Business Vision Winter 2019 - 2020 by Business Vision

.W O R L D Financing the the Future Future Financing Interconnected World World Interconnected

Australia burns After the flames ...the claims

2020: Tough year looms for central banks Also in this issue...

Winter 2019-20

Helping micro-enterprises to grow Lisbon: Green Capital GBP 9.95 | EUR 14.95 | USD 15.95

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Something from nothing…?

The upside of 2019

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EV news roundup

Thom Richard is one of the few pilots in the world to possess the talent, experience and courage required to compete in the final of the famous Reno Air Races – the world’s fastest motorsport. Less than ten champions are capable of vying with each other at speeds of almost 500 mph, flying wing to wing at the risk of their lives, just a few feet off the ground. It is for these elite aviators that Breitling develops its chronographs: sturdy, functional and ultra high-performance instruments all equipped with movements chronometer-certified by the COSC – the highest official benchmark in terms of reliability and precision. Welcome to the Breitling world.

BREITLING.COM

WELCOME TO OUR WORLD

CHRONOMAT 44 FLYING FISH

Letter from the editor So… Brexit happened. What's for dinner? It's been looming for so long, stifling trade with its inherent uncertainty and blighting conversations about Blighty (Britain, to our overseas readers) with sometimes unexpected injections of venom, that it's grand just to have it behind us. The predictions about its effect on the UK, on Europe, on expats and migrant workers, have all been made. It's not like we can now sit back and wait to see who was “right”. And anyway, we're likely to see evidence that will back you up on whatever stance you took, but it will emerge over years and decades, not months. The drip-feed of news, as circumstances alter around us, may mean that in real terms, the person in the street (that's you and me) won't even notice the difference. Which is not to say we shouldn't care. The potential pros (surely there must be some) and cons of Brexit stand; how we apply the evidence to the emerging facts and our preconceptions is kind of up to us. More important, if we lift our gaze from our navels, is the progress of the United Nations' SDGs 1 – 17. These are issues that matter; this isn't ire about independence from central policy making, or myths about compulsory banana

bends or cheese that can't be called by its name. The first one of the noble SDGs, End Poverty, is the biggest, the mothership of them all. Solve that one, and the rest will fall into place. But consider those two words: End Poverty. Now there's a challenge — cast an eye at the map below for an idea of scale — and one that merits the attention of every person, of every political stripe. This isn't about how much tax you pay, or whether you feel fairly represented by your union member or local MP. It isn't about that bonus or promotion you're gunning for. This is about the right for everyone to live a decent, dignified,

healthy life, with food on the table and a roof overhead. Jason Agnew opens the SDG can and has a look inside, and you can peer over his shoulder in this issue of BV. We'll be covering all the SDGs in coming issues, adding our insignificant digit to the world pulse. We're looking at other things, too, in this Winter issue. Innovation, for instance. As new inventions and apps rollout by the truckload, entrepreneurs will be making it, or being broken by the system. Funding is in the spotlight, and so are predictions for this brand-new decade, all nice and shiny and symmetrical with its neatly mirrored numerals. Heather Leah Smith takes a backward glance at 2019, and â&#x20AC;&#x201D; as is her charming wont â&#x20AC;&#x201D; accentuates the positive. But face facts: we're stuck with developments we don't want or need, changes that worry or depress us, and the inability to do anything much about problems we see on the horizon. And somehow, it all comes down to us, as individuals, consumers, business owners, workers. It's not a case of democracy in action, it's not about activism. It's about going with the flow, accepting the things we can't change (like Brexit) and trying to change the things we can, like those SDGs. It may be about adapting to a world which tries to exclude or categorise or control

us with AI, and drones, and iris- and voicerecognition. The latest app, whatever it may be, could be just the thin end of a wedge that will prise loose our sense of agency in our lives. There's no point in calling for restraint in the arena of invention, because if one ethical and honourable person refuses to profit from a certain application of his or her discovery because of its potential for harm, a thousand more will be eye-gouging and trampling to fill the gap. It's an amoral marketplace. Innovation is a wonderful aspect of the human psyche, and lateral thinking is a fine and marketable skill. But those things, combined with the lure of profit, ensure that there can always be a downside to discovery. Pandora's Box doesn't come with a lock, or even a lid, in the 21st Century. Innovators, please be kind and invent some cool and neutral things in 2020â&#x20AC;Ś Happy reading, and happy New Year. Hal Williams, editor hw@bv.world

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Correspondence Picking up the phone How good to see the Fairphone 3 emerge as an articulate and sensible response to the e-waste issue. One of my desk drawers provides the last resting place for several expensive pieces of hardware, each of which died dramatically, unexpectedly, and with absolutely no chance of repair. It's wonderful that this phone (reviewed in your Autumn issue) is repairable and designed â&#x20AC;&#x153;with the environment in mindâ&#x20AC;?. Apparently, reviewers think the Fairphone is a bit on the chunky side, but I say it's a good looker that ticks a lot of boxes â&#x20AC;&#x201C; and they are important boxes for me. May I suggest that manufacturers of other products give more thought to the environment, encourage thrift and offer more commonsense solutions. E-waste is offensive and, as Fairphone has shown, unnecessary. I hope BV will let readers know about similar innovative products. Billy Kimber Manchester United Kingdom The editor replies: Thanks for your letter, Billy, and yes, this is something we hope to investigate. HW

Do cry for me, Argentina Your recent article on capital controls in Argentina highlighted just one more desperate measure in the final three-quarters of a century during which the long-suffering Argentine population has been victim of constant macro-economic instability. I learned the lesson young: as a 10-year-old, back in the 1970s, I was encouraged by the Post Office to buy stamps that could be converted into cash. Before I was able to buy the bicycle I had been saving for, the government announced a 100 percent devaluation of the currency. My savings disappeared overnight. This taught me and my fellow citizens that it was better to buy dollars than save in the local currency. Since your article was published, permitted dollar purchases have been reduced to $200 a month, and the Peronistas have regained power. For those advocating a return to a dollar economy, I would remind them of what happened under Carlos Menem in the 1990s.

Fun with photo frames

Adrian Costa Buenos Aires Argentina

What fun it was to experiment with augmented reality with the article about Constellation Beer in your Spring issue. How your pictures editor managed to incorporate the technology onto the printed page I have no idea (I have a tenuous grasp of new technology). Is this some cunning electronic device inserted into the paper of your pages? Please let me know how this was achieved. I followed the instructions given in the magazine and got the desired result, anyway! Jane Thurman Birmingham UK

Pictures editor Richard Thomas replies: Thank you, Jane, it's always interesting to get feedback, especially on one of our more specialist articles, and hopefully I can help you out. There's nothing special about that page other than the image printed on it. When you visit the website and point your phone's camera at the image, the code on the website recognises the photo and adds the three-dimensional effects. When writing the article, I learned that it worked the same whether the image was on a large billboard or a small card placed on the bar or a table. The image as printed in the magazine isn't much smaller that that on the card, so it works just as well there. What matters is that the image fills the field of view of the camera, and the website coding does the rest. RT 10

Look poverty in the eye With reference to your article in BV winter 2019 on the inaugural World Poverty Forum held in January 2020 in Africa's largest slum: While I find the initiative of Kennedy Onede highly laudable, I would like to point out that if these world leaders are so shocked by these conditions in which so many people exist, then they are almost certainly in the wrong job. Moira Watson Dundee (soon to be) Republic of Scotland

Editor Hal Williams Assistant Editor Janet Newbury Executive Editor Susan Shaw Pictures Editor and Layout Richard Thomas

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Contributors Heather Leah Smith Jason Agnew Mohamed A El-Erian Mariana Mazzucato John Foot Conal O'Hara Mareike Voget Jeremy Furniss Charles Hipps Sarah Coutts Rosie Bailey Martin Davenport Victoria Brocklesby Hellen Renata Costa Pinto Cover photo: SS studio photography / Shutterstock.com

Distribution Manager Thomas Terrell Subscriptions Max Pragnell Commercial Director Graham Church Publisher David Eyres Business Vision The Lansdowne Building 2 Lansdowne Rd Croydon CR9 2ER, UK Tel: +44 (0)203 745 7671 Fax: +44 (0)203 745 7674 Email: info@bv.world Web: www.bv.world Printed in the UK. All rights reserved.

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In this issue

16 | Heart of the Matter

34 | Infrastructure finance

17 | How's your cyber hygiene?

37 | C-suite and digitalisation

18 | Are you in the club?

38 | Data and democracy

22 | Banks facing tough times

42 | The working week examined

26 | Bushfire insurance claims

45 | Pensions: will they last?

31 | Bezos backs e-commerce

46 | Protection for execs

32 | Private equity: is it for you?

48 | Business rate... and pillage

56 - 59 | The battle to end poverty 60 | OECD climate warning 64 | Art in the workplace 66 | Something from nothing?

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Contents

Business Vision Summer 2018 Issue â&#x20AC;˘ www.bv.world

80 | Rewards of e-commerce 82 | Open banking explained 85 | Planting the seed 86 | Sustainability in focus

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HEART OF THE MATTER PHILIP SINEL, a senior partner at Jersey-based litigation firm Sinels, gives the pros and cons of offshore regulation. It’s never simple, always challenging — and does it have enough upsides to make it worth the hassle...?

A tale of regulators, gift-wrapped fraud and smoke-detectors in hell

ONE view of offshore regulation, recently expressed provider. This is done by aggressive compliance to me by a former regulator, is that it is like fitting visits, skulduggery, underhand tactics, pressure and smoke detectors in hell. weight of numbers. Offshore clients like tax breaks, the absence of This has side effects, and a number of the transparency, the secrecy and the stability. After all, offshore providers now have private equity capital what else is there for an offshore firm to provide behind them. This means the pressure on profits beyond secrecy and sunny weather? goes up, so the ability of somebody with a legitimate As one client once put it, the point is to ensure reason for wanting an offshore trust — their ability activity is off the balance sheet and out of sight. to find an old-fashioned trustee in the proper sense Added to this is the fact that “offshore” now includes of the word, for example — is becoming limited. Delaware and the City of London. Offshore should There are legitimate functions for businesspeople really be re-defined as “in another place”. who are exposed to the vagaries of irrational or Leaving that to one side, arbitrary regimes, or where there this article is written on the is a danger posed by spendthrift basis of personal experience family members. Finding an oldSkulduggery, in the Channel Islands. After fashioned trustee for a small client the Edwards report, the islands can be very difficult. cleaned up their act. Evasion out, underhand tactics, There is also an unwholesome avoidance in. The evaders went — and, to my mind, unlawful pressure and off to do business in Switzerland, — community of interest and Mauritius and Panama, at least absence of delineation within the until the world started to twig weight of numbers regulator executive making the to the fact that not paying tax is decisions and the enforcement illegal everywhere. arm. The result? Allegations of The benefits of offshore structures remain: no partial or improper behaviour by the enforcers will published accounts, no publicly available list of go nowhere because the executive will not hear of shareholders and beneficial owners — that’s the it. foundation for multi-billion-pound businesses. The I have watched legitimate, honest, well-run small quid-pro-quo imposed on the Crown dependencies trustees face obliteration because of the unwritten in return for these benefits was to stop taking clearly manifesto. I have seen the human toll of bullying by dirty money and stop selling tax-evasion schemes. a well-financed regulator. That means that anybody wanting to provide On the other side of the equation is the “too services in Crown dependencies (those with which big to fail” syndrome. I remember some years ago I am familiar, anyway) has to have rigid KYC “gift-wrapping” for the Regulator and the Attorney procedures so they know who the clients are, where General in a $40m fraud case. When I say gift the money came from. Any politically exposed wrapping, I mean that parts of the case had been persons (PEPs) must be flagged, and woe betide the through a New York court and could be proven. provider who does not carry this out. If there were It was an obvious fraud; the offshore service a similarly well-enforced regime for lawyers in the provider had a valuable asset and two clients; it City of London, pandemonium would break out decided to give the asset to the favoured client, overnight. without telling the other. Nothing came of it; not Unfortunately, problems remain. The regulators a word from the Attorney General or the regulator. offshore have two sets of standards; the first — the So, offshore regulation: does it work? After a unwritten manifesto — is to exterminate the smaller fashion…

Poor ‘cyber hygiene’? Never fear, someone has your back international growth and operating scale, and allow the construction of new offices and product offerings. Michael Assraf, CEO and cofounder, said Vicarius’ algorithm predicts vulnerabilities and potential “zero-days” based on attack scenarios. Its TOPIA technology patches vulnerabilities and offers interim threat protection for target areas thus far unaddressed to patch latent security gaps. This preemptive approach is ideal for organisations with poor “cyber hygiene”, says Assraf. Gadi Porat of JVP Cyber Labs said the new approach safeguards any software without involving the vendor or IT teams. After a decade of limited technological breakthrough in this field, Vicarius offers a pioneering

solution to identify, manage and predict software vulnerabilities, he said. Vicarius’ US team will be based in the JVP International NYC Cyber Centre. The company claims to be the first in the detection of software vulnerabilities before a hack takes place. The system prioritises threats based on the business context, and automatically protects the software — with or without installing security patches. Vicarius was founded in 2016 and is headquartered in the JVP Media Quarter in Jerusalem. Jerusalem Venture Partners is a venture capital fund which has to date raised $1.4bn across nine funds, and has been listed as one of the world’s top-10 consistently performing VC firms.

Business Vision Winter 2019-20 Issue • www.bv.world

THE US Department of Homeland Security estimates that 90 percent of cybersecurity incidents happen because of defects in the code or design of software. In 2019, more than 17,000 software vulnerabilities were discovered — a 300 percent increase within a decade. Vicarius, founded in Jerusalem in 2016 by IT experts Michael Assraf, Roi Cohen and Yossi Ze'evi, is one of the companies offering proactive “attack mitigation” strategies. Using machine learning, the firm’s Vulnerability Assessment (VA) technology detects exposures in software — before hacks occur. The company has announced seed funding of $5m in a funding round led by Jerusalem Venture Partners (JVP), with Innovation Hub and Goldbell also investing. The funding will expand Vicarius’

Lock it up tight... but any security system is only as good as its software and code

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Broaden flexible working horizons — join the club! CONAL O’HARA — himself COO of a London club — argues in favour of dens offering more than just prestige THERE is a new style of flexible working space entering the market: business clubs. The narrative is shifting from tech start-ups and the gig economy as more mature businesses are looking to embrace flexibility whilst maintaining confidentiality, discretion and the gravitas of an established city postcode. Totaljobs recently found that 84 percent of employees would consider turning down a job offer that didn’t offer flexible working. Employees with a sense of ownership over their working day are likely to be more engaged and more motivated. Businesses recognise this, and are starting to view flexibility as a business opportunity that can

Professionals can choose a suitable workspace increase productivity and attract and retain talent. Professionals can choose a suitable workspace, with access to lounges, meeting rooms and “hot-desks” at various locations. Spaces near transport hubs mean workers on the move can drop into any location between meetings, cutting travel time. Clubs also provide IT support,

in-house office maintenance and concierge services. Breakout areas and business lounges let employees select an environment likely to produce optimum results. In increasingly competitive markets, offices can be leveraged in the war for talent. Flexible working and desirable environments are key elements of a job offer. That research by Totaljobs shows 75 percent of employers believe flexible working boosts retention rates. While employees still require traditional incentives, they increasingly look to workplaces for inspiration and motivation. Networking gets a boost,

as workers rub shoulders with other members, and the strategic benefits are appealing. Considering shortand medium-term growth plans, businesses can avoid overcommitting to office space. A shorter 12- or 36-month agreement, supported by turn-key solutions and dropin locations, can offer a good alternative, allowing businesses to scale up or down with changing circumstances. Space is more than just a room these days. It’s about a collection of services, as well as four walls, providing support.

A place where workers can hang out... and make deals, perhaps?

Business Vision Winter 2019-20 Issue • www.bv.world

The gravitas of an established City postcode

* Conal O’Hara is COO of London’s Argyll Club 19

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Tenth time lucky for solar funding leads to multiple plants and stock exchange listing

Wandee Kunchornyakong

PEOPLE

WANDEE Kunchornyakong is living proof that it’s never too late to capitalise on a business opportunity. Kunchornyakong was lured out of retirement in 2008 by new legislation from the Thai government seeking to promote the country’s renewable energy sector. She began to research the potential, and learned that Thailand boasts some of the strongest solar-radiation levels of the region. “With the same investment for setting up a solar-power plant, a solar farm in Thailand will have more energy output, perhaps double to triple capacity of those in developed countries,” she told The Bangkok Post. “I knew the possibility of success was high and the risk for failure was very low.” She went to banks, detailed business plan in hand, to seek financing for her first solar power plant. Despite Kunchornyakong’s fool-proof proposal, she met rejection — and ageism. She was in her early 50s at the time. “The more I was rejected and discredited because of my age, the greater feeling I had that I must make it happen,” she recalls. At the tenth bank she approached — Kasikornbank — she managed to catch the attention of the manager. She suggested that the bank, which broadcast its environmental priorities with a green logo, should change the logo colour if they were to deny her application. The bold move secured a meeting — and an offer to finance 60 percent of the $20m project. Kunchornyakong raised the missing capital by reaching out to friends and family and by selling her and her husband’s home and land. When she applied for the permits for the plant, she was granted not one, but 36. She was the first, and only, applicant. Kunchornyakong had little difficulty in locating a blended finance package from the World Bank’s International Finance Corporation and the Clean Technology Fund. The solar energy conglomerate she founded — SPCG PCL — now includes the 36-plant network in Thailand and more than 40 subsidiaries, including solar-farm and solar-roof businesses. Listed on Thailand’s Stock Exchange (BKK: SPCG), the company has announced new joint ventures in the pipeline and predicts revenue growth to exceed 15 percent in 2020.

Patrick Collison

WHEN Patrick Collison took his first computer course at Limerick University as an eight-year-old, he was off to a head start. He continued his precocious progress by learning computer programming two years later, and by the time he was 16, Collison had won BT Young Scientist of the Year for creating his own programming language, Croma. He then attended Massachusetts Institute of Technology for a while but dropped out and returned to Limerick. Enterprise Ireland, the state development agency, denied Patrick and his brother John funding for a start-up project, which led them to relocate to Silicon Valley in California. There they teamed up with Kulveer and Harjeet Taggar, cousins and Oxford graduates, to found Auctomatic, a free service helping businesses manage selling on online sites such as eBay. The brothers sold Auctomatic for $5m on Good Friday 2008 — making Patrick a millionaire five months short of his 20th birthday. The company was soon acquired by a Canadian company, Live Current Media. Patrick Collison was appointed director of engineering, but his entrepreneurial drive proved too strong. By 2010 he was back with John to found Stripe, a software firm that allows individuals and businesses to make and receive payments over the internet. The business took off so quickly that by the end of 2014 the business had received a $3.5bn valuation. Around a decade later, Stripe is valued at $35bn — catapulting the Collison lads into top spot as Ireland's wealthiest entrepreneurs. They have an estimated personal net worth of $4.2bn — each. Collison is an avid reader, and on his website advises would-be entrepreneurs to read — a lot. Other pearls of wisdom he imparts: your prime years are those between 10 to 20 (!) and that it is best to “go deep on things, become an expert”. If you're over 20 and have missed the boat... well, too bad. Hindsight is always 20/20, but we here at BV can't help thinking that this is one time that Enterprise Ireland must be kicking itself for missing out on this chance.

Business Vision Winter 2019-20 Issue • www.bv.world

PEOPLE

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Plain sailing for the central banks in 2020? Dream on — uncertainties are multiplying The US Federal Reserve and the European Central Bank spent the past year reversing course with interest-rate cuts and liquidity injections. But central bankers cannot assume calm conditions in 2020. MOHAMED A EL-ERIAN reports. AFTER a year that involved one of the biggest U-turns in recent monetary-policy history, central banks are now hoping for peace and quiet in 2020. This is particularly true for the European Central Bank and the US Federal Reserve, the world’s two most powerful monetary institutions. But the realisation of peace and quiet is increasingly out of their direct control; and their hopes would easily be dashed if markets

Fed and ECB are on path to reduce their balance sheets were to succumb to any number of medium-term uncertainties, many of which extend well beyond

economics and finance to the realms of geopolitics, institutions, and domestic social and political conditions. Just over a year ago, the ECB and the Fed were on the path of gradually reducing their massively expanded balance sheets, and the Fed was increasing interest rates from levels first adopted in the midst of the global financial crisis. Both institutions were attempting to normalise their monetary policies after years of Norbert Nagel via Wikimedia Commons

European Central Bank: ‘peace and quiet’ is out of its direct control

relying on ultra-low or negative interest rates and large-scale asset purchases. The Fed had raised interest rates four times in 2018, signalled further hikes for 2019, and set the unwinding of its balance sheet on “autopilot.” And the ECB had ended its balance-sheet expansion and begun to steer away from further stimulus. A year later, all of these measures have been reversed. Rather than hiking rates further, the Fed cut them three times in 2019. Instead of reducing its balance sheet, the Fed expanded it by a greater magnitude during the last four months of the year than at any comparable period since the crisis. And far from signalling an eventual normalisation of its rate structure, the Fed moved forcefully into a “lower-for-longer” paradigm. The ECB, too, pushed its interest-rate structure further into negative territory and restarted its asset-purchase programme. As a result, the Fed and the ECB cleared a path for many interestrate cuts around the world,

producing some of the most accommodative global monetary conditions on record. This dramatic policy turnaround was particularly curious in two ways. First, it materialised despite growing discomfort — both within and outside central banks — about the collateral damage and unintended consequences of prolonged reliance on ultra-loose monetary policy. If anything, this discomfort had grown throughout the year, owing to the negative impact of ultra-low and negative rates on economic dynamism and financial stability. Second, the dramatic reversal was not a response to a collapse in global growth, let alone a recession. By most estimates, growth in 2019 was around three percent — compared to 3.6 percent the previous year — and many observers are expecting a quick rebound in 2020. Rather than acting on clear economic signals, the major central banks once again succumbed to pressure from financial markets.

