The 10th issue of the G20 Leaders Global Briefing Report. by The Group of Nations

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R E P O R T

BIG TECH WHY DATA IS NOT THE NEW OIL

Osaka I Japan I June 28-29th 2019

THE NEW SPACE RACE: WHO WILL TAKE THE LEAD? PAGE

FROM BLUEPRINT TO BUILDING: REFORMING GLOBAL FINANCE ARCHITECTURE A SPECIAL REPORT IN CO L L A B O R AT I O N W I T H

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

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CONTENTS

C O V E R S T O RY

Features

Special Report

Why Europe Should Support Africa in Adapting to Climate Change Oluyede Ajayi

Simultaneous Heatwaves Caused by Anthropogenic Climate Change

From Blueprint to Building: Reforming Global Finance Architecture

The New Space Race: Who Will Take the Lead?

A new report on global financial governance represents a unique opportunity to urgently shape a new multilateralism.

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Ana C.Rold

Peter Rüegg

Special Branded Stories

Inequality, Agriculture and Climate Change: From a Vicious to a Virtuous Circle

Japan’s First Comprehensive Fishery Product Traceability System

Elwyn Grainger-Jones

G20 Japan Attracts Millennials for their SDGs Innovation Hubs

JCI Japan / CePIC

The Future of Education How WISE is Reimagining Education Through a Biological Metaphor

Governance in the Age of Ignorance: The Role of Knowledge Infrastructures

Allyson Berri

Sponsored by Inc.

Global Energy Transition is Unstoppable

The Unmissable Dividends for Gender Equality

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Phumzile Mlambo-Ngcuka

The Think Tank at the Intersection of Technology and Society

Closing the Gap on Gender Equality The Why and the How

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Jo Andrews

Uniting the World Through Education

How AI Could Spur Drug Development Gisbert Schneider

The State of U.S.-Japan Trade Negotians

Personalized Medicine and the European Data Misery

Rong Qin

102

Ernst Hafen

Dante Disparte

Roberto Suárez Santo

112

Migration Model for the UK

Economy Corporations, Commonwealth, Sandboxes, and Shared Value

Marianne Lucien

Chris Purifoy

PUBLISHER/CEO & FOUNDER Chris Atkins EDITOR-IN-CHIEF Ana C. Rold editors@diplomaticourier.org CREATIVE DIRECTOR Christian Gilliham christian@cgcreate.co.uk (+44) 7951 722265 EDITOR (LSE) Erik Berglof

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COMMUNICATIONS OFFICER (LSE) Carolina Stern PROGRAMME DIRECTOR (LSE) Piroska Nagy-Mohacsi

SPECIAL THANKS

WELCOME MESSAGES

South American Jets CPA Canada The Coaching Educator

98 Taiwan Civil Government 106 Global Talent Summit

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73 Cybathlon 79 Invest in Great 101 Taiwan Civil Goverment 104 Eden Roc 109 Global Talent

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110 Learning Economy 114 DSX Inc 116 INC Innovation

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Franz Wldenberger Kyoko Yoshida Michael Silva Eriya Unten

EXECUTIVES Ray Baker, Phil Cook Anthony Leigh Jones, Delano Johnson & Tyrone Eastman

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Business Together for Sustainable Development

While Data May Be Worth Trillions, It is Not the New Oil

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Seiko Hashiba Haruki Takara Masayuki Matsunaga

06 Shinzo Abe PRIME MINISTER

10 Soichiro Takashima MAYOR OF FUKUOKA CITY

Copyright 2019 the CAT Company. All rights reserved. The G20 Publication is a product of CAT Company. No part of this publication can be reproduced without written consent of the publisher Chris Atkins and the CAT Company. All trademarks that appear in this publication are the property of the respective owners. Any and all companies featured in this publication are contacted by CAT Company to provide advertising and/or services. Every effort has been made to ensure the accuracy of information in this publication, however, CAT Company makes no warranties, express or implied in regards to the information, and disclaim all liability for any loss, damages, errors, or omissions.

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PUBLISHER’S LETTER

Chris Atkins PUBLISHER, CEO & FOUNDER CAT COMPANY, INC.

Dear Readers, I am thrilled to welcome you to the 2019 G20 Leaders Global Briefing Report. It has been more than two decades since CAT Company produced the very first G7 Summit publication. In 1997, our work earned us the trust of the host government and since then we have been honored to be the go-to publisher and consultant for host governments of the G7 and the G20 Summits for 22 years in a row. And for over two decades our company’s own history and legacy are tied to these most important of global leadership gatherings. As we reflect on the past two decades and more, I wish to express my heartfelt thanks to Japan’s G20 Host Committee for the use of the official G20 logo. I also want to take this opportunity to thank our editorial partner, the London School of Economics and Erik Berglof, the inaugural Director of the Institute of Global Affairs and the Global Policy Lab. It’s been a true privilege to work again with Professor Berglof in this edition and I look forward to our

continued collaboration this year at the G7 Summit and beyond. Since 1997 our company has grown and expanded exponentially. Our portfolio of publications, which also includes the leading editions for the APEC CEO Summit, G7 Leaders Summit, G20 Leaders Summit and B20 Summit respectively, have been recognized globally. Our company’s mission has been and continues to be to educate the global community on the most vital topics affecting our society and the agenda and leaders at the APEC, G7, G20 Leaders and G20 business summits. Through our award-winning publications, we have created an unprecedented opportunity for private sector leaders, IGO leaders, and civil society to have a voice at these summits even when they don’t have a physical seat at the table. We look forward to the G20 Leaders Summit in Japan this year and we look forward to working with you all again in the years to come. Thank you for reading!

I wish to dedicate this G20 issue to my late father. Peter Atkins, 16th September 1940 to 3rd April 2019. He will be truly missed.

