Most EU companies investing in climate change mitigation, adaptation

The EIB’s Investment Survey 2024 shows European companies are leading the green transition despite geopolitical risks and supply chain disruptions. They continue to invest in reducing emissions and adapting to climate mitigation and adaptation while strengthening digital capacities.

Companies in the European Union have successfully faced health, price, and trade challenges over the past four years and have increased their ambitions for green and digital transformation, according to the European Investment Bank (EIB).

This year’s survey covered 12,000 businesses across all EU countries and a comparative sample in the United States. As many as 61% of companies in the EU have already invested in mitigating and adapting to climate change. In 2023, the level was 56%, and in the previous year, 53%.

More than a quarter of EU firms view the transition to a net-zero economy as an opportunity

According to the survey results, more than a quarter of EU firms view the transition to a net zero economy as an opportunity. Green transition is perceived as a business risk by 34% of companies in the EU, compared to 42% in the US.

“The commitment of EU firms to the green and digital transitions illustrates the potential of the European economy,” said EIB President Nadia Calviño.

According to the report, 90% of companies in the EU and US have taken measures to reduce their greenhouse gas emissions, mainly through investments in waste reduction, recycling, and energy efficiency. In the EU, 66%  reported exposure to physical climate risks, compared to 60% of American companies. However, less than half of firms in both the EU and US are taking concrete actions to address these risks.

Focus on innovation among EU companies

In the EU, 37% of total investments are directed towards intangible assets such as research and skills development, highlighting a strategic focus on innovation and digital solutions, the report shows.

A significant number of EU firms, 74%, are adopting advanced technologies to increase their competitiveness. However, according to the report, US companies lead in this regard, with 81%.

While nearly half of American firms plan to expand their business in the next three years, European companies prioritize replacing capacities, with only 26% planning to grow, the report states.

High energy costs are the main barrier to capital investments in Europe

The main obstacles in both the US and the EU lie in the business environment. Survey participants highlighted the lack of skilled labor and uncertainty about the future. Additionally, high energy costs are a significant barrier to business investments for 46% of EU companies.

EIB Chief Economist Debora Revoltella said European companies are making progress in addressing both climate change and digital transformation, but that strengthening investments in the EU requires a less fragmented market. EU exporters still emphasize the need to comply with different standards and consumer protection regulations from one country to another.

The results showed that companies from both regions share concerns that political and trade tensions will disrupt their supply chains and that they will struggle to comply with new listings, standards, and certifications.

In response to trade shocks, companies in the EU and US have opted for similar strategies: stockpiling, investing in digital inventory tracking, and diversifying their supply chains.