Examples include the fourth quarter of 2018, when the Fed reacted to a sharp stock-market sell-off that seemed to threaten the functioning of some markets around the world. Another occurred in September 2019, when the Fed responded to a sudden, unanticipated disruption in the wholesale funding (repo) market — a sophisticated and highly specialised market segment that involves close interaction between the Fed and the banking system. This is not to suggest that central banks’ objectives weren’t at risk on each occasion. In both cases, generalised financialmarket dislocations could have undermined economic growth and stable inflation, creating the conditions for an even more acute monetary-policy intervention down the road. That is why the Fed, in particular, couched its policy U-turn in terms of “insurance”. But the challenges facing central bankers do not stop there. By allowing financial markets again to dictate monetary-policy changes, both the ECB and the Fed

Business Vision Winter 2019-20 Issue • www.bv.world

The US Federal Reserve is one of the world’s most powerful monetary institutions

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poured more fuel on a fire that has been raging for years. Financial markets have been driven from one record high to another, regardless of the underlying economic fundamentals, because traders and investors have been conditioned to believe that central banks are their BFFs. Time and again, central banks have proved willing and able to step in to suppress volatility and keep prices of both stocks and bonds elevated. As a result, the right approach for investors has been to buy whenever the market dips, and to do so more and more rapidly. Yet, given mounting mediumterm uncertainties, central bankers cannot assume tranquil conditions in 2020. While ample and predictable liquidity can help calm markets, it does not remove existing barriers to sustained and inclusive growth. The eurozone economy in particular is currently saddled with structural impediments that are eroding productivity growth. And there are deep longterm structural uncertainties stemming from climate change, technological disruptions, and demographic trends. Moreover, around the world,

Qassem Soleimani there has been a generalised loss of trust in institutions and expert opinion, as well as a deep sense of marginalisation and alienation among significant segments of society. Political polarisation is more intense, and many democracies are undergoing uncertain transitions. Also, although the trade tensions

between the United States and China have been temporarily alleviated by a “phase one” deal, the underlying sources of conflict have hardly been resolved. And the world is suddenly on tenterhooks as tensions between the US and Iran have escalated, with Iran vowing further retaliation for America’s targeted killing of Iran’s top military leader, Qassem Soleimani. For long-term economic wellbeing and financial stability, this litany of uncertainties demands a policy response that extends well beyond central banks’ traditional remit. It calls for a comprehensive multi-year engagement using structural, fiscal, and cross-border tools. Without that, financial markets will continue to expect central-bank interventions that a growing body of evidence indicates are not just increasingly ineffective for the economy but also potentially counterproductive. Whether or not central banks avoid the spotlight in 2020, they are likely to face even greater challenges to the political autonomy and policy credibility that are so crucial to their effectiveness.

UN REPORT: HALF-A-BILLION STRUGGLING TO FIND WORK ALMOST half-a-billion people around the world battle to find sufficient paid work, a UN report on employment and social trends shows. The World Employment and Social Outlook: Trends 2020 (WESO) report by the UN’s International Labour Organisation (ILO) predicts that unemployment figures will rise by around 2.5m this year. Global unemployment has been roughly stable for the past nine years — but slowing economic growth means not enough new jobs are being generated. Guy Ryder, the director-general of ILO, points to “persisting and substantial work-related inequalities and exclusion”. The trend had “profound and worrying implications for social cohesion”, he warns. The WESO report shows that a disparity between labour supply and demand extends beyond unemployment into broader labour underutilisation. As well as the 188m people unemployed around the world, 165m don’t have enough paid 24

work — and 120m have given up searching. Inequality is higher than previously thought, especially in developing countries. Worldwide, the share of national income going to labour (rather than to other factors of production) declined from 54 percent to 51 between 2004 and 2017. That’s a greater fall than expected, and most pronounced in Europe, Central Asia and the Americas. Moderate or extreme working poverty is expected to hamper the achievement UN Sustainable Development Goal 1 (eradicating poverty everywhere by 2030). Working poverty — earning less than $3.20 per day — affects more than 630m people: one in five of the global working population. Other significant inequalities — defined by gender, age and geographic location — remain stubborn features of labour markets, the report says, limiting individual opportunities and general economic growth.

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A burning issue: Australia is in flames, and the insurance industry girds its loins While the physical clear-up will take years, insurers and assessors have sprung into action to work with those who have lost literally everything. HAL WILLIAMS reports. “HOW DO we sleep when our beds are burning?” Those lyrics from Australian band Midnight Oil (whose frontman, Peter Garrett, later became the country’s Environment Minister) are particularly haunting in the reflected light of the bushfire disaster Downunder. Beds, the homes around them, as well as forests, farmlands, vehicles, barns and businesses have been burning in Australia since

September 5, 2019. And — at the time of writing — the blazes rage on, fuelled by high temperatures and gusts of hot summer wind. Four states — New South Wales, Queensland, South Australia and Victoria — are still battling fires, many still out of control. To date, 29 human lives have been lost, along with an unknown number of wild and domestic animals, and some 2,500 homes and buildings destroyed. Flora and fauna have

been decimated, the country’s delicate ecosystems ravaged. Aside from the individual, shared and national sense of loss, there are financial losses to account for. And that’s where the insurance industry takes centre stage. Lisa Kable, of the Insurance Council of Australia (ICA), said 8,985 claims had been made (by early January) with more flooding in each day. Kable estimates the loss value at around $700m — a

A country, its people, and its wildlife decimated by raging bushfires

figure that is almost certain to rise. More than 1,838 residential property losses have been confirmed (at the time of writing): 1,405 in NSW, 45 in Queensland, 88 in South Australia and 300 in Victoria. Total insurance claims for Australia’s bushfire season have so far reached $1bn, with assessments still flooding in. That tally of losses increases daily, even hourly, as property owners gain access to areas that had been inaccessible. An awful reality awaits some, returning after the passage of the flames to find generational homes razed and landscapes forever changed. “Representatives from the ICA and the insurance industry are in many bushfire-affected communities,” Kable says. “Insurance assessors are active in many affected communities. The Australian insurance industry is well placed to manage natural disasters, she says. “Claims teams and assessors have already moved into some of the affected areas and are assisting customers faceto-face. The ICA has a 24-hour catastrophe hotline that people can use if they need insurancerelated advice.”

The new hotline has, received thousands of calls in recent weeks. The ICA also hosts community forums in affected communities for local policyholders needing assistance with the insurance process. “These forums occur regularly for several months after a natural disaster of this scale,” says Kable. There’s no grace period or holding pattern in the insurance industry. Work starts on claims as soon as they are lodged and — depending on the claim and policy type — some are closed within a week of being lodged. “Twenty percent of claims lodged since September 5 have been assessed, and 50 percent closed,” Kable reports. But while the insurance industry is calmly coping with an unprecedented level of chaos, the Australian government seems less composed. Energy Minister Josh Frydenberg recently demanded insurers provide the country’s treasury with details of claims for bushfire losses. The demand was circulated to insurers by the ICA, which outlined 38 pieces of information about individual claims that

Frydenberg is requesting. The detail includes street address, the year the building was constructed, and the amount for which it was insured. The onus is on insurers to continue to provide this information for months, possibly years. Frydenberg also wants data on claims settlements, the dates of approvals by local authorities for reconstruction work, and when cash payments are made. Insurers normally provide only aggregated data about total claims to the ICA, which uses the information for the catastrophes database. The clean-up after the fires will take years, and the scale of the bureaucratic aftermath is likely to drag on as well. It is impossible to know exactly how big the task is, Kable says. “The insurance industry only works with lodged claims, rather than predicting how many claims will be made and the loss value. Insurers know how many policies they have in affected areas, but it will depend on how much of the affected area sustains loss or damage.” Home, contents, motor vehicle, business interruption,

Business Vision Winter 2019-20 Issue • www.bv.world

Scenes of Australia’s Rural Fire Service battling blazes have captivated the world

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commercial and farm insurance policies… all these need to be assessed, collated, completed. All Australian insurers will be able to pay valid claims without going under, Kable believes, thanks to reinsurance — insurance for insurers. It can be used to cover different risks and insurers use this failsafe to ensure they can claims in the event of a major disaster, such as the bushfires, but which could also come in other destructive forms: cyclones, floods, earthquakes, tsunamis. This is usually called catastrophe cover. “Insurers may also use reinsurance to cover situations where they experience claims from policyholders that are higher than a certain value, which has been agreed beforehand with the reinsurer.” Reinsurance involves a number of insurers, often from various geographic regions, that join together to share risk exposure. Thanks to the robust system, it is unlikely that even a disaster on the scale of the bushfires will

Some homes have been razed, others saved in time sound a death knell for smaller insurance companies. “Insurers make appropriate prudential and logistical provisions for natural disaster season,” Kable says.

The question of how long Australians must wait before they can be compensated for lost homes, cars, livestock — and even loved ones — is an open-

Haze, ash and smoke have blighted views of Sydney Harbour even in daylight hours.

BUSHFIRE CLAIMS Insurers have received 13, 750 bushfire catastropherelated claims since November 8, with losses estimated at $1.34 billion. The ICA is anticipating a sharp increase in the number of claims as household property assessments are undertaken and commercial claims are lodged. response to the catastrophe. The industry was represented by the ICA and chief executives and senior staff from major insurers including IAG, Suncorp, QBE, Allianz, Zurich, Commonwealth Bank and Westpac. The council reassured Frydenberg that the industry is harnessing all resources to help customers in the four states affected. Insurers said that they were dealing “compassionately and sensitively” with customers

and are ensuring the claims process runs as painlessly as possible. At the time of the meeting, insurers had received 13,750 claims from New South Wales, Victoria, Queensland and South Australia. Many more claims are expected to be lodged in coming days and weeks. Insurance losses stand at $700m. The Insurance Council’s disaster hotline has handled more than 1,000 calls per fortnight, providing guidance to householders and business owners. The ICA has also opened an online register to help local tradespeople and builders play a significant role in rebuilding their regional communities. ICA head of Risk and Operations Karl Sullivan said insurers were committed to using local trades and builders where possible. “Employing and contracting local professionals and suppliers during the rebuilding phase of bushfire recovery is an essential component in ensuring the

Business Vision Winter 2019-20 Issue • www.bv.world

ended, but optimistic, one. “This depends on when they lodge their claim,” says Kable, “the type of claim, and the way they choose to be compensated. “Cash settlements are much faster than replacements, rebuilds or repairs. “The government assists with different aspects of recovery after natural disasters. In the past they have assisted with debris removal and clean-up costs.” And few people should find themselves falling into any gaps in their policy. All Australian home and contents policies cover fire — which includes bushfire. Act of god clauses don’t exist in Australia. Kable says she is unable, at this stage, to speculate on the eventual monetary total of replacing, repairing and repatriating once all the dust and ash has settled, or what the effect will be on the country’s economy. “That’s one for an economist,” she says. Treasurer Frydenberg and Commonwealth officials recently made a statement on the industry’s

M. W. Hunt / Shutterstock.com

Tourists visiting Sydney’s iconic Opera House were met with scenes such as these.

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economic viability of communities, including the preservation of jobs and supporting local businesses and service providers,” he said. “Building professionals will still need to provide competitive quotes when contracting for work. “Experience from recent natural disasters shows insurers predominantly use local trades for most rebuilding and repair works.” Sullivan urged residents to watch out for unscrupulous repairers, or firms offering to assist with insurance claims. The Consumer Action Law Centre has also called for a crackdown on exploitative claims management services. The ICA is hosting insurance hubs to assist customers in southern New South Wales. Disaster recovery specialists from the Insurance Council and insurance companies will assist policyholders with insurance questions and help with the insurance claim process.

Sydney Opera house seen without the now-familiar smoke shroud

Hope, and new growth, spring eternal, and the tough native plants and trees are regenerating

Bezos’ billion-dollar bid to boost India’s SME business India is online as never before, and the Amazon founder is doing his bit to ensure it goes on that way

Some traders see the internet giant as having ‘a negative impact’ see as Amazon's “negative impact” on the local retail market. They say Amazon is putting them out of business by offering discounted products and favouring a few “big sellers”. The Competition Commission

of India (CCI) has launched a formal investigation into Amazon and the Walmart-owned Flipkart, the two main players in India's e-commerce market. The regulator said it would study discounts, preferential listings and exclusionary tactics that Amazon and Flipkart are alleged to have used. Amazon denies the allegations and Bezos remains upbeat. He says an India-US alliance would be most important of the 21st century — which he referred to as “the Indian century”. He praised India’s dynamism and energy and described it as a key market. “This country has something special, and it's a democracy,” he said.

Business Vision Winter 2019-20 Issue • www.bv.world

AMAZON founder and CEO Jeff Bezos is launching a £770m bid to bring India’s SMEs online. Bezos said his firm will invest the sum — a round $1bn in US currency — digitalising SMEs to allow them to sell and operate online. Amazon expects to promote and export Indian-made goods worth $10bn by 2025, and is committed to an eventual investment of $5.5bn. Bezos is in New Delhi for an e-commerce summit, and declared that Amazon would put its mighty shoulder to the export wheel. But his trip to India comes with criticism from many of the country’s small business owners. Traders in 300 cities are demonstrating against what they

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Private equity, your company and the future: keep it simple and you'll keep it sweet There are benefits to business owners of working with private equity investors for partial exits. JEREMY FURNISS explains. IN OR out? It’s not always such a simple question. Entrepreneurs are increasingly selling stakes in their businesses to private equity (PE) investors. These partial exits can be used to take some cash off the table, secure additional funds to reinvest into the company fund acquisitions or buy-out a partner. Whatever the reason, private equity has a role and, for many, it’s a compelling source of external funding. To make a minority investment from PE work, entrepreneurs should consider the deal from the point of view from a PE investor, however, as well as their own. They’ll have to put in the prep

and know what they’re doing to get the best deal… First, they need to be clear what they want to achieve. The reasons for entrepreneurs to bring in an external investor vary, but can be divided into two main areas: to provide capital to accelerate growth, or to diversify assets, create liquidity or personally “de-risk”. PE investment provides benefits in both cases. In the first instance, a mature but still growing company may need more cash than it can generate from operations alone. IMPROVING REVENUES PE can offer financing arrangements that will contribute

capital — as well as (potentially) support and counsel on improving revenues or implementing programmes that yield operational efficiencies. Most PE firms bring not only investors with money, but also experience. PE may help address a major issue for many entrepreneurs: that they have a considerable amount — often the majority — of their personal wealth tied up in the business. That might be necessary at the outset, but it represents risk in the long term. Recapitalisation should create liquidity and allow business owners to extract cash to secure their financial situation and/or to reinvest in the business.

This could be part of the incremental value PE brings to a company. It is important to work with trusted and experienced advisers during the sale process to ensure proper understanding. Expert advisers will know which of the PE’s requirements are reasonable.

Be clear about objectives and align interests Finding the right advisers is vital when bringing PE investment on board. Business owners should be careful to choose an adviser who understands the industry, as well as the process of PE investment. Advisers should be able to guide their client to investors and create a competitive process to improve the company’s value. Good PE investors should be comfortable with firms taking advice, and if not it is worth asking why. Choosing the right financial partner is the most important driver of successful investment.

Most investors have an established reputation, sector emphasis and style of transacting; entrepreneurs need to do their due diligence. That means looking not just at the firm’s reputation, but also at the individuals involved. Who is involved in the final decisionmaking process? Who sits on the Investment Committee, and is that committee excited about your company and deal? These are the people the business owner will be working with, and it’s important to develop a level of trust. Being clear about objectives is crucial to ensure that interests are aligned. PE investors and business owners should be clear about their responsibilities post-sale. The groundwork for a successful partial exit deal should begin before the search for an investor. That means having robust accounting and finance systems, a tidy balance sheet, and, where possible, at least a year of growth and an order book that shows that the company can sustain its momentum. The key component for a partial sale will always be the leadership figures.

Business Vision Winter 2019-20 Issue • www.bv.world

Despite the potential benefits, some entrepreneurs have a dim view of PE. It is inadvisable to generalise — and advisable to understand the PE perspective. When PE investors get involved they are primarily concerned about their financial returns. If they take a minority stake, and become a relatively passive investor, they have an interest in the business’s success. Success will be defined by the business plan that the management team has developed. The plan defines expectations and creates a framework for management to take care of dayto-day business. PE investors will insist on having a say on key strategic decisions, as well as certain preagreed operational issues such as CEO compensation. And they will want to be informed early if things start to go wrong. If things do go wrong, and management does not appear to able to cope, a minority PE may want to step in. In extreme cases, this may include the power to fire the CEO, or take over management of the business. This is the worst possible outcome for any PE, which needs to protect the investment. PE firms are likely to insist on formal governance structures.

* Jeremy Furniss is a partner at Arrowpoint Advisory 33

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Dedicated proponent of sustainability using ‘tool' of infrastructure finance KOMMUNALKREDIT Austria AG is headquartered in the heart of Vienna, and serves German and international markets from its branch office in Frankfurt. As a specialised bank for infrastructure and energy financing, it uses investment as a tool for answering social needs. What sets Kommunalkredit apart from other financial institutions is a dedication to benefiting communities, fighting climate change, and promoting sustainability. Kommunalkredit believes in creating values that bring shared benefit. Sustainability is one of its driving principles, along with client-centricity and operational efficiency. Tangible benefits come from the bank's economic dynamism, focus on urban development and renewal, job creation, climate change measures and social cohesion. “We are committed to continue on this path,” says CEO Bernd Fislage. “Kommunalkredit has a number of sustainability ratings from well recognised agencies; ISS oekom research rates it as a ‘Prime Company'. The consultancy firm imug assigns a rating of ‘very positive' to our covered bonds. Sustainalytics ranks Kommunalkredit‘s sustainability practices as ‘above average'. “The firm rfu (Reinhard Friesenbichler Business Consulting), a specialist in sustainable investments and sustainability analysis, assigns a status of ‘Qualified' to our sustainability rating. “The concept of sustainability is firmly embedded in our business model and processes.”

Bernd Fislage, CEO of Kommunalkredit Austria since 2018 In 1997, Kommunalkredit established an EMAS (Environmental Management System) and developed it into a system of overall sustainability management. Kommunalkredit is the first Austrian issuer of a Social Covered Bond, and it continues to develop its green bond framework. It is considering the issue of a green senior bond for 2020 to finance infrastructure projects that meet sustainable criteria under the EU taxonomy: renewable energy,

water and waste remediation and e-mobility. When it comes to acquiring new business, the bank again focuses on clear selection criteria. There is stringent emphasis on the efficient employment of capital, as well as structure, pricing and suitability for investors. Looking to the future, Kommunalkredit will bank on its core competencies to expand its activities in acquisition finance, hybrid/corporate finance and financial advisory services. It will

business (ABS, CRE, illiquid trading) in Germany, Austria and Switzerland. The CEO has also held senior positions with NatWest Markets and BHF Bank, and is a graduate of the Technical University of Darmstadt. Kommunalkredit benefits from the strengths of its modest size, he says. “We are agile and nimble, we have no silo mentality. We have rapid decision-making processes, and we can swiftly react to changes.” POSITIVE FEEDBACK The bank has attracted and retained top talent to its team, and increased repeat client servicing, winning it strong positive feedback from business partners, customers, the media and even its competitors. “We are very pleased with our achievement in setting up our Fidelio KA Infrastructure Debt Fund platform in 2018,” says Fislage, “with the first close for our debut fund requiring a total time to market of less than 10 months. We are able to offer customers access to infrastructure and energy financing via an asset management solution. “We are ambitious. We take this as an obligation to get better every day.”

Fislage says he tries to lead by example — providing value as a priority, for clients and investors, colleagues and employees, for the entire community. “I also believe in being bold,” he says, “and daring to make mistakes… I encourage my colleagues and employees to share their ideas and visions and explore out-of-the-box-concepts.” He is also a firm believer in transparency in the decisionmaking process, and the bank hosts regular business-related events and monthly townhall meetings. What does the future hold? “We will continue to broaden our product range by launching additional infrastructure debt funds under the Fidelio KA umbrella and by targeting the market for export credit financing,” says Fislage. “We will expand our market footprint across Europe with a special focus on our Austrian home market and Germany. We and aim to establish Kommunalkredit as a partner of choice for infrastructure investments, and we hope to create a better world by enabling the development of sustainable infrastructure that improves the quality of people's lives.”

Business Vision Winter 2019-20 Issue • www.bv.world

also focus on asset management on the basis of its KA Fidelio platform. Bernd Fislage has been a member of the executive board of Kommunalkredit Austria AG since February 2017, and its chief executive since September 2018. “When I was appointed CEO, Kommunalkredit was in a transformative phase (to become) an internationally recognised infrastructure business,” he recalls. “This presented us with a sub-set of challenges. “Accordingly, we have adjusted our operational capacities and we kept making progress in our optimisation process. “To stay relevant, we have to constantly adapt. As Charles Darwin said, ‘It's not the strongest that survives, nor the most intelligent that survives. It is the one that is most adaptable to change'.” Fislage has a career in banking that spans more than 25 years in leading regional and global management positions. He was globally responsible for Deutsche Bank's asset finance (infrastructure, energy, transportation, structured transaction group). In regional terms, he conducted Deutsche Bank's structured finance

Vienna, home of Kommunal Kredit Austria AG, reflected in the blue Danube

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Ari Askhara

Garuda chief takes legal flak for dodgy importation of some Milwaukee metal...

