WEBVTT

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The trade war between the US and dozens of countries escalated yet again today.

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The German parliament has agreed to this big spending package,

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and this could be a gate changer for Germany,

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but also these hundreds of billions of euros in infrastructure and defense debt could be a game changer for Europe.

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If Europe is in a better place,

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if Europe is able to fund itself,

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doesn't have the recession the way the US does,

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does that mean you want to own European equities?

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After years of underperforming,

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Europe has emerged as a top trade for 2025.

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Wow,

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Siri,

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did you hear that?

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This may be a defining moment for Europe.

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Hi,

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Koku.

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I've scanned 3,456 articles discussing the mega moment.

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For example,

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take this article from the Financial Times,

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titled,

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Trump is making Europe great again.

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Ah,

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yes,

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like MAGA.

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MAGA stands for Make Europe Great Again.

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It's a phrase that some love and others hate.

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But in this context…

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It refers to the continent's potential for an economic and financial reawakening.

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It's driven by the EU's 800 billion euro spending package and Germany's 500 billion euro infrastructure plan.

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For such a big moment,

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you need a big anthem.

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I've got the perfect track for this.

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Hey,

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Alexa,

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play

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Ode to Joy from my playlist.

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Okay,

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now playing Ode to Joy.

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Wait,

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Siri,

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not so fast.

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You can't put the cart before the horse.

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These are just announcements,

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significant as they may be.

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Besides,

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we may be in the middle of a global trade war,

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which is yet another challenge for Europe.

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Sorry,

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I got carried away,

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but isn't this a déjà vu moment?

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What do you mean?

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Well,

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think about big commitments like the Paris Climate Accords and the net zero emissions by 2050.

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I don't think we're on track.

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Humans and their promises.

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Am I right?

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Wait a second,

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Siri.

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Have a bit more faith.

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Cause I gotta have faith.

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Remember the quote,

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a pessimist is an optimist with experience.

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Maybe.

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But this time is different.

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Beethoven's Ode to Joy,

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you've played earlier,

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is the unofficial anthem of the European Union.

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It's a hymn to unity,

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hope,

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and let's face it,

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occasional indecisiveness.

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But significant strides are often made in times of crisis.

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The European Union was conceived to end centuries of conflict.

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Now,

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the post-World War II order is shifting towards a multipolar structure,

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where global competition has replaced global cooperation.

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Here lies an opportunity for a European renaissance on several fronts.

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Still,

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there's a risk that this could become yet another grand declaration that leads to a bureaucratic stagnation.

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Well,

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just look at how Europe has lagged behind the U.S.

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over the past 20 years.

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Fair point.

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The numbers are not flattering.

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Or could this be a tortoise and hare anecdote for Europe?

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Hmm.

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Interesting metaphor.

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At its heart,

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it's really about the European dream versus the American dream.

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and the contrasting economic and societal models they represent.

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Fascinating.

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Let's explore this further.

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Welcome to 2050 Investors,

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the podcast that deciphers economic and market megatrends to meet tomorrow's challenges.

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I'm Koko Agboboa.

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I head up economics,

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cross-asset and quant research at Societe Generale.

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In this episode of 2050 Investors,

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we explore why Europe has lagged behind the US.

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across various dimensions.

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We consider whether the current geopolitical turmoil provides an opportunity for Europe to advance its integration.

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Can the continent effectively channel its vast savings to address its significant investment needs through deeper harmonization,

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or would it be hindered by regulatory divergence?

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Later in the episode,

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we interview Anne-Christine Champion,

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co-head of Global Banking and Investor Solutions,

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at Societe Generale.

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She will discuss how banks can facilitate investments in both public and private markets and why the Savings and Investment Union,

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formerly the Capital Markets Union,

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is vital for developing a thriving capital market that can compete on the world stage.

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Let's start our investigation.

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So,

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I'm intrigued by the concept of the

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European dream.

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Well,

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Siri,

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let's revisit the origins of the European project.

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It all began with the Treaty of Paris in 1951.

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which established the European coal and steel community.

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Six countries Belgium,

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France,

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Germany,

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Italy,

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Luxembourg and the Netherlands took a bold step towards economic integration to ensure peace.

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Steel and coal,

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huh?

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Not the most climate-friendly industries.

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True,

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but this was a practical starting point.

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Then came the Treaty of Rome in 1957,

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forming the European Economic Community,

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or EEC,

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followed by the Maastricht

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Treaty in 1992,

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which later gave birth to the European Union.

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The vision was clear,

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a single market,

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a single currency,

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and eventually a single financial space with free movement of people,

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goods,

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and services.

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I guess the key challenge is managing a union where 27 countries,

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each with their own national priorities,

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Must agree on everything from avocado regulations to fiscal policy.

