Brussels, 22

Brussels, 22.10.2007

COM(2007) 642 final

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL

AND THE EUROPEAN PARLIAMENT

Progress Report on the Sustainable Development Strategy 2007

{SEC(2007)1416}

EN EN

TABLE OF CONTENTS

1. Introduction.................................................................................................................. 3

2. Ensuring

coherence

across

EU Strategies and partnership between actors ................. 3

3. Assessment of progress made on the key challenges................................................... 4

3.1. Climate Change and Clean Energy .............................................................................. 4

3.2. Sustainable

Transport................................................................................................... 5

3.3. Sustainable Consumption and Production ................................................................... 6

3.4. Conservation and Management of Natural resources .................................................. 7

3.5. Public

Health................................................................................................................ 9

3.6. Social

Inclusion,

Demography and Migration ........................................................... 10

3.7. Global

poverty............................................................................................................ 10

4. Cross Cutting Policies................................................................................................ 11

4.1. Education and Training.............................................................................................. 11

4.2. Research and Development........................................................................................ 12

4.3. Financing and Economic Instruments........................................................................ 12

5. Delivering in partnership............................................................................................ 13

5.1. Communication, Mobilising Actors and Multiplying Success .................................. 13

5.2. Producing

Results ...................................................................................................... 13

6. Conclusion.................................................................................................................. 14

EN 2

1. INTRODUCTION

In 2005 the European Council set out principles to guide Europe on a sustainable

path of development. These principles include the ongoing need to foster economic

prosperity based on an innovative, competitive and eco-efficient economy, protecting

and improving the quality of the environment; promoting equity and social cohesion

in solidarity with the rest of the world. In 2006 the European Council adopted a

renewed Sustainable Development Strategy (SDS) that sets out a single, coherent

plan on how the EU will more effectively live up to these principles and the

overarching objective of sustainable development enshrined in the Treaty. The plan

consists of seven key challenges which must be tackled if Europe is to move along a

sustainable development path and maintain current levels of prosperity and welfare.

It recognised that SDS goals can only be met in close partnership with the Member

States and hence set in motion a new process of review and reporting involving the

Commission and the Member States.

This Progress report is the first stocktaking based on this new way of working. It

reviews results in moving towards the seven core objectives and identifies policy

initiatives at both EU and MS level that have contributed to these results. Because it

would not have been possible to show meaningful trends on the basis of one year's

data, 2000 is taken as a baseline against which progress is measured in the different

areas.

This report gives a first snapshot of the state of play.1 It shows relatively modest

progress on the ground. Development of policy initiatives at both EU and Member

States level is more encouraging. For example, climate change and sustainable

energy have become top priorities for the EU's domestic and international agendas.

This far reaching progress on the policy front should bring results on the ground in

the years to come. There appears to be increasing convergence between the different

actors on priorities: the EU, Member States, citizen groups, NGOs and business are

increasingly focusing on the same issues and working to meet the same goals.

The stocktaking provides the basis for discussions, in the various sector policy fora,

in the context of follow-up to the 2002 World Summit on Sustainable Development

and in the SDS coordination framework, on the need to adjust the course or speed of

policy initiatives, with a view over the longer terms of readjusting objectives and

recalibrating targets.

2. ENSURING COHERENCE ACROSS EU STRATEGIES AND PARTNERSHIP BETWEEN

ACTORS

One of the key imperatives of the 2006 strategy was to engage all actors the EU,

Member States at national, regional and local levels and civil society and business -

in partnership to focus on the same priorities and to try to ensure coherence across

policy areas. This is a long term process but experience in the first year of

implementing the strategy demonstrates that it can be done.

1 The analysis of progress on the SDS is, as requested by the Council, based on different sources -

national reports provided by the national SDS coordinators as set out in the EU SDS, the Eurostat

monitoring report based on Sustainable Development Indicators (SDIs) using the year 2000 as a

baseline and a Staff Working Paper of the Commission as well as an Independent Consultancy study.

