Europe’s Top Executives Look to the Future

After three years of inflationary pressures, top executives in Europe are beginning to look beyond emergency measures against rising costs and start planning for the future.

Mark Schneider, who was once again rated the top-ranking chief executive in the food producer sector in Institutional Investor’s Developed Europe Research Team, said Nestlé is analyzing web searches to detect consumer trends before rivals. Enrico Vita, top ranked in the medical technologies and services sector, said that Amplifon, which supplies hearing aids, is using digital technology to personalize its service in and out of stores. While Carlo Messina, who came first in the banking sector, said Intesa Sanpaolo is powering ahead of traditional competitors in Italy with a new cloud-based banking platform called isybank.

At Iberdrola, a multinational electric utility company based in Spain, Ignacio Galán is celebrating more than two decades of innovation. Galán pushed for the company to commit to renewables when he arrived as chief executive in 2001. In 2023, Galán said Iberdrola is innovating in all areas including financing through green bonds and green hybrid bonds, renewable technologies like floating offshore wind, the use of AI in smart grids, and the development of brand new energy sources like green hydrogen and products derived from green hydrogen like green ammonia or green methanol. “Globally, in moments of crisis, there is always the temptation to focus only on the short term, but we need to preserve a long-term orientation,” Galán said. Galán shares first place in the utilities sector with Markus Krebber of RWE, who agreed that companies must stay focused on the future: “Looking back, I am so proud of team RWE’s hard work and dedication and that, despite these additional challenges, we never lost sight of our long-term goal: driving the energy transition.”

While RWE invests in recyclable rotor blades for offshore wind turbines and towers made from low-carbon steel, and Nestlé uses algorithms to launch coffee mixes and probiotic supplements in China, not all innovation is tangible. “Our innovations are often quiet, but no less disruptive,” said Timotheus Höttges, chief executive of Deutsche Telekom, who was voted best leader in the telecommunication services sector. “Hardware becomes software for us. This turns Telekom itself into a platform. The next step is to scale.”

But innovation does not exist without investment, and many of Europe’s top chief executives are fearful that a more protectionist trade environment, coupled with ongoing inflation and interest rate rises, could dampen the appetite for invention. “What worries me is the war in Ukraine,” said Krebber from RWE. He said that achieving decarbonisation will require stable investment, functioning supply chains, and a wider production of green technologies. “This is made even more difficult considering the current circumstances.”

Meanwhile, AstraZeneca CEO Pascal Soriot, the top-scoring chief executive in the pharmaceuticals sector, fears the diversion of state resources to the military, which might weaken investment in healthcare. “Already today, innovation in healthcare in Europe is not incentivized and, as a result, it will continue moving to the U.S. and China,” he said.

At DPDHL, the multinational package delivery company based in Germany, chief financial officer Melanie Kreis answered II’s interview request on behalf of Frank Appel, who ranked best chief executive in the transport sector before he retired in May. Kreis has her own reason to celebrate — she was the top-scoring CFO in the transport sector. She said DPDHL supports cross-border trade, even in times of geopolitical tension. “We are a strong proponent of global trade as an engine for growth,” she said. Ola Källenius at Mercedes Benz, who ranked first in the autos and auto-parts sector, agrees that Europe needs fewer barriers to trade: “We are very much pro-free trade.” Höttges at Deutsche Telekom adds to a chorus of voices demanding the end of red tape to support innovation on the continent: “Europe seems to recognize that it cannot continue as before in the face of geopolitical change,” he said. “Instead, it needs impetus for investment. We need less bureaucracy to unleash growth and innovation.”

Messina from Intesa Sanpaolo said that he is sensitive to other business leaders’ concerns about inflation and geopolitics, but his main worry is the situation for the common man. He said that investment in social and environmental goals must continue, despite the challenges, and that Intesa Sanpaolo is doubling down by providing €400 billion ($429 billion) in lending to households and businesses in Italy between 2021 and 2026. “My main worry is growing inequality,” Messina said. “Many families and businesses are struggling, and we remain committed to supporting them.”

