change14. The
nia, and incorporating biodiversity protection and component also introduces two new schemes to
emissions reduction as explicit goals in infrastruc- improve public transport access: the first, a mul-
ture planning. The mobility of the future also needs ti-mode booking platform; the second, more signif-
to anticipate and design systems which facilitate icant, annual passes for use of all public transport
smooth mixed-mode transportation connections. which offer a fixed price for unlimited travel and
This is particularly important to not exclude rural reductions for particular groups.
communities from sustainable transport systems.
This should particularly include a focus on smaller In addition to this consideration of consumer access
cities and rural hubs, and on active travel particular- and behaviour, there is investment in zero-emission
ly in denser population hubs. vehicles (specifically business and commercial vehi-
13 Ref polish plan, page 172 Ministerstwo Funduszy I Polityki Regionalenej. (2021). Krakowy Plan Odbudowy I Zwiekszania
Odpornosci. https://ec.europa.eu/info/business-economy-euro/recovery-coronavirus/recovery-and-resilience-facility_en
p. 172
14 Bundesministerium Finanzen. (2021). Österreichischer Aufbau- und Resilienzplan 2020-2026. https://ec.europa.eu/info/
business-economy-euro/recovery-coronavirus/recovery-and-resilience-facility_en
14Transformation Report #1 A future-fit recovery?
cles) and investment into new railways and electrifi- tives. The Koralm Railway is one of very few exam-
cation of existing lines. However, these are focused ples of biodiversity measures being implement-
on existing heavy traffic routes and do not offer solu- ed alongside infrastructure, however this doesn’t
tions for regional or local train infrastructure. While change the need to do a deeper analysis of the envi-
all of this takes a multi-modal approach to shifting ronmental impact of the new infrastructure on all
the mobility system in Austria, there are still some measures across the plan. Finally, the plan current-
places for improvement. First, while the Mobility ly only incentivises sustainable mobility rather than
Master Plan incorporates cycling and walking, there complementing this with the phase-out of unsus-
are no related infrastructure investments or incen- tainable mobility for certain places like city centres.
National health service
Housing
Social responses
Culture
Corporate capitalisation innovation
Qualifications and competences
Infrastructure
Forests
Water management
Sea
Decarbonisation of industry
Sustainable bioeconomy
Energy effiency in buildings
Hydrogen and renewables
Sustainable mobility
Industry 4.0
Quality and sustainability of public finances
Economic justice and business enviroment
Public administation
(digitalisation, interoperability, cybersecurity)
Digital education
−4 −2 0 2 4 6 8
Natural World Potential Natural World Risk
Just Transition Potential Just Transition Risk
Figure 3: Portugal NRRP dashboard overview
15Transformation Report #1 A future-fit recovery?
Italy: Mobility for regional cohesion etc.) 15. However, the addition of renewables to this
Italy’s approach to mobility represents a further road project as an add-on to a large-scale road build-
example of how mobility investment can be used ing project risks greenwashing this component. The
to work towards social and territorial cohesion out- addition of EV charging and solar panels to the ten-
comes. The investment of EUR 24 billion into the dering conditions makes it possible to tag this meas-
rail network represents a significant investment in ure as a climate measure, and therefore a thorough
improving inter-regional mobility and modernising DNSH assessment for the additional roads is not
the transportation system, specifically the addition required. This component also lacks the necessary
of high-speed lines connecting to the south of the consumer incentives to improve the accessibility of
country, which are for both passenger and freight the EV market, and instead just focuses on physical
transportation. Improvements to transnational infrastructure. Equally, there is little thought given to
rail connections are included alongside domestic ensuring the infrastructure projects would conserve
rail changes. This is also paired with investment in or promote biodiversity and be constructed with sus-
urban transportation, including buses, cycle lanes, tainable methods. There is extensive research indi-
metro and trams. The emphasis on public transport cating that additional roads do not improve conges-
systems to drive social and economic connections tion, but instead lead to more traffic and more emis-
between the regions is a notable difference from sions 16. In addition, it is also widely understood that
many other plans which place emphasis on green- more than half of emissions from road traffic come
ing private car travel and infrastructure, such as Ger- from tyres, brakes and the road surface rather than
many, Belgium and Portugal. combustion engines17. Therefore, this measure does
not comply with the DNSH.