EN 3

The review has shown that ensuring coherence across policy areas is a challenge at

all levels of governance. At EU level, the challenge is to work towards convergence

of the overarching long term objective of sustainable development, focusing on

quality of life, inter-generational equity and the long-term viability of European

society, and the medium term goal of growth, competitiveness and jobs under the

Lisbon strategy. The energy and climate change agenda provides a good example of

how these medium and longer term strategic goals have converged. The Single

Market is another example, demonstrating how market opening when accompanied

by social and environmental measures, can promote growth and well being. The EU

Better Regulation programme has also contributed to ensuring coherence across

policy areas by requiring the systematic assessment of economic, social and

environmental impacts of all major policy initiatives.

3. ASSESSMENT OF PROGRESS MADE ON THE KEY CHALLENGES

The following reviews the state of play in each of the seven priority areas of the

SDS. It highlights actions taken at both EU and Member State level to move towards

policy goals. All the challenges are interlinked; hence solutions in one have an

impact on the others and are mutually supportive.

3.1. Climate Change and Clean Energy

The EU is making progress in reducing greenhouse gases (GHG) and projections

indicate that the Community will reach its Kyoto target provided that Member States

put in place and implement as soon as possible their planned additional policies and

measures, while the EU economy is growing.

In 2005, EU-15 emissions of greenhouse gases had decreased by 2% compared to

their Kyoto base year value.

Meeting Kyoto targets will require increased reliance on renewable energy sources.

consumption of renewable energy sources as a whole for the EU-27 increased at an

average rate of 3.2% per year during the 1990s, growing to 4.1% between 2000 and

2005. In spite of this increase, because of the relatively high growth rate of gross

inland consumption, the share of renewables in final energy consumption only

reached 8.5% in 2005. The average annual growth is insufficient to reach the 2010

target of 12% in overall consumption. In 2005, the share of biofuels represented only

1.08% for the EU-27, far from the 2010 target of 5.75%

There have been significant forward looking policy developments in this area at EU

level, the most important being the March 2007 European Council's new Integrated

Climate Change and Energy policy which sets ambitious binding 2020 targets for

greenhouse gas (GHG) reductions, renewable energies and biofuels. Other initiatives

include an Energy Efficiency Action Plan (October 2006) and work on carbon

capture and storage.2

2 Communication of 10 January "Limiting Global Climate Change to 2 Celsius: The way ahead for 2020

and beyond" and "An Energy Policy For Europe".

EN 4

Almost all Member States have now adopted national climate change strategies,

either as a separate strategy or as a part of national energy policy packages. Some

have set up specific offices and scientific councils to deal with climate change

(UK,SE). Some are taking initiatives on taxation. 23 National allocation plans under

the Emissions Trading Directive were adopted in 2007 reducing emissions to

1903.43 Mt annually instead of the 2101.64 Mt initially proposed by Member States.

Continued efforts need to be made to meet climate change and energy targets within

the agreed deadlines. This will require continued attention to making a success of the

Emissions Trading scheme; promoting renewables and sustainable use of biofuels

and developing climate change adaptation strategies and plans.

3.2. Sustainable

Transport

Europe is not yet on a sustainable transport path. Energy consumption by transport,

used as a proxy for transport demand, grew at an average rate of 1.3% per year

between 2000 and 2005 in the EU-27, only slightly less than the 1.7% average for

GDP over the same period, showing no real signs of decoupling.

Transport GHG emissions are still growing, with an average annual growth rate of

1.2% between 2000 and 2005 in the EU-27. In 2004, domestic transport was

responsible for 21% of total greenhouse gas emissions in EU-15. It grew by 26%

between 1990 and 2004 whereas emissions from most other sectors decreased during

the same period. Average CO2 emissions emitted per kilometre from new passenger

cars have decreased steadily from 2000 to 2004 in the EU-15, at an average annual

rate of 1.3%, but this rate of change is slower than in the previous decade, and is not

sufficient to reach the 2008/09 target of 140 grams per kilometre, or the 2012 target

of 120 grams per kilometre.

