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WELCOME

Richard von Appen CHAIR OF APEC BUSINESS ADVISORY COUNCIL (ABAC) 2019

The Asia Pacific Economic Cooperation forum (APEC) doesn’t host an MSMEs and Entrepreneurs Summit every year. It’s something of a landmark moment to host a Summit dedicated to our smaller market players during the calendar events for APEC 2019, and I’m proud of the shift in the traditional business agenda that this represents. MSMEs are integral to APEC economies – they constitute 97% of all enterprises in the region, and they provide 50% of employment. Although APEC hosts a CEO Summit every year, which brings together the most influential business people in the Asia Pacific so that their concerns can be heard, it’s high time that we heard from a more diverse range of participants in the economy. Without the blood, sweat, and tears of MSMEs and entrepreneurs, our economies would lack an enormous amount of innovation, creativity, and passion. Their hard work has fundamentally changed the landscape of business, and it’s hard to imagine what life would be like without the developments produced by startups, social enterprises, and tech hubs, among others. By hosting the MSMEs and Entrepreneurs Summit, APEC

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and ABAC aim to celebrate the work of smaller market participants but also to support them to thrive, recognizing that they currently face disproportionate barriers to setting up and sustaining viable business models. As a consequence of prioritizing the voices of MSMEs and entrepreneurs this year, we have gained new insight into their challenges and frustrations, and have been able to use these insights to fuel our work in tackling them. Our key findings have been that MSMEs and entrepreneurs struggle to access international markets – especially when it comes to taking advantage of free trade agreements – and that they also find it difficult to digitize their business models. A core driver of both of these challenges is the fact that smaller market participants have limited access to the time and upfront capital required to invest in expanding their business models and upskilling their management and workers. The program of our MSMEs and Entrepreneurs Summit is designed to provide training on some of those key issues in an easy-to-access, low cost setting, in order to remove barriers to the knowledge that they need to thrive. We have a host of speeches and panels featuring entrepreneurs and people running MSMEs who empathize

completely with our attendees, and can offer concrete advice based on their own experiences. The features of the program place particular emphasis on digitization and adapting to the digital economy, as our studies have shown that MSMEs that successfully digitize their business models are much more likely to succeed in the long term. The program also features important mile stones in the development of two APEC projects targeted at supporting MSMEs and entrepreneurs: the launch of the Monde B2B e-commerce marketplace for importing and exporting, and the final stage of the APEC Startup Challenge. These projects are tangible ways in which we are giving MSMEs and entrepreneurs the tools to launch themselves into the global, digital marketplace. You can read more about them in our cover story. We cannot afford to exclude the voices of MSMEs and Entrepreneurs in international business settings which have such wide-reaching implications for how we do business. Luckily there is growing consensus within APEC and ABAC that we must support the voices of smaller market representatives and enable them to succeed. The APEC MSMEs and Entrepreneurs Summit 2019 is a momentous step in that direction. ◆

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APEC

Have an Important Agenda to Pursue Despite Meeting Being Cancelled When Chilean President Sebastian Piñera announced he was cancelling the annual meeting of Asia-Pacific Economic Cooperation (APEC) in Santiago in November it cast a stark eye on the realities of hosting global summits in challenging times. By Molly McCluskey

When

Chilean President Sebastian Piñera announced he was cancelling the annual meeting of Asia-Pacific Economic Cooperation (APEC) in Santiago in November, as well as the UN climate summit known as COP25 in December, it cast a stark eye on the realities of hosting global summits in challenging times. “This has been a very difficult decision. We understand perfectly the importance of APEC and COP for Chile and the world, but we have based our decision on common sense,” Pinera said. “A president needs to put his people above everything else.” Chileans have flooded in the streets of Santiago since October, in what initially began as action against a metro fare hike, and has since blossomed into protests on the country’s vast financial →

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GLOBAL POLICY LAB APEC 2019

Leaders

G L O B A L B R I E F I N G R E P O RT APEC 2019 C O V E R S T O RY

→ and social inequality. More than a dozen people have been killed, hundreds have been injured, and thousands have been detained in what is the country’s worst unrest since the end of the Pinochet dictatorship in 1990. Initially ordering a state of emergency that allowed the Chilean military to patrol the streets, Piñera’s more recent attempts at appeasement have ranged from new social welfare packages to a shuffling of leadership. But as the protests show no sign of abating, and UN investigators arrive in-country to probe allegations of abuse, many Chileans are calling for Piñera’s resignation, and a new constitution. “Given the difficult circumstances that our country has experienced, the President has decided to cancel the APEC Summit 2019, to be held in November, to concentrate the efforts of the Government to fully restore public order, citizen security and social peace, and promote the New Social Agenda,” Foreign Minister Teodoro Ribera said in a statement. It marks a stark departure from the promise of the Chilean APEC year, which began in November 2018 in Papua New Guinea. Founded in 1989, the forum’s modern 21 “member economies” of APEC include Australia; Brunei Darussalam; Canada; Chile; China; Hong Kong, China; Indonesia; Japan; South Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; The Philippines; Russia; Singapore; Chinese Taipei; Thailand; the United States and Viet Nam. These APEC members take turns hosting annual meetings, chairing the annual Economic Leaders’ Meeting, selected ministerial meetings, senior officials’ meetings, the APEC Business Advisory Council, APEC Study Centers Consortium, and serving as APEC chair for their host year. This annually rotating presidency begins in December per annum, for the following calendar year. In addition to its 21 members, three official observers participate in APEC; the Pacific Economic Cooperation Council (PECC), the Association of Southeast Asian Nations (ASEAN) Secretariat, and the Pacific Islands Forum (PIF) Secretariat. The APEC G20G7.COM

Secretariat is based in Singapore. Collectively, APEC members represents 60% of world GDP and nearly 40% of global population. Unlike other regional trade associations, commitments to reducing barriers to trade and investment made via APEC are nonbinding, based on consensus, and designed to foster open dialogue. Each member’s vote holds equal weight. Collectively, their stated goals are to create greater prosperity for the people of the region by promoting balanced, inclusive, sustainable, innovative and secure growth and by accelerating regional economic integration. Similar to hosting an Olympics, hosting APEC also gives Chile the opportunity to showcase its unique national assets, ranging from cultural to natural, to economic, to the wide array of international guests attending the various meetings. A Steady Hand Required As 2019 host, Chile was expecting more than 20,000 people to participate in more than 200 APEC forum meetings throughout the country by the end of their presidential year. These gatherings are to have included working group meetings, workshops, committees of High Representatives, and an assorted of other meetings of academics, executives and government officials. A country’s hosting duties culminate in November with the Leaders Summit, where, is keeping with the forum’s tradition, the head of state closes their year and the next country’s leader, in this case, and Prime Minister Mahathir Mohamad of Malaysia, opens their host year. 2019 is the Latin American country’s second hosting go-round; the first was in 2004. Chile joined APEC in 1994. Through its membership in APEC, Chile has signed 16 trade agreements with other APEC member economies, fifteen of which are already in force. Those include Australia; Canada; China; South Korea; USA; Hong Kong-China; Japan; Malaysia; Mexico; Peru; P4 (New Zealand, Brunei, Darussalam, and Singapore); Thailand; and Vietnam. The 16th agreement, with Indonesia, was signed in 2017 and is pending approval. Additional free trade agreements with China, Canada, and South Korea are in the midst of being

Chileans have flooded in the streets of Santiago since October, in what initially began as action against a metro fare hike, and has since blossomed into protests on the country’s vast financial and social inequality.

updated, and one with the Philippines is currently being considered. As the host member, Chile sets the agenda, priorities and deliverables for APEC throughout the year. For APEC 2019, Chile determined four priority areas to be the focus of their presidency, and for all member economies. They were presented in December 2018 at the Informal Meeting of High Representatives (ISOM), which was the beginning of the APEC’s Chilean presidency. They’re also responsible for navigating the tensions between member economies. However, in 2018, for the first time in the forum’s history, there was a lack of consensus on a joint communique, a fallout from the ongoing trade war between the US and China. This conflict between two of the world’s largest economies have created tensions and alliances within APEC, and altered the forum’s more idealistic founding notions. US President Trump and China’s President Xi Jingping had teased the idea of signing an interim trade agreement during the forum in Santiago. As host, Chile was expected to facilitate that signing. “Frictions between the big economies are nothing to celebrate—they’ll likely cost the global economy hundreds of

GLOBAL POLICY LAB APEC 2019

billions of dollars—but the fact that windows are still open for negotiations is,” said Dr. Rebecca Fatima Sta Maria, Executive Director, APEC Secretariat, Singapore. “It’s when they’ve stopped talking to each other that we should be worried.” Sixty percent of Chilean imports, and seventy percent of their exports, are with APEC members. Chile holds the majority market share of salmon to the United States, and they are the largest supplies of blueberries, nectarines and avocados to China. “Chile’s success reflects APEC’s record of excellent growth over the past 30 years. The region’s GDP has more than quadrupled since 1989. This growth has been slowing down of late,” said Dr. Sta Maria. “The slowdown can be attributed in part to uncertainties brought about by trade tensions and barriers, tariff hikes and counter measures. These are policies that will continue if left unchecked. If so, they may have an impact on supply chains and increase the prices of goods, affecting incomes and jobs.”

to Malaysia at year’s end; the deadline for meeting the so-called Bogor Goals established in 1994, after the annual meeting in Bogor, Indonesia. These goals call for “the long-term goal of free and open trade and investment in the Asia-Pacific.” The deadline envisioned twenty-five years ago? “No later than the year 2020.” Twenty-five years later, a trade war between two of its largest economies has all but ensured those goals won’t be fully realized. However, significant progress has been made in several of the Goals’ recommendations, including consistency with World Trade Organization policies, a lowering of regional tariffs, nondiscrimination across member economies, and the ability to adapt to various members’ levels of development. As as Chile prepares to hand off hosting responsibilities to Malaysia at the end of an unconventional year, it will no doubt be at the top of the agenda for 2020. ◆

Looking ahead As 2019 host, Chile also faces another challenge, one which they will hand off

About the author MOLLY MCCLUSKEY is an independent investigative journalist and Editor-at-Large of Diplomatic Courier magazine.

G L O B A L B R I E F I N G R E P O RT O LY M P I C S O F I N N O VAT I O N B R A N D E D S T O RY

Announcing the 2020 Olympics of Innovation in Davos By Ana C. Rold

The issues, which define the 21st century are unfolding daily. As populations grow and urban centers expand, humanity’s mutual needs increasingly collide. Clean water, fresh air, renewable energy and climate change are challenges confronting all nations collectively. Coming up with the solutions will take an inter-disciplinary approach. Most importantly, solutions will not come from government heads—or, at least not from government heads alone. For the first time in history, mindboggling technological advancements have democratized solution-making. Now more than ever, every single individual is empowered to create sweeping change for humanity. For more than a decade, our team of futurists at Diplomatic Courier and our Think Tank, The World in 2050, have been concerned with the state of the world. Our global summits have tackled the future of diplomacy; philanthropy; connected cities; jobs and education; and, much more. We don’t profess to be fortunetellers. Rather, we embrace the skills, practices, and behaviors of futurists. It is behind this backdrop that we are thrilled to announce the launch of a unique new program aimed at identifying and elevating a new group of solutionists from around the world. The Olympics of Innovation, a yearly global innovation list, will champion top ideas, startups, and innovations in seven categories. The call for applications will officially open during the World Economic Forum annual meetings in Davos. The program will focus on solutions in seven clusters, G20G7.COM

each representing a megatrend that will be transformative for our longterm future. Future of Society. There is no question we will solve to live longer, work less, and know more than ever before. But what will we do in this post-employment world? Who will win? How will society deal with the knowledge and new social classes (those who have or create the knowledge and those who consume it)? Supercomputers, drones, robots, transformative gadgets, quantum computing, 3D Printers, etc. These advancements are allowing us to re-imagine and re-engineer our world. But what will they mean for the Future Society? Future of Humanity. We know Artificial Intelligence (AI) will reign supreme in our imaginations but the World in 2050 will not be a battleground between AIs and humans. Augmented humans will test the limits of humanity and they are already walking among us now. Biotechnology and gene editing are allowing us to engineer a new kind of human. Future of Energy. Humans’ impact on the planet is so irreversibly profound that exploring alternative forms of energy will be paramount to humanity’s survival in the long term. Innovations and cutting-edge research is already in the works but the goal of our generation will be to become less and less dependent (and eventually completely independent) from fossil fuels. Future of Health. On a large scale, humanity is struggling against bacteria and disease as well as noncommunicable diseases (NCDs). Today our focus is on primary prevention (intervening before a disease is developed) or secondary prevention (preventing progression of a disease when you are already sick). In the near future, we will be solving for “primordial prevention”, looking at the prevention of the risk factors in the first place, and we will treat age as a disease that not only can be “cured” but can be prevented. Future of Transportation. Flying

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cars, the Hyperloop, intergalactic travel? These are not Sci-Fi visions of the future but the world now. At the famous World’s Fair in New York in 1939, GM envisioned a futuristic society where highways connected the rural to the urban. With 70% of the world’s population moving to the urban sphere in the coming decades, innovating in the transportation realm will be paramount. Off This World. Space is the next great frontier for our civilization and becoming a multi-planetary species is one of the most important future forward achievements we can strive

Flying cars, the Hyperloop, intergalactic travel? These are not Sci-Fi visions of the future but the world now. for. Advancements in space flight and moonshots by both private sector (SpaceX and Virgin Galactic) and government (UAE’s Mars 2117 initiative) will make ours the first Mars Generation. Artistic Visions of the Future. What about art, poetry, or inventions for things and issues that have not even been imagined yet? What is the role of pop culture or film in solving for the future? This category is for the dreamers who will marry the practical to the whimsical. Who should be a part of this? Whether you are a writer or an engineer, a student or a business leader, we want you to be a part of this. We want to use our global platform and connections to showcase your work and help take you to the next level: recognition, partnerships, and even funding. To learn more and to apply visit www.2050challenge.com ◆

About the author ANA C. ROLD is the Founder and Publisher of Diplomatic Courier. Rold teaches political science courses at Northeastern University and is the Host of The World in 2050–A Forum About Our Future. To engage with her on this article follow her on Twitter @ACRold.

G L O B A L B R I E F I N G R E P O RT MERCOSUR F E AT U R E

Will Mercosur Be the Next EU? Mercosur’s core membership represents nearly 4.6 trillion dollars of GDP, which would make it the sixth largest economy in the world. By Jakob Cordes

Mercosur

(Mercado Común del Sur/Mercado Comum do Sul/Ñemby Ñemuha), South America’s largest free trade bloc, recently concluded negotiations with the EU for a trade deal which would steeply reduce barriers between most South American countries and the EU, providing the deal is approved by national legislatures. If the deal is realized, it would mean a profound shift in our understanding of South American regional politics and may pave the way to political integration of the region like what the EU achieved in the 20th century. Mercosur is a relatively new organization, founded in 1991 as a way to unify the markets of Uruguay, Paraguay, Brazil, and Argentina, and which now includes all South American states as associate or full members (except Venezuela, which had its membership suspended in 2016 for violations of democratic standards and trade manipulation). It has avoided becoming further entangled in the Venezuela crisis, unlike Unasur, which, though once the region’s preeminent coordinating bloc, has now been reduced to five members, as frustrations over inaction regarding Venezuela led the presidents of Colombia and Chile to create a competing bloc, Prosur. Prosur itself has had trouble garnering interest in the region, facing skepticism over its ability to offer a new approach. Mercosur’s core membership, excluding the Andean Community (Peru, Colombia, Ecuador, and Bolivia), which holds associate status, now represent nearly 4.6 trillion dollars of GDP, which would make it the sixth largest economy in the world (where the EU is counted as a single economy).

This market, with its growing middleclass of consumers, is highly attractive to investors in developed industrial economies like the U.S., EU, and, in recent years, China. However, the shape of the EU trade deal, which includes concessions from the EU on agricultural subsidies, demonstrate that this time around the South American states will be active agents where trade is concerned. If one thing has been made clear by the Mercosur/EU trade deal, it is that the Roosevelt Corollary, which formed the basis of American interventions in numerous South American governments of the 20th century, has lost its sway in the region. The Roosevelt Corollary, created as an addition to the older Monroe Doctrine, was used to justify intervention and to warn off European colonial and business interests. The doctrine was, essentially, an attempt to keep Europe out of South America by extending American interests. But Mercosur is a challenge the doctrine cannot contend with. Europe isn’t entering South America; South America has gone to Europe. A unified South American bloc would be a formidable player on the world stage, and there is some precedent for the emergence of such a bloc from a regional economic organization. The EU itself has its roots in the European Coal and Steel Community (ECSC), founded in 1951 in the wake of World War II. Like Mercosur, the ECSC was an economic arrangement between neighbors that eventually grew in scope to become the EU as it is today. Mercosur, along with the Andean Community, which it shares close ties to, has shown that economic pragmatism is a better unifying

Mercosur is a relatively new organization, founded in 1991 as a way to unify the markets of Uruguay, Paraguay, Brazil, and Argentina, and which now includes all South American states as associate or full members (except Venezuela, which had its membership suspended in 2016 for violations of democratic standards and trade manipulation). G20G7.COM

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force for once mortal enemies like Argentina and Brazil than the ultimately failed idealism of Unasur. However, integration is not an inevitability. Serious challenges still exist to the continued functioning of this emergent bloc. The authoritarian tendencies of Jair Bolsonaro, president of Brazil, have caused concerns in the EU and in other South American nations. China, which has made inroads into South America since the turn of the century and would likely prefer to conduct trade negotiations with individual nations, not a regional bloc, to better bring economic pressure to bear and extract favorable terms. The United States, likewise, would likely prefer to continue dealing in South America as it has for nearly two centuries, though the chaotic approach of the current administration to trade negotiations has made American priorities in this area unclear. South America is increasingly a growth region, and individual nations such as Peru, Ecuador, and Uruguay have pioneered green economics which will only grow more important as global warming continues. Mercosurâ&#x20AC;&#x2122;s entrance onto the world stage highlights the growing importance of regional blocs in tackling international issues, even as the U.S. has increasingly withdrawn from global commitments. It remains to be seen whether Mercosur will realize its potential as a unifying force for South America, and whether it will complete the process of integration with the Andean Community, but these negotiations with the EU make one thing clear: American hegemony in the region has been all but replaced by new regional consciousness. â&#x2014;&#x2020;

About the author JAKOB CORDES is a multimedia journalist and contributor to Diplomatic Courier magazine.

G L O B A L B R I E F I N G R E P O RT VIETNAM I N T E RV I E W

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G L O B A L B R I E F I N G R E P O RT VIETNAM

A Conversation with Siva Yam, President of U.S.-China Chamber of Commerce. By Paul Nash

With the

U.S.-China trade war dragging on and President Trump set to place 15% duties on $300bn of Chinese imports by the end of the year, many U.S. companies are shifting their manufacturing and trade to Vietnam, driving up that country’s trade surplus with the United States. To better understand the situation, we spoke with Siva Yam, President of the United States of America-China Chamber of commerce, a bi-national not-for profit organization founded by the late Prescott Bush Jr., brother of late U.S. President George H. W. Bush, to assist American companies to stay competitive in the global market Siva Yam, CPA, CFA, is a certified public accountant. Yam also holds the chartered financial analyst designation. He is an investment banker with over

U.S. companies have hesitated to explore Vietnam and other emerging economies, but the situation now has forced them to do so.

20 years of experience in mergers, acquisitions, public offerings and private placements of securities, venture financing and privatization. He has served as advisor to a number of venture funds and corporations including the Federal Reserve Bank of Chicago. He is also managing director of Siva Yam & Associates, LLC, a private consulting and investment banking boutique, which specializes in cross border business and trade, and He received his MBA from Duke University on a Fuqua Fellowship and his bachelor of business administration, magna cum laude, from the University of Wisconsin. He also graduated from the Hong Kong Polytechnic University with honors and is fluent in both English and Chinese. How has the ongoing trade war between the United States and China affected the U.S.-China Chamber of Commerce? Yam: Our focus has always been and will continue to be on U.S.-China business. As the global economy evolves, however, there is a continued shift in manufacturing to the emerging economies, particularly those of Southeast Asia. Vietnam has been a destination of choice. The U.S.-China Chamber of Commerce (USCCC) has taken a number of initiatives to aid the American business community to better

understand this new paradigm. About seven years ago, we realized that Vietnam had emerged as a promising economy. As a result, we established a sister organization, the U.S.-Vietnam Chamber of Commerce (USVNCC), and opened a full-service office in Vietnam. We also noticed that a number of U.S multinational companies, primarily in the consumer products and energy sectors, had started to enter into Vietnam. Manufacturers from Singapore, Japan, Korea, and Taiwan also started setting up plants in Vietnam. Many of these companies, however, particularly those from Taiwan, mix real-estate development with manufacturing. How does the U.S.-Vietnam Chamber of Commerce assist U.S. companies in Vietnam? Yam: As the U.S.-China trade dispute continues, the movement of manufacturing and assembly to Vietnam has accelerated. Many of our members and the general public have asked us for assistance in import substitution in the short term and for help relocating production in the long term. Accordingly, we have allocated resources to that effect. And we’ve enjoyed much success, as we’ve been operating in Vietnam for almost seven years now. →

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Have U.S. companies been prepared for this shift? Yam: U.S. companies have hesitated to explore Vietnam and other emerging economies, but the situation now has forced them to do so. Some American companies, however, have been left behind by their competitors from other nations that began exploring Vietnam earlier. Is Vietnam cheaper or in other ways more attractive than China? Yam: While Vietnam has the advantage of a young labor force and low wages, the total manufacturing cost is not much lower than it is in China, and, in many cases, it is even higher. These costs are due to a lack of infrastructure, an inadequate supply chain, and low productivity. Vietnam’s inexperience in international trade has also led to unrealistic pricing, which has hindered the shift in production from China. How are China and Vietnam similar in terms of the economic reforms each has undertaken over the past several decades? Yam: Although both China and Vietnam are very similar in many respects, the roots of their economic reforms are dramatically different. The core of Chinese manufacturing is located in its very large state-owned enterprises (SOEs) that were engaged in manufacturing prior to 1978 and continue to play an important role in the Chinese economy. The growth in manufacturing was augmented by the patriotism of its enormous, successful community of overseas Chinese, primarily from Hong Kong, who jumpstarted China’s economic reforms. The recent Chinese government policy seems to reinforce this idea by increasing the influence of SOEs in the Chinese economy and by proposing a privatepublic partnership between SOEs and leading private companies. At this time, in Vietnam, most of the factories that are able to produce goods to meet western standards tend to be foreign-owned. Are foreign direct investments as important to Vietnam as they have been to China? Yam: While foreign direct investments are critical in the development of both G20G7.COM

going to Vietnam to manage the import tariffs imposed by the United States on Chinese imports. However, we have also seen Chinese companies moving back to China from Vietnam.

We are in the process of hiring more staff and developing a knowledge-base of manufacturers in Vietnam. economies, the Chinese government, through its regulations and SOEs, has ensured that its economy continues to be fully controlled by its people. This might not be the case in Vietnam. How does a U.S. company go about exploring a shift to Vietnam? Does it just go onto the internet and begin there with some research? Yam: Obtaining reliable information on Vietnam is difficult. Reliable information on China, by contrast, is available through a number of commercial websites plus associations established by the Chinese governments such as the China Council for the Promotion of International trade (CCPIT) and local chambers. How does the business culture in Vietnam differ from the business culture in China? Yam: The business culture of Vietnam is very different from that of China. The Chinese are known to work almost 24/7, and they have their mobile phones with them all the time. The Vietnamese tend not to be available after regular work hours, and it is very difficult to reach them on weekends and holidays. Are Chinese companies also moving to Vietnam? Yam: The U.S.-China trade dispute has created a rush of Chinese companies

Will Vietnam become the next China? Yam: Despite all these concerns, we continue to believe that China, an established manufacturing powerhouse, and Vietnam, a fast-growing economy, will together provide American companies and consumers the best options for the future. Vietnam has the youngest population in the world. It follows China’s success model and modified its approach so as to reach its goals with the shortest route and minimal resources of its own. So, we can expect a rapid acceleration of imports from Vietnam? Yam: Migrating imports from China and relocation to Vietnam are not simple processes. U.S. companies will have to make significant investments to understand the culture and business infrastructure in Vietnam, and also “teach” their Vietnamese counterparts how to do business with them. This is a strategic, long-term shift that’s beginning to take place. The shift is already underway, then? Yam: Yes, but the international trade environment could change in the blink of an eye. For that reason, any hasty decision on the part of U.S. companies could prove to be fruitless and essentially whipsawing. You said that both the U.S.-China Chamber and the U.S.-Vietnam Chamber are allocating more resources to help U.S. companies. What exactly are you doing in this respect? Yam: We are in the process of hiring more staff and developing a knowledge-base of manufacturers in Vietnam. We are also better integrating the ways in which the two organizations work together. We believe that our combined efforts will help us to deliver more meaningful results to American companies involved in international trade. ◆

APEC Nations: It’s time to recognize the

People of Taiwan As the 22nd largest economy in the world, and the 11th largest trading partner of the U.S., no discussion about the Asia-Pacific region can meaningfully occur without including Taiwan. Since the world does NOT recognize the Republic of China government (ROC), it is time to allow the People of Taiwan the opportunity to determine their own future. We call on the APEC nations to recognize Taiwan and reject the label “Chinese Taipei.”

TAIWAN’S ECONOMY AND STATURE

US’s eleventh largest trading partner with $76 billion in total goods traded in 2018.

22nd largest economy in the world by GDP.

Trade between Taiwan and the EU-28 reached US$ 58.5 billion in 2018.

U.S. trade in services to Taiwan totaled $18.5 billion in 2018.

Learn more: TaiwanCivilGovernment.com

Materials distributed by Global Vision Communications on behalf of the Taiwan Civil Government. | Additional information is available at the Department of Justice, Washington, DC.

