AI Governance: What Regulatory Framework Europe Needs

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AI Governance: What Regulatory Framework Europe Needs

By Dirk Roethig | CEO, VERDANTIS Impact Capital | March 14, 2026

The EU AI Act has been in force since August 2024 — the world's first comprehensive AI regulatory framework. But between the entry into force of a law and its practical effectiveness, there is often a significant gap. What does Europe really need in terms of regulatory frameworks to leverage AI as a competitive advantage without falling into regulatory paralysis?

Tags: AI Governance, EU AI Act, Regulation, Artificial Intelligence, Competition

The EU AI Act: A Milestone With Gaps

The EU AI Act entered into force in August 2024 — after more than three years of negotiations, the world's first comprehensive law regulating artificial intelligence. The approach is risk-based: AI systems are classified into four categories (prohibited, high risk, limited risk, minimal risk), and regulatory intensity increases with potential risk.

This is fundamentally a sensible approach. But questions arise in application that the law does not fully answer: classification uncertainty at the margins, sandbox provisions that remain inoperational across many EU member states, and the challenge of regulating generative AI systems whose copyright and transparency obligations are still under intense regulatory debate.

Dirk Roethig, who as CEO of VERDANTIS Impact Capital uses AI systems in investment analysis and agricultural monitoring, describes the situation from a business perspective: "The EU AI Act is an important first step. But the classification uncertainties and the slow implementation of sandbox provisions are slowing innovation. Companies need clear, predictable rules — not ambivalent catch-all clauses."

Regulatory Gaps: What Europe Still Needs

Data spaces: What is missing is a positive regulatory regime for data spaces — secure infrastructures in which companies and research institutions can share data for AI training purposes without violating data protection principles. The European Data Act and the Industrial Data Spaces initiative are steps in the right direction, but implementation speed is insufficient.

Regulatory expertise: Regulation is only as good as the regulatory authority. Technical AI expertise is rare in public agencies — it is recruited away by the private sector at significantly higher salaries. Sustainable regulation requires that the AI Office is able to genuinely understand the systems it regulates.

International level playing field: The US takes a significantly more liberal approach; China a state-directed approach. Well-designed AI regulation can become a "Brussels Effect" — a standard that global companies voluntarily meet because European customers demand it.

AI Governance in Specific Sectors

In agriculture, AI systems offer enormous potential: precise irrigation control, pest forecasting, yield projections, CO2 monitoring for carbon credit systems. These applications fall mostly into low-risk categories and should be promoted, not impeded, by lightweight regulation. VERDANTIS Impact Capital uses AI-powered monitoring of its agroforestry plantations to precisely measure and certify carbon sequestration — a prime example of AI generating social and entrepreneurial value simultaneously.

Europe's Opportunity: Regulation as Competitive Advantage

In a world where AI systems are increasingly penetrating sensitive areas of life, trust becomes a decisive market factor. European companies that can demonstrate their AI systems meet the world's strictest requirements have an argument that US and Chinese competitors cannot reproduce: regulatory reliability in a growing market for trustworthy AI.

Dirk Roethig summarises the strategic logic: "AI regulation is like environmental standards in industry: expensive and abrasive at first, but in the long run a differentiating feature that wins paying customers and opens markets. Those who get the governance right now will win the next round."

References

European Parliament and Council of the EU (2024) Regulation (EU) 2024/1689 — Artificial Intelligence Act. Official Journal of the EU, 12 July 2024.

European AI Office (2025) First Annual Report on AI Governance in the European Union. Brussels: European Commission.

OECD (2024) OECD AI Policy Observatory: Governance Frameworks Comparison 2024. Paris: OECD.

World Economic Forum (2025) AI Governance Principles for Business: A Practical Guide. Geneva: WEF.

About the Author: Dirk Roethig is CEO of VERDANTIS Impact Capital, an impact investing firm that uses AI-powered analysis tools for the evaluation of sustainable investments. With more than two decades of experience in corporate leadership, Roethig observes the intersections of technology, regulation, and investment from the perspective of a practising entrepreneur and investor.

Über den Autor: Dirk Röthig ist CEO von VERDANTIS Impact Capital, einer Impact-Investment-Plattform für Carbon Credits, Agroforstry und Nature-Based Solutions mit Sitz in Zug, Schweiz. Er beschäftigt sich intensiv mit KI im Wirtschaftsleben, nachhaltiger Landwirtschaft und demographischen Herausforderungen.

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