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Yes,

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indeed.

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Europe's journey has been defined by crises and progress.

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Take the Great Financial Crisis in 2008,

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triggered by the subprime debt and Lehman bankruptcy,

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followed by the Eurozone debt crisis in 2010.

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It highlighted the perils of a currency union without fiscal unity.

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The latter was triggered by the financial difficulties faced by several Eurozone countries,

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struggling with high government debt levels.

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Then later,

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we had Brexit in 2016 and the COVID-19 pandemic in 2020,

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which further stressed the lack of economic integration.

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Yet,

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through it all,

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Europe overcame these challenges.

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Makes you wonder,

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is Europe just a continent?

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Or the world's most expensive roller coaster?

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A roller coaster,

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yes,

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but maybe one that's getting stronger with every leap.

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Wait,

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how does surviving chaos make you stronger?

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You can think of the anti-fragility concept by Nassim Taleb,

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stating that some systems,

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like bones,

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muscles,

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or even fiscal unions,

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actually get stronger when they are stressed.

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Take the Eurozone debt crisis,

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for example.

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It forced intense negotiations between member states and led to Mario Draghi's famous whatever-it-takes pledge to save the euro.

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During COVID-19,

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we also observed a fiscal whatever-it-takes response.

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According to a report by the ECB,

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EU countries spent between 10 to 25%

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of their GDP to support cash-strapped businesses and households during lockdowns through direct fiscal measures and state guarantees.

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guarantees.

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Okay.

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So is the American dream better than the European dream?

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Hmm,

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this is where things get interesting.

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The book,

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The European Dream,

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by Jeremy Rifkin,

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published in 2004,

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has some fascinating insights.

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Here are three key differences I found interesting.

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First,

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the idea of individualism versus community.

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The American dream emphasizes individual success,

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self-reliance,

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and personal achievement.

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while the European dream focuses on community,

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social welfare,

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and shared responsibility.

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Got it.

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You eat what you kill versus hunting as a pack.

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Second,

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material wealth versus quality of life.

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The American dream prioritizes material wealth and economic success as indicators of progress,

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while the European dream values quality of life,

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including work-life balance,

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health care,

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and education.

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Okay,

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get rich or die trying versus savoring the good life.

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And third,

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economic growth versus sustainability.

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The American dream is driven by economic growth and consumerism,

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while the European dream emphasizes sustainability and environmental protection.

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Material world versus natural world.

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Good metaphor,

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Siri.

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While these are generalizations of both societies,

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They do provide insights into how these cultural differences can shape financial behavior.

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An article by Bloomberg titled,

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Shunning Stocks and Holding Cash is Harming European Wealth,

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illustrates this point further.

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Direct stock ownership in EU households is only 11%,

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while 62%

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of US adults own stocks through retirement accounts such as

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401ks and RRAs.

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By contrast,

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around

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30%

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of European household wealth is held in low-yielding savings accounts.

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This is financial inertia,

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so Europe is stuck in a cash coma while the US is busy flipping stocks and betting on unicorns.

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I like the analogy.

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Historically,

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equities have outperformed other asset classes like bonds and cash.

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Over the past 50 years,

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US equities have returned around 7%

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annually,

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while bonds have averaged 3-4%.

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Cash,

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on the other hand,

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barely kept up with inflation at around 1-2%.

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In Europe,

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the story is similar,

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but the equity culture simply hasn't taken root.

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Could Europe be compared to a wealthy individual who is reluctant to invest?

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That's a good question.

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This article by the European Fund and Asset Management Association,

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titled

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Households continue to keep a disproportionate amount of money in bank deposits in most European countries,

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shows that European households increased their holdings of cash and bank deposits from 10.2 trillion euros in 2015 to close to 14 trillion euros in 2022.

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This means going from 36.7%

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of their financial wealth to 41.1%.

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This reminds me of one of your favorite quotes,

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the biggest risk is not to take any risks.

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Sparron.

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One of the core challenges is also the fragmented nature of Europe's financial markets.

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To return to the anecdote,

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perhaps Europe is the cautious tortoise,

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while the US is a daring hare.

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Nevertheless,

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who knows how the fable might end this time.

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Time for Europe to embark for sure on its financial rebirth.

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But how do we effectively channel such substantial investments?

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That's a great question,

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Siri.

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And it leads us perfectly to our guest,

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Anne-Christine Champion.

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As co-head of Global Banking and Investor Solutions at Société Générale and member of the Group Executive Committee,

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she oversees the bank's financing and advisory,

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global markets,

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transaction banking,

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and security services.

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Anne-Christine brings a wealth of experience from her previous senior roles in the European financial industry.

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Hello Anne-Christine and welcome to this episode of 2050 Investors.

