Aligning Corporate Engagement with the EU Commission’s Strategic Focus September 2021
Foreword The European Commission has recently published its second annual Strategic Foresight Report. ‘The EU’s capacity and freedom to act’, presents a forward-looking perspective on the important trends affecting the EU’s capacity and freedom to act in the coming decades, including: • • • •
Climate change and other environmental challenges Digital hyperconnectivity and technological transformation Pressure on democracy and values Shifts in global order and demography
So why does this matter? As one of Europe’s leading Public Affairs consultancies, we help our clients understand and shape the regulatory and policymaking landscape at a national, European and international level. A key part of this involves understanding where there is overlap between our clients' strategic objectives and how they align against the current European policy agenda. The themes identified by the report affect all businesses, regardless of size and sector. They are themes that will not only resonate with policymakers in the EU, but with your shareholders, the investor community, wider external stakeholders and with your customer-base. The firms that can offer original insight and thought leadership from an industry perspective on these themes are most likely to achieve stronger engagement and awareness across all audiences. Within this short document we provide a summary of the key trends identified by the Commission and offer our own insights into both what the coming year may have in store and what firms should be thinking about.
Helena Walsh Managing Director, EU Public Affairs helena.walsh@cicero-group.com
Mark Twigg Executive Director mark.twigg@cicero-group.com
Andrew Roberts Head of Research andrew.roberts@cicero-group.com
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THEME 1: CLIMATE CHANGE AND OTHER ENVIRONMENTAL CHALLENGES
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Global warming will probably surpass 1.5oC in the next 20 years and head towards 20oC by mid‑century, worsening the pressure on water and food safety worldwide. By 2050, 200 million people will be in need of humanitarian assistance partly due to ecological effects. - EU Commission
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Corporate strategy and the climate crisis: Addressing the climate crisis is rightfully mentioned first among key strategic challenges. It ties into every sector of the economy as well as every person’s life. We’ll need to change the way we move around, what we eat and where we shop, to how we live, maintain and heat our homes. The EU’s ambition for the continent is in trying to maintain competitive advantages while building strategic autonomy, all the while establishing whole new circular industries that help us to reduce critical dependencies. The 2050 carbon neutrality target, and the latest package of legislation to implement it, make clear that the EU is putting a price on pollution. While that may be necessary, it raises major challenges, starting with preventing another yellow vest movement or a mass exodus of companies moving to less regulated pastures. Getting – and keeping – everyone on board is arguably the greatest communications challenge of this century, both for governments and private actors. Companies from all sectors are responding with a flurry of corporate sustainability announcements and carbon neutrality targets. The good news is that more consensus is emerging on what ‘net zero’ or ‘carbon neutral’ actually means for a company, which
will help clarify both corporate strategy and external communication. The bad news is that some black sheep will likely use the absence of clear definitions for greenwashing, tainting broader efforts. This is increasingly drawing the attention of regulators and will be reflected in EU initiatives on substantiating green claims and measures to empower better consumer choices, with proposals for both expected in December. Investors are equally supposed to get a better understanding of what is green through the bloc’s taxonomy framework, some details of which are still being fleshed out. A third topic relevant to corporate strategy is a proposal on how to ensure sustainability in supply chains, expected for late October. Taken together, these proposals are a powerful lever that will require companies to re-evaluate some of the efforts already made as well as how to communicate on them vis-à-vis consumers, governments and investors. While serious commitment by all is required to shift the dial on the climate crisis, it is in all companies’ interests to ensure they are effectively communicating and engaging with stakeholders as part of this transition. Sophie-Charlotte Walter Senior Account Manager
ARCHITAS – ESG GLOBAL INVESTOR CAMPAIGN Cicero/amo supported Architas to develop its ESG thought leadership credentials across key European and Asian markets to build both the business case for sustainable investments and to build relationships with key regulatory stakeholders. We created an integrated thought leadership campaign, based on the insights generated from proprietary research across eleven European and Asian markets exploring the opportunities, challenges and barriers facing retail investors with regards to sustainable investing – creating a call to action for ESG funds to reflect the values of the end-investor. Cicero/amo created a flagship report exploring the various aspects of ESG and the trade-offs involved in balancing competing needs in different markets. This incorporated the end-to-end copywriting and digital design. We supplemented this report with a series of additional communications outputs, including a series of op-eds and social media campaign collateral to be used in each market covered in the survey. More details on the campaign can be found here. 3
THEME 2: DIGITAL HYPERCONNECTIVITY AND TECHNOLOGICAL TRANSFORMATIONS
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The number of connected devices globally might increase from 30.4 billion in 2020 to 200 billion in 2030. Increased connectivity of objects, places and people will result in new products, services, business models, and life and work patterns. Europe’s global leadership ambition in the twin transitions could position it strongly in an emerging lucrative market and create new types of work, for example green jobs, in both established and emerging sectors.