PEOPLE

HARLEY-Davidson is a company that is all about image, and it tends to plump for iconic themes to pump-up a prospective owner’s self-image. Think freedom. Tassels and chrome. And, er, eagles. Indonesia's national airline Garuda is also linked with the freedom of travel, and great birds. (The eponymous Garuda of Hindu legend is half-man, half-bird.) Not so unusual, then, that the head of the Indonesian airline, Ari Askhara, is a fan of Milwaukee metal. But that could cost him his job. Not owning a Harley, which is still legal, but for illegally bringing one of the machines into the country. Garuda CEO Askhara was recently accused of failing to declare the importation of a Harley Davidson (and two folding bicycles, for reasons which haven’t been made clear). Indonesia's finance minister said Askhara skipped the equivalent of a cool £82,000 in customs duties. Which is pretty scary if you live in the region and fancy bringing in a hog of your own. Garuda has faced other questions in recent months — a question mark over financial results for 2018, for example — so the bike smuggling attempt from France is just a bit more weight for it to bear. “This process was done completely within a state-owned company, not only by an individual,” Reuters quoted State-Owned Enterprises Minister Erick Thohir as saying. Thohir said payment for the bike was made via an Amsterdam-based finance manager for Garuda, and investigations into the importation were continuing at the time of writing. Askhara took up the CEO role at Garuda in 2018. The investigation was on-going at the time of going to press, so this is another one to watch from the sidelines. Will the eagle fly free...? If Askhara faces the ultimate penalty and is sacked as a result of the Harley importation scandal, here’s hoping he has found something cooler than a folding bike to ride in his soonto-be-free time.

Disconnect between the C-suite, IT and the general workforce on digitalisation embracing digitalisation as a collaborative effort between business and IT. Just 12 percent are “highly satisfied” that planning is flowing effectively through to execution, and almost half (49 percent) of transformation projects are still IT-led. Wayne Speechly, VP of Advanced Competencies, NTT, said: “Organisations should focus less on perfecting a grand digital plan, and more on taking considered and iterative steps in their transformation journey. “For various reasons, an organisation (can be) its own worst enemy, so any change has to be supported by pragmatic, self-aware leadership.” The research project was comprehensive. It surveyed more than 1,150 executives from 15 countries across North America, Europe, the Middle East, Africa and Asia Pacific, and from 11 industry verticals. The results provide an insight into how these leaders perceive the business opportunities presented by digital transformation, the delivery challenges experienced in realising a digital transformation strategy, and the value being achieved.

Business Vision Winter 2019-20 Issue • www.bv.world

JUST 11 percent of organisations are highly satisfied with those leading the charge for digital transformation — even though almost 75 percent are already on the path. According to NTT Ltd’s 2019 Digital Means Business report, organisations worldwide are achieving some success with digital transformation, but there’s still a need for radical change in leadership style and focus. Some 71 percent of organisations canvassed, all of which were in the early stages of digitalisation, believe a complete restructuring of the business and operating models is called for. Only 49 percent of respondents believe their leadership team has the requisite skills. New behavioural priorities and performance indicators were flagged as lacking in the drive for a more proactive, tactical transformation. The research also revealed a direct correlation between organisations’ ability to regularly realise outcomes-driven value from the transformation and their digital maturity. But only 29 percent of organisations are

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Democratic leadership in a populist and algorithmic age The uses and abuses of data by Facebook and other tech companies are attracting official attention. Will users be the platform economy’s masters, or its slaves? MARIANA MAZZUCATO investigates. PROSPECTS for democratising the platform economy remain dim. Algorithms are developing in ways that allow companies to profit from our past, present, and future behaviour — or what Shoshana Zuboff of Harvard Business School describes as our “behavioural surplus”. In many cases, digital platforms already know our preferences better than we do, and can nudge us to behave in ways that produce still more value. Do we really want to live in a society where our innermost desires and manifestations of personal agency are up for sale? Capitalism has always excelled at creating new desires and

cravings. But with big data and algorithms, tech companies have both accelerated and inverted this process. Rather than just creating new goods and services in anticipation of what people might want, they already know what we will want, and are selling our future selves. Worse, the algorithmic processes being used often perpetuate gender and racial biases, and can be manipulated for profit or political gain. While we all benefit immensely from digital services such as Google search, we didn’t sign up to have our behaviour catalogued, shaped, and sold. To change this will require focusing directly on the prevailing

Mariana Mazzucato: ‘They know our preferences’

business model, and specifically on the source of economic rents. Just as landowners in the seventeenth century extracted rents from landprice inflation, and just as robber barons profited from the scarcity of oil, today’s platform firms are extracting value through the monopolisation of search and e-commerce services. To be sure, it is predictable that sectors with high network externalities — where the benefits to individual users increase as a function of the total number of users — will produce large companies. That is why telephone companies grew so massive in the past. The problem is not size, but how network-based companies wield their market power. Today’s tech companies originally used their broad networks to bring in diverse suppliers, much to the benefit of consumers. Amazon allowed small publishers to sell titles (including my first book) that otherwise would not have made it to the display shelf at your local bookstore. Google’s search engine used to return a diverse array of providers, goods, and services. But now, both companies use their dominant positions to stifle competition, by controlling which products users see and favouring their own brands (many of which have seemingly independent names). Meanwhile, companies that do not advertise on these platforms find themselves at a severe disadvantage. As Tim O’Reilly has argued, over time, such rent seeking weakens the ecosystem of suppliers that the platforms were originally

created to serve. Rather than simply assuming that economic rents are all the same, economic policymakers should be trying to understand how platform algorithms allocate value among consumers, suppliers, and the

platform itself. While some allocations may reflect real competition, others are being driven by value extraction rather than value creation. Thus, we need to develop a new governance structure,

which starts with creating a new vocabulary. For example, calling platform companies “tech giants” implies they have invested in the technologies from which they are profiting, when it was really taxpayers who funded the key underlying technologies — from the Internet to GPS. Moreover, the widespread use of tax arbitrage and contract workers (to avoid the costs of providing health insurance and other benefits) is eroding the markets and institutions upon which the platform economy relies. Rather than talking about regulation, then, we need to go further, embracing concepts such as co-creation. Governments can and should be shaping markets to ensure that collectively created value serves collective ends. Likewise, competition policy should not be focused solely on the question of size. Breaking up large companies would not solve the problems of value extraction or abuses of individual rights. There is no reason to assume that many smaller Googles or Facebooks would operate

Business Vision Winter 2019-20 Issue • www.bv.world

Governments are creating platforms to identify citizens, collect taxes, and provide public services.

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differently or develop new, less exploitative algorithms. Creating an environment that rewards genuine value creation and punishes value extraction is the fundamental economic challenge of our time. Fortunately, governments, too, are now creating platforms to identify citizens, collect taxes, and provide public services. Owing to concerns in the early days of the Internet about official misuse of data, much of the current data architecture was built by private companies. But government platforms now have enormous potential to improve the efficiency of the public sector and to democratize the platform economy. To realise that potential, we will need to rethink the governance of data, develop new institutions, and, given the dynamics of the platform economy, experiment with alternative forms of ownership. To take just one of many examples, the data that one generates when using Google Maps or Citymapper — or any other platform that relies on

‘Go back and read Adam Smith — his ideal of a free market was free of rents’ taxpayer-funded technologies — should be used to improve public transportation and other services, rather than simply becoming private profits. Of course, some will argue that regulating the platform economy will impede market-driven value creation. But they should go back and read their Adam Smith, whose ideal of a “free market” was one free from rents, not from the state. Algorithms and big data could be used to improve public services, working conditions, and the wellbeing of all people. But these technologies are currently

being used to undermine public services, promote zero-hour contracts, violate individual privacy, and destabilise the world’s democracies — all in the interest of personal gain. Innovation does not just have a rate of progression; it also has a direction. The threat posed by artificial intelligence and other technologies lies not in the pace of their development, but in how they are being designed and deployed. Our challenge is to set a new course.

Mariana Mazzucato is Professor of Economics of Innovation and Public Value and Director of the UCL Institute for Innovation and Public Purpose (IIPP). She is the author of The Value Of Everything: Making And Taking In The Global Economy, which was shortlisted for The Financial Times-McKinsey Business Book of the Year Award.

SAME VALUES

NEW

DRIVE NADER JABER WINNER OF THE 5K & 10K LEBANESE CHAMPIONSHIPS

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We have the tools and the technology to work less — and live better as a result John Maynard Keynes and the five-day week; how did we come up with five on, two off...? TOBY PHILLIPS investigates IN 1930, a year into the Great Depression, John Maynard Keynes sat down to write about the economic possibilities of his grandchildren. Despite widespread gloom as the global economic order fell to its knees, the British economist remained upbeat, saying that the “prevailing world depression … blind[s] us to what is going on under the surface”. In his essay, he predicted that in 100 years' time, ie 2030, society would have advanced so far that we would barely need to work. The main problem confronting countries such as Britain and the United States would be boredom, and people might need to ration out work in “three-hour shifts or a 15-hour week [to] put off the problem”. At first glance, Keynes

John Maynard Keynes with Lydia Lopokova 42

‘World depression blinds us to what is going on under the surface’ seems to have done a woeful job of predicting the future. In 1930, the average worker in the US, the UK, Australia and Japan spent 45 to 48 hours at work. Today, that is still up around 38 hours. LEGENDARY STATURE Keynes has a legendary stature as one of the fathers of modern economics — responsible for much of how we think about monetary and fiscal policy. He is also famous for his quip at economists who deal only in longterm predictions: “In the long run, we are all dead.” And his 15-hour working week prediction might have been more on the mark than it first appears. If we wanted to produce as much as Keynes's countrymen did in the 1930s, we wouldn't need everyone to work even 15 hours per week. If you adjust for increases in labour productivity, it could be done in seven or eight hours, 10 in Japan. These increases in productivity come from a century of automation and technological advances: allowing us to produce more stuff

with less labour. In this sense, modern developed countries have way overshot Keynes prediction — we need to work only half the hours he predicted to match his lifestyle. WORKPLACE EFFICIENCY The progress over the past 90 years is not only apparent when considering workplace efficiency, but also when taking into account how much leisure time we enjoy. First consider retirement: a deal with yourself to work hard while you're young and enjoy leisure time when you're older. In 1930, most people never reached retirement age, simply labouring until they died. Today, people live well past retirement, living a third of their life workfree. If you take the work we do while we're young and spread it across a total adult lifetime, it works out to less than 25 hours per week. There's a second factor that boosts the amount of leisure time we enjoy: a reduction in housework. The ubiquity of washing machines, vacuum cleaners and microwave ovens means that the average US household does almost 30 hours less housework per week than in the 1930s. This 30 hours isn't all converted into pure leisure. Indeed, some of it has been converted into regular work, as more women — who shoulder the major share of unpaid domestic labour — have moved into the paid labour force. The important thing is that, thanks to progress in productivity and efficiency, we all have more

applies to vaccines, refrigerators, renewable energy and affordable toothbrushes. Globally, people enjoy a standard of living much higher than in 1930 (and nowhere is this more true than in the Western countries that Keynes wrote about). We would not be content with a good life by our grandparents' standards.

‘Pursuing the arts of life as well as the activities of purpose' We also have more people working in jobs that are several steps removed from subsistence production. As economies become more productive, employment shifts from agriculture and manufacturing to service industries. Thanks to technological and productivity progress, we can deal with all of our subsistence needs with very little labour, freeing us for other things. Many people today work as mental health

counsellors, visual effects artists, accountants, vloggers — and all of them do work that is not required for subsistence. ECONOMIC SUBSISTENCE Keynes's essay argues that more people will be able to pursue ‘the arts of life as well as the activities of purpose' in the future, implicitly framing these activities as separate from the menial world of subsistence work. In actual fact, the world of work has simply expanded to include more activities — such as care work, the arts and customer service — that did not feature significantly in Keynes's estimation of solving the problem of economic subsistence. Finally, persistent social inequality also helps the 40-hour week persist. Many people have to work 30- to 40-hour weeks simply to get by. As a society, on aggregate, we are able to produce enough for everyone. But unless the distribution of wealth becomes more equal, very few people can afford to cut back to a 15-hour working week. In some countries, such as the US, the link between productivity and pay has broken: recent increases in productivity benefit only the top tier of society. In his essay, Keynes predicted the opposite: a levelling and equalisation, where people would

Business Vision Winter 2019-20 Issue • www.bv.world

control over how we spend our time. So if today's advanced economies have reached (or even exceeded) the point of productivity that Keynes predicted, why are 30- to 40-hour weeks still standard in the workplace? And why doesn't it feel like much has changed? This is a question about both human nature — our ever-increasing expectations of a good life — as well as how work is structured across societies. INSATIABLE APPETITE Part of the answer is way-oflife inflation: humans have an insatiable appetite for more. Keynes spoke of solving “the economic problem, the struggle for subsistence”, but few people would choose to settle for mere subsistence, “pursuing the arts of life as well as the activities of purpose”. Humans live on a hedonic treadmill: we always want more. Rich Westerners could easily work 15 hours a week if we forgo the trappings of modern life: new clothes and Netflix and overseas holidays. This might seem trite when talking about consumer goods, but our lives are better across many other important dimensions, too. The same logic that applies to Netflix also

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The Great Depression threw a lot of things into turmoil, and started some workplace traditions

work to ensure other peoples' needs were met. In one sense, you can see this in the social safety nets that didn't exist back in 1930. Programmes such as social security and public housing help people get over the low bar of the economic problem of base subsistence, but they are insufficient to properly lift people out of poverty, and insufficient to meet Keynes's ideal of giving everyone a good life. HUMAN QUALITIES In his essay, Keynes disdained some of the core tendencies of capitalism, calling the money motive “a somewhat disgusting morbidity” and bemoaning that “we have exalted some of the most distasteful of human qualities”. Of course, these human qualities — “avarice and usury and precaution” — drive progress forward. And striving for progress is no bad thing: even Keynes acknowledged that these tendencies are necessary to “lead us out of the tunnel of economic necessity”. But at some point we should

look back to see how far we have come. Keynes was right about the amazing advancements his grandchildren would enjoy, but wrong about how this would change overall patterns of work and distribution, which remain stubbornly fixed. It doesn't need to be so.

Our collective inertia will mean that we will never reach Keynes’ 15hour week In developed countries, at least, we have the technology and tools for everyone to work less and still live highly prosperous lives, if only we structure our work and

society towards that goal. Today's discussions about the future of work quickly end up in fanciful predictions of total automation. More likely, there will continue to be new and varied jobs to fill a five-day work week. And so today's discussions need to move beyond the old point about the marvels of technology, and truly ask: what is it all for? Without a conception of a good life, without a way to distinguish progress that's important from that which keeps us on the hedonic treadmill, our collective inertia will mean that we never reach Keynes's 15-hour working week. ** This story first appeared in Aeon magazine

Toby Phillips is the head of research and policy at the Pathways for Prosperity Commission, at Oxford University's Blavatnik School of Government

Shake-up long overdue in pensions sector, study shows to support pensioners. Steve Watson, head of proposition of Smarterly, said pension legislation had changed in recent years. Those changes, and financial pressures, have seen a move away from defined benefit schemes to defined contributions schemes. But the products themselves have remained the same and there is very little innovation the market, he said. “With employers now legally obliged to enrol their employees into a pension scheme, existing providers are under very little pressure to innovate. “They still seek to compete on cost, of course, but with a captive audience, providers see no need to design ground-breaking products or offer outstanding levels of service — they know that

there is ample business out there.” Given these difficulties, more than half of UK employers (54.4 percent) plan to carry out a pension review in the next six months. They are likely to be disappointed when they go back to the market. If their current schemes are failing young employees and higher earners alike, they are unlikely to find anything radically different on the shelves. “Employers are unhappy about the status quo in the pensions market,” said Watson. “Legacy providers are simply not doing enough to keep up with the new generation.” The research took into consideration the views of 250 HR professionals working in businesses with a workforce of 300+ employees.

Business Vision Winter 2019-20 Issue • www.bv.world

ALMOST 90 percent of UK employers will review their pensions providers this year, 65 percent say providers are not doing enough to offer new products, and 63 percent want to see a new disrupter enter the market. While the last 20 years has seen a shift away from final salary schemes to defined contribution plans, little else has changed. The majority of respondents to a survey by investment firm Smarterly felt the UK pensions market was “crying out” for fresh ideas and innovation. The study shows 87 percent of employers intend to review their pension providers in 2020, with the overriding impression that customer service levels have fallen to the provision of a minimum service. ANCIENT ORIGINS Pensions date back to ancient Rome, a reward, initially, for soldiers after their years of service. The first state pension came in Germany in 1890, and the system has spread to become global. Or not, as the case may be. Support in old age is not guaranteed around the world, and up to a third of the world's older people have no pension. Those that do often struggle to survive on the amount they receive. In developed countries, there is an assumption that workers will be financially cared for in old age — but that assumption is increasingly in doubt. The challenge to the existing system is one of demographics and, ironically, improved healthcare. Life expectancy has increased, while the number of workers coming into the system — thanks to decreasing birth rates — has fallen below the number required

Autumn years: is the pensions sector up to scratch?

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Cover your assets, directors — and that means sides A and B Attorney SARAH COUTTS explains the niceties (and nastiness) of insolvency protection

WHILE the past decade initially saw a decrease in the number of insolvencies, after a peak in 2009, there has been a steady increase once again, particularly in the UK retail, hospitality and travel sectors. Companies purchase D&O to provide cost protection for directors and officers from investigations and claims which may arise from the decisions taken by them in their capacity as directors or officers of the company they are helping to run. As they can be held personally liable for their decisions, the policy protects their personal assets. The most notable rise is in the number of Side A claims being made under directors and officers (D&O) insurance policies. There is a growing need to ensure that insured individuals are able to fully access their D&O insurance cover. Side A provides cover for the personal liability of insured individuals. It is usually triggered if the policyholder company refuses to, or is unable to, protect or indemnify its D&O risks. It may also be triggered in an “insured versus insured” situation if the company has to take action against its own directors or officers. There is no excess payable under Side A, meaning that the policy will provide an indemnity to D&O risks from the ground up. Side B provides company reimbursement cover, where the company steps in and indemnifies the director or officer in the first instance — either in line with its Articles, due to statute or regulation, or due to prior contractual agreement. Under

Take cover when there is a dispute... Side B, an excess is usually payable; this is an amount payable by the policyholder company before insurers are liable to provide an indemnity. There is a significant amount of legislation and regulation setting out the extensive duties and responsibilities directors and officers owe to the company they work for and its shareholders. These include promoting the success of the company, acting within their powers, exercising independent judgement, exercising reasonable skill, care and diligence, and avoiding conflicts of interest. In a litigious environment, these prescriptive lists of directors’ duties can leave them increasingly exposed to action from a variety of third parties, including the regulators themselves. Globalisation means that international organisations face claims from a variety of

jurisdictions, and regulatory activity has increased in the wake of the financial crisis. It is therefore only right for directors and officers to expect the company they run to indemnify them when claims are made against them. While they may have this obligation memorialised in the company’s Articles or by a Deed of Indemnity, in reality that indemnification may not be as forthcoming. Directors face additional exposures in the event of insolvency, as the duties they owed to the company’s shareholders shift to the company’s creditors, and the creditors themselves will be searching for avenues to recover their resultant losses. A very recent English court decision has confirmed that directors’ duties survive a company’s entry into administration. The director in the claim was found to have breached his duty to act in the

allegations directly against the director or officer (for, say, misconduct in office). Regulatory investigations can also give rise to conflicts, not only between an individual and the company, but between individuals who are identified and questioned by the Regulator in the course of its investigation. A board dispute may also result in two (or more) insured individuals taking action against one another.

The defence of one party can implicate another In any of these scenarios, the defence of one party could implicate another party. As a result, the company will not be able to indemnify the insured individuals, meaning that each director or officer will need to make a Side A claim under their D&O policy. A company may refuse to indemnify its leadership based on reputational reasons. In the current climate of event-driven litigation, such as that arising from the #MeToo campaign,

shareholders are increasingly bringing claims against companies and their directors or officers. The company may not want to be seen to be providing support to an individual who is facing allegations of serious criminal misconduct. Movements such as #TimesUp have amassed legal funds of over $20m to support and finance claims of sexual harassment, which will often target non-offending directors for turning a blind eye to the misconduct. Side A cover is a critical safety net for D&Os. It is there to fund the costs they incur in defending themselves in investigations or claims arising from the decisions they have made in running a company. It also covers the amount they may become legally obligated to pay to the claimant/s. Side A cover will also ensure that personal assets of the director. It would be wise to take steps to ensure they are able to access that cover. If a director or officer becomes the target of a claim or investigation, they should be prepared to seek cover under the policy themselves without the company’s support.

* Sarah Coutts is Complex Claims and Disputes Team advocate, Marsh JLT Specialty Business Vision Winter 2019-20 Issue • www.bv.world

interests of creditors when he purchased an undervalued house owned by the insolvent company, rather than insisting it was sold on the open market. Regulators will also be taking an interest in the failure of the company, with directors and officers often a key target in investigations which can be long and costly. Insolvency practitioners consider insurance claims a potential asset in an insolvency and will often look to progress claims against the company’s leadership for wrongful trading, breach of fiduciary duty, fraudulent trading or other misconduct. While directors and officers may be at risk of adverse actions, once the company enters into insolvency it is no longer able to provide an indemnity to them. They will have to notify and manage their insurance claim themselves to ensure full access. If there is an actual or perceived conflict between a director or officer’s interests and those of the company, the individual should make a Side A claim. This most commonly occurs where the company is bringing the claim against the director or officer. This may be in the form of a derivative action, one brought by shareholders, acting on behalf of the company, against the individual. Alternatively, the company itself may make

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Rate and pillage: how can SMEs challenge the system? By MARTIN DAVENPORT BUSINESSES on the high street are in trouble, partly due to the current economic climate — but the current rating system is playing a part. Businesses rates payable equate to almost 50p in the pound each year, and suffer from a complex appeals process. Struggling businesses need to take creative steps, such as popups stores or multi-use sites, to survive. But to do this they must change the official use of their property (from retail to leisure, for example) and the applicable rate — and this is where they are facing another hurdle. The rates system known as CCA (Check, Challenge and Appeal) is cumbersome and slow. To submit a challenge, the burden of proof lies with the ratepayer and the process of submitting checks is complex and unpredictable. This is tricky for unrepresented ratepayers, as there is a requirement for any business to be registered on the government gateway before making an appeal. The process discourages appeals, because of ignorance or the complexity of the system. One option is converting a former office or retail property into a yoga studio, gym or leisure club. Rateable values are inconsistent as properties like this are valued on their former use. If a yoga studio takes on a former office site, the rates still reflect the office rate. To achieve a fairer system for SMEs, the “mode and category of use” when valuing property for rating purposes should be taken into account. This would mean more reasonable values in the first place and, over time, encourage businesses to consider innovation. There are some avenues open to SMEs wanting to get their rates

reduced. If a business has one property with a rateable value of less than £12,000, it can apply for small business rate relief. This is 100 percent and can sometimes be backdated. The ratepayer can do this via the charging authority and completing a form online. But it does not immediately benefit to multiple retailers due to the size of the threshold, and EU limit on state aid.

