Can sustainability regulation be a competitive advantage for Europe?

Sustainability regulation is often misunderstood as a burden on business. But in reality, it can serve as a powerful catalyst for innovation, investment, and long-term market leadership — especially in complex, carbon-intensive industries like construction.

That was the core message from a panel discussion at the 2025 Summer Sustainability Summit, where leaders from policymaking, manufacturing, and construction gathered to explore how regulation is shaping Europe’s competitive edge. The panel featured Sirpa Pietikäinen, member of the European Parliament; Ilari Aho, vice president of sustainability and regulatory affairs at Uponor’s Water Europe; Panu Pasanen, CEO and founder of One Click LCA; and Céline Carré, head of public affairs at Saint-Gobain. Together, they examined why consistent, performance-based regulation is essential to ensuring fair competition — and how it can drive stronger outcomes for the economy, the environment, and industry innovation.

Regulation builds strong, future-ready markets

Europe’s economic systems were built on the assumption of abundant natural resources — an outdated foundation in today’s climate-constrained reality. For Sirpa our economic system has been created in times when you didn’t have the planetary limits, which means that harmful externalities like carbon emissions are still often ignored in pricing and investment decisions.

“Our economic system has been created in times when you didn’t have the planetary limits. It was sort of thought of as an endless resource — cheap resource: water, air, wood, biodiversity. And so it has perversive incentives. We support fossil fuels much more than what we put on climate change on a global level.”

Sirpa Pietikäinen, Member of the European Parliament

As the panelists emphasized, well-designed regulation helps correct these market failures. It does so by requiring companies to internalize environmental costs, making sustainability a transparent part of product performance and investment risk.

According to Ilari Aho from Uponor, regulation should create the metrics for performance, so that businesses can innovate and compete above a fair, defined baseline: 

“If you create the metrics for performance in the right way, that allows companies to go way beyond that bar and compete on that performance.”

Ilari Aho, Vice President of Sustainability and Regulatory Affairs, Uponor’s Water Europe

The Energy Performance of Buildings Directive (EPBD) is a concrete example of how regulation can drive innovation at the design level. 

“By 2030, all new buildings in the EU will require carbon assessments and will need to meet national limit values. That’s going to change how buildings are designed — not just the materials we use, but the whole approach. It’s a powerful catalyst for innovation.”

Paul Astle, Decarbonization Lead for Global Buildings, Ramboll

A level playing field enables fair competition

Without consistent rules, businesses that take measures to promote sustainable practices are often at a disadvantage. One of the strongest points from the discussion was for harmonized product-level standards and reporting frameworks — ones that enable apples-to-apples comparisons and prevent a race to the bottom.

In the construction sector, this is especially crucial. For Céline, change takes a very long time to hit the ground due to fragmented markets and long investment cycles. Regulation, she said, must account for these sector-specific dynamics while offering clear signals and timelines to drive forward progress.

For Panu, transparency empowers better decision-making by buyers, designers, and investors alike: 

“Carbon is invisible, environmental impacts in the supply chain are invisible, so you don’t know — you wouldn’t be able to tell what’s the harm a certain thing has caused. But the regulations, they actually make things visible, and they make it possible for you to understand what I am actually buying here.” 

Panu Pasanen, CEO & Founder, One Click LCA

Smart, stable regulation fosters innovation

When done right, sustainability regulation doesn't just prevent harm — it drives improvement. Regulation creates a shared framework that enables sectors to evolve through innovation and collaboration. As Céline noted, effective regulation “acts as a point to which all actors — from finance to manufacturers to architects — can align their strategies.”

From a manufacturer’s perspective, Schneider Electric highlighted how important is to support that alignment with accessible data and cross-sector collaboration:

“We’d heard from our customers and partners that the lack of environmental data for electrical and mechanical products was a pain point. It was hindering their environmental impact assessments and reporting efforts, and it made it harder for them to reach a given voluntary sustainability standard or even regulations.”

