Delivering on the European Green Deal A Private Sector Perspective 2025

Introduction Global carbon emissions reached all-time highs in 2023,1 yet the European Union (EU) has managed to reduce its emissions by 33% since the 1990s.2 The growth in disposable income per capita in the EU, however, is only half of that in the US, and innovative investments in the EU are also lagging behind the US.3 The International Monetary Fund (IMF) forecasts the EU27 economy to grow at an average of 1.6% until 2029, compared to 2.1% for the US over the same period.4 At the same time, reaching climate neutrality by 2050 remains a key priority for the European Commission.5 If successfully integrated into the EU’s broader growth and competitiveness agenda, this could make Europe the market-maker for renewable and net-zero technologies.6 Delivering on the targets set out in the European Climate Law and reaching economy-wide climate neutrality by 2050 is, however, currently being held back by structural limitations.7 Based on data collected from more than 300 European companies, Scope 1 and Scope 2 emissions fell by an estimated 28% between 2019 and 2023.8 Given that 75% of the EU’s emissions originate from economic activities of the private sector,9 it is imperative that the private sector remains steadfast in reaching its existing decarbonization targets and receiving clear direction on interim ones. This could enable society-wide decarbonization and the scaling up of new solutions and investments in sustainable and green technologies.10 Economic value generation and delivering on climate objectives should be mutually reinforcing. Establishing the best enabling environment possible must be a principal priority for national policy- makers and the incoming European Commission in the period 2025-2029. Companies will need to commit to investing in making their operations more sustainable, increasing their R&D investments in Europe, and taking collective responsibility to support their labour force in navigating the transition. To continue delivering on the European Green Deal (EGD) objectives, four broad enablers have been identified that should remain priorities: regulation, permitting, financing and skills.11 European companies especially struggle with the reporting burden, which continues to be an issue for the public sector to address in a synchronized way across member states.12Improved innovation and financing, streamlined permitting and workforce transition are key enablers for the European net-zero mission. Methodological note BOX 1 In this iteration of the report, the analysis focuses on a broader private sector sample to track environmental target setting and actual performance. The study examines companies across metrics like emissions, energy, waste and water. Secondary research includes AI- augmented analysis of public reports and data sets, covering European innovation potential, R&D, permitting environment and workforce transformation. The analysis covers developments over the period 2019-2022, and where updated data is available up until 2023. For details on the methodology, please consult the appendix. Delivering on the European Green Deal: A Private Sector Perspective 5