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- EU Commission
Strengthening EU capacities on innovative technologies and data: During her State of the Union address to the European Parliament’s plenary this year, European Commission President Ursula von der Leyen called digital the ‘make-or-break issue’ of the year. It therefore rightfully follows that a key theme within the EU’s Strategic Foresight report is also strengthening the EU’s capacities with respect to innovative technologies and data. The EU has been falling behind the US and China in the tech and digital spheres over the past decade. In response, the Commission has decided to put the issue at the front of its agenda, proposing reforms to strengthen its own capacities. The EU is aiming to create an internal datasharing regime and move data out of third country jurisdictions. Looking ahead, businesses will have readier access to industrial data, through European data hubs, and will no longer need to depend on third country providers for data processing and storage. The Commission will also reconsider existing positive data equivalence assessments, constantly checking whether foreign data regimes are keeping pace with the EU framework. The EU would thus be able to
standardise their own data rules and promote them globally. Digital connectivity, and more access to data though does not come without its risks, which is why the EU is also putting significant focus on the security of its digital ecosystem through new cybersecurity rules. To effectively complete its technological transition, the EU will also need significant investment in the development and production of next-Generation technologies so as to avoid third-country dependencies. It is preparing new regulatory frameworks to facilitate the development and production of such technologies (such as the Chips Act). On the funding side, the EU’s recovery package as well as recent revisions to state aid rules will help funnel funds into the EU’s digital transformation. Finally, these policies will be accompanied by strengthened checks on Foreign Direct Investments (FDI) and take-overs. European digital/tech businesses would be incentivised to look for investments within the bloc and have the necessary regulatory landscape to scale. Jörn-Jakob Röber Director, EU Public Affairs
TRANSFERWISE – CROSS BORDER PAYMENT FEES Cicero/amo was appointed to develop a proactive pan-EU technical lobbying campaign on cross border payment fees regulation that would establish high-level visibility for Wise (formerly TransferWise) with European lawmakers and consumers. Cicero/amo hosted roundtable events in the European Parliament with key lawmakers and leading working groups with the European Commission to maximise engagement and awareness of Transferwise’s campaign. Our value also included providing strategic analysis of early copies of legislative documents, effective messaging and position papers to Transferwise’s internal team. Cicero/amo won significant rule changes on behalf of Transferwise that mandated service providers to disclose more standardised and simplified costs and charges to consumers for exchange rates transactions - for example from Euros to Pounds and vice versa. 4
THEME 3: PRESSURE ON DEMOCRACY AND VALUES
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As of 2020, 34% of the world’s population was living in countries where democratic governance was declining and only 4% in countries that were becoming more democratic. Large-scale misinformation, powered by new tools and online platforms, will pose increasing challenges to democratic systems and drive a new type of information warfare. - EU Commission
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The growth of geo-political instability is a risk for both corporate reputation and corporate wallets: The strength of the EU, the largest group of democracies in the world, currently relies on democratic governance globally being how most states are run. However, zones of political instability near Europe are growing, both through state and non-state actors, with active efforts being made to undermine and polarise debates on the European stage. The risks this may pose cut across the policy agenda – from health, to security to the environment.
Civil unrest unsettles both Governments and businesses alike. 2020 was a notable year for popular movements including Black Lives Matter, which prompted street demonstrations in several countries. Such movements can present a number of challenges to businesses – including the reputational risks that come with extreme splits in popular opinion. Ultimately, citizens and civil society groups have found a growing range of means to make their voices heard in corporate boardrooms and this can have an impact on both company reputation and the bottom line.
Governance issues can also create real problems for international businesses, due to the increased risk of exposure to corruption or organised crime in certain global markets. Going further, some countries are also subject to sanctions regimes, which adds a legal barrier to doing business and could create supply chain challenges. Navigating these risks requires investment from businesses in legal and risk departments and to ensure they have strong governance frameworks embedded across all markets.