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INSIDE G20 › GCEL: SPECIAL FEATURE THE DIGITAL PATH TO SUSTAINABLE ECONOMIC PROSPERITY

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› The Urban 20: On City Diplomacy › The Youth 20: On the Future of Work

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KEY UPDATES ON THE JAPANESE ECONOMY

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FOOD SECURITY INEQUALITY & CLIMATE CHANGE

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BIG TECH WHY DATA IS NOT THE NEW OIL

Osaka I Japan I June 28-29th 2019

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10TH YEAR ANNIVERSARY ISSUE

THE NEW SPACE RACE: WHO WILL TAKE THE LEAD? PAGE

THE NEW PECKING ORDER IN THE WORLD PAGE

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Women in Finance

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The New Gold Standard for Development

Embracing a Female Future

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MAKING THE GLOBAL FINANCIAL SYSTEM WORK FOR ALL

FROM BLUEPRINT TO BUILDING: REFORMING GLOBAL FINANCE ARCHITECTURE

A SPECIAL REPORT IN CO L L A B O R AT I O N W I T H

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G L O B A L B R I E F I N G R E P O RT PRIME MINISTER’S MESSAGE

LEADERS SUMMIT

WELCOME

Shinzo Abe PRIME MINISTER

Following the successful completion of the G20 Buenos Aires Summit on December 1, 2018, Japan has finally assumed the G20 presidency for the very first time. This year, Japan will host the G20 Osaka Summit on June 28 and 29, 2019. In addition to the G20 member countries, we will also welcome leaders of invited guest countries and head of invited guest international organizations. This will be the largest summit meeting that Japan has ever hosted. Osaka will be the venue for hosting the G20, the “premier forum for international economic cooperation,” which gathers and brings together many developed countries and emerging countries with growing presence in the international economy. Osaka has historically prospered as a commercial hub and its unique tradition and culture, including food culture, has recently gained much reputation home and abroad. Moreover, Osaka has thrived as a merchant city and has constantly sought to take in new ideas. It is a place where the spirit and willingness to take on new

challenges has been nurtured and was also chosen to host the Osaka-Kansai Expo in 2025. At the Osaka Summit, Japan is determined to lead global economic growth by promoting free trade and innovation, achieving both economic growth and reduction of disparities, and contributing to the development agenda and other global issues with the SDGs at its core. Through these efforts, Japan seeks to realize and promote a free and open, inclusive and sustainable, “human-centred future society.” In addition, we will lead discussions on the supply of global commons for realizing global growth such as quality infrastructure and international health. As the presidency, we will exert strong leadership in discussions aimed towards resolving global issues such as climate change and ocean plastic waste. Furthermore, we will discuss how to address the digital economy from an institutional perspective and issues that arise from an ageing society. We will introduce Japan’s efforts, including the productivity revolution amid a “Society 5.0” era, towards achieving a society where all

individuals are actively engaged. We will also be hosting related Ministerial meetings starting from the Finance Ministers and Central Bank Governors Meeting in Fukuoka, Agriculture Ministers’ Meeting in Niigata, Ministerial Meeting on Trade and Digital Economy in Tsukuba, Ibaraki, Ministerial Meeting on Energy Transitions and Global Environment for Sustainable Growth in Karuizawa, Nagano, Labour and Employment Ministers’ Meeting in Matsuyama, Ehime, Health Ministers’ Meeting in Okayama, Tourism Ministers’ Meeting in Kutchan, Hokkaido, and Foreign Ministers’ Meeting in Nagoya, Aichi. There will be many delegations and journalists from all over the world who will be visiting Japan on the occasion of the Osaka Summit and these Ministerial meetings. We will take this as an opportunity to exhibit Japan’s “Omotenashi” spirit (hospitality) and introduce the unique aspects and attractiveness of Japan and the host cities to the world. With great support from you all, I am determined to lead the Osaka Summit towards great success. ◆

At the Osaka Summit, Japan is determined to lead global economic growth by promoting free trade and innovation, achieving both economic growth and reduction of disparities, and contributing to the development agenda and other global issues with the SDGs at its core. Shinzo Abe Taken from g20.org

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

LEADERS SUMMIT

EDITOR’S LETTER

Ana C. Rold EDITOR-IN-CHIEF CAT COMPANY, INC.

Welcome to the 2019 edition of the G20 Summit global policy publication. We are thrilled to collaborate with the London School of Economics and the Global Policy Lab again, to produce a publication focused on how leaders from the policy, diplomatic, business communities as well as civil society are offering solutions to some of the most intractable challenges facing the G20 members as well as our world at large. We are particularly proud to have the support of Japan’s organizing committee in distributing our publications to the attending leaders at the G20 Summit for this year’s increasingly relevant and important forum of global leaders—a testament to our longevity in the field and our team’s tireless efforts to produce a publication by the leaders for the leaders for more than two decades now. Global financial transparency, climate change, automation and the future of work, agriculture and food security, health, wealth, and so much more. The agenda for the G20 Summit continues to be ever ambitious. The issues at hand are as big as ever and bubbling at the heels of major political upheavals and key elections in the Americas, Asia, and Europe. Despite its shortcomings, the G20 remains a key forum for managing the global economy. And unlike its sister organization, the G7, the G20 includes both developed and developing economies in its membership, which allows for more inclusion and

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collaboration. This year, with Japan’s presidency, we note a continuation of the work that member states have started since the UN Sustainable Development Goals (SDGs). In fact, we see that SDGs have guided the G20 agenda, making this year’s summit even more inclusive to the goals and needs of the entire world, not just the most fortunate. As I have said before, even though the G20 was the result of the financial crisis in 2008, the institution has adopted a proactive approach to future crises. Initially a diagnostic venue, the G20 has now evolved into a “wellness clinic” where issues are debated and looked at from a future-forward vantage point. The members are looking to prevent and mitigate, not just “cure” after the fact. For that reason, the articles you see in this edition—curated always carefully to include voices from a multitude of disciplines and expertise—tend to take a futurism tone. The authors are not just diagnosing the issues, they are offering innovative solutions that defy established expectations. They have imagined a world where the rules can be remade to ensure an abundant future for all and where a future G20 is not just grappling with problems but it is managing prosperity better. We hope you enjoy reading the selection of articles for this edition and always feel free to contact us with your comments and feedback. ◆

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WELCOME

Soichiro Takashima MAYOR OF FUKUOKA CITY

Hello everyone, It is with great pleasure that Japan’s first ever G20 Finance Ministers and Central Bank Governors’ Meeting is being held in Fukuoka. I would like to extend a warm welcome to everyone coming here from around the world for this exceptional event. Fukuoka is a compact city blessed with comprehensive urban functions and rich natural surroundings. The city boasts world-class accessibility, with the center only a stone’s throw away from the airport, a mere 10 minutes by subway. Fukuoka also has an impressive track record as a venue for international conferences, and is set to host major international events, including some of the 2019

Rugby World Cup matches and the 2021 World Aquatics Championships. Fukuoka’s rich natural environment provides not only beautiful scenery but also a bounty of delicious foods from both sea and land, a place where fresh ingredients are available in abundance. Our city attracts gourmets from across Japan, lured by a variety of culinary delights including worldrenowned ramen noodles, seafood and hotpot dishes like mizutaki. Fukuoka has long been a gateway to mainland Asia, a hub for exchanges of culture since ancient times. You can get a real sense of tradition here, from crafts such as Hakata-ori textiles to local festivals like Hakata Gion Yamakasa.