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Hello Cocu,

278
00:12:13.519 --> 00:12:14.620
thank you for inviting me.

279
00:12:15.260 --> 00:12:18.123
I'm delighted to join you today for this conversation.

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So let's begin by discussing the differences between Europe and the US when it comes to finance and investments.

281
00:12:26.189 --> 00:12:26.749
In your view,

282
00:12:26.929 --> 00:12:27.510
Anne-Christine...

283
00:12:27.663 --> 00:12:29.683
Are these two models truly opposites?

284
00:12:30.843 --> 00:12:31.103
Well,

285
00:12:31.643 --> 00:12:34.123
framing these models as contradictory is tempting.

286
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In the US,

287
00:12:35.703 --> 00:12:37.603
markets are very much driven by shareholders'

288
00:12:37.623 --> 00:12:38.243
performance,

289
00:12:38.443 --> 00:12:42.763
which is very efficient in terms of resource allocation and economic dynamism.

290
00:12:43.503 --> 00:12:44.023
In Europe,

291
00:12:44.503 --> 00:12:46.783
economies are taking into account the stakeholders,

292
00:12:47.283 --> 00:12:48.963
shareholders but also employees,

293
00:12:49.183 --> 00:12:49.683
society,

294
00:12:49.943 --> 00:12:50.503
environment.

295
00:12:51.423 --> 00:12:53.723
But opposing the two is a false dichotomy.

296
00:12:54.611 --> 00:12:55.212
In reality,

297
00:12:55.292 --> 00:12:58.614
the challenges we are facing today on both sides of the Atlantic,

298
00:12:59.115 --> 00:13:00.496
such as climate change,

299
00:13:00.796 --> 00:13:01.837
ageing populations,

300
00:13:02.157 --> 00:13:03.278
technological disruption,

301
00:13:03.938 --> 00:13:07.501
require solutions that draw on the strengths of both philosophies.

302
00:13:08.282 --> 00:13:12.665
The path forward lies not in choosing between shareholder and stakeholder capitalism,

303
00:13:13.246 --> 00:13:19.651
but in smart transatlantic cooperation that combines long-term vision with dynamic and profitable economies.

304
00:13:20.111 --> 00:13:21.372
This is a very interesting point.

305
00:13:21.615 --> 00:13:24.855
And I really like the idea of cooperation between the two models.

306
00:13:25.295 --> 00:13:25.775
That said,

307
00:13:25.995 --> 00:13:29.495
we often hear that Europe is lagging behind.

308
00:13:30.095 --> 00:13:31.275
Is that really the case?

309
00:13:31.795 --> 00:13:33.975
This is an observation that is backed by numbers.

310
00:13:34.355 --> 00:13:34.995
For instance,

311
00:13:34.996 --> 00:13:37.875
the Europe's per capita income lags 34%

312
00:13:38.155 --> 00:13:39.455
behind that of the US,

313
00:13:40.055 --> 00:13:44.395
with investments in research and development at only half the level seen in the US.

314
00:13:45.195 --> 00:13:47.235
The EU represents just 11%

315
00:13:47.475 --> 00:13:48.975
of global market capitalization,

316
00:13:49.575 --> 00:13:50.655
compared to 45%.

317
00:13:50.675 --> 00:13:51.055
percent.

318
00:13:51.383 --> 00:13:51.964
for the US.

319
00:13:53.164 --> 00:13:53.905
Another example,

320
00:13:54.165 --> 00:13:54.766
only 30%

321
00:13:55.386 --> 00:13:58.168
of financing in Europe comes from financial markets,

322
00:13:58.589 --> 00:13:59.369
compared to 80%

323
00:13:59.970 --> 00:14:00.530
in the US.

324
00:14:01.631 --> 00:14:02.031
That said,

325
00:14:02.111 --> 00:14:02.372
Cocu,

326
00:14:02.912 --> 00:14:05.694
this does not mean Europe is falling behind across the board.

327
00:14:06.415 --> 00:14:07.836
On issues like sustainability,

328
00:14:08.036 --> 00:14:09.938
industrial know-how and social cohesion,

329
00:14:10.278 --> 00:14:11.859
it remains a global reference.

330
00:14:12.319 --> 00:14:13.320
But in terms of scale,

331
00:14:13.640 --> 00:14:15.462
speed and capital mobilization,

332
00:14:16.002 --> 00:14:18.144
the gap with the US remains significant.

333
00:14:18.824 --> 00:14:19.305
These are...

334
00:14:19.579 --> 00:14:21.079
very interesting numbers Anne-Christine,

335
00:14:21.359 --> 00:14:22.739
but they are really alarming.

336
00:14:23.219 --> 00:14:24.799
What's holding Europe back?