2022 was a strong year for Euronext on several aspects. From a financial perspective, we reached record revenue above €1.4 billion thanks to a strong performance of our non-volume related activities which was combined with our trademark cost discipline. From a strategic perspective, 2022 has been crucial in laying the foundations for the future growth of our group. In June 2022, we successfully completed the first major milestone of our 2024 strategic plan with the migration of our core data center from Basildon in the UK to Bergamo in Italy. In addition to demonstrating our unrivaled expertise and capabilities in managing complex market infrastructure migration projects, this achievement paved the way to the successful migration of the Italian cash equity market to our state-of-the-art trading platform Optiq earlier this year. As a result, Euronext is now handling 25 percent of equity trading in Europe within our new green core data center. We have made significant progress toward our ambitious ESG objectives as our upgraded emission reduction targets were validated by the science-based targets initiative (SBTi). Thanks to our ESG commitment, the Euronext share was included in both the Equileap Eurozone 100 and the Equileap Gender Equality France 40 indices, demonstrating the progress we are making in striving towards more equality. Overall, 2022 and 2023 so far have once again demonstrated our ability to deliver key strategic migrations on time, on budget, and with excellent results. All these critical milestones have definitely positioned us as the leading market infrastructure in Europe and I am proud that Euronext is now the strongest it has been since its IPO, almost 10 years ago.

We are confident in the upcoming milestones of our 2024 strategic plan and we are certain that our diversified business model has strengthened Euronext. However, from a broader perspective, the past few months have been critical for Europe and demonstrated very clearly the need for reinforced European cooperation and a strengthened EU. At Euronext, we are committed to our European roots and to our global ambitions. We know that cooperation and consolidation across Europe are vital to secure prosperity and peace among the European nations that have pooled their destiny in common. This is the mindset we also apply within the infrastructures we operate.

We constantly strive to strengthen our business across the value chain to build the only fully integrated trading value chain in Europe. To do so, innovation and client satisfaction are at the core of our strategy, and we were glad to announce earlier this year two new innovative trading services to enable our clients to leverage Euronext's strengths. For our institutional clients, we will launch a best-in-class dark execution facility for Euronext-listed stocks in the fourth quarter of 2023. This new service will enable market participants to benefit from the full suite of on-exchange execution models for the leading pan-European venue with the largest and deepest liquidity pool. This dark execution facility will notably include a sweep mechanism between the midpoint and central limit order book. Thanks to our state-of-the-art technology Optiq, this new facility will also enable lower latency between dark and lit executions. In addition, we'll reinforce our offering toward retail investors. We will soon propose a simplified access to trading of a wide range of pan-European and U.S. securities. Leveraging on our existing multilateral trading facility in Italy, Euronext Global Equity Market or GEM, we will simplify and broaden access to trading of non-domestic securities. Through this new innovative offer, we will offer retail investors with a true one-stop-shop experience for equity trading. All in all, these two initiatives will further reinforce our leading position as the European leading venue for cash equity trading.

The thing I am most proud of is the acceleration in our strategy, which is also reflected in the two acquisitions that we have announced in June and in July. Liberty Seguros will further reinforce our market position in Iberia and our overall insurance leadership in Europe while the acquisition of Conning Holdings and its affiliates will provide additional skills and scale to our global asset management platform. Furthermore, we have been very consistent in making Generali increasingly profitable, diversified and resilient, with a strong financial position. At the halfway point of the plan, we are fully on track to meet our ambitious targets, confirming that the Group has the right set-up to navigate the continually evolving macroeconomic and geopolitical scenario.

The stickiness of inflation is a source of concern because the series of hikes in interest rates may slow the economy down, and if inflation is persistently high central banks may have a limited propensity to lower rates. Not all companies and businesses may be well prepared for a lower growth trajectory while facing higher interest rates.

The innovation I am most proud of is the one we have been implementing and continue to implement to enhance customer experience. It is a series of innovations which not only enable us to save money but more importantly to better serve our customers. Another equally important innovation is the one we are pushing through behind the scenes to make our operating machine more efficient also in order to better face the inflationary environment.