The objective of achieving a balanced shift towards environmentally friendly

transport modes has not been achieved. The EU-27 share of road in inland freight

transport has continued to increase, albeit relatively slowly, since 2000 to reach

76.5% in 2005. Passenger-kilometres by car showed a relative stabilisation in the

EU-15, but still reached 84.8% of total inland passenger transport in 2004. Road

congestion has been increasing.

On the positive side, progress has been made on reducing pollutant emissions from

transport, with emissions falling by 4.4% per year on average between 2000 and

2004 for ozone precursors, and by 4.2% for particulates.

Likewise, despite the increase in road traffic, there has been a steady reduction in the

numbers killed in accidents in both the EU-27 and the EU-15. The EU-15 is well on

track to meet the proposed target of halving the number of deaths by 2010 compared

to 2000, but the EU-27 lags slightly behind.

Key EU policy developments include the Commission's mid-term review of the

Transport White Paper; the Green Paper on Urban Mobility, the adoption of

Regulations (known as Euro 5 and 6 standards) setting stricter standards for cars and

light commercial vehicles; and Commission proposals to amend the fuel quality

directive and Directive 2003/96 regarding minimum excise rates for road diesel and

to include aviation within the EU emissions trading scheme. A railway liberalisation

package has been adopted and the legal framework for public transport services has

been revised.

EN 5

Member States are taking a range of actions to move towards more sustainable

transport and environmentally-friendly transport modes. Only a few Member States

(FI) have transport strategies. Others have written sustainable transport into other

strategies (eg national spatial planning, financing strategies (IE, IT). Other initiatives

range from lorry tolls (AT) to modernisation of road infrastructure and taxes (BG).

Some Member States have adopted fiscal measures to stimulate the reduction in

GHG emissions, promoting smaller, more fuel efficient vehicles (DK, BE),

alternative fuels (RO) and bio-fuels (AT, BG), providing exemptions from excise

duty (DK), tax subsidies (HU) and financial incentives (IT). Some Member States

have implemented local speed limits and introduced park-and-ride schemes (AT,

MA). Many are taking actions to promote a shift towards environmentally friendly

multimodal transport modes (DK, HU) both for passengers (CZ) and for freight

(NL). Public transport initiatives include investment schemes in rail (national,

regional and suburban), road charges and specific initiatives to promote bicycling

(AT, BG, DK, FR, IT, UK). On road safety, some have adopted National Road

Safety Strategies (CZ, GR), others have focused on improved inspections of vehicles

(eg BG) and stringent speed control systems (FR).

Further steps can be taken. Measure which Member States could take include

promotion of technology for fuel efficiency, greener propulsion and environmentally

friendly, less energy intensive modes of transport; tightening of pollutant emission

standards and GHG intensity for all transport modes; continuing the development of

noise mapping and measures to reduce transport noise at source; launching action on

urban mobility and making optimal use of logistics; and development of

methodologies for infrastructure charging.

3.3. Sustainable Consumption and Production

Sustainable consumption and production is difficult to measure reliably on a broad

basis. That being said, the headline indicator 'Resource Productivity' reveals a

decoupling of material consumption from economic growth. Furthermore, more

businesses are reporting on environmental performance and there are a rapidly

increasing number of sustainable products and services on the market. But, despite

this progress, there is untapped potential. For example, in the EU, the average

material intensity is approximately 1 kg/EUR, which is slightly less than in the

United States, but twice as high as in Japan3.The EU could save at least 20% of its

present energy consumption in a cost-effective manner, equivalent to *60 billion per

year, or the present combined energy consumption of Germany and Finland.