G L O B A L B R I E F I N G R E P O RT THE PHILIPPINES F E AT U R E

Manila Gives Rise to Philippi Philippines-China security relations demonstrate the potential of how hedging against a neighboring great power can become a double-edged sword. By Chester Cabalza and Mark Payumo

Popularized

in 1961 by German political scientist, Richard Lowenthal, the term â&#x20AC;&#x153;Finlandizationâ&#x20AC;? was coined amid Finnish acquiescence to Moscow as a direct result of two wars that it lost against Russia. When taken in the context of PhilippinesChina security relations, it may well demonstrate the potential of how hedging against a neighboring great power can become a double-edged sword and, ultimately, problematic. But today, Finland is a highly developed nation and recognized as a leader in the export of technology and promotion of startups in the information and communications technology, cleantech, and biotechnology sectors among many things. Its 2017 centennial celebration of national independence was reflective of this rise from widespread impoverishment to an independent, sovereign, and economically advanced state. Nevertheless, 75 years after it lost territory to Russia and paying $300 million in reparations, it continues to tread a potentially volatile relationship with Moscow. Technically, it gained security isolation from the West as a function of this relationship, but effectively retained its sovereignty and a relatively good amount of latitude in its foreign trade relations. As a result, peace and prosperity are ostensibly the positive externalities of this arrangement, but it leaves very little room for Helsinki to obtain G20G7.COM

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nedization

security guarantees from other countries that may potentially be hostile to Russia despite Finnish membership to the European Union. Hence, amid Russia’s invasion of Crimea and support of Syria’s Bashar Al-Assad against regime change, this manner of strategic acquiescence is increasingly being called into question along with the viability of Finland’s long-term security. Under Philippine President Rodrigo Duterte, critics see Manila’s strategic rapprochement with China as the Asian version of Finlandization whereby it is allowing itself to be significantly influenced by a larger and more powerful neighbor. Understandably so, the stakes are high as the country stands to lose territory if Manila ultimately capitulates to China, which would be quite reminiscent of the Finnish experience. Yet, Duterte’s rhetoric in pursuit of Chinese foreign direct investments (FDI) has gradually tempered even as he signed $12 billion worth of trade deals during the Belt and Road Forum (BRF) in May 2019. In fact, three weeks before he flew to Beijing to attend the BRF, Duterte exhorted the Philippine military to prepare for suicide missions as he warned China to back off from Thitu Island, a Philippine-occupied territory in the South China Sea. Indeed, there are perceptible parallels between the Finnish and the Philippine experience in navigating a complicated relationship with a neighboring great power, which may well provide insights beyond what traditional hedging may allow. But while a general overview may otherwise be prohibitive to extrapolate beyond what is already obvious, a potentially novel behavior in strategic interactions is gradually coming to the fore as the world’s search for an appropriate response to gray zone coercion continues—and it may well come from the least likely actor: the Philippines. Submission or Subversion? On the eve of Manila’s historic victory over its landmark case against China at the Permanent Court of Arbitration at The Hague, observers saw it as the beginning of the end. Although the case ended the three-year arbitration that ultimately favored the Philippines, → 25

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→ the lack of an enforcement seal intensified the power play between China and the U.S. as a furious Beijing became more aggressive in the South China Sea. However, under Duterte, PhilippinesChina relations have been strategically elevated, effectively easing tensions while continuously evolving as the two Asian states pursue warmer bilateral relations on various fronts, recalibrating, if not reversing, the post-arbitration award from The Hague. As a result, the Philippines’ hedging policy increasingly appears to play by Chinese objectives in the South China Sea which, on the surface, follows a single betting approach where Manila appears all-in on playing the China card. But for China, the win-win solution rests on Manila choosing to set aside the sovereignty issue in the South China Sea, and bandwagon with eijing as the emerging regional power through joint exploration; joint conservation of the environment; joint development and tourism; and to incessantly engage in bilateral dialogue. This is evidenced by Beijing’s persistent prodding on the use of bilateral diplomacy as a way to legitimize the nine-dash line. To an increasing extent, China currently appears well on its way in accomplishing its objectives especially in light of its trade relations with the Philippines. Manila’s policy of silence on explicitly asserting The Hague ruling is certainly beneficial albeit contrary to the Philippine military’s behavior on the operational and tactical levels. In this sense, both China and the Philippines are practically engaging in geostrategic ambiguity along the wartime-peacetime spectrums, effectively demonstrating each other’s refusal to budge as a function of their territorial claims in the South China Sea. Indeed, what appears to be political fumbling and fearfulness on the part of the Duterte administration could be taken as an unsophisticated strategy in dealing with Beijing’s sovereigntyeroding statecraft, offering both a mixture of danger and opportunity that may lead to an extreme case of Finlandization. However, amid the populist leader’s defeatist rhetoric G20G7.COM

that offers up the Philippines as China’s newest province, or declaring that the contested South China Sea waterway is already in Beijing’s possession, there may be more than meets the eye. Hard to Get In many ways, Manila’s pursuit of an independent foreign policy under Philippine President Rodrigo Duterte may well be a misnomer. At least on the surface, Manila’s foreign policy choices give more weight to China’s growing regional centrality in the Indo-Pacific, effectively replacing the United States as its avowed hegemonic big brother by slow degrees. Yet, nearly halfway through Duterte’s presidency, this foreign policy recalibration rather serves to validate America’s invaluable, if not indispensable, role in Philippine national security. Hence, when taken collectively, all indications ostensibly point to Duterte making use of the U.S. and the socialist bloc in his hedging strategy: He anticipates China (and increasingly, Russia) as the Philippines’ economic emancipators, while America remains the balancing great power as Manila pursues the country’s longdeferred military buildup. Beijing, however, remains measured and ultimately hard to get. Ever since Manila’s initiation of talks between the two capitals in 2016, what China has delivered up to this point is a far cry from the multi-billion-dollar pledges in trade and investments that Beijing made early on. Consequently, even after an aggressive diplomatic campaign to bring in Chinese FDI, Duterte, for his part, roughly averaged $1 billion per year, which means this campaign has generated investments approximately equivalent to just 1.9 percent of the $170 billion required to finance his “Build! Build! Build!” Program. Judging by how Beijing delivered on its pledges since 2016, even the trade deals that Manila signed with Beijing during the BRF leave much room for skepticism. Strategic Acquiescence Demonstrating the Philippines’ nascent Finlandization, however, is incomplete without measuring the extent of its strategic acquiescence in the realm of

Philippines-China security relations. Yet, in contrast to Finland, the Philippines has never been in a conventional military confrontation with China. Nevertheless, potential parallels with Finland’s capitulation to Russia could emanate from the Armed Forces of the Philippines’ (AFP) obsolescence in comparison to the People’s Liberation Army (PLA). Additionally, Thitu Island’s rehabilitation has been painfully slow that China’s maritime militia was enough to complicate Philippine claims to it, similarly evoking Finland’s loss of territory to Russia if the AFP were to be pitted against the PLA. Be that as it may, other Southeast Asian nations such as Vietnam, Malaysia, and Taiwan share the same predicament with the Philippines; and, unlike Finland—that is unable to unilaterally decide on its alliance with the West through the North Atlantic Treaty Organization (NATO)—America’s staying power in the Indo-Pacificprovide a buffer against China’s Finlandizing tendency to bend smaller states to its will. This allows Duterte to loosen up on Beijing while the defense establishment

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On the surface, Manila’s foreign policy choices give more weight to China’s growing regional centrality in the Indo-Pacific, effectively replacing the United States as its avowed hegemonic big brother by slow degrees.

is busy activating the Philippine Army’s Territorial Defense Division, boosting multi-role defense acquisitions, and maintaining U.S. military presence through the Enhance Defense Cooperation Agreement. This validates the proposition that the AFP will remain apolitical (even at the geopolitical level), but will never be comfortable with decoupling from the U.S. in any meaningful way. The Concept of Philippinedization But Duterte’s rapprochement with the Chinese could well be his own version of a “Crazy Uncle” strategy: that while hawkish and defiant towards the U.S. since coming to power in 2016, this behavior has in fact served as a starting point for Manila to finally confront the elephant in the room that Washington has long ignored: the 1951 U.S.-Philippines Mutual Defense Treaty. Manila’s warming relations with Beijing, in effect, gives the Philippines a semblance of leverage when approaching Washington, and what seemed to be a behavior on the part of Duterte that appear to run counter to Indo-Pacific stability may prove to be beneficial after all.

In the grand scheme of diversifying Manila’s foreign relations, Duterte could either be an anomaly or a trendsetter for succeeding Philippine presidents. But regardless of Manila’s foreign policy direction post-Duterte, his continued campaign to deliver on his threats against the U.S. has yielded potential policy innovations that will benefit the Philippines, allowing it to reshape his country’s nascent Finlandization without reversing t altogether. Although making sense of this strategy does bring Finlandization to mind, it remains insufficient in some ways. To be sure, Duterte refuses to ake part in enforcing the Hague ruling. However, his administration is most likely aware that the ruling stands and the worst thing he could do is to set it aside temporarily, not issue a decree that turns the country’s back on it which is political suicide. The Philippines also maintains geopolitical flexibility as evidenced by the world’s powerful navies doing the heavy lifting for Manila in enforcing the Hague ruling. Obviously, Manila’s return to the status quo in U.S.-Philippine relations may increase

tensions with China, but the costs are not as high as Finland anticipates from Russia if it decides to join NATO. Lastly, the Philippines does not share a land border that figures in its territorial disputes with China. Unlike Finland that lost territory along its 830-mile border following two wars with Russia, it would have utterly complicated Manila’s territorial claims without the British, Australian, French, Canadian, Japanese, Indian, and U.S. militaries performing freedom-ofnavigation operations at will. But if Finlandization merely reminds Manila of its potentially precarious situation, it may have stumbled upon a policy innovation that, if prudently navigated, could generate positive economic and security externalities for the Philippines. As this entire process plays out, a combination of strategic rapprochement for economic gains and simultaneous military buildup can be observed, leading one to coin the term, “Philippinedization,” which may well be appropriate especially in light of the historic Hague ruling that Duterte temporarily set aside. Its distinctly Filipino characteristic draws from the ruling’s unprecedented nature, allowing Manila to be at the forefront of upholding the UNCLOS and rejecting China’s nine-dash line. In technical terms, therefore, Philippinedization is the process whereby a weaker state, backed by a powerful country, goes through great lengths in temporarily refraining from opposing a neighboring great power by resorting to economic and diplomatic rapprochements at the strategic level, but strengthening its national security infrastructure on the operational level with an eye for potential conflict in the foreseeable future. But still, it is questionable whether the Duterte administration has formulated this strategy right from the beginning in 2016. What is clear is that the perceptible body of policy choices that points to Manila increasingly behaving in this manner exists. It now remains to be seen whether the future will favor Philippinedization. ◆ About the author CHESTER CABALZA, PHD and MARK PAYUMO are security and defense analysts.

G L O B A L B R I E F I N G R E P O RT FOOD SECURITY F E AT U R E

Why ‘Match-Making’ Is the Key to Transforming Food Systems Feeding a growing population on a warming planet is the challenge of our lifetime, despite or rather especially, living in the age of plenty. By Marcel van Nijnatten

Feeding

a growing population on a warming planet is the challenge of our lifetime, despite or rather especially, living in the age of plenty. Not only is there a wealth of evidence to support the need for climate action, including climate-smart agriculture, but climate finance is increasing and so too is public awareness. Yet there is one element still lacking, which will continue to thwart climate justice and food security unless it is overcome. We must bridge the gaps between those with the solutions to transform our food systems, those who can fund and implement them, and those who increasingly need them. This means going beyond Greta G20G7.COM

Thunberg’s call to “unite behind the science” and instead unite policy and practice with research to ensure science works for the good of all. In the Netherlands, we call this “match-making” and events like last week’s Global Science Conference on Climate-Smart Agriculture are essential to deliver that message and make sure partners can find each other. The big opportunity at such conferences and summits is not for scientists to highlight where more research is needed or showcase the latest findings of pilot studies, but rather to collaborate and develop “bankable” and “scalable” projects that allow for real-life implementation on the ground.

For the 800 million people worldwide still going hungry, many of whom in regions worst-hit by extreme weather, policy notes and research papers are meaningless unless they translate to well-supported, well-delivered initiatives. One such practical project that the Netherlands has funded is a five-year initiative to reach 300,000 smallholders across East Africa with climate-smart practices to boost agribusiness and sustainable food production by 2022. Convened by the CGIAR program on Climate Change, Agriculture and Food Security (CCAFS), Climate Resilient Agribusiness for Tomorrow (CRAFT) is implemented by Dutch non-profit SNV with the support of Wageningen University,

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In the Netherlands, we call this “match-making” and events like last week’s Global Science Conference on Climate-Smart Agriculture are essential to deliver that message and make sure partners can find each other.

Agriterra and Rabo Partnerships. This 40 million euro project has the potential to transform the lives of hundreds of thousands of smallholder farmers by helping them to produce more while coping with climate change. But it could not take place without the funding, the know-how and the logistical support of those on the ground. Another project that got off the ground thanks to collaboration between different players is a program that works with dairy farmers in West Java, Indonesia to make use of the circular economy to reduce emissions. Researchers identified that average dairy farm in Lembang, West Java emits 33 tonnes of CO2 equivalent per year, the same as the annual energy

use of four homes. A survey of 300 farmers also found 80 per cent were releasing at least some cattle manure into the environment. With this evidence, it was possible to implement targeted training sessions, demonstrations and outreach with dairy farmers to encourage them to use cattle manure as fertilizer and reduce the environmental footprint of their operations. These are just two examples of where real results were possible thanks to the matches made between scientists and practitioners, funders, private sector and implementers. For every challenge posed by the trade-offs between food production and environmental impact, there are often

multiple possible solutions depending on who you ask. What we as governments want to see is a focus on how we can listen to one another to find ways to implement some of these solutions at scale beyond conferences. Our objective is to match the people with the solutions with those who need them. For that to happen, policymakers, farmers, financial institutions, private sector and scientists need to learn to understand each other’s language and then walk the talk. ◆ About the author MARCEL VAN NIJNATTEN is Policy Coordinator at the Ministry of Agriculture, Nature and Food Quality in The Netherlands.

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What Hackers Can Teach Schools About Thriving in a Decentralized Reality Blockchain, Artificial Intelligence, and other emerging technologies are creating a brave new world for the education sector. By Walter Fernando Balser & Taylor Kendal

It’s a cold

but sunny afternoon in Denver, Colorado as students, educators, technologists, and content experts from across the world gather in a converted century-old department store to share ideas that might one day change the world. The once novel “Hack-a-thon” has become ubiquitous. Project leaders

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present challenges that self-organizing communities of learners, leaders, and doers tackle together in teams, often without sleep over the course of days. Some challenges are monumental, one might say even existential; others are just for fun, like dressing up a favorite “bot” in a new code-colored outfit. But don’t be deceived by the playful tinkering; these simple exercises

have a much deeper meaning than the presumed, surface-level layer of playfulness. This is much less a playground, and more an artful sandbox. These bots are not just cartoons, they are meticulously curated, crafted, and forked algorithms that act much more like human DNA than the PowerPoint program you’re used to— tracking and locking into memory a user’s every contribution through a distributed network of digital ledgers known as a blockchain. Sound complicated? Amazingly, in this community forged in technological and artistic crucibles, it’s all relatively easy to understand. This is a universe of sharing, cocreation, and teamwork. But most of all, it’s a world of intense learning. We are at ETHDenver, where dozens of teams of hackers have come together to not only envision a new world of open collaboration but actively shape it through a shared model of implicit norms and governance.

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This is open source (OS) thinking (and teamwork) at its finest—imagine what traditional schools could learn. Beyond the Grammar of Schooling in a Decentralized World As experienced school leaders, we wanted to explore the world of open source software development and its relationship to school leadership. More to the point, we wanted to witness for ourselves how teams working on decentralized applications, or DApps, build breathtaking products at a breakneck pace in the age of limitless information. Education—like the rest of the world—is finding its way in a new era of openness and decentralization, where neither information nor those who control it can be “walled in”. Much like a hack-a-thon, you can walk into any classroom today and witness teachers and students in a flurry of innovation, iteration, sharing, and yes, hacking, both in the literal and figurative sense. The term hacking is not just breaking into computers/ networks, but can also refer to nonmalicious activities like creatively improvising content or processes. Seen through this lens, the parallels to be drawn between coders, teachers, and students are numerous. In a few clicks, a teacher shares an activity with another teacher. That teacher iterates for his or her use and then shares their forked version with another teacher across the country. Likewise, students often work in teams updating, editing and adding original content simultaneously to a shared product, and in a few short hours, they produce a collective work of art beyond what any instructor could have imagined. This is the natural open environment that defines most schools and students’ lives, and today, coupled with technologies like Google Apps, Slack, Twitter, TikTok, and smartphones, the potential is truly limitless. Despite this unstoppable momentum globally, and the inescapable benefits this paradigm shift could have on learning, it seems that schooling as a system is entrenched in its “old ways of doing things.” Albert Einstein once noted that, “it is a miracle that curiosity survives formal education.” In many ways, schooling’s penchant for

centralization is only accelerating while the rest of the world speeds away in another direction exponentially. According to many, we are stuck in that grammar of schooling where industrial thinking, widget-building, and precision not only persists, but in some cases, may actually be getting worse. To say this is unsustainable is an understatement. Beyond the effects on teachers, this misalignment results in glaring discrepancies between how we teach students in schools and how they operate in society. Effective systems, on the other hand, should mirror their environment, which today means designing systems that are more decentralized, open, global, organic, and interoperable. Open-Source Thinking and Schooling So, we attended ETHDenver in 2019 looking for answers from a community that has, at least in part, cracked the nut of how teams work together in this

new reality. We embedded with the three-person hacker team from Odyssy. io as they built their Gittron bot avatar. Just behind us was a team from Apprent.io, a non-profit organization teaching underserved students how to code for a new reality based on blockchains and cryptocurrency. All of these projects are built on the Ethereum platform through #BUIDLS (yes, that is “build” misspelled--that’s how they roll here). Buidls are prototype ideas that offer other developers a chance to join projects/teams for the significant work ahead. All of the teams hacking at “Eth” are working on applications that will operate on the decentralized web (web 3.0), where theoretically no one and everyone is in charge. It is as much an oasis of ideals as it is a sandbox for new technology and protocols. Developers code away while leaders on the Ethereum network—a global, eccentric mindtrust ranging from economists to technologists—co-conceive/create a →

Illustration 1.0: School Systems. Birth to Recode

SANTIAGO_CHILE

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→ decentralized future built on opensource software and relentless, radical collaboration. Even if you are unfamiliar with the term “Open Source” (OS), you are most certainly familiar with the body of work produced by communities like Github, Wordpress, or even Wikipedia. These are just a few of the retail examples of open-source platforms. Underneath virtually all of the technology we use today, especially on our smartphones, lives an ecosystem of open-source creations like Javascript, Linux, or even Android. These are coding languages, rules of operation, shared guidelines, message boards, and protocols built and run, not by individuals or even institutions, but by networks often consisting of millions of members. A driving principle of open-source development is that of voluntary peer review, with products such as source code, blueprints, and documentation becoming freely available to the public. There are hundreds of OS platforms bringing together groups around geographic information systems (GIS),

genetics, the natural sciences and beyond. In education, the Open Educational Resources (OER) movement has been in development since roughly 2002, yet this has been confined to a handful of initiatives as capacity in the P-20 sector for open sharing of resources remains elusive. While the goals of OS may vary by community, at the heart of the revolution lie three fundamental principles that have fueled the movement’s explosive growth since the 1980s, and if applied to the education sector, we believe could have similar catalytic effects. These are: empowerment of individuals through trust; collaborating toward a common good through fluid networks; and building on systems of transparency. Thus, we look to draw on open-source communities for inspiration and as models for how teams operationalize these principles, and we present ideas for how these values of “openness” might manifest in the context of schooling. Put simply, we believe educators have far more in common

with hackers, artists, and developers than they do with corporate CEOs and assembly line workers, and believe schools can operate more like GitHubs and Googles than boardrooms and factories. What we need now in schools is an organic revolution of basic order; a shared set of cultural guidelines similar to the ones open-source communities have been operating under for years. Beyond the effects this could have on individual schools, we believe the adoption of an open-source ethos could also pave the way for overcoming persistent monolithic mindsets at the administrative and policy levels. For example, in the 1990s, corporate powers like Oracle, Microsoft, and even universities argued that average people could not create something more sustainable or superior to traditional institutions. They were simply wrong. Today, more than half of all servers run Apache; the internet itself was built on the back of Java; Wikipedia offers 16 million articles in 270 languages; 70% of phones run Android, and 30% of all websites run on Wordpress. Even the genetic code was mapped using open source. Using this precedent, then, we suggest that teachers, students, and other stakeholders can and will shape the standards, curricula, assessments, and schools of tomorrow through distributed and open systems—faster, better, and more efficiently. All we need is a collective paradigmatic shift in mindset; the technology already exists. So, What Would an “Open-Source School” Look Like? We present three core values to help define “openness” in any context, especially schools, and we refer to current open-source communities as relevant exemplars of where these values are playing out in real-time. To land on concrete steps we can take today in schools, however, we suggest using the Adaptive Schools framework of Garmston and Wellman. Whereas Adaptive shifts require a disposing of previous systems and a fresh start, Technical shifts build on existing systems. This is not meant to be an exhaustive how-to manual on open systems, however, we suggest a few examples in both frames as a starting point for discussion.

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Shared leadership and a many-to-one orientation Shared leadership is a relevant approach for 21st century organizations because it provides a flexible governance model not unlike those being used by open-source communities. Beyond governance, schools need to devise systems that cross-pollinate ideas and solutions between disparate groups. The ethos that anyone—not just an insider— might have the answer is natural in OS but not at all intuitive within most schools. Professional Learning Communities (PLCs), academic departments, and other constructs move us into spaces of informed intelligence where specific people have answers. To make this kind of transition, it is necessary to shift perspective from a one-to-many toward a many-to-one orientation. A many-to-one orientation also has pedagogical meaning as infinitely more resources are accessible to all students, only one of which is the teacher. This adaptive shift can accurately be characterized as moving from an emphasis on instruction to an emphasis on learning. Sandbox Much like nature, open-source thinking is an inductive, generative process where fuzzy ideas percolate, and where users, together in teams, create novelty upon adjacent dimensions we cannot yet see. As we worked with coding teams in this context, we observed systems in place to capture the best ideas and to test them swiftly and brutally through a peer-review process. All ideas, even seemingly silly ones like the Gittron project we observed, are shared in a transparent space where others can contribute and critique openly. Every project is built on a “testnet” and only promoted to the “mainnet” after a rigorous vetting process. This adaptive shift toward openness is both an act of faith and a challenge to the conventional P-20 rhetoric of “having a clear vision”, “strategic planning”, or “best practices”. In many ways, it’s an orthogonal move that redistributes control and pushes power to the edges. Governance + Innovation What stood out most from our experience working with coders was not

the robust processes for building and testing things—this we expected from developers—but rather the attention paid to how decisions for the platform are made and by whom. At least in the Ethereum community, we observed as many discussions around governance and the economics within their fledgling society as we did on the gadgets being crafted on the platform itself. In the decentralized application (DApp) developer community, it seems that innovation is part and parcel with tensions around decision-making and accountability in the broader opensource society. In a K-12 context, this would be the equivalent of teachers and students—not just school or policy leaders—being actively engaged in all aspects of an innovation or intervention proposal. Perhaps most importantly, views would not be limited to the proposed intervention but also the underlying reasons and implications of the proposal, all of which would be captured and debated in an open and evolving public forum. Open Exchanges While email still serves a purpose, wikis and other collaboration tools can best promote teamwork in this new reality. Email conversations reinforce power structures in an organization and offer only limited access to potential team members, meaning ideas are shared by a few creators and presented to the rest of the community after key decisions have been made. A wiki approach allows for transparency and networking during the iteration process. Through wikis, teachers can share, fork, and merge activities, curricula, assessments, and more in an open marketplace of learning potential. Common wiki tools, even a simple Google doc, now offer revision tools for identifying editors and reverting to previous versions in a single click. The OS software community offers mature exchanges like Github or its predecessor SourceForge. In K-12, products like Curriki.org are only just beginning to take shape. As these continue to develop, imagine the potential for reduced coordination costs through “using and remixing” new school proposals, interventions, pedagogical tools, and more. This could alter the

leadership orientation from one focused on design and innovation, to one of execution. As former Secretary of Education Bill Bennett once noted, “we already know everything there is to know about knowing.” We just have to do it. Open-source thinking and the many associated tools can enable this by allowing us to fork, share, merge, and reimagine the best resources already available. Interoperability In recent years the emphasis in schooling has been on replicating the best ideas and innovations across contexts. What worked in one setting, the reasoning goes, should work in another. The challenge, however, is that schools operate in dramatically different environments. While they may have similarities, like grades and credits, each school, district, or university operates under a wide range of governance structures and organizational cultures and contexts. One is not necessarily better than the other, thus there is little motivation to play with others. Using a playfulness analogy some may prefer Legos while others use Tinker Toys, Lincoln Logs, Erector sets and so on. Fundamentally all of these “work” and “fit”, and each is building something useful that makes sense for its own setting. An entire foundation is built on the precise design of these blocks, so altering course is impractical. But what might we create if we could connect these seemingly disparate building blocks into a universally fungible whole? What if we created a keystone that connected a Lego to a Tinker Toy? →

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Illustration 2.0: Innovation in Schooling. Discourse and Rhetoric

→ An interoperable education system where protocols are built intentionally towards interplay is a natural evolution, and one we can finally start to envision on the horizon. Even more, as the education system grows in complexity through an ever-expanding marketplace, the need to connect these pieces across root building sets is more important than ever. As Clay Shirky notes, the coordination and transaction costs between groups have collapsed, thus allowing ideas and resources to flow in near real-time. Yet, like a root system, the complexity grows exponentially faster than the size of the network itself. In other words, one cannot have “open”, “innovative”, or “creative” aspirations, as is often the case, without creating systems that will somehow capture this energy. Advances in web3.0 technologies, particularly blockchains, will help make this possible. Using blockchains, an infinite array of trusted data and self-executing instruction can now be captured agnostically on the web, where it will sit, cryptographically hashed, until it is referenced for use at a future date. Blockchains and digital identifiers are, in a sense, waiting for keystones. The only thing we need now are protocols to interpret these data in a manner that makes sense to the end-user, educators. G20G7.COM

Dynamic Guidelines Printing school handbooks are standard practice throughout every level of schooling. An emphasis on codifying policies that address issues in a moment of time has led to a near-constant revision process that is unsuitable for this reality. Therefore, dynamic guidelines based on a school’s mission, vision and values offer timelier revisions and helps move organizations from a state of compliance to one of participation. This follows the first rule of change management that states that you can’t change an organization unless its structure lets you promulgate new policies, implement those policies, and assess their outcome. Discourse In Illustration 1.0, we highlight a conceptual view of sectoral shifts in various frames, with the right column representing the natural flow of global developments toward more open and decentralized systems. We contend that educational leaders should be placing greater emphasis on building capacity in the right column, which will require a “recode” of sorts, and that starts with language. Using parlance from software development, we need elegant code to allow for interoperability between the old and the new, the new and the new,

but not the old and the old. This requires a deeper examination of values and beliefs—in other words, examining the core source code that drives behavior in schooling contexts. Illustration 2.0 provides an example of adaptive shifts we need to make in our discourse if we are to move along the continuum toward more open systems where prototyping, testing, and building on each other’s ideas, while discarding what doesn’t work, is commonplace. Moving Toward Openness in Schooling In describing the power of open source, legendary technology pioneer Tim O’Reilley noted that “in the end, innovations tend to come from small groups, not from large, structured efforts.” We couldn’t agree more. Indeed, that is why we embarked on a path to see for ourselves where innovation is flourishing in this brave new world, and attempt to uncover what schools could learn from others grappling with similar challenges. While much of this rhetoric may seem confined to the “tech-culture”, we believe nothing could be farther from the truth. “Empowerment of individuals,” O’Reilley continued, “is a key part of what makes open source work.” Call us crazy, but this sounds an awful lot like the goal of schooling; something educators and hackers alike should have an interest in getting right. ◆

About the author TAYLOR KENDAL is an educator, writer, designer, improviser, community developer, and techno-philosopher. His work with the U.S. Dept. of Education, U.S. Chamber of Commerce Foundation, Library of Congress, Metropolitan State University of Denver, and the University of Colorado Denver has led to his complex love affair with education, innovation, design, and (de)centralized, future-focused networks. WALTER FERNANDO BALSER is an assistant clinical professor in Educational Leadership and Policy Studies in the Morgridge College of Education at the University of Denver and creator of the Open Partnership Education Network (learnopen.org). Walter’s research focuses on the intersection of private capital in public schooling and its effects on practice and policy, most recently examining governance systems in open source communities and their relation to schooling.

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G L O B A L B R I E F I N G R E P O RT SOVEREIGN IDENTITY F E AT U R E

Convivial Identity: Digital Palaces for the People To achieve the Sustainable Development Goals, we must solve three key challenges in identity: confusing design, fragmented technology, and abusive politics. By Jacksón Smith

Knife overhead, a young girl breaks free of her father’s grasp and darts between shadows in the chilly halfmoon streets of post-soviet Moldova. Shivering behind trash bins, an old lady approaches. Who are you? A homeless man knuckles a pen, hovering over papers to apply for food stamps. A tear drops and blurs the signature line. Who are you? The screen flickers at a mother seeking online courseware, prompting username, password, email, and phone number. Who are you?