I think that having exceeded our guidance and improved the financial strength of the company in a very difficult macro and energy environment is our main accomplishment. Our results in 2022 and the first half of 2023 prove that we have the right strategy and that we are executing it properly. In July, we raised our 2023 outlook for the second time in only six months. Another key achievement of the last year was the presentation of our updated outlook to 2025. We are living in an uncertain scenario, but long-term orientation is key in a capital-intensive sector like energy. And we are moving fast in its implementation: In less than one year, we have reached our dividend floor target for 2025 and we have met our targets on asset rotation and partnerships (where we have closed agreements for €10 billion). And I feel very proud of how our growth is translating into a larger contribution to the communities where we operate, especially in a year of economic instability. This means maintaining stable prices for customers and preserving energy security for them. Also, our ongoing reduction of emissions, which are slightly above 60 grams in Europe, 75 percent lower than those of our competitors. And, of course, investing more (€11 billion), making purchases worth €18 billion that allow us to sustain 400,000 jobs in our suppliers and making 5,000 new hires. All this model is being increasingly recognized. I was very honored when a few months ago Harvard Business School dedicated a case study to us under the title “Iberdrola: Leading the Energy Revolution.”

Globally, in moments of crisis, there is always the temptation to focus only on the short term, but we need to preserve a long-term orientation. For instance, 2024 must be the year of the energy transition ambition. What does this mean? More investment in renewables, networks, storage, and green hydrogen. The commitment I see in most countries, in the business community and the wider society makes me remain optimistic. My message during NY Climate Week and COP28 will be to increase momentum. An energy and industrial policy that promotes the acceleration of decarbonization can also accelerate macro stabilization, thanks to the economic benefits of additional investments and lower dependence on fossil fuels. And, for this, we will need clear energy policies, attractive regulatory frameworks, and faster permitting processes. We see some positive signs, for instance in networks, where we see regulators asking for additional investments on both sides of the Atlantic. At Iberdrola, our main focus for 2024 is to continue meeting or exceeding our growth targets and preserving our financial strength. Maintaining a proper balance between expansion and solidity is going to be the key success factor in 2024.

Innovation is in Iberdrola's DNA. In technology, in processes — also in financing. We were pioneers in green bonds and green hybrid bonds. It is part of our culture. As an integrated player, we always look for innovations that have a positive impact across the energy system. We need to ensure that electrification improves efficiency, sustainability, and affordability for the system. For this reason, our innovations range from new renewable technologies, like floating offshore wind, to the introduction of AI in smart grids, or new storage systems to optimize the integration of green energies. And, of course, we are also promoting new demand for renewable electricity in transport or industry, or new green products based on green hydrogen, like green ammonia or green methanol. Three or four years ago not many people knew about green hydrogen, and we have already completed the largest green hydrogen plant in Europe in Puertollano in Spain. And we have 60 additional projects in eight countries. We have been ahead of the curve for the last 20 years, but we know this competitive advantage may fade away quickly if we don't keep moving forward. That is why according to the EU we are the private electricity company that invests the most in R&D and innovation in the world, around €400 million per year. And we believe in an open innovation model, in close alliance with our suppliers, start-ups and universities. Major impacts can be seen in highly innovative projects like the plant in Puertollano, but if you follow our activity closely you can see the results of these innovations everywhere, reaffirming its role in our strategy.

Telekom did not allow itself to be infected by the mood of crisis around it. Rather, we put our blinkers on and focused on implementing our strategy; above all, network leadership in all our markets. This is how we managed to turn Telekom into a growth group. We grow with customers and results on both sides of the Atlantic.

Overall, I am optimistic. Europe seems to recognize that it cannot continue as before in the face of geopolitical change. Instead, it needs impetus for investment. And that we need less bureaucracy to unleash growth and innovation. In this respect, my main concern is that awareness is not followed by implementation.

Our innovations are often quiet, but no less disruptive. We are radically transforming our production model. Hardware becomes software for us. This turns Telekom itself into a platform. The next step is now to scale it. In the process, we are of course also relying on AI, which, by the way, we are using and will use more in all areas of the group, especially in customer service.

It’s great to see the strong demand for our electric and top-end products. It shows that our transformation is in full swing.

Rising trade tensions and protectionism could limit growth opportunities for the economy. We are very much pro-free trade.

We are re-inventing the car. The most recent example: our upcoming electric CLA is setting the benchmark in range and efficiency.

We were able to demonstrate the resilience of our business model and navigated successfully through unprecedented times. Revenue and earnings before revenue and taxes remained on a high level — even after coming from an e-commerce related extreme surge in volumes during the pandemic.

Generally we are a strong proponent of global trade as an engine for growth and prosperity and therefore support and enable global cross-border trade — even in times of geopolitical tensions. For us the main question for next year is when the economy is picking up again. We are, however, well prepared for any scenario due to our broad portfolio and footprint.

