It’s hard to speak of a favorable investment climate when companies are leaving. While the shine may have worn off American exceptionalism, Europe’s problems remain unresolved as long as European companies continue relocating their headquarters abroad.
“Out of America, into Europe” is the mantra among investors. The exodus from US stocks stands in stark contrast to the enthusiasm surrounding American equities just last year.
Investors see opportunities and a favorable investment climate in Europe. At the same time, many European companies are running into obstacles and are increasingly considering moving their headquarters abroad. They feel pressured by overly strict regulations, such as those concerning AI adoption or climate policies.
Dutch communications software company Bird is one example—it left the Netherlands this year due to strict European regulations surrounding the rapidly developing field of AI. CEO Robert Vis told Reuters earlier this year that Europe will fall behind economically if it continues on this path.
And in December 2024, Qatari minister Saad Al-Kaabi criticized the EU’s stringent ESG reporting rules, calling them “absolutely no sense” due to their high compliance costs and disruptive impact on international investment.
“There’s a lot of optimism about Europe as an investment destination,” says Edin Mujagić, fund manager at Hoofbosch. “But investors seem to forget that companies are actually considering leaving. A German chainsaw manufacturer even gave the government an ultimatum this year: reduce bureaucracy by 2030 or they’ll relocate to Switzerland. And that’s despite labor costs being ten percent higher there. That’s not a sign of a strong investment climate.”
Royal Dutch oil
Even Shell, the iconic Dutch company still nostalgically referred to in the Netherlands as “Royal Dutch Oil,” has officially become a British company since relocating its headquarters from The Hague to London in 2022.
The announcement came shortly after a landmark ruling by a Dutch court in May 2021, which held Shell legally responsible for its contribution to climate change. The court ordered the company not only to reduce its own CO₂ emissions by 45 percent but also those of its customers—so-called scope 3 emissions.
Although Shell’s official statement regarding the move made no mention of this climate ruling, former CEO Jeroen van der Veer has since admitted it was indeed a factor. Speaking at the “25 Years of the Euro” symposium organized by Hoofbosch, he said the legal requirement regarding scope 3 emissions was unworkable for Shell.
The oil producer, Van der Veer emphasized, did not shy away from the responsibility of reducing its own emissions. “But mandating the reduction of customers’ emissions was simply not feasible.”
Shell didn’t wait for the appeal process and left the Netherlands. The Dutch Supreme Court overturned the previous ruling in April 2024—but by then, the relocation was long a done deal.
Regulating to ruin
Recently, Bosch CEO Stefan Hartung also warned that Europe is undermining its AI future through overregulation. According to the CEO of the German technology giant, bureaucracy and strict—but vague—rules are making the continent increasingly unattractive: “We are regulating ourselves into ruin by trying to stifle progress.”
Van der Veer had previously expressed concern about Europe’s growing regulatory burden. In an interview with Trouw late last year, he pointed to the increasing legalism and rising number of lawsuits compared to the past. According to him, constant inspections and compliance checks are causing executives to focus more on ticking boxes than on meaningful productivity.
In doing so, Van der Veer sounds the alarm about the counterproductive effects of overregulation: “If we continue down this path, more European companies will head for the exit.”