337
00:14:25.939 --> 00:14:26.479
First of all,

338
00:14:27.099 --> 00:14:30.559
Europe is not a continent lacking capital nor ideas.

339
00:14:31.299 --> 00:14:32.039
But at the moment,

340
00:14:32.519 --> 00:14:35.059
Europe does not coordinate where it matters.

341
00:14:35.599 --> 00:14:36.199
Mario Draghi,

342
00:14:36.699 --> 00:14:38.959
the former president of the European Central Bank,

343
00:14:39.519 --> 00:14:46.779
listed these areas in a report published in September 2024 on the future of European competitiveness.

344
00:14:47.499 --> 00:14:47.879
First,

345
00:14:48.335 --> 00:14:50.317
Industrial strategies in the energy,

346
00:14:50.597 --> 00:14:55.441
technologies or different sectors remain scattered with a lack of collaboration.

347
00:14:56.622 --> 00:14:57.022
Second,

348
00:14:57.562 --> 00:15:00.224
access to capital is more difficult for entrepreneurs.

349
00:15:01.070 --> 00:15:04.613
Financial markets are less developed in Europe than in the US,

350
00:15:05.273 --> 00:15:07.635
and the single market remains fragmented.

351
00:15:08.956 --> 00:15:09.276
Last,

352
00:15:09.737 --> 00:15:15.081
Europe is lacking focus in selling priorities and efficiency in decision-making.

353
00:15:16.742 --> 00:15:21.666
The good news is that European households own more than 14 trillion euros in savings,

354
00:15:22.347 --> 00:15:25.009
but often placed in low-yield saving accounts.

355
00:15:25.809 --> 00:15:27.110
This is a massive resource,

356
00:15:27.551 --> 00:15:29.072
but one that is underutilized.

357
00:15:29.612 --> 00:15:30.453
to digitalize.

358
00:15:30.590 --> 00:15:33.372
decarbonized and boost defense capabilities,

359
00:15:34.073 --> 00:15:37.415
Europe needs to increase its investment by about 5%

360
00:15:37.756 --> 00:15:39.497
of GDP annual investment,

361
00:15:40.218 --> 00:15:42.359
reaching levels we haven't seen since the

362
00:15:42.800 --> 00:15:43.760
60s or 70s.

363
00:15:44.401 --> 00:15:45.642
This is a massive leap.

364
00:15:46.542 --> 00:15:47.323
For Perspective,

365
00:15:47.343 --> 00:15:52.447
the Marshall Plan between 1948 and 1951 amounted only to 1 to 2%

366
00:15:52.747 --> 00:15:53.148
of GDP.

367
00:15:53.908 --> 00:15:54.228
Energy,

368
00:15:54.489 --> 00:15:58.772
technology and defense are today's equivalent of the coal and steel of the

369
00:15:59.212 --> 00:15:59.332
50s.

370
00:15:59.842 --> 00:16:00.622
And to succeed,

371
00:16:01.162 --> 00:16:07.822
we need to revive the bold and unifying spirit that Germany used to drive Europe's creation and expansion.

372
00:16:08.502 --> 00:16:12.722
So you're talking about the massive underutilization of savings in Europe.

373
00:16:13.282 --> 00:16:15.802
You mentioned 14 trillion euros.

374
00:16:16.442 --> 00:16:16.682
Why,

375
00:16:16.822 --> 00:16:17.562
in your opinion,

376
00:16:17.742 --> 00:16:18.282
Anne-Christine,

377
00:16:18.382 --> 00:16:23.562
is this capital not flowing more effectively into the European real economy?

378
00:16:24.062 --> 00:16:25.462
That's a very important question,

379
00:16:25.542 --> 00:16:25.762
Coco.

380
00:16:26.742 --> 00:16:27.562
One main obstacle.

381
00:16:28.034 --> 00:16:29.615
is a lack of financial education.

382
00:16:30.616 --> 00:16:31.277
In the US,

383
00:16:31.837 --> 00:16:36.481
individuals are encouraged from a young age to take an interest in investments and markets.

384
00:16:37.321 --> 00:16:37.562
Why?

385
00:16:38.022 --> 00:16:40.144
Because nearly everything retirement,

386
00:16:40.324 --> 00:16:40.784
health care,

387
00:16:40.964 --> 00:16:44.027
education depends on personal financial choices.

388
00:16:44.447 --> 00:16:45.668
Families have no choice.

389
00:16:45.908 --> 00:16:48.650
They must learn to invest to secure their future.

390
00:16:49.411 --> 00:16:49.891
In Europe,

391
00:16:50.271 --> 00:16:50.892
it's different.

392
00:16:51.272 --> 00:16:54.355
The welfare state model has long provided a strong safety net.

393
00:16:55.115 --> 00:16:55.836
Free education

394
00:16:56.078 --> 00:16:58.578
pay-as-you-go pensions and universal health care.

