The shareholder: a key player in companies’ development

 Joint interview with Muriel De Szilbereky, Delegate General of the Association Nationale des Sociétés par Actions (ANSA) and Patrick Renard, Director of Air Liquide Shareholder services.

Why are individual shareholders a key asset for companies?

Muriel de Szilbereky:  Investors generally invest their savings with a long-term view. At the same time, we believe that strengthening a company’s shareholders' equity is paramount because it is not healthy to finance growth solely via debt. So that these savings can meet this corporate need, ANSA actively promotes a stable legal and fiscal framework to encourage the growth of individual share ownership. We believe that this is crucial for the sustainable growth of companies in France and Europe. Individual shareholders represent strong support for a company’s strategy, if they are confident in it.

Patrick Renard:  Share ownership is indeed essential for a company to independently drive its long-term strategy. This is particularly true for Air Liquide, which has always endeavored to maintain a high percentage of individual shareholders, as reflected in the 32% of share capital which they own, and the fact that 64% of our shareholders have owned their shares for more than ten years. By aiming for profitable, steady, and responsible growth over the long-term, we meet their objective of obtaining regular growth for their portfolio.

How has this share ownership changed?

Muriel de Szilbereky: The AMF has noticed that the number of individual shareholders in France has increased slightly over the last two years. There is no doubt that the position of public authorities in favor of investing in shares, as well as recent taxation changes, have contributed to this changing trend. However, it must be noted that this shift only includes a minority from the younger generations, which remain widely under-represented among French individual share ownership.

Patrick Renard: Yes, and successfully reaching out to the younger generations is something that Air Liquide's Shareholder Services really cares about. This is why we are carrying out major nationwide surveys to better understand their expectations and what is putting them off. The conclusions of our most recent survey, which was published at the end of 2018, was particularly informative. These generations invest at least as much as their elders and for medium-term objectives (acquiring their first home) and, in particular, long-term purposes (building up an estate for their children’s future or even for retirement). But they nevertheless invest in short-term, low-yield products. It is rather paradoxical. Did you know that it would take 93 years to double your initial capital at the 0.75% rate currently offered by the French Livret A savings product and 139 years at the 0.5% rate of the French Compte Épargne Logement (home purchase savings account)? And moreover, this is just in theory since, at the same time, inflation rises at a faster pace.

Muriel de Szilbereky: Yes, indeed, studies regularly highlight that shares are the most profitable form of long-term investment. A recent report by the AMF shows that, on average, equity investments over 20 years generate a largely positive nominal return. Although equity investments are risky and volatile, returns must be assessed over the medium and long-term. This directly highlights French people's lack of awareness of the economy and how companies are financed.

Against this backdrop, what is the best way to attract young people to invest in shares?

Muriel de Szilbereky: We need to raise awareness among younger people about the demographic context which requires everyone to start preparing financially for their future as soon as they enter the workforce. Companies also have a major role to play by regularly informing these younger generations in an educational manner, and by supporting them as they discover saving through shares. This was done in the past by the retail banking networks, which have markedly reduced their involvement in promoting securities, as shown in the AMF’s “mystery surveys”. Much can also be done in terms of the products and services on offer: the PEA Jeunes (young person’s personal equity plan) planned as part of the French loi Pacte currently debated, and for which ANSA has been campaigning strongly in recent months, is an excellent source of economic education for young French people and is likely to revive demand for this “equity product”. Finally, I believe that the new trend of capital raising, made popular by the emergence of crowdfunding, should inspire us and push us to be more innovative in the way we address these younger generations

Patrick Renard:  At Air Liquide, we sincerely believe that we need to act on several fronts to convince the 25-40 year old age group. Education and support, which you have already mentioned, are essential. But it is also necessary to discuss the long-term financial performance of their investment, as well as the “purpose” provided by the company through its corporate contributions: protecting the environment, tackling climate change, dialoging with stakeholders, among others. It is up to us to communicate in a different way with the younger generations, and show them that they can be part, through a financial investment, of a profitable and sustainable human and technological adventure.