Portugal: Road network expansion
Across many of the NRRPs there is a strong empha-
sis on transforming car infrastructure and usage to
be zero-emission or low emission. This can be seen
across many plans which focus mobility investment
in electric or hydrogen vehicle infrastructure and Energy
incentives, but it can also be seen in plans like Portu-
gal’s, where solutions to needed interregion and rural Investment from the RRF presents an opportunity
mobility come in the form of expanding the road net- to future-proof the EU’s energy infrastructure by not
work and not through a strengthened mixed-mod- only installing new renewables, but also doing so in a
al transport network. In contrast to Italy’s approach, way that the social and economic benefits of this are
Portugal plans to invest EUR 580 million for a mas- spread across society to build economic resilience,
sive expansion of roads as part of their infrastructure community and regional cohesion and protect bio-
component. As can be seen in the graph below, the diversity. This funding also offers an opportunity to
plan attempts to counterbalance this with the instal- focus on re-skilling and the energy transition by not
lation of large-scale roll out of electric vehicle charg- just offering new jobs related to infrastructure con-
ing stations and adding conditions to the tendering of struction, but also by supporting communities and
these infrastructure projects (such as that they must workers in regions of transition through protection,
include EV charging, solar panels, fire protection, 5G, skills development, and other support schemes.
15 Ministério do Planeamento. (2021). PRR – Recuperar Portugal, Construindo o Futuro. https://ec.europa.eu/info/
business-economy-euro/recovery-coronavirus/recovery-and-resilience-facility_en
16 García López, M.-À., Pasidis, I., Viladecans Marsal, E. (2021). Congestion in highways when tolls and rail-roads matter:
evidence from European cities. EB Working Paper N. 2020/11. https://ssrn.com/abstract=3785888
17 Air Quaility Expert Group. (2019). Non-Exhaust Emissions From Road Traffic. https://uk-air.defra.gov.uk/library/reports.
php?report_id=992
16Transformation Report #1 A future-fit recovery?
Generally, there is an over-reliance on hydrogen On a social and just transition level, the transition
research and implementation as an energy source includes training, capacity-building and reskilling
across all plans. While no infrastructure is risk-free, initiatives across all four components and the plan
the devil is in the details in how and which hydrogen describes the intention to promote synergies and
technologies are used, how this fits into the exist- carry these actions out jointly. All all four compo-
ing energy mix, and what it replaces. To be truly nents include public participation or consultation
transformative and realise climate objectives, plans processes. Furthermore, the plan uses a gender lens
need to be bold about not just increasing capaci- to promote women’s participation in the energy sec-
ty of renewables, but also including reforms for the tor and includes a regional focus on non-peninsular
planned closure of heavy-emitting energy sources. parts of the country to mitigate territorial disparities
To address the climate crisis, large scale investment to fight energy poverty and exclusion and avoid rural
in new renewables coming into the energy grid mix depopulation. Finally, the plan contains a reform
will be needed. However, this needs to be coupled for the development of energy communities to pro-
with energy efficiency measures and energy con- mote new actors and forms of citizen participation
sumption reduction reforms that ensure that effi- in the energy transition. This reform includes a pub-
ciency gains effectively translate into carbon emis- lic consultation to gather the opinions of interested
sions. groups, awareness-raising to demonstrate the ben-
efits of these organisations, and training and capac-
Spain: Planned transition ity-building measures.
