PowerPoint Presentation

[Audio] "Welcome to Module Four: Policy and Regulatory Drivers. In this module, we'll look at how policy and regulation don't just set rules — they actively shape markets, steer innovation, and influence where capital flows. We'll explore how regulatory frameworks, public missions, and global standards work together to reduce risk, create demand, and turn complex societal challenges into investable opportunities. By the end of this module, you should see policy not as a constraint, but as a strategic driver for innovation, scaling, and long-term investment.".

[Audio] "Let me start by setting the broader context with the European Green Deal. The European Green Deal is not just an environmental policy — it is the EU's overarching growth strategy. It was launched in 2019 with a very clear purpose: to fundamentally transform how the European economy works, so that growth is no longer dependent on environmental degradation. At its core, the Green Deal sets the EU on a pathway toward climate neutrality by 2050. This means that by mid-century, the EU aims to balance greenhouse gas emissions with removals, effectively reaching net zero. Importantly, this is also the European Union's concrete contribution to the Paris Agreement, which all EU member states have ratified. That agreement commits countries to keeping global temperature increases to no more than 1.5 degrees Celsius above pre-industrial levels. What makes the Green Deal particularly significant is that it treats climate action as an economic and social transformation, not just a technical fix. The strategy explicitly aims to turn the EU into a fair and prosperous society, supported by a modern, competitive economy. In other words, environmental ambition is meant to go hand in hand with economic opportunity and social fairness. Another key principle is that every policy area must contribute to fighting climate change. So this is not limited to energy or environmental policy alone. The Green Deal spans across energy systems, transport, industry, agriculture, sustainable finance, and many other sectors. Each of these areas has a role to play in reducing emissions and supporting the green transition. Finally, it's important to stress that the Green Deal is not just a vision document. Through the work of the Council and the European Parliament as co-legislators, its objectives have been translated into binding legislation. These laws now apply across all EU member states, ensuring a coordinated and legally enforceable approach to climate action across the Union.".

[Audio] "So, building on that overview, let's look more closely at the key goals of the European Green Deal. The first and most overarching goal is climate neutrality. The EU aims to drastically reduce greenhouse gas emissions and become the first climate-neutral region in the world. This is about fundamentally changing how energy is produced and consumed, while ensuring that economic activity can continue without adding to climate change. A second major objective is the shift to a circular economy. Instead of the traditional 'take–make–dispose' model, the Green Deal promotes an economic system where products are reused, repaired, and recycled for as long as possible. This reduces waste, conserves natural resources, and lowers emissions across the entire lifecycle of products. Closely linked to this is the goal of clean industry. The Green Deal pushes European industries to become cleaner, more energy-efficient, and more sustainable, while remaining competitive in both EU and global markets. The idea is that environmental leadership can also be an economic advantage, driving innovation and new business models. Another key pillar is creating a healthier environment. This includes restoring ecosystems, protecting biodiversity, and moving towards zero pollution for air, water, and soil. The long-term aim is to ensure a healthy living environment for both current and future generations. The Green Deal also places strong emphasis on more sustainable farming. Through greener agricultural practices, the EU seeks to protect soils, water, and biodiversity, while still ensuring that citizens have access to healthy, affordable food. Finally, and very importantly, the Green Deal is built around climate justice and fairness. The transition is designed to be inclusive, supporting workers, regions, and communities that are most affected by the changes. The guiding principle here is simple: no one should be left behind in Europe's green transition.".