Fukuoka also provides robust support for startups, and has been designated as a Special Zone for Global Startups and Job Creation by the government in recognition of its efforts. By taking steps such as opening Fukuoka Growth Next, a startup support facility leveraging public-private collaboration, we are bringing new vitality to Fukuoka as a place with excellent prospects for those looking to launch businesses here. From urban functions to cuisine and tradition, Fukuoka’s allure lies in its sheer diversity, with something to please all. It is my sincerest hope that you take this chance to experience the very best of our city. ◆

Fukuoka’s rich natural environment provides not only beautiful scenery but also a bounty of delicious foods from both sea and land, a place where fresh ingredients are available in abundance. Soichiro Takashima

皆さま、こんにちは。福岡市長の髙島宗一郎です。この度，日本で初めて「G20財務大臣・中央銀行総裁会議」が，ここ福岡市で開催されますことを大変嬉しく思いますとともに，世界各国より来福される皆さまを心より歓迎申し上げます。福岡市は，充実した都市機能と豊かな自然がコンパクトに集約された都市であり，空港から市中心地へは地下鉄で１０分程度と，その利便性は世界でもトップレベルです。国際会議の開催実績も豊富で，今後，ラグビーワールドカップや世界水泳などの

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大規模な国際イベントも開催される予定です。豊かな自然はその景観を楽しむことはもちろん，海の幸，山の幸をもたらしてくれます。世界でも有名なラーメンだけでなく，海鮮料理や水炊きなどの鍋料理など，その新鮮な素材を活かし，日本有数の食の都としても知られています。また，古くからアジアとの交流の窓口として発展してきた歴史があり，博多織などの伝統工芸や，博多祇園山笠などの祭りなどの伝統文化を感じることができます。一方で，スタートアップの支援に力を入れており，国から「グローバル創業・雇用創出特

区」としての指定をいただき，官民協働型のスタートアップ支援施設『Fukuoka Growth Next』を開設するなどの施策を進めることで，起業を望む新しい力が福岡市に集まってきています。このように都市機能をはじめ，食，伝統など多様な魅力がたくさんございますので，ぜひこの機会にお楽しみいただければと思います。福岡市をあげて皆さまのお越しを心よりお待ちしております。

LSE GLOBAL POLICY LAB CONTENT 15 Taking a Systematic View

Erik Berglof

16 Making the Global Financial

System Work for All

18 The EPG:

Overview Proposal

20 The Asian Infrastructure Investment Bank’s Complementary Approach to the G20 Summit Jin Liqun

22 An Eloquent Case for Multilateralism and Urgent Action Suma Chakrabarti

24 On the Credibility and Legitimacy of the G20 Mario I. Blejer

26 Is the Global Financial Safety Net Fit For the Next Crisis? Isabelle Mateos y Lago

28 Making the Global Financial Safety Net “Fit for Purpose” Erik Berlof, Giorgios Papaconstantinou & Jean-Pisani Ferry

30 IFC and Amundi’s innovative partnership to finance green projects in Emerging Markets Xavier Musca & Frédéric Samama

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From Blueprint to Building: Reforming Global Finance Architecture A new report on global financial governance represents a unique opportunity to urgently shape a new multilateralism.

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Taking the Systemic View Erik Berglof

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

The final report from the G20 Eminent Persons Group on Global Financial Governance (EPG) was presented in Bali last October. The Report was arguably the first ever attempt to take a systemic view of the entire global financial system. Previous exercises have looked at the World Bank and the IMF separately, and at the demarcation between the two, but no one has brought together the development finance architecture and the structures aimed at maintaining financial stability. Yet, we know that the two are connected – we do not want to achieve the Sustainable Development Goals at the expense of financial fragility. Critics of the Report say that the proposals are not going far enough and that implementation efforts are too timid. Yet, at a time of populism and major backlash against multilateralism and the institutions of global governance, the EPG Report is the best thing we can hope for – a comprehensive and analytically astute benchmark for the necessary discussion of a new multilateralism. Some proposals could have gone further and all ideas are not fully developed, reflecting political constraints, but they can now be picked up by others and taken further. The EPG proposals are now being implemented. The Japanese G20 Presidency encouraged a prioritisation exercise and has taken charge of the proposal to establish “country platforms”, a country-owned effort to ensure coherence of the global system at the level of individual countries. The G20 Working Group on the International Financial Architecture is in charge of developing the principles. Japan is also committed to facilitate the launch of a series of pilots in