According

to the World Identity Network, one billion people have no formal identity. Without a way to identify who they are, the bureaucracies of modern life stall, sputter, and spin—incapable of providing essential services like healthcare or education to people in the metaphorical borderlands, neither dead nor alive in their accounting spreadsheets. These invisible peoples are stifled, unable to take out loans, vote for their leaders, travel, secure housing, apply for jobs, save in bank accounts, enroll for school—in short, to participate in the basic functions of economic, political, social, and legal life. These are fundamental human rights promised by one hundred and sixtyeight countries around the world—

Analog or digital, the realm of identity has become a field of technical expertise. For those who exist in ledgers: who controls your credit scores, transcripts, drivers’ licenses, social media, birth certificates? G20G7.COM

the closest we’ve ever come as a global community to near universal consensus. A woman whose identity is through her father is not free. A child who does not have the papers to enroll in school is not free. An overworked and underpaid shadow worker with no legal recourse against abuse is not free. To achieve the Sustainable Development Goals, we must solve three key challenges in identity: confusing design, fragmented technology, and abusive politics. Step zero: a radically accessible, distributed, ethical infrastructure for identity. Problem one: the current discourse around identity is impenetrable. What is identity and why does it matter? As Juliet famously mused of Romeo, “A rose by any other name would smell as sweet.” Contrary to the world she yearns for, Romeo’s essence is tied to his family lineage: the Montagues. Who you were was who your family was. Any good Victorian novel opens with a long monologue describing the elaborate family tree behind the main protagonist. No family; no identity. Aristotle

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scores, transcripts, drivers’ licenses, social media, birth certificates? Left to the hands of experts, we drain our imaginations and stilt our capacity to participate in accounting for ourselves and each other.

emphasized the power of a name by recommending orators to appeal to one’s name as a form of persuasion: Oh Braveheart, where is your bravery? Oh beautiful Pearl, sparkle! A name signaled your nature; your essence. In that respect, identity is profoundly philosophical: who are you? A name, a biography, a list of qualifications, an energy, a job title, a social security number? Today, identity is a deeply bureaucratic, administrative accounting headache. A glorified roll-call to keep tabs on who’s who. People who talk about identity are ensnared in ugly technical jargon: claims and identity providers, certificates and authentication protocols, trusted networks and acronyms like IAM, OAM, OAuth, DID, DPKI, and DIF. In short, the whole industry is premised on creating verifiable pathways for claims about who you are. Analog or digital, the realm of identity has become a field of technical expertise. For those who exist in ledgers: who controls your credit

Problem two: the architects of the internet protocols—like http, www, ftp—did not bake identity into the fundamental fabric of the internet. At first, this left every internet company to roll their own system for authenticating and permissioning online experiences: every website and their website’s cat required users to register a wholly new identity on their platform. Please enter your username, password, and email, ma’am. Various proxies were developed to prevent duplicate account creation: please enter your phone number, email, social security number, credit card. At best, this data is encrypted to be hacked at a later date. When everyone rolls their own identity solution, no one is a specialist, leading to a vast web of insecure and poorly managed credentials. Every now and then, malicious actors reach in and grab what they would like—as in the Equifax breach. Eventually, some savvy tech companies sought to unify these standards. Facebook created singlesign-on services, allowing you to login to third party apps like Farmville, Tinder, and Fitness apps using your Facebook identity—which provided the added side benefit of proving the authenticity of your identity based on the robustness of your social network. The FTC just won their largest settlement ever against the social network for abusing its role as an identity provider. Facebook told their users they needed their personal phone number as a step in two-factorauthentication (another work-around for the lack of an identity layer in the internet). What they didn’t tell users: they lumped this identifying info into the heap of other personally identifiable data they were shuttling to other third-party apps. (Facebook seems to be the bad apple leading the pack: just the other day, Twitter revealed they also used phone numbers and emails of users who had opted into two-factor authentication to serve targeted

ads for profit.) The Equifax, Aadhaar, and Cambridge Analytica scandals echo through recent memory. In the early 2000s, Microsoft attempted to be the unified identity infrastructure through Passport— and they notably failed, with one of the projects leads, Kim Cameron, publishing the famous “Laws of Identity” closure, remarking: “The Internet was built without a way to know who and what you are connecting to… if we do nothing, we will face rapidly proliferating episodes of theft and deception which will cumulatively erode public trust in the Internet.” One of Cameron’s fundamental laws: users of identity must be in control of their identity, or the system will inevitably lose their trust and crumble. That is, the challenges of identity have deeper roots than just technology. Problem three: identity is not a simple accounting procedure—identity management is waterlogged through history by the overlapping waves of power. The Romans conquered foreign lands and, as a matter of official policy and strategy, ruthlessly translated names, books, into their native tongue. Western expansionists washed away the native identities of pre-Columbus Americans, forcing kin of tribes to pick their new, English identities out of a name hat— sometimes literally. Jack. Barbara. Joseph. British colonists pioneered new techniques in census-taking, slicing and labeling swaths of India by ethnic lineage. Nazis developed punchcard systems to track the ethnicity of moving populations. These top-down identity managers imposed insidious translations of whole peoples, identities, cultures. Today, the Myanmar government erase records of Rohingya peoples, thousands of Uyghur family members disappear in Xinjiang, China, and innumerable people labor in migratory shadowlands across the world in return for low-pay and abuse. When identities are erased, people become invisible. Invisible, frustrated authorities and advocates are no match against the one hundred and fifty billion dollar industry channeling millions into the seams of human trafficking. → 37

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→ In a different but parallel vein, Facebook can’t be trusted as a universal identity provider. At a time when the U.S. government is attempting to put back doors into encryption, compromising privacy rights in the name of national security and expanding dragnet surveillance— governments are not good stewards of identity either in terms of winning over the trust of people, especially those vulnerable to abuse. Dr. Dahan, co-founder of the World Identity Network, conjured an anecdote of an aid worker harvesting biometric data—which, inevitably, will be stored in a shoddy and poorly secured database—from a refugee in exchange for food and water: “We are on the cusp of something critical for humanity. The risk of an orwellian system became too obvious to be ignored. As a global community, we need to redefine identity.” The problem isn’t necessarily that governments are evil. Rather, that dangling mechanisms that can be abused through politics will. This is the tragedy of the symbols—when it comes to value symbols like votes, dollars, or identity, not only can they be corrupted, they will be corrupted if anyone is left in charge of them. Like how we hand monetary policy over to an independent federal reserve—as a restraint against the politician’s temptation to lower unemployment at the cost of rampant inflation—so too must we create infrastructures which transcend the petty political interests in erasing peoples and denying them permission to exist. The long-standing utopian promise of technology was to liberate us from our daily burdens, empowering humanity to achieve total freedom. If we so desired, we could be a baker in the morning, fisher in the afternoon, and an artist in the evening. But, each wave of technological innovation seems only to gild that hollowing promise. The news regularly reports the latest breakthroughs available to the techhaves: dragnet surveillance, mass misinformation campaigns, genetic experimentation, degrading deepfakes of women and algorithmic criminal justice decisions. Every day, we wake to new software versions seamlessly G20G7.COM

downloaded across each of our devices, steadily streaming the latest decisions of developers and tech executives to our home screens and notification bars. We become passive consumers, letting our phones shape our menu of friends, autoplay one more YouTube video, push recommended news to our attention, and distract us from ourselves and our loved ones. Our identity is increasingly defined by an evolving digital fingerprint none of us fully understand. We’ve come to accept as normal this flow of change and disruption as inevitable, natural, and ultimately good. Yet, the existing change and disruption is primarily driven by the inherent “good” of maximum engagement—seldom do our devices ask us what our goals and ambitions are. When was the last time your phone told you to turn itself off because you were spending too much time on it? We must reject our current trajectory and reclaim the conviviality of our identity—the philosopher Ivan Illich’s long-lost argument that each of us should be in the driver’s seat for deciding the purpose of our technological tools. Rather than assuming that technology can “know us better than we know ourselves,” convivial tools asks us what we want to accomplish in our life, then facilitate the flourishing we decided. A convivial tool is one that doesn’t buzz, beep, scream, and thrash when you turn it off for good because you no longer need it. Convivial tools are open, accessible, and simple. They transform the preordained uses baked into our everyday blackboxes into Lego blocks that empower us to scheme, build, and lead lives of our own designs. Like paintbrushes, scissors, and language itself, hammers are convivial because they do not demand to be used in a particular way—how you use a hammer is up to you, be it to smash a box, build an orphanage, repair a hospital, escape a prison, or scaffold a city! Conviviality in a tool is negated the moment we are degraded to the status of mere consumer, passively accepting the plans of designers and coders in distant lands. Billions of people around the world have simply been told who they are— or are not—by systems they had little

We’ve seen remarkable strides over the past decade in the decentralized identity space, and the opportunity for libraries to be ethical and dynamic leaders here is incredibly energizing. say in. They are consumers of their identity. Today, identity is a technology poised on the precipice of conviviality. But, is this possible? Yes. Over the past decade, remarkable progress has been made, particularly around the concept of “self-sovereign identity” which takes advantage of the finer points of blockchain to put users in control of their identities and decide at a granular level which information is revealed and to whom. Yes, tell the bouncer I am at least 21, but do not share with him my birthdate or home address. Yes, verify for my employer

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that I’m over 16 and I have a high school diploma. No, do not share my bank account balance with my current landlord, only share that I have enough in my account to pay rent. Unfortunately, the same three problems remain. Identity is confusing, but “self-sovereign identity” is an even larger cranial boondoggle—so much so even the leading experts have a hard time communicating what that term means and dispelling the most commonly assumed myths about its definition, much less creating ways for both eight and eighty-year-olds to understand and use in their everyday life. An impressive array of technological solutions like Civic, ID.me, and uPort have emerged, but the same challenge of fragmented siloes remains: how do you get different identity ecosystems and ledgers to talk to one another in a secure, safe way? The Sovrin Foundation, in conjunction with the Government of British Columbia, and Hyperledger Indy developers, have worked tirelessly to open-source the critical building blocks to make interoperability between systems feasible through the Hyperledger

Aries project. The technology necessary to liberate identity for people around the world is rapidly maturing—but, how do we tackle the politics behind identity, ensuring that whatever systems are adopted work not only today, but ten, twenty, a hundred years from now? The key catalyst: libraries. Libraries are critical for championing a society where knowledge is open, accessible, and flourishing. Often overlooked are the evolving preconditions, infrastructure, and tools necessary to cultivate such a world. Identity is a critical prerequisite. As Jason Griffey, an affiliate at Harvard’s MetaLab and one of eight winners of the Knight Foundation News Challenge for Libraries, argues: Libraries—“by virtue of their position in the community, their values, and their deep experience in making information openly available while still protecting the interests of their users—are uniquely situated to take the lead in re-decentralizing the Internet.” That means advocating for computer literacy, supporting peer-topeer communication networks like Tor, and empowering people to take ownership of their identity is more important than ever.

We’ve seen remarkable strides over the past decade in the decentralized identity space, and the opportunity for libraries to be ethical and dynamic leaders here is incredibly energizing. While the standards, protocols, and implementations are nearing maturity, shared identity infrastructures need to be open, free, and unowned—and a strong, distributed social institution to ceaselessly advocate for these underlying values. Even further, consortiums of libraries have a profound potential to operate as a crucial piece of the identity metasystem through physical access-points, a robust network of validation nodes, and fertile norms for a sustainable governance backbone that constitutionally serves and is collectively owned by users. Libraries are distributed, public-bound, and exist to make resources and knowledge discoverable, accessible, and useful. Identity needs convivial infrastructure—and libraries are fundamentally convivial institutions. They do not prescribe what you should use them for, rather, libraries provide essential Legos for anyone, anywhere to construct a life. As NYU professor Klinenberg eloquently reflects in his latest book, libraries bestow anyone who walks through their doors with a certain sense of nobility, of dignity—they are the original, unabashed palaces for the people. Imagine a world where anyone, anywhere can walk to their nearest branch with a universal library card and equip themselves with an easy to use portfolio of identities for checking out books and upskilling or applying for scholarships, jobs, financial assistance, and more. Where anyone can construct a sense of self, an identity. Trekking thousands of miles through shadows, mud, and sludge, an eminent woman was asked: now that you are free, what would you like to be called? That woman was Harriet Tubman. Harriet Tubman was, like most heroes, ahead of her times. Names are important, now it’s time to let the world name itself. ◆ About the author JACKSÓN SMITH is a Co-Founder and the CTO of the Learning Economy and a senior contributing editor of Diplomatic Courier.

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Integrated Design of Future Low Carbon Cities To contribute to the fight against climate change, future cities need to reduce energy demand, use energy more efficiently, and increase renewable energy to supply consumer needs without compromising comfort and well-being. This calls for the use of analytical tools in an integrated urban design process. By Arno Schlueter

Prototype of Future Cities Lab Solar Facade G20G7.COM

Today,

people in urban areas consume 80% of global primary energy. Reducing energy consumption, improving energy efficiency, and moving towards renewable energy sys-tems is crucial to reduce anthropogenic greenhouse gas emissions and ultimately limit global warming. Compared to other industry sectors, such as transportation, the building sector benefits from available and economically viable technology, materials, and knowledge to transform building stock towards low carbon emissions. The scarcity of space, high energy density, and complex interactions of urban areas make such a trans-formation significantly more difficult than in rural settings. Due to climate change, rising temperatures— especially in expanding urbanized regions near the equator—will result in a global energy demand for cooling that the International Energy Agency projects will double by 2040.

The Beauty of Urban Energy Harvesting solar energy from the rooftops, skylights, and the facades of buildings termed “Building Integrated Photovoltaics (BIPV)” offers not only a source of on-site renewable energy

generation, but also a number of economic advantages. For example, rather than utilizing additional urban space for infrastructure, integrating photovoltaics replaces conventional ‘inactive’ building elements and materials with an active resource. Three essential drivers recently boosted the potential of BIPV for large-scale application. First, the mass production of photovoltaic (PV) cells has lowered their cost dramatically. In many countries, harvesting solar electricity on a building has become a competitive advantage equal to or even cheaper than the cost per kWh of electricity provided from traditional utility services. Globally, electricity generated using PV cells has reached a cost parity with fossil fuel generated electricity in many countries. The cost parity led to an exponential growth in installed PV capacity. Second, new surface treatments have changed the aesthetic appeal of photovoltaics. Un-til recently, Building Integrated Photovoltaics lacked support for large-scale implementa-tion from many architects, city planners, and officials who deemed the material visually unappealing. Recent advances in the treatment of the covering layers of photovoltaic cells unleashed almost limitless possibilities—from custom designed BIPV as high-standard glass facades to hidden active technologies behind thin layers of stone and, even, concrete. These developments allow architects and planners to treat BIPV like al-most any facade cladding material. Third, new regulations beyond feed-in tariffs have made the joint exploration and self-consumption of on-site solar energy generation more economically attractive. Now, less expensive and more energy efficient, BIPV technologies are becoming econom-ically and ecologically viable also on surfaces that receive less solar radiation. This is es-pecially relevant in dense urban settings where buildings are primarily vertical and their envelope offers large vertical surfaces areas. The challenge; however, is that verti-cal facades generally receive less solar radiation and are subject to shading from neigh-

G L O B A L B R I E F I N G R E P O RT CARBON CITIES

boring buildings. Optimization of urban design for renewable energy generation ad-dresses both urban form, as well as function. Advances in integrated urban design could affect both the availability and solar energy generation potentials of surface facades, as well as, shape the energy loads and demands to maximize its utilization. On the energy systems level, it is just as important to consider complementary technologies such as storage and thermal systems, for example district heating and cooling networks, heat pumps, and chillers. Analytical Tools for Integrated Urban Design Just considering the scale of individual buildings is too limited to depict present and fu-ture energy systems and networks that often span from just a few to hundreds of buildings. New methodologies and research enable the development and analysis of urban energy flows and systems. As part of our research at the SingaporeETH Center’s Future Cities Laboratory, we developed the “City Energy Analyst”—an open-source digital mod-elling platform. The platform provides parametric urban design tools to generate proto-typical urban blocks and districts, engineering models for buildings, and district energy supply and demand systems. It also enables a variety of occupancy models to depict the behaviors and activities of the urban population. Combined with location-specific weath-er data, these models, embedded in optimization routines, enhance the search for best-performing solutions within given targets and parameters, such as capital and opera-tional expenditures, CO2 emissions, and primary energy. Even though, urban design influences the lives of millions of people over multiple gen-erations, urban designers and city planners rarely utilize analytical tools to make in-formed decisions toward low carbon, livable cities. In case studies such as the University District or “Hochschulquartier” in Zurich, Switzerland and the new Waterfront Tanjong Pagar in Singapore, researchers have investigated integrated processes and demon-strated the ability to generate knowledge that guides decision-making processes.

City Energy Analyst Tool

These case studies illustrate that urban development and design, without the consideration of urban energy systems, makes it impossible to reach societal goals like the 2000Watt / 1t CO2 society or other emission reduction targets. Buildings have lifespans—from decades to centuries. Each building and each city that we develop without consideration of its impact and energy systems is lost in the fight against climate change. ◆

About the author PROFESSOR ARNO SCHLUETER is the chair of Architecture and Building Systems at ETH Zurich and a principle investigator at the Singapore-ETH Center’s Future Cities Laboratory. Schlueter and his research teams de-velop new approaches, design methods, and technologies to make buildings efficient and dynamic agents in the urban fabric.

Urban Singapore

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The End of Privacy As technologies continue to advance at a far faster rate than our understanding of them an important question is raised: how are we paying for this upgrade in quality of life? By Ana C. Rold

From the

Internet to the Internet of Things and everything in between, the ease and freedom big tech has brought to modern society has altered not only the way we go about our daily lives, but has also changed the way we think about the world and humanity. Social media platforms such as Facebook and Twitter have brought a new level of interconnectedness between people and nations on a global level; other online platforms such as Google or Amazon have transformed the way we behave as consumers and knowledge gatherers. In the physical world, technologies such as smart home devices, driverless cars, and all of the sensory systems necessary to connect these devices to the wider grid system have brought the ease and luxuries of the internet out into the real world. Similarly, physical technologies like drones and satellites equipped with advanced software programs that can detect everything from facial features

to heat signatures, are providing the military, governments, private businesses, and even citizens with the ability to view the world in a more broad and in-depth way the likes of which has never been experienced before. As these technologies continue to advance at a far faster rate than our understanding of them can keep up with, an important question is raised: how are we paying for this upgrade in quality of life? The answer is, with our personal data, of course. With Google, Amazon, and Facebook providing virtually free and limitless access to their platforms to anyone with an Internet connection, it is easy to forget that these companies are able to maintain these platforms by selling the information that their users provide them to advertisers and any other entities who may request it. And while most people may be aware that the information they provide to these platforms may not be as privately secured as they like, bigger fears over IoT devices such as smart home devices and cell phones and their ability to record and store information one had no intention of allowing them to record has many concerned about the future of personal privacy. Perhaps most concerning of all, advances in facial recognition programs and other detection software have already been used illegally by criminals—and in some instances, even by governments—to spy on and surveil citizens without their knowledge through the use of satellites, drones, and CCTV. With protecting our online data difficult as it is, and our ability to evade monitoring in both public and private spaces becoming near impossible, is this the end of privacy? As technology continues to permeate our homes, places of work, and digital lives, many of the companies behind

A recent IBM survey found that 71 percent of consumers say that it’s worth sacrificing privacy for the benefits of technology, and while 80 percent were concerned about how their data is used, only 45 percent had actually updated their privacy settings in the last year.

these technologies have developed a new hidden aim of gleaming every possible bit of information about their users— where they go, what they do, how they feel, how often they use the technology, who they communicate with, etc.—in order to sell this information to advertisers and other companies, who then in turn analyze the data to predict what the consumer might be interested in purchasing based on the information they have provided. This new system of “surveillance capitalism”—where instead of goods, predictions, and personal information are for sale—has zero regard for our concept of privacy and indiscriminately monetizes and objectifies our personal data. While this is undoubtedly distressing, what is more alarming is that the majority of consumers are fine with this trade off. A recent IBM survey found that 71 percent of consumers say that its worth sacrificing privacy for the benefits of technology, and while 80 percent were concerned about how their data is used, only 45 percent had actually updated their privacy settings in the last year. In fact, many of the companies that collect large amounts of data on consumers—Amazon, Microsoft, and Google, to name a few—are among the most trusted institutions in the U.S., and the upgrade in quality of life these companies have provided people may very well be what has allowed surveillance capitalism to boom. But what personal data exactly do these companies have on consumers? Amazon, for example—which owns everything from Amazon.com to Kindle to Prime Video to live-streaming service Twitch, and even grocery food store chain Whole Foods—has information on everything you’ve bought, searched for, watched, browsed, and read, as well as your name, address, and the name and address of anyone you’ve ever sent something to using any of these services. Amazon’s security doorbell system Ring can store videos for 30 to 120 days for paying customers, and their smart home system Alexa—which can be switched on using specific wake words—in theory, could be accidentally activated and unintentionally collect and send your personal audio to Amazon. Similarly, other tech giants such as Facebook and Google have → 43

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→ access to similar personal information, as well as more sensitive information such as GPS location, phone numbers, place of work, criminal records, and the likes. While there are opt-out processes and safer browsing options you can use to reduce your digital footprint, complete erasure of one’s personal data from the Internet is near impossible. And while consumers may have a general idea of the information they’re providing these online platforms with, the real sense of danger comes from how pervasive the Internet of Things has become in our personal homes and daily lives—and what information these devices may be inadvertently collecting without our knowledge. With these devices able to pick up your voice and anything you talk about, as well as daily habits, TV preferences, and even the times you leave your house and come back, tech companies are gathering highly private information about who we are in our most personal spaces—information that could fall into the hands of the government or even criminal hackers. And as IoT continues to advance and become more prevalent in the gadgets we use in our everyday lives— integrating into our sprinkler systems and even our toasters—it may soon be near impossible to evade its reach even in our own homes. Perhaps most concerning of all, it is not just the big tech companies that may be encroaching on privacy at home and in the digital realm, but also the government as public surveillance systems become more commonplace around the world. In the era of drones, satellites, and video surveillance systems in nearly every public area, visual and audio information is being recorded on a 24/7 basis not only in CCTV-laden urban areas, but also from satellite systems hundreds of miles in the sky. And while governments and law enforcement agencies have used technology such as satellite imaging to reduce crimes like drug trafficking and civil disorder, the way in which officials go about using this technology often infringes on the right to privacy. Several government agencies use of facial recognition technology on state driver’s license databases in order to track down undocumented citizens G20G7.COM

and others who may not show up in the traditional criminal database, for example, has all been done without the consent of those whose state driver’s licenses they use, and may continue if policies to protect people’s information at the DMV isn’t soon put into place. Of course, even more nefarious uses of these surveillance systems are already in use by various governments around the world. For example, the recent media attention on China’s oppression of the Uyghur people in the XinJiang province has revealed a sophisticated surveillance operation by the Chinese state in which not only are the Uyghurs’ use of social media and instant messaging harshly monitored, but facial recognition technology is also used in public places such as supermarkets, malls, and hospitals

It is not just the big tech companies that may be encroaching on privacy at home and in the digital realm, but also the government, as public surveillance systems become more commonplace around the world.

to track down potential dissenters. And in Saudi Arabia’s planned futuristic city-state NEOM, recently uncovered documents reveal the government’s plan to have NEOM’s citizens under constant surveillance through similar facial recognition technology—all of which will supposedly be reviewed under a legal system operating outside the boundaries of Saudi Arabia’s court system. However, some action is being taken in order to reign in governments’ abuse of surveillance technologies. Kazakhstan’s recent move towards forcing citizens to use a special national certificate when browsing the web instead of the traditional certificate that encrypts user data saw Google, Mozilla, and Apple opposing the move by agreeing not to accept the national certificate in their respective web browsers and mobile operating systems. But while this move may work due to the fact that outside of these three mega companies there are few options for web browsing, the development of competing web browsers by other countries could see to a higher rate of surveillance schemes by governments in the future. Ultimately, as people’s ability to evade surveillance diminishes and they begin to feel more and more that they are targets under constant investigation, trust between people and their governments—and more importantly, people and technology—is severely damaged, and society’s ability to function begins to cease. And as these new surveillance technologies continue to fuel the systematic invasion of privacy, people will continue to feel less like autonomous beings and more like objects under constant scrutiny by the government, up for sale by ad companies, and under attack by more nefarious actors. It is crucial that policies and infrastructure be put into place soon lest the trust between citizens and society is destroyed. ◆

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The Internet of Education: A Decentralized Learning Revolution The 21st century will pioneer exponential solutions for education and work, but the revolution will not be centralized. By Chris Purifoy

In 2020,

education and work will collide with an exciting and unprecedented inflection point. The plans have been laid, the relationships formed, the Internet of Education is coming. We now understand new models for quantifying value and proving the impact of every influencer in the life of a student, for measuring lifelong learning journeys, and transferring skills across borders. We are developing new protocols and models for incentivizing students as they learn and teachers for creating substantive value. We finally know how to measurably solve skills gaps and connect the fragmented landscape of education and work into decentralized but unified innovation hubs without sacrificing the value of proprietary stakeholder data or student privacy. The knowledge economy, predicted decades ago, can finally be realized. The 21st century will pioneer exponential solutions for education and work, but the revolution will not be centralized. A Decentralized Protocol for Transferring Value Twenty-two months ago, in the thin air of the Swiss Alps, a conversation about a decentralized graph for education began—what if a protocol for coordination could be developed that aligns everyone’s incentives with a democratic governance? What if it could provide a common framework for schools and employers to share data and value? We would have an infrastructure that could measure lifelong learning, skills, credentials, and employment. Governments and institutions could benchmark for impact when they investment in humans, in schools, and in learning. We could finally G20G7.COM

quantify student outcomes and solve many of our toughest challenges. Enter: The Learning Economy Protocol I learned from my most expensive entrepreneurial lesson that we must always add value without changing behavior, especially if there are legacy systems involved. The Learning Economy Protocol was developed with this ethos in mind. It provides a framework to transfer information and value between any stakeholder in education and work without the friction of individual partnerships or the need to install new systems. The Learning Economy Protocol connects the fragmented learning ecosystem into a unified value chain. It allows schools, employers, researchers, and institutions to translate information between multiple standards and systems without changing their behaviors, since global education is just as diverse as the people teaching and learning. The Learning Economy’s information layer creates a modular graph for student record keeping, badging, and tracking impact, that can be privately connected to any digital learning or workforce system with APIs and distributed ledgers. The Learning Economy’s value layer quantifies the impact of each stakeholder on the life of a student with machine learning, and tracks the marginal contribution of everyone who adds value to the learning economy with distributed ledgers. A Community of Innovation In the last twenty-two months, we have had the honor to learn about and meet with so many efforts and organizations that are improving 21st century education and work. Each of them will play a role

in this exciting decentralized future of value. Forums like the Global Talent Summit, Ed 3.0, T3 Innovation Network, WISE, Hyperledger Education Architecture SIG, Singularity University, American Workforce Policy Advisory Board, and Salzburg Global Seminar are convening to help make space for dialog as we envision a more abundant future for students and teachers. Institutes like ScienceAtHome, New America, and the Education Design Lab are confronting challenges and developing new ways to promote and quantify soft skills like leadership, creativity, and teamwork. NGOs and government agencies like the U.S. Department of Education, U.S Chamber of Commerce, Smithsonian, CO Department of Higher Education, and Educate Lanka are convening thought leaders and working to empower the world with education that produces real-world impact. Companies dedicated to social responsibility like Starbucks, LEGO, Amazon, Hilton, Disney, Salesforce, and Adidas are helping to reskill the future workforces and those without access to education. Innovative ideas are being piloted at universities like MIT, UC Berkeley, Western Governors, Arizona State, UC Irvine, Central New Mexico Community College, San Jose State, Harvard, and Virginia Tech to learn how blockchain can enhance the student experience, make skills and credentials more portable, and solve equity gaps. Philanthropic organizations like the Lumina Foundation, Bill & Melinda Gates Foundation, Carnegie Corporation, NewSchools Venture Fund, Google.org, and Salesforce Foundation are funding and fueling the future of education and work.

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Earn to Learn efforts are underway by the World Bank, Scholar Coin, Consensys, and Coinbase to develop incentivized learning tools that reward students as they learn. Next generation classroom providers like General Assembly, Trailhead, Century Tech, Instructure, Coursera, Spoonread, and edX are helping us rethink how students learn and educators teach. Next generation credentialing efforts like Learning Machine, Credly, Credential Engine, Badgr, IMS Global Competencies and Academic Standards Exchange, Bit Degree, and ETS are reforming assessment into 21st-century models. Blockchains by Ethereum, Ripple, and Hyperledger are empowering a range of decentralized innovations and laying the groundwork for 21st century education and workforce infrastructure. Data trust and interoperability organizations like BrightHive, DXtera, Sovrin, IBM, and Microsoft are developing new ways to protect and share student information and identity. Machine Learning efforts by GoogleX, Carnegie Learning, IBM, and Century Tech are surfacing new techniques for

Machine Learning efforts by GoogleX, Carnegie Learning, IBM, and Century Tech are surfacing new techniques for mapping student pathways and quantifying the value of education.

mapping student pathways and quantifying the value of education. And programs like Stanford d.school, Singularity University, X Prize, and MIT Lab are working toward the radical adoption of new technologies, inspiring action, and awarding innovators. There are so many amazing and innovative efforts that it would be impossible to list them all. Blockchain and machine learning radically change the landscape of education. How we use these tools is remarkably important. Rethinking global infrastructures requires a thoughtful, research-led approach for the sake of students and teachers. Otherwise these new tools could further spread inequality and fragmentation. The more student-centered we architect this new Learning Economy the better. The integrity of blockchain protocols will help us guarantee that students always remain in control.

supported by Learning Economy, a non-profit organization with a mission to accelerate the worldâ&#x20AC;&#x2122;s transition to 21st century education and workplace infrastructures. To see this goal accomplished we must work together. Everyone has a role to play. â&#x2014;&#x2020;

Integrity matters. Privacy matters. Student-centric ideologies matter This brave new education and workforce protocol is facilitated and

About the author CHRIS PURIFOY is a Co-Founder and CEO of Learning Economy.