We focus on investments and innovations that drive our core business activities around logistics. We deploy robotics, data analytics and AI in all our entities across the world.

First and foremost, last year was overshadowed by Russia’s terrible war of aggression against Ukraine. It changed the world, has caused untold suffering and sadness, and led to the severe energy crisis here in Europe. As one of Europe’s leading energy companies, we were at the forefront of helping support the government to secure energy supplies — especially in substituting Russian gas. RWE was amongst the first to build the infrastructure for LNG imports into Germany — tripling our LNG imports to Europe in record time — and we also brought all available non-gas-fired power generation back to the grid. Looking back, I am so proud of team RWE’s hard work and dedication and that, despite these additional challenges, we never lost sight of our long-term goal: driving the energy transition. Not only did we meet, but we even exceeded our renewable investment target. We also made the strategic acquisition of Con Edison Clean Energy businesses, making us a top renewable energy company in the U.S. and positioning us now among the leading companies in all our core markets. Finally, in reaching an agreement with the German federal government to exit coal-fired power generation by 2030, we have brought forward the coal phase-out by eight years. This has laid the foundation for our ambitious goal to reduce our carbon emissions more quickly and in line with the 1.5-degree reduction path.

What worries me is the war in Ukraine. The fighting continues and there is no end in sight. The destruction and suffering of the Ukrainian people is unimaginable, and it will take many years, much strength, and money to rebuild the country. But this war has also shown us how important it is to diversify our energy imports to remain independent. We need significant investments in new technologies to solve the current energy and climate crisis. Achieving our decarbonisation goals thus calls for a stable, reliable investment framework, functioning supply chains and the expansion of production capacities for green technologies. This is made even more difficult considering the current circumstances — additional geopolitical tensions are negatively impacting global alignment and world trade, and we find ourselves in an inflationary environment due to higher interest rates.

We at RWE are developing and investing in all technologies needed for the new green energy world: offshore wind, onshore wind, photovoltaic solar energy, batteries, and the hydrogen economy. For this, we are driving forward new innovations with floating offshore wind, floating PV, and H2-ready gas-fired power plants. Our teams are also at the forefront of deploying sustainable technologies, such as the first-ever fully recyclable rotor blades for offshore wind turbines in the world and towers made from low-carbon steel. In onshore wind as well, we are currently testing black blades to help better protect birds. We are conscious of the responsibility our position in the energy world brings and for all our projects, we are working to operate in harmony with ecosystems and to aid biodiversity.

It’s been an incredible year for Haleon, and I’m really proud of all of my colleagues for all of their hard work over a number of years culminating in successfully separating and demerging from GSK last year and listing as a new FTSE 100 company. All of this was done without business interruption whilst at the same time delivering strong results and navigating a global pandemic.

The global macro environment remains challenging, with geopolitical tensions and uncertainty, as well as consumer discretionary income under pressure. These are factors which clearly we need to navigate but ultimately we don’t control, and those would be the things I most worry about if I had to call anything out. At the same time Haleon has an incredible portfolio of trusted brands, all serving a health need for consumers, and at a time when post-Covid health is more relevant than ever. As such, although mindful of the current challenges, I am confident in our ability to navigate them, and that given the strength of our portfolio, competitive capabilities, and our strategy for growth, we will continue to deliver attractive performance.

As a branded consumer company innovation is a key lever for us to drive growth, and given the science in our pharma legacy DNA coupled with our deep understanding of consumer health needs, we think we are uniquely positioned to deliver on this. With consumers increasingly demanding more, coupled with significant unmet consumer health needs, innovation will remain a priority focus area for us.

We announced our new four-year business plan just days before the invasion of Ukraine last year. Needless to say, the war unsettled markets and dented the expected post-pandemic recovery. Despite the difficult macro environment, Intesa Sanpaolo went on to deliver the best net income of the past 15 years. We also distributed cash dividends of €3 billion — equal to a 70 percent payout ratio, as promised — and in the first part of this year we completed our share buyback, bringing total additional capital distribution to €3.4 billion. The 2022 to 2025 business plan is an industrial one — built on a full range of concrete business initiatives — aimed at ensuring we remain a leader in European wealth management, protection and advisory in any interest rate environment. This is about ensuring that all our stakeholders benefit from our sustainable leadership over the next decade. I am proud that today — despite all the external challenges we faced — more than 80 percent of the business plan initiatives are running ahead of schedule, while we continue to deliver all-time high financial results each quarter. Undoubtedly key to our success is a strong, long-standing, and cohesive management team. Intesa Sanpaolo’s strong performance is continuing into the current year. We recently closed the best six months ever, with net income reaching €4.2 billion.

