WEBVTT 1 00:00:07.080 --> 00:00:09.930 European business leaders will need to adopt 2 00:00:09.930 --> 00:00:13.500 a number of strategies to respond to these challenges. 3 00:00:13.500 --> 00:00:16.230 Firstly, they need to plan for a range 4 00:00:16.230 --> 00:00:18.930 of different possible future outcomes. 5 00:00:18.930 --> 00:00:22.080 There's no longer one obvious way the world 6 00:00:22.080 --> 00:00:24.870 or the European continent will develop. 7 00:00:24.870 --> 00:00:27.390 We need to adopt scenario-based approaches 8 00:00:27.390 --> 00:00:29.850 in order to plan for the future. 9 00:00:29.850 --> 00:00:32.670 Secondly, the future will continue 10 00:00:32.670 --> 00:00:34.860 to be uncertain and volatile, 11 00:00:34.860 --> 00:00:37.800 and that will impact the macroeconomic environment 12 00:00:37.800 --> 00:00:40.410 through things like high interest rates, 13 00:00:40.410 --> 00:00:43.440 volatile commodity prices, and so forth. 14 00:00:43.440 --> 00:00:45.270 Thirdly, a more fragmented world 15 00:00:45.270 --> 00:00:47.190 means that multinational companies 16 00:00:47.190 --> 00:00:49.560 need to adopt different strategies 17 00:00:49.560 --> 00:00:52.110 and maybe even different organizations 18 00:00:52.110 --> 00:00:53.550 for different parts of the world, 19 00:00:53.550 --> 00:00:56.040 rather than relying on a single common 20 00:00:56.040 --> 00:00:59.880 organizational structure or policies or rules. 21 00:00:59.880 --> 00:01:02.430 And finally, trade growth, 22 00:01:02.430 --> 00:01:06.870 we at BCG predict will predominantly be in emerging markets 23 00:01:06.870 --> 00:01:08.520 over the next decade, 24 00:01:08.520 --> 00:01:11.460 and so anyone involved in trade and export 25 00:01:11.460 --> 00:01:13.500 needs to seize the opportunities 26 00:01:13.500 --> 00:01:16.890 that those markets will present over the coming years. 27 00:01:16.890 --> 00:01:19.590 One of the key future developments 28 00:01:19.590 --> 00:01:23.490 that we're really seeing now is the increased interlinking 29 00:01:23.490 --> 00:01:27.510 between trade, geopolitics, and climate action. 30 00:01:27.510 --> 00:01:29.940 And Europe, and the European Union in particular, 31 00:01:29.940 --> 00:01:32.580 is at the heart of this shift, 32 00:01:32.580 --> 00:01:34.320 and it's something that business leaders 33 00:01:34.320 --> 00:01:37.410 really need to understand, whether they are in Europe 34 00:01:37.410 --> 00:01:39.780 or serving Europe's markets, 35 00:01:39.780 --> 00:01:42.300 or in supply chains that involve Europe. 36 00:01:42.300 --> 00:01:45.960 The European Union has shown global climate leadership 37 00:01:45.960 --> 00:01:47.100 for many years, 38 00:01:47.100 --> 00:01:51.060 but as it struggles with its own competitiveness challenges, 39 00:01:51.060 --> 00:01:55.320 it's starting to connect its domestic regulation 40 00:01:55.320 --> 00:01:58.380 with its large single market. 41 00:01:58.380 --> 00:02:01.290 Whether it is ramping up carbon pricing 42 00:02:01.290 --> 00:02:04.350 or introducing new market access conditions 43 00:02:04.350 --> 00:02:06.960 like climate levies on imports 44 00:02:06.960 --> 00:02:10.410 or new rules on forced labor and deforestation, 45 00:02:10.410 --> 00:02:14.460 we're seeing the EU use its market size to influence 46 00:02:14.460 --> 00:02:18.180 and try to decarbonize and improve ESG standards 47 00:02:18.180 --> 00:02:20.190 throughout global supply chains. 48 00:02:20.190 --> 00:02:22.740 Business leaders globally need to understand 49 00:02:22.740 --> 00:02:25.410 and adapt to this new European trend 50 00:02:25.410 --> 00:02:28.350 linking climate regulation and trade. 51 00:02:28.350 --> 00:02:30.180 Whether you are a business exporting 52 00:02:30.180 --> 00:02:32.850 a carbon-intensive product like steel, 53 00:02:32.850 --> 00:02:35.580 whether you might have labor 54 00:02:35.580 --> 00:02:38.610 or other challenges within your supply chain, 55 00:02:38.610 --> 00:02:41.130 or whether you're trading in a product 56 00:02:41.130 --> 00:02:43.170 that's made on deforested land 57 00:02:43.170 --> 00:02:45.180 or potentially deforested land, 58 00:02:45.180 --> 00:02:47.730 these new rules will impact you 59 00:02:47.730 --> 00:02:49.590 if you are trading with the EU. 60 00:02:49.590 --> 00:02:52.290 The EU's linkage between climate, 61 00:02:52.290 --> 00:02:54.420 ESG, and trade has the potential 62 00:02:54.420 --> 00:02:56.940 to reshape global supply chains, 63 00:02:56.940 --> 00:03:00.030 whether that is decarbonizing your products, 64 00:03:00.030 --> 00:03:02.490 complying with new compliance 65 00:03:02.490 --> 00:03:06.060 or transparency rules when serving the EU, 66 00:03:06.060 --> 00:03:07.740 or thinking about where you might want 67 00:03:07.740 --> 00:03:10.950 to locate your manufacturing facilities. 68 00:03:10.950 --> 00:03:14.490 It's important to understand this geopolitical dimension 69 00:03:14.490 --> 00:03:17.223 and factor that into future business strategy.