Ursula Woodburn is director of the Corporate Leaders Group Europe, which brings together business leaders committed to supporting the transformation to competitive and sustainable economies that will deliver a climate-neutral future by 2050.
A critical choice faces Europe’s leaders as they meet today at the European Council summit: Will Europe shape the future of global industry or be shaped by it?
In today’s volatile geopolitical and economic landscape, Europe must act decisively to secure its industrial sovereignty and long-term competitiveness or risk missing out on economic, security and climate benefits.
Creating a strong industrial strategy that both reflects the global clean tech race and addresses the challenges facing European industry would bring clear opportunities, and has huge potential to attract new investments.
But despite the benefits, the European Commission’s recent industrial drive, the Clean Industrial Deal, threatens to fall flat. When it was proposed at the beginning of the year, it promised action, but now the EU is sending mixed messages, with the Commission promoting “staying the course” while also cutting back on green policy.
Global race to invest in clean tech
Europe’s industrial base is strong, but it’s under pressure. Global competitors such as China are investing heavily in clean technologies, and the race for industrial leadership is accelerating, taking over sectors where Europe used to lead.
While necessary streamlining and simplification is useful, it is veering into a major upheaval of EU regulations. For example, wholesale cuts to sustainability reporting risk jeopardising investments already made in due diligence and reporting, and turning compliance efforts into uncompetitive costs, de facto rewarding the laggards.
It also ignores the major economic benefits that companies could have from becoming more sustainable.
The European Commission must instead focus on how to build a streamlined, industrial strategy that both reflects genuine concerns from businesses and creates a pathway towards sustainability.
Businesses and investors are behind this. They are calling on the EU to set a robust 90% emissions-reduction target by 2040, arguing this would send a vital signal of Europe’s continued commitment to climate neutrality and industrial leadership.
Europe must support, not stifle green investment
Whatever the headlines say, businesses across Europe are already investing in the huge opportunities of a cleaner future economy and in reducing their broader impacts. This is because they understand the risks for their supply chains and the direction of future markets.
These efforts must be supported – not stifled – by forthcoming legislation. This should include clear incentives for reinvestment and instruments to reduce costs and secure Europe’s leadership in clean technology.
More than 130 signatories have just outlined a roadmap to strengthen the EU’s industrial edge, outlining a business roadmap with priority actions.
As EU leaders meet in Brussels, they need to implement a framework to support business cases delivering on Europe’s goals and ensure a future-proof economy. This is about ensuring that Europe can grasp future opportunities, rather than being mired in the past, and enable it to unlock billions of euros of investment for a resilient, clean and competitive Europe.
A strong industrial strategy could help mitigate significant risks to our economy – a recent report estimated 43 billion euros in losses from the droughts, heatwaves and floods that hit EU countries this summer, forecasting that losses would hit 129 billion euros a year by 2029.
Effective rules and lower costs
In the statement, businesses and investors are calling for simple, stable and effective regulation to attract investment and drive industrial renewal. This needs to be accompanied by effective enabling policies, including a robust European Emissions Trading Scheme.
Affordable clean energy and electrification are also crucial for reducing bills and enhancing energy independence. This means work needs to be done to increase access to and demand for this, supported by the right infrastructure.
In addition, the European Commission needs to follow through on the Clean Industrial Deal’s promise to use lead markets and strategic procurement to scale innovation and reduce prices. This has enormous potential to derisk the investments needed to scale up the production and sale of clean products and services, driving costs down thanks to economies of scale and enhancing consumers’ trust, and ensuring that clean products and services compete fairly with the fossil-based economy.
The company tracking energy transition minerals back to the mines
Following through on work to move from a linear to a circular economy, including the upcoming Circular Economy Act, is also essential. Effectively leveraged, it can boost productivity and resilience and tackle Europe’s resource overuse in a constrained world, but deployment is nowhere near delivering on this potential.
All of this requires mobilising a huge amount of investment, enabling investor confidence through clear long-term policy frameworks. Public finance should also be used to attract private capital and bridge the investment gap, including supporting the uptake of future-proof products and services, rather than extending the lifespan of assets that we know belong in the past.
This is a moment for pragmatic leadership and delivering a strategic industrial agenda. With clear direction and consistent action, European leaders can ensure the twin transitions deliver a stronger, more resilient, and globally competitive economy.