Martin Davenport To challenge a rate and set up an account on the government gateway is relatively simple. Once registered and with the property claimed, an agent can be appointed, and checks made. These relate to physical factors, not the value of the property. Once registered, ratepayers can get rates reduced or eliminated during a refurbishment or changeof-use. Appeals for disturbance due to roadworks or building work can be submitted, as well as for splits or mergers. All supporting documents must be submitted by the ratepayer up-front and, because of this requirement, the Valuation Office Agency (VOA) is more likely to agree the check — a positive aspect of the system. Following the check process, a challenge can be made. All

evidence needs to be submitted at the time of the challenge; should evidence be submitted later, it will not be admissible. If relevant evidence arrives at a later stage, why should it be discarded…? Despite this, businesses can still work with the system. Central discussions are taking place to check whether the level of rateable value in a number of UK towns and cities is incorrect. The result should be available soon to those who have participated — and could mean rate reductions back-dated to April 2017. To further support businesses and encourage fewer empty properties on the high street, there are key changes that the government could consider. These include increasing the small business rate relief threshold to £30,000 rateable value, doubling retail relief to 66 percent, and increasing the rateable value threshold to £100,000. Abandoning any link with EU state aid will also help. Right now, there does not appear to be much will to change the system, apart from more frequent revaluations. The government is working on the 2021 revaluation with a valuation date of April 1, 2019. In the meantime, SMEs can navigate the current system by reviewing these options and gaining a better understanding of the processes. Although cumbersome, there is a helping hand during a tough trading period. * Martin Davenport is partner and head of business rates at Hartnell Taylor Cook and former president of the Rating Surveyors Association

Poor investing leaves UK SMEs missing out big time UK SMEs are holding record levels of cash as uncertainty surrounding Brexit persists after the fact — and it is costing them billions of pounds. In the past 12 months, SME cash reserves have increased by more than three percent to £333bn — the highest level on record, according to analysis by the Centre for Economic and Business Research (CEBR). Nearly 58 percent of all SME cash reserves are held in instantaccess accounts. By doing this, firms are missing out on billions of pounds in interest. With SMEs currently holding £191bn in instant-access accounts and receiving an average rate of 0.41 percent, they are on track to earn £566 m in interest in the

Switching to leading instant-access rate would save billions coming year. If they were to switch to a market-leading instant-access rate of 1.40 percent, they would earn £2.7bn — £2.1bn more. UK SMEs currently hold £141bn in fixed-rate deposit accounts earning on average 0.86 percent, meaning they are

expected to earn £1.2bn in the next 12 months. If they invested at the 1.95 percent one-year fixed rate, they would collectively earn £2.8bn in interest: £1.6bn more. That would fund a year of salaries for more than 123,360 workers on the UK average annual salary of £29,588. Separate research conducted by YouGov on behalf of Flagstone (which commissioned the study) reveals why SMEs are reluctant to shop around for a better rate. Almost four in ten of the 500 firms surveyed said the hassle of opening an account is the greatest barrier; around a third said the perceived risks of depositing money with a challenger or nonhigh-street bank was the biggest deterrent.

Business Vision Winter 2019-20 Issue • www.bv.world

The lingering effects of Brexit are haunting Britain’s small business operators

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Go-ahead Lisbon gets a head start on 2020 with European Green Capital classification JASON AGNEW reports on the Portuguese city that has taken its place in an elevated environmental milieu LISBON has become the first national capital in the south of Europe to be awarded the European Green Capital title. Although the prize was lifted by the Basque city Vitoria-Gasteiz in 2012 (geographically in the south of the continent, even if the populace don’t feel that they are), the only previous national first cities to achieve the accolade have been the Scandinavian triumvirate of Stockholm, Copenhagen and Oslo, along with Ljubljana in Slovenia. What makes Lisbon’s journey to sustainability exceptional is that it started during a

Inspiration, and a model for many cities around EU period of economic crisis. The transformation provides inspiration and a model for many cities across the EU, demonstrating that sustainability and economic growth go handin-hand. Economic difficulties

no longer cut it as an excuse for environmental inaction. So, how did this port city in the Tagus estuary, founded by the Phoenicians three millennia ago, manage to pull off such a remarkable conversion? When the Socialist leader Antonio Costa won the elections in November 2015, he hit the ground running in tying economic growth to green policies, determined to prove that there is no mutual exclusivity. The progressive government has led the way in the decriminalisation of drug consumption — with unprecedented success in

The 25 de Abril Bridge links Lisbon with Almada on the south bank of the Tagus River

reducing the rate of addiction. Costa’s administration, in the words of the jury, “showed how to turn environmental challenges into opportunities, and make their cities healthy and enjoyable places to stay, live and work in, using best-practice environmental management, good urban planning, and citizens at the heart of their green transformation”. Lisbon was the first capital in Europe to sign the New Covenant of Mayors for Climate Change and Energy in 2016. To be fair to previous administrations, this was done after achieving a 50 percent reduction in C02 emissions (2002-14); reducing energy consumption by 23 percent, and water consumption by 17 percent, from 2007 to 2013. Costa was continuing a transformation he had already contributed to while mayor of Lisbon from 2007 to 2015. In the last few decades of the 20th century, Lisbon, like many cities, experienced population decline as people moved out to the suburbs. This caused an increase

in traffic as people commuted by road to the centre. To counter this, a Sustainable Energy Action Plan was drawn up in 2002. This concentrated on the transport sector, which managed to reduce its consumption by over a third by 2012. URBAN MOBILITY Lisbon has a clear vision for sustainable urban mobility and has introduced measures restricting car use and prioritising cycling, public transport and walking. In common with other urban centres, Lisbon has introduced a public bike-sharing scheme — and two-thirds of Lisbon's fleet is made up of electric cycles because of its hilly topography. The Portuguese capital also boasts one of the world's most extensive vehicle-charging networks, with 516 plug-in points around the city. Two in five vehicles in the municipal car fleet are now electric; the local council is leading by example. The council has also increased bus and tram routes: 93 percent of the population live within

300 metres of a public transport service. It has also converted derelict land into sustainable green spaces and has developed an infrastructure to counter the effects of climate change and encourage people back into the CBD. Repopulation has been a mixed blessing, as property prices in traditional areas such as Alfama have seen prices rocket, forcing local families out as gentrification takes hold. The current mayor, Fernando Medina, banned all plastic cups, dishes and cutlery from its schools in 2018 and offered freshly cooked meals to all pupils. As of 2020, the ban has been extended to the city's bars and restaurants. Shops are no longer allowed to sell fruit, vegetable or bread in plastic packaging. These measures demonstrate that where there is a political will, administrations can make a marked difference in improving the environment while fostering economic growth.

Business Vision Winter 2019-20 Issue • www.bv.world

Britain’s Edward VII visited Lisbon in 1903 and gave his name to the largest park in the city

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What is reneging, and why do some firms seem to be struggling with it? By CHARLES HIPPS RENEGING on job offers is becoming an increasingly popular trend, particularly among graduates. Research shows that nearly one offer in 12 (8.2 per cent) was reneged upon — after being accepted. Turning down a job offer — let alone reneging on one — would have been unthinkable a few years ago, when post-graduate employment was harder to come by. But there has been a generational shift. Baby Boomers are leaving the workforce, creating skills gaps which organisations are struggling to fill. This allows qualified applicants to hoard offers and select the best one. In essence, it is a case of supply and demand. Promising candidates can afford to delay and consider counter-offers before accepting a post. CULTURAL SHIFT This has caused a cultural shift, enabling Millennials to be more open-minded about their careers. Millennials are happy to think with their feet, and often prefer a healthy work-life balance to a high salary. Earlier generations were afraid to ask for flexibility: work came first. But many grew up in a recession and saw their parents suffer despite working long hours;

that has changed their attitudes to work. The addition of technology means it is also much easier for them to work remotely. Fresh innovations in communications, IT and demographics mean hiring policies must change. Each post attracts high volumes of applications. Technology does the heavy lifting in the new normal of talent acquisition, and is the most powerful tool a recruiter can have. AUTOMATED RESPONSES By setting-up automated responses, recruiters are able to “keep the candidate warm” while they wait. Individuals with rare and sought-after skills make new connections earlier and earlier. If HRDs fail to track and make their own connections with them, they’ll lose the first bite of the recruitment cherry. Relationships are digital now, and the best firms will create propositions of digital value that talk to those they’re attracting as well as existing staff. HRDs must engage with talent at virtual events and encourage existing staff to be brand advocates. Technology helps to identify potential. Sifting through hundreds of CVs is timeconsuming, and using video or psychometrics can help. Firms that understand

recruitment will know that success depends on relationships. Even when dealing with people they won’t hire, smart firms know they need to create some level of engagement — even if that’s just feedback. Why? The candidate who was turned down today could be perfect for the job a few years down the line. Appearing on the right social media sites, building talent pools and using Big Data will also play pivotal roles in attracting talent. This will require investment in agile development processes, well-developed APIs, flexible data structures, configurable systems and security that is fully futureproofed. UNCHARTED WATERS The answer to the reneging problem is simple: make people take stock of their recruitment practices and revisit how they work. Recruitment procedures need to constantly improve and evolve. Reneging is considered the trend of the moment, and these unchartered waters seem deep and scary — but with the right tools and technologies you can limit its impact and control the level of it.

Charles Hipps is the CEO and founder of Oleeo

New employee demands are haunting employers in 2020 MORE than one in 10 office workers have admitted to “professional ghosting” when applying for a job over the last 12 months, according to new research. Nearly one in six (14 percent) office workers admitted to the practice when going through the recruitment process, with the average worker ghosting prospective employers twice a year. Professional ghosting refers to a potential employee avoiding communication with a company during the application process. It is more common among younger workers, with a quarter of under 35-year-olds admitting to the practice, compared to just five percent of workers who are aged over 45. Ghosting is symptomatic of the current “buyer’s market”, with employment levels reaching

record highs in 2019. Job seekers are juggling multiple offers, putting the onus on employers to review their talent attraction strategies — and for them, that encompasses more than remuneration alone. FLEXIBLE HOURS A third of employees said they would decline a job offer that did not include flexible working hours, and the average employee is prepared to take a three percent pay cut in return for the option to work outside of “normal” office hours. A bonus is a deal-breaker too, with 14 percent of workers saying they would reject a job offer if that wasn’t part of the proposal; 12 percent would do the same if they were not able to work from home at least once a week. A third of workers (32 percent) would take a pay cut if a company offered them other benefits, such

as a gym membership. Separate to employee benefits, company culture is also important to prospective employees, particularly the younger generation. Two in five workers said that company culture is more important than salary, rising to 43 percent for under 35-yearolds compared to 29 percent of workers aged over 45. Matt Weston, managing director at recruitment firm Robert Half UK, which carried out the study, said business leaders had to review their employee attraction strategies. “Where the recruitment process was once entirely driven by the employer’s timetable, the war for talent is seeing a powershift towards in-demand talent which is feeding the growing trends of professional ghosting,” he said.

31%

52%

12% 5% 2%

11%

Flexible working hours

Bonus

Ability to work from home at least once a week

Above average employer contribution to pension

Employee wellbeing packages

Above average maternity / paternity packages

Unlimited annual leave

Share options

Gym membership

Leisure/games facilities in the office

Business Vision Winter 2019-20 Issue • www.bv.world

14%

None of the above

Many said they would consider rejecting a job offer if benefits or perks were not offered

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Reinsurance industry needs to be ready to confront challenges of a new decade AN INABILITY to deploy new technologies and a lack of readiness to confront structural change top the list of risks facing the global reinsurance industry. This comes from a biannual risk report by PwC. Entitled Reinsurance Banana Skins 2019, it reveals fears that the industry is grappling with legacy IT systems as new data sources proliferate. Another major concern, listed as second in importance, is cyber risk, because of the unknown liabilities of underwriting cyber policies, and the threat of cyberattacks against insurance companies. Closely linked to these worries, the report notes, is the industryâ&#x20AC;&#x2122;s concern around change

Groundbreaking advances in risk analytics management. This reflects worries about insurance markets being upended by new technologies, and radical shifts in customer expectations. Technology has opened-up a proliferation of data from new sources â&#x20AC;&#x201D; such as sensors and Internet of Things connectivity

â&#x20AC;&#x201D; while ushering-in groundbreaking advances in risk analytics. The results are revolutionising risk evaluation and prevention. The big risk for reinsurers was being left behind as the industry transforms, says Arthur Wightman, territory leader of PwC Bermuda, and insurance leader of PwC in the Caribbean. In this scenario, the front-runners recognise that talent and access to data are as important as the systems themselves in navigating change. The inclusion of cyber risk so high on the list of banana skins reflects the accumulation of exposures and risk of unforeseen losses in portfolios on one hand, and the potential vulnerabilities

No slip-ups... The Reinsurance Banana Skins report reveals fears about cyber attacks

within reinsurers’ digitalised operations on the other. “Successful technological transformation isn’t just a systems issue,” Wightman says. “It demands buy-in and upskilling throughout the organisation. The workforce needs to embrace change and see it as an opportunity.” The third-biggest concern on the list is climate change — which received its highest-ever score. The reinsurance industry expressed anxiety about the costs of mounting claims from more frequent and more severe natural disasters, and the prospect that some risks could become uninsurable. REGULATION RISK Rounding-out the top five is regulation risk, up from eighth place two years ago. This is largely due to concerns about a raft of new rules such as the EU General Data Protection Regulation and IFRS 17. The remainder of the top 10 mostly focus on operating risks. “The impact of climate change is at number three, a new entry in the top 20 and noticeably higher than for the insurance industry as a whole,” the report states. “From floods to wildfires, the frequency of events and the severity of reinsurers’ losses are mounting as once-sporadic events become almost commonplace. “Even greater risks lie ahead if climate change continues on its current trajectory. Through modelling of the vulnerabilities and their impact, reinsurers have a central role to play in strengthening prevention and resilience worldwide.

‘Even greater risks lie ahead if climate change continues on its current trajectory’ reinsurance industry. “Respondents were more sanguine about the macroeconomic environment (11) and interest rates (14), which were down significantly from 2017 — although the survey was taken early in 2019 before concern around current interest rate declined,” the report notes. In the bottom half of the table, governance risks were generally seen as under control, particularly corporate governance (18) and business practices (15) — although quality of management is more of a concern for the reinsurance industry. The bottom cluster — including social change (18), capital availability (19), and the

Arthur Wightman UKs departure from the EU (20) — are largely unchanged. The survey also shows the extent to which the reinsurance industry shares risks with the broader insurance community of brokers, life companies, and other respondents. A key difference is that the reinsurance industry places more emphasis on the threat posed by climate change. The score assigned to this banana skin (3.86) is higher than the score of any other ranked by the nonreinsurance response. Technology and cyber risk are considered more urgent by the reinsurance industry. Regulation and investment performance are seen as slightly less worrying. IDENTIFIED RISKS The report also assesses reinsurance respondents on how prepared they feel the industry is to handle the identified risks. On a one-to-five scale (one bad, five good), they gave an average response of 3.17, which is higher than the average 2017response of 3.02. The broader insurance industry gave an average response of 3.11 this year (up from 3.02 in 2017).. “If we look at the top five risks as a whole,” the report notes, “what’s striking is the extent to which they feed into each other — technology is driving change management risks, for example, just as data regulation and cyber threats are heightening technology risks. “This underlines the importance of looking at today’s fast-evolving risk landscape in the aggregate.”

Business Vision Winter 2019-20 Issue • www.bv.world

‘Workforce needs to embrace change’

“The industry can also bring hard numbers to the debate over how to tackle this global threat.” Investment performance, at number six, reflects worries that low yields could encourage insurers to take greater investment risks to improve returns. Doubts were raised at number seven on the list — the industry’s ability to attract and retain talent, particularly in technical areas. Cost reduction (up two positions to 10) and reputation risk (up five to 13) both reflect the current mood. Political risk is also rated slightly higher at number nine, with protectionism, populism and trade wars of particular concern for the

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UN goal driving us towards a more inclusive world: is this something we can achieve...? BV’s JASON AGNEW takes a look at the UN’s Sustainable Development Goal 1: The bid to end world poverty

INDIAN political and spiritual leader Mahatma Gandhi once said: “Poverty is the worst form of violence.” While India has greatly reduced its levels of destitution, and much of the country would be unrecognisable to Gandhi in 2020, there are still over 70 million people living — or existing — in extreme poverty. The 17 Sustainable Development Goals (SDGs) were set by the United Nations' General Assembly in 2015, designed to be a “blueprint to achieve a better and more sustainable future for all”. The ambition is to achieve these goals by 2030. SDG1 aims to “end poverty in all its forms everywhere”. Extreme poverty has been more than halved in the last 20 years — but one in 10 of the planet's population still has to survive on less than $1.25 a day. Worldwide, the poverty rate in rural areas is 17.2 percent — more than three times higher than in urban areas, which explains the global exodus from the countryside, and the rise of the megacity. Poverty does not just refer to a lack of income or resources; it encompasses healthcare, education, and security. Despite it being widely accepted that children constitute the majority of those living in extreme poverty, 63 percent of countries have no data specific to child poverty — and a staggering 97 percent have insufficient data to make viable projections towards Goal 1. Having a job certainly doesn't

save you from abject misery; in fact, eight per cent of the world’s

workers and their families were living in extreme poverty in 2018. So how have some of the major companies embraced these goals, not as an exercise in philanthropy but as a means of preservation for the marketplace of the future? As the chief marketing officer of Unilever, Keith Weed, wrote in The Guardian: “The brands that have not yet caught on to this, and are not thinking about how they will embed environmental and social sustainability within their business model, will not be around in the next 50 years.” Financial services company Visa is addressing SDG 1 by reaching out to under-served markets, to 500 million of the two billion “unbanked” adults with no or little access to financial services

Picturesque... but stricken with poverty

because of poverty or where they live. Electronic payments have become an important tool in helping people, especially those in rural areas, to avail themselves of such services. By empowering new consumers, a company is creating a whole new client base for itself. The UNGSII (UN Global Sustainability Index Institute) was created to support, accelerate and monitor the implementation of the SDGs, evaluating and comparing sustainability performance of companies, cities and countries in a transparent manner. Its Commitment Report considers the top 100 blue chip companies. Of those 100 with a combined market cap of $9.781tn, 82 disclosed their commitment to the SDGs in their 2016 annual reports. The results were not surprising: Volvo came top, Novartis second and Sainsbury third in terms of visibility, i.e. how many statements in their annual reports refer to the SDGs. US giants such as Walmart, Boeing

and Apple didn’t make mention of the goals in their reports, although this is not necessarily indicative on their sustainability policies. The problem for SDG 1 is that with such a broad, ambitious goal, it is hard for companies to know where to start. If you're a renewable energy company, your first instinct on looking at the SDGs might be to think, “Great, we are contributing to SDG 7 (clean and affordable energy) and that's our role in the SDGs sorted”. LOW PRIORITY GOAL Companies assume that SDG1 doesn't apply to them — and that is one of the major reasons why it is ranked as a “low-priority goal” for the business community. The lack of specificity makes it easier for firms to identify with more narrowly focused SDGs and finding solutions for Climate Change, Gender Equality, and Reduced Inequality have been identified as the top SDG priorities for corporations. This means that SDGs 5,10 and 13 are much easier for

companies to prioritise whereas the eradication of poverty tends to be viewed as the responsibility of governments. A good example of commitment to SDG 1 comes from Myanmar, where in 2015 the government was proposing to create a minimum wage of $2.60 a day for workers. Garment manufacturers in the country were proposing an opt-out for their industry. But 30 European companies — including Tesco and M&S — wrote to the Myanmar government opposing the suggestion on the grounds that it would deter them from investing in the country. The government duly forced through the new base wage. Such actions can lift thousands, even millions, out of extreme poverty, and relatively quickly at that. The UN probably cited No Poverty as its prime objective because achieving that would lead to other sustainable development goals becoming achievable. That, in itself, makes SDG1 an extremely worthwhile aim.

Business Vision Winter 2019-20 Issue • www.bv.world

Rural areas are often poorly served when it comes to the basics, such as education

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Grim UN report shows halfa-billion of world’s people struggling to find work ALMOST half-a-billion people around the world battle to find sufficient paid work, a UN report on employment and social trends shows. The World Employment and Social Outlook: Trends 2020 (WESO) report by the UN’s International Labour Organisation (ILO) predicts that unemployment figures will rise by around 2.5m this year. Global unemployment has been roughly stable for the past nine years — but slowing economic growth means not enough new jobs are being generated. Guy Ryder, the director-general of ILO, points to “persisting and substantial work-related inequalities and exclusion”. The trend had “profound and worrying implications for social cohesion”, he warns. The WESO report shows that a disparity between labour supply and demand extends beyond unemployment into broader labour under-utilisation.

