Category: 3. Business

Eurozone inflation edged up last month to the European Central Bank’s 2% target, confirming that the era of runaway prices is over and shifting policymaker focus to trade war-induced economic volatility.

Inflation in the 20 nations sharing the euro currency crept up to 2.0% in June from 1.9% a month earlier, in line with expectations in a Reuters poll of economists, as energy and industrial goods continued to pull down prices, offsetting quick services inflation.

Underlying inflation, a closely watched measure that excludes volatile food and fuel prices, meanwhile held steady at 2.3%, in line with expectations.

Anticipating this fall, the ECB has lowered interest rates from record highs by two full percentage points over the last year, and debate has turned to whether it needs to ease policy further to prevent inflation becoming too low given weak growth.

The development in services costs, which have been stubbornly high for years, is pivotal as it has raised fears that domestic inflation could get stuck above 2%.

Last month, services inflation edged up to 3.3% from 3.2%, as prices rose 0.7% on the month, supporting the argument of policy hawks that domestic inflation remains uncomfortably high, reducing the risk of undershooting.

Financial investors expect one more ECB rate cut to 1.75% towards the end of the year, then anticipate a period of steady rates before possible increases towards the end of 2026.

The outlook, however, is complicated by the fact that it depends on the outcome of a trade dispute between the EU and US President Donald Trump’s administration.

Indeed, the eurozone’s economy is barely growing, with full-year expansion expected at less than 1%, as industry struggles after a multi-year recession, with private consumption weak and investment low.

If US trade barriers stay, the EU is likely to retaliate and that is bound to be inflationary. Firms will then start rearranging value chains, which would add to increased production expenses.

Despite roiling financial markets and global supply chains, Donald Trump’s tariffs have also contributed to an easing of price pressures across the euro area.

The volatility of Trump’s policy-making has caused the euro to strengthen significantly against the dollar since the start of the year, thus lowering the price of imports into the single currency area.

Expectations that US duties could trigger a global recession have caused oil prices to fall. Cheap Chinese exports being redirected to Europe are also likely to aid the disinflationary process, according to analysts.

A team of more than 50 ERM leaders and experts were on the ground at London Climate Action Week (LCAW) 2025. The 2025 iteration was by far the largest in the gathering’s seven-year history, with over 45,000 participants. ERM organized more than 10 events, including several with partners like the World Business Council for Sustainable Development (WBCSD) and the Natural Climate Solutions Alliance (NSCA).

The week commenced with the launch of the WBCSD Business Breakthrough Barometer. To many people’s pleasant surprise, the Barometer reveals that 91 percent of 300 leading global businesses have maintained or increased investments in the clean energy and net zero transition vs 12 months ago, with 56 percent citing competitiveness as their primary reason for doing so. At least for this group of companies, backlash is not resulting in backslide.  

Our team captured several key takeaways from our LCAW discussions with business leaders, investors, policymakers, and representatives of civil society organizations. We share insights on how to get from volatility to value and more below.  

Navigate volatility

1. With global uncertainty and upheaval prominent, companies need clear action plans to avoid being blown off course. The ERM-convened Council on Sustainability Transformation launched a report in the lead up to LCAW exploring how companies can reframe and retool their approaches to sustainability during this time of change.
2. With the cost of inaction rising, companies need to quantify ‘do nothing’ options alongside other investment cases and take action that makes progress towards climate goals and generates business value simultaneously.
3. An event we held with WBCSD on industrial heat highlighted how companies are expanding investments in renewable heat despite economic incertitude. Companies are turning towards technological innovation and partnerships to drive progress even when policy support may be insufficient.

Adapt for each geography 

1. A one-size-fits-all-geographies approach no longer works as companies shift from goal setting to implementation, as implementation needs to be tailored to each operating environment.
2. Success depends on recognizing that the energy transition is place-based and emphasizing just transition. The effects of the transition will be felt most where activities occur (e.g., job creation or losses, local economic empowerment or displacement, enhanced adaptive capacity, etc.).
3. No transition plan will succeed without people. Corporate speakers at a just transition roundtable we hosted in partnership with WBCSD said companies must account for the people-related impacts of their transitions and engage people in transition solutions.
4. During an infrastructure-focused workshop hosted with WBCSD, participants stressed the importance of turning a local lens to physical risk mitigation and recognizing that direct (e.g., property damage) and indirect (e.g., supply chain disruptions) risks will vary by site and geography.

Creating value requires getting into the details  

1. Ana Toni, the CEO of COP30, said that businesses need to identify very specifically what they require to progress towards their climate goals. Doing this will enable ‘unlocks’ from policy makers, investors, and others in country plans (like Nationally Determined Contributions and National Adaptation Plans).
2. The complexity of implementing targets and plans within the current operating environment is forcing companies to get down to details. ERM held LCAW sessions on the electrification of industrial heat, long-duration energy storage, and climate markets, including removals and decarbonization in the manufacturing and pharmaceutical sectors.
3. Identifying how sustainability programs create enterprise value is essential. Whether growing market share, lowering operating costs, enhancing energy security, or lowering costs of capital, there are many opportunities to add value A blog ERM published before LCAW explores how companies can use financial quantification to help visualize the full benefits of their sustainability-related actions. There are hurdles as well. Companies participating in a financial quantification roundtable we co-hosted with WBCSD stressed that a lack of consistency in data quality and availability makes quantification difficult. 

