Sweden has become a global leader in cleantech, consistently punching above its weight in both technological development and exports. However, Sweden’s success in the cleantech sector isn’t by accident. It’s the result of a combination of factors that create an ideal environment for innovation, growth, and international competitiveness. Here, we outline four key factors that have driven Sweden’s industrial and cleantech success.

With a population of just over 10 million, Swedish companies have always had to look beyond their borders to grow. This export-driven mindset is part of Sweden’s business culture, and Swedish companies understand that being competitive in the global economy is not an option, but a necessity. Exports account for nearly 50% of Sweden’s GDP, illustrating how integral global markets are to the nation’s economy. This exporting focus has enabled Swedish startups and industries to establish themselves as competitive players on the global stage, with cleantech being no exception.

Sweden’s startup ecosystem benefits from easy access to local early-stage venture capital, supported further by government programs, pension funds, retail investors, and foundations. The country stands out for having deep capital markets relative to its size, which has been key to keeping smaller domestic businesses at home rather than moving abroad. Sweden’s strong investment culture, which engages everyone from individual citizens to institutional investors, has allowed many smaller companies to list on the stock exchange, making the IPO market particularly vibrant. Moreover, impact investment is particularly high in Sweden, with a large portion of venture capital flowing into impact-focused startups specifically. This broad participation across all levels of investment, combined with a deep, localized capital base, has solidified Sweden as a leader in entrepreneurial growth and innovation—especially in cleantech.

Sweden has long been a leader in research and development (R&D), and this tradition has played an important role in fostering cleantech innovation. Over 3% of the country’s GDP is allocated to R&D, one of the highest rates in the EU. With heavy investments from both public and private sources, this commitment has established Sweden as one of the most innovative nations in the world.

Sweden’s long-standing commitment to sustainability is deeply embedded in its industries and innovation. The country was one of the first in the world to introduce a carbon tax, and still sits with the world’s highest carbon tax. This foundation has encouraged businesses to innovate and align with ambitious climate goals, helping establish the country as a leader in the global cleantech revolution. While other parts of the world are now advancing their own environmental targets and policies, Sweden’s legacy of sustainability continues to drive leadership in cleantech innovation and industry.