Pioneering WATER AI for You

The world is not spinning any faster today than it was ten years ago. The truth is that global political and economic developments have become more complex, more fragmented and thus more unmanageable. And that is not a comforting thought. The response to this diagnosis can therefore not consist of mere window dressing.

Russia’s war of aggression against Ukraine triggered a geopolitical turning point, which has led in turn to a geoeconomic turning point. As the CEO of a multinational group with German roots, I have seen European decision-makers swear ever since in speeches, key notes and panel discussions that the world has changed. But, in reality, they hope that they are wrong. They hope that the world will recover again. That protectionism will peter out. And that the traditional European business model will work again – some day. But the change that Europe needs has to start by acknowledging the truth.

The more confusing the situation is, the sharper our analysis has to be.

The questions we are seeking answers to are many and varied – but they are all interlinked. Everything is connected. This complexity can be illustrated using three key challenges that Europe is facing: the geopolitical situation, water shortages and the AI revolution.

Challenge 1

Europe’s voice has no weight in the great game between the world powers

The geopolitical turning point has left Europe behind and bewildered. The European idea was already under pressure. The European Union had fallen into a state of paralysis, was caught up in too much red tape, had become too overbearing. Added to this crisis of legitimacy in internal policy came alienation in foreign affairs: the US, Russia and China are wrestling for zones of influence and asserting their interests with all their might.

Europe no longer recognises the world around it – and regards itself as the last bastion of a clear set of values. A representative survey at the Munich Security Conference among the G7 and BRICS countries (excluding Russia) corroborates this. It shows that Europe is experiencing the global challenges as more dangerous than other powers are.

Together, this is a cocktail of pure poison. Europe lacks the collective insight that a stronger focus on hard interests and less on soft values is required in order to be taken seriously on the world stage in 2026. And even if this insight were gained, Europe’s structures do not allow it to implement its own interests consistently. The Mercosur agreement is the latest case in point. After more than 25 agonising years of negotiations, it was finally concluded, only for the EU to sabotage this success just before the finish line by hauling it before the European Court of Justice.

Challenge 2

Europe is facing water bankruptcy

The European Union’s crisis of legitimacy has produced an unsavoury aftertaste for the key European idea with the aims of prosperity and peace. The EU is under considerable pressure. How considerable can be seen in particular when solidarity is called for: European friendship quickly ceases when it comes to critical infrastructure as well as in defence, health and energy policy. The way the marriage of convenience among the EU’s member states works is marked by arguments even in good times. In bad times, it comes close to breaking.

Over the past 75 years, the European community has largely enjoyed good times together. A genuine and crucial test awaits Europe here: water bankruptcy. The term originates from a United Nations report that was published in 2026. The word “crisis” is no longer adequate to describe the situation facing global water reserves, warn the authors.

Europe cannot rest on its laurels here. The water shortage has also been a European problem for a long time. It can be seen in the pictures of massive forest fires that come to us at regular intervals from southern Europe. The Intergovernmental Panel on Climate Change has predicted that a total of 44 million Europeans will be affected by water shortages in 2070. Just as alarming is a glance at the Water Risk Atlas of the World Resources Institute: a large part of southern Europe is already coloured blazing red today. In the coming decades, however, the water risk will “eat” its way up from the south to the north, due in particular to water scarcity.

Challenge 3

Europe is not competitive

Economic prosperity has always been a necessary condition for ensuring peace. The era of peace that endured in large parts of Europe for decades after the Second World War and still endures in some places today is a historic achievement. It was enabled primarily by the coalition of former enemies in a common economic area and, ultimately, the European Union. Here is the paradox of prevention: we underestimate the value of the EU as a project for securing peace and prosperity because we do not know what our lives would be like if it had never existed.

Europe may possibly wake up only when the peace between the countries of the European Union crumbles – and prosperity falls. Here is the only positive that might be gained from Europe’s economic decline.

The outlook is not good for Europe as an economic and industrial location. For years, the heads of government of the European states and EU politicians have discussed the location disadvantages, the resulting lack of competitiveness and the downturn in the European economy. The growth gap with China and the US has widened considerably since the failure of the Lisbon strategy launched in 2000. In other words: Europe is lagging behind not only politically, but also economically.