As well as the 188m people unemployed around the world, 165m don’t have enough paid work — and 120m have given up searching. Inequality is higher than previously thought, especially in developing countries. Worldwide, the share of national income

going to labour (rather than to other factors of production) declined from 54 percent to 51 between 2004 and 2017. That’s a greater fall than expected, and most pronounced in Europe, Central Asia and the Americas. Moderate or extreme working poverty is expected to hamper the achievement UN Sustainable Development Goal 1 (eradicating poverty everywhere by 2030). Working poverty – earning less than $3.20 per day – affects more than 630m people: one in five of the global working population. Other significant inequalities — defined by gender, age and geographic location — remain stubborn features of labour markets, the report says, limiting individual opportunities and general economic growth. More than 267m people aged 15-24 are currently not in employment, education or training, and many more endure substandard working conditions. The report cautions that

The UN’s ILO says the pace and form of economic growth hampers efforts to reduce poverty intensifying trade restrictions and protectionism could have a significant impact on employment. The ILO found that the current pace and form of economic growth is hampering efforts to reduce poverty and improve working conditions in low-income countries. The report

recommends that growth shifts in focus to encourage higher-valueadded activities through structural transformation, technological upgrading and diversification. “We will only find a sustainable, inclusive path of development if we tackle these kinds of labour market inequalities,” says the report’s lead author, Stefan Kühn.

‘Profound and worrying’ implications for social cohesion

THE average SME in the UK expects to spend £160,000 in 2020 to fill the skills gap in the organisation. Research commissioned for recruitment agency Robert Half UK 2020 Salary Guide highlights the need to address the growing gap. The study found that it could cost the average UK SME £145,000 this year, rising to £318,000 in the next five years. Over two-thirds of SMEs said they planned to invest in training and development, with many looking at hiring permanent and temporary staff. The skills gap has widened as a result of macro challenges, including a shrinking talent pool (thanks Brexit), increased digitalisation and the future of work. Digitalisation is especially concerning for UK SMEs. Half of respondents cited digital transformation as the most pressing change facing

their business – with seven in 10 admitting that find qualified professionals was a challenge. Three in five SMEs are investing more to train staff on new technologies than two years ago. Some employers are turning to the temporary hiring market to fill the gap created by digital transformation. Three quarters of SMEs say that temporary staff have become increasingly important to managing digital transformation efforts – with 73 percent using interim employees to upskill permanent members of staff. Matt Weston, managing director of Robert Half UK, said the skills required to thrive in today’s economy were different to those required five or 10 years ago. “Temporary or contract staff are a vital asset for SMEs looking to navigate their way through digital transformation,” he said.

Business Vision Winter 2019-20 Issue • www.bv.world

TEMPORARY STAFF ‘UPSKILLING PERMANENT EMPLOYEES’

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OECD’s forecast for growth comes with qualifications — and warnings of climate woe A BLEAK view of the future of the global economy has been painted by the OECD — and climate change has a central role. A report by the Paris-based Organisation for Economic Cooperation and Development says risks have increased while prospects have dwindled — and it decries a lack of direction on climate policy. “It is vital that countries strengthen their ability to understand, plan for and continuously manage climate risks,” the organisation says. The report also called for “urgent, strong and co-operative action based on mutual trust and

‘Vital’ that countries plan for and continually manage climate risks understanding”. And while the report — described as “decidedly downbeat” by the BBC — nonetheless

forecasts growth, at 2.9 percent the figure is the lowest in a decade, and down one percent on September forecasts. A clear policy on climate change is needed to restore confidence to investors, the report says; a lack of business investment has weakened overall economic performance. The OECD suggests creating national funds to make public investments in key areas, and warns of other risks inclulding a sudden slowdown of the Chinese economy and ongoing trade wars. Recent obstacles to trade should be rolled back or the global economy would stagnate, it said.

The future is yours... which one do you want? Choose wisely, says OECD 60

920007699 SME@tawuniya.com.sa

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Ursula von der Leyen

PEOPLE Sandro Halank via Wikimedia Commons

PRESIDENT of the European Commission Ursula von der Leyen is the first woman to take on the role. Her support for a European Green Deal is central to her ambitions for the Continent to become climate-neutral continent, “the greatest challenge and opportunity of our times”. Mother of seven and a qualified doctor, German citizen Von der Leyen has served as her country's Families Minister and, more recently, Defence Minister (another first for a woman). She has shown allegiance to Angela Merkel, having served in her cabinet since 2005. She is known for her tenacity — and sometimes controversial stances — on issues she believes in. She enjoys popular support in the EU parliament and was nominated for presidency by member states. Von der Leyen won the respect of NATO for her tenure at the defence ministry, and is aiming to drive a transition to make Europe more integrated, united and powerful. Von der Leyen's focus on social development and sustainability have across-theboard have appeal in the current global mood, and conservatives admire her family values. She has promised to propose a Green Deal in her first 100 days in office, including the first European Climate Law to enshrine 2050 carbon-neutrality targets in law. Von der Leyen has said her aims the creation of a “United States of Europe”, modelled on federal states like Switzerland, Germany and the US. “Peace, security and development are all mutually dependent,” she says. She has pledged to push for majority voting on external action so that the EU can take its place on the world stage. 62

Sal Mohammed

Not yet the CEO? This podcast's for you!

QUICK to Act (QTA) is a specialist company helping corporates and start-ups to accelerate growth through strategic partnerships with like-minded businesses. QTA was founded in 2018 by Sal Mohammed, pictured here. The firm has announced the launch of a podcast, Not Yet CEO. Mohammed explains: “There is a host of podcasts that provide expert CEO commentary around the world; however, I have always been particularly interested to hear from those individuals that play an essential role in striving to achieve the company’s objectives on a day-to-day basis. “Not Yet CEO provides insight from successful individuals who are on their way to becoming leaders, while demonstrating the route they have taken along the way.” QTA is an amalgamation of partnership consultants from technology companies including Google, Facebook, Amazon and Apple. It was established to provide leading corporates and startups worldwide with an opportunity to accelerate their growth through strategic partnerships, and analyses the presence and competitive landscape of its clients. Mohammed is passionate about giving a voice to employees at the centre of some of the world’s most reputable organisations. The podcast provides an opportunity to learn how growth can be accelerated through engagement with future industry leaders. Not Yet CEO aims to offer a fresh outlook and an alternative perspective on business matters. The first series of interviews captures the thoughts and insights of inspiring senior executives from around the world. The guest list includes Tim Heard, of Barclays, Oana Jinga, the retail partnerships lead at Google, and Tom Carter, director of partnerships at City Football Group.

Business Vision Winter 2019-20 Issue • www.bv.world

PEOPLE

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Why art is a secret weapon in the battle to make businesses attractive — and productive Wellbeing in the workplace comes from many areas, and eye candy is one of them. PATRICK MCCRAE investigates for BV. IT WAS Florecnce Nightingale who recognised the positive impact of art on our physical and mental health 160 years ago — long before the term “wellbeing” had been coined. But the potential to harness the power of art to build more creative, productive workplaces is rarely discussed. The character of a workplace affects job satisfaction, motivation and mood — and art needs to become part of this conversation. Some may be sceptical of the claims, but the concept is supported by solid evidence. Doctor Oshin Vartanian, from the University of Toronto, has conducted research on the neuroscience of aesthetics and creativity. He found that art activates the brain’s default mode network — the area associated with original thinking — helping us to retrieve memories and think about the future, as well as engaging our pleasure and reward systems. In 2014, a survey of 7,000 employees for the Leesman Index, a comprehensive study

of workplaces, found that one in two employees thought art was an important part of their workplace environment — but 85 percent were dissatisfied with the artwork in their offices.

Patrick McCrae Research by another doctor — Jenny Thomas, director of Performance Consultancy — found that while many organisations installed artwork in their reception areas or meeting rooms, few had introduced it to the main office. Seven out of 10 workplaces

had no artwork installed, and 95 percent of employees could not see any art from their workstation. Thomas conducted studies by changing sensory aspects of a workplace, including temperature and air movement, and providing access to a new “breakout” space. But — unsurprisingly, given the topic here — the biggest impact came from introducing artwork. Staff said they were more alert in the afternoons, avoiding the traditional post-lunch dip in concentration. They felt the art promoted social interaction. A study by the British Council For Offices in 2013 found that 61 percent of employees believed artwork inspired them to think and work more creatively. Research by ARTIQ suggested that people were 14.3 percent more productive in an art-adorned office. Art enables positive cognitive distraction and creates spaces that are active and connective. It engages staff and clients. It has this impact because it is innately human, encouraging the viewer

Art: a positive cognitive distraction that energises the viewer

Photographer/Shutterstock.com

to engage and find meaning. But thought must be given to the relevance of art to its specific environment. Office art should tell a story and connect to brand values and heritage, creating a clear narrative. Global law firm Mayer Brown recently worked with ARTIQ to develop an art collection for its London office, following an extensive modernisation and refurbishment programme. An art committee was set up, bringing together a group of partners and employees to choose paintings, sculpture, prints and street art for the office. It was developed around the themes of diversity and equality to reflect Mayer Brown’s commitment to promoting a diverse workforce — 86 percent of the art was created by women. Artists from outside the UK, or those who have recently graduated from art schools and colleges and are trying to build a career, are also represented. The art collection has become a talking point for staff and

offers a visual representation of the firm’s values. The links can easily be explained to visitors and prospective clients. By supporting emerging artists, the firm is also acting as a patron, supporting the creative economy at a time of increasing strain. UK residents and workers on average invest 40 percent less on art than their counterparts on the Continent. RENTAL MODEL Investec, the international banking and wealth management group, wanted art at two of its London offices to complement the design by architectural firm tp bennett. Reflecting Investec’s heritage, the collection features the work of dynamic artists from South Africa and London. ARTIQ catalogued the collection and worked closely with Investec to design an online auction platform, giving employees the opportunity to purchase the artwork that has been part of their working environment.

The initiative worked on two levels: as an effective means of employee engagement — including a pop-up exhibition for the new collection — and as a way of supporting contemporary artists. Investing in an office art collection might sound like the preserve of big corporates, but an art rental model allows any business to host an expertly curated collection without breaking the bank: say £1,600 a month. The collection will be refreshed every few months, making it a continual talking point for staff and visitors. Above all, an art collection is a compelling way for a business to articulate its values and to express its identity to the wider world. It's also nice just to see it hanging there...

Business Vision Winter 2019-20 Issue • www.bv.world

All public areas, not just workplaces, can benefit from the inclusion of creative works

* Patrick McCrae is chief executive of art consultancy ARTIQ 65

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‘Magical' manufacturing processes bringing hope Sometimes, all we need is the air that we breathe — and a bit of hi-tech genius. BV editor HAL WILLIAMS reports. SOMETHING from nothing: it’s an age-old siren song — dreams of perpetual motion or three magic wishes from the genie in the teapot. But, spoilsport science tells us, zero sum transactions can’t be had (for perpetual motion, anyway; no official word on genies). Laws of Thermodynamics pull rank and tell us that no machine can work indefinitely without some sort of energy input. So how about the next-best thing: fuel — or food — from thin air? With concern about climate change, fuel reserves and clearfelled rainforests approaching

Renewable methanol from invisible realms (justifiable) international neurosis, if alternatives exist to the crudeness of crude and the brutality of beef, the world is surely ready for them. And — it seems — exist they do. But so far, their creation has been without fanfare, and

promising developments seem to be small-scale. Enter — modestly, as the result of chance encounters and a bit of idle internet browsing rather than publicity from the companies concerned — Carbon Recycling International (CRI), of Rejkyavic, and San Francisco’s Air Protein. CRI is a self-proclaimed world leader in the production of renewable methanol from the invisible realms of carbon dioxide, hydrogen and electricity. Air Protein recently announced the creation of “meat” — or at least a protein product — from the air that we breathe, without the usual land, water or weather

Doom, gloom and dying trees. Can solutions to modern problems simply be plucked from the ether...?

requirements. CRI says it has produced “a synthetic liquid fuel at industrial scale from CO2 capture”. It designs, engineers and implements methanol production plants based on its Emissions-toLiquids (ETL) technology, with no impact the food chain or land use. The ETL platform “enables integration of more electricity in various modes of transport that are ‘hard to electrify’, including long-range travel, heavy goods transport, marine transport and aviation”. As carbon-neutral fuel, renewable methanol could potentially eliminate air pollutants such as nitrous oxides and sulphur compounds, as well as particulate matter. The resulting methanol can be used for fuel applications, greener chemicals and products. Working with partners, CRI is developing “transformative” projects, increasing resource efficiency and creating value from waste gases. Air Protein, meanwhile,

claims that its food production method “will revolutionise how we approach food production in the future”. The process uses elements found in the air, combined with water and mineral nutrients. It uses renewable energy and a probiotic production process to convert the elements into a nutrient-rich product with the same amino acid profile as meat. As an added bonus — to a something-from-nothing deal — the protein is packed with B-vitamins, which are often deficient in a vegan diet. ENABLING TECHNOLOGY In a world where averting, or at least moderating, climate change is vital, and carbon emissions count, the ETL and Air Protein technologies promise large-scale recycling of CO2 as a raw material for liquid fuels, food and chemicals. “ETL is a key enabling technology for the transition to a circular economy… avoiding the use of fossil fuels,” CRI says on its website.

The company has a Powerto-Gas and Power-to-Liquid processing plant capable of recycling thousands of tons of carbon dioxide and regurgitating it as renewable fuel via a hydrogenation process. “We offer technical solutions to industrial clients and investors, including technology licenses and services to engineer, build and operate renewable methanol plants.” Air Protein says it uses carbontransformation technology which was inspired by NASA’s closedloop carbon cycle concepts for long space missions. The protein found in air-based meat is produced using natural processes, and is free of pesticides, herbicides, hormones or antibiotics. The new protein source can be used to make meatless burgers, protein-enriched pastas, cereals and beverages. The United Nation Food and Agricultural Organisation (FAO) predicts that to meet the nutritional needs of a population expected to reach 10 billion by 2050, farmers will need

Business Vision Winter 2019-20 Issue • www.bv.world

Carbon Recycling International was founded in Iceland on the idea of recycling carbon dioxide

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Cruelty-free: an elegant solution to nutritional and evironmental challenges from Air Protein to increase food production by 70 percent — with only a five percent increase in land use. Air-based meat “offers an elegant solution to that equation”. The probiotic production process takes just days, the company says, independent of weather conditions or seasons, and works in a similar fashion to yogurt-

making or beer brewing. “We believe air-based meat is the next evolution of sustainablyproduced food,” says Air Protein CEO Lisa Dyson. So, is the future of food and fuel happening around us, at no environmental cost? How do these miracles of genesis take place? Can the mopping-up of

greenhouse gas really become a production process that yields clean energy? BV hopes to bring you the answers to those questions and more detail on similar developments in 2020. For the moment, let’s just enjoy the glimmer of hope that innovation brings.

FOOD FROM THIN AIR: CAN IT REALLY BE TRUE? THIS US FIRM SAYS YES AIR PROTEIN, a San Franciso-based company, is pulling off a new trick: food from thin air. Air Protein recently announced the creation of “meat” — or at least a protein product — from the air that we breathe, without the usual land, water or weather requirements. The United Nations Food and Agricultural Organisation (FAO) has been facing up to the challenge of meeting the world's nutritional needs. It the global population will to reach 10 billion by 2050. Coming to terms with numbers like that will entail lateral thinking in terms of agriculture. Farmers will need to boost food production by 70 percent, and achieve that with just five percent increases in suitable land use. Air Protein's probiotic production process uses 68

carbon-transformation technology to pull off the sort of miracle the world will need. In just days, a brewing process similar to that used in brewing creates nourishment. The company's claim that “air-based meat is the next evolution of the sustainably-produced food movement” seems reasonable, given the early advances — and the potential. And while it's a search for a natural solution to a problem, the food product called for scientific intervention. NASA's closed-loop carbon cycle concepts for long space missions played a part here. The good news is that the protein is free of pesticides, herbicides, hormones or antibiotics. The new protein source can be used in various forms, and the technology is beginning to attract serious attention.

Vouchers ‘could bring export support for small businesses’ SMEs in line for support for overseas trade — if FSB recommendations are heard currency’s volatility — and Brexit. Some 53 percent of smaller exporters to the EU believe their business continuity and growth will be negatively impacted by a no-deal scenario. No-deal preparations cost on average £2,880, rising to around £3,000 for those that import and or export. FSB national policy chairman Mike Cherry said exporting was a critical part of the British economy. “But … it’s time that the government stepped in and gave small firms the help that they need. “The introduction of export vouchers will alleviate some of the strains that exporting firms are

facing.” It was important to establish an understanding of the terms of post-Brexit trading with the EU and the rest of the world, he said. Uncertainty stops small firms planning and preparing for the future, with 40 percent of exporters saying the factor had a negative impact on their ambitions. Around 21 percent of small firms currently export, but FSB believes that with additional assistance from the Government that figure could double. These financial incentives are “a great way to support small firms” which are “the backbone of the economy”.

Mike Cherry, FSB national policy chairman

Support needed to avoid scenes like this

Export: it’s not all about the big guns

Treasury buildings in Whitehall.

Business Vision Winter 2019-20 Issue • www.bv.world

THE UK’s Federation of Small Businesses (FSB) is calling on the Department for International Trade and the Treasury to give small firms an injection of support. The FSB wants to introduce export vouchers, to a value of £3,000, to help small firms with costs in translation services, market research, and finding new clients. The aid would be sourced via overseas trade fairs — helping to grow individual businesses and the economy as a whole. The potentially positive impact on exporters of the depreciation in Sterling has been offset by the

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PEOPLE

Roula Khalaf

The ‘pink press’ gets a new editor

FOR the first time in its 130-year history, The Financial Times has its first female editor: Roula Khalaf The UK news outlet has grown from a traditionally pinkhued print publication into a diversified subscription service with over a million readers around the world. Khalaf, who had served as deputy editor since 2016, is a 25year veteran of the business publication. The FT’s owner, Japanese publisher Nikkei, expressed confidence that Khalaf would continue the “mission to deliver quality journalism without fear and without favour”. Khalaf has previously written for Forbes, and during her time there penned an investigative piece about Jordan Belfort, the infamous stockbroker immortalised in Martin Scorsese’s The Wolf of Wall Street. Khalaf’s work helped to alert authorities to Belfort’s criminal misconduct — and earned her a mention in the movie. The US-educated Lebanese native has been praised for her distinguished career. She served as The Financial Times Middle East editor, foreign editor and deputy editor before assuming lead editorial responsibilities this year. She has been credited with boosting newsroom diversity and expanding the FT’s female readership. Khalaf expressed gratitude to her predecessor, Lionel Barber, for his mentorship and his legacy. The paper was founded in 1888 and headquartered in London. It was an early pioneer of digital content and has always maintained that quality doesn’t come cheap. It launched its first digital paywall in 2002, requiring readers to purchase a subscription plan for access. In 2007 it moved to the metered model still in effect today, which allows a limited number of free online articles before the paywall blocks access. There are now over a million paid subscribers, and 75 percent of circulation comes from digital avenues. The Financial Times began 2020 in a strong market position, and — according to Barber himself — a “strong, wise, and fair individual” at the helm. He says Khalaf will take the publication “to another space and level”.

Ex-PayPal UK chief takes on challenging new role with school payment platform

Mark Brant has caught the attention of the industry, with Wilson winning a host of awards. The company was recently named by Megabuyte as the UK’s fifth-best performing privately-owned technology company. Brant, who played a key role leading PayPal, will oversee a similarly ambitious growth plan for ParentPay. The group plans further European acquisitions and the development of a suite of new products. These plans include the creation of a new platform to expand ParentPay’s services

ParentPay aims to go outside the school gates...

Clint Wilson outside the school gates in a move that will open up the platform to a far wider audience, challenging traditional payment providers. Wilson said: “When I took the helm in 2005, we had a firm belief that we could make life easier for schools and parents and we set about building a platform capable of supporting schools across the UK. “We now serve over 15,500 schools and for many, ParentPay has become a household name, with families paying schools securely online as a part of normal daily life. Our ambition is for this to be true right across Europe. “Over the last 15 years, ParentPay has helped to shape the industry.” Wilson said Brant was “the ideal successor”. Andrew Neubauer, ParentPay Group executive chairman, said Brant’s experience and skill-set “closely matched the requirements that Clint and I identified for this role”. “Our future growth plans are ambitious,” said Brant, “but we have the right team and platform… I’m excited about what lies ahead.”

Business Vision Winter 2019-20 Issue • www.bv.world

MARK Brant, the former managing director of PayPal UK, has been announced as CEO of the ParentPay Group, a payment platform for schools. The company is looking to expand, and Clint Wilson — the outgoing CEO who has led the business for 15 years — will become the group corporate development director. ParentPay, used by more than half of all British schoolchildren, was launched in 2004. It was the brainchild of former teacher and founder Lynne Taylor. Wilson, who spotted an opportunity to pioneer a new market and transform the way payments were made within schools, became CEO soon after launch. Under his leadership, the group saw rapid growth, returning a compound annual growth rate of 61 percent in EBITDA since its first profit in 2007. It has developed its offering by acquiring Schoolcomms, Cypad and the Netherlands-based WIS, the latter marking the business’ first foray into Europe. The group also launched two new businesses: Just Education and nimbl. ParentPay’s sustained growth

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Future Disrupted predictions: data, automation and IoT The trends that are coming to you, whether you like it or not, according to report on the future business landscape TECH services provider NTT Ltd has released its Future Disrupted: 2020 report outlining the trends likely to shape the business technology landscape. It considered six key areas, based on insights of technology experts: disruptive technologies, cybersecurity, workplace, infrastructure, business, and tech services. The company predicts that 2020 will see all the buzzwords of the past decade come together to create connected environments capable of running themselves. That means intelligent cities, workplaces and businesses — on a secure basis. Data, AI and secureby-design will be at the heart of this movement, empowering devices to talk to one another and act on that information without human intervention. Smart cities and IoT will become the norm, NTT predicts, as they improve productivity, growth and innovation across entire regions.