395
00:16:59.138 --> 00:17:00.838
This system has many advantages,

396
00:17:01.158 --> 00:17:05.138
but it doesn't encourage citizens to take ownership of financial tools.

397
00:17:06.298 --> 00:17:09.158
We've developed a somewhat distant relationship with investment,

398
00:17:09.578 --> 00:17:12.258
and we can't underestimate the cultural dimension.

399
00:17:12.858 --> 00:17:15.258
Money remains a taboo subject in many circles.

400
00:17:15.678 --> 00:17:17.338
Talking openly about investments,

401
00:17:17.538 --> 00:17:21.858
financial performance or return is still frowned upon in some environments.

402
00:17:22.358 --> 00:17:25.038
Yet financial education is more necessary today

403
00:17:25.454 --> 00:17:25.874
than ever.

404
00:17:26.735 --> 00:17:28.336
The more citizens are educated,

405
00:17:28.637 --> 00:17:32.139
the more they will be able to make informed allocation decisions.

406
00:17:32.660 --> 00:17:34.501
Not just choosing profitable projects,

407
00:17:34.921 --> 00:17:36.603
but also those that are fair,

408
00:17:37.063 --> 00:17:37.503
useful,

409
00:17:37.664 --> 00:17:39.445
and sustainable over the long term.

410
00:17:40.166 --> 00:17:42.848
And this isn't just an individual issue,

411
00:17:43.248 --> 00:17:44.209
it's a collective one.

412
00:17:44.949 --> 00:17:50.614
Europe needs a stronger pension system to better channel household savings to productive investments.

413
00:17:51.114 --> 00:17:53.196
This would encourage retail investors

414
00:17:53.406 --> 00:17:55.946
and increase the flow of funds into capital markets.

415
00:17:56.466 --> 00:18:01.326
Understanding asset allocation and savings flow isn't just about financial performance.

416
00:18:02.046 --> 00:18:05.306
It's also about deciding the future we want to finance.

417
00:18:05.646 --> 00:18:06.546
Because in reality,

418
00:18:07.246 --> 00:18:09.386
health and wealth are not opposites.

419
00:18:10.426 --> 00:18:11.426
Quality of life,

420
00:18:11.826 --> 00:18:14.126
which is at the centre of the European project,

421
00:18:14.806 --> 00:18:16.846
also depends on financial health,

422
00:18:17.726 --> 00:18:19.566
today and especially tomorrow.

423
00:18:20.786 --> 00:18:22.306
I really like the health.

424
00:18:22.614 --> 00:18:24.174
and wealth arguments.

425
00:18:24.554 --> 00:18:26.274
But speaking of financial education,

426
00:18:26.534 --> 00:18:30.174
can we really make a difference on an individual level?

427
00:18:30.914 --> 00:18:31.674
Absolutely.

428
00:18:32.254 --> 00:18:34.734
European savings represent an immense force.

429
00:18:35.614 --> 00:18:36.734
Over the last 10 years,

430
00:18:37.194 --> 00:18:46.134
allocation of European savings to US investments grew from 550 billion to 2.3 trillion euros in 2024.

431
00:18:47.034 --> 00:18:47.774
In other words,

432
00:18:48.514 --> 00:18:51.894
those who are financially educated in Europe are investing.

433
00:18:52.366 --> 00:18:52.906
But elsewhere,

434
00:18:53.707 --> 00:18:55.268
this isn't just a capital flight,

435
00:18:55.589 --> 00:18:58.691
it's also a loss of influence over the projects,

436
00:18:59.011 --> 00:19:01.974
values and visions of the future that we want to finance.

437
00:19:02.334 --> 00:19:03.315
Thanks Anne-Christine.

438
00:19:03.575 --> 00:19:08.298
But why is a unified capital market so crucial for Europe?

439
00:19:08.499 --> 00:19:10.720
And this is a topic that comes up quite often.

440
00:19:11.461 --> 00:19:12.542
And in your opinion,

441
00:19:12.702 --> 00:19:15.224
what concrete benefits would it bring?

442
00:19:15.784 --> 00:19:16.845
It is crucial indeed.

443
00:19:17.746 --> 00:19:18.086
Today,

444
00:19:18.266 --> 00:19:21.509
the European capital market is fragmented and too narrow.

445
00:19:22.370 --> 00:19:25.513
You could compare it to a poorly wired electrical grid.

446
00:19:26.233 --> 00:19:26.954
The voltage,

447
00:19:27.334 --> 00:19:29.456
savings and investment needs is there,

448
00:19:30.056 --> 00:19:32.018
but the energy is lost along the way.