Coralie Vergez, Director of Partnering for Sustainability, Schneider Electric

The panel was also clear that stability and predictability are essential. Businesses need to understand the direction of policy in order to plan and invest. Sudden reversals or politically motivated deregulation can erode confidence and punish early movers. As Sirpa noted, in order to attract investment that support innovation you need regulation:

“The role of politicians is to create a long-term perspective by regulation — environmental regulation. Okay, we are going to go climate neutral, biodiversity-compensative, non-toxic chemicals, better resource efficiency… and then you get the investments. You get the security to make the plans and to innovate.”

Sirpa Pietikäinen, Member of the European Parliament

Simplification does not mean progress

As the EU revisits key pieces of Green Deal legislation, the panel warned against confusing structural improvement with deregulation. Ilari welcomed simplification, “as long as it doesn’t compromise the long-term objectives like climate neutrality or a functioning circular economy.”

For Céline Carré, oversimplifying regulation risks becoming both confusing and counterproductive, potentially undermining the goals of the EU Green Deal:

“If we think it’s too complex, too sophisticated, like a five-star restaurant menu — maybe we can make it simpler. But we cannot allow ourselves in the EU to go for junk food instead.”

Céline Carré, Head of Public Affairs, Saint-Gobain

Instead, regulation should evolve incrementally, sector by sector, based on what has been learned. Ilari urged policymakers to “correct what we got wrong, but in manageable steps,” and warned against swinging between extremes.

The consensus: regulation enables European leadership

The discussion concluded with unanimous agreement that Europe’s approach to sustainability regulation — though imperfect — is a global benchmark. If it stays the course, the EU can lead the world in responsible competitiveness.

Key insights from the discussion included:

• • Sustainability-driven innovation boosts competitiveness — improvements made for environmental reasons often deliver broader performance gains.
    
    
  • Regulation should focus on market outcomes — clear performance metrics enable companies to innovate beyond the baseline.
    
    
  • Effective policy is built on collaboration and long-term roadmaps — those lacking cross-sector input risk short lifespans and low impact.
    
    
  • To enable transformation, regulation must also remove barriers — slow permitting for green industrial investments can delay the transition.

Moving forward: what the industry needs

To fully unlock the benefits of sustainability regulation in construction and manufacturing, the panel outlined a few clear next steps:

• Performance-based product standards, enabling market-driven sustainability
  
  
• Consistent, comparable carbon data, supported by LCA and EPD frameworks
  
  
• Clear policy timelines, especially in long-cycle sectors like construction
  
  
• Public-private collaboration to co-create durable regulatory roadmaps
  
  
• Supportive infrastructure, including financing tools, training, and automation

As Coralie noted earlier in the session, improving data accessibility is foundational to meeting both voluntary and regulatory sustainability targets.

“We decided that we needed to put our information where our partners and customers needed it to be… So with One Click LCA, we’re able to go a step further in terms of accessibility.”

Coralie Vergez, Sustainability Global Director, Schneider Electric

EU standards pushing for a more regulated construction market

This regulatory shift is far from isolated. The EU has introduced multiple policies targeting the construction industry. The updated Construction Products Regulation (CPR), in force since January 2025, strengthens environmental reporting and aligns EPD requirements with the EN 15804 standard. The Energy Performance of Buildings Directive (EPBD) mandates whole-life LCAs and carbon footprint limits for new buildings by 2028. Broader regulations like the Corporate Sustainability Reporting Directive (CSRD) and EU Taxonomy extend sustainability disclosure to supply chains and investment decisions, while the Carbon Border Adjustment Mechanism (CBAM) ensures a level playing field for EU producers by pricing carbon on imported goods. The Ecodesign for Sustainable Products Regulation (ESPR) will further support transparency through digital product passports, making green claims verifiable and products easier to compare. Together, these regulations are reshaping construction markets and accelerating demand for transparent, low-carbon materials.

With the recast of new life cycle carbon requirements rolling out across the EU, the next five years will define whether Europe can scale low-carbon construction in practice — not just in principle.

As Panu Pasanen concluded: “Structural improvements are possible because regulations push you to do better. They’re very hard to achieve otherwise.”