Own your narrative 

1. Defining the narrative for your company’s climate action is critical. If you do not tell your story, someone else will. There is no room for greenhushing in a world where investors, policymakers, other businesses, and stakeholders demand to see evidence of tangible action linked to quantified outcomes.
2. Outputs on sustainability – however impressive the metrics – mean little until they are set in the context of what matters to stakeholders. Think about framing your story from the outside in, starting with the meaningful outcomes you can deliver.
3. Communication is an important vehicle for translating the financial quantification of sustainability into language that resonates within and beyond your organization. Tone matters—it is so important to be positive! Participants in an ERM/WBCSD session on quantification and communication stressed the need to avoid overemphasizing risk; human beings respond to inspiration.
4. Narrative consistency is key—there cannot be one message for employees and another for investors. Participants at an ERM roundtable on sustainability in a volatile world emphasized the importance of transparent and consistent stakeholder communication in building trust and credibility.

Seek opportunity 

1. Opportunities emerge during volatility. Companies we spoke with are keeping their eyes open for places where they can create value and build sustainability momentum at the same time. Companies and financial institutions in Asia, for example, are innovating and investing in response to market needs, while global participants at an ERM-supported session on energy storage highlighted the use of the technology as a solution that can generate significant financial opportunity and be a powerful force for decarbonization.
2. Carbon markets and water were high on the opportunity agenda at many of the sessions in which ERM participated. Companies are determining how to build business cases for these and other nature-related issues and integrate them into their sustainability strategies. As companies face pressure to achieve targets, participants underscored the importance of high-quality carbon credits. While concerns remain about greenwashing, logistical barriers, and the need for clearer standards and metrics, there was a consensus that demand stimulation, policy clarity, and technological innovation are crucial to scaling this key market.

Delivering in uncharted territory

Amidst the backdrop of an ever-changing world, a sense of what’s possible in the delivery of climate solutions that make commercial sense spread throughout the biggest LCAW ever. Themes like adaptation, value creation, narration, and opportunity identification emerged as strategies capable of helping companies forge ahead into uncharted territory. ERM was honored to contribute to the conversation.

The Circularity Gap Report Finance is the first empirical global study that quantifies and explains the global financial streams to circular business models, such as resale and repair, which allows for estimating the ‘gap’ in finance for a circular economy. It was authored by the Amsterdam-based impact organisation Circle Economy in collaboration with KPMG International, with support from the International Finance Corporation (IFC).

The report highlights that circular economy investments can deliver risk-adjusted returns. Circular business models generate additional revenue, unlock new markets, and deliver greater value from fewer resources. In addition, circularity is emerging as a key strategy for the financial sector to manage resource risks from supply chain disruptions and material scarcity—risks that are now more relevant than ever, considering trade wars and geopolitical instability.

The sector increasingly recognises these benefits: investment in the circular economy has grown from US$ 10 billion in 2018 to US$ 28 billion in 2023, peaking at US$ 42 billion in 2021. While this upward trend signals a strengthening business case for circularity, the failure to surpass the 2021 peak suggests waning momentum. Banks account for the majority of these investments in the form of debt. Nevertheless, circular investments still represent just 2% of all tracked capital (in the scope of this report), suggesting a vast unrealised potential.

Investments mainly go to conventional applications of circularity, like rental and repair, which have existed for decades. High-impact solutions and innovations in design and production received just 4.7% of all investment, despite their potential to eliminate waste and pollution at the source.

RWE and KRONOS TITAN (KRONOS) are breaking new ground in the sustainable energy supply of industrial sites. RWE plans to build and operate a ground-mounted photovoltaic plant with an output of 24.7 megawatts peak on a 20-hectare site at the KRONOS location in Nordenham, Lower Saxony. RWE has leased the land for this project from KRONOS, and KRONOS will purchase the green electricity generated there by means of a long-term PPA. Construction of the solar plant is scheduled to begin in summer, with commissioning planned for spring 2026.

Carsten Büsing, Plant Manager of KRONOS TITAN GmbH at the Nordenham site: “We are delighted to be working with RWE to lead our site into a more sustainable future. With the new solar farm, we can cover a significant part of our energy needs with green electricity. This plant plays a crucial role in achieving our transformation goals and underlines our commitment to environmentally friendly solutions at the site.”

Katja Wünschel, CEO RWE Renewables Europe & Australia GmbH: “The joint project with KRONOS TITAN shows how industrial customers can play an active role in the energy transition. They provide land and we take over the planning, construction, investment and operation of the solar farm. The customer receives long-term green electricity at predictable conditions. In this way, we combine our expertise in the expansion of renewable energies with our experience in energy trading.”

A total of around 38,200  solar modules will generate approximately 22,000 megawatt hours of electricity per year, enough to cover a significant part of KRONOS’ electricity requirements at the Nordenham site. The immediate neighbours have also been notified about the joint project of RWE and KRONOS.

An image for media purposes is available in the RWE media library (Image rights: KRONOS TITAN).