Swedish industry is ready to transition – but market conditions are holding it back
Eight in ten manufacturing companies believe that the transition to net zero will strengthen their competitiveness in the long term. At the same time, more than half identify insufficient demand or willingness to pay for lower-emission products as one of the biggest barriers. These are the findings of a new report from the innovation programme Net Zero Industry.
– The manufacturing industry’s commitment to the transition is strong. Companies have ambitious targets and see clear competitive advantages in reducing greenhouse gas emissions. However, for the transition to gain real momentum, investments must also be financially viable in the shorter term. This requires both stronger demand and a stable, long-term policy framework, says Sofia Wieselfors, Programme Director at Net Zero Industry.
In its report The Manufacturing Industry’s Path to Net Zero, Net Zero Industry examines how Swedish manufacturing companies are working to reduce their greenhouse gas emissions, the barriers they face and how they view the relationship between the transition to net zero and competitiveness.
The findings show that efforts to reduce emissions are well established across much of the industry. Six in ten companies (62 per cent) aim to achieve net-zero greenhouse gas emissions by 2040, while three in four have strategies and action plans in place to reduce emissions.
At the same time, there is a clear gap between companies’ long-term ambitions and the commercial realities they face today. While 80 per cent believe the transition to net zero will strengthen their competitiveness in the long term, only 37 per cent see a similar advantage within the next three years. However, there are significant differences between companies. Among large companies, 57 per cent see a competitive advantage in the short term, compared with just 25 per cent of small companies.
Weak demand is holding back investment
The biggest barrier to companies’ transition to net zero is insufficient demand or willingness to pay for lower-emission products, cited by 54 per cent of respondents. Four in ten also report that climate-related investments compete with other business priorities.
– Companies can develop new technologies, improve production efficiency and adapt their offerings to customer needs. But they cannot create the demand needed for new solutions to gain traction on their own. If we are to combine net zero with stronger competitiveness, even in the short term, choosing products and solutions with a lower carbon footprint must become more financially attractive here and now. Today’s policy framework makes it too cheap to delay the transition to net-zero greenhouse gas emissions, says Cecilia Ramberg, Deputy Programme Director at Net Zero Industry.
Companies call for long-term policy certainty
The report reveals widespread dissatisfaction with the predictability of the policy environment. Almost two in three companies (63 per cent) believe that Sweden’s climate and energy policies are not sufficiently predictable to support long-term investment decisions. Among large companies, this figure rises to 91 per cent.
When asked which measures would have the greatest impact on progress towards net zero, companies primarily highlight financial incentives favouring fossil-free alternatives, long-term policy decisions and simpler, better-coordinated regulations.
– This sends a clear message to policymakers. The manufacturing industry’s climate transition is already under way, but companies need a stable policy framework to make long-term investment decisions with confidence. The priority now is to remove barriers and create favourable market conditions for fossil-free alternatives, enabling the transition to accelerate, says Sofia Wieselfors.
Key findings from the report
- 80 per cent believe the climate transition will strengthen competitiveness in the long term, but only 37 per cent see the same advantage in the short term.
- 57 per cent of large companies see a competitive advantage in the short term, compared with 25 per cent of small companies.
- 62 per cent aim to achieve net-zero greenhouse gas emissions by 2040.
- 75 per cent have strategies and action plans in place to reduce emissions.
- 54 per cent identify insufficient demand or willingness to pay as one of the biggest barriers to the transition.
- 63 per cent believe that Sweden’s climate and energy policies are not sufficiently predictable to support long-term investment decisions.
About the report
The report The Manufacturing Industry’s Path to Net Zero is based on telephone interviews with 173 companies in Sweden’s discrete manufacturing industry, conducted between 28 August and 25 September 2026. The survey was supplemented by ten in-depth interviews carried out in October 2026.