The EU has taken a number of initiatives to review, stimulate and foster sustainable

production and consumption: implementation of the eco-design aspects of the Energy

Using Products Directive; and, the EU Environmental Technologies Action Plan4;

and continued work on an Environmental Technologies Verification System. The

EU, with the support of the Member States, continues to work to improve on eco-

labelling and environmental monitoring systems. But, the number of products which

have an eco-label remains small and there is very limited uptake of EMAS, with the

number of registered EMAS companies estimated at 5000 (out of a total of roughly

29 million companies operating in the EU).

3 EEA

Report,

Sustainable use and management of natural resources, n9/2005.

4 http://ec.europa.eu/environment/etap/pdfs/comm_pdf_com_2007_0162_f_en_acte.pdf

EN 6

Member States have a variety of strategies and action plans dealing with aspects of

sustainable consumption and production. There are a number of publicity campaigns

and actions aimed at promoting sustainable consumption, such as the UK guide to

greener living and their 'Every Action Counts' campaign, school competitions in

schools promoting sustainable consumption (AT) and a "Green Responsibility"

campaign (DK).

Public authorities across the EU are taking action to stimulate and support corporate

social responsibility (CSR). In the Netherlands, the authorities established CSR

Netherlands, a foundation for the exchange of knowledge and experience.

Companies listed on French stock exchange are obliged by law to include social and

environmental information in their annual reports.

Ten Member States have adopted national action plans on green public procurement

(GPP) and some have set national GPP targets. In the Netherlands, public

procurement is to be in 100% sustainable by 2010. The UK adopted a Sustainable

Procurement Plan. The Swedish Environmental Management Council, a company

co-owned by the central and local government and by the Confederation of Swedish

Enterprises, provides expertise, training and a web-based tool to public purchasers

that want to include environmental requirements in technical specifications.

Member States are actively encouraging business innovation and uptake of

environment technology. Joint government and business bodies have been set up to

strengthen business opportunities and the development of environmental

technologies (SE, UK). Some Member States are improving access to finance for

environmental technologies, including financial incentives (UK) and awarding

innovation prizes to companies (IT). SI has set up an environmental technologies

excellence centre. 21 Member States have completed roadmaps for implementing the

Environmental Technologies Action Plan (ETAP).

More can be done. Forthcoming actions include - implementing the Integrated

Product Policy approach; strengthening green public procurement; revision of the

EMAS and Eco- label schemes and; fostering research into less resource intensive

products and production processes.

3.4. Conservation and Management of Natural resources

This challenge touches a number of different areas. Progress towards reducing the

overall use of non renewable natural resources is measured through Domestic

Material Consumption (DMC). DMC has decreased by 0.8% per year on average

between 2000 and 2004, reversing the trend of a slow average growth of 0.1% per

year from 1990 to 20005. Resource productivity has increased by 2.3% between 2000

and 2004. There is a certain degree of stability within some elements of this

challenge, including areas such as resource efficiency, forestry and waste generation.

However, certain sub-indicators for biodiversity, such as trends in some fish stocks,

show areas of great concern.

5 EUROSTAT 2007 Monitoring report.

EN 7

The situation regarding specific resources such as water, air and soil, as well as in

regard to biodiversity and fisheries is diverse and complex, with complete EU27 data

often lacking. From 2000 to 2003, most of the Member States for which data are

available appear to have reduced the pressure on water resources by reducing their

abstraction of groundwater. The situation for surface water is not as clear. There has

been some progress in improving air quality, with harmful emissions from transport

ozone precursors, acidifying substances and fine particles declining between

1990 and 2004. Soil quality continues to deteriorate with climate change

exacerbating both greenhouse gas emissions from soil and threats such as erosion,

landslides, salinisation and organic matter decline. Depletion of fish stocks remains

problematic. A considerable proportion of fish catches in EU-managed waters is

taken from stocks that are already below their safe biological limits, particularly for

highly valued species (white fish). Trends in demersal and benthic fish stocks, such

as cod, plaice and sole, remain of concern. Whilst common bird populations seems to

be stabilising, a recent study shows that 15% of Europe's mammal species are

threatened, and a further 9% are close to qualifying for threatened status. 27% of

European mammals have declining populations. Only 8% of mammal species

populations are increasing.

