Meeting bold policy with bolder action: Accelerating Europe’s climate goals

Europe is poised to emerge as a global leader in the transition to a resilient, net-zero future. There’s a strong foundation for climate action: an intensifying climate crisis, a tightening regulatory ecosystem, and growing consumer demand for more sustainable products and services. However, Europe-based corporations must meet their commitments with bold action, embracing proven sustainable solutions that complement their core business.

Early-stage climate tech startups are building these proven, scalable solutions tailored to local contexts. Through strategic partnerships, corporations and startups can cement Europe’s position as the global climate leader, unlocking long-term financial and environmental value that drives real, lasting impact.

The pressures of Europe’s tightening regulatory ecosystem on corporations

Europe began emerging as a climate leader when it launched its comprehensive European Green Deal in 2019, a sweeping policy framework aimed at making the continent climate-neutral by 2050. The suite of regulations and mandates introduced new pressures for corporations, major contributors of greenhouse gases, to transition to cleaner, lower-emission production processes. Key initiatives such as the Circular Economy Action Plan, Fit for 55, and the Digital Product Passport exemplify this shift, embedding sustainability into every aspect of the value chain, from manufacturing to product design and cross-border trade.

Today, two regulations impacting corporations most immediately are the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). They require large EU-based (and qualifying non-EU companies operating in the EU) organisations to track, report, and address comprehensive sustainability data across their entire value chains. Preparing to meet these requirements is a heavy lift, involving investment in new technologies and infrastructure, and the establishment of new internal cultures and governance mechanisms.

Companies that fail to meet sustainability compliance risk financial penalties, reputational damage, and restricted access to capital. At a broader level, however, companies that focus only on the short-term costs and complexity of such regulations overlook a lesser-known strategic advantage: sustainability reduces costs, boosts competitiveness, and drives both financial growth and environmental impact when embedded into core business models.

In response to backlash from business leaders, primarily in Germany and France, the European Commission proposed a Simplification Package (unofficially the Omnibus Package) to ease perceived regulatory burdens. These changes represent delays rather than eliminations. As the EU Parliament and member states deliberate, corporations that take a wait-and-see approach risk leaving value on the table.

The opportunity for climate-focused startups to power corporate sustainability transitions

Rather than resisting regulatory shifts, corporations should embrace them, building new infrastructure to maintain compliance, unlock business value, and gain a competitive advantage along the way. While many corporations have the scale to drive industry-wide change, they often lack the focus or incentive to develop breakthrough solutions.

Startups, on the other hand, excel at building scalable, locally tailored solutions with speed and innovation. Their technologies help corporations transition to sustainability by addressing critical gaps, implementing new systems, or reimagining legacy ones to accelerate compliance and meet net-zero targets. Their agility also allows corporations to adapt and iterate quickly in response to ever-changing market conditions.

In addition to offering innovative, scalable products and services, many startups employ subscription-based pricing models, making them accessible partners for corporations with varying budgets and risk appetites.

It is when these two actors come together through strategic partnerships that they generate long-term financial and environmental value. Countless impact startups across industries are ready to support corporations in their sustainability transitions. In turn, such partnerships provide startups with much-needed capital and customer bases to scale their solutions for greater impact.

Blueprints for impact: strategic partnerships driving change

Early successes from strategic corporate–startup partnerships set powerful precedents for others to follow. Italy-based Musthad enables fashion and textile companies to move towards a circular, zero-landfill future. By extending the life of clothing by nine months, this resource-intensive industry, responsible for 92 million tonnes of waste per year, can reduce its carbon, water, and waste footprints by 20 to 30 per cent.

Musthad’s automated, data-driven SaaS platform helps fashion companies efficiently manage and monitor excess inventory. Its solution turns waste and surplus stock into secondary revenue streams, improves efficiency, and reduces demand for virgin materials. Through its partnership with fashion retailer Uniqlo, Musthad leverages its EU network of recycling and upcycling solutions to give new life to excess inventory and pre-loved items. This collaboration creates shared value, driving financial growth for both Uniqlo and Musthad while advancing environmental progress on a European scale.

Global retailers like Uniqlo rely on climate-focused Musthad to ease their sustainability transitions, giving new life to excess inventory and pre-loved items.

UK-based Nellie Technologies (Nellie) is another climate-focused startup helping companies meet emission reduction targets. Its bioengineered carbon capture technology converts biomass into biochar and biofertiliser for agricultural use anywhere, permanently sequestering carbon dioxide and generating carbon dioxide removal certificates (CORCs) for sale.

Recognising the need for urgent, scalable action, Zurich Insurance Group teamed up with Nellie through a minimum five-year agreement to secure 17,500 tonnes of carbon removal. Under the agreement, Nellie will deliver the CORCs through its carbon dioxide removal (CDR) activities, transferring an increasing number of certificates each year.

Zurich’s collaboration with Nellie reinforces its proactive leadership in advancing its net-zero strategy to remain compliant and create new value. It also validates the scalability and commercial viability of Nellie’s carbon removal technology, setting a powerful precedent for dual environmental and business impact.

Zurich Insurance Group teamed up with Nellie Technologies to meet its emission goals and remove 17,500 tonnes of carbon over the next five years.

Leveraging corporate–startup partnerships to turn climate commitments into scalable action

Europe-based corporations can set themselves up for success by leveraging the pipeline of innovative, climate-focused startups, as Zurich Insurance Group did with Nellie and Uniqlo with Musthad. They can also invest in innovation through world-class networks and accelerators. Lastly, corporations can rely on agile startups to streamline onboarding and due diligence processes and establish sandboxes to test and scale emerging solutions.

Europe’s foundation and commitment to climate progress are already in place. Now it is time for corporations to build on this foundation by collaborating with innovative startups. Europe’s position as a global leader in the journey towards a resilient, net-zero future depends on it.

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