[Audio] "Building on the overall vision of the Green Deal, this slide zooms in on how that vision is meant to be achieved in practice. The European Green Deal sets out a clear ambition: to make Europe the first climate-neutral continent by 2050. But beyond climate targets, it lays out a new growth strategy—one that is sustainable, inclusive, and people-centred. The idea is to boost the economy while at the same time improving health, quality of life, and environmental protection, ensuring that the transition benefits everyone and leaves no one behind. At the very heart of this strategy sits the Farm to Fork Strategy. This initiative focuses specifically on transforming food systems, from production and processing to distribution and consumption. What's important here is that it takes a comprehensive approach, recognising that food is not just an agricultural issue, but one that connects human health, social wellbeing, and environmental sustainability. In other words, healthy food systems depend on a healthy planet—and vice versa. The Farm to Fork Strategy is also a key part of the European Commission's commitment to achieving the United Nations Sustainable Development Goals. By reshaping how food is produced and consumed, the EU aims to contribute to global objectives related to climate action, health, responsible consumption, and social equity. Another critical aspect of this strategy is its focus on a just transition, especially in the context of the COVID-19 pandemic and the subsequent economic downturn. The Green Deal recognises that recovery from the crisis must not simply restore the old system, but instead put Europe on a more resilient and sustainable path. A shift to sustainable food systems can deliver environmental and health benefits, while also creating economic opportunities. Finally, the strategy highlights the importance of ensuring a sustainable livelihood for primary producers, particularly farmers, who often lag behind other sectors in terms of income. Supporting these actors is essential—not only for the success of the green transition, but also for a fair and durable economic recovery across the EU.".

[Audio] "This slide introduces eco-schemes, which are one of the key new elements of the Common Agricultural Policy for the 2023–2027 period. Eco-schemes are designed to support farmers in adopting practices that reduce the environmental and climate impact of agriculture. The underlying idea is to help farmers gradually shift toward more sustainable farming models, while ensuring that they are financially supported during this transition. What's important to understand is that eco-schemes are directly linked to the EU's environmental and climate objectives. Farmers who choose to adopt or maintain certain beneficial practices receive payments in return. In this way, eco-schemes recognise and reward farmers not just for producing food, but also for preserving natural resources and delivering what we call public goods—such as biodiversity protection, cleaner water, healthier soils, and climate mitigation. These benefits are valuable to society as a whole, but they are not reflected in normal market prices. Another key feature of eco-schemes is that they are built around a common list of action areas defined at EU level. This ensures a shared direction across all member states, while still allowing some flexibility in national implementation. In practical terms, eco-schemes can support a wide range of farming practices. These include organic farming, agro-ecological approaches, and precision farming, which uses technology to optimise inputs like water and fertilisers. They also cover practices such as agroforestry, carbon farming, and measures aimed at improving animal welfare. Overall, eco-schemes represent a shift in how agricultural support is delivered in the EU. Instead of focusing mainly on income support, they increasingly link payments to environmental performance, aligning agricultural policy more closely with the broader goals of the European Green Deal and the Farm to Fork Strategy.".

[Audio] "This slide gives us a more concrete picture of how eco-scheme funding actually looks on the ground across different EU member states. As a general rule under the CAP 2023–2027, eco-schemes provide annual, voluntary payments to farmers, typically averaging around 60 to 65 euros per hectare. These payments come from the 25% of the direct payments budget that every member state is required to dedicate to eco-schemes. However, as you can see here, the actual amounts and structures vary quite a bit by country and by practice. Starting with Ireland, farmers adopting approved eco-scheme practices receive approximately 66 euros per eligible hectare. This fits closely with the EU-wide average and reflects Ireland's focus on encouraging broad participation in environmentally friendly practices. In Greece, the approach is somewhat different. Payments for specific actions—such as using host plants for insects—range from about 1 to just over 4 euros per hectare, depending on the crop and action. These payments are typically layered on top of wider greening support, showing how eco-schemes can be combined with other environmental measures rather than acting alone. Looking at Germany, and more generally across parts of the EU, we see that more demanding environmental services—such as maintaining permanent pastures or converting to organic farming—often receive higher payments. In some cases, these can reach around 86 euros per hectare, particularly for specific greening measures that deliver clear environmental benefits. Finally, the Netherlands offers a slightly different model, using a three-level 'medal' system. Here, payments increase according to the level of ambition chosen by the farmer. The more environmentally demanding the eco-scheme, the higher the reward. This structure is designed to actively encourage farmers to move beyond minimum requirements toward more ambitious practices. Overall, this slide highlights an important point: while eco-schemes are built on a common EU framework, their design is highly adaptable. This flexibility allows each country to reflect local farming systems and environmental priorities, while still contributing to the shared goals of the European Green Deal.".

