Europe has transformed itself many times in the past. Particularly during recent decades, its capacity to respond to challenges has been essential in maintaining prosperity and preserving living standards. Yet the transformation required now is arguably unprecedented.

DWS’s own research shows what is needed today is a transformation that is both multifaceted and profound. It encompasses how we think about business, regulation, policy, politics, technology, digitisation, nature, the environment and society as a whole.

DWS first identified “European Transformation” as a strategic priority in 2022. We have since produced ground-breaking research around our identified key themes that both highlights the urgency of the challenge and outlines potential solutions through transformative investment solutions.

Our ongoing research takes a long-term view in order to discern risks and opportunities that are not widely recognised. We see this as a vital element of our fiduciary duty and our broader responsibility to society.

Even though the European Commission has proposed that by 2030 all new buildings must be zero emission, this still leaves the existing building stock, 85% of which will still be standing in 2050.^[1]

One of the goals of the European Commission’s Green Deal^[2] is to achieve a 55% reduction in transport-related greenhouse gas emissions by 2030, and a 90% decline by 2050 (compared to 1990 levels). Within the transportation sector, road transport represents 77% of the sector’s overall emissions ^[3] in 2020 and this sector is ripe for transformation.

The innovation solutions needed to bring about change increasingly comes from smaller businesses, yet securing funding has been a major challenge. In particular, small- and medium-sized business SMEs have seen their access to bank loans fall significantly since the global financial crisis with only 10% of external financing comes from capital markets.^[4] As a result, private investment via direct lending is now rightly gaining recognition as a vital means of allowing innovative SMEs to survive, thrive and fulfil their potential as the backbone of Europe’s economy. We believe it is key to European Transformation.

Buildings represent 40% of Europe’s energy use and create around 36% of Europe’s greenhouse gas emissions.^[5] Consequently the widespread acceleration of energy efficiency measures to green existing European buildings and infrastructure is essential.