Key EU initiatives to foster resource conservation and biodiversity include: ongoing

implementation of the air quality and water framework directives as well as the Birds

and Habitats directives; the implementation of the New European Fisheries Fund; the

Thematic Strategy on Soil Protection; the "Forest Law Enforcement, Governance and

Trade (FLEGT) Initiative".

Most Member States have made efforts to improve management and avoid

overexploitation of renewable natural resources, in particular in areas of agriculture,

forestry, fisheries, promoting biodiversity, water management and waste

management. All are actively implementing the waste, air quality and water

framework directives. The focus of activities naturally differs from Member States to

MS with the new Member States, for example, more concerned with waste water

treatment. Some (AT, DE) have raw materials action plans aimed at improving

resource efficiency. Most have taken specific actions to halt biodiversity loss and to

designate Natura 2000 areas. Performance in reaching biodiversity targets and on

NATURA designations varies significantly between Member States. However, the

index of sufficiency of sites designated under the Habitats directives reached 93% in

the EU-15 and 82% in the EU-25, with many Member States reporting that they have

completed their network or are close to it.

Forthcoming actions should include an overall strengthening of the integration of

biodiversity impacts into policies and programmes (including the CAP health check);

continued attention to the implementation of the waste, air quality and water

framework directives; completion of the NATURA 2000 network of protected areas

both on land and at sea, and ensuring effective management and financing of the

network; strengthening effectiveness of international governance for biodiversity.

The EU target of halting the loss of biodiversity by 2010 and contributing to a

significant reduction in the worldwide rate of biodiversity loss by 2010 will not be

met unless substantial additional efforts are made. Member States have a particular

responsibility through improved planning, to reconcile land use and development

needs with the conservation of biodiversity and maintenance of ecosystem services.

EN 8

3.5. Public Health

Europeans are not only living longer, but they are living a greater part of their lives

unaffected by serious health problems. Fewer people are dying from chronic

diseases. There is a continuous reduction in the incidence of serious accidents at

work.

On a less positive note, life style illnesses such as obesity and mental illness are

becoming an increasing problem. Depending on the country, between 30 and 64 % of

young males aged between 25 and 34 were overweight or obese in 2003 and between

12 and 47 % of young women. The proportion of over-65s who are overweight or

obese is considerably higher, ranging from 62 to 80 %. Obesity increases risk of

Type 2 diabetes, cardiovascular diseases, certain forms of cancer as well as greater ill

health due to back pain and depression.. Estimates of direct costs of obesity in the

EU in the 1990's ranged from 1% of health care expenditure in the Netherlands and

up to 3.1-4.2% in Germany, and 6% in Belgium.

Smoking continues to present health problems. 26% of Europeans were regular

smokers in 2003 - 32 % of males and 21 % of females.6

Concerning mental health, while the suicide rate is decreasing overall, 60 000

suicides occur annually, exceeding the number of Europeans killed in transport

accidents. Some 11.5% of Europeans suffer from a mental disorder. Mental health

problems currently cost the EU at least 3-4% of GDP. The WHO predicts that after

heart disease depression will be the second global disease by 2020.

Health inequalities, measured by differences in life expectancy between social

groups range from 4-6 years among men to 2 to 4 years among women. In some

countries, these differences are considerably higher (10 years) and in many countries

the gap appears to have widened over the last 3 decades. Most of the Member States

which joined the EU since May 2004 have significantly worse health indicators than

those states which were members before May 2004.

Whilst most policy action is taken at Member State or local level, the EU has taken a

number of initiatives of direct relevance to public health - a review of the options for

general food and nutrition labelling; a White paper on 'A strategy for Europe on

Nutrition, overweight and obesity related health issues'; an action plan on combating

HIV/AIDS within the European Union and its neighbours; a proposal for a

framework directive on the sustainable use of pesticides, and a new EU Animal and

Health Strategy for the period 2007-13.

