Europe’s pathway to sustainable competitiveness

A competitive Europe needs successful transitions, and successful transitions can strengthen Europe's competitiveness. As a long-term investor, we are committed to supporting societal transitions and invest in companies that are well positioned for the long term.

Yet we recognise that these transitions are not straightforward. Neither businesses, policymakers nor investors can address these challenges alone. Therefore, on 9 September, together with the Dutch Pension Federation, APG and MN, we organised a stakeholder event in Brussels to bring together different perspectives and explore how we can work together to create an investible environment that accelerates Europe's strategic transitions and strengthens its competitiveness.

What investors need to support Europe's transitions
Europe does not lack technologies or capital. The challenge is not identifying solutions but creating the conditions that allow them to scale. This requires a policy and market environment that provides confidence for businesses and investors to make long-term decisions.

At the same time, investment opportunities must be structured in a way that aligns with the risk-return requirements of long-term institutional investors. Geraldine Leegwater, CEO PGGM Investment Management, elaborated that for long-term investors, three conditions are particularly important: policy stability, effective market signals and demand creation.

One of the most important conditions is policy stability. Europe’s transition requires investments with horizons extending ten, twenty or even thirty years. Whether in renewable energy, industrial decarbonisation, electricity networks, EV charging infrastructure or emerging clean technologies, investors need confidence that the overall direction of travel will remain clear.

A second essential element is the existence of effective market signals. For long-term investors, a credible and predictable carbon price supports capital allocation decisions and helps underpin the business cases for many transition-related investments. In that context, it is encouraging that, despite pressure from some parts of industry and broader economic concerns, the European Commission remains committed to carbon pricing and alignment of the ETS proposal with the EU’s 2040 climate target. 

Turning innovation into scale
Demand creation is equally critical. Innovation on the supply side alone is unlikely to deliver the transition at the pace required. Companies will only invest in new technologies, production facilities and infrastructure if they believe sufficient future demand will exist.

This is why clear and credible demand signals are so important. Whether in electric mobility, renewable energy, sustainable aviation fuels or low-carbon industrial products, investors and businesses alike need confidence that markets will continue to develop. Europe has already established long-term pathways in many of these areas. Maintaining those commitments provides an important foundation for future investment.

For long-term investors, the message is relatively simple. The capital is there. But mobilising it at the scale Europe requires depends on creating an environment characterised by stability, predictability and credible market signals. When those conditions are in place, private capital can become a powerful driver of Europe’s competitiveness, energy security and climate goals.

Lively panel discussion with industry leaders 
During the panel discussion, we brought together four companies at the forefront of Europe's industrial and energy transition. Three of these companies are part of our infrastructure and Climate and Energy Transition Solutions (CETS) portfolio: Stockholm Exergi, RIFT and Elyse Energy. The fourth was ArcelorMittal who provided the perspective of Europe's hard-to-abate industries.

• Stockholm Exergi is Stockholm's district heating company, jointly owned by the City of Stockholm and an investor consortium that includes APG and PGGM. In 2025, the company took the final investment decision to build Europe's largest BECCS (Bio-Energy with Carbon Capture and Storage) facility, which is expected to remove up to 800,000 tonnes of CO₂ annually from the atmosphere.
• RIFT is an Eindhoven-based scale-up developing Iron Fuel Technology, which replaces natural gas with iron powder to provide carbon-free industrial high-temperature heat. The company is preparing to build its first commercial production facility in Antwerp. PGGM is a key investor alongside Invest-NL, while the project has also received support from the European Innovation Fund.
• Elyse Energy is a French developer of sustainable fuels and low-carbon molecules, including e-methanol and sustainable aviation fuel (SAF), for the maritime, aviation and industrial sectors. The company is developing production projects across France, Spain and Portugal.
• ArcelorMittal is the world's leading steel producer and plays a critical role in Europe's industrial base. As one of the most hard-to-abate sectors, steel is central to both Europe's competitiveness and decarbonisation ambitions. ArcelorMittal is investing in lower-carbon steelmaking technologies.

During the discussion, we explored the key barriers these companies face in scaling their solutions, the conditions required to create viable business cases, the respective roles of public and private capital, and the policies that matter most for accelerating Europe's strategic transitions. 

European Commission perspective
Lastly, Han ten Broeke, Head of Cabinet to Commissioner Hoekstra, underlined the importance of climate resilience and climate policy following a summer marked by severe heatwaves across Europe. In his view, climate resilience is not only a climate issue, but also a matter of Europe's future prosperity and competitiveness. He highlighted the Commission's ETS proposal earlier this summer as an important step towards accelerating the energy transition and achieving the EU's 2040 and 2050 climate objectives, while recognising the need for a pragmatic approach that enables European industry to remain competitive throughout the transition.