Building fully connected environments will be key NTT brought together 40,000 people across 31 brands to serve 10,000 clients. Using insights gathered from this global client base, it looks at the way businesses should prepare for the next year. The company's CTO, Ettienne Reinecke, says 2020 will be a year of change. “We'll see complete end-to-end computing come to the fore,” he predicts, “bringing to life fully intelligent environments that are completely connected. “We will see most cities and societies starting to follow in the footsteps of Las Vegas, which … shares data across the region, improving situational awareness

through video and sound data. “With IoT technology on a secure infrastructure, its created a safer environment to live in, improving living conditions and, ultimately, saving lives. “Projects like these need a variety of different technology capabilities to come together in order to achieve great things, so building fully connected environments will be the key focus point next year.” Technology is changing quickly — but this is the slowest pace of change we'll ever see, according to NTT. “We've never before had so much powerful technology at our disposal,” says Reinecke.

THE PREDICTIONS:

1. Digital twinning: With enough datapoints, it is possible to model behaviours and understand patterns – for example, the diet of someones biometric twin – and calculate the time before a health incident occurs. 2. Building trust. Now that AI has evolved, businesses

meeting room, office, shop — and plug in technologies to transform it into a virtual environment and create a range of experiences. 4. Smart buildings. IoT will automatically adjust temperatures according to the number of people in a space, or turn on

lighting at the right time of day — while becoming more sustainable. 5. Data wallets: Putting data in the hands of the person who owns it, and ensuring that nobody can access it without permission. When under threat, the data can be locked down.   Business Vision Winter 2019-20 Issue • www.bv.world

can move from being purely transactional to having a more relational engagement with customers, applying rules that bring empathy to the interaction. 3. “Phygital” spaces: The physical world blends with the digital take any physical space — a

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Oh, what a year that was... The positive side of 2019 is there (if you look carefully) BV staffer HEATHER LEAH SMITH looks back and comes up with a list of the year’s breakthroughs and positives GOOD BUZZ FOR BEES

London is rolling out the welcome mat to nature’s favourite pollinators with a seven-mile corridor of wildflower refuge through the city. Construction began over the summer. In Holland, the city of Utrecht has covered hundreds of bus stops with living green roofs to make them buzz stops too, providing respite for honeybees and other insects, boosting biodiversity and improving air quality. Researchers at the University of Helsinki have developed the PrimeBEE vaccine, which has shown promise in combating the microbial diseases threatening bee colonies worldwide. The scientists hope for a commercial launch within a few years to inoculate the pollinators — and protect global crops

worth between $235 and $577bn annually.

PLASTIC SNACKS

Over the past two years, more than 50 types of plastic-eating mushrooms have been identified. One variant was found to digest small quantities of polyurethane in a matter of months, and another degraded plastic while growing into an edible snack. Scientists are working on scaling the solutions. Mexican researcher Sandra Pascoe Ortiz has developed a bioplastic made from the juice of the prickly pear cactus, which has a natural breakdown time of only three months — or two weeks in water. If ingested, the bioplastic is harmless to humans and animals. Pascoe Ortiz is being courted by businesses that hope to help

her take her breakthrough from the “laboratory to an industrial process”. Recycling programmes are ratcheting-up the impact. In Rome, metro passengers can now pay for the trip by recycling plastic bottles. The initiative has collected over 350,000 bottles thus far. In Nigeria, Lagos schools have implemented a win-win

Bee happy with wildflower refuges across London

ECOSYSTEMS WIN OUT

Norway has rejected plans for mineral exploration in the Lofoten area — estimated to hold around 1.3 billion barrels of oil and gas — to preserve the picturesque region’s fragile ecosystem. Meanwhile Norway’s Government Pension Fund Global has begun to phase out oil stocks, affecting about $7.5bn in equity holdings. A ruling in favour of the indigenous Kofan people has freed more than 79,000 acres in the Ecuadorian Amazon from gold mining contracts. The courts have also sided with the Ecuadorian Waorani tribe, denying the government’s intent to auction off Amazonian rainforest for oil exploration. These efforts aim to embolden indigenous people and activists to take legal action against environmental offenders. Tim Sweeney — the CEO of Epic Games, the company that created the popular video game Fortnight — has spent millions over the past decade to fund a “conservation land grab” in his native North Carolina. Sweeney is one of the state’s largest landowners, with 40,000 acres protected under his name. He swooped in to save the wild

spaces from developers dreaming of golf courses and retail shops. The protected forests are home to black bears and bobcats, foxes and coyotes. NASA data has confirmed that the Earth is greener than it was 20 years ago. Ambitious reforestation and agricultural programmes in China have contributed to the boost in global vegetation and helped the industrial giant offset its carbon emissions. In India, grassroots hero Jadav Payeng planted a tree each year over the past few decades to eventually create a protected forest reserve of about 1,360 acres, home to tigers, rhinos, and elephants. In India’s Uttar Pradesh, 800,000 people volunteered for 24 hours to plant over 50 million trees — and earned an entry in the Guinness World Records.

EMPOWERMENT

The Indian village of Piplantri is recognised for environmental stewardship and gender empowerment. Every time a baby girl is born in Piplantri, the village celebrates by planting — and nurturing to maturity — 111 trees in her honour. They also open a small trust fund for each female infant to combat the burden of the still prevalent dowry system and enforce age limits on marriage to enable the girls to pursue a proper education. The village now boasts equal numbers of boys and girls enrolled in school as well as lush

orchards of mango, neem, and aloe vera. Iceland has been consistently ranked by the World Economic Forum as the most genderbalanced country, and in 2018, the country passed a law to enforce equal pay for equal work — and put the onus of proof on the employer. Companies with 25 employees or more must certify the equality of their pay policies with the government — and face fines if found wanting. Iceland is striving to eradicate the gender pay gap completely by the year 2022. Malawi’s Chief Theresa Kachindamoto was appointed in 2003 to rule over a district of some 900,000 people. She has since banned child marriages, annulled over 3,500 underage marriages, and supported children’s educational initiatives. She has advocated against gender-based violence and promoted women’s rights. Kachindamoto is a force to be reckoned with and in her native dialect, her surname aptly warns “Don’t mess with fire”. Karen Uhlenbeck became the first woman to be awarded the Abel Prize, the most prestigious recognition amongst mathematicians. Her work has been called transformative, leading to some of the most dramatic mathematical advances of the past 40 years. Uhlenbeck’s research has inspired generations of female mathematicians to follow in her footsteps.

Business Vision Winter 2019-20 Issue • www.bv.world

solution for students and parents, municipalities and nature. Through the Recycle Pay project, parents and children collect plastic trash in payment for school fees.

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Middle-tier workers “at-risk” as automation takes hold of UK imagination and habits UP TO 30 percent of UK jobs — 10.5 million of them — are considered “highly automatable”, and globally, some 75 million jobs are likely to be displaced by AI. Data show that employment growth has been greatest at the extreme ends of the spectrum: the top and bottom 20 percent. In-between there has been a hallowing-out of jobs. The middle-tier workforce is falling victim to the “automation paradox”. These findings come from a report published by recruitment firm Robert Walters and market intelligence company Vacancy Soft. “As businesses become ever more reliant on AI, there is an increasing amount of pressure on the processes of data capture and

Data-related roles are up by 80 percent integration,” said Robert Walters principal Ollie Sexton. “Next generation” roles were being created as others disappeared, he said — with data-related roles up 80 percent since 2015. Sexton pointed to the emergence of data scientist as a mainstream profession, where vacancies are up 110 percent year-on-year. “The same trend

can be seen with data engineers, averaging 86 percent year-on-year job growth,” he said. Industries most disrupted by AI are: Retail: AI is being used to drive consumers back to the “bricks-and-mortar 2.0” with selfcheckout and pattern monitoring, data to enhance the in-store experience, and linking online and offline channels. Business support: AI has been implemented at every level, from spam filters and smart emails to smart personal assistants such as Siri, Cortana, and Google Now. It also dominates customer support and business forecasting. Healthcare: Google’s DeepMind is being taught to read retinal scans, while healthcare

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of professionals lack sufficient experience for the role, while 51 percent lack the technical skills.” Another recent survey found that just 10 percent of cybersecurity professionals, 31 percent of data management professionals, and 27 percent of software developers rated their skills as “advanced”. Almost 40 percent said their skills were at the “beginner” level.

“Historically, the UK has been able to attract skilled IT and data professionals from across the EU,” adds Chambers, “…but with the current political climate this may become more of a challenge.” The upskilling of mid-tier UK talent – in London in particular – could create an opportunity for Britain to be at the centre of the tech and AI revolution,” he said.

Business Vision Winter 2019-20 Issue • www.bv.world

apps are saving GPs time, assisting with safety and training, and removing bias and inequality. “The concern should not be about jobs being displaced,” says Tom Chambers of Robert Walters, “but whether our workforce is ready and prepared to accommodate a job boom within data and digitalisation. “In the tech field, 56 percent

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Recruitment in 2020: time to write posts for dream jobs

BY MAREIKE VOGET JANUARY is a boom time for recruiters. After the holiday season, many employees embrace the moment to change jobs and embark on a fresh challenge. In the 2020 competition for talent, organisations will be striving to be front-of-mind for potential applicants; everybody wants to hire the best. But attracting potential employees is easier said than done in today’s omnichannel world. Employers can’t just post a job and hope. They need to cultivate an employer brand and use digital sourcing tools. While a job ad is only part of the picture, it’s an important one. Experts have analysed two years of job ads listed used by over 16 million research professionals to find out what does (and doesn’t) work. Stick to short, informative job titles. Online job titles over the past 10-15 years have become more creative: Digital Overlord, Wizard of Lightbulb Moments… Despite the creativity, job applicants can find these hard to grasp. Clear and concise job titles help candidates understand the role, and whether they want to find out more. Aim for no more than 71 characters — ads with job

Focus on vital information and try to be specific titles within this length enjoy an above-average click-through rate. Focus on vital information here. Employers are sometimes guilty of painting a picture of what could be, rather than what will be. To avoid disappointment on both sides, be brief and specific. Job listings between 1001-1500 characters receive almost 15 percent more applications than longer posts. Talk about what they’ll be doing day to day, rather than wasting characters on your organisation’s prestige. Focusing on what the role entails will give candidates a better feel for the job. Recent research of 10,000 scientists found that the most important “on-the-job factor” is providing the opportunity for applicants to carry out work within their area of expertise. Keeping employees interested and challenged is one of the key elements in engaging and

retaining staff. Probation periods are a costly exercise if new employees decide that the role isn’t for them after just a few weeks Be transparent about pay and benefits. Work-life balance and location both rank highly among job seekers. Spell this out — discuss salary brackets, paid holidays and working hours. While some sectors, such as academia or the public sector, are confined to strict pay limits, people still need to know what they’re buying into. Know how to target your audience. Online ads don’t resonate equally with professionals across all sectors. Researchers in political science, agricultural science and architecture apply for roles quickly. Those specialised in geography, neuroscience, and space sciences show the opposite behaviour. You might need to utilise more advanced, active recruitment solutions. Searching for new employees takes time, commitment and perseverance. Just because something worked once it doesn’t mean it will work again a year later.

Mareike Voget is a scientific recruitment product manager at ResearchGate, a professional platform for scientists.

Energy exchange group EEX acquires deal to buy Nasdaq future and options business strategy,” said EEX chief executive Peter Reitz. “It will bring significant benefits for our client base worldwide.” Kevin Kennedy, Nasdaq senior vice-president of North American market services, said Nasdaq had entered US energy and freight markets in response to client wishes. STEADY PROGRESS “After evaluating the steady progress we made to expand our client base and grow open interest, the next step forward is for EEX and Nodal to continue this mission,” he said. Nodal Exchange and Nodal Clear will complete the integration of US power contracts by December, while EEX and ECC aim to complete the transfer of all open positions in dry bulk freight by February 2020.

US natural gas, crude oil and ferrous metals contracts will transfer to Nodal in spring 2020. Commodities form a small part of Nasdaq offerings on equities, options, fixed income and derivatives, the transaction adds considerable weight to EEX’s global growth strategy. EEX, originally a European electricity bourse, has recently acquired US peer Nodal, which added gas trading in September, and widened its access — also via its EEX Asia subsidiary — to all time zones. This allows global price arbitrage as well as clearing and registry services, which in turn help to boost liquidity. EEX platforms serve more than 600 participants trading energy, carbon, freight, metals and agricultural products.

Business Vision Winter 2019-20 Issue • www.bv.world

ENERGY exchange EEX Group has announced an agreement with US-based Nasdaq Futures (NFX) to buy its futures and options exchange business. The German-based European Energy Exchange, or EEX, is part of Deutsche Börse. It is expanding its presence in American energy markets and in sea-borne commodities. Under the deal, EEX will receive NFX’ core assets. Existing open positions in US power, natural gas, crude oil, ferrous metals, dry bulk freight futures and options contracts will be transferred to EEX Group’s clearing houses, Nodal Clear and ECC. The value of the transaction was not specified. “This is a landmark deal for EEX Group as we continue to follow our global expansion

Immersion Imagery / Shutterstock.com

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World Bank: e-commerce is likely to bring tangible rewards to developing world E-COMMERCE can flourish in developing countries and in rural areas to create employment opportunities, according to research released by the World Bank and the Alibaba Group. The report, E-Commerce Development: Experience from China, is based on a statistical data for China as a whole and a survey of Taobao Villages, rural Chinese settlements that are heavily engaged in e-commerce. It reviews the patterns and evolution of e-commerce in China and specific government policies and private sector initiatives. The report also identifies the preconditions needed for successful e-commerce development, and examines links with household welfare improvements. Findings seem to show that e-commerce has the potential to overcome market barriers and connect consumers and businesses. Jobs can be created through logistics services and through other parts of the wider, and widening, e-commerce ecosystem.

Potential to overcome market barriers There is also potential to reduce inequality by bringing to rural areas the convenience, variety, and low prices enjoyed by urban dwellers. This combines to contribute to economic growth by lowering the asymmetry of information and increasing economic efficiency, the World Bank says. “China’s experience shows that developing countries can harness digital technology and e-commerce to create jobs and improve people’s lives,” said Victoria Kwakwa, World Bank vice-president for East Asia and the Pacific. “We hope this report will contribute to discussions on ways

to support inclusive growth.” China has one of the largest and fastest-growing e-commerce markets in the world, accounting for more than 40 percent of the total value of global e-commerce transactions. More than five percent of employment in the country is in e-commerce. China has proved that innovative business started by grass-roots entrepreneurs in rural areas of developing countries can thrive via the e-commerce platform, believes Wen Jia, partner and president of Public Affairs at Alibaba Group. In Taobao Villages, households that participate in e-commerce have incomes 80 percent higher than those that don’t. E-shop workers have wage levels equal to, or higher than, workers in urban private industries. Women and younger, better-educated households are also strong beneficiaries from the ecosystem. The report identifies the risks and hurdles of e-commerce. These range from regulatory challenges such as ensuring a level playing field for comparable digital services, consumer protection, and fairness between online and physical vendors. It also considers online risks in terms of cybersecurity, privacy, fraudulent, defective or counterfeit products, electronic payment concerns, and risks stemming from imbalances in competition. The report highlights the need for investment in training, infrastructure and logistics, and the creation of a conducive business environment.

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Open banking — it's what it says on the tin, with added advantages to empower SMEs A GLOBAL research project suggests Open Banking is set to change the nature of entrepreneurialism, small business and broader society. Two years on from its launch in the UK, 40 percent of UK small business decision-makers admit to knowing little or nothing about the subject. The report identifies three trends expected to “power the disruption and usher-in a decade of prosperity and financial wellness” for the UK’s small business owners. 1) AI could increase control and lessen financial stresses and administrative burdens that come with running a business.

2) Banking as a Service (BaaS). Banks will involve business owners taking meaningful decisions while administrative tasks happen seamlessly in the background. 3) Open banking is providing small businesses greater ownership of their data. Chris Evans, vice-president and UK country manager at Intuit QuickBooks, which commissioned the study, said it looks at the associated opportunities for small businesses in the UK. It paints a picture of a future where financial services and small businesses work hand-in-hand to drive success. “The Open Banking revolution will empower small

business owners that want to do things differently and embrace new and better ways of working,” he said. “Those that want to power their productivity will build personalised suites of financial services that suit their individual needs.” The new future of a mix-andmatch approach to financial services will see SMEs being able to tailor their financial “wardrobe” to their specific needs, Evans said, and remove the need to switch their main banking provider. Many small businesses feel obliged to stay with their existing bank, the study shows. “They worry about whether

Promise of open banking – that’s not what they meant, but dream on...

payments might go missing, or that switching accounts may create accounting headaches. “This is holding back many businesses from accessing the best financial products. Some 32 percent of SMEs describe poor finance options as holding their business back from growing.” Open banking opens doors to an accessible and open financial marketplace where small businessowners will be able to choose from options from financial providers, competing on price and service. IMPROVED LOAN RATES More than two in five (44 percent) of the SMEs canvassed agree that open banking will make the choice of loan providers better, while 36 percent believe loan rates will be improved. It will also cut down the administrative time needed to monitor and apply for competitive deals, appealing to a younger generation of SME businessowners (24 percent of those aged 18-34 feel they spend too much time managing business finances). China is embracing the

concept. WeChat, China’s “super app”, can tackle insurance to investment, invoicing to peer-topeer payments. Open banking could drive an interconnected suite of specialist financial products that offers applicable solutions for disparate business needs. The report, with the unwieldy title of Open Banking Revolution: Invisible, Customer-First, Feel Good, was produced for Intuit Quickbooks by futures consultancy The Future Laboratory. Clearer ownership of and access to data is one benefit of open banking, but sometimes too much data can cause decision paralysis. Half of senior managers in SMEs report financial problems causing a negative impact on their mental wellbeing. The concurrent development of AI could relieve the administrative burden. Small business owners can delegate tasks to AI, letting them decide how much or little involvement they would like. Open banking — as it stands

— allows SMEs and individuals to connect data across financial accounts via interface technology. Banking of the future becomes orientated around actions meaningful to the business owner. Automated credit-checking based on comprehensive linked financial records could enable preauthorisation for loans to cover impending cash flow crunches. The only user interaction would be approval via biometric device. PARADIGM SHIFT All this is likely to cause a paradigm shift, changing what it means to engage with a bank. Customers needing to actively switch will build a combination of financial products that works for them. SMEs are lcreating their own financial wardrobe that helps fuel the growth of their business. Taking a loan from one provider, alongside a savings account from another, will become as simple as it sounds — while syncing information and insights into business management software.

Business Vision Winter 2019-20 Issue • www.bv.world

Senior managers in SMEs report financial problems cause negative impact on their mental wellbeing

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Navinder Sarao

PEOPLE Rogue trader’s abortive career ends with home detention order A BRITISH stock market trader who caused a trillion-dollar crash on Wall Street in 2010 has been sentenced by an American court to a year of home detention. Navinder Sarao, 41, a self-taught trader, must stay at his parents’ home in west London – the very home from which he illegally manipulated stock markets and triggered the “flash crash”. Prosecutors and Sarao’s legal team both appealed for leniency as the defendant has been diagnosed with Asperger’s syndrome and did not appear to have been motivated by money. Sarao was said to be addicted to trading, and has since cooperated with the US government. The Department of Justice (DoJ) initially charged Sarao with 22 counts of fraud, including placing fake trades during his five-year scheme. In May 2010, the Dow Jones Industrial Average briefly plunged 600 points in five minutes because of Sarao’s trades. He was extradited to the US in 2016 and all but two charges were dropped. He had been facing imprisonment of up to eight years, as well as possible fines, and spent four months in a UK prison while awaiting trial. The DoJ alleged that Sarao earned some £45m in trading profits, but his only significant purchase was a car worth £5,000. In the true trading spirit, he lost most of the rest and surrendered to the court his remaining trading profits of £5.84m. Sarao is said to be looking forward to moving on and putting the incident, and presumably his trading days, behind him. 84

From little things big things grow... and new programme aims to add some fertilizer of their increasingly evident potential, and their general readiness to scale-up. More than a million microbusinesses currently employ some four million people and contribute an annual £533bn to the UK economy. HARNESSING TECHNOLOGY Small Business Minister Kelly Tolhurst said her experience as an entrepreneur had shown her the importance of harnessing technology. “Helping small and microbusinesses make better use (of this programme) will enable them to seize new opportunities, boost productivity and scale-up in new markets as we look to leave the EU,” she said in an interview. Anne Kiem of the SBC agreed, and said that it seemed an exciting initiative. “The pace of technological advances means that small firms who embrace innovation will be tomorrow’s success stories” * Small businesses can apply to take part by visiting smallbusinesscharter.org

Business Vision Winter 2019-20 Issue • www.bv.world

FIFTEEN of the UK’s top business schools are sharing their expertise to help micro-enterprises grow. A programme delivered via the Small Business Charter (SBC) is part of a £9m package to support the minnows via Business Basics, run by the Department of Business, Energy and Industrial Strategy (BEIS) and Innovate UK. The funding will allow the SBC to assist 700 microbusinesses that employ nine people or fewer to engage with technology and boost their overall productivity. A consortium of accredited business schools will deliver the Leading To Grow programme — at no cost to participants — across England, mostly in tbe north and midlands. With Leeds, Newcastle Sheffield, Leicester, Nottingham, London, Manchester and Birmingham covered, the programme has the potential to make a difference to the regions. The dispersed nature of small enterprises has historically side-lined them from government intervention programmes. They are getting their day in the sun because

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Why sustainability is now an essential part of any business strategy, and not an option Choice is a fine thing when it comes to encouraging environmentally friendly shopping habits By VICTORIA BROCKLESBY OVER the past decade, there has been a fundamental shift in the way consumers choose between suppliers, brands and products. Today, shoppers want brands to help them be more environmentally friendly, according to Forbes, and 60 percent of global consumers are willing to pay more for sustainable goods. The trend for seeking out the eco-friendly option is set to rise, with 70 percent of Millennials saying they would choose a sustainable option over the alternative, according to an international poll by Nielson. This knowledge brings a

Improving carbon footprint has enabled expansion new world of opportunity for savvy businesses to use their eco awareness as a means to rise above the competition. UK door and window manufacturer Origin is just one company whose focus on improving its carbon footprint

has positively impacted the tender process, helped to win big contracts, and is now a key part of annual reports. Danone, for example, is urging its customers to join the “food revolution” and adopt healthier, more sustainable eating and drinking habits. IKEA has more than 700,000 solar panels powering its stores, while Carlsberg is developing a range of beer “bottles” made from paper. Sustainability is a journey, not a destination; small changes can have the biggest impact. It’s an accumulation of small changes that make a significant difference. A useful starting point is to evaluate suppliers and select those

that share the same sustainability values. Reducing packaging is essectial to cutting back on plastic waste. Reviewing delivery routes and letting suppliers know when drivers will be passing depots allows collection of goods, rather than awaiting delivery, can save fuel and time. It can help to build better business relationships, too. Electric vehicles are becoming a must for those with big fleets. Fuel emissions have been linked to higher incidents of asthma, cancer and dementia. By adapting operations, effects trickle down to employees and beyond, having a positive impact on relationships and reputations. Origin is considering switching all delivery vans and lorries to electric and has undertaken a digital transformation to reduce the number of air miles travelled by senior members of the leadership team.