The systemic approach of the EPG is at the core of the LSE Institute of Global Affairs. countries to test the approach. It is on the agenda for the G20 Finance Ministers and Central Bank Governors in Fukuoka. In this issue of the LSE Global Policy Lab, launched in connection with the meeting of the G20 finance ministers and central bank governors in Fukuoka and the G20 Leaders in Osaka in June, we have invited some of the leading stakeholders in the global system and some key commentators to reflect on the Report and the ongoing work to implement its 22 proposals. They come together in a desire to ensure that this unique opportunity to address the flaws in the current system is not lost. The systemic approach of the EPG is at the core of the LSE Institute of Global Affairs. Our Global Policy Lab was set up to support connecting

policymakers and thinking environments within and across emerging economies, and ultimately to help them increase their impact on global decision-making. The EPG embodied the mission of the Global Policy Lab with equal representation from advanced and emerging economies, with the EPG Chair, Tharman Shanmugaratnam, Deputy Prime Minister of Singapore, representing the growing leadership of the emerging world. LSE has also come together with the Centre for Global Development and the Brookings Institutions in Washington, D.C., in the Friends of EPG initiative. We want to work with institutions and individuals in emerging and advanced economies to further develop the ideas in the EPG Report and encourage its implementation. We hope that you will engage with us to help shape a new multilateralism. We begin a summary of the report and contributions from the presidents of two important multilateral development institutions - the Asian Infrastructure Investment Bank and the European Bank for Reconstruction and Development – both institutions created significantly after the original Bretton Woods institutions, but in rather different economic and political contexts. These articles are followed by a reflection on the legitimacy of the G20 and two perspectives – a private sector view and one from a more academic perspective – on what needs to be done to make the Global Financial Safety Net more complete and more resilient. We end with a presenting a promising collaboration between an IFI and an institutional investor to encourage decarbonisation and green technologies. ◆

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LSE GLOBAL POLICY LAB

Making the Global Financial System Work for All

n April 2017, the G20 Eminent Persons Group on Global Financial Governance was asked by the G20 Finance Ministers and Central Bank Governors to recommend reforms to the global financial architecture and governance of the system of International Financial Institutions (IFIs) so as to promote economic stability and sustainable growth in a new global era; and to consider how the G20 could better provide continued leadership and support for these goals. The result was the first of its kind global report titled “Making the Financial System Work for All.” At the heart of the report is the future of the open and competitive world order that has brought a large part of humanity out of poverty, raised living standards across nations, and provided the foundation for unprecedented global peace over the last 70 years. That open order remains critical to every nation’s future. But the system of international governance and cooperation that underpins it is fraying. Left on its own, there is a real risk of drift into a fragmented world, with policies in different parts of the world working at odds with rather

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than reinforcing each other, and with all nations ending up losing. We cannot return to the past. The central challenge is to create a cooperative international order for a world that has changed irreversibly: one that is more multipolar and decentralized in decisions, yet more interconnected, and with challenges ahead that are much larger and more pressing than we have seen in decades Getting national policies right is at the core of achieving inclusive societies and mutual prosperity. But international and national initiatives should reinforce each other in a way that creates a stronger future for all. An open, competitive and wellcoordinated international order will enable win-win outcomes for nations. Its weakening will lead to lose-lose outcomes, as global growth and opportunities for new jobs are eroded over time, and as financial stability and the global commons become more fragile. Equally, cooperative internationalism will survive only if it helps the broad base of nations achieve inclusive growth. The reforms that we propose in our report strengthen and add resilience

At the heart of the report is the future of the open and competitive world order that has brought a large part of humanity out of poverty, raised living standards across nations, and provided the foundation for unprecedented global peace over the last 70 years. to global financial governance for this new, cooperative international order. The present system lacks the coherence, joint capacity and effectiveness to support its most fundamental goals in global development and financial stability. It must be brought up to date with the realities of a new era. We can achieve this by implementing decisive reforms to make the system work as a system. These reforms are within our reach. They do not require new international bodies. They instead require that we take bold and defined steps to ensure that today’s institutions – global, regional and bilateral – work together as a system. They require that we build

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trust and transparency among these different institutions, and leverage their combined strengths, so that the system as a whole delivers greater and more lasting development impact and reduces the frequency and damage of crises. Our proposals build on various reforms that had been underway among the IFIs, and seek to take them further. But they also require a much greater sense of urgency and recognition among their shareholders of the need for consistency and joined-up efforts among the IFIs and all other stakeholders so we raise our whole game. We need a step change in the pace and scale of reforms to enable the growth, job opportunities and sustainability that are critically needed in the next decade. The consequences of failure will not be simply economic. We also need further reforms to avert major, systemic crises; and to make it possible for developing countries to finance sustainable current account deficits, where they are fundamentally needed at their stage of development, without the recurring bouts of instability that set back growth. As an Eminent Persons Group, our task was to provide an independent

assessment of the changes needed. We focused especially on systemwide reforms, rather than those in individual institutions. Our mandate also excluded issues to do with the capital and shareholding structures of the IFIs, which we believe are of central importance but are covered by other ongoing reviews in the G20 and the IFIs. Importantly, we were guided by the request that our proposals could be acted upon by the G20 and the IFIs in coordination with the other bodies integral to the international monetary and financial system. In this regard, besides drawing on our Groupâ&#x20AC;&#x2122;s collective experience in policy-making, our discussions benefited greatly from consultations with a broad range of national authorities, the IFIs, many other thought leaders from civil society, think tanks, academia and philanthropies, and private sector experts. These diverse interactions helped us arrive at proposals which we believe can be implemented within a reasonable time-frame, but which taken together should have a transformational impact. The ambition is in the doing.

Some of the reforms should be early wins in international coordination. Most are achievable within a few years, with focused effort. Some others go beyond current thinking. We urge that they be considered with an open mind, and developed further or adapted if necessary to enable their implementation. We have deliberated intensively as a Group, supported by our very able Secretariat under the leadership of Siddharth Tiwari. We thank the G20 for the opportunity to review these important issues. We present our report with sober awareness of the challenges facing the international community, but also with hope for the collective resolve needed to take us into this new era of cooperative internationalism, with benefits for all. â&#x2014;&#x2020;

This introduction is adapted from the report: Making the Global Financial System Work for All, published by the G20 Eminent Persons Group on Global Financial Governance. Published with permission.

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The EPG: Overview proposals

Proposal 1: Re-focus on governance capacity and human capital, as foundations for a stronger investment climate.

Proposal 2: Build effective country platforms to mobilize all development partners to unlock investments, and maximize their contributions as a group, including by convergence around core standards.

Proposal 3: Implement regional platforms to facilitate transformational crossborder investments and connectivity.

Proposal 4: Reduce and diversify risk on a systemwide basis to mobilize significantly greater private investment, including portfolio-based infrastructure financing.

Proposal 4a: Shift the basic business model of the MDBs from direct lending towards risk mitigation aimed at mobilizing private capital.