The situation is particularly clear in Germany, for so long the economic and industrial workhorse of the EU. Deindustrialisation is galloping along: one headline after another highlights job losses in German industry. At the same time, foreign direct investments in Germany are rising significantly. What sounds like good news has a notable downside. German entrepreneurs have lost faith in the country as a business location and are selling to foreign investors. Even people who have taken responsibility for businesses for decades are now leaving the sinking ship.

The more confusing the situation is, the more decisively we have to take action.

So how can Europe respond to these challenges? Perhaps like this:

Answer 1

Europe needs disruption, liberalism and multilateralism

How can Europe succeed in being taken seriously on the global stage – without betraying its own ideals? The search for the answer leads to the offices in Brussels. In its current state, the European Union is no less than dysfunctional. A necessary condition for gaining geostrategic importance in foreign policy is disruption in domestic policy.

But not all disruption is equal. This term to describe the radical upheavals in technologies, processes, systems, societies and culture has to be handled with care. It cannot be understood as a general mandate to destroy political structures and to avoid irksome and arduous efforts to undertake reforms.

If we want to use disruption as an instrument of change, we must not forget to allow it a design that is suited to the freedom caused by all the upheaval. This is how it becomes creative destruction – constructive disruption. This is how Europe is revived – more effective, streamlined, more functional and noticeably more relevent for the citizens of the European Union than ever before.

This change in domestic policy is the basic requirement for gaining importance in foreign policy. An unprecedented free space will emerge that will need to be shaped. And Europe must not turn to the crude protectionist methods other political powers are pursuing – quite the contrary.

Yes, Europe must (and can) represent its own interestsmore powerfully. It must not betray its fundamentalvalues in doing so. The abandonment of liberalismand multilateralism in world politics and the globaleconomy has left a gap that Europe can fill. Now more than ever.

While the political great powers of the US and China are helping mercantilist state capitalism to flourish again and intervening in markets at their pleasure, holding on to free trade is giving Europe an edge, especially in terms of efficiency and innovation. The same is true for the defence of multilateralism: new partnerships on an equal footing, in particular with countries from the Global South, will bring Europe a global competitive advantage.

Answer 2

Europe needs a Blue Deal

The European Union is dysfunctional, even though it is affected to a far lesser degree than other powers by one of the most existential threats facing the world: water shortages. But this is only a temporary competitive advantage. The clock is ticking for Europe. The member states of the European Union are therefore called on today to take the right action so that they are not left high and dry tomorrow – literally.

This involves, firstly, recognising that critical infrastructure no longer includes just the – undoubtedly highly relevant – sectors of defence, health and energy, but also the water sector. It remains true: without water there is no life, and without efforts in the area of water infrastructure there can be no European sovereignty. And secondly, it involves addressing the problem with a visionary, large-scale project – implementation of the widely demanded Blue Deal.

One thing is certain: this must be based on a strategy that deserves this designation. The water crisis must be tackled with long-term concepts. Knee-jerk reactions and activism won’t cut it. It is also clear that the responsibility for developing and implementing the Blue Deal must lie at the European level – this is literally a prerequisite! The entire process would be doomed to failure if it were to end in petty nationalism.

Nothing can be off the table given the magnitude of the water crisis. The goal has firstly to be harmonising the entire European water infrastructure by 2050. But there's more to it than that. We should even consider transporting water in long-distance pipelines from the North with its abundant water supplies to the South where water is scarce. Ultimately, only the redistribution of water resources based on this kind of solidarity can succeed.

And after this undoubtedly ambitious plan has been implemented, we will have a resilient European water infrastructure. The moral value of the initiative is priceless. The crisis of legitimacy the EU is facing is putting huge pressure on it as a community of values and an economic area. What Europe needs is a new, positive narrative that involves the nucleus of the European idea: the mutual solidarity among the countries of Europe. Between the rich and the poor. Between the large and the small. And above all, between those with plenty of water and those without.

Answer 3

Europe needs an AI mindset

In the midst of the economic and industrial downturn, Europe has been caught off guard by a technological revolution such as artificial intelligence. Right?