G L O B A L B R I E F I N G R E P O RT INC S P E C I A L B R A N D E D F E AT U R E

Values for a New Generation of Leaders By Kaitu’u ‘i Pangai Funaki

As the host

for APEC 2019, Chile has identified four priorities for action for member economies: Digital Society; Integration 4.0; Women, SMEs, and Inclusive Growth; and Sustainable Growth. The concept of sustainable human connectivity links these priorities. As the growing APEC economies collectively constitute a majority in the world’s population, GDP, and trade, there is no better time than now to identify the underlying values that tie together the peoples of the APEC region. Interdependence is increasing, and within this context based upon better relations and understanding interdependence needs to be strengthened. Both governments and non-governmental organizations are currently undertaking the work of identifying and employing the values that have the power to unite APEC societies. Among NGOs, the Innovative Nurture Community. (“inc.”) is one of Japan’s dynamic numerous private

initiatives addressing the four APEC 2019 priorities by developing human connectivity. As an organization, inc. is a global catalyst pursuing the creation of a vibrant network for realizing a better society through equitable and sustainable growth. inc. provides platforms for individuals and organizations to come together and, through embracing their differences, broaden and deepen understanding with the end goal of enhancing growth, facilitating relationships, and achieving respectful recognition among and between APEC communities. Furthering this vision, within inc. the New Generation Leadership Initiative (NGLI) is committed to empowering talented young leaders around the world and supporting them in articulating new visions for creating a society of shared values. NGLI provides a platform for young leaders to mutually enhance one another through both their differences and similarities. As part of this vision,

Interdependence is increasing, and within this context based upon better relations and understanding interdependence needs to be strengthened. G20G7.COM

NGLI is documenting ideas and insights collected from these young leaders for incorporation into an e-book application. NGLI’s e-book application platform is premised on the GNG framework. GNG (“Gross National Generosity”) is a framework that evolved out of the cultures of the Pacific Islands and which employs the traditional Pacific value of reciprocity in support of balanced relationships among nations. Pacific cultures pair reciprocity with generosity to maintain and strengthen relationships. Mining the diverse human heritages found across the Asia Pacific region and then reframing this wisdom and knowledge through the lens of the perspectives brought by the young leaders of the next generation will contribute to building the critically important human resources required for a sustainable future. APEC Chile 2019 is the time to act decisively and move forward in building a more sustainable future. inc. and NGLI believe that identifying traditional knowledge that can be reframed and applied by the next generation of leaders is crucial to integrating economies and fashioning a sustainable world for the future. Fortunately, indigenous knowledge in the Asia Pacific remains vibrant and influential, particularly in rural areas and on islands. A collective effort on the part of all the countries and cultures of the Asia Pacific to rediscover and embrace this wisdom will help APEC achieve its four priorities, further integrating economies within the region and strengthening ties to its global network. ◆

Profile: KAITU’U ‘I PANGAI FUNAKI is the Director of the New Generation Leadership Initiative (NGLI) at inc. A researcher in Asia Pacific studies, politics and international relations, the founder of the Dignified Pacific Initiative.

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Ritsumeikan Asia Pacific University: From zero to 150+ nationalities in 20 years By Haruaki Deguchi

When it was

established in April 2000, Ritsumeikan Asia Pacific University (APU) embarked on an unprecedented mission for a Japanese university—to become an international university at a scale previously unimaginable for the country. The initial goals APU set out to meet were known as the “three 50s”: To enroll a student body that was 50% domestic Japanese and 50% from outside Japan, to have 50% of the faculty come from overseas, and to have students from at least 50 countries. These conditions were seen as a part of creating an environment of diversity that would serve as a path to global citizenship, while preparing future leaders with an innovative undergraduate curriculum offered in both Japanese and English. Now, almost 20 years later, APU is home to almost 6,000 students enrolled in undergraduate and graduate programs. Holding true to our founding goals, we have maintained a 50:50 ratio of international and domestic students. The international students currently on campus come from 93 countries and regions, a diversity that no other Japanese university can match. Our current students come from the Americas, Oceania, Asia, Europe, and Africa. Since our founding we have welcomed students from 155 countries and regions, and currently have over 18,000 alumni all around the world. All of this takes place in a mid-sized city in the southwest of the country, far from Japan’s major metropolitan areas. Our location in the city of Beppu in Oita Prefecture contributes to the cultural blending that forms the base of our students’ educational experience. The university has had a strong, positive impact locally, with our students integrating into the community. Wherever you go in Beppu you are bound to encounter students from APU, whether they are participating in a festival, volunteering at a community

center, or working part-time jobs in local businesses. The experience at APU is more than just multicultural, however. Our education meets international standards. APU is the third Japanese university to gain accreditation from AACSB—the Association to Advance Collegiate Schools of Business, and the second university in Japan to earn UNWTO.TedQual certification from the United Nations World Tourism Organization. We have consistently placed in the top five private universities in Times Higher Education’s annual Japan University Rankings. APU’s success in achieving and maintaining the founding goals has resulted in an immersive, international education and unparalleled intercultural student experience. Those who study at APU gain cultural knowledge and practical skills necessary to contribute to positive social change, intercultural coexistence, responsible business leadership, and sustainable development. Wherever you go in the world, you can find our graduates. It is my hope that one day, you can find your way to our campus so that you can meet these world-class students in what I like to call our “United Nations of the young.” ◆

The experience at APU is more than just multicultural, however. Our education meets international standards.

Profile: HARUAKI DEGUCHI is the president of Ritsumeikan Asia Pacific University in Beppu, Oita Prefecture. A popular lecturer and author of more than 40 books, he founded Lifenet Insurance in 2008 after a career spanning nearly 35 years at Nippon Life Insurance Co.

G L O B A L B R I E F I N G R E P O RT 101 STUDIOS S P E C I A L B R A N D E D F E AT U R E

A Case Summary on Global Collaboration By Michael Silva

In October 5, 2017

Hollywood was rocked by an exploding sexual scandal. It was alleged that studio owner Harvey Weinstein had abused his position and power to take sexual advantage of multiple aspiring artists over a prolonged period of time. While legal outcomes have yet to be clearly established (as of the writing of this article) the hint of scandal— even in a fairly flexible Hollywood environment—cost Mr. Weinstein his company as bankruptcy claimed both his assets and his legacy. Various assets and contents of the Weinstein Company including the Yellowstone Series with actor Kevin Costner and The Current War with actors Benedict Cumberbatch and Tom Holland were purchased out of bankruptcy by a very well regarded investment group headed by billionaires Ron Burkle (Yucaipa) and Marc Leder (Sun Capital). Messrs. Burkle and Leder then assembled an experienced best-inclass management team headed by

David Glasser and David Hutkin. Over the last decade, Glasser previously oversaw production, marketing and distribution for worldwide films, garnering a total of 195 Academy Award and Golden Globe nominations and 40 wins for titles including, but not limited to Inglourious Basterds, he King’s Speech, The Artist, Django Unchained, Silver Linings Playbook, The Butler, and Lion. This includes Best Picture nominations seven years in a row and consecutive Best Picture wins for The King’s Speech (2011) and The Artist (2012).1 The extensive experience of Glasser and Hutkin were put to the test as they were tasked with building a world-class next generation entertainment-media platform under the banner of 101 Studios, Beverly Hills, California. While the opportunity was clearly compelling the implementation of a lucid mission and subsequent corporate objectives would be daunting for five reasons:

The extensive experience of Glasser and Hutkin were put to the test as they were tasked with building a world-class next generation entertainment-media platform under the banner of 101 Studios, Beverly Hills, California. G20G7.COM

First, Hollywood is an exceptionally competitive environment where many want to be called but very few are actually chosen. In the case of Hollywood severe competition is buttressed by a club-like atmosphere that is very effective in keeping newcomers on the fringes of the industry. In this regard consider the attempt to ban upstart Netflix from competing for Academy Award Honors. Second, Hollywood not only has talented artists but it also boasts of ery talented management. While Mr. Glasser and Mr. Hutkin have exceptional pedigrees of their own, they are forced to go head-to-head with other exceptional leaders. In a very real sense the upper echelon of the entertainment industry is like watching athletes in the NFL (National Football League). After hours of backyard passes, followed by Pop Warner, followed by high school competition and the final grind of Division 1 college football—what makes it to the rosters of professional football are simply the best of the best. Management talent in Hollywood is a grueling progression from small beginnings to a slugfest at the top of the profession. There is no comfort in resting on ones laurels as having talent in Hollywood only leads to the constant requirement of honing that talent on a daily basis. Third, Hollywood does not lack for cookie-cutter powerhouse studios. As an emerging operational entity 101 Studios needed to be different or die trying. The metaphor is simple; if there are ten people in a room and they all dress alike, talk alike and think alike— nine of them are unnecessary. The progress and process of 101 Studios would not only need to be dynamic it would also need to be competitively differentiating. 101 Studios needed to represent unique slice of Hollywood rather than a figurative scan of existing competition. Fourth, the formation of 101 Studios comes exactly as the very intersection of the entertainment industry and technology. Content is and remains the bread-and-butter of Hollywood. However, not far behind is the disruptive impact of technology. 101 Studios is neatly sandwiched between significant issues such as the amount

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and type of Computer Generation (CG) that could and should be used when producing content to the likely decision that neither television nor the cinema will be the ultimate destination for content. In all likelihood mobile devices are the new Hollywood medium. As a result mobile device manufacturers and mobile service providers are the new Hollywood players. Fifth, 101 Studios must be a global player. Where traditional studios once faced the difficult reality of dealing with the nuances of artistic talent they must now face the nuances of another type—cross boarder relationships and decision-making. The geographical reach of Hollywood has always been global. However, being global currently means something very different. It means the new media world involves major segmentation between a mobile device audience in one country and another audience receiving the same content in another country. The nuances of countries, cultures and governments creates an exponential set of decision and performance variables. Adding to the nuances of cultural differences is the universal and unified ability for any one audience to reach out to social media and destroy a particular project or even an entire company through the creation of spontaneous social media global opinion. To “kick around” the challenges of an embryonic Hollywood studio tasked with global expansion the management of 101 Studios reached out to Wirthlin Worldwide, a strategic consulting firm. In turn, WirthlinWorldwide suggested Innovative Nurture Community., “inc.” in Japan as a potential partner for 101 Studios in Asia.

inc. is a rather rare breed of organization. inc. is a not-for-profit entity completely committed to partnerships and alliances that contribute toward the social good in ways much beyond mere tax revenue. When inc. determines that a particular endeavor has social merit the organization then creates a commercial consortium in support of a particular set of corporate objectives and subsequent profitability.

In this case 101 Studios and inc. became instantly aligned in support of a unique approach toward the creation of a next generation entertainment-media company. Following a detailed effort to understand the history, mission and motivation of 101 Studios inc. and WirthlinWorldwide suggested three differentiating activities as follows: First, the Creation of a Collaborative (not Competitive) Platform: The traditional model of content distribution is competitive in nature. Essentially media content is sold to the highest bidder for distribution. Consequently, the mass of losers (which fail to secure distribution rights) vastly outnumbers the mass of winners (which succeed in securing distribution rights.) In our book The Future 5002 we proposed a new approach resulting in better mission execution and higher profitability. Our mantra was that “tomorrow’s organization will replace cutthroat competition with collaborative performance”. inc. transformed our theoretical model into a living collaborative consortium. Rather than create divisions between winners and losers inc. brought competitive elements such as broadcasters, film producers, music producers and talent agencies into a single group of commercial supporters. As the time of this article there are 20 members of the consortium including five major broadcasters, three distributors, three talent agencies, a global data company and a major mobile phone service provider. The combined annual revenue of the consortium membership exceeds $ 148 billion. Second, the Inclusion of Outliers in the Collaborative Platform: As we previously mentioned the collaborative consortium includes a global big data company and a major mobile service provider. From the perspective of the traditional entertainment industry a data company and mobile phone company are considered outliers. However, both outliers play prominent roles in the evolution of the mediaentertainment industry. The ability to amass and identify consumer preferences using analysis of large structured and unstructured data allows for the customization of content

reaching deeper and deeper into smaller and more specialized consumer groups. For example, we should fully expect media content produced to the discerning tastes not merely of the consuming masses but also multiple sub-categories of viewers and listeners. Further, the distribution of content will migrate from the large screen to the smaller screens of tablets and mobile phones. What may appear to be outlier participation in the development of media will eventually become the mainstream platform of the entertainment industry. Third, the Creation of Content aimed Specifically at Asian Audiences to establish a new genre of Entertainment: In terms of entertainment there are three unique characteristics of the Asia market: First, most of Asia cannot compete with the US and EU in the production of full length feature movies. Second, much of Asia secures their content on mobile platforms such as tablets and phones rather than television and cinema houses. Third, much of Asia is a commuting society where life is measured in blocks of time such as the 30 minute commute. The unique characteristics of Asian viewership suggest the creation of a commuter based entertainment industry with ten, twenty and thirty minute → 51

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→ content features that can be easily viewed on mobile devices. The creation of “commuter short” content with quality levels identical to large screen productions is a segment of the industry yet to developed for a geographical area that accounts for over 65 percent of the global population.

The platform created to provide entertainment alternatives to the Asia market is 101 Studios Asia 101 Studios Asia is a collaborative effort to execute the global mission of 101 Studios in Asia. With a mission statement that includes consortiums, outlier contributions and media content specific to the Asian market 101 Studios Asia is committed to become a next generation media-entertainment platform. The inc. commitment to 101 Studios Asia is based on their belief that a new media-entertainment platform would contribute toward the betterment of social conditions by creating a more tailored and customized reach to consumers of values and standards that uplift and motivate individual performance and sound social citizenship. The intent is to represent these values and standards through the media art of story telling rather than cinema sensationalism. Content such as The Current War, which tells the rather unknown story of the battle between Thomas Edison and Nikola Tesla for the future of the emerging electronic grid in America is an example of transmitting sound social values over a media platform. The story, based on actual events, conveys the values of personal conviction, perseverance and the extremity of human performance. Values clearly needed at many levels of global social leadership. While the idealism of 101 Studios Asia is admirable the accomplishment of their global objectives demands three very real corporate characteristics. Branding: Although 101 Studios is a very new entity the management team of Glasser and Hutkin, the investor duo of Burkle and Leder and current content such as Yellowstone and Current War must be presented in a manner that creates a recognizable and verifiable brand in the mediaG20G7.COM

The projects through inc. always goes through the process of arranging the conditions. entertainment industry capable of guiding industry change to a global market. Vision: The vision of 101 Studios Asia must provide a clear and compelling direction on multiple levels as follows:

101 Studios Asia needs to create a next generation entertainment alternative to Asian audiences. This portion of the vision must appeal to traditional players in the entertainment industry such as the broadcasters, distributers, talent agencies and music providers. 101 Studios Asia must provide a smooth migration from terrestrial and cable broadcasting to streaming on mobile devices. This part of the vision requires the integration of outlier technology companies normally not associated with the entertainment industry. Additionally, the entertainment industry must make a major technological foray into big data. This is likely the most powerful, yet least visible and understood variable in the creation of the future of global entertainment Plug & Play: All of the activities of 101 Studios Asia must have clear connections to the vision of global entertainment. A vision of this magnitude and importance cannot tolerate distraction or detours. Distractions and detours motivated by the constant pressure to produce short-term profitability are the most dangerous to the implementation of a revolutionary long-term vision. The requirement to provide a seamless integration of disparate activities to accomplish complicated objectives is figuratively similar to the gaming industry demand for plug & play enhancements. Each level of enhancement to the global mediaentertainment vision of 101 Studios Asia must be capable of making

seamless connections with previous and future levels of the mission and vision. Otherwise, the vision is slowly and subtly derailed by tangents lacking in connection to the original statement of mission and objectives. Tom Peters, author of In Search of Excellence, referred to this as “sticking to the knitting”.3 In Japan the objective of sticking to the knitting is accomplished by arrangement for conditions. The projects through inc. always goes through the process of arranging the conditions. Each country has unique conditions that are required for the successful execution of a corporate vision. To ignore the conditions saves time but ultimately courts disaster. Paying the price to identify and meet the conditions is time and energy consuming but contributes greatly toward successful outcomes. In a corporate world dominated by quarterly-visions taking the time to do it right is a luxury that seems unavailable. Yet, it appears that the common sense carpenter wisdom of measuring twice and cutting once is very applicable. The creation of the 101 Studios Asia platform through the combined efforts of 101 Studios and inc. Japan is a bold and unique move as the first step in the execution of an equally bold and unique vision for the next generation of global media entertainment. ◆ 1. Deadline Hollywood News, January 22, 2019 Edition 2. The Future 500, Harper Collins Publisher, 1988, Michael Silva and Craig R. Hickman 3. In Search of Excellence, Published 1982 and reprint by Harper Collins in 2006, Tom Peters and Robert H. Waterman, Jr.

Profile: MICHAEL SILVA is the Managing Director of WirthlinWorldwide LLC. Established in 1969 by Dr. Richard Wirthlin, former Chief of Strategy for two terms in the Reagan Whitehouse, WirthlinWorldwide has provided strategic direction and crisis management to over 70 firms in the Fortune 100 and multiple governments including the USA, Israel, Brazil, India and the UK.

LSE GLOBAL POLICY LAB CONTENT 56 From “Green” to “Blue Finance”

Erik Berglof and Torsten Thiele

58 The Ocean and Climate Change:

The Rising Cost of Global Inaction Alex David Rogers

60 From Canary to Hummingbird:

The Ocean vs the Climate Crisis Sébastien Treyer and Julien Rochette

62 The Politics of Transparency in Global Climate Governance Michael Mason

64 The G20: The Reluctant Climate Leader Gerd Leipold

66 Integrating the Ocean into the Global Climate Architecture Erik Berglof and Andrés Velasco

68 Adding “Blue” to International Climate Finance Torsten Thiele

70 How Financing ClimateSmart Development is Key to Island Survival? Angelique Pouponneau

72 Central and Southern Africa: High-Stakes Decisions under Climate Uncertainty Declan Conway

74 Responding to the Urgency of Ocean Risk Karen Sack, Chip Cunliffe and Nathanial Matthews

76 Nature-Based Flood Resilience: Reaping the Triple Dividend from Adaptation Swenja Surminski and Michael Szoenyi

78 Decarbonisation Risks in Shipping: Implications for Insurance Underwriters Oliver Walker, Justine Schafer and Swenja Surminski

80 Solving a Chinese Puzzle in Global Governance Zhongying Pang

82 The Case for Agile Regional Ocean Sustainability Banks Nishan Degnarain

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From “Green” to “Blue Finance”

Integrating the Ocean into the Global Climate Finance Architecture A collaboration between the LSE Institute of Global Affairs and the LSE Grantham Research Institute on Climate Change and the Environment with contributions from academics, researchers and organisations addressing the strongly interlinked climate threat and the health of the Ocean.

Institute of

Global Affairs IN PARTNERSHIP WITH

LSE GLOBAL POLICY LAB

Introduction From “Green” to “Blue Finance” Erik Berglof

Professor, Director, Institute of Global Affairs, London School of Economics and Political Science

Torsten Thiele Visiting Fellow, Institute of Global Affairs, London School of Economics and Political Science

The LSE Global Policy Lab this time turns to climate and the Ocean emphasizing the need for innovative finance. Like climate, the Ocean links up all continents; what Jacques Cousteau called the “great unifier.” But it is also vital in the fight against climate change. The IPCC Special Report on the Ocean and Cryosphere in a Changing Climate issued on September 25 2019 confirmed the fundamental role the Ocean plays in regulating global temperatures. For decades, the Ocean has been absorbing 20-30 percent of our carbon emissions and 90 percent of our excess heat. That contribution is now at risk. To address the current challenges to the health of the Ocean, urgent policy action is required, including comprehensive governance and finance measures. In this issue we partner with the LSE Grantham Research Institute to bring together academics, researchers and advocates of reform. The focus on Ocean solutions allows us to consider the climate challenge in a holistic way. The contributions provide, from very different perspectives, a range of important policy responses. The IPCC Special Report reveals the benefits of ambitious and effective adaptation for sustainable development and, conversely, the escalating costs and risks of delayed action. The authors in this issue provide insights into what actions are needed and how to implement them. The bleaching of coral reefs is only one of many potentially irreversible changes currently affecting vital ocean ecosystems. Alex Rogers, Science Director for REV Ocean, shows how

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climate change is reversing some gains from improved fishery management in advanced economies, but more seriously is driving away fish populations from the warmer waters in the developing world. Scientists studying low-lying islands and coral reefs recognise that the Ocean has long been the canary in the climate coal mine, sending early warnings of inundated land and bleached coral. Sébastien Treyer and Julien Rochette argue that the Ocean cannot magically solve the climate crisis. This requires a profound transformation of our economy and development models. But like the hummingbird in the famous tale, a little action in the Ocean could make an outsized contribution to the global effort towards climate change mitigation and adaptation. Oceanrelated measures must be part of the next generation of Nationally Determined Commitments under the COP. Transparency around climate information is an important part of achieving coordinated action. Michael Mason argues that Ocean governance arrangements are often too fragmented across administrative and sectoral boundaries to provide the necessary integrated responses to climate-related changes. What is

needed is a global regime of climate transparency, designed to generate and use information according to the planetary needs of earth systems governance. Short of a global regime NGOs have taken their own initiatives. Perhaps the most ambitious effort is that of Climate Transparency which aims to track implementation in the G20. In presenting their latest CT’s Programme Director Gerd Leipold notes that these countries are dramatically behind on the 2030 sustainability agenda. Energy-related emissions of these countries grew again, by 1.8 percent in 2018, because growth was higher than anticipated and because fossil-fuels grew quicker than renewable energy. Finance is a critical part of responding to these threats. Integrating the Ocean into the global financial architecture is long overdue. The increased awareness of the climate threat to the Ocean must now urgently be translated into effective action on an unprecedented scale. Erik Berglof and Andrés Velasco argue that the international financial institutions can provide capital and know-how, but most of all they much help crowd in private capital and the innovative capacity of civil society, globally and locally. Torsten Thiele shows how by integrating the “blue” into international climate finance we can move towards a global blue deal that addresses the challenges of climate transition, in particular, for coastal regions and ecosystems. Many of the innovations in “green finance” translate directly to “blue finance”, but there are also specific features of the Ocean and

Institute of

Global Affairs

To address the current challenges to the health of the Ocean, urgent policy action is required, including comprehensive governance and finance measures.

local and regional mitigation measures that matter. Finding innovative financing solutions is particularly important for small island developing states. Angelique Pouponneau provides a Seychelles perspective on how financing for climate-smart development is key to their survival. They are particularly exposed and need to be at the forefront of blue finance solutions. Africa will also bear the brunt of climate change and its impact on the Ocean. In a project to understand better the climate of Southern and Central Africa Declan Conway, explains how we have been able to better integrate local variations in climate model, but massive uncertainty still remains. Adaptation is the key to climate policies in Africa and approaches must be deployable from one area to another. One industry that is grappling with climate and the Ocean, perhaps more than any other part of the finance is insurance. Karen Sack, Chip Cunliffe and Nathanial Matthews of the Ocean Risk Resilience Action Alliance (ORRAA) outline a new way to engage with the insurance sector to develop

Finance is a critical part of responding to these threats. Integrating the Ocean into the global financial architecture is long overdue.

innovative products to address risk perceptions in investing into coastal natural capital. Another example of an insurance industry initiative is the Zurich Flood Resilience Alliance, a “holistic” approach to resilience working with more than 100 communities across 13 countries. Swenja Surminski and Michael Szoenyi argue that this example shows how local decisionmakers can build resilience using natural capital and the ecosystem services it provides as well as human, financial, social and physical capital. Many of the solutions to climate change and mitigating its impact on the Ocean require lateral thinking and collaboration across sectors and policy areas. Oliver Walker, Justine Schafer and Swenja Surminski illustrate these “concomitant challenges” involving shipping and insurance. The former industry is a major emitter of carbon and the latter is broadly exposed to the impacts of the sector and any future regulation or standards adopted by the industry. The shipping industry can adapt by serving new markets, adopting new technologies and complying with its own new

standards. Active engagement with the insurance industry will be necessary to facilitate this transition. The fight against climate change, particularly in its impact on the Ocean, will never be won without the active participation of China. Zhongying Pang addresses the Chinese puzzle in global governance. A sustainable development of China’s marine economy will be critical to achieve global climate goals, but Chinese participation is also critical to the delivery on the “Blue Partnership”, agreed at the UN Ocean Conference in 2017. President Xi’s “Shared Marine Future” must be translated into multilateral action. We may need new institutions that specifically address the challenges associated with the Ocean. Nishan Degnarain makes the case for agile Regional Ocean Sustainability Banks as practical tools to deliver ocean solutions. He also calls for a systemic view with acupuncture pressure points—a “bold and holistic” Ocean finance approach. He wants to engage new industries in a sustainable Ocean economy and encourage new financial instruments and tools for “blue risk” management. ◆

LSE GLOBAL POLICY LAB

The Ocean and Climate Change: The Rising Cost of Global Inaction Alex David Rogers Science Director, REV Ocean; Senior Research Fellow, Sommerville College, University of Oxford

In the early 1980s the ocean crossed a tipping point driven by rising temperatures. This was the first recorded incidence of global mass coral bleaching. The symbiotic algae living in the tissues of corals which provide them with their nutritional needs, are expelled as a result of anomalously high temperatures. The corals often die as a result. Since then there have been 6 major global mass bleaching events including the 1997/1998 event which is estimated to have killed 16% of the worldâ&#x20AC;&#x2122;s coral reefs. The recent mass bleaching of 2014 to 2017 may exceed this event in its severity. As a result, coral reefs are probably the most threatened ecosystem on Earth. They are also one of the most valuable with reefassociated fisheries, coastal protection and tourism running into hundreds of billions of US dollars in value. There is less awareness of the effects of rising ocean temperatures on other coastal marine ecosystems. Seagrass beds, mangrove forests and canopyforming seaweeds are all killed directly or indirectly by high temperatures, particularly episodic events known as marine heat waves. All of these ecosystems not only provide coastal protection and critical habitat for marine life, including commercially valuable species, but they can also store large quantities of carbon. As with forest fires, when these habitatforming organisms die off not only are their carbon sequestration capacities lost but large quantities of CO2 can be released. These ecosystems are also on the move, changing patterns of distribution by moving towards polar latitudes. Fish are also heading towards the poles and away from low to warm

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temperate latitudes where many of the developing countries most dependent on fishing as a source of income, livelihoods and nutrition are located. The recent dispute between the EU, Iceland, the Faroes and Norway over shifting North Atlantic mackerel stocks demonstrate the how unprepared our systems of governance are for management of ocean resources in the face of climate change. The fish are also likely to get smaller, a physiological effect of rising temperatures, reducing the productivity of stocks. Overall, this is likely to result in a climate driven decline in fish production compounded by overfishing and illegal, unregulated and unrecorded (IUU) fishing with significant implications for global food security. Climate change has other symptoms as well. Sea level rise is now predicted to reach more than a meter by the turn of the century. It is a direct threat to coastal wetlands such as mangrove forests and saltmarshes which will lose substantial area through drowning.

This is especially the case where coastal development prevents transgression, the landward movement of such ecosystems. Engineering projects on rivers, such as dams, also choke the supply of sediments to these ecosystems, preventing them from increasing their elevation and making them more vulnerable to rising sea level. The intensity of severe weather events is also increasing and these are also highly destructive to coastal ecosystems. The ocean has absorbed about a third of human CO2 emissions since the industrial revolution. This CO2 is converted to carbonic acid in seawater lowering its pH. A side effect of this is an alteration in the carbonate equilibrium in seawater reducing the availability of calcium carbonate for building shells and skeletons. For corals this may mean weakened skeletons and reduced growth rates making reefs more vulnerable to intense cyclones and less able to recover from mass bleaching events. For other organisms the effects are less clear but weakened shells may mean a higher vulnerability to predators and alteration of marine food webs in ways that are difficult to predict. Increasing temperatures also mean that seawater carries less oxygen. It also reduces the tendency for mixing of shallow waters with deep, nutrient rich water layers over large areas of the ocean, a process called stratification. Microscopic algae, or phytoplankton in the surface layers of the ocean, the base of the food chain, are dependent on a supply of nutrients, particularly nitrates, to maintain their growth. Overall this means a decline in primary production in the ocean. Whilst this will be compensated for at polar latitudes by

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disintegrating ice shelves and declining sea ice duration leaving more ocean area for phytoplankton production, the effect is unlikely to completely offset the effects of thermal stratification. Declining oxygen levels are also leading to the expansion of the oxygen minimum zone, the depths in the ocean where oxygen levels fall to low values, generally between 200 and 1000m depth. Observations indicate that the vertical expansion of low oxygen waters in the tropics is compressing habitat for large ocean predatory fish like marlin which need oxygen-rich waters. In the coastal zone where the runoff of agrochemicals, particularly fertilisers, can produce un-natural blooms of algae which are broken down by bacteria the ocean, can become very oxygen poor (hypoxic) or even anoxic (no oxygen). These dead zones are likely to expand as a result of warming. In some parts of the ocean, the proximity of oxygen poor and low pH waters near to the coast have caused mass mortality of marine life including aquaculture species such as oysters during upwelling events (e.g. western coast of the USA). The IPCC Special Reports on Global Warming of 1.5oC, published in 2018 and Oceans and Cryosphere, published in 2019 deliver very clear messages with respect to climate change impacts on the ocean. The first is that failure to keep global temperatures at or below 1.5oC of warming will have increasingly severe impacts on marine ecosystems. Even at 1.5oC 70-90% of coral reefs may be lost as a result of ocean warming and other climate change impacts. At 2.0oC this will rise to 99%. Other marine ecosystems such as seagrasses, mangroves, and salt marshes will be progressively

Climate change has other symptoms as well. Sea level rise is now predicted to reach more than a meter by the turn of the century.

destroyed if emissions continue to rise, with positive feedbacks on atmospheric CO2 levels. Also, as emissions rise, options for adaptation reduce. Even if protected, coral reefs will die and efforts to restore or allow transgression of ecosystems such as coastal wetlands will be overwhelmed by rising temperatures, sea level and extreme storm events. Efforts to increase the efficacy of fisheries management are showing success, particularly in the waters of wealthy states such as off North America, Europe and Australasia. However, these efforts will be increasingly undermined by climate impacts if emissions are not reduced drastically. The economic costs, costs to livelihoods and elevated risks to coastal infrastructure and human society are a threat to lives and global security. Those most exposed include populations of developing coastal states, especially island nations who are highly dependent on fishing and/or tourism and who are most exposed to increasing impacts of sea level rise and extreme weather events. ◆

Professor Alex Rogers is a marine ecologist who has undertaken research over the last 30 years on biodiversity hotspots in the ocean including both warm-water and cold-water coral reefs, seamounts and deep-sea hydrothermal vents. He has worked on ocean policy particularly related to areas beyond national jurisdiction. During his career he led the biodiversity research program at British Antarctic Survey, an independent ocean research group at the Zoological Society of London and was Professor of Conservation Biology at the University of Oxford’s Department of Zoology from 2010 to 2019. He has also advised intergovernmental organisations, including the International Union for Conservation of Nature (IUCN) and the UN Division of Oceans and Law of the Sea (UN DOALOS), as well as non-governmental organisations including Greenpeace, the World Wildlife Fund for Nature, the Deep-Sea Conservation Coalition and Pew-Bertarelli Global Ocean Commission. Alex now works as Science Director for REV Ocean, a new not-for-profit organisation undertaking research to find solutions to major ocean problems including those caused by plastic pollution, climate change and overfishing. REV Ocean are currently constructing the world’s largest multipurpose research vessel to support scientists globally undertaking research in its core thematic areas.