Proposal 4b: Develop system-wide political risk insurance and expand use of private reinsurance markets. Proposal

Proposal 4c: Build a developing country infrastructure asset class with the scale and diversification needed to draw in institutional investors.

Proposal 5: Right-sizeâ&#x20AC;&#x2122; capital requirements for MDBs and other investors in infrastructure, given their default experience.

Proposal 5a: Establish tailor-made capital and liquidity frameworks for the MDBs.

Proposal 5b: Review the regulatory treatment of infrastructure investment by institutional investors.

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Proposal 6: Strengthen joint capacity to tackle he challenges of the global commons.

Proposal 6a: Integrate activities in support of the global commons into the IFIs’ core programs, and coordinate them within country platforms.

Proposal 6b: Create global platforms with the UN guardian agency and the World Bank coordinating and leveraging on the key players in each of the commons.

Proposal 7: Integrate trust fund activities into MDBs’ core operations to avoid fragmentation.

Proposal 8: Plug shortfalls in data and research that hamper effective policymaking, especially in developing countries.

Proposal 9: Leverage more systematically on the ideas and operating networks of business alliances, NGOs and philanthropies.

Proposal 10: The IFI community should strengthen and accelerate efforts to help countries develop deep, resilient and inclusive domestic financial markets.

Proposal 11: TheIMF’s framework of policy guidance should enable countries to move toward the long-run goal of openness to capital flows and to better manage the risks to financial stability.

Proposal 11a: Develop evidencebased policy options to enable countries to benefit from capital flows while maintaining financial stability, and to provide assurance to the markets that measures taken are appropriate.

Proposal 11b: Develop an understanding of policy options that enable sending countries to meet domestic objectives while avoiding large adverse international spillovers.

Proposal 12:

Proposal 18:

Integrate the surveillance efforts of the IMF, FSB and BIS in a coherent global risk map, while preserving the independence of each of the three institutions’ perspectives

Incorporate non-official and contrarian views systematically for more robust risk surveillance.

A G20-led group, with representation from key non-G20 constituencies and the IFIs, should steer the reorientation of development finance over the next three years before handing the coordinating role to the IFI Heads. This should include building complementarity among all development partners, and a clear system of metrics to track impact and value for money

Proposal 13:

Proposal 19:

Build on the IMF-FSB Early Warning Exercise (EWE) to ensure policy follow-up from the global risk map.

A biennial strategic forum convened by the IMFC and DC should identify development risks before they manifest, and the required collective responses.

Proposal 12a:

Proposal 14: Stitch together the various layers of the GFSN to achieve scale and predictability.

Proposal 15: Establish a standing IMF liquidity facility to give countries timely access to temporary support during global liquidity shocks.

Proposal 15a: Use a country’s qualification for the IMF’s liquidity facility in considering the activation of RFA support.

Proposal 16: Enable the IMF to rapidly mobilize additional resources in large and severe global crises.

Proposal 20: The Executive Board of each IFI should focus on strategic priorities for the institution and advancing systemwide goals.

Proposal 21: Adopt a practical, risk-based approach to delegate greater responsibility to IFI Management, and hold them accountable for outcomes.

Proposal 22: Ensure diversity and better match the skills available to IFI Boards and Management to the shift in the business models and increased complexity of challenges.

Proposal 17: The G20 should refocus on a multiyear, strategic agenda, rationalize workstreams, and devolve more work to the IFIs.

To read more about each proposal please visit: www.globalfinancialgovernance.org

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LSE GLOBAL POLICY LAB

The Asian Infrastructure Investment Bank’s Complementary Approach to the G20 Summit Jin Liqun

President and Chair of the Asian Infrastructure Investment Bank (AIIB)

With their share of the world economy ever increasing, developing countries are eager to play a greater role in the multilateral development banks (MDBs). It stands to reason that they should hold greater weight in these institutions, but with greater weight comes greater responsibility, particularly when it comes to the reforming of and financing by the MDBs. At the same time, investments through external borrowing should not undermine debt sustainability or leave a big footprint in environmental and ecological systems. Achieving all these not quite congruous objectives is the only way to secure buy-in from the people for these actions. This makes it all the more important to identify a fresh approach to development based on our collective experiences. In this context, MDBs should ramp up their efforts to be more responsive, innovative, efficient and cost-effective, and they have to break away from outdated modus operandi. We in the Asian Infrastructure Investment Bank (AIIB) are trying to come up with such a new approach. While AIIB resembles most of its peers in terms of governance structure, one distinctive feature is its non-resident Board of Directors, which guides, directs and oversees the management. The board approves policies and strategies, and delegates authority to the management and holds it accountable under the Boardapproved Accountability Framework. This governance structure and its function are not just cost-effective, which is certainly important for any institution, but more crucially they demarcate a clear-cut division of responsibility between the board and management.

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The role of the board is enhanced rather than reduced since the directors can focus on more strategic tasks. Starting in January 1, 2019 AIIB’s board began delegating project approval responsibility to the management on a principles-based approach. While this appears to be an innovative feature for a multilateral development bank, it is common practice in the private sector. Forward-thinking governance practices tell us clear accountability placed on individuals leads to better outcomes. As AIIB embeds this modern practice into its organization, we hope there will be lessons learned which will be of interest to our peers in the development world. As a young organization, we have the ability to test new operating models to find efficient ways of delivering development outcomes. If we identify ones that work well, we intend to share what we have learned with our development partners who have so generously shared their growth journeys with us.