I am sensitive to business leaders’ concerns about inflation, interest rates, growth, and geopolitical uncertainty. There are still some clouds on the horizon. Nonetheless, I am definitely positive on the Italian economy. We are seeing a slowdown but the fundamentals remain strong, with very resilient SMEs and world-leading household wealth. I see no risks from non-performing loans for the Italian system and certainly not for us. I am confident that this will be a very good year for Intesa Sanpaolo. Our efficient and resilient business model is set to succeed in any context. But my main worry is growing inequality. Many families and businesses are struggling and we remain committed to supporting them. As part of this, we are providing €400 billion in lending to the real economy and stepping up our many social and climate initiatives. We remain determined to be the world’s number one impact bank. While some companies are backing down on ESG, we are doubling down.

We are going all-in on our tech transformation and evolving fast. We see a need for speed. This is all about building a bank that continues to be a leader in the next decade. We have already invested €1.8 billion while building isytech — the new tech backbone of our group. We are the first leading bank fully adopting a next-gen, cloud-based core banking solution. Leveraging isytech, in June we launched our state-of-the-art digital bank, isybank, in just 12 months. By the first quarter next year, we will already have more than 2.5 million isybank customers. Not only is isybank the most innovative banking platform in comparison with our traditional competitors, but we can also proudly say that isybank stands out among digital challengers. This makes us ready to win against the fintech challenge. In July, we also created Italy’s first network of wealth advisors working exclusively through online channels, with the launch of Fideuram Direct, a digital wealth platform for customers wanting to invest remotely in listed markets and asset management products. We are also investing heavily in AI. AI has huge potential to unlock new business opportunities, increase efficiency and manage risks. But we also believe that responsible and ethical adoption of AI is critical. These tech initiatives will generate an additional €500 million gross income in 2025, on top of what is already included in our 2022 to 2025 business plan.

The inflation surge was a key challenge in our industry and I believe we navigated it well. After three years of detailed operating management and “fire fighting,” we also got back to a more forward-looking management style. We made strong progress in defining what it takes to succeed in the 2020s and getting the organization ready to make it happen. We call it future-proofing our business.

The main risks are coming from geopolitical and macroeconomic volatility. By definition, they are outside of our control. To thrive in that environment requires a step up in organizational agility and flexibility.

Innovation is a key growth driver for us. We benefit from some of our past moves, in particular the strong R&D group we have built and a streamlined innovation process from concept to store shelf. Now we are exploring new digital capabilities to speed up innovation, for example AI-assisted concept development or web-search analysis for early detection of consumer trends.

The great performance of all our teams, in particular the progress of our pipeline, the successful integration of Alexion and strategic synergies generated, and the progress of our decarbonisation agenda.

Covid showed us the importance of a strong, well-resourced healthcare system. Unfortunately, in Europe the combination of high inflation, expensive energy, growing cost of debt, and requirement to invest in the military is likely to create enormous pressures on other budgets and my worry is that healthcare may suffer. Already today, innovation in healthcare in Europe is not incentivized and, as a result, it will continue moving to the U.S. and China.

We innovate across all elements of our value chain through investment in new science and technologies, use of AI and, of course, continued efforts in strengthening talent in the organization.

We are proud to have exceeded the €2 billion revenue threshold for the first time in Amplifon’s history, with double-digit growth in net profit, increasing our market share even further and strengthening our global leadership in the retail hearing care sector. These results are even more significant because they have been achieved in a more complex market than expected due to the uncertain macroeconomic scenario and high inflationary environment. At the same time, we continued to invest heavily in all strategic matters, starting from our people and organization.

Our sector’s fundamentals are strong and very resilient, but of course we constantly monitor the evolution of external factors that could indirectly temporarily affect every business, such as the macroeconomic environment and the geopolitical situation.

Innovation is crucial in all business sectors. Only those companies able to innovate will have enduring success. At Amplifon, our vision has been to employ new digital technologies to innovate in the service we offer to our customers in and out of our stores, to ensure the continuous personalization of a distinctive experience.