Supply-chain sustainability under the EU system of carbon pricing and trading

Abstract

As global climate change continues, policymakers at various levels of government have taken up the great challenge of decarbonisation and adopted tools to help reduce greenhouse gas emissions. Environmental policy, including climate policy, is explicitly aimed at promoting environmental protection and conservation, but it also carries economic and social effects. Academic interest in sustainable supply chains has grown significantly in recent years. Social aspects, as well as the integration of the three dimensions of sustainability, are still rare. The purpose of this study is: (1) to review the most recent literature on greenhouse gas emissions policies, particularly pollution taxes and pollution rights trading schemes; (2) to investigate the European Union Emissions Trading System (EU ETS) with a focus on market and price development; (3) to identify possible effects of this system on supply-chain sustainability; (4) to offer inspiration for further research into the links between the EU ETS and sustainable development of the supply chain. The article concentrates on the impact of the cap-and-trade scheme on the three pillars of sustainable development: the environmental, economic and social dimensions. The findings of this study prove that this scheme has significantly affected not only upstream regulated sectors, but also downstream companies in the supply chain as well as households. In addition, our investigation suggests the presence of trade-offs between the environmental (climate) and socio-economic goals of sustainable development as a result of applying the EU ETS.