Spain’s NRRP includes some of the most challeng-
ing but also most ambitious aspects of a just transi- Similar community energy schemes are also includ-
tion in its energy system, strongly synthesising social ed in Poland and Slovakia’s plans.
and environmental outcomes. Through four inter-
connected components on energy, Spain addresses Slovenia: biodiversity and climate tensions
the closure of coal mines and coal and nuclear pow- Slovenia’s plan includes many very good examples
er plants while transitioning to renewable energy of a systemic approach to their energy transition
sources and converting from grey hydrogen (which including: planned closure of coal plants and the
uses natural gas and produces GHG emissions) to use of circular principles in the construction of new
green hydrogen (which uses water electrolysis from energy infrastructure. However, their plan includes
renewable energy sources and does not produce and acknowledges the risks that hydroelectric and
emissions) 18. geothermal energy sources pose for nature and bio-
diversity, which is one of the key tensions between
Beyond the climate change action that the transition a holistic perspective on sustainability and pursuing
to renewable energy sources provides, the plan also emissions reductions alone. The plan includes dis-
includes measures to rehabilitate and decontami- cussion of new hydroelectricity, which according to
nate land and water for the recovery of the environ- other analysis, refers to a widely contested site 19.
ment and biodiversity in the territories affected by While it offers an alternative if this is not approved, a
coal plant closures. This includes actions for land- deeper engagement in the negative impacts of this
scape and biodiversity protection; revegetation pro- plan, and whether it complies with the DNSH crite-
cesses, afforestation and reforestation; waste man- ria, is required.
agement measures; and the conversion of contami-
nated land into carbon sinks with renewable energy
installations in many of these areas.
18 Gobierno de España. (2021). Plan de Recuperación, Transformación y Resiliencia. https://ec.europa.eu/info/
business-economy-euro/recovery-coronavirus/recovery-and-resilience-facility_en
19 Euronatur. (2021). Building Back Biodiversity: How EU Member States fail to spend the recovery fund for nature.
https://www.euronatur.org/fileadmin/docs/umweltpolitik/RRF/Building_Back_Biodiversity_Recovery_Funds_
Analyse_20210519.pdf
17Transformation Report #1 A future-fit recovery?
Romania: natural gas Portugal: Resilient Forests
Romania’s energy component manifests a key ten- The Portuguese plan takes a landscape approach to
sion in the energy transition: the use of natural gas their component on Resilient Forests. This means
as a bridge in decarbonisation of the energy sup- that the role of forests was approached from a diver-
ply. While there are some key measures related to sity of perspectives including: climate risks, biodi-
new renewable energy capacity, this plan continues versity, bioeconomy jobs, nature-based solutions,
investment and infrastructure expansion of natural collective and local management and participation,
gas. Being aware that guidance on DNSH from the and enhancing the population’s connection to and
commission states that natural gas is in line with the participation in landscape management 21. The com-
DNSH principle, there are not enough details in the ponent explores and incentivises new participation
plan to understand whether Romania uses gas only and ownership models, as well as new living mod-
as a bridge technology, but rather promotes a lock- els involving greater participation and collective
in of high-emitting energy sources.20 responsibility for the landscape. There are risks in
how local actors are engaged in this process. Devel-
oping local economies with nature and with the land-
scape remains a priority for local economic develop-
ment and resilience.
Romania: water management 22
Biodiversity and bioeconomy
Integrated river basin management, the core prin-
(including agriculture, sea and ciple behind the water management component in
marine, tourism) Romania’s plan, is an approach that is widely seen
as a positive, interdisciplinary, holistic and system-
While many plans had sections specifically relat- ic approach to water management. However, with-
ed to the bioeconomy to incorporate specific meas- out elaboration on how this will be developed, there
ures around forests, agriculture, tourism, or the are many risks for the natural environment, local
marine environment, best practice would have also communities and the resilience to climate change
been to thoroughly integrate nature-based solutions, of measures included. In particular, vague language
the bioeconomy, and sustainability into each sec- about the kind of structures that will be built leaves
tion with climate mitigation and adaptation strate- open questions like whether this will result in small-
gies. Any components which relate to the bioecon- scale hydroelectric plants, or other new infrastruc-
omy should have incorporated biodiversity, conser- ture which would be particularly damaging to the
vation and sustainability objectives into these meas- ecosystem and community with few climate benefits.