Another new approach we have adopted is to create Client Relations and Programming (CRP) Office. CRP’s role is to conduct on-going dialogue and program-based engagement with our member-clients. To ensure orderly, rational and systematic business development, CRP conducts country program consultations without building large country-based offices. Our belief is we can still develop deep relationships and a strong project pipeline with a mobile and specialized team while keeping operational costs down. The CRP is off to a strong start and we look forward to sharing what we learn with the development community. There is an African proverb that says, “if you want to go fast, go alone. If you want to go far, go with others.” When examining the task ahead of us, there is no question we have far to go. As described in the Report of the G20 Eminent Persons Group on Global Financial Governance, the international monetary and financial system lacks coherence and does not “work as a system.” There are global and regional players, in some cases working as partners and other cases working as competitors for the same projects. According to the Asian Development Bank, multilateral development banks only make up 2.5% of funding in developing Asia. This compared to the USD 1.7 trillion needed every year in Asia (from 2016-2030) means we have to make our dollars work harder. One way to amplify our investments is through better cooperation amongst ourselves, and the other is by mobilizing private capital. Like AIIB, all of our peer MDBs have plans in place to mobilize private capital. It is broadly acknowledged

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Forward-thinking governance practices tell us clear accountability placed on individuals leads to better outcomes.

as the clear way to bridge the infrastructure gap in emerging markets. However, we must be careful not to take money from one pocket to put in another. We should stop thinking as individual banks chasing after the same dearth of bankable projects but thinking as a cohesive unit. Each bringing capital, knowledge and expertise to the table. Identifying complementary products that will exponentially increase the pool of capital available worldwide. Working as team mates leverages our best qualities for the sake of the whole. Lack of bankable projects points to the lack of work upstream on project development. Much needs to be done by the MDBs in close collaboration. Leveraging each other’s policies, products, knowledge, and standards to make it easier for governments and private sector clients to partner with us. We are better positioned to build capacity and improve prospects for more bankable, high quality projects to be developed. We can facilitate discussions across borders to promote regional connectivity and better policy alignment. At the recent heads of MDBs meeting during the IMF and World Bank Annual Meetings, consensus was reached that MDBs should not come to the table as competitors

As a young organization, we have the ability to test new operating models to find efficient ways of delivering development outcomes.

Jin Liqun is President and Chair of the Asian Infrastructure Investment Bank (AIIB). Before being elected as the Bank’s first president, he served as Secretary-General of the Multilateral Interim Secretariat (MIS) tasked with establishing AIIB. Immediately prior to assuming the role of Secretary-General of the MIS, he was Chair of China International Capital Corporation Limited, China’s first joint-venture investment bank. From 2008 to 2013, he served as Chair of the Supervisory Board, China Investment Corporation. From 2009 to 2012, he served as Deputy Chair then subsequently as Chair of the International Forum of Sovereign Wealth Funds.

but to always support each other as partners. Firm adherence to this commitment is testament to our professional integrity. We work for the people. This is our privilege and we must do everything in our power to achieve the goals set before us. ◆

He joined the Ministry of Finance in 1980, where he served as Director General and Assistant Minister before becoming Vice Minister in 1998. He was also a Member of the State Monetary Policy Committee. Earlier in his career, he served as Alternate Executive Director for China at the World Bank and at the Global Environment Facility as well as Alternate Governor for China at ADB. Jin holds a master’s degree in English Literature from Beijing Institute of Foreign Languages (now Beijing Foreign Studies University). He was also a Hubert Humphrey Fellow in the Economics Graduate Program at Boston University from 1987 to 1988.

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LSE GLOBAL POLICY LAB

An Eloquent Case for Multilateralism and Urgent Action Suma Chakrabarti

President of the European Bank for Reconstruction and Development (EBRD)

Multilateralism is at risk. Yet, the need for collective action, long-term thinking, and alliances that bridge across parochial interests has never been stronger. But multilateralism has no natural constituents. And it takes brave leaders to speak against the tide sweeping public debates today. I therefore heartily welcomed the strong message from the G20 Eminent Persons Group (EPG) on Global Financial Governance. The EPG made an articulate and unapologetic call for a well functioning multilateral system, alongside national governments and other actors. In championing the case for bolstering the system, the EPG also conveyed a sense of urgency for action. To deliver the Sustainable Development Goals (SDGs) by 2030, the multilateral system, in partnership with national governments and the private sector, needs to deliver better, more and faster. This is true especially as the world faces a number of global challenges, climate change being the major one. And Africa, with its fast growing population, and the region most behind on achieving the SDGs, is another priority. At the same time, the EPG acknowledges that the system needs to adapt to be fit for the challenges and opportunities of the future. And that is also right. The multilateral system is valuable—let us invest in strengthening it. The EPG has inspired us at the EBRD. We see opportunities to strengthen the system through a number of channels. One is reinforcing our efforts to mobilise private financing—this must be at the core of the development finance agenda. The EPG elevates this

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message that EBRD takes to heart. Indeed, working with the private sector is part of EBRD’s DNA and is baked into our business and operating model. Private sector mobilisation is critical, and deepening local capital markets must be seen as integral to this work. The details of how best to scale up mobilisation need further and deeper discussion, and it is important to avoid being tempted by the promise of magic bullets. Creating sustainable markets requires long term, quality investment. Another point is that financing alone is not enough. From our work on sustainably growing the private sector, we have learned that it requires the still too little incentivised—or recognised—work of implementing policy reforms. EBRD’s policy work and carefully designed activities with the public sector is often key to unleashing opportunities for the private sector. Partner countries need to implement the sometimes-difficult policy reforms to improve the investment climate and

unlock opportunities for both foreign and domestic investors. The EPG makes welcome and pointed recommendations on the Multilateral Development Banks (MDBs) working as a system. To deliver on financing and policy reforms, we need to coordinate, both at the country level in full collaboration with national authorities and at an institutional level. The momentum for policy reforms is best driven when development financiers are coherent in their messages to national authorities, and willing to engage in tough and frank discussions. The G20 is rightly promoting country platforms as a mechanism to improve this coordination. Underpinning operational cooperation amongst the MDBs are strong institutional relationships. Indeed, through EBRD’s chairmanship of the MDB Heads group in 2018, we made sure that the work of MDBs as a system, alongside working with the private sector, was on the agenda for the MDB Heads. Private sector investment, policy reforms, and coordination across the system are critical to delivering greater impact. But the EPG went a step further, touching on the governance of the whole system as key to its efficient functioning. The MDBs have different mandates, geographies and histories, and as a result have developed specialist expertise and operational capacities. If shareholders look at the system holistically, beyond individual entities, to find creative ideas to use capabilities in more agile ways, we should be able to derive more value from a system-wide perspective. Development banks are not perfect