LSE GLOBAL POLICY LAB

From Canary to Hummingbird: The Ocean vs the Climate Crisis Sébastien Treyer Executive Director, IDDRI, Sciences Po Paris

Julien Rochette Ocean Programme Director, IDDRI, Sciences Po Paris Unbeknown to most, the ocean has been quietly absorbing 20-30% of our carbon emissions and 90% of our excess heat for decades. In its recently released Special Report on the Ocean and Cryosphere in a Changing Climate (SROCC), the Intergovernmental Panel on Climate Change (IPCC) sounds the alarm: the ocean is warming and acidifying, while sea-level is rising due to increasing rates of ice loss from the Greenland and Antarctic ice sheets. These drastic changes are compounded by the longstanding threats faced by the ocean—pollution, habitats destruction and unsustainable fishing, for example. These impacts affect marine life, ecosystems services, and the livelihoods and well-being of millions of people. Fish are migrating, dead zones are growing and major economic sectors, such as tourism or aquaculture, are at risk. The solution to fight climate change is well known: rapid decarbonisation. The ocean can play an active role in this global effort. The ocean is not only a victim of climate change, but also part of the solution. As the backbone of international trade, the shipping industry contributes to around 2% of anthropogenic CO2 emissions, and this figure is expected to significantly increase in the coming years. Solutions however exist to improve ocean-based transport efficiency and limit GHG emissions, especially through the introduction of low or zero-carbon fuels. Similarly, shifting to clean energy in the fisheries and aquaculture sectors can make a significant contribution to reducing GHG emissions. The ocean also offers great opportunities to develop renewable energy, through offshore wind installations or wave and tidal power for instance.

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Perhaps most importantly, the ocean is a major carbon sink. Mangroves, tidal marshes, and seagrass meadows are known for their sequestration capacities and, according to the IPCC, the restoration of these ecosystems could provide climate change mitigation “through increased carbon uptake and storage of around 0.5% of current global emissions annually”. Crucially, improving the ocean’s “Blue Carbon” capacity provides many co-benefits: biodiversity conservation, improved water quality and increased resilience of ecosystems and communities in the face of extreme weather and coastal hazards. In recent years, many initiatives have sought to raise awareness of the role of the ocean in the climate system and put ocean issues on the agenda of international climate change processes. Identifying opportunities for synergies between mitigation, adaptation and ocean ecosystem protection, as well as potential risks and trade-offs to be avoided, scientists have highlighted ocean-based solutions for climate action and recent processes, such as the Because the Ocean Initiative or the High Level Panel for a Sustainable Economy, have provided States with guidelines to include ocean-based measures into their Nationally Determined Contributions (NDCs) and National Adaptation Plans.

The 25th Conference of Parties to the United Nations Framework Convention on Climate Change, to be held next 2-13 December under the Chilean presidency, offers an opportunity to build on these recent initiatives and scale up efforts to include marine components in mitigation and adaptation strategies. In particular, the so-called “Blue COP” should increase the States’ understanding of the role of the ocean in climate change strategies and promote the inclusion of ocean-related measures into the next generation of NDCs. But the climate change negotiations cannot be left alone to determine the fate of the ocean: many intergovernmental organisations already have a mandate on marine issues and a key role to play. This is obvious for the International Maritime Organization, where strategies towards the reduction of shipping emissions are discussed, but regional organisations can also contribute to climate change mitigation—e.g. through the conservation of Blue Carbon ecosystems—and adaptation, by anticipating the economic and human consequences of fisheries on the move for instance. And let’s hope that the current negotiations for a treaty on high seas biodiversity will provide half of our Blue Planet a regime able to increase the resilience of marine ecosystems. Scientists studying low-lying islands and coral reefs recognise that the ocean has long been the canary in the climate coal mine, sending early warnings of inundated land and bleached coral. The ocean cannot magically solve the climate crisis, which requires a profound transformation of our economy

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The solution to fight climate change is well known: rapid decarbonisation. The ocean can play an active role in this global effort. The ocean is not only a victim of climate change, but also part of the solution.

and development models. But, like the hummingbird in the famous tale, a little action in the ocean could make an outsized contribution to the global effort towards climate change mitigation and adaptation. This could become true if such ocean-based solutions are designed well enough to play as trigger of transformative change in key sectors of the economy or in the economic model of whole regions. In this regard, there is an opportunity for ocean economies (those regions or countries where maritime or coastal sectors are critical for the economy) to be frontrunners of the transformation to a decarbonised and resilient society, at a time when it is very important to reinforce political leadership in climate action. ◆ Read the IDDR policy brief on ocean and climate change: “Gattuso et al., 2019, Opportunities for increasing ocean action in climate strategies, IDDRI Policy Brief 2 / November 2019”: https://www.iddri.org/en/publications-and-events/ policy-brief/opportunities-increasing-ocean-actionclimate-strategies)

Scientists studying low-lying islands and coral reefs recognise that the ocean has long been the canary in the climate coal mine, sending early warnings of inundated land and bleached coral processes.

Sébastien Treyer is the Executive Director of IDDRI, the Institute for Sustainable Development and International relations, based at Sciences Po Paris. A graduate from Ecole Polytechnique and AgroParisTech, with a PhD in environment management, he is a specialist of foresight for public policies and international negotiations on sustainable development. Before joining IDDRI, he has been active as a civil servant for the French ministry for the environment and French research institutes. Julien Rochette is the Ocean programme director of IDDRI, the Institute for Sustainable Development and International relations, based at Sciences Po Paris. A lawyer specialized in marine issues, his work has led him to invest particularly in regional organizations, especially in the Mediterranean, the Western Indian Ocean, West Africa and the Pacific. Julien holds a doctorate in public law (University of Nantes, France) and public international law (University of Milan, Italy) and joined Iddri in September 2007.

LSE GLOBAL POLICY LAB

The Politics of Transparency in Global Climate Governance Michael Mason Associate Professor, Department of Geography & Environment; Director, Middle East Centre, London School of Economics and Political Science

Transparency, defined here as information disclosure, has become a central attribute in global climate governance as a way to monitor and/or reward various actors’ climate change commitments and performance. The prospect for climate transparency is linked to the increasingly fragmented nature of climate governance – encompassing multilaterally negotiated treaties, transnational municipal networks, subnational actors, bilateral agreements, and voluntary corporate initiatives. In these diverse contexts, the demand and supply of transparency is multi-directional, flowing from and to a wide array of state and nonstate actors, rather than only from governments to interested publics. As such, the rationales for furthering transparency, and the governance benefits to be derived from disclosure, necessarily also vary and may even clash with each other. In the past decade, prompted above all by the evolution of reporting and review processes within the UN Framework Convention on Climate Change (UNFCCC), we can observe three drivers of transparency in global climate governance: 1. Democratisation: the disclosure of climate-related information to enhance a right-to-know, accountability, choice, and participation; 2. Technocratisation: the disclosure of (expert-led scientific) information on climate change matters to rationalise decision-making; 3. Marketisation: the disclosure of climate-related information to ascribe economic value to environmental services, compensate for performance, or facilitate market exchanges.

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Climate transparency is inextricably linked to political and normative disagreements about these drivers of disclosure, which impact on transparency goals – whose actions should be made transparent, by whom, and to what end? Thus, disclosure is itself a site of contestation, rather than a neutral means to help transcend political conflicts over climate change governance. Public and private climate governance arrangements occupy particular zones of overlap between diverse rationales and practices of disclosure, so climate transparency cannot necessarily be mapped by straightforward, binary ascriptions of public and private authority. The democratisation driver for increased transparency of states on their climate actions has principally emerged from global Northern states, supported by civil society organisations. In an international context, the penetration of climate transparency in the UNFCCC reflects wider transparency norms in public

international law (e.g. prior notification and access to information), but it is also constrained by the primacy of voluntary consent in rule-making. UNFCCC parties agree on their own rules of transparency, and agreement over these rules encompasses nondemocratic parties with political cultures often hostile to information disclosure. National self-reporting of climate mitigation and adaptation activities, which allows significant discretion and control by parties over climate information disclosed, is well-established. This “sovereignty sensitivity” of UNFCCC decisionmaking limits the scope and meaningfulness of transparency norms within a state-to-state reporting framework, though modest gains in review processes for inter-state accountability have been realised by the “enhanced transparency framework” of the 2015 Paris Agreement; for example, the “Facilitative Sharing of Views” process, whereby update reports by developing countries are subject to public questioning over their climate actions by other UNFCCC parties. At the same time, increased transparency of developed country climate commitments has permitted more open scrutiny of these states’ mitigation and adaptation actions under the “pledge and review” reporting system of the Paris Agreement. The increasing professionalisation of climate transparency has seen democratising imperatives tempered by rationalist managerial norms of technocratisation, in which climate information presented as “public” is often restricted or rendered opaque to outsiders by the scientific and

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technical discourse surrounding UNFCCC reporting and review systems or, in voluntary climate governance, by the managerial and financial auditing interests of subscribing organisations (e.g. the Carbon Disclosure Project). In multilateral climate governance, politically contested issues are often deflected, in the implementation phase, into a (seemingly apolitical) technocratic focus on building bureaucratic capacities, in order to enhance the scope and “soundness” of disclosed information as a means to rationalise decisions. The technocratic rationale for transparency also plays a part in private climate governance systems. Indeed, it has acquired increasing importance in carbon offset markets – particularly voluntary markets – in the wake of carbon fraud and widely acknowledged deficits in the credibility of carbon offset information. As such, the technocratisation of (private) climate transparency can provide a necessary role in the development of systems of professional auditing and certification pertaining to the release and use of climate data. Another major impetus for climate transparency arises from the privileging of market-based solutions to climate change. For climate governance, this marketisation means interpreting transparency in terms of the information entitlements and needs primarily of market-based actors (e.g. the climate risk disclosure rules of the US Securities and Exchange Commission). Marketrelevant transparency can and is solicited from both public and private actors, as well as individual citizens (e.g. personal carbon budgeting or offsetting). Use of a marketisation rationale can also be consistent with state-based, multilaterally negotiated governance architectures—as with disclosure requirements underpinning the smooth functioning of marketbased flexibility mechanisms, such as the Clean Development Mechanism within the UNFCCC. However, the marketisation of climate governance may also displace, and crowd out, the development of public legal

Climate transparency is inextricably linked to political and normative disagreements about these drivers of disclosure, which impact on transparency goals – whose actions should be made transparent, by whom, and to what end? obligations (both nationally and internationally) on the disclosure of relevant climate information. The more information on climate risk is appropriated as a private good – as in the evolution of carbon markets – the less likely it is that affected parties can participate in decision-making about the desirability or direction of climate governance choices. Indeed, the privatised transparency of voluntary carbon offsets has exacerbated the concerns of civil society actors, and many states, over the credibility of

wider carbon markets and global climate governance more generally. Climate transparency arrangements in the UNFCCC are skewed towards national reporting (state-state account giving), while private climate reporting initiatives have focused on corporate greenhouse gas emissions and other climate-related actions. There is a need for greater integration of transparency systems across domains of public and private authority, addressing above all the climate information needs of global planetary governance. This is particularly evident for the climate change-sensitive management of the oceans, including that majority area (60%) of the oceans – the high seas – outside the jurisdiction of states and therefore state reporting of climate actions. In its Special Report on the Ocean and Cryosphere in a Changing Climate (2019), the Intergovernmental Panel on Climate Change argues that the enabling conditions for effective adaptation to climate impacts requires the coordinated utilisation of climate information in decision-making. Ocean-related governance arrangements are, in many contexts, seen as too fragmented across administrative and sectoral boundaries to provide integrated responses to climate-related changes in ocean regions. A coordinated, global regime of climate transparency, designed to generate and use information according to the planetary needs of earth systems governance, is not on the horizon. ◆

Michael Mason is an Associate Professor in the Department of Geography and Environment. At LSE he is also Director of the Middle East Centre and an Associate of the Grantham Research Institute for Climate Change and the Environment. His research interests encompass environmental politics and governance, notably issues of accountability, transparency and security. Alongside articles in a wide range of academic journals, he is the author of Environmental Democracy (1999) and The New Accountability: Environmental Responsibility across Borders (2005). He is also co-editor (with Amit Mor) of Renewable Energy in the Middle East (2009) and (with Aarti Gupta) Transparency in Global Environmental Governance (2014).

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The G20: The Reluctant Climate Leader Gerd Leipold Programme Director, Climate Transparency

The G20 countries are the natural international grouping to offer bold leadership for the international community to prevent the dangers of climate change. Two thirds of the world’s population live in G20 countries, about 85% of the global GDP is earned by them and they are responsible for about 80% of the global greenhouse gas emissions. The most powerful countries in the world are part of the G20 and while they cannot and should not replace the international UN climate negotiations, they could and should be the political, economic, and technological leaders in the fight against climate change. If they succeed to reduce emissions to net zero by 2050, there is a reasonable chance that global temperature increases could be kept below the 1.50 C limit. Unfortunately, the recent climate performance of the G20 countries does not give confidence that they are taking on this leadership role, which those countries most of risk can rightfully expect. As a recent “Brown to Green Report” of Climate Transparency has shown, the energy related emissions of the G20 grew again in 2018 by 1.8%. This can be explained by the high economic growth and the fact that fossil-fuel energy supply grew stronger than renewable energy. In 9 of the G20 countries—Australia, Canada, China, India, Indonesia, Russia, South Africa, South Korea, and the United States— the energy supply from fossil fuels grew, mostly because of increased fuel usage in transportation and higher electricity demand. This is in line with the long-term trend. Renewable energy has been an amazing success story, but its

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growth has been outstripped by increased use of fossil fuels. In 2018, still 82% of the energy demand came from fossil fuels. If one would look at energy consumption, however, the share of renewables is substantially higher as they have hardly any conversion losses, whereas the conversion losses of fossil fuels are in the order of 60%. The NDCs, the Nationally Determined Contributions of countries required under the Paris Agreement, where countries communicate their intended actions, are by far not ambitious enough to keep temperature increase close to 1.50 C. The recent IPCC 1.50 C report specifies emission reduction needed by 2030 and 2050. This report now allows defining benchmarks (as done in the Brown to Green Report) for the most important sectors, a crucial instrument with which countries can design their policy measures. The ambition of existing NDCs of G20 countries is too low for the world to avoid dangerous climate change.

The recent Climate Summit of the UN Secretary General in September 2019 did not bring much progress, in spite of the urging of António Guterres. The next and important milestone will be the year 2020, in which countries are required by the Paris Agreement to update their NDCs. It will be the litmus test, whether the G20 countries are responding to the climate crisis and act on the concerns of millions of people. Independent assessments of countries’ plans and actions, as performed by Climate Transparency in the Brown to Green Report or the World Resources Institute, are important instruments to create comparability and to stimulate learning and competition. Mark Carney, governor of the Bank of England, has repeatedly pointed out that climate change is as much an economic risk as an environmental risk. With their mandate of safeguarding the global financial system, the G20 have therefore a strong reason to take steps for protecting the climate. For years they advocated the reduction of fossil fuel subsidies, but actions have been rather timid. Though in 2017 one could observe a slight reduction of fossil fuel subsidies. G20 countries, most prominently China, Japan and Korea, are also playing a major role in financing coal plants in other countries. A laudable initiative of the Financial Stability Board of the G20, the Task Force on Climate Related Financial Disclosures (TCFD) has come up with specific guidelines for companies to declare the risks due to climate change. These important guidelines are increasingly recognised and applied on a voluntary basis, their effectiveness would become stronger, if they were to be made mandatory

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as for example in France. Agreement in the G20 to make climate risk disclosures compulsory would be a sign that the G20 is willing to lead in the fight against climate change. There are good economic reasons for firm climate action to keep the temperature increase to 1.50 C. Already now, extreme weather events lead to around 16,000 deaths and economic losses of USD $ 142 billion in G20 countries every year. Limiting the global temperature increase to 1.50 C would reduce negative impacts across sectors in G20 countries by over 70%. For example, it cuts down the average drought length by 68% and the number of days above 35°C per year from 50 to 30. And it also limits the growing season’s shrinkage and the reduction of rainfall, as well as substantially diminishing the risk of heat waves that ravage crops. Climate change has progressed too far for countries to argue, who should act first. Rather, they all need to agree to act fast. The G20, who between them have biggest share of global emissions, have the responsibility to speed up their action to prevent dangerous climate change, safeguard the world’s economy and reap the benefits of climate action for this and future generations. ◆

Fossil fuels rose again in 2018: 82% of the G20 energy mix still comes from fossil fuels

Dr. Gerd Leipold led the international environmental organization Greenpeace as Executive Director between 2001 and 2009. At present, he coordinates the Climate Transparency Partnership, which analyses the climate action of the G20 countries in the yearly “Brown to Green Report.” He studied physics and oceanography in Munich, Hamburg, and San Diego.

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Integrating the Ocean into the Global Financial Architecture Erik Berglof

Professor, Director, Institute of Global Affairs, London School of Economics and Political Science

Andrés Velasco Dean of the School of Public Policy, London School of Economics and Political Science The climate threat to the Ocean, like other challenges to the global commons, often leaves the poor more exposed and invariably more vulnerable. The international community has a critical role to play both in supporting developing countries in protecting the global commons, and through their own national actions. The G20 Eminent Persons Group on Global Financial Governance recently proposed a range of reforms to improve the effectiveness of the institutions of international financial system in protecting the global commons. These proposals also apply to the Ocean climate challenge. Total infrastructure capital around the world is expected to double in the next 15 years. How and with what technology that investment takes place will have a profound influence on the global commons, including on climate and the Ocean. The international financial institutions (IFIs) have an essential and urgent role to play in ensuring the quality and sustainability of that investment. Like other global challenges, the Ocean climate challenge spans national borders and requires international action to provide the public goods (transnational and local) to respond to these threats. Some of the necessary measures are about mitigation and, as such, about pure public goods where everyone’s contribution adds up. But much of the investment, particularly in poorer countries, is in adaptation, where the required public goods are more likely to be national and sometimes regional, and the bulk of what is required is likely to be private investment to enhance resilience. The different

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nature of the public and private goods needed to address the Ocean climate challenge have important implications for how efforts should be coordinated, and for the allocation of responsibilities across institutions. The activities aimed at addressing the Ocean climate challenge must be integrated into the core programs of IFIs, and coordinated within country platforms owned by national governments. IFIs have a critical role to play in setting global standards and developing market-based approaches that would crowd in the private sector. They should also encourage the adoption of standards regarding the disclosure of risks and help countries incorporate actions to address the Ocean climate challenge into their growth strategies and investment plans, and assist them in adopting a consistent approach across the government. Climate action, including in the Ocean space, should be coordinated on a global platform led by the UNFCCC Secretariat as the UN guardian agency and the World Bank with the broadest reach among the MDBs. Together they should be responsible for identifying gaps in the global response, such as climate change adaptation, and coordinating and leveraging on the key players. An effective international response

requires strong action within and across countries, and across the UN agencies, IFIs and other relevant bodies including philanthropies and the private sector. The regional development banks also have significant capabilities that could be applied. The UN agencies have a normative function in most areas, defining goals, setting standards and providing political legitimacy. They are also in many instances first responders in emergencies and crises. The IFIs play different key roles, based on their comparative advantage in policy advice and derisking of investments, mobilizing finance, building resilience and strengthening countries’ implementation capacity. The private sector has a crucial role to play and its collaboration with the MDB system should be strengthened. The philanthropies, often working with the private sector and NGOs, are a source of important innovation, experimentation and establishing systems for measuring impact. The current scale of activities falls dramatically short of what is needed given the urgency and magnitude of the climate challenge and the degradation of ecosystems in the Ocean. Climate finance is very fragmented, and the need for streamlining is urgent. The recent replenishment of the Green Climate Fund, which helps developing countries is a positive sign, but it doesn’t fill the gap left after the withdrawal of Trump administration (along with Australia and Russia). The IFIs together with the specialized UN agencies, should collaborate to collect data and

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undertake the analytical work necessary to develop early warning indicators, and prevention and resilience plans. The philanthropies with more risk absorption capacity play an important role in funding R&D and innovation. For example, in response to the West African Ebola virus epidemic (2013-2016), Wellcome Trust played an important role in the development of vaccines – a risky activity which is difficult for MDBs to engage in. The MDBs are best positioned to crowd in private resources into the Ocean climate responses. In addition to their regular financing, MDBs should develop contingent public finance facilities and system-wide insurance instruments which are key to fast disbursement and launching support operations. There are many models from other areas that could be applied to the Ocean space, for example, the Bangladesh Delta Plan is a long-term integrated plan that brings together programs for water and food security, economic growth and environmental sustainability. The World Bank and the Netherlands have brought together experience and adapted to Bangladesh’s need. There is significant untapped potential in the combined data and knowledge of the IFIs that can be used to develop early warning indicators and design appropriate prevention and resilience programs. IFIs are also uniquely positioned to ensure that their programs and projects embed appropriate prevention, preparedness, and resilience mechanisms, including helping the most vulnerable adapt to climate change, and early and effective

response to the deterioration of Ocean ecosystems. The IDB’s Emerging and Sustainable Cities Program combines environmental, urban and fiscal sustainability and governance, particularly in relation to sustainable infrastructure. A new cooperative international order must also enable mobilization of flexible coalitions of countries and institutions around specific global or regional commons. The Bangladesh Delta Plan exemplifies how multilateral organizations, bilateral partners and national authorities can join forces and avoid fragmented efforts for greater long term impact. The Global Commission on Adaptation, which delivered its final report, is another example of how a coalition of partners can come together on a critical challenge. Integrating the Ocean into the global financial architecture is long overdue. Recent events calling attention to the climate threat to the Ocean, and the associated reduction in its capacity to absorb carbon and excess heat, are very much welcome, but the increased awareness must now urgently be translated into effective action on an unprecedented scale. The IFIs can provide capital and know-how, but most of all they help crowd in private capital and the innovative capacity of civil society, globally and locally. ◆

Erik Berglof is the Director of the Institute of Global Affairs (IGA) and its Global Policy Lab at the London School of Economics and Political Science (LSE). He has published widely in top journals on economic and political transition, corporate governance, financial development and EU reform. He was a member of the Secretariat for the G20 Eminent Persons Group on Global Financial Governance (2017-18) and subsequently a member of the High-Level Wise Persons Group on European Development Finance Architecture (2018-2019). Prior to joining LSE, Professor Berglof was the Chief Economist and Special Adviser to the President of the European Bank for Reconstruction and Development (EBRD) and Director of the Stockholm Institute of Transition Economics (SITE) and Professor at the Stockholm School of Economics. He is also a Non-Resident Fellow at the Brookings Institution, a Research Fellow of the Centre for Economic Policy Research (CEPR) and Senior Fellow of the European Council for Foreign Affairs (ECFR). In 2013, he was awarded the Leontief Medal for his contributions to economic reform.

Andrés Velasco is the Dean of the School of Public Policy at the London School of Economics and Political Science. In 2017-18 he was a member of the G20 Eminent Persons Group. During 2015-16 he co-chaired the Global Panel on the Future of the Multilateral Lending Institutions. In 2013-16 he was a member of the Global Oceans Commission. Professor Velasco was a presidential candidate in Chile in 2013. He also was the Minister of Finance of Chile between March 2006 and March 2010. During his tenure he was recognized as Latin American Finance Minister of the Year by several international publications. His work to save Chile´s copper windfall and create a rainy-day fund was highlighted in the Financial Times, the Economist, the Wall StreetJournal and Bloomberg, among many others.

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Adding “Blue” to International Climate Finance Torsten Thiele Visiting Fellow, Institute of Global Affairs, London School of Economics and Political Science

Global marine ecosystems are rapidly degrading as a result of overfishing, pollution, climate change and lack of adequate regulatory protection. As the largest “global common”, the global ocean makes up 2/3rd of the planet As our knowledge of the ocean advances we are increasingly able to assess impacts and apply market-based pricing mechanisms. This allows the design of new financing structures that can offer sustainable investment opportunities in protecting and developing a healthy ocean. Climate finance tools need to be aligned appropriately so as to direct funding to ocean solutions. The concept of blue natural capital provides a way to analyze the marine space in economic terms for the benefit of the protection of marine life. Natural coastal ecosystems, including wetlands, mangroves, salt marshes and sea grass meadows, provide significant benefits to coastal communities as well as globally. They act as carbon sinks, helping to mitigate greenhouse gas emissions, and they also assist in adaptation to climate change by delivering protection from storms, by trapping sediments and preventing erosion. The amount of carbon they sequester in their biomass and subsoil is significant and these natural habitats act as breeding and nursery grounds for many fish species. Locals and tourists treasure the aesthetics and recreational value of beaches and coasts, providing important sources of income. Already a significant number of countries have included coastal wetlands in their nationally determined contributions (NDCs), suggesting Mitigation and Adaptation actions including in the blue carbon space

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will play a part in delivering on their climate goals. Payment for ecosystem services is an emerging resource management tool that provides incentives for behavioral changes to increase the provision of ecosystem services, e.g., by discouraging overharvesting of resources or destruction and degradation of habitat. On the back of coastal adaptation knowledge, a number of efforts have been made to develop nature-based solutions. However, the expertise of engineers, the broader knowledge base and the evidence of NBS effectiveness is still sparse, thus, public and blended finance is required to grow both the evidence base and subsequently the demand for NBS solutions and investment therein, with the need of some funders, e.g. climate funds, to demonstrate that a project addresses climate risk adaptation as well as development goals. There is considerable scope for near-shore marine restoration to

contribute to both maintaining and rebuilding the coastal margins in particular of small island and large ocean states to enhance their capacity for long-term coastal protection. These values need to be incorporated into national accounting strategies and coastal adaptation planning. Development banks, DFIs and multilateral climate funds can play a vital role in helping countries to deliver on their NDCs. For Innovative Finance Mechanisms for coastal habitat protection to emerge at scale they need to be consistent with the wider efforts around sustainable finance. The Sustainable Blue Economy Finance Principles now host4d at UNEP-FI provide such specific guidance to funders. The Climate Bond Initiative’s Adaptation and Resilience Principles will in future provide guidance for determining which projects and assets are compatible with a climate resilient economy and therefore should be certified under the Climate Bonds Standard. Innovative financing, including accessing capital markets, represents a promising opportunity for delivering ocean solutions, including for critically threatened ecosystems. Environmental impact and sustainability bonds for coastal resilience and nature-based infrastructure can provide formats that deliver cash up front and could include performance-based components would allow risk sharing and faster delivery. A key constraint for commercial funding of ecosystem solutions is the lack of clear metrics and parameters for investment. Progress made over the last year include increased

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A key constraint for commercial funding of ecosystem solutions is the lack of clear metrics and parameters for investment.