Member States are actively pursuing initiatives to curb lifestyle related diseases,

pandemic preparedness, and to improve the handling of chemicals. They did not

report extensively on their activities in the area of food and feed legislation, animal

welfare, mental health or on reducing health inequalities. There is only limited

evidence of good inter-ministerial and inter-sectoral cooperation on public health.

6 EUROSTAT 2007 Monitoring report and Commission DG sources as well as international sources

including WHO.

EN 9

In general, the EU and Member States need to continue actions to curb the current

increase in lifestyle related diseases. Continued attention should be paid to health and

environment (chemicals and air born pollution impacts). The persistent health

inequalities in Europe warrant further consideration both at EU level and by Member

States.

3.6. Social Inclusion, Demography and Migration

A sustainable Europe has to build solidarity between and within generations so as to

increase the quality of life generally. It is worrying that 16% of the EU population is

at risk of poverty, with children, single parents and the elderly being particularly

vulnerable. Integration remains a challenge in many Member States, with non-native

populations in some Member States suffering from persistent high unemployment.

Unemployment rates of youth remain high and a high number of school leavers

present a problem in some Member States.

On the positive side, unemployment is down overall and there has been modest

progress on ensuring social and territorial cohesion, although there are considerable

differences in wealth between the richest and poorest regions of the EU. Social

protection systems are being modernised in view of demographic change. Women

are increasingly participating in the work force and the average age when individuals

leave the work force is increasing. Member States are reforming their pension and

health care systems.

The open method of coordination is the EU's main policy tool in its fight against

social exclusion and poverty. Recent initiatives include a new Council framework for

social protection and social inclusion; a new roadmap 2006-10 for equality between

women and men, and a Communication addressing the demographic future of

Europe. A broad policy plan on legal migration (comprising a framework directive

and four specific directives) will be implemented in 2007-2009.

All Member States have presented strategies for social protection and social

inclusion 2006-2008 covering all three areas. The scale and phasing of meeting

demographic challenges vary significantly between countries, as do the policy

responses.

Further work in this area should focus on making social protection, health and

pension systems sustainable in light of demographic trends. As part of the broader

labour market strategies, the Member States will need to continue to implement

measures that will increase the labour market participation of women, older and

younger workers as well as migrants. Flexicurity, which provides a balanced

approach to flexible contractual labour arrangements while providing appropriate

support for the individual, is being developed as part of Member State's response to

these challenges. Member States should also continue their work on developing

comprehensive lifelong learning strategies, effective labour market policies and

modern social security systems.

3.7. Global poverty

There are some encouraging developments in delivery of the Millennium

Development Goals (MDGs). Global poverty fell by almost 4% since 2000, meaning

that 134 million people were lifted out of serious poverty. The primary school

completion rate has improved from 78% in 2000 to 83% in 2005. Aid quality and

effectiveness is improving. However, pressures on environmental sustainability

remain high, notably access to key resources such as water, wood or arable land

EN 10

which potentially dramatic impacts for the livelihood of the poorest and could be a

cause of conflicts.

On the other hand, 1 billion people still remain in extreme poverty. All developing

regions fail to meet the target for reducing child mortality and one-third of all

children in developing countries are underweight or have stunted growth. Half of the

people in developing countries lack access to improved sanitation. After a low

around the year 2000, there was a sharp increase in the EU-15 ODA/GNI

contributions, resulting in an increase from 0.32% to 0.44% between 2000 and 2005.

However this growth stalled in 2006, when ODA/GNI fell slightly to 0.43% and the

EU fell slightly behind on its 2010 intermediate target path.

There has been progress on policy development at EU level. In December 2005, the

three EU institutions agreed "The European Consensus on Development", which puts

eradication of poverty at the centre of EU development policy. The EU is the largest

donor in the world and its EU Africa Strategy gives priority to cooperation with

Africa (Joint EU-Africa Strategy 2007). The EU is also very active in the

Mediterranean through its neighbourhood policy and in its cooperation with Latin

America and Asia. Many new policy initiatives have been taken to strengthen EU

coordination and coherence of aid.