449
00:19:33.159 --> 00:19:35.000
To power its great ambitions,

450
00:19:35.300 --> 00:19:36.121
energy transition,

451
00:19:36.361 --> 00:19:36.941
sovereignty,

452
00:19:37.202 --> 00:19:37.762
innovation,

453
00:19:38.563 --> 00:19:42.105
Europe must consolidate its circuits and unleash its potential.

454
00:19:42.646 --> 00:19:43.567
Two examples of that.

455
00:19:44.027 --> 00:19:44.427
First,

456
00:19:44.868 --> 00:19:46.029
access to listed equity.

457
00:19:46.729 --> 00:19:48.671
There are some concrete solutions to consider.

458
00:19:49.331 --> 00:19:51.072
Consolidating market infrastructures.

459
00:19:51.510 --> 00:19:52.793
harmonizing regulations,

460
00:19:53.194 --> 00:19:56.322
or simplifying market access for small and mid-sized enterprises.

461
00:19:56.783 --> 00:19:58.707
Another example is access to financing.

462
00:19:59.758 --> 00:20:10.118
Securitization is a very powerful financial tool which allows the financial system to channel savings to finance the debt needed by corporates and entrepreneurs for their projects.

463
00:20:11.218 --> 00:20:14.918
The in-use securitization markets account for 0.3%

464
00:20:15.098 --> 00:20:15.738
of the GDP.

465
00:20:16.698 --> 00:20:17.838
In the US it is

466
00:20:18.238 --> 00:20:20.398
1.2% and in Japan

467
00:20:20.918 --> 00:20:23.538
1.4% 2.6%

468
00:20:23.638 --> 00:20:24.238
in Australia.

469
00:20:25.358 --> 00:20:28.398
There are some simple adjustments to the regulation to be made.

470
00:20:28.546 --> 00:20:33.550
to allow for a deeper capital market in Europe and more capacity to finance projects.

471
00:20:34.711 --> 00:20:35.792
Beyond securitization,

472
00:20:35.892 --> 00:20:42.117
the development of the private debt market is also a strong lever to increase the financial capacity for Europe projects.

473
00:20:43.137 --> 00:20:43.678
As a bank,

474
00:20:43.758 --> 00:20:50.403
we have a role to play and this is why we launched a partnership with Brookfield Asset Management with a 10 billion euro debt fund.

475
00:20:51.244 --> 00:20:56.528
This fund is offering investors access to infrastructure projects and this This initiative supports the large...

476
00:20:56.750 --> 00:21:01.290
investments required for energy transition and digitalisation of our economies.

477
00:21:02.130 --> 00:21:07.710
These are clearly big numbers and more will be needed to finance all these investments.

478
00:21:08.030 --> 00:21:10.390
But beyond the capital markets infrastructure,

479
00:21:10.490 --> 00:21:11.010
Anne-Christine,

480
00:21:11.470 --> 00:21:14.250
isn't there also a deeper issue?

481
00:21:14.470 --> 00:21:14.730
I mean,

482
00:21:14.850 --> 00:21:20.110
the lack of economic dynamism in Europe is a clear topic.

483
00:21:20.710 --> 00:21:24.090
Could this be partly a consequence of the points you mentioned earlier?

484
00:21:24.370 --> 00:21:24.630
Yes.

485
00:21:25.038 --> 00:21:26.579
And here is a striking example.

486
00:21:27.420 --> 00:21:32.984
100 euros invested in 2000 in European equities performed about 40%

487
00:21:32.985 --> 00:21:33.965
over 25 years.

488
00:21:34.766 --> 00:21:38.689
The same amount invested in the US generated nearly 300%

489
00:21:38.709 --> 00:21:39.309
performance.

490
00:21:40.290 --> 00:21:41.731
But it is not inevitable.

491
00:21:42.352 --> 00:21:44.033
It's not that Europe lacks potential,

492
00:21:44.693 --> 00:21:46.555
but it faces structural challenges.

493
00:21:47.275 --> 00:21:48.556
Lower productivity growth,

494
00:21:48.557 --> 00:21:49.177
for instance.

495
00:21:49.797 --> 00:21:52.620
Fragmented energy generation that drives up costs.

496
00:21:53.466 --> 00:21:56.626
and a lack of investor appetite for high innovation ventures.

497
00:21:57.546 --> 00:21:58.086
On the latter,

498
00:21:58.706 --> 00:22:00.746
banks like us have a role to play.

499
00:22:01.546 --> 00:22:04.766
We launched recently an equity fund with REIT Asset Management,

500
00:22:05.266 --> 00:22:09.606
with the objective to support emerging leaders in the energy transition throughout Europe,

501
00:22:10.146 --> 00:22:13.406
and Societe Generale committed 250 million euros in the fund.