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The EPG has inspired us at the EBRD. We see opportunities to strengthen the system through a number of channels. substitutes for each other—and their different skills and instruments are strengths to leverage for shareholders, client countries and companies. In response to the report, for example, EBRD has committed to stepping up our operational collaboration with MIGA, the political risk insurance arm of the World Bank Group. At EBRD we are responding to the call to action and focussing on delivering better, more and faster. To do this, we are implementing a threeyear plan that aims to raise our investment levels by more than 20 per cent during that time. By the end of 2019, we hope to invest more than ten billion Euros annually. This would be a first time record for the EBRD, and it would be on the back of strong a performance in 2018, where the quality and diversity of our investments speaks for itself: 40 per cent of our business in local currency; an increase in disbursements and growth of our operating assets to a record EUR 30 billion; and increased business in small countries as well as projects in countries where transition is least advanced. Recognising climate change as the most critical challenge ahead, EBRD wants at least 40 per cent of investments in our Green Economy Transition by the end of 2020, and we are close to hitting that ambitious goal. Alongside this work, we will continue to contribute to strengthening the

The EPG makes welcome and pointed recommendations on the Multilateral Development Banks (MDBs) working as a system. I believe the SDGs are achievable, but that requires scaling up both individual actions and partnerships. A strong multilateral system helps focus on a common agenda, define the rules of the game, standards and principles that deliver sustainable results, and provide the space for countries with divergent interests and backgrounds to engage, resolve differences—and work together in a way that promotes prosperity, peace and security for all. ◆

international development finance system, promoting ever closer collaboration with our partners. And we look forward to the recommendations of another group formed to address similar issues, with a focus on Europe. We expect the recommendations from the High Level Group of Wise Persons on the European financial architecture for development in the autumn and they will no doubt continue to stimulate concerted action to deliver better, more and faster.

Sir Suma Chakrabarti, born in 1959 in West Bengal, India, is the sixth President of the European Bank for Reconstruction and Development (EBRD). The EBRD’s Board of Governors re-elected Sir Suma as President of the Bank for a second four-year term in 2016. He began his first term in 2012, having replaced Thomas Mirow. Before arriving at the EBRD, he held the position of Permanent Secretary at the British Ministry of Justice and was its most senior civil servant. Sir Suma also worked in the late 1990s in the UK Treasury, where he was responsible for UK public expenditure, and in the early 2000s in the Cabinet Office, where he led on cross-departmental strategic issues and subsequently the management of the Cabinet agenda. After studying Politics, Philosophy and Economics at the University of Oxford, Sir Suma took a Masters in Development Economics at the University of Sussex. He also holds honorary doctorates from the Universities of Sussex and East Anglia and the Bucharest University of Economic Sciences.

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LSE GLOBAL POLICY LAB

On the Credibility and Legitimacy of the G20 Mario I. Blejer

Board Director, IRSA, Advisor to IDB & visiting Professor in the Institute of Global Affairs at the London School of Economics and Political Science

International organizations, even those with an intended global reach, not always have global universal membership. Among economic and financial organizations there are, beyond pure regional organizations, formal and important institutions that include only a subset of countries. Among those is clearly the OECD, a club of developed nations to which lately a number of emerging countries with a good track record have been added. Similarly, the Bank for International Settlement in Basel, a relatively old organization that sometimes is referred to as the “central bank for central banks,” has limited membership that is not necessarily based on objective criteria. The World Trade Organization is closer to universal membership, but does not have one. At the center of the current structure of multilateralism are the two pillars of the post Second World War system: the International Monetary Fund and the World Bank. These two organizations constitute the vertebral column of the global international relationships and one of its prominent features is indeed its global, i.e., universal membership. All independent countries in the world have the right of membership in both organizations. In that sense they follow the nature of the United Nations organization to whom they formally belong. There are however two very important, perhaps crucial, differences between the membership structure in the United Nations and these financial organizations. These differences can be summarized in the concept of “constituency” and “weighted voting rights”. While in the United Nations all countries are directly represented

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by a delegation of each countries and all countries have their own representatives in the General Assembly, in the International Monetary Fund only a few selected countries are directly present with their own Executive Director while the majority belong to constituencies where clusters of countries are organized in groups with a single representative of the group being the Executive Director for each for the whole. Leadership of the constituency can rotate or be fixed to some extent – without clear criteria. The World Bank is similarly organized. The second difference has to do with the weighted nature of the vote. While in the United Nations the system is one country one vote, in the financial organizations the vote of each member is supposed to represent its relative importance in the system (based on quotas that are subject to revisions from time to time). This also gives veto power to the largest member, the United States of America

which has close to 20% of the vote and many decisions require 85% of the vote. When the number of countries for membership increased in the aftermath of decolonization, nationalism that split up countries, and later the fall of the Berlin Wall, the pressure for more representation increased too. It was difficult to make decisions in real time and the risks increased that real power was slipping from the existing multilateral system and returning to bilateral or ad-hoc arrangements. To formalize the situation, or in fact to give it more credibility and in some sense more transparency, a ‘nonorganization” was created back in 1975/76 that admitted to have the real power without a formal procedure but with formalised dues and duties. It was called the G7 and gathered the powers of the West (the USA, UK, France, Italy, Canada, Germany and Japan). Later on it was expanded to include (although with some limitations) also Russia to become G8, but only temporarily and Russia was “disinvited” (suspended) as part of the sanctions around the Ukraine conflict in 2014. If you have noticed the real absent here, you are right: the emerging global giant, China, was outside the new global club and never invited even as its economic and political heft was rising rapidly since the early 1990s. From that point of view the lack of representativity of the G7 for some key emerging countries became its weakness. By the end of the turn of the century, following the collapse of communism in Europe and the completion of decolonization, the need for a credible forum for representatives of the world economic powers to discuss and to

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The glaring absence of China was evident but the pressure from important emerging countries to have a place on the stage was also being felt

The chair of each group is important in the discussion of these topics and traditionally a representative of the host country carrying the G20 Presidency.

make far-reaching decisions effectively became critical. The United Nations was considered a “talk club” in this respect without too much of a decision making—let alone implementing— capacity to fulfil such a role. And the Bretton Woods system became too specialized and not too versatile. Its weighted system was notoriously difficult to adjust to reality, leaving much of the veto or lead powers to traditional heavy weight countries beyond their real numerical quotas. The G7 remained a convenient venue but was regarded more and more illegitimate by more and more countries. The glaring absence of China was evident but the pressure from important emerging countries to have a place on the stage was also being felt. In this context the idea of creating a G7+, i.e. to enlarge the G7 to cover China and some of these important emerging countries started gaining currency. Immense amount of time was spent to discuss various formats. Finally the debate was settled in favour of a Canadian proposal to create a “nonformal organization” that could be fast in diagnostic and origination of treatment and that can become more accepted by all, particularly by China and some “prominent and notable emerging countries evenly distributed geographically”. The problem was whom exactly and how to choose.