[Audio] "This slide marks an important shift in how we should think about regulation in the digital economy. Very often, regulation is framed purely as a constraint—something that slows innovation or adds administrative burden. But the European approach increasingly treats regulation as infrastructure: something that enables trust-based digital markets. In this sense, regulation is not just about compliance, but about creating the conditions in which markets can function fairly, transparently, and at scale. This is why we're seeing a deliberate move away from a compliance-only mindset toward what we can call market-enabling regulation. The goal is to provide legal clarity, reduce uncertainty, and unlock innovation—especially in data-driven and AI-powered sectors. A good example of this is the Data Act. The Data Act focuses on ensuring fair access to industrial and Internet-of-Things data, particularly data generated by connected devices and machines. By improving data portability and limiting vendor lock-in, it allows businesses—especially smaller firms—to switch providers more easily, develop new services, and compete on a more level playing field. In short, it aims to turn data into a shared economic resource, rather than something controlled by a few dominant actors. Another key pillar is the AI Act, which introduces a risk-based regulatory framework for artificial intelligence. Instead of applying a one-size-fits-all approach, the AI Act categorises AI systems based on their risk levels—from unacceptable risk, which is prohibited, to high-risk systems, which face stricter requirements, and down to limited and minimal risk applications, which remain largely unrestricted. Crucially, the AI Act provides legal certainty for both the development and deployment of AI. By clearly defining what is allowed and under what conditions, it reduces ambiguity for innovators and investors alike. This clarity is essential for building trust—not only among regulators and companies, but also among citizens who interact with AI systems in their daily lives. Overall, these regulatory frameworks show how the EU is using regulation as a strategic tool to shape digital markets that are competitive, innovative, and grounded in trust.".

[Audio] "So the natural question that follows is: how does regulation actually unlock innovation, rather than restrict it? One of the clearest ways is through the emergence of data-driven business models. When regulation clarifies who can access data and under what conditions, it becomes much easier to build data-sharing platforms and trusted intermediaries. These frameworks make it possible for companies to collaborate without fear of legal uncertainty or misuse. This regulatory clarity also enables new commercial models, such as pay-per-use or outcome-based services, where customers pay for performance rather than ownership. At the same time, we're seeing the rise of cross-sector data marketplaces, connecting data from industry, mobility, energy, and health. Regulation acts as the common rulebook that allows these very different sectors to exchange data safely and at scale. Regulation is equally important when it comes to AI innovation models. Rather than slowing development, clear rules encourage companies to embed compliance directly into their products—what we often call 'compliance-by-design'. AI systems that are built to meet regulatory requirements from the outset can actually become a competitive differentiator, especially in highly regulated markets. We also see strong innovation potential in vertical AI solutions, meaning AI tools designed specifically for regulated sectors such as healthcare, finance, energy, or agriculture. In these contexts, generic AI often falls short, while tailored solutions that understand regulatory constraints can deliver much greater value. Finally, regulation helps position trustworthy AI as a premium feature. Capabilities like auditability, transparency, and explainability are no longer just legal requirements—they become selling points. For customers, especially public institutions and regulated industries, trust is not optional. And for innovators, meeting these expectations opens doors to markets that would otherwise remain inaccessible. Overall, regulation doesn't close off innovation pathways—it shapes them, guiding investment toward solutions that are scalable, trustworthy, and fit for real-world deployment.".