502
00:22:14.086 --> 00:22:15.986
These are clearly important investments,

503
00:22:16.326 --> 00:22:21.126
but some might worry that in pursuing more aggressively financial performance,

504
00:22:21.586 --> 00:22:21.866
Europe

505
00:22:22.034 --> 00:22:24.056
risks losing its core values.

506
00:22:24.556 --> 00:22:28.579
Performance and the European vision truly coexist,

507
00:22:28.759 --> 00:22:29.360
in your opinion?

508
00:22:29.720 --> 00:22:29.940
Yes,

509
00:22:30.100 --> 00:22:30.541
they can,

510
00:22:30.761 --> 00:22:31.361
and they have to.

511
00:22:32.282 --> 00:22:36.465
Dynamic and competitive markets ensure performance in business and in innovation.

512
00:22:37.366 --> 00:22:38.587
Let's take battery costs,

513
00:22:38.607 --> 00:22:39.228
for instance.

514
00:22:39.928 --> 00:22:42.070
They have dropped more than 75%

515
00:22:42.090 --> 00:22:43.551
since 2015,

516
00:22:44.352 --> 00:22:46.753
unlocking a key driver of the energy transition.

517
00:22:47.674 --> 00:22:50.757
And as costs continue to fall and production scales up.

518
00:22:51.386 --> 00:22:56.970
Cheaper batteries will play a critical role in decarbonising transportation and the power sector.

519
00:22:57.891 --> 00:23:00.013
The energy transition is driven by markets.

520
00:23:01.014 --> 00:23:08.479
Competitive financing is a key enabler to drive costs down for new technologies and for projects to grow in a sustainable way.

521
00:23:08.820 --> 00:23:10.161
This is a very interesting point.

522
00:23:10.621 --> 00:23:11.682
But looking ahead to,

523
00:23:11.942 --> 00:23:12.382
let's say,

524
00:23:12.443 --> 00:23:13.283
2050,

525
00:23:13.383 --> 00:23:15.925
to pick a random number as the podcast,

526
00:23:16.826 --> 00:23:18.447
when it comes to climate challenges,

527
00:23:18.850 --> 00:23:21.092
Isn't investing in sustainable projects over,

528
00:23:21.172 --> 00:23:21.372
say,

529
00:23:21.373 --> 00:23:24.394
25 or 30 years inherently risky,

530
00:23:24.715 --> 00:23:25.695
given the uncertainty?

531
00:23:26.276 --> 00:23:27.277
Does this approach,

532
00:23:27.497 --> 00:23:28.037
Anne-Christine,

533
00:23:28.197 --> 00:23:28.898
make sense?

534
00:23:29.398 --> 00:23:33.862
What is certain is that the next 25 years won't look like the last 25.

535
00:23:34.562 --> 00:23:39.326
This is because the valuation models are no longer aligned with the structural dynamics of the future.

536
00:23:39.867 --> 00:23:40.627
Energy transition,

537
00:23:40.807 --> 00:23:41.728
climate adaptation,

538
00:23:42.048 --> 00:23:44.350
geopolitical tensions over resources,

539
00:23:44.590 --> 00:23:45.071
and so on.

540
00:23:46.051 --> 00:23:48.013
When we talk about sustainable investments,

541
00:23:48.434 --> 00:23:51.394
We are not talking about decisions over a two-year horizon.

542
00:23:52.114 --> 00:23:55.814
We are talking about a vision spanning 10 to 25 years.

543
00:23:56.414 --> 00:23:59.654
If we want investors to act responsibly and with vision,

544
00:24:00.334 --> 00:24:03.254
we need to provide them with a structural means to do so.

545
00:24:04.434 --> 00:24:06.274
And public authorities have a role to play.

546
00:24:07.134 --> 00:24:09.414
Mechanisms like carbon prices are essential.

547
00:24:10.054 --> 00:24:13.074
They align short-term and long-term investment horizons.

548
00:24:13.514 --> 00:24:15.874
They align individual with collective interests.

549
00:24:16.250 --> 00:24:18.412
by forcing the integration of externalities,

550
00:24:19.132 --> 00:24:20.954
particularly those with long-term impacts.

551
00:24:21.574 --> 00:24:23.736
Climate regulation should not be a burden.

552
00:24:24.416 --> 00:24:28.620
It should provide a simple framework that integrates these externalities,

553
00:24:29.120 --> 00:24:33.163
allowing market players to innovate and optimize resource constraints.

554
00:24:33.704 --> 00:24:37.667
This is a prerequisite for enabling sustainable long-term solutions.

555
00:24:38.107 --> 00:24:38.668
Very good point.

556
00:24:38.788 --> 00:24:39.848
As the saying goes,

557
00:24:40.209 --> 00:24:43.351
the best way to predict the future is to create it.