Blue natural capital approaches can be a logical component of an effort for greater private sector funding for coastal ecosystems.

engagement of the insurance industry around the concept of ocean risk and the development of a blue natural capital approach. Private sector funding will benefit not only from tools such as the proposed oceans supplement to the natural capital protocol but also from clear regulatory frameworks. Without adequate ecosystem financing we will not be able to slow, let alone reverse the ongoing loss and degradation of coastal habitats. Public sector sources and in particular climate finance for adaptation, including through blended finance led by multilateral development banks will play a relevant and relatively costeffective role in delivering some funding for coastal landscapes and ecosystems but this will be insufficient. Supporting local livelihoods and a just transition will be key to get the required buy-in, scale and dynamics to offer sustainable ecosystem financing mechanisms. Nature-based solutions, in particular for adaptation finance towards resilient coastal infrastructure are likely to be of increasing importance. Engineering challenges and local capacity building need to be addressed adequately yet such infrastructure, including utilities, transport and coastal protection is most easily accessible to large-

funding. How the forthcoming EU taxonomy on sustainable adaption finance will apply to blue ecosystem finance will be an important determinant of the ability to scale coastal habitat finance. Blue natural capital approaches can be a logical component of an effort for greater private sector funding for coastal ecosystems. Blue natural capital assets will be seen as significantly more valuable under any scenario in which asset managers and governments realize the scale of the stranded assets problem in more traditional sectors. â&#x2014;&#x2020;

scale debt finance. Marine habitats such as mangroves, tidal salt marshes and seagrasses are relevant carbon sinks and further opportunities exist to update the blue carbon accounting based on further science such as by adding macro algae and deep-water seagrasses and addressing carbon cycling to more accurately estimate carbon offsets in blue carbon ecosystems. Adaptation finance area is emerging as potentially a robust source of funding for coastal ecosystems. The climate finance space is rapidly developing and starting to offer formats for water and landscape

Torsten Thiele is a Visiting Fellow in the Institute of Global Affairs at the London School of Economics. His research areas are ocean governance and blue finance. Founder of the Global Ocean Trust and Senior Research Associate at lASS, Torsten Thiele had a long career in infrastructure finance in the City of London, where he was Head of Telecom Project Finance for Investec Bank plc till 2013. He holds graduate degrees in economics and in law from Bonn University, an MPhil from the University of Cambridge and an MPA from the Harvard Kennedy School. He returned to Harvard University as a 2014 Advanced Leadership Fellow. Torsten Thiele is also active on a number of advisory boards, including DOSI and EU ocean projects SOPHIE and iAtlantic.

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How Financing Climate-Smart Development is Key to Island Survival? Angelique Pouponneau Co-Founder of SIDS Youth AIMS Hub; CEO of Seychelles’ Conservation and Climate Adaptation Trust

Small island developing States (SIDS) often describe themselves as the sentinels of the ocean. Their interests and desire to protect the marine environment stems from our very reliance on the health of the ocean for our survival. The ocean, and its ecosystem, provide citizens with their main source of protein. In my own home country of Seychelles, the reliance can be depicted with the comparison between the global average consumption of fish per capita at 22.3 kg annually to the country’s average consumption of 67 kg of fish per capita annually. Furthermore, the marine environment is the foundation of the economy of SIDS, as tourism and fisheries remain pivotal to the generation of income and sustaining livelihoods. While strides towards sustainability remains central to the vision for development, the threat of climate change continues to undermine such efforts. Collectively, 44 SIDS emit 1% of greenhouse gases, yet have the most to lose due to the impacts of climate change. The biggest threat is an existential one, with many low-lying islands threatened with extinction due to the rise of sea level. Some islands may not disappear but they will become uninhabitable and be thrust into poverty as the impacts of climate change invades marine ecosystems with rising temperatures and acidification. The Special Report on the cryosphere and Ocean indicates that coral reefs will not survive as temperatures reach beyond 2 degrees Celsius, which will result in a collapse of food systems for local communities and the collapse of the two pillars of our economy. In 1997-98, during the episode of El Niño there was a clear

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movement of pelagic fish out of the EEZ of Seychelles to cooler latitudes, resulting in vessels landing their catch in alternative ports, leaving the largest tuna canning factory in the Indian Ocean short of fish to process, and leading to a significant loss in revenue. It is expected that such occurrences will become frequent until they become the norm. Despite, its negligible contribution to emissions, the urgent need to adapt to these impacts are every day considerations, while unequal disbursement between mitigation and adaptation continues at the international level. As SIDS face these impacts, national budget allocations towards addressing these effects increase while access to public funds for adaptation dwindle. This reality is compounded by the fact that in 2017, the Seychelles has graduated to a “high income” country, further reducing its access to international public funds and concessionary financing. This “high income” classification is based solely

on the high GDP that Seychelles shows while ignoring the fact that this is skewed by the very small population (i.e. 95,000) and the high inequality that the GNI indicates. It cannot be ignored that expenditure towards infrastructure to adapt to climate change is a greater burden for each citizen because of the small population. Regardless of attempts by the Government of Seychelles to call for a “resilience/vulnerability index” to underline the vulnerabilities of SIDS as it relates to climate change, this has fallen on deaf ears internationally. The situation is exacerbated as Seychelles is no longer ODA eligible and expects that public funds will no longer be channeled to it. With few developing countries reaching this categorization, the transition has been abrupt with news that there will be significant reduction of funds channeled from the UN institutions and agencies. Questions have emerged as to why such institutions, which are grounded in following the 2030 SDG agenda and ensuring that “no one is left behind” opts for a non-inclusive development for the most vulnerable communities, as SIDS are. While marginal changes may lead to graduation, its results are drastic and SIDS often find themselves unprepared for this transition. With the threat of climate change, the occurrence of countries slipping back into previous income statuses will happen even more frequently, but in more dire circumstances. However, the Seychelles has refused to sit idly and is attempting to pave a new path to cope with its new realities by making innovative financing or blended capital as a means to address this lack of access to public funds. The Seychelles has engaged in two

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As SIDS face these impacts, national budget allocations towards addressing these effects increase while access to public funds for adaptation dwindle.

One of the managers of the proceeds of these blended capital instruments is the Seychelles’ Conservation and Climate Adaptation Trust (SeyCCAT).

financial instruments, i.e. the debtfor-nature swap whereby a USD $21.6 million debt-buy back was facilitated between the Government of Seychelles and its creditors at the Paris Club with a loan and grant from The Nature Conservancy. The second, is a sovereign blue bond whereby three U.S.-based private investors have invested in a bond worth USD $15 million with the intent that the proceeds will be used towards the transition to sustainable fisheries. One of the managers of the proceeds of these blended capital instruments is the Seychelles’ Conservation and Climate Adaptation Trust (SeyCCAT). SeyCCAT is an independent public-private trust fund with the mandate of disbursing USD $ 750,000 annually towards ocean conservation and climate adaptation projects. It is evident that the priorities of the Seychelles (and why funds are required) are inevitably linked to the ocean and climate. So far, the funds have been channeled toward local communities to collect data and pilot management measures and citizens’ education on climate change. Additionally, Seychelles is still able to access funds from multilateral funds such as the Green Climate Fund (GCF)

thing that SIDS depend on – the ocean. It is clear that the few options that remain open to SIDS are engaging in public-private partnerships, leveraging public funds to attract private capital to address its most pressing issue. However, this comes with challenges as private investors seek greater clarity on their financial returns on such investments, measurable and clear impact based on existing baselines, which are often lacking in such areas such as climate change and the ocean. As this area grows, investor confidence will increase but will it be in time to save these islands? To ensure the resilience and longevity of SIDS it is required that both public and private commitment will warrant that no one is left behind. ◆

and the Adaptation Fund (AF), which is why it continues to advocate for the replenishment of such funds. It is increasingly clear that the tipping points are fast approaching and SIDS are likely to be left behind with the real possibility of the extinction of islands as rising temperatures and the acidification of the ocean undermine the very

Angelique Pouponneau is a lawyer by profession and co-founded a non-governmental organisation, the SIDS Youth AIMS Hub Seychelles which focuses on climate change and sustainable development at grassroots levels. She recently completed an LLM in Environmental Law where her research focused on the necessary legal framework for oceans to be able to act as a solution to climate change. She is currently the Chief Executive Officer of the Seychelles’ Conservation and Climate Adaptation Trust.

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Central and Southern Africa: High-Stakes Decisions under Climate Uncertainty Declan Conway Professorial Research Fellow, Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science

Rapid development in parts of central and southern Africa is occurring within a context of high exposure and vulnerability to climate change but with relatively low capacity for adaptation. Major infrastructural investments with 5–40 year lifetimes are being planned and implemented in the region – many without being informed by climate information. Ensuring this infrastructure is viable in a changing climate is essential, yet decision-makers face significant challenges in assessing how climate change affects investment decisions. An international research project led by the Grantham Research Institute at LSE has been working over the past four years to address critical knowledge gaps in the understanding of central and southern Africa’s climate and to effectively communicate climate information to decision-makers – crucial for enabling climate-resilient development in this highly vulnerable region. The research has generated important advances in understanding the complex processes that influence variability and extreme events in the climate system1. This enables evaluation of the credibility of the modelled future climate, in contrast to more dated approaches which simply average the results of climate models. The project, named UMFULA (meaning ‘river’ in Zulu and standing for Uncertainty Reduction in Models for Understanding Development Applications) has focused on rainfall as the most important challenge for climate models and a crucial variable for major decisions that affect the water–energy–food sectors. The researchers undertook detailed work on the management of water in Malawi and Tanzania, in a context of

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increasing demand for agricultural production and hydropower under a changing climate. Research focused on the Lake Malawi Shire River Basin, where outflows from Lake Malawi into the Shire River are critical for hydropower and irrigation, and also for biodiversity; and on the Rufiji River Basin, a significant source of water for drinking, irrigation, livestock and hydropower in Tanzania. UMFULA has advanced the potential for climate models to capture the key features that drive the climate in central and southern Africa. For example, the researchers have improved insights into the El Niño Southern Oscillation, the single biggest influence on large-scale rainfall variability in southern Africa. They show how a strong Pacific Ocean El Niño event affects regional circulation patterns, and that humancaused warming has increased the risk of severe drought. In terms of adaptation and climateresilient planning, a significant finding

from the project is the importance of understanding the likely future characteristics of climate risk that infrastructure will be exposed to. However, given uncertainty over how the climate will change in future, approaches must be strongly informed by local considerations and be robust to that uncertainty: that is, options need to work reasonably well across a range of uncertain future climate (and other) conditions. This approach allows researchers to inform decisions being made now, without having to wait for possible reductions in uncertainty. The UMFULA team investigated the implications of a range of potential outcomes, to enable decision-makers to determine priorities while factoring in the uncertainties in the climate projections. In both UMFULA’s case studies in Malawi and Tanzania, decisions in the water–energy–food nexus involve large investments, long life-times and irreversibility. Development plans have to incorporate trade-offs between irrigation, hydropower and agricultural intensification and the impacts on ecosystem services (such as natural flood defences and ecological reserves), among other considerations. UMFULA’s aim was to provide the evidence base for this decisionmaking. For example, the region contains a number of major dams and more are planned, including one that when complete will be among the largest in Africa. The project’s results show that adaptive rules for dam operation will be needed to deal with greater variability in reservoir inflows, and that improved coordination of decisions across water–energy–food sectors will be required to achieve development goals sustainably.

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Development plans have to incorporate trade-offs between irrigation, hydropower and agricultural intensification and the impacts on ecosystem services, and UMFULA’s aim was to provide the evidence base for this decision-making.

UMFULA also embraced a process of co-production of knowledge by researchers and wider stakeholders, to help build capacity to factor climate risks into long-term planning. Researchers have gained a better understanding of real-world decisionmaking in which climate change is one of many important factors. For example, the tea sector is important to Malawi’s employment and economy – and is highly reliant on the right rainfall and temperature conditions. UMFULA has worked with large tea estates and smallholder farmers to tailor future climate projections, analysing changes for a set of metrics that could specifically affect tea yield and quality. Co-producing this information between UMFULA researchers and stakeholders in the tea sector has enabled the growers to identify appropriate ways to adapt their industry to reduce climate risk. Of course, political influences, policy processes and local perspectives affect decision-making processes at all levels.

Adaptive rules for dam operation will be needed to deal with greater variability in reservoir inflows, and improved coordination of decisions across water–energy–food sectors will be required to achieve development goals sustainably.

Tea pickers in the Mulanje region of Malawi Photo: UMFULA, 2019

UMFULA’s analysis of Malawi, Tanzania and Zambia shows that change in political leadership, frequent cabinet reshuffles, shifts in ministerial mandates and rotation of high-level civil servants have led to a focus on short-term planning that links with electoral cycles, rather than on the necessary long-term building of resilience strategies and climate adaptation investments. The climate is already changing – with major consequences for ecosystems and society. Adaptation strategies are needed to manage current impacts and will be

increasingly vital as the world continues to warm. But adaptation is complex and societies are only at the start of a learning process that will continue for decades. In UMFULA the aim has been to contribute to this process by developing capacity to understand climate risks and to collaboratively design ways for their incorporation into long-term planning in Malawi, Tanzania and more widely in central and southern Africa. ◆ 1.See UMFULA (2019) The current and future climate of central and southern Africa: What we have learnt and what it means for decision-making in Malawi and Tanzania, Cape Town: Future Climate For Africa, https://futureclimateafrica.org/resource/keymessages-from-the-umfula-project/

Declan Conway is a Professorial Research Fellow at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science, where he leads the sustainable development research theme. Declan’s research cuts across water, climate and society, with a strong focus on adaptation and international development.

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Responding to the Urgency of Ocean Risk Karen Sack President & CEO, Ocean Unite

Chip Cunliffe Sustainable Development Director, AXA XL

Nathanial Matthews Director of Programs, Global Resilience Partnership United Nations Secretary General António Guterres remarked earlier this year: “… I have visited many communities affected by extreme weather events and other natural hazards. From the South Pacific to Mozambique to the Caribbean and beyond, I have seen the devastating and life-changing impact of the climate emergency on vulnerable communities. Disasters inflict horrendous suffering and can wipe out decades of development gains in an instant. In the coming decade, the world will invest trillions of dollars in new housing, schools, hospitals and other infrastructure. Climate resilience and disaster risk reduction must be central to this investment.” But in building that resilience and allocating those investments, the ocean is often forgotten as an investible solution to mitigate risk. The ocean is changing faster than at any time in human history, creating increased uncertainty and risks for billions of people. Global heating from CO2 emissions is warming the ocean and making it more acidic, causing sea levels to rise, intensifying storms and damaging marine ecosystems which provide essential services from resilience to food security and climate regulation. The recent IPCC Special Report on the Ocean and Cryosphere in a Changing Climate provided fresh evidence on the speed and extent of the changes occurring in the ocean. The report warns that ocean heating and acidification are increasing at a steady rate, and highlights a wide range of associated impacts on the world’s coastal areas, which are home

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to 40% of the world’s population – more than 600 million of whom (around 10 per cent of the world’s population) live in areas that are less than 10 metres above sea level. Ocean changes pose threats to the lives and livelihoods of millions of people, most of them in the poorest and most vulnerable communities in the Global South and in Small Island Developing States (SIDS). Their economic, social, cultural and political security, traditional ways of life, access to food and nutrition, and health all stand to be significantly affected. It is increasingly clear that the changes to our ocean come with huge financial costs attached. Analysis by the UN Office for Disaster Risk Reduction points to a rise of 151% in direct economic losses from climaterelated disasters over the last 20 years. In the last 10 years alone, insurers have paid out some $300 billion following storm damage to coastal regions, and the costs to governments and

taxpayers have been far higher. It’s now estimated that by 2050, the global community will face annual costs of $1 trillion as a result of the combined effects of rising sea levels and extreme weather events on our coastlines. The mounting evidence of the environmental, human and economic costs of ocean changes demand urgent and meaningful action to address ocean risk. And yet, our global response has not, so far, matched the scale and complexity of the challenge. But things are changing. Following a call for action by the UN last year, a paradigm shift in addressing ocean risk is under way, with the launch of a new multi-sector initiative, the Ocean Risk and Resilience Action Alliance (ORRAA), at the UN Secretary General’s Climate Action Summit in September. Founded by leading insurer AXA, ocean conservation non-profit Ocean Unite and the Global Resilience Partnership, ORRAA is supported by the Government of Canada and has a diverse and growing set of members, observers and partners. It is designed to foster crucial collaboration between governments, financial institutions, the insurance industry, environmental organisations and other stakeholders to create innovative finance solutions that build resilience to ocean risk in the regions that need it the most. Its multistakeholder engagement will enable key actors to work together on critical solutions. This starts with developing finance products that invest in resilient natural capital. It’s impossible to overstate the importance of healthy reefs,

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mangroves, seagrass beds, saltmarshes, wetlands and other marine ecosystems to coastal protection in countries that often lack the resources to finance relief and recovery efforts. Ensuring that these ecosystems are protected, managed and regenerated requires new approaches that unleash costeffective investment. Research by the Nature Conservancy estimates that mangroves, for example, reduce annual flooding for more than 18 million people worldwide. They are also known to sequester between five to 10 times the amount of carbon from the atmosphere as a terrestrial forest and are nurseries for multiple species. A healthy reef can reduce incoming wave energy by up to 97 percent, whilst a one metre loss of coral reef height, on the other hand, can double the damage done to the shoreline from an extreme weather event. It has also been estimated that the median cost of building a tropical breakwater is about 15 times greater than the cost of restoring a coral reef, so incentivising investment mechanisms that safeguard these natural shields makes sense whichever way you look at it. The Ocean Risk and Resilience Action Allianceâ&#x20AC;&#x2122;s work is based on three interconnected pillars. First, it will focus on developing innovative, risk-adjusted and scalable products that change the risk perceptions of investing in coastal natural capital. These include naturebased insurance, risk pools, sustainability incentives, carbon credit initiatives, green/blue bonds, resilience bonds and debt restructuring. It also promotes investments in people

through micro-finance and microinsurance products that incentivise sustainable practices that will pay off in the long term. After piloting a number of small-scale projects in specific coastal areas, ORRAA will expand and replicate those across wider regions. Second, the Alliance will advance and integrate the global narrative on the critical importance of ocean resilience within the climate agenda, informing and advancing ocean risk policy amongst governments and the private sector, and increasing public understanding. Finally, key to the adoption of these new finance instruments and influencing policy outcomes is understanding the science that underpins ocean-derived risks and deepening the understanding of workable solutions. This is why another priority for the Alliance is to accelerate the research and data collection needed to better analyse, model and manage ocean risk. In collaboration with several partners, AXA is leading the development of an Ocean Risk Index to develop potential scenario analyses of the implications of sea level rise and habitat degredation on fiscal policy. In addition, through a partnership with the world-renowned Stockholm

Resilience Centre, ORRAA, will begin by curating a synthesis report on the impacts of ocean risk on women and girls in vulnerable regions. Additionally, SRC will deliver a cornerstone report on the impacts of ocean risk on SIDS and Least Developed Countries to describe the potential for building adaptive capacity within these communities, and the funding modalities and reporting mechanisms needed to ensure maximum positive impact. Understanding and building engagement around ocean risk as a function of the hazards, exposure and vulnerabilities of communities, cities, countries and regions , is more critical than ever. By bringing sectors together, collaborating, generating knowledge and leveraging public funds to significantly scale private investment, we can regenerate and revitalise nature for the benefit of ecosystems and society for future generations. â&#x2014;&#x2020; Karen Sack is President and CEO of Ocean Unite, a not-for-profit organisation which catalyses ocean regeneration by engaging and activating audiences on the importance of the ocean, as well as innovating change and accelerating investment in building ocean health and resilience. Chip Cunliffe is Sustainable Development Director for AXA XL, the property & casualty and specialty risk division of AXA, which, under the auspices of the Ocean Risk Initiative, helps identify solutions to address the implications of ocean-related risk. Nathanial Matthews is the Director of Programs for the Global Resilience Partnership, which brings together public and private organisations to find better futures for vulnerable people and places.

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Nature-Based Flood Resilience: Reaping the Triple Dividend from Adaptation Swenja Surminski Head of Adaptation Research, Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science

Michael Szoenyi Global Flood Resilience Specialist, Zurich Risk Engineering

The actions taken to overcome poverty and manage climate change will determine what the future will look like. Natural capital – the world’s stock of natural assets – and the ecosystem services it provides to make human life possible, are hugely important to climate change adaptation and to sustainable development more widely. This has long been recognised but the approach still lacks financing and the pace of translating natural capital’s potential into policy and business models remains slow. Yet smart climate change adaptation – with natural capital playing a key role – could realise a triple dividend: avoiding and reducing the losses and damages from climate change impacts; stimulating entrepreneurship and economic activity; and generating sustainable development co-benefits. The integrated management of flood risk is one context where natural capital could take centre stage. On the coast, natural capital solutions include maintaining or establishing oyster reefs or mangrove forests to dissipate wave energy, buffering against high tides and storm surges and reducing coastal erosion. Inland, methods include cleaning up waste from riverbanks and estuaries to support drainage and prevent channel obstruction, and making space for the natural flow of river systems rather than restricting them to ever narrower artificial channels. Nature-based solutions offer many advantages over ‘hard’ engineered measures such as seawalls: healthy ecosystems can regenerate, do not need energy supply and do not lose their performance capacity over time

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(unless they are harmed). They also help to maintain biodiversity and reduce pollution, contribute to positive mental health and provide spaces for tourism and leisure. The Zurich Flood Resilience Alliance (ZFRA) has been working with more than 100 communities across 13 countries to help strengthen resilience to floods. An important area of interest for the Alliance is determining how natural capital – as well as human,

financial, social and physical capital – can be a part of resilience-building strategies. Building climate resilience and adaptive capacity is not simply a question of strengthening or upgrading homes and infrastructure: it is also about ensuring the necessary human, social, physical, natural and financial systems are in place to address climate impacts when they occur. Climate change cuts across all of these systems, which in turn are complex and interrelated, and trying to tackle adaptation focusing on only one system is likely to fail. Funding for preventative adaptation and resilience needs to match what is currently being spent on relief efforts and repairs after a disaster – as this ex-ante approach will leverage much greater returns in the long run. ZFRA has developed a holistic approach to resilience, designed to enable local decision-makers and those most at risk to identify how their own resilience can be strengthened. Within this, natural capital is recognised as offering significant benefits but there are challenges in trying to strengthen its role. One challenge surrounds trust. It is more difficult to convey how increased natural water storage, mangrove forests or improved river biodiversity, for example, could be as effective as a physical construction such as a levée. Timelines come into play here too: hard engineering will have a clear, immediately visible impact, whereas natural capital solutions will take more time to provide a quantifiable effect.

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In promoting immediate investment in natural capital solutions, and other types of adaptation and resilience measures, we need better messaging to drive home the urgency.

Looking at a system in its entirety will help identify crossover opportunities between climate change mitigation and adaptation.

It is also more difficult to ‘sell’ natural capital methods that are relatively new and may lack rigorous analysis of their results – new approaches may be needed to better understand what constitutes their costs and benefits. In promoting immediate investment in natural capital solutions, and other types of adaptation and resilience measures, we need better messaging to drive home the urgency: the world cannot afford to spend decades waiting for solutions to develop, mature and be mainstreamed. The benefits of acting now far outweigh the costs of waiting and addressing climate impacts after the fact; that the cost of doing nothing is not zero must be much better acknowledged if we are to assess current and future costs more accurately. Experts like ZFRA need to find ways to convince those developing investment vehicles to act quickly. For example, the market for ‘blue bonds’ – funds dedicated to ocean-friendly projects – needs to mature in the next two to three years if it is to have an impact before it is too late to make lasting improvements to the health of the oceans. Politically, we need to stop accepting that the external costs – among them the negative and unequally distributed effects of climate change – of current

the economies that depend on them. Additionally, looking at a system in its entirety will help identify crossover opportunities between climate change mitigation and adaptation. For example, a mangrove reforestation project has carbon sequestration benefits – and thus could get carbon credits to generate cash flow to make the project investable – but would also have storm surge protection potential. Viewing these benefits holistically can help advance blue finance. Ultimately, we need better quantification of the additional benefits of a natural capital approach to climate change adaptation and resilience and to move away from a classical cost–benefit analysis that is rooted in physical infrastructure only. ◆ investments are often borne by the weakest and most vulnerable in society. This makes these investments seem economically more viable than they really are, to the detriment of greener and bluer investments. And we need to better assess and quantify the long-term benefits of non-traditional, ‘softer’ approaches that yield benefits that are difficult to monetise; this again twists decision-making at the expense of the oceans and coastal regions and

Swenja Surminski is Head of Adaptation Research at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science. Swenja holds a PhD in Political Science from Hamburg University. Michael Szoenyi works in the Sustainability function with Zurich Insurance Group, leading Zurich’s award-winning Flood Resilience Programme. Michael has master degrees in Natural Hazards Management and in Geophysics, both from ETH Zurich.

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Decarbonisation Risks in Shipping: Implications for Insurance Underwriters Oliver Walker Principal, Vivid Economics

Justine Schafer

Senior Economist, Vivid Economics

Swenja Surminski Head of Adaptation Research, Grantham Research Institute on Climate Change and the Environment Limiting the impacts of climate change requires significant decarbonisation efforts across countries, sectors and stakeholders. Collaboration and engagement are necessary to meet the concomitant challenges, as the example of insurance and shipping shows. Vivid Economics and experts from the Grantham Research Institute have recently examined the effects of decarbonisation on the global economy up to 2030 and drawn out its implications for insurance markets. This article summarises the expected effects on activity patterns and risk profiles for the shipping sector, and sets out an agenda for insurance markets to help facilitate decarbonisation. Global efforts to decarbonise economies will act as a headwind to growth in the shipping sector but are unlikely to cause an about-turn in the next decade. In a scenario where the global average temperature increase is kept to 2°C above pre-industrial levels, Vivid Economics’ Net Zero Toolkit predicts a slight fall in revenues in 2030 in the sector, compared with a reference scenario in which countries fulfil their current Nationally Determined Contributions to the Paris Agreement. But in the absence of viable alternatives to container shipping, and with growing demand for global trade, we expect the sector to continue to grow even in more ambitious decarbonisation scenarios: in a ‘beyond 2°C’ scenario (where warming is limited to well below 2°C), global volumes are expected to more than triple up to 2060.

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However, as a conduit of global economic activity, regional and sectoral patterns of shipping will be profoundly affected by the zerocarbon transition. Some significant routes are expected to decline precipitously: for example, a third of maritime trade currently comprises fossil fuels, but global consumption of coal and oil would fall by 55 and 21 per cent respectively over the period to 2030 under a ‘beyond 2°C’ scenario, according to the International Energy Agency. On the other hand, very rapid growth is expected for cargoes such as biomass, renewables equipment and lithium, all of which present distinct risks for transporters. This will impact the geographical mix of shipping revenues, with the United States acting as a key supply source of wood pellets for Europe and global lithium reserves concentrated in Latin America.

In the absence of breakthrough technologies, the sector will likely need to rely on incremental efficiency measures up to 2030. Shipping is not directly included in the Paris Agreement: the challenge to reduce global emissions is set instead by the International Maritime Organization (IMO), the UN agency with responsibility for the safety and security of shipping and the prevention of pollution by ships. In April 2018 the IMO set an ambition to reduce total annual greenhouse gas emissions from shipping by a minimum of 50 per cent by 2050 compared with 2008. Under current activity projections this target would require zero-emissions vessels to be operational by 2030. It is not clear what technology zero-emissions vessels could employ, but to achieve decarbonisation by increasing efficiency a mix of technical measures will likely be required, including the use of lighter materials, propulsion devices such as wind turbines, reducing speeds and ship size, and optimising ship–port interfaces to reduce emissions throughout the shipping process. A barrier to progress on decarbonisation within the sector relates to the functioning of the IMO. Developing regulatory standards for the sector will involve complex negotiations between the organisation’s 174 member nations. Past experience – for example with the IMO’s 2020 sulphur cap regulation – suggests this could be a protracted process. All of these trends – shifts in revenue sources, changing technology and

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Very rapid growth is expected for cargoes such as biomass, renewables equipment and lithium, all of which present distinct risks for transporters, and which will impact the geographical mix of shipping revenues.

uncertain future regulation – could have far-reaching effects on the risks of doing business in the sector. Insurers therefore have an important role in supporting the zero-carbon transition: through both making the most of opportunities and rising to challenges that the transition presents. Opportunities for insurers include growth in premium income associated with increasing insurable values of vessels as they adopt low-emissions technologies and as the set of insured risks, including risks on compliance with new regulations, broadens. There is also a potential role for insurers to facilitate investment in low-carbon technologies by supporting more effective risk-sharing between vessel owners and charterers. Collaboration between insurers and risk managers is to be encouraged for its potential to support the transition, in particular through developing common risk

Challenges relate to uncertainty around the future mix of regulations and technologies, as well as possible asset-stranding and sudden shifts in risks resulting from the transition towards new routes and cargoes.

management standards for insurance contracts and new risk-sharing mechanisms to underpin investment. Challenges relate to uncertainty around the future mix of regulations and technologies, as well as possible asset-stranding and sudden shifts in risks resulting from the transition towards new routes and cargoes. Proactivity is required to meet these challenges – both in anticipating changes in risk profiles and in advocating the adoption of efficient regulatory standards. In sum, the decarbonisation efforts that are necessary to limit climate change are expected to cause a radical rebalancing of global economic activity over the coming decade. The shipping sector, which conveys 90 per cent of world trade, can adapt to the transition by serving new markets, adopting new technologies and complying with its own new

decarbonisation regulations. Given the resultant impact on risks across the sector, active engagement by insurance underwriters will be an important ingredient of a successful transition. ◆ Oliver Walker manages the natural resources practice group at Vivid Economics. He is a leading expert on the economics of resilience, disaster risk management and disaster risk finance. Oliver has a DPhil in Economics from the University of Oxford. Justine Schafer supports Vivid Economics’ clients across the finance, energy, industry and oil and gas sectors. Justine holds an MSc in Economics from the London School of Economics and Political Science. Swenja Surminski is Head of Adaptation Research at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science. Swenja holds a PhD in Political Science from Hamburg University.