On the contrary. In fact, AI has arrived “just in time” for Europe as a location. Europe’s traditional business model has prospects again thanks to AI. In particular, Europe’s beleaguered industry has the opportunity to maintain its excellence and innovative strength – while improving productivity at the same time. This situation will significantly change the starting point for Europe as an industrial location. The key lies in physical or even industrial AI: industrial processes and data flows are being optimised, which will make production more efficient and more intelligent.

On the fertile ground of Europe’s cutting-edge industrial ecosystem, which largely follows Industry 4.0 but is too expensive by international comparison, industrial enterprises will be revived – and so will Europe’s economy as a whole. At least, if Europe can correctly harness the disruptive power of artificial intelligence.

First of all, the EU must resist the temptation to regulate AI applications in the industrial environment and thus to strangle the power of the technology to enhance productivity before it can be brought to bear. And secondly, Europe must commit, almost culturally, to a common AI mindset: artificial intelligence is not the enemy, but a friend of Europe as an economiclocation. And it is important to treat it as such.

As Europe becomes a pioneer in physical and industrial AI, it has the opportunity to gain ground in the AI race – and to differentiate itself: Europe can use AI as an advantage in industrial performance and location, while the US, for example, drives AI as a scalable software and platform business.

The more confusing the situation is, the more important pioneers become.

Three challenges facing Europe, three answers for Europe. They show that only those who have the courage to tell the truth will find answers. They show that the challenges that Europe sees itself confronting in 2026 are complex and interdependent – everything is connected, and so there are no simple solutions. And they show that Europe has the opportunity to emerge stronger from supposed crises if it can manage to find some momentum for change.

As a multinational water technology group with strong European roots, the Wilo Group is also affected by the challenges described here – to a greater or lesser extent. As a family business now being run by the fifth generation, we know that the answer to these tasks cannot be resignation. Responsible management means facing up to them with entrepreneurial vision. Again and again.

Which is why the about 9,000 Wilo employees worldwide follow a clear strategic framework as they carry out their jobs. For several years now, we have considered our Group-wide sustainability strategy, called “Creating, Caring, Connecting”, as our overarching approach. All other functional strategies are subordinate to it – without exception. ‘Creating’ covers the sustainable contribution our technology makes in areas such as decarbonisation and improving water supplies. ‘Caring’ describes our responsible action with regard to the environment, employees and society and includes goals such as emission reduction. ‘Connecting’ stands for our commitment to strong international partnerships.

The past year has seen us formulate our WATER AI strategy – Wilo’s strategic response to the digital and AI age. We talk about the three Es: embed, enable, embrace. We are integrating AI in our solutions, which will in turn generate sustainable impacts in the market. One of these impacts is that they empower the entire AI value chain. And of course we are embracing AI in our day-to-day work at Wilo.

The next logical step lies in systematically combining the two strategies: from now on, our Group Strategy will be called “Pioneering WATER AI for You”.

This step has a far greater impact that the simple renaming of Wilo's guiding principle. Merging our sustainability strategy and our AI strategy reflects our conviction that our vision of creating a better future for people and the planet can be achieved only if we think
about our commitment to sustainability in a consistent symbiosis with artificial intelligence. AI is probably the most important lever for sustainable development.

What that looks like in practice is demonstrated by the strategy impact area we call Creating: Wilo's sustainable solutions integrated with AI support the development of smart and water-efficient urban regions. In addition, access to clean water will be managed intelligently – and thus improved. Food security will increase, for example, as a result of digital solutions in agricultural irrigation. Healthcare will be enhanced through the use of AI in water technology. And finally, the digital and AI age will itself depend on smart water technologies: we are empowering the infrastructure of the AI economy to be water-efficient.

This overarching guiding principle will be accompanied by our irrefutable values, our Ambition 2030 growth strategy and our region-for-region strategy, which we have consistently implemented for many years now. It has the goal of meeting local and regional customer needs with locally and regionally manufactured products, systems, and solutions. That is why we at Wilo have been working for a long time in regionalised processes. We expanded our region-for-region strategy considerably with the regionalisation of our organisational structure at the start of 2025 – and are today more flexible, more resilient and closer to our customers than ever before.