[Audio] "Let me continue with startups and scale-ups, because this is where the connection between regulation and capital becomes very concrete. Capital is fundamentally risk-averse. Investors don't just look at technology or market size — they look at uncertainty. And regulation, when it's clear and predictable, actually reduces uncertainty rather than increasing it. When founders operate in a regulated environment with well-defined rules, investors can model risk more accurately. They know what is allowed, what is coming next, and how compliance costs will evolve over time. That lowers perceived risk, which in turn lowers the cost of capital. This is especially true for AI and data-heavy ventures. These companies depend on access to data, clarity on data ownership, and legal certainty around algorithmic accountability. Clear regulatory pathways — for example around AI deployment, data sharing, and ethical use — signal to investors that these companies can actually reach the market, not get stuck in legal limbo. Another key factor is scaling. Startups don't just need one market — they need many. When regulation is harmonized across the EU, companies can scale cross-border without redesigning their product or legal structure country by country. That makes European startups more attractive because growth is faster, cheaper, and more predictable. So when regulation reduces uncertainty, clarifies market access, and enables cross-border scale, capital naturally follows. Not despite regulation — but because of it." "Now let's look at the investor and public funding side, because regulation doesn't just shape startups — it shapes capital itself. In Europe, regulation sets strategic priorities. When the EU signals long-term commitments to digital sovereignty, shared data spaces, and AI excellence, capital aligns with those signals. Investors pay attention because they know policy direction influences markets for years, not months. We're seeing the growth of impact-driven and compliance-aware venture capital. These funds are not trying to avoid regulation — they are building strategies around it. Compliance becomes a competitive advantage, not a cost. Funds that understand regulatory frameworks can deploy capital earlier and with more confidence. At the same time, regulation unlocks public–private funding at scale. Programs like Horizon Europe, IPCEIs, and national AI funds don't just provide grants — they de-risk private investment. Public money acts as a signal: this sector matters, this technology is strategic, and this market will be supported. For institutional investors, this alignment matters enormously. Pension funds, sovereign funds, and development banks require regulatory clarity and political backing. EU-level frameworks provide exactly that. So when regulation defines priorities, mobilizes public capital, and rewards compliance, it reshapes the flow of money. Capital follows regulation because regulation defines where long-term value will be created.".

[Audio] "Let's start with Mission Soil, because soil is one of the most underestimated strategic assets we have. Healthy soils sit at the intersection of food security, biodiversity, and climate resilience. Yet for decades, soil has been treated as invisible infrastructure. What this mission does is make soil measurable, investable, and governable. This is where agri-tech and soil data platforms come in. By combining remote sensing, in-field sensors, and AI-driven analytics, we can now monitor soil health in near real time — carbon content, moisture, biodiversity indicators, and degradation risks. That data transforms how agriculture is financed and regulated. Regenerative farming models depend on this measurement layer. Investors and public funders need proof of outcomes, not just promises. Monitoring and certification systems enable outcome-based agriculture, where farmers are rewarded not for inputs, but for verified improvements in soil health, carbon sequestration, and ecosystem services. This creates a new value chain. Farmers gain access to finance and incentives. Tech companies build scalable platforms. Policymakers get reliable data to support climate and food strategies. And capital flows because soil health becomes a quantifiable, low-risk investment category. Mission Soil turns sustainability into infrastructure — and infrastructure is exactly what long-term capital looks for." "Mission Climate shifts the focus from climate targets to something very concrete: cities and regions as systems. Cities are where emissions concentrate, but also where solutions scale fastest. This mission recognizes that climate neutrality isn't just about technology — it's about integration. Energy systems, mobility, buildings, and data all have to work together. That's why smart cities are central here. Digital platforms that connect energy grids, transport networks, and urban services allow cities to optimize performance in real time. AI-driven climate data helps predict heatwaves, floods, and energy demand, making cities not just greener, but more resilient. What's particularly important for capital is the move toward performance-based climate services. Instead of funding individual technologies, cities procure outcomes — lower emissions, higher efficiency, improved resilience. That changes the investment logic. City-scale pilots play a crucial role. They de-risk innovation by testing solutions at real scale, under real regulatory conditions. Once proven, these models can be replicated across regions and countries. For investors, this mission creates stable demand, long-term contracts, and predictable returns. For policymakers, it accelerates implementation. Mission Climate turns climate ambition into bankable urban transformation." "Finally, Mission Oceans addresses a space that is vast, complex, and historically hard to govern: our oceans and coastal areas. Oceans are critical for climate regulation, food systems, and economic activity, yet they suffer from fragmented monitoring and weak enforcement. This mission changes that by putting data and digital infrastructure at the center. Marine monitoring technologies — from satellites to autonomous sensors — allow continuous observation of water quality, biodiversity, and human activity. When combined into digital twins of oceans, we gain predictive models that can simulate pollution spread, ecosystem stress, and climate impacts before they become irreversible. This data foundation enables smarter regulation and investment. Sustainable fisheries can be managed based on real ecosystem conditions, not static quotas. Pollution tracking becomes enforceable because impacts are visible and traceable. That's a game changer for accountability. At the same time, this mission unlocks the blue economy. Startups working on marine robotics, monitoring platforms, and sustainable aquaculture gain access to public pilots and regulatory clarity. Investors gain confidence because risks are measured, not hidden. Mission Oceans turns protection into innovation. By making oceans observable and governable, it creates the conditions for both ecological recovery and long-term economic value.".