LSE GLOBAL POLICY LAB

Solving A Chinese Puzzle in Global Governance Zhongying Pang Distinguished Professor of Global Affairs and Dean of the National Institute of Marine Development, Ocean University of China (OUC), Qingdao, China

While the US, the world’s largest economy, withdrew from the 2015 Paris Agreement in 2017 under the Donald Trump administration, China, the second largest economy, has been taking the lead in forging and fulfilling the Agreement. China’s commitment and compliance in global climate governance is just part of China’s systemic liberal global/ foreign policy. Under the leadership of President XI Jinping, unlike Trump’s USA, China has been taking a proglobal governance attitude and action: China not only defends the existing globalization, but seeks a “new globalization” represented by the largest ever “Belt and Road Initiative” (BRI) in global development, particularly in the development of global infrastructure networks. In 2017 and 2019, China organized two BRI summits in Beijing to drive globalization in a new direction amid serious “de-globalization” symbolized by the Donald Trump’s “America First” anti-globalism foreign policy and UK’s leave from the European Union (Brexit). The core doctrine of China’s liberal global policy is self-entitled “A Community of Shared Future for Mankind” (Ren Lei Ming, Yun Gong, Tong Ti), which was formally presented at the 18th and 19th National Congresses of the ruling Communist Party’s Political Reports in 2012 and 2018. The doctrine was legally written into the Constitution of the People’s Republic of China in March 2018. Currently, there is an unprecedented global puzzle emerging from China, as the USA is ending the liberal order represented by the United Nations and International Economic (finance and trade) Organizations as well as UN-

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organized global governance processes like the UNFCCC, while China, labeled in the West as “illiberal”, conducts a liberal foreign/global policy. This is not a story of the globally fashionable “illiberal China in a liberal order”, but how the ironically “illiberal” China helps save the existing liberal order. On April 23rd, 2019, in the port city of Qingdao, with the heads of foreign naval delegations at the commemoration of the 70th anniversary of the founding of the Chinese People’s Liberation Army(PLA) Navy, President Xi Jinping called for concerted efforts to safeguard maritime peace for a Shared Maritime/Marine Future: “The blue planet humans inhabit is not divided into islands by the oceans, but is connected by the oceans to form a community with a shared future, where people of all countries share weal and woe”. Since then, China has been doing much to seek a policy of “A Maritime/Marine Community with a Shared Future”. China has been taking great action

to build the future, including the 21st Century Maritime Silk Road, which is a key part of the BRI, and since 2012 has organized the China Marine Economy Expo (CMEE). Recently, Shenzhen, China’s leading innovative city, held the expo in October 2019 with President Xi Jinping’s strong message: towards “a Shared Marine Future” by developing a first class “blue economy”—a sustainable marine resourcesbased economy. At home, China has been pursuing a nation powered by seas and oceans (Hai Yang Qiang Guo, HYQG). The HYQG is well known indispensable part of China’s nationalist renaissance ambition. The goal of the HYQG includes not only traditional sea power, but also a highly developed marine economy. China looks at marine areas as a new source of national power and a new driving force to boost China’s economic transformation from heavily dependent on continental resources to marine resources. So far, since the beginning of this century, the growth of China’s marine economy has been achievable as the nation is already a large marine economy. It is clear that if China’s marine economy is systemically decisive in its whole economic system, it will significantly contribute to the ocean’s already serious problems, particularly global ocean warming. In an important national forum on the “Shared Marine Future” at the Ocean University of China (OUC) in Qingdao. Professor Wu Lixin, director of the Qingdao National Laboratory for Marine Science and Technology (QNLM), warned of a vicious circle-climate change affects oceans and ocean warming affects climate. He believes China’s effective

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It is clear that if China’s marine economy is systemically decisive in its whole economic system, it will significantly contribute to the ocean’s already serious problems, particularly global ocean warming.

and active role in preventing global ocean warming is a must. Wu’s remarks show China’s leading marine scientists have realized the danger of global ocean warming. China’s paradox is that in a time of global climate change, it is untimely to be a leading maritime nation. How does China solve its contradiction between being a leader in global climate governance, and nationalist requests for an advanced marine economy? China needs to strike a balance between its maritime ambition and its international liberal commitment: towards a “Shared Marine Future”. Before the 2019 UN Climate Action in New York, China issued its “Position and Action” document in Beijing: “China has always attached great importance to addressing climate change. Upholding a national strategy of attaching equal importance to mitigation and adaptation, China has regarded addressing climate change as a great opportunity to achieve high-quality economic development and promote ecological progress.

This document highlights how China contributes to global climate governance by abiding by the UN climate rules, moving towards a “Shared Future”. It is not enough: China’s marine aspect of climate policy is lacking.

China will continue, as always, to firmly implement the Paris Agreement, fully honor its commitments, promote the establishment of an equitable, rational, and win-win global climate governance mechanism, and work with others to build a community with a shared future for mankind.” At the UN Climate Action Summit, China was a co-leader in advocating the “Nature Based Solutions” (NBS). This document highlights how China contributes to global climate governance by abiding by the UN climate rules, moving towards a “Shared Future”. It is not enough: China’s marine aspect of climate policy is lacking. In other words, China needs to make specific policies and practices in order to solve the conflict between the rapid development of a marine economy and the prevention of ocean climate change. This lies in forging a “Shared Marine Future”. Before President Xi Jinping’s 2019 “Shared Marine Future” advocacy in Qingdao, China joined the United Nations Ocean Conference in 2017 for “partnering for the implementation of

Sustainable Development Goal 14” “Blue Partnership”. China’s academic and media have also paid attention to the Intergovernmental Panel on Climate Change (IPCC) Special Report on the Ocean and Cryosphere in a Changing Climate (2019). No doubt, as the marine policies grow in prominence in the development agenda at various levels in China, China needs to do double governance work: governing China’s marine economy according to ongoing global climate governance, and truly practicing its liberal policy to promote the world’s Shared Marine Future.” ◆

Professor Dr. Pang Zhongying is a Distinguished Professor of Global Affairs and Dean of the National Institute of Marine Development, Ocean University of China (OUC), Qingdao, China.

LSE GLOBAL POLICY LAB

The Case for Agile Regional Ocean Sustainability Banks Nishan Degnarain Senior Visiting Fellow, Institute of Global Affairs, London School of Economics and Political Science

The health of our ocean is the single biggest driver of climate change on the planet. The transition to a lowcarbon, more sustainable economy, is estimated at over $2 trillion1. This is four times larger than the 1933 New Deal to avoid the Great Depression ($650 billion in todayâ&#x20AC;&#x2122;s prices) and over ten times larger than the Marshall Plan for European Recovery after WW2 ($150 billion in todayâ&#x20AC;&#x2122;s prices). Such a transition represents the single biggest economic opportunity over the next decade, and if designed and executed well, can harness the power of new technologies, create new economic sectors, stimulate the economies of many low-income countries, creating millions of new jobs and ensuring technology transfer to the Global South. Our current sustainability investment efforts are fragmented, piecemeal and focused on traditional sectors that will lead to incremental solutions, relative to the challenges our planet faces. Government and Philanthropic Investments into the ocean represent only $5 billion a year, relative to the $200 billion a year needed over the next decade. This paper calls on the creation of new financial instruments that will turbo-charge investment into revenue-generating high potential new growth sectors of the economy, which will not just address the crisis facing our oceans, but restore planetary health. Planetary Tipping Points Look at any chart of human impact on the oceans since the 1950s in every ocean basin, and you will see nearexponential curves2, whether these be for the growth of industrial fisheries, growth of coastal tourism, collapse

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to address the challenge our ocean faces. Harnessing the resources of the private sector and global finance community will be crucial.

of fish stocks, collapse of coral reefs, destruction of mangroves, loss of polar ice, spread of invasive species, and increasing endangerment and extinction of species. This has placed the world on the brink of various tipping points which will impact the most vulnerable populations around the world. The changes to the physics, chemistry and biology of our ocean systems are compounded by the socio-economic challenges of high unemployment and declining opportunities in the traditional maritime sector. These pressures are mounting and are likely to come to a head in the next decade in many parts of the world, as more fisheries collapse, tourism sites decline, and our oceans become more barren. Incremental solutions based on current technologies are not sufficient to restore a healthy ocean ecosystem. Such interventions will be overtaken within a decade, by both a changing ocean environment, as well as new technological advances. Government and Philanthropic interventions are important, but not sufficient alone

A Fourth Industrial Revolution We are on the brink of a Fourth Industrial Revolution in modern times â&#x20AC;&#x201C; a period where technological advancement is so rapid, that it fundamentally alters our economic systems for almost a century. New digital platforms, new energy systems, Artificial Intelligence, Autonomous Robotic Systems, 3D printing, Synthetic Biology could transform our economies into new fast-growth trajectories. How can we harness the power of the Fourth Industrial Revolution, as a force for good, ensuring the right safeguards are in place? Acupuncture points and systemic solutions At first glance, the challenges for such a transition appear almost insurmountable. Estimates are that the transition will cost an estimated $2 trillion over the next decade. The scale of transition to move our economy from our current production systems, transportation, energy production, land and ocean use will be the single biggest transition we have seen in modern times. The suite of solutions we need call for a global approach across multiple sectors, and requires both the deindustrialisation of OECD countries, as well as new development paths for fast growing economies. It calls for a new consumption model for the emerging middle classes of China, India, South East Asia, Africa, Latin America, that looks radically different from the middle-class consumption pattern

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of Western Economies (four times lower ecological footprint per capita). This means de-risking some solutions, both through financial investments as well as policy innovation. In consumer packaging, we have seen how policies against plastics has stimulated the growth of alternative new biodegradable materials and greater recycling solutions to emerge in response. Similarly, statements and policies in favour of electric vehicles have now ensured all major car divisions around the world have some form of Electric Vehicle capability that are likely to come online in the next few years. We now need to take a bolder approach, if we are going to mobilise the full potential of the private sector. A Bold and Holistic Ocean Finance approach 1. Build a Sustainable Ocean Economy Governments should explore ways to encourage Fourth Industrial Revolution technologies into their maritime economies. Potential ideas include building new Ocean investment asset classes and indices (ESG), build Capacity Building Centres and Training Academies in each country to develop a ‘high-skilled’ ocean economy talent base, making procurement processes easier for new technologies to be adopted in existing Public and large Private Sector Enterprises. This will help address existing sectors and ensure greater transparency of operations. At the same time, we need to encourage new sectors that currently do not exist, but can restore ocean health. For example, we may need to encourage a large-scale coral-growing industry or algae carbon sequestration, in the same way that the Space Race was seen as solely in the Government domain until 2004 when California-based X-Prize3 launched the growth of the private space industry. 2. Create new Ocean Financial Instruments To support such investments, there is a need to develop new public and private financing tools for ocean activities. This includes developing

Investment Frameworks for Long Term Institutional Investors, Governments and private investors (such as new ESG indicators), building Investment Pools around different Ocean Asset Classes, develop new financing tools (e.g., credit guarantees). Potential ideas include ‘Blue Bonds, or Debt for Nature Swaps,’ the World Bank’s ‘Plastics Investment Pool,’ identifying Ocean Infrastructure priorities to set an investment agenda, Belt and Road Blue Investment Principles. Such approaches need to take into account nature-based solutions, that could often ensure a greater Return on Investment. 3. Develop Blue Risk Instruments There is a need to develop new financial risk tools to assess the risk of various ocean investments. For example, through insurance and financial risk leaders, develop new ocean risk tools to guide financing, building new ocean risk metrics, develop new ocean risk technologies to de-risk ocean investments (operationally and financially). Potential ideas include building an ‘ARC of Oceans4,’ a G20 FSB-Taskforce on Climate Disclosure, that has stronger emphasis on the oceans. Regional Ocean Sustainability Banks Each ocean basin has their own particular challenges (e.g., extinction risk of various species, loss of land, emergence of Seabed Mining, changing oceanic currents). The challenges in our ocean are sufficiently different from land, requiring different skillsets to understand, make scientific recommendations as well as investment decisions, particularly around hybrid-finance mechanisms with the private sector and explore sectors that have never needed to exist before (e.g., to prevent species extinction, prevent coral degradation, explore nature based solutions around carbon sequestration and coastal protection). Having Regional Ocean Sustainability Banks that can channel public and private capital into projects to

Having Regional Ocean Sustainability Banks that can channel public and private capital into projects to transform economies into more sustainable blue economies will be crucial. transform economies into more sustainable blue economies will be crucial. These must have strong scientific advisory bodies to ensure solutions being developed are fully sustainable, and to ensure best practice is being shared globally. Guiding investments of $200 billion a year will require hybrid capital approach with credible investment partners. A strong area to start could be with China. China has the potential to be a global leader in this area, as the Belt and Road Initiative covers over a quarter of the world’s EEZs. A Blue Belt and Road, with Blue Investment Principles could be developed. In words of Jacques Cousteau, “The sea, the great unifier, is man’s only hope. Now, as never before, the old phrase has a literal meaning: we are all in the same boat.” The warning signs are all around. Now is the time for bold leadership. ◆ 1 Global Center on Adaptation 2019 Report: https://gca.org/ global-commission-on-adaptation/adapt-our-world 2 The Great Acceleration: An Environmental History of the Anthropocene since 1945 by J. R. McNeill and Peter Engelke (2014) 3 Diamandis, P. and Kotler, S. (2012), “Abundance: The Future is Better Than You Think” 4 ARC (Africa Risk Capacity) is a new public-private sovereign risk agency of the AU to build African countries’ capacity to manage Natural Disasters

Nishan Degnarain co-leads the Blue Finance Initiative at the LSE Institute of Global Affairs. He is an economist who recently published “Soul of the Sea in the Age of the Algorithm,” focused on how the ‘Fourth Industrial Revolution’ will transform global ocean governance. He Chaired the World Economic Forum’s Global Agenda Council on Oceans where he developed and launched a new three year Special Initiative on the Ocean, brokered a major UN Declaration on illegal fishing (Tuna Traceability Declaration) and works with major technology companies on breakthrough solutions for the ocean. Nishan sits on the Board of the National Ocean Council of Mauritius and is an international member of China’s CCICED, advising the Chinese Government on their National Ocean Strategy.

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South American Jets and the APEC Summit 2019 South American Jets celebrates Chile leadership as the host for the upcoming APEC 2019 forum. South American Jets – About us? We are an enterprise that works in the airline industry. Within this sector, we provide a luxury and exclusivity service, chartering private planes for you, your business and your cargo. However, we consider ourselves much more than a simple premise such as this. In SAJ, we strive to go beyond the boundaries, to meet and understand the trends in the industry and the global economy. Consequently, when we were asked to participate in the APEC magazine, without hesitation, we said yes. Our purpose is to line up our business role in the present society and build bases to navigate the global economic challenges that arise in front of us. The Private Jets Business It should come as no surprise that the private jets business wants to participate in the economic forum this coming 16 and 17 of November. Private jet service companies have become one of the fastest-growing branches in the airline industry. We are talking about pioneering, intrepid enterprises, focused on those business niches ignored by commercial and traditional air cargo lines. Reports such as “Aviation International News” and other portals specialized in the airline industry, show figures and results of a rising global market. Under such favourable scenarios, large and small companies, over the years, have professionalized their services. We talk about an innovating industry that is creating new job skills and ground-breaking services, plus developing careers that didn’t exist before. South American Jets (SAJ) is an American company with 25 years of experience. Our top priority is exclusive high-end service and the G20G7.COM

safety of the aircraft. We work with international corporations such as ARGUS and WY YVERN, who regularly audit our operator’s maintenance records, flight history, insurance coverage, frequency of aircraft inspections and the ability of a program to meet or exceed FAA standards. SAJ recognizes Chile´s global leadership Under the business model of our company, Chile has played an essential role in our growth and development. An excellent reason why we are glad to see Chile hosting the APEC 2019 summit. Just like its neighbouring country Argentina, which last year became the host for the G20 summit. Chile, indeed, has taken a firm grip of the course it wants to pursue. The direct participation in the economic forum, shows the countries confidence in its resources, its people, and the vision. Has set it as a nation to be at the forefront of the emerging countries, assuming the new role of world leadership. But ... What is APEC, and what does it stands for? The Asia Pacific Economic Cooperation Forum (APEC), in short, is the most important and dynamic free trade forum in the world, founded 30 years ago and the objective was and still is to strengthen trade between the 21 participating economies. To achieve such goals, the forum strives for the commercial fluidity, technical cooperation, and the facilitation and liberation of profitable channels to produce the flowing investments in the Asia-Pacific region. To illustrate the importance of the forum, we will use Chile as a reference point. APEC represents 60% of world GDP, and 39% of the population.

For Chile, 58% of investments in the country come from APEC and 69% of Chilean exports go to APEC. Which countries participate in APEC? The twenty-one member countries of the Asia-Pacific Economic Cooperation Forum (APEC) are: Australia, Brunei Darussalam, Canada, Chile, ChineseTaipei, Hong Kong- China, Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea, the People’s Republic of China, Peru, Republic of Korea, Russia, Singapore, Thailand, Philippines, United States and VietNam. APEC achievements Not surprisingly, APEC is said to be one of the most important economic forums, but also one of the most dynamic. Among its achievements are: 1. The APEC Business Travel Card (ABTC): Within a 5 year term, the card allows business travellers and government officials to enter 19 of the 21 APEC economies. No visa required and staying for 90 days. In addition, it facilitates the expedited entry to any of the airports of any of the member economies. 2. Environmental Assets: The heads of government of the member economies reduced tariffs to a minimum of 5%, to 54 environmental products or goods. An effort that led to a new trend and awareness of environmental care, creating the basis for future Environmental Assets Agreements (EGA) 3 Asia Pacific Free Trade Area (FTAAP): The proposal has gained strength, especially after a collective study on FTAAP was approved at one of the summit of APEC . At present, and because of the juncture of events

to the abysmal differences between the two main world economic forces: USA and CHINA

developing right now, it may become an alternative response to the current economic war between the USA and CHINA. What is the APEC 2019 work agenda in Chile? Chile has set 4 priorities for the 2019 APEC, which are: Digital Society, Women Entrepreneurs, Integration 4.0 (within the context of the Industrial Revolution 4.0) and Sustainable Development. To meet these priorities, Chile created a well-thought agenda of meetings, seminars and work tables, where a diversity of topics were developed and worked to deliver concrete results. The topics for each priority are: 1. Digital Society: • Implement the Digital Economy, and Internet roadmap • Improve connectivity through telecommunications • Improve regulatory frameworks • Adaptability and work conversion • Measurement of the Digital Economy and Internet • Development of standards for digital commerce 2. Integration 4.0: • Integration of global value chains • Authorized Economic Operator Programs and Mutual Recognition Agreements • Single window interoperability • Customs transit improvements • Boost smart trade • Talent mobility • Contribute to FTAAP 4. Women, SMEs and Inclusive Growth: • Roadmap, Women and inclusive

growth • Tools to promote the participation of women in nontraditional sectors • Gap evaluation in digital literacy • Promote the collection and use of gender-based indicators • Update of the APEC Marketplace ( SMEs) • Debate on the impact of the Fintech industry on SMEs. 4. Sustainable Growth: • Protection of Oceans: Illegal Fishing and Marine Waste • Energy: Workshops on flexible systems, Distribution and tariff; and solutions for remote areas • Goal on Electromobility • Debate on energy regulations • Exchange of best practices for Smart Cities. Chile’s challenges for the APEC 2019 summit Today, the APEC and Chile must face the political and historical problems that bring the year 2019. The challenges: the riots in Hong Kong, Brexit, the trade war between the United States and Asia, the global recession and the questioning of reports over global warming, the galloping pollution and irreversible destruction of the planet’s natural resources, including the recent Amazonian fire that alarms the world. However, the economic war between the USA and CHINA presents one of the most difficult challenges to overcome. For the first time, at the close of 2018 APEC summit, held in New Guinea, the final document between the 21 participating economies was not signed due

Puerto Varas – The tourist expo for the rest of the world As a private jets company, many of our clients and flight routes include Chile. The country has a thriving economy, recognized as one of the four economies with the highest growth projection in Latin America. Therefore, for a business air carrier it´s not a surprise, the choice of Puerto Varas as the location to receive the high dignitaries of the Asia-Pacific forum. Indeed, tourism is one of the main pillars on which Chile´s development is based. The Minister of Foreign Affairs, Roberto Ampuero, told the media: «To host APEC for one year, it gives us a display so that it is Chile, and not just Santiago, that shows itself to the whole world». Puerto Varas is a city located in southern Chile, in the province of Llanquihue, better known as the lake region. The single description of the name evokes highlands, green mountains and noble cities. In addition, the region has several volcanoes (Osomo, Calbuco and Puntiagudo), rivers with emerald waters that amaze its visitors, majestic lakes like Todos los Santos and national parks that are worth the experience as is the Vicente Pérez Rosales National Park. The city of Puerto Varas, with a strong Germanic influence, cuts a historic silhouette against the background of the lake. The Cubres Puerto Varas hotel will be the epicentre for the meetings of the APEC. The Rol of SAJ in APEC 2019 Our role has always been to adapt successfully to the new technologies, and understand the economic trends that the world undergoes. But, and specially, we want to be participants and not spectators, recognizing the changes that are taking place and acting proactively with our immediate environment such as: our clients, our collaborators, the community and civil society with which we interact. Our expectations are in the present, are in Chile at the APEC 2019 summit. ◆ 85

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Sustainability is Business By Pamela Phua

Cities across the world face new, interlinked sustainability challenges that are redefining the role of privatesector business, but progress is being made in cleansing urban environments and supporting international collaboration on pressing environmental issues, writes Pamela Phua, general director of Vietnam, decorative paints South Asia, AkzoNobel. According to the UN Chronicle, energy consumption and air pollution are two of the most critical issues for the 3.5 billion people who live in urban communities. The World Health Organization calculates that nine out of 10 people around the world currently breathe unhealthy air, leading to pollution-related diseases that cause seven million deaths every year. When it comes to energy – most of which is still generated from nonrenewable sources – our cities are using more than ever before, with urban demand accounting for as much as 80% of global production. At AkzoNobel, sustainability is business and business is sustainability. G20G7.COM

We take our responsibility to depollute the paints and coatings in our urban environment seriously, and we are committed to applying these lessons throughout the supply chain to address both energy use and air quality. We have made an ongoing commitment to invest in sustainability, innovation and society as part of our vision for a cleaner and healthier world. The foundations of our work are built on a review of the risks and opportunities within the context of our key market segments to 2050. This has demonstrated to us the need to leverage the latest knowledge across science and society, identify and mitigate our challenges, and develop strategies to make the future better. For example, South-East Asia is a market experiencing robust economic and population growth, which requires high levels of construction to meet the demands of a new middle class and rapid urbanisation. However, as our research identified, this also means that there is vast opportunity to pioneer new solutions

Environmental targets •E nvironmental: Achieve zero carbon emissions in our own operations; source 100% renewable energy •S ocial: Reduce use of volatile organic compounds and substances • Economic: Achieve zero waste and 100% resource productivity in our operations. “Our renewable energy supply strategy has three focus areas: to protect our current renewable share; support cost-effective, large energy ventures; and explore commercially feasible on-site renewable energy generation” A strategy for cleaner air In all industries, environmental impact occurs throughout the manufacturing process, from R&D to the ultimate application of products. When you look at the total carbon emissions in the supply chain, it becomes clear that the key to reducing our environmental impact is to work collaboratively. To lead the change, we have assembled a cohort of 4,000 scientists

who will work closely with our global customer base to push for new, suitable and sustainable solutions. Further, we are undertaking trials of our depolluting paint for launch in three megacities in India and Indonesia that struggle with severe pollution issues. In our work to depollute air, we can now use photocatalysis to trigger chemical reactions. In this process, photoactive titanium dioxide absorbs sunlight and reacts with oxygen and moisture to generate highly reactive free radicals, which in turn can contribute to the abatement of noxious emissions from motor vehicles, and decompose harmful gases such as nitrogen oxide, sulphur dioxide and VOCs. Some impacts occur beyond the scope of our processes, with our suppliers and customers. For example, in paints and coatings more than 98% of our carbon footprint comes from upstream (supplier) and downstream (customer) activities. Upstream, we know that the emissions from raw materials such as pigments, resins and solvents are our greatest impact, so we have joined forces with suppliers to drive the use of bio-based materials, recycled content, or raw materials produced with renewable energy. We closely monitor the cradle-to-grave life cycle of our raw materials and finished products to reduce Volatile Organic Compounds, the impact of transportation and other environmental fallout. Creating better enery Energy is one of our single biggest expenditures – in some products it accounts for as much as 80% of our variable cost – and such overheads directly affect our bottom line. AkzoNobel • 50% of products now deliver sustainability benefits to customers • 20% or more of our products deliver industry-leading sustainability benefits • 40% renewable energy used • '100% carbon-neutral target set for 2050 • In Vietnam, consecutively ranked in Top 100 sustainable enterprises honoured by VCCI

Adding renewables to our profile also improves the sustainability of our products, helping us retain and acquire customers and find new ways of creating value for them. Our renewable energy supply strategy has three focus areas: to protect our current renewable share; support cost-effective, large energy ventures; and explore commercially feasible on-site renewable energy generation. By investing in these areas, we are securing profitability in the long term. However, in finding cost-effective solutions, we need to identify those that can withstand the test of time. We have leveraged the power of energy to support our sustainability programme and renewables now power 45% of our requirements, meeting our 2020 target ahead of schedule. We found that in doing this we have created direct benefits for our business by lowering costs and risk, and creating new value chains. We draw power from solar, wind, natural gas and biomass, through multiple suppliers, meaning we can depend on an extremely reliable supply with low risk exposure to power shortages, rising oil prices or changes in carbon pricing. For example, we are sourcing power direct from newly developed wind farms, together with Google, Philips and DSM in the Netherlands.