Five years after the World Summit on Sustainable Development (WSSD 2002) there

is only modest progress on some WSSD goals and targets. However, the EU and the

Member States are committed to actively promoting sustainable development

worldwide and ensuring that the EU's internal and external policies are consistent

with global sustainable development. This is a very broad objective, and Member

States tend to focus more on specific themes or geographic regions that are

particularly important to them.

On the volume of aid, it is still possible to achieve the intermediate target of 0.56%

in 2010 moving towards the MDG target of 0.7% of GNI by 2015. However, it is

clear that significant further efforts are needed to achieve the goal. Many challenges

remain including: to further develop the use of general budget support as an aid

delivery mechanism; to tackle the growing challenge of environmental migrants and

internally displaced persons; to increase Member State commitment to the water and

forests initiatives; to ensure that the environmental element of sustainable

development is sufficiently considered in the allocation of aid; to work towards an

international environment governance system that can deliver sustainable

development and to ensure that trade policy contributes to sustainability. Further

cooperation and coordination of aid is clearly essential if the EU is to make a marked

contribution to achieving the MDGs.

4. CROSS CUTTING POLICIES

4.1. Education and Training

Education and training are prerequisites to equipping citizens to achieve sustainable

development goals. The Education and Training 2010 work programme is the policy

framework for European actions in education and training, within which Member

States have agreed on five key benchmarks to be met by the year 2010: reducing the

number of early school leavers; increasing the literacy level of 15 year olds, and;

boosting the levels of upper-secondary completion. The programme aims to improve

quality and access for all. Increasingly Member States are responding to these

EN 11

challenges and are incorporating sustainable development challenges in their

education systems. The increase in EU-25 lifelong learning from 7.5 % in 2000 to

9.6 % in 2006 in the EU-25, is encouraging in the light of the Barcelona target of

reaching 12 % by 2010.

4.2. Research and Development

Research and Technological Development is essential for designing the innovative

and forward looking solutions needed to make real progress on the seven key

challenges. Eurostat data shows that investment in research and development in

terms of percentage of GDP stagnated between 2000 and 2005, at 1.9 % in 2005 in

the EU-15 and 1.4 % in the EU-25, far from the EU target of 3 % of GDP by 2010.

One of the main objectives of the Seventh RTD Framework Programme (FP7),

launched in January 2007, is to mobilise European research for sustainable

development.7 In the first year of implementation 2007, 40% of the cooperative

research actions called for are directly or indirectly related to the EU SDS

challenges. Two Joint Technology Initiatives, "Clean Sky"8 and "Fuel cells and

Hydrogen"9 have been proposed. Fifteen working technology platforms and fourteen

ERANETS are also dealing directly with the EU SDS challenges. The Commission

has developed guidelines on the use of tax incentives and public procurement to

boost investment in private sector research and has revised its framework on State

Aid to support R&D and innovation activities.

Member State reports show that most national research policies are putting R&D at

the service of the seven EU SDS key challenges, in a European Research Area

perspective.

The Commission will further pursue its efforts to put R&D at the service of

sustainable development with a view to exploiting the synergies between the Lisbon

strategy for growth and jobs and the EU SDS.

4.3. Financing and Economic Instruments

A wide variety of market based instruments (taxes and emission trading system) and

policy specific market incentives (financial support to R&D, innovation and

demonstration on specific issues) are used at EU and Member State level to support

sustainable development. There is more potential for the use of market based

instruments.

In March 2007, the Commission adopted a Green Paper on the use of market-based

instruments for environment and energy related policy purposes and in the course of

2008 the Commission will review the Energy Taxation Directive10 and start to

examine how to identify and phase-out environmentally harmful subsidies. The

Commission proposed legislation to re-structure passenger car taxation11 and to

coordinate taxation of unleaded petrol and gas oil used as motor fuel.12

7 Decision No1982/2006/EC of the European Parliament and of the Council of 18 December 2006

concerning the Seventh Framework Programme of the European Community for Research,

Technological Development and Demonstration activities (2007-2013)-whereas 29 and Annex 1.