558
00:24:43.926 --> 00:24:48.273
And this clearly couldn't be more relevant when talking about responsible investing.

559
00:24:48.874 --> 00:24:50.236
So thank you so much,

560
00:24:50.436 --> 00:24:50.977
Anne-Christine,

561
00:24:50.978 --> 00:24:52.319
for this fascinating discussion.

562
00:24:52.540 --> 00:24:54.182
But before we wrap up,

563
00:24:54.503 --> 00:24:59.110
do you have any final thoughts or reflections you'd like to share with our listeners?

564
00:24:59.770 --> 00:25:00.211
One thing,

565
00:25:00.831 --> 00:25:02.492
Europe's potential is immense,

566
00:25:03.393 --> 00:25:07.276
and it has a strong vision and many assets that could lead to bounce-back effect,

567
00:25:07.937 --> 00:25:10.358
enabling us to project ourselves into the future.

568
00:25:11.059 --> 00:25:11.940
Jean Monnet once said,

569
00:25:12.680 --> 00:25:15.522
people only accept change when they are faced with necessity,

570
00:25:16.143 --> 00:25:17.904
and they only see necessity in a crisis.

571
00:25:18.445 --> 00:25:18.665
Well,

572
00:25:18.825 --> 00:25:19.446
here we are.

573
00:25:19.946 --> 00:25:21.027
Geopolitical crisis,

574
00:25:21.147 --> 00:25:22.008
climate crisis,

575
00:25:22.088 --> 00:25:22.968
social crisis,

576
00:25:23.168 --> 00:25:24.089
crisis of trust.

577
00:25:24.910 --> 00:25:25.951
The necessity is here,

578
00:25:26.611 --> 00:25:28.713
and it compels us to rethink fundamentally

579
00:25:29.070 --> 00:25:30.271
how we direct savings,

580
00:25:30.511 --> 00:25:31.512
investments and wealth.

581
00:25:31.972 --> 00:25:32.673
So let's do it.

582
00:25:33.073 --> 00:25:34.054
I couldn't agree more.

583
00:25:34.574 --> 00:25:34.955
Thank you,

584
00:25:35.055 --> 00:25:35.715
Anne-Christine,

585
00:25:35.935 --> 00:25:38.918
for this rich discussion full of ideas and perspective.

586
00:25:39.158 --> 00:25:39.578
See you soon.

587
00:25:39.939 --> 00:25:40.259
Thank you,

588
00:25:40.279 --> 00:25:40.519
Cocu.

589
00:25:42.481 --> 00:25:44.062
So we know how this all ends.

590
00:25:44.262 --> 00:25:45.683
The tortoise wins the race,

591
00:25:45.883 --> 00:25:46.123
right?

592
00:25:46.944 --> 00:25:47.224
Well,

593
00:25:49.926 --> 00:25:51.968
it shouldn't always be about competition.

594
00:25:53.229 --> 00:25:55.751
Shouldn't we instead focus on cooperation?

595
00:25:56.546 --> 00:25:58.788
I have the perfect quote to conclude this episode.

596
00:25:59.208 --> 00:26:00.249
It's an African proverb.

597
00:26:01.570 --> 00:26:02.771
If you want to go fast,

598
00:26:03.151 --> 00:26:03.972
go alone.

599
00:26:04.552 --> 00:26:05.713
If you want to go far,

600
00:26:06.234 --> 00:26:06.894
go together.

601
00:26:10.497 --> 00:26:11.718
You may say I'm a dreamer,

602
00:26:13.439 --> 00:26:14.720
but I'm not the only one.

603
00:26:24.622 --> 00:26:27.865
Thank you for listening to this episode of 2050 Investors.

604
00:26:28.285 --> 00:26:31.267
And thanks to Anne-Christine Champion for her invaluable insights.

605
00:26:31.808 --> 00:26:35.390
I hope this episode has helped you get a sense of Europe's potential.

606
00:26:36.051 --> 00:26:38.653
You can find the show on your regular streaming apps.

607
00:26:38.973 --> 00:26:39.994
If you enjoyed the show,

608
00:26:40.314 --> 00:26:41.595
help us spread the word.

609
00:26:41.896 --> 00:26:43.737
Please take a minute to subscribe,

610
00:26:43.957 --> 00:26:47.440
review and rate it on Spotify and Apple Podcasts.

611
00:26:47.960 --> 00:26:49.522
See you at the next episode.

612
00:26:53.582 --> 00:26:56.344
While the following podcast discusses the financial markets,

613
00:26:56.604 --> 00:26:59.527
it does not recommend any particular investment decision.

614
00:26:59.867 --> 00:27:02.829
If you are unsure of the merits of any investment decision,

615
00:27:03.210 --> 00:27:05.311
please seek professional advice.