[Audio] "Now let's talk about how these missions are actually financed, because ambition without mechanisms doesn't move systems. The backbone here is Horizon Europe mission calls. These calls are not traditional research funding — they are explicitly designed to solve real-world problems at scale. That means higher budgets, clearer impact requirements, and strong incentives for cross-sector consortia. A critical tool within this framework is the use of living labs and large-scale pilots. These are real environments — cities, regions, farms, coastal areas — where solutions are tested under real regulatory, technical, and social conditions. For innovators, this is invaluable: it shortens the path from prototype to deployment. For funders, it reduces uncertainty by generating evidence of performance. Public procurement plays an equally important role. When public authorities act as first customers, they create demand where markets are still immature. Pre-commercial procurement goes one step further by funding development before a product even exists, while still keeping competition and innovation open. Together, these mechanisms do something very powerful: they shift funding from isolated projects to system-level experimentation. They don't just support innovation — they prepare it for market adoption. And that is exactly what makes these missions credible in the eyes of both innovators and investors." "Once these funding mechanisms are in place, capital attraction becomes a logical outcome rather than a policy hope. Mission alignment is a powerful de-risking tool. When a project aligns with EU missions, it signals regulatory support, long-term demand, and political commitment. For investors, that dramatically reduces strategic risk. This is why we see the growth of impact and thematic funds. These funds are designed to invest precisely where public missions are active — climate, food systems, oceans, and digital infrastructure. They are not niche players anymore; they are becoming mainstream capital providers. Blended finance is another key development. By combining grants with equity or debt, public funding absorbs early risk while private capital scales what works. This structure improves returns without compromising impact, making projects attractive to a broader investor base. Finally, corporate and city co-investment is accelerating. Corporations invest to secure future markets and technology access. Cities invest to achieve policy goals and unlock private capital. Together, they anchor projects in real demand. So capital doesn't follow missions out of idealism. It follows because missions reduce risk, structure markets, and create investable pathways. In that environment, capital moves decisively.".