Governments and businesses have a common cause in addressing governance issues. Upholding the rule of law and having a secure business environment is often a key factor in attracting inward investment. Increasingly, this will go hand in hand with how businesses are viewed with respect to their own commitments to their own internal governance and values. Andrew Roberts Head of Research
KENNEDYS LAW – GEOPOLITICAL OUTLOOK: BUSINESS RISK BAROMETER Working with global law firm Kennedys, Cicero/amo undertook consumer research in 12 countries across the globe. We used the survey data to create the Kennedys Business Risk Barometer, showing how the political landscape differs in each country. The barometer provides a heat map of a basket of risks currently facing communities around the world. The specific risk factors considered were: climate risk, pollution, disease, poverty, corruption, tax evasion, organised crime, trade, immigration, technological advancements, terrorism, civil unrest and political instability. The final report demonstrates how salient macro-political issues are among grassroots communities, providing businesses and their insurers with a clear understanding of emerging risk to enable long-term sustainable operations. The report, and supporting articles (produced by Cicero/amo) are housed on the Kennedys thought leadership hub, and used to support direct partner outreach for new business purposes. More details on the campaign can be found here. 5
THEME 4: SHIFTS IN GLOBAL ORDER AND DEMOGRAPHY
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The world is becoming increasingly multipolar. China is set to become the biggest economy before the end of this decade, with India possibly surpassing the EU in the next 20 years. The world’s population is expected to reach 8.5 billion in 2030 and 9.7 billion in 2050, while the EU’s is expected to fall by 5%, to just over 420 million by 2050.
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People are aging, times are changing: Aging demographics pose a number of challenges to European governments – both in the immediate term and in the longer term. An aging population and increasing dependency ratios place strain on the public purse, both in terms of public pension systems and health and social care services. These challenges are exacerbated by the increasing economic weight of emerging economies, such as China, India, Brazil and Indonesia. With this can come increased geo-political tensions as economies jostle for their position in the redistribution of power and wealth – both internationally and intergenerationally. While, politically, the debate will be about how easy access is to goods, services, raw materials, and people, these trends will result in very real challenges for businesses also. Indeed, the success of many businesses is intimately linked with the strength of the economy in which it operates. This epitomises much
- EU Commission
of the ideological debate around Brexit, in terms of how economically material loss of access would be on both the UK and EU markets. Demographic changes too can impact on how businesses access talent and skills, ensuring their workforce is both representative and that their products and services are designed to reflect the needs of the people they are looking to serve. Similarly, pressure on public services is likely to lead to specific policy decisions being taken by governments in the near future. With these decisions come threats and opportunities. This is something we can already see in the Commission’s ten strategic priorities – with health and pharma, food, financial services, green infrastructure and security and defence all identified as priorities. For players in these sectors, this could soon bring strategic business opportunities. Mark Twigg Executive Director
AEGON - SUSTAINABILITY OF GLOBAL RETIREMENT SYSTEMS For the previous 10 years Cicero/amo has contributed to Aegon’s thought leadership programme highlighting the theme of sustainability of global retirement systems and the need for pension reforms. More latterly the campaign has focussed on the need to create a new social contract which reflects 21st century working patterns. Cicero/amo conducted an annual survey on 16,000 respondents in 15 countries providing a global research platform containing workers and retirees. To date, we have surveyed over 150,000 workers globally. Combined with in-depth desk research, we devised a strategic campaign message around pensions and sustainability to help drive Aegon engagement via thought leadership, public policy and media activities. In addition to generating over 2,000 pieces of press coverage annually across key global markets, the campaign supports Aegon’s policy engagement through inputting into OECD policy debates throughout the year, including the annual OECD Forum in Paris. More details on the campaign can be found here. 6
MEANINGFUL COMMUNICATIONS
The trends identified by the European Commission will shape Europe’s future and provide the context for a range of possible policy responses. These policy responses can have a meaningful impact on businesses based in or operating within the EU and will present both threats and opportunities. Cicero/amo, part of the Havas Group, designs and implements national, regional and global public affairs and communications campaigns for some of the world’s largest listed businesses, new entrant challengers and technology disruptors. We provide clear and original thinking to help organisations craft their message, cut through the noise and lead by example. We help our clients create meaningful change, carefully navigating the threats while maximising the opportunities.
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Aligning Corporate Engagement with the EU Commission’s Strategic Focus www.cicero-group.com
Research design and creative by Cicero/amo
Contact: Andrew Roberts Head of Research +44 (0)20 7947 5329 +44 (0)7841 582 730 andrew.roberts@cicero-group.com