From compliance to competitiveness: Sustainability’s strategic role in the Nordic capital goods sector

In an era of persistent uncertainty and diverging climate and sustainability policies, the external environment for businesses is becoming increasingly complex. While European regulations continue to guide the direction of change, the pace has moderated, and the tone has softened. For Nordic industrial companies, this evolving landscape presents an opportunity to reframe sustainability: not as a burdensome compliance race, but as a strategic enabler of resilience, financing and future competitiveness.

Regulation: Direction is clear, but timing is flexible

The European Union remains committed to decarbonisation, circularity and supply chain transparency, although implementation is evolving. Instruments like the EU Emissions Trading System (ETS) and the Carbon Border Adjustment Mechanism (CBAM) continue to shape long-term cost structures and trade dynamics, particularly for carbon-intensive manufacturing and global sourcing. However, transition periods and practical enforcement are becoming increasingly flexible.

Product regulations such as the Ecodesign for Sustainable Products Regulation (ESPR) and Right to Repair (R2RD) continue to encourage durability and energy efficiency—driven not only by mandate due to low circularity but also increasingly by market expectations and demand. Similarly, while the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) may soften in tone, they still reflect investor and stakeholder appetite for traceable, accountable business models.

What this means: Sustainability-aligned strategies remain important, but companies now have the latitude to be thoughtful, phased and commercially grounded in their approach.

Technology & capital access: The opportunity is now

Amid regulatory shifts, the business case for green technology remains strong. Investments in electrification, renewable energy integration, process digitalisation and circular economy models are driving measurable efficiency, cost savings and operational resilience.

Furthermore, sustainability alignment increasingly unlocks preferential access to capital. Financial institutions, particularly in the Nordics, continue to channel funding toward projects aligned with the EU Taxonomy and broader sustainability goals. Green lending, performance-linked financing and innovation grants remain robust, offering a significant advantage to early movers

What this means: Sustainability-focused investments are no longer just about compliance. They now serve as key drivers for unlocking capital and building operational excellence. This is particularly evident in areas with growing regulatory and market-driven demand, such as smart packaging solutions, chemical tracking and labelling systems, and sustainable fulfilment machinery, among others.

Circularity and energy efficiency as cost shields

In an era dominated by inflation, higher-for-longer interest rates, potential energy volatility and supply insecurity, circular economy models and energy-efficient processes are not just about sustainability considerations—they’ve become smart operating strategies.

A look at end-of-life recycling rates for critical raw materials reveals significant opportunities. While lead and copper have recycling input rates of 75% and 50% respectively, other materials crucial to the sector, such as magnesium, cobalt, and lithium, remain under 25% (European Commission, 2023). This disparity underscores the significant potential for material recapture, reuse and competitive differentiation.

Chart: End of life recycling input rate

What this means: Nordic firms adopting proactive circular sourcing strategies stand to gain multiple advantages. They may not only reduce exposure to geopolitical supply shocks but also potentially secure a competitive edge in terms of cost efficiency and ESG brand reputation, leading to long-term benefits.

Supply chain strategy: Transparency is the differentiator

Geopolitical fragmentation and resource nationalism are elevating supply chain risk. While regulatory initiatives like the CSDDD and forced labour bans may face slower enforcement, client expectations and reputational risks remain significant.

For export-oriented Nordic firms, supply chain resilience and transparency are becoming crucial differentiators in global B2B markets. Buyers, particularly in Europe and Asia, continue to scrutinise ethical sourcing practices, emissions exposure and risk mitigation strategies, creating demand for greater tracking in a space where, for instance in the EU, only around 8% of industrial firms track full scope 3 emissions (IEA, 2024) 

What this means: Investing in supply chain traceability and risk mapping is about more than just meeting requirements—it’s a strategic move that can provide a competitive advantage and mitigate future risks.

While the global ESG narrative is fragmenting, opportunities for Nordic industry remain robust. Companies that navigate this landscape with strategic clarity, commercial logic and long-term vision will do more than just manage uncertainty—they will position themselves as leaders in driving the next phase of sustainable and resilient industrial growth.

At Nordea, we help consumer durables and capital goods sector translate sustainability ambition into bankable action, offering a range of different solutions and products—through green financing, transition products, and sector-specific advisory—to our large as well as small- and medium-sized corporate customers.