[Audio] "To understand why capital flows the way it does, we also need to look beyond the EU and consider the role of global organizations. Global organizations shape norms, standards, and best practices long before they show up in national laws or investment strategies. They define what is considered legitimate, credible, and scalable. In that sense, they don't just influence policy — they influence markets. By setting common frameworks, these organizations affect national regulation, funding priorities, and even how risks are assessed. When countries align with global standards, investors gain comparability across markets. That comparability lowers transaction costs and increases confidence, especially for cross-border investment. They also provide coordination. Complex challenges like food systems, climate, and digital governance cannot be solved in isolation. Global organizations act as conveners, aligning governments, researchers, industry, and finance around shared goals. Let me briefly highlight three key actors. The FAO plays a central role in shaping global policies on food systems, agriculture, soils, and fisheries. Its frameworks influence how sustainability, productivity, and resilience are defined worldwide. When FAO standards are adopted, they legitimize investment in sustainable agriculture and soil health across regions. CGIAR complements this by driving research-for-development. It translates global challenges into applied innovation for agri-food systems, particularly in emerging and vulnerable regions. This research pipeline reduces technological risk and accelerates adoption, making innovations more investable. The OECD operates at the policy level, setting standards on data governance, AI, economic development, and public policy design. Its guidelines shape how governments regulate digital technologies and how markets evaluate responsible innovation. Together, these organizations don't just guide policy — they structure global opportunity. By creating shared rules and reference points, they make innovation legible, scalable, and attractive to capital.".

[Audio] "Let's now look more closely at how specific global organizations translate norms into real policy and market outcomes. Starting with the FAO. The FAO sets global frameworks for food security and sustainable agriculture. These frameworks don't stay at the global level — they directly influence national policies on agricultural data, soil management, and fisheries. When countries align with FAO guidance, they also align with internationally recognized definitions of sustainability and productivity. The FAO also plays a critical role in capacity building, helping governments and institutions adopt technical standards and data systems. This creates a shared language that investors and policymakers can trust. CGIAR plays a different but complementary role. It generates evidence, data, and scalable models through research-for-development. Importantly, CGIAR doesn't stop at academic output. It translates policy goals into deployable solutions — new farming practices, data tools, and resilient crop systems. By operating at the intersection of science, policy, and practice, CGIAR reduces uncertainty around what actually works on the ground. That makes innovation more credible and easier to finance. The OECD operates at the policy systems level. It develops policy principles around AI, data governance, and sustainability that governments use as reference points. Through benchmarking and comparative analysis, the OECD creates peer pressure among countries to converge toward best practices. This convergence shapes investment conditions, competition policy, and digital regulation. For investors, OECD alignment signals policy stability and institutional maturity. Together, FAO, CGIAR, and OECD form a powerful chain: global frameworks, applied solutions, and policy standards. This chain turns global challenges into coordinated action — and coordinated action is exactly what long-term capital looks for.".

[Audio] "Now let's translate all of this into practical implications, starting with innovators and companies. For innovators, early alignment with global standards is not a compliance exercise — it's a market strategy. When solutions are designed from the outset to align with internationally recognized frameworks, they reach markets faster. There is less friction with regulators, fewer redesigns, and smoother procurement processes. This also enables global interoperability and scale. Technologies that work across jurisdictions — whether in agri-tech, climate services, or data platforms — are far more attractive than bespoke, country-specific solutions. Global standards act as a common operating system for innovation. Equally important is credibility. Alignment with global frameworks signals seriousness to governments, donors, and multilateral organizations. It tells them that a solution is not just technically sound, but institutionally compatible with public systems. That credibility often determines who gets piloted, procured, or scaled. Now let's look at funders and investors. From a capital perspective, global frameworks reduce uncertainty. They provide shared definitions of impact, risk, and performance. That makes due diligence easier and investment decisions more comparable across regions. They also simplify alignment with impact, ESG, and mission-driven funding. Investors don't need to invent their own metrics — they can anchor decisions in globally accepted benchmarks. This is especially important for institutional and public investors. As a result, we see an increased role for multilateral development banks, which invest at scale where global standards are in place. We also see growth in blended finance and donor-backed funds, where public capital absorbs early risk and private capital scales proven solutions. So global frameworks don't just guide behavior — they unlock capital. By reducing friction and increasing trust, they turn innovation into something finance can confidently support.".

thank you!. TALLHEDA has received funding from the European Union's Horizon Europe research and innovation programme under Grant Agreement No. 101136578. Funded by the European Union. Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union or the European Research Executive Agency (REA). Neither the European Union nor the granting authority can be held responsible for them..