Interview: Emmanuel Nazarenko, Managing Director & Senior Partner at the Boston Consulting Group
"We're at a momentum to get the global economy moving"
Time for Transition sinterviewed Emmanuel Nazarenko, Managing Director & Senior Partner at The Boston Consulting Group.
TF - Where do we stand regarding the implementation of the European and French recovery plans? Is there a convergence with our climate commitments?
A whole mechanism is being set in motion, in particular with the European Green Deal. The two are closely linked. For example, more than a third of the European recovery plan is allocated to climate-friendly investments. Even if it must be put into perspective in relation to European GDP, the amount earmarked for the Green Deal (€750 billion) is significant and shows a strong consistency. At the same time, legislative mechanisms are being put in place: Europe is beginning to legislate, for example, on carbon pricing (the border tax is becoming a reality) or on emission standards for individual vehicles. Consequently, things are moving in a coherent way.
TF - What would it take for you for this recovery to be truly sustainable?
This implies taking several aspects into account such as regulation, economic fundamentals, and consumer appropriation. For example, in the case electric vehicles*, regulations and subsidies are driving a spectacular acceleration, as was the case for solar energy several years ago: the sector benefited from considerable subsidies at the outset, then experienced economies of scale and became competitive. At the same time, investor communities are pushing companies to be more virtuous, notably by integrating ESG criteria into their fundamentals. And finally, part of the population is ready to spend more on environmentally friendly solutions.
We are therefore witnessing a very strong acceleration today with all these transition vectors moving in the same direction. The momentum is there to get the global economy moving. We should also be pleased that Europe is now taking a more balanced approach. After focusing on the consumer and low prices, attention is now also being paid to Europe as an industrial economic base and to production tools. This is very important if the continent is to remain a prosperous area and not just a place for imports. The subject of batteries is an example of this and should serve as an example for other future sectors.
TF - What influence can Joe Biden's recent climate-related announcements have on Europe?
We can see that there is a dynamic. All things related to climate action cannot be done without multilateral cooperation and without a framework where there is real convergence. The comeback of the United States is therefore a massive encouragement to continue to act in the same direction. Moreover, the fact that China, the United States and Europe are moving in the same direction shows a strong commitment on the part of economic actors. It is an incentive that fits well with the changing prism of the investment world. The evolution of the US climate targets reinforces Europe's commitment to its own -55% by 2030 targets. And it helps to silence those who express doubts or remain in rearguard actions.
TF - But isn't there a risk that competition will emerge on issues of sovereignty, particularly with low-carbon technologies?
The world needs to find the right balance. For developed economies like Europe, we must continue to control the chain (technology and production), but without being naive. Globalization, economic exchanges, and interdependence will remain important. Industry must adapt and the states must also do their part to facilitate the development of European industry.
TF - At a time when citizens/consumers have ever greater expectations regarding the environment and climate, what will be the role of the government and that of the private sector?
Companies have a fundamental role to play in reducing their carbon footprint and in offering solutions and products that meet new expectations. They must also help to change behavior, particularly by promoting attractive offers and greener value propositions. All of this builds virtuous circles. Companies must therefore be both reactive and proactive. And studies show that the companies best regarded by investors are those that make the most effort.
For its part, the governement must provide a framework with regulations, but this must be done at the right pace, in an ambitious, operational and, above all, not unreasonable manner. The economic mechanisms can then be put in place and promote the transformation of the sectors.
More globally, the future also lies in the measurement by each individual of his or her own footprint: each consumer must be attentive to what he or she does. In this sense, the movement of the younger generations to challenge the whole of society is valuable.
TF - Will the implementation of the recovery and ecological transition plans encourage a certain cultural evolution, notably with the emergence of new collaborations between territories and private actors?
I am convinced of this. I can see it in the very concrete projects that are emerging: it is a very clear trend. Indeed, local elected officials are taking up environmental, climate and sustainability issues both to comply with regulations and to meet citizens' expectations for their immediate environment. This is a level of political responsibility where commitment and trust between elected officials and citizens are fundamental. We can see this on subjects such as circular economy, land use planning, energy and partly on agriculture. The territorial level is relevant and effective. It is therefore very interesting that this level becomes more and more active to drive and facilitate projects. And this is becoming more and more common.
* According to a recent BCG study, the speed of emergence of EVs is four years ahead of schedule: the year when half of all vehicles sold will be EVs will be 2026, not 2030 as previously anticipated.
