European Green Deal: Get Ready to Lift-Off


With its European Green Deal, the EU has set itself the very ambitious goal of becoming the first climate neutral continent. This has the potential of becoming a real game changer for all the actors involved and, as our European Equity Strategy team is keen to highlight, a great boost for portfolios.

The European Green Deal is a set of policies put forth by the European Commission. The goal is for the EU to be climate neutral in 2050. It provides a roadmap with actions to boost the efficient use of resources by moving to a clean, circular economy, restore biodiversity and cut pollution. It outlines investments needed and financing tools available and explains how to ensure a just and inclusive transition. 

This Green Deal may be a once-in-a-century industrial project - “This is Europe's man on the moon moment”, according to Ursula von der Leyen, Head of the European Commission, when she presented the European Green Deal last December. It is Europe's new growth strategy. And Societe Generale strategists believe the European Green Deal has the potential to be an industrial strategic project that could be classified in history next to the US's New Deal (1933), the Marshall Plan (1947) and the foundation of the European Economic Community (1957). Following the COVID-19 crisis, EU leaders agreed to support the recovery through a fiscal plan and the Green Deal is to be at the heart of this. 
It is a long-term environment project that is accelerating quickly. It is also a political project: the latest polls show that environment and climate change are among European citizens' main concerns. The European Green Deal is also becoming a key factor for investors, as shown by the strong inflows into Environment, Social & Governance (ESG) funds. With the Green Deal, Europe wants to accelerate its energy transition and become the world's first climate-neutral continent. This is an opportunity for European companies to develop skills and knowledge which would allow them to potentially export their expertise around the globe.

The Green Deal has the potential to boost portfolios. In the report, our European Equity Strategists detail a tailored European Green Deal basket of 43 European companies that could potentially benefit from the Green Deal and help the EU to achieve its ambitious target. This basket of stocks has risen 73% over the past two years, strongly outperforming the STOXX 600 (+3% during the same period) and its majors peers (ETFs and indices labelled “ Clean Energy” or “Climate change”). The basket shows that there is life outside Health Care, Staples, IT and Luxury stocks in European equities.

The report is composed of four sections:

  1. The European Green Deal: striving to be the first climate-neutral continent
  2. Gear portfolios to the European Green Deal: introducing Societe Generale’s European Green Deal Basket
  3. European commission factsheets & roadmap 
  4. Addendum: Societe Generale European Green Deal basket – company description

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Societe Generale Cross-Asset Research is composed of more than 200 Analysts, Strategists, Economists and Quant, combining their expertise into ‘Research-based’ and innovative solutions suited to client’ needs: fundamental studies and expert views, investment ideas and long-term strategies, trade ideas and tactical baskets, thematic and systematic indices, quant solutions. On top of its established UK and Western European base, Societe Generale Cross-Asset Research benefits from a global coverage thanks to its presence in the US and in Asia (Hong Kong, Singapore, Tokyo and Bangalore) and Societe Generale local networks in Eastern Europe.

This editorial contains financial analysis which reflects the opinion of the Cross-Asset Research department of Societe Generale at the date of its publication. It does not necessarily reflect the views of the other departments of Societe Generale nor the official opinion of Societe Generale. This interview is dedicated to institutional and professional investors and is not deemed to be seen and used by retail investors for investment purpose. The viewers shall consult their own financial advisers to make their own appraisal.