Overseas flights have been cut by 36 percent Microsoft Teams has been integrated across the entire business to strengthen communications between the locations without the need for travel. As a result, overseas flights have been cut by 36 percent; Origin plans to further reduce that by 15 percent in 2020. It has also reduced fuel consumption by introducing routing software to fleet and logistics vehicles to reduce mileage.

Accreditations such as ISO 14001 — achieved by Origin — are a win-win, useful as a guide to meet sustainability targets and reduce the carbon footprint and a seal of approval for consumers. Follow leaders who inspire you, find out what others are doing, and never stop fuelling a drive to improve your eco credentials. better.

* Victoris Brocklesby is co-founder and COO at Origin. She is leading the charge for Origin to be carbon-neutral by 2020. * Share your sustainability story with BV. Contact us at info@ bv.world

Business Vision Winter 2019-20 Issue • www.bv.world

Solar power is one of the changes that can have a real impact on our environmental footprint

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Climate change battle heats up as giants step into the ring Gates and EIB get behind efforts to put some green in our energy generation process

THE greening of the planet has stepped up a pace, with the European Investment Bank phasing out funding for fossil fuel projects and billionaire Bill Gates backing a new venture to turn sunlight into a heat source that can reach 1,500’C. The EIB hopes to become the World’s first “climate bank”, and Gates wants to help end the use of fossil fuels in industry. Moves such as these indicate that financial heavyweights are now squaring up to join the climate battle. The investment bank will curtail financing for oil, gas, and coal projects after 2021 to end its multi-billion-euro support for projects contributing to climate change. This is a major step to achieving the EU’s aim of carbonneutrality by 2050. The incoming European Commission president, Ursula von der Leyen, pictured right, has said she wants Europe to significantly raise its emissions-

‘A major step to achieving the EU’s aim of carbonneutrality’ cutting targets. EIB president Werner Hoyer said the bank’s decision was a quantum leap in “the top issue on the political agenda of our time”. The new policy limits approvals of fossil fuel projects before 2021 to those already under EIB appraisal. The World’s richest man, meanwhile, is pitching in with investments to California-based Heliogen, which concentrates sunlight to reach temperatures high enough for use in heavy industry. Gates said he was pleased to be an initial backer of a promising development in the bid

“to one day replace fossil fuel”. Friends of the Earth Europe spokesman Colin Roche has praised the EIB for its decision, and Gates’ move is likely to win similar praise from environmental groups. Heliogen uses software to align a barrage of mirrors to reflect sunlight and generate heat almost three times as intense as other solar energy systems. The technology could provide sufficient heat to split hydrogen particles from water to create a fossil-free gas for household heating and industry.

The business of ethics, or is it the ethics of business...? SARAH Duncan is to be congratulated on producing The Ethical Business Book, a timely and important presentation of “50 ways you can help protect people, the planet, and profits”. The author makes a strong business case for taking the ethical road, and companies ignore it at their peril. She explains that traditional corporate social responsibility (aka CSR, often a bolt-on after the money has been made) is being superseded by new ethical standards for business. We are now required to live up to society’s expectations while generating profits. Business owners should be thinking about the “triple bottom line”, which measures not only profitability but also integrity and sensitivity to the environment. Duncan’s tone is never hectoring, and she is sympathetic to individuals and companies that need to take baby steps. “Don’t be afraid of the half-way house — all businesses are a work in progress,” she writes. “Companies just need to be able to legitimately say that initiatives are being set in train and this is part of an ethical journey to better things.” The reader is challenged to produce an action plan for greater employee engagement and happiness. It’s a no-brainer when you consider that, according to The Macleod Report, wellmotivated staff generate 43 percent more revenue (with 12 percent higher productivity), take far fewer sick days, and are 87 percent less likely to quit. That’s going to ease the recruitment budget somewhat. Mahatma Gandhi is credited here with having carved out the Ten Customer Commandments

(in essence “Though shalt look after them”). But looking after — and retaining — customers as consumer conscience rises will depend partly on their commitment, too. Some will be ready to switch to similar businesses that display better sustainability credentials. Marketing in this new era moves from manipulation to authentication, adding the values and proof of ethical impact that customers demand. Duncan suggests reinventing BOGOF to “Buy one GIVE one free”.

She commends Toms Shoes (a raft of support to the needy), Mindful Chef (school meals for poor children), and Hey Girls (free sanitary towels to those who could not otherwise afford them). Advertising seems to be confined to the informative (which may sadden those who consider the better commercials to be minor works of art). This guide will be useful to those who are aware they should

be doing something for the environment, but aren’t sure quite what. It’s also an admonishment to people who stuff old newspapers in with household waste when no one is looking. Never again, Sarah, I promise. In the UK, as elsewhere, teenagers’ interest in the Brexit saga is rightly giving way to concern for the welfare of the planet. Young people are worried and in five years, 75 percent of the workforce will be Millennials — who are already shunning companies with poor ethical standards. The Baby Boomers may have eased-off on their idealism, but those born in the 1980s and ‘90s appear to be in for the long haul. THE CONNECTION... The author tells us that this is the age of the eco-leader, who recognises that quality, profitability, sustainability and social responsibility are connected. So how do we lead, follow and adapt? This little book could help. Duncan writes well, wasting not a word. The layout and illustrations are superb, with plenty of room for reader response. The author invites us to consider our position in relation to the new business ethics and jot notes in the book. She is realistic about the time needed to reflect on these matters before putting pen to paper (take heed, Dr Phil) and this would seem to be a very useful exercise.

Business Vision Winter 2019-20 Issue • www.bv.world

Author Sarah Duncan looks at subjects companies ignore at their peril. Review by JOHN FOOT

The Ethical Business Book Published (2019) by LID Publishing Limited London 89

.W O R L D Awards 2019 Winter announcement highlights

AN INVITATION TO VOTE Readers are cordially invited to vote in the Business Vision (BV) Awards Programme. BV seeks out candidates with outstanding corporate achievements but all eventual winners will have convinced the judging panel that they have the vision to maintain and build on their success well into the future. Visit our website www.bv.world/awards to place your vote or email us at award@bv.world We will send you a copy of the nomination form. The information you provide will be used by the BV judging panel but not shared with third parties. As a small token of our thanks you will be entered in a free draw for a one-year complimentary subscription. No vote is wasted. Your recommendation will receive our full attention.

Danske Bank — Best Digital Bank | Denmark 2019

DANSKE Bank can trace its roots to 1871, growing through numerous strategic mergers to become one of Denmark's largest banks, with a core market covering the Nordics and a presence in 13 countries. The bank's innovative product developments and collaborative partnerships have left it firmly footed to meet clients' future financial needs. Danske Bank counts 2.8 million personal and business customers amongst its roster, with 2.1 million registered users of its digital banking services. Across its core markets, cash is no longer king, and Danske Bank has launched cashless solutions for everything from the kids' pocket money to customisable credit card offerings. Danske banking apps transform mobile phones into personal finance hubs for any-time cross-account access and convenient payment processing. The BV judging panel presents Danske Bank with the 2019 Best Digital Bank (Denmark) award.

RBS (Royal Bank of Scotland) — Most Visionary Retail Banking Team | United Kingdom 2019

Europcar — Best Urban Mobility Solutions | Europe 2019

EUROPCAR hopes to dissuade urban residents from individual car ownership through its Urban Mobility Business Unit. Founded as a rental car company in Paris in 1949, Europcar now runs operations in 140 countries. It has embarked on a growth and diversification strategy aptly named SHIFT 2023, which details its roadmap for further profitable expansion. The Urban Mobility Unit is fuelled by the acquisition and development of start-up Ubeeqo, a specialist of corporate ridesharing and mobility solutions. Individual urban cars typically spend over 90 percent of their time parked, but Europcar's elegant solution enables multimodality of its auto assets while offering consumers an attractive alternative to ownership. The BV judging panel applauds the closed-loop business model and presents Europcar with the 2019 Best Urban Mobility Solutions (Europe) award.

Business Vision Winter 2019-20 Issue • www.bv.world

RBS, or the Royal Bank of Scotland, ensures employee engagement by creating a work environment where dreamers with diligence are recognised and rewarded. The RBS retail banking team has rolled out all the stops to offer clients an above-and-beyond suite of products and services. Through RBS's mobile banking app, customers can send money or make payments, freeze and unfreeze misplaced cards, and even access accounts from select other banks. They can order travel cash in foreign currencies for branch pick-up or home delivery. RBS recently launched a budgeting tool to help clients visualise — and better control — where their money goes. For a history rooted in product innovation and customer commitment, the BV judging panel declares RBS as the 2019 winner of the Most Visionary Retail Banking Team (United Kingdom).

JSC MTBank — Best SME Bank | Belarus 2019 .W O R L D

AS ONE of the first Belarusian banks to recognise the potential of — and focus funding on — small and medium-sized enterprises (SMEs), JSC MTBank offers a comprehensive suite of value-added products and services. MTBank provides credit lines for working capital, investment projects, leasing assets and trade finance. As a modern commercial bank, it also offers security deposits, currency exchanges with an option of individual rates, bank guarantees and brokerage services, paying attention to the online payment tools improvement. MTBank always aimed to help private business to develop, to become efficient and profitable. Therefore, the bank actively supports various educational projects, creates its own business training initiatives and organizes regular networking meetings. Fruitful partnership with leading international financial institutions such as the European Bank for Reconstruction and Development (EBRD) also gives MTBank the funding to further fuel the SME market. The BV judging panel recognises MTBank with the 2019 award for Best SME Bank (Belarus).

Rabobank — Best Community Social Impact Bank | Netherlands 2019 ESTABLISHED as a Dutch agricultural co-operative bank in the late 19th century, Rabobank remains committed to its members by reinvesting profits to support local, national, and international projects of strong social impact. Rabobank engages in open dialogue with members to elicit feedback to shape the bank's trajectory and to transform the current global food system into a more ecologically and economically sustainable model. As such, Rabobank recently partnered with IBM to implement a blockchain-based application that gives coffee lovers a trusted account of the beans' journey, from farm to mug. Consumers can use the app to monitor the supply chain and to support initiatives that benefit local farming communities. The BV judging panel agrees that no challenge can withstand a unified front of collaboration and solidarity. The judges present Rabobank with the 2019 Best Community Social Impact Bank (Netherlands) award.

Jerónimo Martins — Best Corporate Responsibility | Portugal 2019

THE JERÓNIMO Martins story dates back more than two centuries, giving the food distributor ample time to perfect the five-pillar action plan outlining its corporate responsibilities. Jerónimo Martins stocks shelves with quality food that promotes good health, including expanding product lines free from lactose, gluten, and animal proteins. It prioritises environmental initiatives that combat climate change, boost biodiversity, and optimise waste management. It forges lasting partnerships with local suppliers and leads by example to incorporate the highest standards of safety, environmental stewardship, and social impact across the supply chain. Jerónimo Martins runs community support programmes that tackle hunger and malnutrition. As a benchmark employer, it demonstrates leadership in gender equality and initiatives that strike a healthy worklife balance. The BV judging panel presents Jerónimo Martins with the 2019 Best Corporate Responsibility (Portugal) award.

Kommunalkredit Austria AG — Most Sustainable Infrastructure Project Partner | Central Europe 2019

KOMMUNALKREDIT Austria specialises in financing infrastructure and energy projects, and prides itself on its swift and decisive management processes. Its stated aim — to be a leader in the European infrastructure market — has been realised with aplomb. Recognition from the media, its partners, customers, and even its competitors, shows that another of its ambitions — to improve people's lives — has been equally successful. In 2018, Kommunalkredit was ranked in the Top 30 Initial Mandated Lead Arrangers of credit financing in the EMEA (Europe, Middle East and Africa) region. The BV judges recognise this as an organisation with sustainability at the heart of its business model, and at the core of its activities. With ongoing projects in the areas of energy, the environment, social infrastructure, communications and transport, it shows that true sustainability can be more than just a noble goal. Kommunalkredit Austria AG is the winner of the 2019 award for Most Sustainable Infrastructure Project Partner (Central Europe).

SAP — Best Enterprise Application Software Solutions | Europe 2019

Tesco plc — Best Customer Satisfaction Retailer | United Kingdom 2019

TESCO is enjoying the fruits of a five-year turnaround plan led by outgoing CEO Dave Lewis, who is credited with steering the British grocery giant back to its former glory. When he took the helm, Lewis applied a back-to-basics approach to force executive leadership to live the shopping experience of the common consumer. Tesco offloaded underperforming facilities, refined its merchandise mix, and expanded its range of plant-based foods to boost customer satisfaction. It launched the Clubcard Plus, a monthly subscription customer reward card with special savings on Tesco exclusive brands and Tesco mobile data. The strategies are paying off as Tesco has received the highest customer satisfaction ratings in years. The BV judging panel recognises Tesco's strong turnaround with the 2019 award for Best Customer Satisfaction Retailer in the United Kingdom.

Business Vision Winter 2019-20 Issue • www.bv.world

WITH OVER 90 percent of Forbes Global 2000 companies counted amongst its client roster and 200 million subscribers to its cloud base in 180 countries, SAP has proven itself an ideal partner of intelligent enterprise. The European multinational is a world leader of enterprise application software solutions, with 77 percent of global transaction revenue passing through an SAP system. SAP has formed partnerships with more than 18,000 organisations worldwide, including hyperscalers like Microsoft, IBM, Amazon, and Google. It honours a 47-year legacy of business innovation by funding over 100 research and development centres to deliver the digital solutions that make the world run more smoothly. The BV judging panel names SAP as the worthy winner of the 2019 Best Enterprise Application Software Solutions (Europe) award.

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National Bank of Bahrain (NBB) — Most Innovative Banking Team | Bahrain 2019

AS THE oldest bank in the country, the National Bank of Bahrain (NBB) takes pride in a history steeped in service and innovation. The farsighted bank articulates a team vision of harnessing modern tech advancements and knowledgeable human capital to deliver on customer demands. The bank runs regular training sessions across its ranks, including a Director Development Programme, to ensure the NBB team keeps a sharp competitive edge in the rapidly changing financial industry. NBB has updated its product portfolio with the digital solutions and services that contribute towards a more financially inclusive and economically empowered nation. The BV judging panel congratulates the National Bank of Bahrain, winner of the 2019 Most Innovative Banking Team (Bahrain) award.

Equinor — Most Responsible Energy Corporate Leadership | Nordics 2019

EQUINOR follows the Nordic tradition of exploring beyond the horizon to shape the future of a global market. The Norwegian company develops oil, gas, wind and solar energy in over 30 countries, and is an active advocate of the Paris Climate Agreement and UN Sustainable Development Goals. Equinor has pledged to cut carbon emissions by 40 percent by 2030, 70 percent by 2040, and to near zero by 2050. It's establishing a framework to create the long-term value that leads to a low-carbon future — and collaboration is key. Along with a network of like-minded partners, Equinor plans to invest 50 billion Norwegian kroner (more than $5bn) to undertake large-scale industrial measures to reduce its carbon footprint, including energy efficiency, digitalisation and electrification initiatives. The BV judging panel recognises Equinor's climateaction contributions with the 2019 award for Most Responsible Energy Corporate Leadership (Nordics).

ENGIE — Best ESG Mobility Solutions | Europe 2019

URBAN municipalities are tackling the challenges of gridlocked traffic and poor air quality with the help of ENGIE, a French multinational leader of the energy revolution. With 2.4 billion new inhabitants expected by 2050 — two thirds of which will reside in cities — ENGIE is committed to optimising urban transit networks and promoting the transition towards green fuels. ENGIE's eco-mobility programme is in overdrive as it races to help cities strengthen transport infrastructure and upgrade to smart transit systems. The company receives top marks in environmental, social, and governance (ESG) assessments and has issued an open invitation for collaboration to start-ups working on promising projects in sustainable mobility, smart communities, and renewable energy storage. The BV judging panel is delighted to present ENGIE with the 2019 award for Best ESG Mobility Solutions (Europe).

Tesla — Outstanding Contribution to Sustainable Energy | Global 2019

TESLA has reached international fame as a high-tech alternative to legacy luxury car brands, with a focus on sustainable energy that has pushed product development and diversification from smart cars to power storage and solar energy. Tesla has evolved from a niche manufacturer to a mass producer of zero or lowemission solutions. The company entered the solar energy market in 2017, selling traditional solar panels and innovative solar roof tiles. Tesla storage solutions include the Powerwall, Powerpack, and Megapack, which enable users to collect and save solar energy for a rainy day. Over the past year, Tesla has doubled its global energy storage capacity to more than 2 GWh. Company founder Elon Musk asserts that Tesla is poised for exponential growth — and that renewables are fuelling the development process. The BV judging panel recognises Tesla as an industry innovator with the 2019 Outstanding Contribution to Sustainable Energy (Global) award.

GlaxoSmithKline — Most Innovative Pharma R&D Team | United Kingdom 2019

UniCredit — Best Banking Growth Strategy | Italy 2019

UNICREDIT is a pan-European bank with a strong core market and an expansive — and expanding — international presence. The bank seeks to strengthen the group value by focusing on customer satisfaction, supporting the personal and professional development of its workforce, and generating synergies throughout the network. Conscientious risk management and disciplined execution of growth strategies have proven successful, yielding steady performance and marked progress. Digitalisation has simplified processes, boosting ease of access and convenience while shoring up security. The BV judging panel believes that UniCredit has laid the groundwork for a sustainable and future-proof business, with optimisation initiatives that will help it build the bank of tomorrow. The judges congratulate UniCredit, the 2019 winner of the Best Banking Growth Strategy (Italy) award.

Business Vision Winter 2019-20 Issue • www.bv.world

GLAXOSMITHKLINE pushes the boundaries of innovation to bring medicines to market in the shortest timeframe and safest manner possible. It nurtures collaborative partnerships — academic, business, non-profit, and private — to unlock potential in the discovery and manufacturing process of vaccines and transformational medicines. GlaxoSmithKline established a Research and Development (R&D) department that employs 16,000 people across three global businesses — and invested more than $5 bn in 2018. The Fortune-500 company invested along with various collaborators to launch the Medicines Manufacturing Innovation Centre (MMIC) in Scotland. By 2023, the $73m innovation centre will provide high-value R&D employment. The GlaxoSmithKline R&D team at the MMIC will focus on continuous manufacturing and advanced crystallisation, which can drastically reduce market launch times while still meeting strict standards of quality control. The BV judging panel presents GlaxoSmithKline with the 2019 Most Innovative Pharma R&D Team (United Kingdom) award.

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Veolia Environment S.A. — Best ESG Utility Management Solutions | Europe 2019

VEOLIA Environment boasts a 166-year legacy of utility innovation. The French transnational collaborates with municipalities, businesses, and private citizens to develop solutions that make the most of finite resources through a circular economy system. The recovery and regeneration of materials and energy is a prime focus of Veolia. It offers water distribution, wastewater treatment, energy optimisation, power production and distribution, and waste treatment services. Veolia operates more than 140 facilities on five continents, helping public and private entities fulfil basic human needs as well as meeting rapidly evolving environmental, social, and governance (ESG) standards. It has achieved nearly 60 milestone projects, half in its core European market and the others spread across the globe. The BV judging panel present Veolia with the 2019 Best ESG Utility Management Solutions (Europe) award.

Zoomlion Ghana — Best ESG Waste Management Solutions Team | West Africa 2019 WITH a worldwide shift towards sustainability, circular economies become less of a pipe dream and more an inevitable part of the future. Founded in 2006 as one of the few private waste collections providers, Zoomlion Ghana now claims 70 percent of the market. The industry leader operates as a knowledgeable and like-minded partner, not adversarial market competitor. Through public-private partnerships, Zoomlion manages over 85,000 workers across the continent. The environmental sanitation specialist recovers and recycles plastics. It diverts organic waste to its 600-tonne, 400 tonne — and soon to be completed 1,000-tonne — composting facilities. The company fulfils its corporate social responsibility through ongoing environmental, educational, and health care initiatives. For outstanding contributions to a clean, green, and healthy Africa, the BV judging panel presents Zoomlion Ghana with the 2019 Best ESG Waste Management Solutions Team (West Africa) award.