8 COM(2007)315

final.

9 COM(2007)571

final.

10 Council Directive 20003/96/EC.

11 COM(2005)261.

12 COM(2007)52.

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The European Regional Development Fund and the Cohesion Fund are major EU

financial instruments providing significant financial support for the 2007- 2013

period to key areas of the EU SDS such as climate change (* 9 bn) and sustainable

transport (* 36 bn). Cohesion policy applies the sustainable development principles

of both 'Involvement of citizens' and 'Policy coherence and governance', by including

all stakeholders at all levels of government, as well as promoting coherent policy

making across different sectors.

5. DELIVERING IN PARTNERSHIP

5.1. Communication, Mobilising Actors and Multiplying Success

The EU SDS can only work efficiently and effectively if it is appropriately

communicated and implemented at all levels of society, involving citizens,

businesses and government. Both EU and Member States have undertaken awareness

events and specific issue conferences on topics such as climate change, transport and

national health towards this goal.

Citizen input (including NGOs) represents a constructive and critical voice on

delivery and implementation. Local Agenda 21 and the European Sustainable Cities

& Towns Campaign serve as examples. The EESC stakeholder forum in May 200713

brought together groups from civil society, to discuss how civil society itself can

continue to develop constructive solutions to climate change.

Companies and business leaders are beginning to realise the competitive edge that a

sustainable approach to business gives them. The Dow Jones Sustainability Group

Index14 shows that listed companies regularly outperform those not listed. Business

leaders are taking new initiatives - the European Corporate Leaders Group and the

European Alliance for Corporate Social Responsibility (CSR), are two such

initiatives, pioneering new innovative ways to improve the environmental and social

performance of business.

5.2. Producing Results

The 2006 SDS brought a new governance structure. In the past year each Member

State has appointed a SDS coordinator and the Commission set up a SDS

Coordinators group which also works with the European Sustainable Development

Network (ESDN).

Eurostat has contributed to monitoring progress on the basis of a comprehensive set

of SDIs which are now better aligned with the priorities and objectives of the

renewed EU SDS15 There are regular discussions with Eurostat on indicators.

13 http://www.eesc.europa.eu/stakeholders_forum/index_en.asp

14 Launched in 1999, the Dow Jones Sustainability Index is the first global index tracking the financial

performance of the leading sustainability companies worldwide.

15 A list of the reviewed list of SDIs is presented in an annex to the Commission Staff Working Paper on

the SDS.

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The EU SDS proposed to institutionalise peer reviews of national strategies in order

to better identify and share good practices in a process of mutual learning. The

Commission has developed a handbook and has in 2007 co-financed the peer review

of the Dutch NSDS. This review constituted a substantial input to the ongoing

redesign of the Dutch SDS and had visible political impact. Further reviews are

planned for 2008.

The EESC set up a Sustainable Development Observatory (SDO)16 in September

2006 which prepared an opinion on the Biannual Progress Report of the EU

Sustainable Development Strategy, adopted 11 July 2007. The Committee of the

Regions has prepared an Opinion on Education Promoting Sustainable Development

for adoption autumn 2007.

Member States are updating their national strategies and planning to bring these into

line with the EU SDS.

6. CONCLUSION

The European Council conclusions of June 2006 marked the beginning of a new

partnership between the EU, Member States, civil society and business aimed at

working together towards achieving sustainable development objectives.

This progress report shows that progress on the ground is modest but that policy

development at both EU and MS level has progressed significantly in many areas,

notably on climate change and clean energy. The priorities set in the June 2006

strategy remain valid. As the many examples contained in this report and the

accompanying annex show, continued attention needs to be paid to implementation

in all priority areas.

16 http://www.eesc.europa.eu/sections/sdo/index_en.asp

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