As Europe’s industry faces mounting pressure and deep transformation, public finance must play a central role — driving decarbonisation, innovation, and quality jobs while ensuring funds are used fairly and effectively. This briefing showcases selected examples from across Member States where public investment is already delivering tangible social and environmental value.
Europe’s industry is under growing pressure, facing challenges from energy and raw materials to digital dependence, global overcapacity, and ageing assets. Across the continent, production is declining in manufacturing regions, while sectors like batteries and wind undergo major restructuring. For millions of Europeans — especially in coal-dependent regions — this transition will bring significant socio-economic change, further strained by the cost-of-living crisis.
Public finance can and should play a central role in this transition. It is a critical driver of decarbonisation, innovation, circularity and the creation of quality jobs. Well-directed public investment can foster green manufacturing, support innovative firms, and accelerate the transformation of industrial value chains. However, the expansion of public support also raises fundamental questions about how this money is used. Without a harmonised set of minimum conditions across Member States, companies will continue subsidy-shopping – driving up costs, undermining the Single Market, and deepening economic divergence.
There are already many examples of social and environmental conditionalities being applied at the national and sub-national level, in Europe and beyond. These experiences demonstrate both the potential of such approaches and the lessons learned to make them effective. This policy briefing highlights a selection of these cases to support the broader mainstreaming of conditional public support. The era of blank cheques for companies must come to an end.
Lessons learned from Member States concerning social and environmental conditionalities in public finance for companies: A promising way forward?
Across EU Member States, a growing number of innovative policy instruments are emerging to link public financial support to environmental and social outcomes. Early evidence points to the fact that the most effective approaches combine conditional financial support with strong environmental and social criteria, alongside a supportive framework that enables companies to participate successfully.