The LEGO Group — Best ESG Transformation Strategy | Nordics 2019

LEGO's brightly coloured, interlocking bricks are a staple of childhood playrooms. The tiny indestructible toys have been passed down from generation to generation, just as the LEGO company has passed from father to son since 1932. The LEGO Group safeguards the inheritance of future generations by investing in sustainable solutions today. It has invested about $150m to build the Sustainable Materials Centre that will search for sustainable yet durable alternatives to the traditional plastic bricks. The group makes strong environmental, social, and governance (ESG) commitments and logs steady progress towards its eco-ambitions. In 2018, LEGO recycled 93 percent of operational waste and fully balanced its energy consumption with renewable wind investments. In 2020, it will phase out all single-use plastic bags in favour of responsibly sourced paper packaging. For a company of purpose and play, the BV judging panel presents the LEGO Group with the 2019 Best ESG Transformation Strategy (Nordics) award.

UBS — Best Banking ESG Strategy | Europe 2019

THE UNITED Bank of Switzerland (UBS) has roots that stretch back to 1862. The Swiss group is a trusted financial partner at home and abroad, offering asset management as well as personal, commercial, and investment banking services. As an industry leader of Sustainable Investing (SI), UBS assists investors in aligning portfolios with principles to reap healthy rewards. UBS pledged to direct $5 bn worth of assets towards completion of the UN's Sustainable Development Goals (SDGs) by 2022 — and it's already more than halfway to its target. Environmental, social, and governance (ESG) integration across asset classes enables investors to cherry-pick their portfolio structure according to theme, impact, or exclusion. Furthermore, the bank leads by example in terms of organisation-wide programmes promoting education and entrepreneurship. The BV judging panel applauds the bank's eco-stance and presents UBS with the 2019 Best Banking ESG Strategy (Europe) award.

Mashreq Bank — Best Digital Banking Technology | Middle East 2019

Philips — Best CSR Leadership | Netherlands 2019

PHILIPS is a Dutch multinational with global brand exposure and exemplary leadership in sustainability. The conglomerate has set itself some ambitious targets, including achieving carbon-neutral operations by the end of 2020 and leveraging products and programmes to positively impact the lives of three billion people each year by 2030. Philips shares the results of its corporate social responsibility (CSR) plan in regularly published and externally audited assessments, with data that details its steadfast march towards its targets. It approaches sustainability as a solution to the climate crisis and a driver of economic growth and innovation, making Philips the obvious choice of the BV judging panel for the 2019 Best CSR Leadership (Netherlands) award.

Business Vision Winter 2019-20 Issue • www.bv.world

MASHREQ works in client-bank partnership to find the best opportunities for innovation. Over its more than 52-year history, Mashreq Bank has maintained a process of continuous self-assessment and actualisation to deliver superior customer service and cutting-edge fintech products. One of the UAE's best performing banks for five decades, Mashreq is a leading financial institution with an expanding footprint across the Middle East. They have international offices across Europe, Asia, Africa and the US, and a strong presence in all the financial capitals of the world. Across Mashreq operations, the focus is on cultivating client relationships and pushing product innovation. Mashreq Digital and Online Banking platforms convert devices — phone or fax, inbox or ATM — into a personal bank branch. Dozens of next-generation features ensure the Mashreq Mobile app brings convenience and ease — plus a bit of the “wow” factor — to finance management. For its customer-driven innovation, the BV judging panel declares Mashreq Bank as the winner of the 2019 Best Digital Banking Technology (Middle East) award.

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Zhang Xin

PEOPLE

ZHANG Xin heads the largest real estate developer in China, and that’s saying a lot. Xin co-founded SOHO China and now has a net worth of more than $3bn; all the more impressive considering her humble beginnings, and was pulling 12-hour factory shifts at the age of 15 to help her family. She quickly realised that the transformative power of education could change her life, and began saving to study abroad. She managed to fund studies at Cambridge University and went on to work with Goldman Sachs in London, New York, and Hong Kong. With her husband, Pan Shiyi, she founded the real estate giant in 1995. Over the past 25 years, SOHO China has developed 60 million square feet of real estate. The organisation also engages in education-focused initiatives to fight poverty. Through the philanthropic SOHO China Foundation, Xin has funded a $100m initiative to help outstanding scholars to attend top universities. She acknowledges that gender discrimination still exists in the country. “We still see a bias towards boys in the countryside,” she says. “Most abandoned children are girls; we have few women ministers. But women dominate in school and the Olympics, and there are more and more self-made women entrepreneurs.” Zhang Xi has contributed to China’s rise to super power status, and worries that trade disputes such as the recent one with the US are hurting investor sentiment. “There seems to be a public consensus that the rise of China is inevitable,” she says. “The United States seems to not want to see a strong China to be its rival. And therefore, there is a strong will to contain China.” There was no chance of a collapse of economic growth in the country, she believes, but acknowledges the days of 10 percent GDP growth are over.

Hanzade DoganBoyner Senesenevler via Wikimedia Commons

AS THE daughter of a billionaire newspaper mogul, Hanzade Dogan-Boyner may have been born the silver-spooned darling of Turkey, but she bucked stereotypes to forge an empire of her own. The tech entrepreneur started Hepsiburada in 2000; today, it is the largest e-commerce platform in Turkey, with $786m in revenue for 2018. The platform attracts 150m visitors each month, and annual company growth is 60 to 70 percent. Before launching Hepsiburada, Dogan-Boyner spent a decade in the family media business. She was an early advocate of digitalisation and suggested the media group invest in the sector to modernise. She could sense a revolution building, but her timing was off. “It was probably my drive that pushed me out of the company,” she says. Her father, Aydin Dogan, agrees and admits that “our structure was not to accept fresh, and perhaps risky, ideas at that time”. Hanzade Dogan-Boyner continues to challenge stereotypes as a Muslim woman running a top tech company. When she realised that only 400 of the 8,000 merchants on the Hepsiburada platform were female-owned, she launched an initiative to level the playing field. Hepsiburada offers free training seminars and on-boarding assistance to women. Female merchants are promoted on the company’s homepage, and algorithms help consumers identify products marketed by women. Merchants “graduate” from the programme when their company revenues hit certain thresholds. Business owners then cede their spots — and benefits — to a newcomer. By November 2019, 4,000 women had enrolled in the programme, and nine percent of the platform’s GMV (Gross Merchandise Value) comes from female entrepreneurs. “It's an investment we're very proud of making,” Dogan-Boyner said. “We have to support women for their financial independence. This is important for women and for Turkey's continued development.” Hepsiburada’s growing market presence in Europe, the Middle East and Africa has led international media to label it the Amazon of the East.

Business Vision Winter 2019-20 Issue • www.bv.world

PEOPLE

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It don’t get no Goodr than this: food from rich to poor HEATHER LEAH SMITH reports on a woman who singlehandedly takes on hunger and want, with blockchain as an ally

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A “DO-GOODER” from an early age, Jasmine Crowe founded a blockchain-based company in 2017 to combat hunger across the US. Crowe serves as CEO of Goodr, the Atlanta-based company leveraging blockchain technology to divert excess food from restaurants and supermarkets to the tables of the needy. She’s a seasoned warrior in the fight against hunger, starting as a soup kitchen volunteer and later spearheading her own grassroots charity events. In 2013, Crowe was organising pop-up restaurants in areas with high homelessness in Atlanta, Baltimore, Charlotte, New Orleans and Washington, DC. The “aha” moment for Crowe came when the initiative — which she led through her previous non-profit, Sunday Soul — was captured on video and went viral on social media. “People were asking which restaurants were donating the food, but the reality was nobody was donating,” she shared in an interview with the non-profit ReFED (Rethink Food Waste Through Economics and Data). “I was couponing and pricematching and cooking all the food myself and loading it into my car and going downtown and feeding people.” She did some digging and was floored to discover about 72 billion pounds of food is wasted in the United States each year. That costs the US economy an estimated $218bn — and Crowe found this a moral affront in a society where nearly 12 percent of households are food-insecure. She fumed even more as she

Jasmine Crowe: feeding the needy from way back thought of the environmental impact of that. “We have the waste of the food itself, the waste of all the money associated with producing this now-wasted food and the waste of labour with all of the above,” she explained in a 2018 TED Talk that’s already logged over a million views. “And then there's the social inequity between people who really need food and can't get it and people who have too much and simply throw it away.” Crowe saw it as a problem of logistics, not scarcity. Enter Goodr, which harnesses the power of

blockchain technology to create indelible, transparent ledgers of the journey — and impact — of donated foods. Food businesses sign-up for Goodr’s paid service and use the app to click-add foods for pick-up. A network of logistics providers collects the donations and transports them to a non-profit, aged home or foodbank within a five to 10-mile radius. Clients track their donations on the app dashboard, where deep analytics render reports on sustainability impacts, surplus inefficiencies and tax rebates. Data-backed reports demonstrate

Urban poverty in the US: queues for soup kitchens still exist

Business Vision Winter 2019-20 Issue • www.bv.world

clients’ commitment to positive climate action, detailing the amount of water or labour saved by their donations. The donations qualify clients for big tax rebates and the reports unlock hidden savings. Crowe estimates that Goodr saves clients $14 for every dollar spent with the company. STREET CRED Goodr has raised $1.25m in funding and partnered with several national chains, who appreciate the bottom-line help the company provides — but benefit even more from the “street cred” the association has garnered. “[Businesses are] seeing that, next year, 50 percent of all the workforce is going to be millennials, and they care a lot more about supporting businesses that are doing the right thing,” she warned. “They recognise the need for new attitudes around food waste, recovery, recycling and being good stewards of the environment.”

Hand-to-hand, with love: Goodr gives with grace and generosity (with blockchain as an ally)

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Tepid growth forecast in World Bank’s 2020 report Global economies struggling to find traction as tensions and slowdowns take a toll on expansion THE WORLD Bank forecasts a slight increase in global economic growth for 2020. But the operative word is “slight”: the bank’s prediction is for expansion of 2.5 percent, just 0.1 percent up on a weary and worrisome 2019. The US is expected to face another uninspiring year, while some emerging countries and economies that struggled through last year could be in for a more prosperous time. Some optimists are still hopeful of good times to come, but 2019 dragged its heels more than any other year since the 2008 financial crisis. If 2020 follows suit, experts expect a tough slog.

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India is anticipating something of a resurgence after a poor 2019, and Brazil and Mexico are hoping for similar progress — but Argentina's already tight economy is predicted to contract still further. MISSILE ATTACK The bank warns of renewed tensions in the Middle East in general, although its report was compiled before the recent missile attack and the US drone assassination of Iranian general Qassem Soleimani. Factors such as political unrest and conflict could affect ongoing economic outcomes. The possibility of rising oil prices was taken into account in

the World Bank report. Unrest in the Middle East has previously led to a hike in oil, and economic reverberations around the world. Trade tensions between the US and China — despite recent positive progress — could resurface, the report authors note. There is also concern about mounting debt in developing economies, which has grown faster than anticipated. In general, global borrowing is seen as a problem. “Low global interest rates provide only a precarious protection against financial crises,” Ayhan Kose, director of the World Bank’s Prospects Group, wrote in the report.

Grim forecast: the World Bank Group HQ in Washington, DC

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Mark Carney

PEOPLE Princely sum of $1 a year for his challenging role…

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MARK Carney, governor of the Bank of England, has been appointed UN Special Envoy for Climate Action and Finance. Carney will take up the post in February 2020. The announcement was made shortly before the COP25 summit in Madrid, the UN's annual climate change conference. He said the conference provided a platform to bring the risks from climate change, and the opportunities from the transition to a net-zero economy, “into the heart of financial decision-making”. Investing for a “net-zero” world “must go mainstream”, he said. Carney expressed his honour at taking up the role, and good on him, because honour is pretty much all he gets: it’s a pro bono position for which he’ll be paid the princely sum of $1 a year. He will also step down as governor of the bank. The landmark Paris Agreement sets a framework to combat climate change and limit global warming to below two degrees Celsius; it was signed by 195 countries in Paris in December 2015. The post was previously held by Michael Bloomberg, billionaire and former mayor of New York. Carney’s job is to mobilise private finance for climate action, with the goal of a net-zero carbon economy for the 26th COP meeting, to be held in Glasgow in November 2020. The task facing him includes building new frameworks for financial reporting and risk management, and making climate change a priority in private financial decision-making.

Get on the road...

...with BV motoring

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Plug-and-play takes on new meaning with feisty Ego Evo ITALIAN electric bike firm Energica Motor Company is the sole manufacturer for the FIM Enel MotoE electric motorcycle racing championship. Its supersport model is the Evo, and 2016 Formula 1 world champion Nico Rosberg was recently spotted riding the bike ahead of its unveiling at the 2019 EICMA show. The second-gen Ego gets a new battery pack, expected to be a lithium-ion set-up with better performance, greater range and less weight than the current 13.4kWh lithium-polymer pack. In Eco power-saving mode, the Ego is touted to have a range of around 190km. With 107kW and 200Nm of continuous torque on tap, Eco will probably be more than enough for Ego maniacs. The updated machine also

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Touted to have a range of 190km with 107kW and 200Nm of torque receives better electronics, including ride-by-wire throttle, four riding modes and regenerative braking maps, six levels of traction control and Bosch dual-channel ABS with rear-wheel mitigation system. Aesthetically, the motorcycle gets some modest updates.

Rosberg tries two e-wheels The fairing has been slightly redesigned, presumably to incorporate the updated battery pack. Mechanical components, including adjustable Marzocchi forks and a Bitubo monoshock rear-end with adjustable rebound and preload, remain unchanged. And for good reason: it's topdrawer stuff. An international launch for the Evo is expected soon. With the c-vehicle market hotting-up, these are exciting times.

Ride like the wind... The new generation of electric motorcycles offers stunning performance

Unions unsettled as Vauxhall merges with Fiat Chrysler Bid to cut costs and fund research into the EV sector creates world’s fourth-largest car firm The merger aims to cut costs and bankroll research and investment into the EV sector. Major cost cutting would require plant closures and significant job cuts, according to union representatives. PREDICTED SALES Fiat Chrysler is ItalianAmerican owned, with brands including Alfa Romeo, Jeep and Maserati. The combined Fiat ChryslerPSA entity will be worth about £39.9bn, with predicted annual sales of almost nine million vehicles based on previous performances. French Finance Minister

Bruno Le Maire welcomed the deal. The minister said the deal now had sufficient financial heft to encourage investment in cleaner technologies. The combined group formed by the merger will be based in the Netherlands, with a board comprising members representing Peugeot and FCA. To clarify the break-down of ownership in more detail, Italian Exor will have the largest stake in the new entity. Exor's majority stake is followed by the Peugeot family, Dongfeng Motor (China) and the French state.

Business Vision Winter 2019-20 Issue • www.bv.world

FIAT Chrysler is merging with Vauxhall parent PSA, making it the world's fourth-largest car company. The merger is understood to be “50-50”, and should provide cost savings for both entities — but there are fears for the future of jobs at Vauxhall in the event of restructuring. Vauxhall UK employs 3,000 people, and unions want discussions with the French PSA, which owns Peugeot and Citroen, to clarify the situation. No factory closures are planned, the company says, but unions have called the move “unsettling”.

Graphic by Richard Thomas

Unions representing Vauxhall workers want talks with PSA

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EV NEWS ROUND-UP BY RICHARD THOMAS THE most-clicked recent news story in the world of electric vehicles has been the launch of the Tesla Cybertruck. In itself that wouldn’t be a big story, but this one attracted a lot of attention. It wasn’t the vehicle’s angular looks that got the attention, is was that stuff-up with the window-smashing spectacle. Here we are anyway, still writing about it. Tesla claims to have received 200,000 orders within seven days of the disastrous launch. Like many other utilities recently launched, the look is more car than truck. The new Mercedes-Benz EQC falls into the small SUV/Crossover category, with a range of 450km or so. The 0 – 100kmh time is an impressive for a family car: 5.1 seconds. In Europe, the basic model

Tesla’s tragic Cybertruck launch: off to a smashing start...? without extras will set you back €77,425. If the Benz is a little pedestrian for you, there are other options. British sports car company Lotus has just announced that its e-hypercar, the Evija, has entered the construction phase. With a top speed of over 200mph (on the Autobahn, of course), its 250-mile range would see you heading for

the charging station every hour or so. Here on the BV motoring desk we don’t see that as too much of a problem. Although maybe a test drive is needed to be able to say for sure… On the subject of range, or anxiety thereof, a network of charging stations launched in April 2018 by Ionity, a joint venture of BMW, Daimler, Ford and Volkswagen Group (which includes Audi and Porsche) has been spreading. Ionity’s goal is to build highpower charging stations along all the major highways of Europe. It currently has live stations across western, central and eastern Europe, from Ireland to Hungary, Finland to Spain — and more are under construction. And to make budgeting easier, each charging session has an easily remembered fee in your local currency. In the

Mike Mareen / Shutterstock.com

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The Tesla Cybertruck... not the prettiest flower in the field, and not as tough as Musk thought

Cobalt mine at Bou-Azzer in Morocco; there are others in DRC. It can be a messy process.

GREEN JUICE AGAIN

THE main driver for development and uptake of electric vehicles is concern for the environment. But the news isn't all positive, and care must still be taken to minimise impact. Back in April, a German thinktank showed that a Tesla Model 3 emitted slightly more CO2 per km than the diesel-powered Mercedes-Benz C220d. Oh dear. Since shunning nuclear power, most electricity in Germany is generated from coal. Production of lithium-ion (Li-ion) batteries has a non-zero carbon footprint — depending on the method used to generate the electricity (see our article How green is your juice in BV Spring 2019). The lithium is extracted from the earth, a finite resource. Most lithium reserves are under salt flats high in the Andes in South America. The residents of these areas of Argentina and Bolivia

don’t benefit from the extraction process, which also requires large amounts of water in dry regions. Another much sought-after ingredient for Li-ion batteries is cobalt. This element is abundant in small rocks found on the surface of the seabed around the world, but harvesting it should be done without damage to the seabed, its flora or its fauna. Research is currently being undertaken by the European Union on extraction in the Mediterranean. Cobalt is currently mined on land, with almost 75 percent of the world’s supply coming from the Democratic Republic of the Congo (DRC). DRC has a bad track record on environmental issues, working conditions and child labour, and manufacturers are looking to reduce their social and environmental impact. Tesla and BMW will be looking to source it from other countries, such as Australia and Morocco. However, with the quantities required globally, it will not be possible to avoid or using DRC as a source. Volvo battery suppliers

use blockchain technology to trace cobalt to only socially and environmentally responsible mines.

UP, UP AND AWAY

ON A lighter note, let’s mention advances in the field of electric flight. Many advances in combustion engines came via the racing scene, particularly F1. It is hoped that Formula E will do the same for electric cars and planes. To push the evolution of electric flight, the world’s first electric plane-racing series will be launched in 2020, the brainchild of Airbus. A prototype of a racing plane was unveiled at the recent Dubai Air Show, developed from a craft which won podium places in Formula Air racing in Europe in the ‘80s and ‘90s. The plane has been converted to fully electric by a Yorkshirebased company. It can hit 300mph, with 100kg of Li-ion batteries providing a full-speed flight duration of five minutes, with reserve capacity of 10 minutes at reduced power — presumably to get to the start/finish line.

Business Vision Winter 2019-20 Issue • www.bv.world

euro zone you pay €8, in the UK £8, and in Scandinavia Norway, Sweden or Demark a round 80 Crowns.

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UK car market's fears for ‘emissions laws and Brexit' NEW UK car registrations in 2019 fell to their lowest level in six years. A total of 2.31m new cars were registered in 2019, down almost 2.5 percent on 2018. This is the nadir since 2013, according to the Society of Motor Manufacturers and Traders (SMMT) — and the third consecutive year of decline. Weak consumer confidence and confusion over emissions legislation are listed as major factors in the automotive industry's misery. Another factor in the decline is the collapse of the diesel-powered car market, which has gone into virtual freefall. It showed a drop of more than 20 percent over 2018 sales — in a sector which once accounted for almost half of new vehicle sales. But SMMT CEO Mike Hawes

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Potential buyers ‘confused, cautious’ Mike Hawes, SMMT CEO pegged Brexit as the biggest problem for the sector, and described the overall situation as “a perfect storm” for the industry. The SMMT says uncertainty over future emissions laws and restrictions has left potential buyers confused and cautious. The organisation adds that stricter air quality rules will mean a surge in the development of electric and

hybrid cars. New light commercial vehicle registrations returned to growth in December after three months of decline, an uptick of 7.8 percent in the month. This was the result of an easing of regulatory changes and attractive offers on new models, the SMMT says — but pickups nonetheless experienced a fall in demand.

Cars loading at Southampton Port — but domestic trade in the auto sector is down

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Business Vision Winter 2019 - 2020

Articles inside

Review: Ethical Business

Goodr as it gets

World Bank forecast

Award highlights

Sustainability in focus

EIB fights for climate

Open banking explained

Planting the seed

Rewards of e-commerce

Automation hits middle-tier

EEX buys the future

Write the right post

Sunny side of 2019

Future disruptions

Reinsurance challenges

Export aid for UK?

Pupils and payment

Art in the workplace

Something from nothing?

OECD climate warning

Lisbon: Green Capital

What is reneging?

SMEs missing out

Protection for execs

The working week examined

Pensions: will they last?

C-suite and digitalisation

Data and democracy

Private equity: is it for you?

Heart of the Matter

Bushfire insurance claims

Are you in the club?

Bezos backs e-commerce

Banks facing tough times

Infrastructure finance

How's your cyber hygiene?