Adding renewables to our profile also improves the sustainability of our products, helping us retain and acquire customers and find new ways of creating value for them. In cases of oversupply, we can use existing facilities to turn electricity into green hydrogen, which can be sold to produce chemicals or as a new product. The Dutch city of Groningen is already running a pilot with two hydrogen buses, supplied by AkzoNobel. Renewable energy is characterised by variation in supply. As we connect more wind parks and solar panels to our national grids, these swings will only become more severe and occur more often. Companies like AkzoNobel can play an important role in balancing these swings, and can even use them to create mutual benefits. Case study: Vietnam Vietnam faces the challenge of sustainable development and urbanisation in a uniquely historic environment, home to many famous architectural structures. To overcome these, AkzoNobel offers a wide range of sustainable products in the local market, as well as → 87

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→ practical support to those who live and work there. In the first quarter of 2019, we hosted two events on urban heritage preservation, which saw 450 experts discuss a masterplan for Vietnamese heritage. To support the next generation in taking over this work, we offer scholarships for architecture students and often host initiatives such as the Orange ASEAN Factory. AkzoNobel has also volunteered thousands of paints and working hours to repaint iconic structures, schools, urban alleys and old apartment buildings. Invested in tomorrow Sustainability is not an afterthought, it is our way of doing business. It is woven into our DNA and is a powerful means of attracting customers. To achieve carbon neutrality by 2050, economic, environmental and social factors are accounted for in our daily work with customers, throughout the product development lifecycle and across our operations, and we have three specific targets in place (see previous page). More than half our products provide sustainability benefits to those who use them, but often we must also engage in leading work beyond our own organisation. We have allocated significant sums to the paints and coatings open innovation platform and a small yet innovative manufacturing acquisition in the UK. To drive the next wave of sustainable solutions, we will make a further investment in our innovation activities before the end of the current decade. By 2020, we are targeting 20% of revenue from products that are more sustainable than those of our competitors, and up to 30% more efficient in resource and energy use across the entire value chain. We also aim to maintain eco-premium solutions at a sustainable 20% of revenue through 2020. These investments are key to long-term sustainable value creation. We know that our in house innovation can achieve higher efficiency at lower impact, in line with our philosophy of delivering more with less. G20G7.COM

Adding colour for the next generation To ensure the best ideas are developed for the benefit of future generations, we must seek out and promote diversity of thought – and that can only be done by collaborating with diverse teams. To drive the paints and coatings industry through its next phase of modernisation, we at AkzoNobel have created a new ecosystem for innovation by launching Paint the Future, an innovation challenge with an open invitation to collaborate and turn exciting potential into brilliant reality. This year, we will combine our global reach with the agility of thought present across the global start-up and scale-up environment, to push the boundaries of what our industry can achieve. The aim is to connect disruptive technologies to accelerate the dynamic world of paints and coatings, based

on five pillars: smart application, enhanced functionality, circular solutions, life science infusion and predictable performance. In the first round, 1,150 members submitted 158 ideas: from turning waste into bio-oils and minerals to using bio-based methods to capture and convert the carbon dioxide from steelworks. Other ideas used renewable and long-lasting dyes from biomass and self-cleaning, air-purifying coatings. Twenty-one outstanding start-ups were selected for the accelerator programme. Now concluded, SAS, Nanotechnologies (from the US), QLayers (Netherlands), Interface Polymers (UK), Apellix (US) and Alucha Recycling Technologies (Netherlands) were rewarded by AkzoNobel, while Octo (the Netherlands) took home the KPMG Scale-up Award. We are committed to continued work with the recipients of these prizes, to pursue sustainable business opportunities through joint collaboration agreements. In March this year, we launched AkzoNobel Cares, an amalgamation of our social programmes, including the Community Programme, Let’s Colour, Community with many repainting projects, and the Education Fund, as well as smaller local activities. Throughout this work, we aim to deliver shared value by helping communities, strengthening our reputation and building the pride our team members hold in the company.◆

Profile: PAMELA PHUA was appointed as Cluster General Director of Vietnam, Singapore and Indochina, Decorative Paints South Asia in 2017. With 20 years of experience in coatings industry, she has driven the business with new technology development and product implementation across the region, especially in Vietnam market. Phua was instrumental in setting up the global research and laboratory operations for AkzoNobel Decorative Paints (Global Exterior Wall Paint Expertise Group) in 2011. In her global capacity, Pamela implements the functional and production innovation strategy for exterior wall paint. She spearheads the RD&I functional excellence, standards and capability, and the efficient delivery of processes as the approved standards and processes across the globe. Together with a special passion for sustainable development, she has led her teams to innovate paintings products and solutions through increasingly sustainable benefits for AkzoNobel customers and the environment. She also actively gets involved in sustainable activities in projects to create inspiring living spaces for local communities and to promote green architecture trends e: pamela.phua@akzonobel.com

G L O B A L B R I E F I N G R E P O RT I N S T I T U T E F O R G L O B A L E X PA N S I O N B R A N D E D S T O RY

Focused international expansion for SMEs and Born Global Start-Ups By Taus Nohrlind

We live in an increasingly interconnected, complex global trading environment. Whether you are a start-up, a small or medium sized business you need to take an international perspective on how you see your business operating in the future â&#x20AC;&#x201C; and make sure you get the fundamental components in place from day one to successfully scale your business internationally. According to the World Trade Association, in most countries, micro, small and medium-sized enterprises (MSMEs) account for around twothirds of total employment, both in developing and developed countries. Despite this, their contribution to GDP is lower, at around 35% in developing countries and roughly 50% in developed countries. This is mainly because these smaller enterprises are much less productive than their larger counterparts. In most countries, small and medium-sized enterprises (SMEs) are defined as companies employing between 10 and 250 people. Companies with up to 10 employees are usually referred to as micro firms. Despite the emergence of new opportunities for smaller firms to connect to world markets, MSMEs participation in international trade is very limited. Several studies have shown that MSMEs are more impacted by trade obstacles than bigger companies. Some of the obstacles include non-tariff barrier, regulations and border procedures, market knowledge, access to finance, and lack of transparency. Local expertise, cultural understanding and G20G7.COM

appropriate resource allocation amongst many other things, also create considerable barriers for the business with international aspirations. At the company level, increased international market coverage will reduce the exposure to economic fluctuations at both the national and international level. Building and sustaining a presence in new, international markets can be a huge challenge. By any measure, differences between countries and markets are often significant and necessitate individual treatment when designing a market entry strategy. What works in Berlin is highly unlikely to work in Shanghai. Evidence suggests that in any given country, a considerable number of SMEs have well developed products with international appeal and market potential but with few, if any, international sales. This leaves a huge untapped market potential, that if explored could benefit both the SMEs themselves as well as national economies. It is well understood that SMEs drive innovation and economic development. Evidence from studies of SMEs with international activities also show that they are more innovative and versatile, and as a consequence often more profitable, which is attributed to the benefits from interacting with a wide range of customers and business partners operating in diverse cultural environments, compared to SMEs which are only operating locally and nationally.

To expand internationally and being able to negotiate all these challenges, help is needed. Current SME support mechanisms are considerable and often of a highly professional level. However, this support is often patchy, fragmented and anchored to Trade Departments, Embassies and Trade Associations, Chambers of Commerce and private consultants. The Institute for Global Expansion is aiming to create a space between cutting edge academic knowledge and world class business thinking on SME internationalisation. On the policy side, the aim is to

from each of the selected countries will be taken through the complete internationalisation process being supported with management, international strategy, market development and funding. The impact of the Guide2Growth Project will extent beyond the SMEs themselves to society in a broader context through driving export revenues, employment and economic wealth. The Guide2Growth Project aim to extend its reach globally covering more than 60 countries and in excess of 20,000 SMEs. This will be done through working and interacting with a wide range of players relevant to SMEs comprising professional organisations and experts within the areas of international strategy, export market development, funding and trade organisations of both public and private nature. Universities will have the lead on the research side, and professional advisors and private consultants will engage with SME’s for the practical side of actually expanding the international business activities of the SME’s and Born Global Start-ups involved. Get into Global Markets Being a Born Global Start-up, a micro firm or a more established SME you are faced with many challenges along the way which needs to be overcome to ensure a successful and profitable expansion:

contribute to improving framework conditions for SME expansion, global trade and entrepreneurial thinking, making research, knowledge and structures available to governments, trade associations and international institutions. On the commercial side, the aim is to create a model for Accelerated Global Expansion for SMEs and Born Global Start-Ups. It will be an all-inclusive solution comprising international strategy, strategic management, market development, sales support and funding. This Global Expansion model will be the commercial result of the research and development

project called Guide2Growth (www.Guide2Growth.com) Guide2Growth - Global Project on SME internationalisation The subject of managing and internationalising SMEs has been thoroughly researched during recent decades. The focus of the Institute for Global Expansion is to build upon this extensive research and extract the key findings from this knowledge across the countries involved to create the best possible foundation for the Guide2Growth solution. In parallel with the research activities, a number of SMEs

• How to identify which markets are right for my business? • How to develop a plan for international expansion? • How to establish and build new markets? • How to approach local cultures

and develop new international customers? How to train and educate the people in my organisation? How to ensure we have the capacity to expand the production and supply chain? How to find the right amount of money to fund the expansion? How to ensure a sustainable growth and high profitability? →

• • • •

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The Guide2Growth solution for Accelerated Global Expansion

Source: Institute for Global Expansion, Guide2Growth concept model for Accelerated Global Expansion

→ All the knowledge, support and professional services you need are out there – But it is not easy to find just the right people, at just the right time, at just the right price! Taus Nöhrlind, co-founder of Institute for Global Expansion, has through more than 25 years of working with SMEs and international expansion, experienced that one of the most common and general mistakes business’ make, is not getting the pricing right – and getting the pricing right, is not as simple as it may sound! The pricing is key to optimising profitability from international sales – and any sales for that matter. What is important to understand is, that when scaling any business two things in particular must be addressed: How the distribution structure should be, and how to optimise profitability from the distribution chain - and that’s all about getting the pricing right. Even if you are an online web shop selling directly to consumers only, there is a distribution structure you should apply – or risk losing out on profits and customers! In the distribution chain, you can have all variations of intermediaries; agent, dealer, importer, channel partner, distributor, business partner, promotional agency, broker, trading house, subsidiary, joint venture partner or the like. All these variations of intermediaries, and probably many more, can each fulfil a specific role for your company, in your efforts to get your product or service delivered successfully and profitably into the hands of your G20G7.COM

Even if you are an early stage start-up just working on getting your first sales, you should consider your pricing in the context of your future international ambitions. customers. Scaling your business internationally is all about getting this distribution structure right, and at the same time, ensuring your production and supply chain having the capacity to deliver the volume of products resulting from the international sales. The distribution structures are likely to be different between different markets, when you have a strict focus on optimising profitability. It is always important to consider the price-profit implications of the different distribution channels, even before the first attempts to approach customers and business partners in new markets are made. Not doing so, and just throwing yourself and your business into international markets without any thorough considerations and calculations of what the right distribution structure is, will surely come back to haunt you, impair your scalability and cannibalise your profit margin This has happened to companies time and time again, and it’s always a painful and costly process trying to revert and restructure pricing

and distribution channels – and it will most likely always have a very negative impact on your distribution channels and your customers. So, get this right – before you invest your time and money in building these valuable relationships – They are the foundation for your own international success. Even if you are an early stage start-up just working on getting your first sales, you should consider your pricing in the context of your future international ambitions – Getting your pricing wrong for international sales, because you only are looking at your home market and the customer next door, could easily create barriers to building scalable distribution for international sales, so once again – Do your homework on the pricing and distribution structures even in the early days of getting your business going. Obviously, the first steps to looking abroad, are to research the markets to understand the competitive situation and which price customers are likely to pay – and even happy to pay, so they will come back for more! The key question is: What is the right distribution structure, to make the most money from selling internationally? ◆ Get involved with the Institute for Global Expansion The Institute for Global Expansion are in the early days of establishment and would welcome any business or organisation who would like to work with contributing to helping businesses improve, expand and grow world trade. Likewise, any SME and start-up with a global potential who are interested in engaging with the Institute for Global Expansion is welcome. Taus Nohrlind; taus.nohrlind@ige.global

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Inclusive Growth: A Rising Tide of Opportunity Lifts All Leveraging the Power of Women in APEC Nations empowers everyone across the Region The global economic engines of Nations continue to waste an abundant fuel and sustainable natural resource of productivity, creativity, adaptableness, investing in human capital, and innovation—Women. By Chestley E. Talley and Kathy M. Graham

Economic Cost of Global Inequality According to the World Bank1 (2018), the economic cost of global inequality is immense––the magnitude of losses in national wealth due to gender-based disparities in earnings adversely influencing economic growth and performance. Wealth is the World Bank standard of measurement representing the “assets base” enabling countries to produce the Income component of Gross

Domestic Product or GDP. The largest component of countries’ wealth resides in their people—human capital, their natural assets, accounting for two thirds of total wealth globally. Depriving women and girls from investing in their country’s economic growth produces estimated losses in human capital due to gender inequality of $160.2 trillion. On a per capita basis, gender inequality generates losses in

wealth of $23,620 per person in the 141 countries studied. Based on the World Bank’s Changing Wealth of Nations Report, ensuring women’s equality in countries located in Asia-Pacific could add $4.5 trillion to their collective annual GDP by 2025, a 12% increase over the business-as-usual trajectory. Leveraging a country’s natural assets can eliminate projected losses in wealth, expand productivity and prosperity, and improve societal health and well-being2. Inclusive Growth The Organization for Economic Cooperation and Development (OECD)3 is an international forum where the governments of 34 democracies with market economies work with each other, along with 70+ non-member economies. OECD defines Inclusive Growth as economic growth distributed fairly across society creating opportunities for all. Elements of Inclusive Growth include Poverty Reduction, Employment Generation, Agriculture Development, Equal Distribution of Income, Industrial Development, and

LONE STAR “FLY GIRLS” COMMEMORATIVE AIR FORCE HEADQUARTERS, DALLAS, TEXAS USA Shauncy Ringo “Fly Girls” Project Leader, Jarvis Christian College Nancy McGee VP of Education, CAF HQ, Amber Collier “Fly Girls” Assistant Project Leader George Kondrach CAF Colonel Volunteer Development Officer & Principal Consultant, The Requisite Leader G20G7.COM

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Reduction in Regional Disparities. Michael Kimmel4, Sociologist and Ted Talk lecturer about the benefits of gender equality reminds listeners “gender equality is not a zero-sum game, but a win-win”. The gender equality movement improves the lives of women, yes, but countries, companies, families, and men also benefit. Kimmel (2015) contends gender equality is “unachievable if gender inequality remains invisible to men”, such that, “making gender visible to men is the first step to engaging men to support gender equality”, especially as more men realize companies with greater gender equality rank higher in productivity, job retention and work satisfaction. McKinsey Global Institute Gender Parity Score The McKinsey Global Institute (MGI)5 asserts their 2015 “Power of Parity” Report demonstrates a “strong link between gender equality in work and in society—the former is not achievable without the latter”. MGI’s Gender Parity Score uses 15 indicators of gender equality to measure the distance each country has traveled toward parity, which is set at 1.00. Asia-Pacific has a GPS of 0.56, slightly below the global average of 0.61—both high levels of gender inequality. APEC countries can benefit from adapting a “best-in-region scenario” to advance women’s equality. Whereby, each country matches the rate of progress of the fastest-improving country in its region. According to MGI, the largest absolute GDP opportunity is in China at $2.6 trillion, a 13% increase over business-as-usual GDP. The Global Gender Gap Index As outlined in The Global Gender Gap Report 2018 compiled by the World Economic Forum, the Global Gender Gap Index6 measures gender-based gaps relative to disparities in access to countries’ resources and opportunities instead of differing levels of development. The Index evaluates countries based on outcomes to provide a snapshot of where men and women stand relative to “fundamental outcome indicators” in the crucial areas of “economic participation and opportunity, educational attainment, health and

survival, and political empowerment” including “skills gender gaps related to Artificial Intelligence”. The scoring ranks countries according to their proximity to gender equality—on whether the gap between women and men for chosen indicators has declined, rewarding countries reaching the point where outcomes for women equal those for men. In 2018, the overall global gender gap was at 32%, meaning the sexes are only about two-thirds of the way to parity. At this rate, the global gap will likely take 108 years to close! At 77.1%, the widest gap occurs in political empowerment, with economic participation and opportunity closely following at 41.9% each. Alternatively, the health and survival gap is 4.6%, while the educational attainment gap at 4.4% should disappear by 2032. Assuming present conditions persist, closing the gender gap will take anywhere from a low of 61 years in Western Europe to a high of 171 years in the East Asia and Pacific region. The Asia-Pacific Economic Cooperation (APEC) Summit By endorsing their Policy Partnership on Women and the Economy (PPWE) Strategic Plan 2019-20217, APEC members conceded the “full potential of women’s economic contribution to the Asia-Pacific economy is often untapped”. There are 600 million women in the region’s labor force, with only 60% engaged in the formal sector. The goal of the PPWE8 is to advance economic integration of women in the APEC region for the benefit of all members and coordinate gender activities across all work streams. PPWE’s “Framework for the Integration of Women in the APEC Agenda” acknowledges opportunities in nontraditional sectors are the future of inclusive growth. Leveraging adaptive strategies in those sectors will assist in attracting, training, retaining, and promoting talented women in industries traditionally dominated by men, such as transportation. APEC Chile Dialogue on “Women and the Economy” On September 16, 2011, as the U.S. Department of State Diplomacy in

Action Key Note Speaker at the (APEC) Asia Pacific Economic Cooperation’s “Women and the Economy Summit”9, Secretary of State Hillary Rodham Clinton remarked: “…[We] adopt a declaration for the first time in APEC’s history that will affirm this organization’s and each member economy’s commitment to improving women’s access to capital and markets, to building women’s capacities and skills…That is a clear and simple vision to state. But to make it real, to achieve the economic expansion we all seek, we need to unlock a vital source of growth that can power our economies in the decades to come. And that vital source of growth is Women…Because by increasing women’s participation in the economy and enhancing their efficiency and productivity, we can bring about a dramatic impact on the competitiveness and growth of our economies.” The manifestation of that “clear and simple vision” in 2011 occurred at the APEC Chile May 2019 Ministers Responsible for Trade Meeting (MRT) when for the first time in APEC’s history, a host Nation’s priority, “Women, SMEs and Inclusive Growth”, focused on women’s economic integration. Small and Medium Enterprises (SMEs) are the engines of growth and innovation in the APEC Region, accounting for 97% of all business, employing over half of the workforce across APEC economies, and contributing to economic growth as a share of GDP ranging from 20% to 50% in most APEC economies. For women to become drivers and beneficiaries of global economic growth, they must participate in higher-wage, high-growth industries, including STEM fields. Greater access to quality education, diverse skills development, capacitybuilding, and technological literacy must keep pace with sector growth11. No Universal Remedy Will Work to Advance Gender Equality “Gender equality is more than a goal in itself. It is a precondition for meeting the challenge of reducing poverty, promoting sustainable development and building good governance.” Kofi Annan12, UN Secretary-General 1997-2006 → SANTIAGO_CHILE

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→ The International Monetary Fund (IMF) reports: income inequality arises in advanced countries within gender gaps of economic participation. In emerging markets and low-income countries, inequality of opportunity is the main obstacle to a more equal income distribution. IMF researchers Dabla-Norris and Kochhar (2019)13 noted the disadvantages women face in labor markets lower GDP in developed countries by 10% and at least 30% in developing economies. Gaining tangible benefits from closing the gender gap depends on “female participation moving from performing routine tasks—those which automation will likely replace by the 2040s—to a greater representation in managerial and professional positions…Because gender discrimination takes so many forms…, no universal remedy will work” to advance gender equality. IMF research suggests a three-prong approach: Policies to bring more women into the workforce, Policies to provide women with the right skills and to empower women in the workplace, and Easing transitions for displaced workers.

Policies to bring more women into the workforce Emerging market and developing economies should invest in infrastructure, support female entrepreneurs by increasing their access to finance, and promote equal rights for women. Mexico introduced public buses exclusively for women to ensure they could travel safely. Initiatives such as Malaysia’s Women Entrepreneur G20G7.COM

Financing Programme helped close the gender gap in borrowing rates. Peru revised their legal infrastructure, reducing gender discrimination by homogenizing laws governing inheritance and property rights. Policies to provide women with the right skills and to empower women in the workplace Gender parity in investments in education and health are necessary to ensure women can obtain quality jobs. Building skills early safeguard against displacement and allow women to benefit from newer work opportunities. Large gender gaps persist in access to the digital technology admitting users to where new job opportunities are created: 60% of the global population, mostly women in emerging market and developing economies, still have no access to the Internet and 250 million fewer women are online than men. Easing transitions for displaced workers Female workers in low-skilled jobs with routine tasks are at a higher risk of displacement through automation in the digital economy. To achieve inclusive GDP benefits from gender-equality, equal support is essential for displaced men and women through labor market policies to improve skills, connect workers with jobs, and promote job creation. The Rising Tide Really Can Lift All Boats In 2003, President Clinton showed how legislation and policy decisions

favorably affecting a Nation’s GDP created a rising tide of opportunity14. “Deficit spending fueled by tax cuts heavily weighted [for] upper income people do not lift all boats. In the 1980s, we had rising economic inequality, and we quadrupled the national debt. Fourteen million jobs were produced. In the 1990s, we produced 22 million jobs, balanced the budget, and ran a surplus. But the more important thing to me is, in the 1980s only 70 thousand people were moved out of poverty. In the 1990s, 7.8 million were. One hundred times as many people moved out of poverty in the…recovery of the 1990s because the rising tide did lift all boats, and because what was fair and decent was … practical….” Wittenberg-Cox and Maitland (2008)15 recommend organizations become “gender-bilingual”, because gender is a “business issue”, not a “women’s issue”. Representing more than half of global human capital resources, women can counteract shrinking workforces and talent shortages. “Gender-bilingual” means applying an adaptive mindset in the workplace when developing women alongside men, which recognizes women are different from men, have their own work and leadership styles, and possesses value and untapped potential that can create a distinct competitive advantage. The Next Growth Industry for Gender Equality is on the Horizon—Aviation Asia-Pacific economies are purposefully turning to non-traditional sectors dominated by men as the horizon for successful economic integration of women, specifically in transportation. The APEC Women in Transport workshop initially was “on the margins of the 2019 47th Transportation Working Group (TPTWG)16 meeting in Canada”. Through active cross-forum collaboration, APEC members agreed to restructure the agenda to elevate the integration of women in the post-2020 vision of transportation’s future as integral to TPTWG’s Aviation Experts Group’s five priorities, specifically Women in Aviation. Eighty-three years after the first Indian woman, Sarla Thakral, obtained an aviation pilot’s license in 193617, in 2019, India leads the world with

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the highest proportion of female commercial pilots. According to the International Society of Women Airline Pilots (ISA)18, India’s 12.4% (1,092 vs. 8,797) of women pilots economically integrated into the aviation transportation industry more than doubles the global average of 5.07% (only 9,398 are female, 185,255 pilots worldwide). The 12.4% benchmark in India is 8 times the 1.55% regional average of commercial women pilots in Asia (360 female vs. 23,237 pilots).19 Boeing projects Asia will require 266,000 more pilots by 203820, a third of the global shortage by Boeing’s estimation. The breakdown of women commercial pilots for airlines operating in APEC Nations supports the growth potential of women in aviation transportation: Hong Kong (176 vs. 3,926; 4.48%), China (56 vs. 11,392; 0.49%), Japan (34 vs. 2,700; 1.30%), Singapore (31 vs. 3,286; 0.94%), and Indonesia (5 vs. 170; 2.94%). In 2019, Bhanu Choudhrie, founder of the Philippines’ largest flight school, Alpha Aviation Group, pledges to double student intake to 1,100: “There is huge demand and men alone can’t fill that. It’s the women who will be the ones to drive this growth”. Lone Star “Fly Girls”: Girls Can Soar Among the Clouds, Too! The National Commemorative Air Force21 (CAF) headquartered in Dallas, Texas asked the Jarvis Christian College Enactus22 Team to identify initiatives to re-energize students’ interest about aviation. The mission of the Lone Star “Fly Girls” is to increase the number of female students in the pipeline who one day become Pilots. Of the 125,871 pilots in the USA, only 5% are female. The first step is getting the word out about how girls can soar among the clouds like the boys who dominate the industry today. One group with this similar mission is the Institute for Women Of Aviation Worldwide23. iWOAW considers “lack of awareness the number one access barrier for girls and women to enter Aviation”. CAF’s VP of Education Nancy McGee agrees with both iWOAW and “Fly Girls” about the criticality of exposing children and youth to Aviation early and often, as the best way to increase

opportunities to ignite that spark of interest that might steer girls into the aviation transportation industry.

“…A big part of getting women into Aviation is to give them opportunities for early exposure. As I talk informally with pilots, I am hearing a lot of them were inspired by the time they were 6 years old. One of the things we have done is create a program called A is for Aerospace. We bring in pre-K kids who are 4-years-old…and give them an opportunity to see airplanes up close: to touch them, to feel them, to be involved,

to do a little [model] building, and some STEM activities… [This] is a great way to get them excited. I do not expect all 1,000 of those kids to be interested in getting into Aviation fields; but, we have to have an early exposure and then multiple opportunities along the way… as they grow up from elementary to middle school to high school to have multiple touchpoints and exposures to fields of Aviation so that they’re interested in it.” ◆ Interview by: “Fly Girls” Project Leader Shauncy Ringo, October 25, 2019

1 World Bank Group. (May 1, 2018). OKR Open Knowledge Repository. In Unrealized potential: The high cost of gender inequality in earnings. Retrieved October 20, 2019, from https://openknowledge.worldbank.org/ handle/10986/29865. 2 McKinsey & Company. (April, 2018). Report. In The power of parity: Advancing women’s equality in Asia Pacific. Retrieved October 20, 2019, from https://www.mckinsey.com/featured-insights/gender-equality/the-power-ofparity-advancing-womens-equality-in-asia-pacific#part1. 3 Organization for Economic Cooperation and Development (OECD). (2018). OECD Global Forum on Development 2018. In The Power of 4 Billion: Inclusive Agendas for Women and Youth, 2018 OECD Global Forum on Development, Paris, April 2018 [YouTube video]. Retrieved September 19, 2019, from https://www.oecd.org/ inclusive-growth/. 4 Kimmel, M. (2015). Why gender equality is good for everyone—men included. TEDWomen. 5 McKinsey & Company. (April, 2018). Report. In The power of parity: Advancing women’s equality in Asia Pacific. Retrieved October 20, 2019, from https://www.mckinsey.com/featured-insights/gender-equality/the-power-ofparity-advancing-womens-equality-in-asia-pacific#part1. 6 World Economic Forum. (December 17, 2018). Insight Report. In The Global Gender Gap Report 2018. Retrieved October 19, 2019, from https://www.weforum.org/reports/the-global-gender-gap-report-2018. 7 APEC Asia-Pacific Economic Cooperation. (September 18, 2018). First Policy Partnership on Women and the Economy Meeting in Viña del Mar, Chile on 8-10 May 2019: 2019/SOM2/PPWE/006 Agenda Item: 5. In PPWE Strategic Plan 2019 – 2020. Retrieved October 21, 2019, from http://mddb.apec.org/Documents/2019/PPWE/ PPWE1/19_ppwe1_006.pdf. 8 APEC Asia-Pacific Economic Cooperation. (August, 2019). SOM Steering Committee on Economic and Technical Cooperation Working Groups. In Policy Partnership on Women and the Economy: Does a Rising Tide Lift all Boats? Women and Inclusive Growth [You Tube Video]. Retrieved October 21, 2019, from https://www.apec.org/Groups/ SOM-Steering-Committee-on-Economic-and-Technical-Cooperation/Working-Groups/Policy-Partnership-onWomen-and-the-Economy. 9 U.S. Department of State. (2009-2017). Diplomacy in Action. In Remarks at the Asia Pacific Economic Cooperation Women and the Economy Summit. Retrieved October 21, 2019, from https://2009-2017.state.gov/ secretary/20092013clinton/rm/2011/09/172605.htm. 10 APEC Asia-Pacific Economic Cooperation. (October 4, 2019). APEC Chile 2019. In 2019 APEC Women and the Economy Forum Statement. Retrieved October 21, 2019, from https://www.apecchile2019.cl/apec/media/news/ 2019-apec-women-and-the-economy-forum-statement. 11 APEC Asia-Pacific Economic Cooperation. (October 4, 2019). APEC Chile 2019. In 2019 APEC Women and the Economy Forum Statement. Retrieved October 21, 2019, from https://www.apecchile2019.cl/apec/media/news/ 2019-apec-women-and-the-economy-forum-statement. 12 Gonzales, C., Jain-Chandra, S., Kochhar, K., Newiak, M., & Zeinullayev, T. (2015). Catalyst for change: empowering women and tackling income inequality. FMI. http://www. imf. org/external/pubs/ft/sdn/2015/sdn1520. pdf. 13 Dabla-Norris, E. & Kochhar, K. (March, 2019). Closing the gender gap: The economic benefits of bring more women into the labor force are greater than previously thought. In Finance & Development Magazine. Retrieved October 27, 2019, from https://www.imf.org/external/pubs/ft/fandd/2019/03/pdf/closing-the-gender-gap-dabla.pdf. 14 John F. Kennedy Presidential Library and Museum. (May 28, 2003). Kennedy Library Forums. In A Conversation with Former President Bill Clinton with Senator Edward M. Kennedy, President Clinton and Michael Beschloss as moderator. Retrieved October 20, 2019, from https://www.jfklibrary.org/events-and-awards/forums/past-forums/ transcripts/a-conversation-with-former-president-bill-clinton. 15 Wittenberg-Cox, A., & Maitland, A. (2008). Why women mean business: Understanding the emergence of our next economic revolution. John Wiley & Sons. 16 https://www.apec.org/Groups/SOM-Steering-Committee-on-Economic-and-Technical-Cooperation/ Working-Groups/Transportation 17 http://www.the-south-asian.com/May-June2003/sarla_thakral__first_woman_pilot.htm 18 International Society of Women Airline Pilots. (2017). International Strides. In Female pilots: Which airline has the highest number?. Retrieved November 9, 2019, from https://www.iswap.org/. 19 International Society of Women Airline Pilots 20 South China Morning Post. (September 16, 2019). Bloomberg News. In Southeast Asia: Female pilots from the Philippines could help drive Asia’s travel boom. Retrieved November 9, 2019, from https://www.scmp.com/news/ asia/southeast-asia/article/3027500/female-pilots-philippines-could-help-drive-asias-travel. 21 https://commemorativeairforce.org/ 22 https://enactus.org/ 23 Institute for Women Of Aviation Worldwide (iWOAW). (2019). iWOAW: Women of Aviation Worldwide Week. In Closing the gender gap in the air and space industry. Retrieved November 10, 2019, from https://www.iwoaw.org/.

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