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European Mid-Sized Firms Embrace Decarbonization Despite Regulatory and Financial Hurdles

Eighty-five percent of European mid-sized firms now see decarbonization as a strategic opportunity, up 18 points from 2024, with 48% already implementing projects. Despite regulatory complexity and financial constraints, most cite energy savings, market access, and financing benefits. Germany, Italy, and Benelux lead, while France shows rising frustration over unclear regulations.

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Eighty-five percent of European medium-sized companies consider decarbonization a strategic opportunity, compared to only 5% who see it as a risk. This figure, which emerged from the third edition of the Climate Transition Barometer conducted by Argos Wityu and Boston Consulting Group ( BCG ), marks a leap of 18 percentage points compared to 2024. This marked shift places sustainability no longer among regulatory or reputational obligations, but at the heart of companies’ industrial and financial decisions.

The research, conducted on a sample of approximately 700 medium-sized companies operating in France, Germany, Italy, Benelux, and, for the first time, the United Kingdom, reveals a Europe that, despite macroeconomic uncertainty and cost pressures, is determined to invest in the transition. 48% have already launched decarbonization projects , while 32% are following a structured roadmap , a figure that has tripled since 2023. Finally, among those who have not yet taken concrete action, 65% plan to assess their carbon footprint in the next three years.

“When large companies calculate their emissions, midsize companies fall within Scope 3 and account for 60% of large companies’ indirect emissions,” says Ferrante Benvenuti , Managing Director and Partner at BCG. “As a result, they play a crucial role in decarbonizing value chains. This interdependence is increasing pressure across all sectors, particularly in the B2B market, although consumer demand is also a key driver in terms of B2C relationships.”

Decarbonization Seen as Key to Competitiveness Despite Costs and Regulatory Challenges

The study’s findings therefore reveal a profound change, driven by a new sense of responsibility and increasingly selective market dynamics, with 88% of companies now considering the ecological transition a strategic priority for their competitiveness.

Overall, 29% of companies already recognize a competitive advantage derived from sustainability projects, while 53% expect this to become the case in the coming years. This data is consistent with another key indicator: 63% of companies cite demand pressure, especially B2B, as a key driver of their climate choices .

Environmental regulations also remain a crucial factor in shaping companies’ strategic choices. 70% of European companies view regulation as a positive factor, capable of providing a clear framework for structuring decarbonization strategies . However, half of the sample cites regulatory complexity and lack of clarity as real barriers. The recent European simplification package (EU Omnibus) is just one example of an evolving regulatory framework that risks slowing the adoption of concrete measures. This dynamic, if left unresolved, risks slowing the pace of the transition precisely at a time when emission reduction targets require consistency and stability.

Another barrier to the transition remains financial, with 62% of companies citing economic constraints as the primary obstacles to implementing green investments . This tension is confirmed by the data: the share of companies investing more than 10% of their annual capital expenditure in decarbonization projects has fallen to 12%, down eight points from the previous year. Companies are therefore maintaining their commitment, but are carefully calibrating their cash flows, highlighting the need for targeted financial instruments and greater support from investors and institutions.

Despite the challenges, the benefits are real. Specifically, 75% of business executives involved in the study cited energy cost savings as the main benefit of decarbonization. This is followed by access to new markets or increased market share (52%) and more favorable financing conditions (44%, +8%). Other positive effects include attracting talent (38%) and subsidies (30%, -6%), while security of supply (25%, -10%) and the possibility of obtaining a price premium (13%, -9%) are less significant.

Sectoral and geographical impact

The change involves all the sectors analyzed, including agriculture and agri-food, where the percentage of companies that see the reduction of greenhouse gas emissions as a strategic opportunity has risen from 50% in 2024 to 80% in 2025 .

Geographically, national differences are marked, but the overall trend is growing everywhere . Germany and Italy lead the way, with approximately 54% of companies already active in decarbonization investments . The United Kingdom, included in the survey for the first time, shows signs of acceleration, with 42% of companies committed and 40% declaring they will have increased the pace of initiatives during 2025. In Benelux, 95% of companies consider decarbonization important or critical, while in France, some cracks are emerging: a third of companies perceive the transition as a constraint or risk, a sign of growing intolerance towards regulatory uncertainty.

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(Featured image by Finn Mund via Unsplash)

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First published in ESG NEWS. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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Jeremy Whannell loves writing about the great outdoors, business ventures and tech giants, cryptocurrencies, marijuana stocks, and other investment topics. His proficiency in internet culture rivals his obsession with artificial intelligence and gaming developments. A biker and nature enthusiast, he prefers working and writing out in the wild over an afternoon in a coffee shop.