Europe risks falling behind the US in attracting investment in its efforts to tackle climate change as regulatory burdens threaten to hold back growth, one of the region’s leading industrialists has warned.
Björn Rosengren, chief executive of ABB, said that while the “drive towards sustainability is quite clear”, the challenge was to “do it in a way that does not destroy Europe . . . when other people are taking different actions”.
“Make the legislations right, don’t over-administrate things,” he told the Financial Times, echoing fears of other executives that complex regulations and reporting burdens could bog down business in the green transition.
Rosengren, whose Swiss-based company specialises in industrial automation and factory robots, urged Europe to take note of the US approach that offered “carrots” to bring about change.
America’s new $369bn Inflation Reduction Act (IRA) involves incentives and tax credits for investments in green energy and technology.
The US reforms have triggered fears in Brussels that companies will invest there instead of in Europe at a time when the region is battling multiple headwinds, including soaring energy costs and high inflation.
Companies faced a greater reporting burden in Europe under legislation designed to cut greenhouse gas emissions that includes the EU taxonomy, a classification system to guide private capital into low-carbon activities, said Rosengren.
“They only have carrots for companies investing in the US and transforming towards a more sustainable future . . . The US will get a lot of investments in the next five years due to the IRA and Europe needs to do something, otherwise we have a big problem in Europe,” said Rosengren.
He noted that European leaders were aware of the need for action, with European Commission president Ursula von der Leyen this month responding to the competitive effects of the US legislation.
Rosengren, who is also a member of the European Round Table for Industry lobby group, is almost three years into an overhaul of ABB which pioneered the world’s first industrial robot in 1974. Today, the group’s activities span more than 100 countries with about 100,000 employees.
The company has set a target of achieving “carbon neutrality” across its operations by 2030.
The US is ABB’s biggest single market, where it makes everything from industrial electric motors to robots, followed by China. About 95 per cent of all products and services the company makes in China are sourced locally.
Rosengren said the group’s strategy of manufacturing as much locally as possible in its different regions would help ensure self-sufficiency at a time when the world was becoming “more fragmented”.
There would be “much more tension between nations . . . and we need to make sure that we are self-sufficient going forward”, he added.