In democracies, the primacy of politics is frequently what matters. Political decisions often take precedence over other social sectors. Including the economy. How Europe’s political decision-makers respond to the challenges described above – a description that makes no claims to being complete – is the core of their democratic mandate. In reality, however, the primacy of politics cannot be a one-way street. That economic operations work more strategically, more innovatively and more efficiently than political operations is inherent in the system. In short: even politics needs role models, and it can find them in the economy.

Wilo sees itself as a pioneer in sustainable and intelligent water technology. We also apply this pioneering spirit beyond technology: we lead the way. Conclusions can therefore be drawn from our business activities about how to deal with the challenges that are facing European politics.

Our Group Strategy

Pioneering WATER AI for You

Based on the three pillars of Creating, Caring and Connecting, Wilo pursues a Group Strategy that, through innovative solutions, the targeted used of artificial intelligence, corporate responsibility and international partnerships, is making a key contribution to a liveable future.

1. Wilo stands for the values of liberalism and multilateralism

Wilo was well prepared for the geopolitical and subsequent geoeconomic turning point with an already widely regionalised structure. The advance of decoupling, i.e. the unravelling of supply chains, and the breaking of existing alliances as well as mercantilist interventionism are an expression of political protectionism. As a multinational company, we had prepared for this with strategic foresight. The regionalisation of our organisational structure was therefore an important, but consistent step on our path.

And the Wilo path is also a clear commitment to liberalism and multilateralism. Despite the tense global political and, accompanying that, economic situation, there has never been any question at the Wilo Group about reducing our global business commitment. It is even more difficult to be successful as a multinational group today than it was ten years ago. But we are convinced of this: sustainable development depends on the success of the multilateral economy. And this economy can only be really successful if it follows the principles of rule-based free trade.

2. Wilo stands for water responsibility out of its sense of tradition

For 154 years, our activities have been based on a key maxim: we improve people’s quality of life. Wilo’s water technology is aimed specifically at this. How AI-integrated solutions from Wilo have an impact can be clearly seen throughout the Creating impact area of our “Pioneering WATER AI for You” Group Strategy. This gives rise to a responsibility for water – and the responsibility to keep on addressing water bankruptcy, which is also making itself felt in Europe. The need is immense: only a visionary and large-scale European Blue Deal can make the outdated water infrastructure fit for the challenges that are (also) approaching Europe.

3. Wilo is an AI pioneer

The Wilo Group puts people at the heart of its activities. The AI revolution does not conflict with that. On the contrary. Its transformative, even disruptive power is a gift: for society, the economy and industry as well as for the people who live and work in it.

We have communicated quickly and simply how we are responding to this revolution as a group – and thus made it clear from the start of the AI boom: Wilo embraces any AI in the company that places the focus on people. We are adapting, systematically and at great speed, the possibilities offered by the technology in our products, systems and solutions as well as in the working and, in particular, the production environment. We are working consistently on the transformation to physical and industrial AI.

For a company with a pioneering spirit and a sense of responsibility, however, this process does not end at the factory gates. That is why we understand artificial intelligence as a driver of our sustainable impacts that we have defined in the group strategy. A multiplier of this effect is the newly founded Wilo Global WATER AI Academy. We are using this initiative to connect science and business around the world and to promote applied science and innovation as well as cooperation projects in the areas of water and AI across and beyond sectoral and national borders.

Wilo's understanding of AI is scalable: for Europe, the value of the AI revolution lies not only in the fact that it can mitigate one of the greatest challenges facing the EU – its lack of appeal as a location and lack of competitiveness. It offers the opportunity to improve the lives of Europeans in every conceivable respect. From energy and water supply to the provision of health care and other areas of life.

Ladies and gentlemen,

We are convinced that this perspective on geopolitical and geoeconomic developments, water shortages and the AI revolution is fit for the future – for the whole of Europe and for the Wilo multinational technology group.

The planet is standing at the dawn of the WATER AI age. Wilo is ready for it.

Yours,

Oliver Hermes
President & Global CEO of the Wilo Group