Europe is asking its companies to do something no other region demands: to be simultaneously transparent, responsible and competitive in a world that rewards none of these qualities. This is the paradox at the centre of the European project today, and it is hitting the industrial world with a violence that many underestimated. Not because sustainability is misguided—far from it—but because Europe has built a regulatory architecture that exposes industrial reality faster than Europe can change it. And in the global race for industrial power, timing matters more than virtue.
Something profound has shifted over the past three years. The sustainability movement that once looked like a moral horizon has become a geopolitical pressure cooker. CSRD, due diligence, taxonomy, CBAM: each of these tools was designed to make European companies confront their impact on the world. Each had the ambition to transform capital allocation, business models, and value chains. But taken together, and placed within the unforgiving reality of global competition, they now form a mandate that appears both admirable and impossible. Europe built the world’s most advanced mirror at exactly the moment it became the hardest place to run an industrial business.
Behind the façade of regulatory elegance lies a more brutal story. European executives are not dealing with sustainability. They are navigating contradictions. They must comply with the deepest reporting framework ever designed while their competitors in the United States receive massive subsidies, face fewer disclosure requirements, and operate with energy costs that Europe cannot match. They must decarbonise faster than China while China continues to scale production, secure raw materials globally, and drive down the cost of clean technologies through sheer industrial volume. And they must align with societal expectations on sustainability while shareholders, markets and remuneration systems still reward short-term metrics shaped in the 1990s.
It would be easy to accuse companies of resistance. The reality is the opposite: they are cooperating in a system that gives them contradictory signals. They are told to invest heavily in transparency, traceability, ESG data, double materiality assessments—yet their industrial environment remains structurally misaligned with the very transformation this transparency reveals. They are asked to make credible net-zero commitments while operating in value chains where Europe controls neither the energy mix nor the critical materials nor the geopolitical environment. They are required to publish transition plans that presume clarity on technologies, infrastructures and costs that do not yet exist. And they must do all of this under political messages that oscillate between ambition and rollback, depending on electoral cycles, energy prices and public opinion.
This is the European dilemma: regulation has moved faster than strategy, and transparency now reveals what strategy is still unable to solve.
In the boardrooms of industrial Europe, this tension is not theoretical. It is the daily substance of leadership. Decisions that once seemed unthinkable are now routine. Do we invest millions into CSRD-grade reporting systems while our competitors invest in production capacity? Do we extend European sustainability standards to global subsidiaries, knowing it could create cost asymmetries and legal exposure in jurisdictions with weaker norms? Do we exit profitable legacy businesses because their carbon profiles make long-term alignment impossible? Should the next gigafactory, datacentre or R&D hub be built in Europe out of loyalty, or in the US where the incentives are overwhelming? How long can we operate plants exposed to volatile energy prices when other regions stabilise industrial costs through state intervention?
None of these decisions are easy. None are addressed in the directives. And none fall on regulators; they fall on the executives who must reconcile principles, politics and survival.
What makes the European situation unique is not the regulation itself but its geopolitical solitude. The United States talks about sustainability but scales subsidies. China talks about climate neutrality in 2060 but scales production and secures minerals. Emerging economies talk about development—and they are right to. Europe, meanwhile, built its transformation narrative on transparency. Not on industrial policy. Not on energy sovereignty. Not on strategic autonomy. On transparency alone.
But transparency is not a strategy. It is an exposure.
What makes this exposure dangerous is that Europe has not yet answered the only questions that matter: What kind of industrial base does it want to keep? What sectors justify public investment? Which value chains must be secured regardless of cost? How much resilience is Europe ready to pay for? And what sacrifices—social, financial, political—is it willing to make to preserve industrial sovereignty?
Without these answers, CSRD becomes a paradoxical instrument. Not a lever of transformation, but an X-ray of structural fragility. It forces companies to make visible the vulnerabilities of a continent that has not decided whether it wants to compete on cost, innovation, resilience or moral leadership. It pushes leaders to articulate transition plans while Europe still hesitates on its own energy and industrial doctrine. And it confronts companies with truths that political systems prefer to treat as technicalities.
There are, of course, leaders trying to turn this burden into an operating system. Companies that redesign products for durability rather than replacement. That bring parts of their supply chain closer to home. That invest in circularity, industrial symbiosis, lifetime extension, traceability. That take resilience seriously, not as a communication theme but as a design constraint. They are not the loudest but they may be the most strategic. Their bet is simple: Europe’s regulatory discomfort is temporary, but the need for credibility is permanent. If Europe ever aligns its industrial and geopolitical strategy with its transparency regime, these companies will be the first to benefit.
But the truth remains: this is not yet Europe’s collective trajectory. Today, sustainability in Europe is a question of individual courage inside a system that still rewards the old equilibrium. And courage has limits when the environment punishes those who move first.
The sustainability debate in Europe will not be resolved by refining ESRS indicators or adjusting thresholds through Omnibus packages. It will be resolved by answering a geopolitical question that has nothing to do with reporting: What does Europe want to be in the next industrial cycle? A museum of past excellence? A regulatory island? A high-trust, high-resilience industrial bloc? Or a region that imposes constraints on itself while depending on others for energy, materials and technology?
European companies cannot answer this question alone. But they are forced to act before Europe has answered it for itself.
That is the heart of the impossible mandate. Europe built the most demanding sustainability mirror in the world without building the political, industrial and geopolitical structures necessary to act on what the mirror reveals. And until this gap closes, European companies will continue to carry a burden that is not of their making: the expectation to reconcile moral ambition with global competition, without the tools that make such reconciliation possible.
If this reflection resonates, explore the other essays in the laboratory.