Trust is still low
10 or more years
after the financial crisis, and
that seems a good enough reason
to say we need to rethink
the various fixes that
were put in place after
the 2008-09 crisis
and see what more profound
change can be brought through
into business and finance.
A movement to reset capitalism
is already underway.
One opportunity in 2020 is
that lots of business people
are now talking about
purpose and the need
to instil new ways beyond
pure shareholder value.
What you're seeing
happening today
is a very necessary return
to stakeholder capitalism
if you like, i.e., the idea
that business and markets should
be set within a
wider social context,
and a legal and
political framework.
We're not just moving from a
world of narrow shareholder
focus to stakeholder focus.
We're also moving towards
a world where investors
increasingly recognise they
need to look at the long term.
You need to have a wider
sense of what context you're
operating in.
Investors and business
executives are people just
like you and me.
They have children.
Those children are
skiving schools on Friday
to go on strike against
the environment.
And this really sharpens
the issue for people.
Suddenly, investors are looking
much more seriously at -
how do we become good stewards
of the global environment?
How do we look ourselves in
the eye in 20 years' time
and think that we
did the right thing?
Each year that we advance
into the 21st century,
a younger generation is
worried about the purpose
of the corporation, the
purpose of capitalism.
And that's an optimistic
sign, I think,
that people will be able to
lead this change in 2020 in ways
that they weren't necessarily
in previous years.
So where is this change going
to come from over the next year?
Well, there's lots of
statistics out there
that show that the
younger people are,
the more they care
about these issues.
These young people are
going to become customers
of banks, of pension providers,
of the entire financial
services industry.
The competitive
pressure that's going
to come from firms looking to
snag business from these people
as they develop wealth,
as they become older,
is getting increasingly intense.
There will be an increasing
clamour of people asking
for business leaders to deliver
on promises that they made
in 2019, notably, the
Business Roundtable.
People will start asking
those 180 or so signatories
of that statement, what have
they actually done in 2020?
For the finance
and market sectors
that I'm primarily
focused on, the real thing
is figuring out how to get
money to green projects.
How do we issue green bonds?
How do we help companies that
are trying to transition away
from being dirty, oily
companies into green technology?
Where does the money come
from for that process?
That's what bankers and
investors are definitely
grappling with now.
And they know that if
they don't get this right,
that next generation - the
Greta Thunberg generation -
is not going to be interested
in using their services.
On the downside, of course,
although we might hope in 2020
for there to be more
regulatory and policy
change to try and reset
and curb the worst
excesses of
capitalism, there are
going to be distractions,
notably the US
presidential election and
impeachment, and also,
in a European scenario, Brexit,
and in Asia, China and Hong
Kong.
So, any investor who's looking
at a company or the corporate
landscape needs to recognise
that if you ignore those risks,
you're in danger of essentially
seeing the value of your asset
being impaired.
So if you want to understand
the reset that's going on right
now it pays to think
about fear and greed.
The fear element is
pretty clear cut.
Essentially, what you have are
many C-suites that are waking
up and realising that if they
don't start paying attention
to stakeholders they
face regulatory pressure.
They face consumer backlash.
They sometimes face
their own protest
from their own employees.
And they also face
potential investor pressure.
But the greed element
is important too.
Some companies also recognise
that if they start looking
at stakeholders more broadly,
they can build for the long
term.
If they can get ahead
of the really important
social and environmental
changes right now,
be that renewable energy, be
that non-meat alternatives,
be that other ways that you can
tap into the growing concerns
amongst consumers for
sustainable products,
if you can do that,
then often you
can make more money in
the long term anyway.
