Reflections on sustainability and European market growth: What’s ahead in 2025

Sustainability will continue to play a critical role in shaping European markets in 2025. During the Euronext Sustainability Week, Duncan Higgins, CEO of Sustainable Trading, moderated a panel that explored how sustainability has evolved from a regulatory requirement to a key driver of market growth.  

 

 

Here are some of the key takeaways that emerged from the discussion, providing insight into the challenges and opportunities that lie ahead for European markets.

 

1. Sustainability as a growth driver: balancing competitiveness with ambition

A major theme of the discussion was the need to recognise sustainability as a core component of long-term business growth. It is no longer seen solely through the lens of environmental responsibility; it is increasingly integrated into business strategies as a driver of competitiveness. However, this raises an important question: how can European markets balance their ambitions for sustainable finance without pushing businesses away and towards less regulated regions? 

As companies face growing pressure to meet sustainability targets, Europe’s leadership in sustainable finance could be at risk if regulations become too burdensome. Policymakers need to carefully balance ambitious sustainability goals with maintaining Europe’s competitiveness in a global market. The challenge will be ensuring that the growth of the European green economy does not come at the expense of the region’s economic sovereignty.

 

2. Navigating political uncertainty and global divergence

The rise of far-right political parties in Europe has sparked concerns about the future of the European Green Deal, with some fearing that political shifts could slow or undermine climate policies. While a complete rollback of sustainability regulations seems unlikely, the pace of policy implementation may become slower, affecting long-term business planning and investment decisions. 

In contrast, regions like North America are adopting a more cautious approach to sustainability regulations, while closely observing Europe’s progress. This is particularly relevant amid rising geopolitical issues like energy security and defence concerns, which are reshaping global ESG frameworks. Europe’s challenge lies in balancing ambition with pragmatic enforcement to maintain its leadership in sustainable finance. 

 

3. Investor demand for green investments and the need for standardisation

Institutional investors continue to align their portfolios with ESG principles, driving demand for financial products that meet these objectives, such as green bonds, ESG-focused equity funds and impact-driven investment vehicles. As this demand continues, investors increasingly expect not only financial returns but also assurances that capital is directed towards genuine, impactful sustainability initiatives. 

This has created pressure for companies to improve the transparency and quality of their ESG disclosures. There is a need for policymakers and regulators to harmonise ESG reporting across regions to remove confusion and build investor confidence. Standardisation will help to ensure greater transparency, enable informed investment decisions and facilitate growth in the green economy. 

 

 

4. Fostering innovation and technological advancements

The rapid growth of the digital economy presents both challenges and opportunities for meeting sustainability targets. As energy consumption rises due to the increasing demands on data centres and the expanding use of AI, could AI itself be harnessed to drive efficiencies and foster innovation in a way that reduces environmental impact while supporting continued progress?  

The panel highlighted that collaboration across industries—between businesses, regulators and stakeholders—will create solutions that balance innovation with sustainability. Leveraging emerging technologies will help ensure a greener future without stifling progress in the digital economy. 

 

5. Balancing short-term pressures with long-term goals

A common challenge for businesses is balancing the immediate pressures of short-term financial performance with long-term sustainability goals. Many companies face a difficult task: meeting quarterly earnings targets while simultaneously committing to sustainability objectives that may not yield immediate financial returns. The key to success will be integrating sustainability into day-to-day operations, ensuring that these long-term goals align with short-term business performance. 

As companies move toward 2025, it will be those that manage to find synergy between sustainability and profitability that will thrive. Successfully navigating this challenge will require thoughtful strategies that balance immediate financial needs with long-term value creation. 

 

Will 2025 be a turning point? 

The role of sustainability in European markets is poised to grow further. The key challenge for companies, investors and policymakers will be to create frameworks that not only foster sustainable growth but also ensure that European markets remain competitive on the global stage. It is clear that the path forward will require a careful balance between regulation and innovation, ambition and practicality, as Europe continues to navigate the complex landscape of sustainability. 

The focus will likely remain on creating systems that promote environmental stewardship while enabling business success. As we approach the milestones of 2030 and 2050, Europe’s leadership in sustainability will depend on its ability to adapt and evolve in response to changing market dynamics and political pressures. 

 


 

 

This article is based on reflections from the Euronext Sustainability Week virtual classroom: Sustainability and the Growth of European Markets moderated by Duncan Higgins of Sustainable Trading 

The growth of European Capital Markets is an increasingly important subject for European policymakers and practitioners alike. The goals of improving access to funding for companies and creating an opportunity for improved savings and investment returns will deliver benefits for many.
 
This session explored the how a focus on sustainability can support this growth, covering a broad array of topics – from capital raising for green companies and supporting the provision of sustainable investment products, through to the changes required from the secondary markets to ensure they reflect the sustainability and social-responsibility values of tomorrow’s issuers, investors and savers. 

Listen to the replay here. 

 

Images and graphics courtesy of Euronext.