ures. More broadly, plans should recognise the inter- Integrated river basin management often includes a
connectedness of social and economy outcomes catchment approach to managing a river, including
and those for nature holistically and across strategy considerations like ground water health (for drink-
objectives. The DNSH assessment offers a key tool ing or agriculture), sustainability of the water sup-
and vehicle for this kind of cross-cutting assessment. ply, pollutants or contamination, nature-based solu-
This was consistently under-utilised, and while many tions for climate resilience and adaptation, and local
components across all countries had opportunities community involvement in management and deci-
to integrate sustainability practices more deeply, sion making. If all of these aspects are implement-
these were not embedded. ed, this component could be an exemplar for river
20 Guvernul Romaniei. (2021). Planul National de Redresare si Rezilienta. https://ec.europa.eu/info/business-economy-euro/
recovery-coronavirus/recovery-and-resilience-facility_en
21 Reference Portugal plan Ministério do Planeamento. (2021). PRR – Recuperar Portugal, Construindo o Futuro.
https://ec.europa.eu/info/business-economy-euro/recovery-coronavirus/recovery-and-resilience-facility_en
22 At time of release, Romania had just released an updated plan. This analysis is not based on the revisions.
18Transformation Report #1 A future-fit recovery?
basin management in eastern Europe. However, the cesses, e-waste regulation and digitalisation, with
plan also refers to upgrading dams, water storage very few including any reference to increased waste,
capacities, and additional hydro-technical nodes. All energy use, or the environmental impact of build-
of these could build the resilience of the river infra- ing new digital infrastructure. Many, including some
structure, but they could also lead to increased flood- that have generally done well on sustainability tran-
ing risks and water mismanagement, leading to neg- sition like France, Austria, and others, explicitly state
ative impacts on the community, in particular sectors that there is no impact from the digital transition on
which rely on water, like agriculture. This component climate mitigation or circular economy, neglecting
has been heavily criticised by nature experts, and in energy consumption and material use. There is an
its implementation would need to comply with envi- important difference between adhering to waste reg-
ronmental and social impact assessments, local con- ulation which currently exists at the local, national
sultations and local, national and EU environmental or EU level, and adhering to circular economy princi-
regulation 23. There are risks that if not implement- ples: adherence to circular economy principles in the
ed in this way, this measure causes environmental digitisation of society is largely absent.
degradation not compliant with the DNSH principle.
Our analysis also shows the majority of Member
Water management also includes development and States didn’t conduct sufficiently rigorous DNSH
modernisation of wastewater and sanitation, which assessment of the impact of their digitalisation
is an important investment to communities current- plans. What can be seen here is a good understand-
ly left behind in sanitation developments. ing of the potentials of digitisation to the future of
the economy but a worrying lack of depth in under-
standing of the risks 24. Finally, there is also box-tick-
ing related to gender inclusion, and a real lack of
specific measures to address digital access for peo-
ple with disabilities and their specific technologi-
Digitalisation cal or learning needs. While some offer digital train-
ing programmes which consider inclusion aspects
Digitalisation in the recovery plans should be a by specifically targeting women and girls, this was
cross-cutting theme interwoven with all the vari- often in the context of education rather than voca-
ous aspects of the recovery. However, few countries tional training, employment or a digital transition in
identified this opportunity, with Poland as a notable the workplace or the economy.
exception. Digitalisation should have also embedded
clear inclusion practices, resourcing not just train- The provision of digital devices for educational pur-
ing and capacity building, but infrastructure which poses, the modernisation of digital equipment in
focuses on the “last mile” and rural communities like schools and public administration as well as the
in Latvia, as well as specific approaches to gender, improvement of digital competences of teachers,
disability, and other disadvantaged groups. In addi- students, and public administrators are part of many
tion, very few countries engaged with the just transi- plans as well, though often appearing in different
tion challenges associated with increasing automa- sections depending on where this was perceived to
tion or mechanisation, both from an emissions and be embedded and how it connected to other reforms
from a job loss perspective. Finally, nearly all plans and investments.
missed the opportunity to connect between circu-
lar economy approaches, green procurement pro-
23 Bankwatch & Euronatur. (2021). Building Back Biodiversity: How EU Member States fail to spend the recovery fund for
nature. https://www.euronatur.org/aktuell/detail/news/missed-opportunities-for-biodiversity-conservation/
24 WBGU. (2021). Towards our Common Digital Future. https://www.wbgu.de/en/publications/publication/
towards-our-common-digital-future
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