G20 covered 90% of the world output and by being quite manageable due to its small number. It was equally clear that the clear political representativity and the credibility of a new outfit could be useful in crises and on well- defined decisions. The problem, however, was with the absent. Important emerging countries were missing and, more relevant, important developed countries, particularly in Europe (Spain, Holland, Sweden, Switzerland) were also excluded as being represented by the EU, though it was truly not the same for them as has been repeated time and again. As usual, addressing the problem of true representation was postponed. ◆

Documentation about the debates between Canada (G7 President in 2000), the United States and Germany (G7 President in 1999), as well as the United Kingdom and France to decide who was to be invited to the first meeting and probably become a member are not yet open to the public, but be as it may, a list was drawn and 19 countries were selected: the original G7, Russia, China and 10 “important countries” with an attempt at balanced geographical coverage. Representatives of these countries were invited to the meeting in Canada in the autumn of 1999 that was not supposed to be a foundational meeting but rather a discussion about the issue. The “20” number was reached by adding as a member the European Union. I was privileged to attend that meeting for the Argentina delegation. It was clear from the beginning of the discussion that these “gatherings” would be the beginning of a truly new, non-formal formal organization. The

Mario I. Blejer, is Board Director, IRSA, Argentina’s largest real estate company; Advisor to IDB, Israel and Visiting Professor in the Institute of Global Affairs at the London School of Economics and Political Science. Previously Professor Blejer has held the positions of Governor of the Central Bank of Argentina, Senior Adviser to the Governor of the Bank of England and Director of its Centre for Central Banking Studies, and held senior positions at the International Monetary Fund and the World Bank. Professor Blejer held the Walter Rathenau Chair in European Economics at the Hebrew University of Jerusalem and was Director of the Helmut Kohl Institute. He also taught at NYU, San Andrés University and Boston University, among others. Professor Blejer has published a large number of books and articles in the areas of monetary policy, financial stability, fiscal policy and performance.

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LSE GLOBAL POLICY LAB

Is the Global Financial Safety Net Fit For the Next Crisis? Isabelle Mateos y Lago

Managing Director & Deputy Head of BlackRock’s Official Institutions Group and a member of the firm’s Global Operating Committee and Geopolitical Risk Steering Committee

International organizations, The Eminent Persons Group (EPG) identified as a key goal for the G20 to secure the benefits of interconnected financial markets and in particular to enable countries to utilize international capital flows without risks arising from excessive market volatility. That this goal remains an aspiration in 2019 despite the innovations introduced in the wake of the global financial crisis (GFC) is telling. FX liquidity lines are an important area where gaps persist. When the GFC broke out, FX swap lines quickly emerged as a gap in the global safety net that we hitherto didn’t know existed—specifically, even countries without significant imbalances and reserve currency issuers could find themselves in urgent need of vast amounts of foreign cash, courtesy of their banks’ funding models. In the event, it was promptly remedied, with the US Federal Reserve (Fed) and then other major central banks quickly stepping in. Does this mean we can trust this gap will not reemerge in the next crisis? Far from it. What worked in the GFC Starting with the Fed, major central banks found themselves challenged in implementing their own monetary policies when both their banks and overseas ones suddenly found themselves exposed massive FX funding shortages. They saw it in their own immediate interest to act as intermediaries between the source currency central bank and their banks, whose soundness and creditworthiness they were better placed to assess. Thus, in late 2007 the Fed entered into swap lines with the ECB and the SNB and shortly after the collapse of Lehman Brothers in September 2008

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would be provided against eurodenominated collateral—though the Riksbank through its swap lines with Latvia and Lithuania further contributed to providing EUR liquidity where it was needed. Again, in all these cases, the prime motivation was seen as domestic national interest, specifically financial stability and monetary policy transmission.

with the BOJ, BOE, and a series of smaller development market central banks. Remarkably, these liquidity lines were uncapped, and swaps outstanding peaked at nearly $600 billion. Swap lines were also established between several of these other central banks. These were ostensibly monetary policy decisions, taken for domestic motives, without pressure from respective governments. Many emerging markets faced similar needs, but ultimately only Brazil, Korea, Mexico and Singapore received Fed swap lines, after consultation with the US Treasury and State Department. These swaps were capped and gave the Fed tighter control of any drawings. But they ended up barely drawn and still succeeded in stabilizing dollar funding costs not just for the four recipient emerging markets but also more generally. In Europe, the ECB limited itself to repo lines with Hungary, Latvia and Poland—i.e., agreements whereby euro-liquidity

Next time will be different Following the GFC, regulatory changes have forced banks to become much more prudent in managing liquidity needs in general, including their FX exposures. As a result, the potential FX liquidity needs arising from banks are generally much lower than in 2007. However, they have not disappeared. The European Banking Authority recently reported that a large number of EU banks had US dollar liquidity coverage ratios well below 100%, and many of them close to 0%. More generally, at 14% of GDP, international lending in US dollars is now 50% larger than in 2007, and the bulk of that lending is now in the form of debt securities, not bank loans. In Latin America, the share of dollar debt in the form of debt securities reaches 12% of GDP. In Europe, emerging markets hold 9% of GDP worth of dollar-debt. If dollar markets shut down again as they did in 2007/08, there will likely be substantial FX liquidity gaps, and these will be more challenging to plug now that the counterparts needing liquidity will often not be banks. Meanwhile, euro funding needs generally remain much lower but there are a handful of banks in the non-Eurozone EU with euro liquidity coverage ratios below 50%. Against that backdrop, the liquidity

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Following the GFC, regulatory changes have forced banks to become much more prudent in managing liquidity needs in general, including their FX exposures.

Against that backdrop, the liquidity safety net has improved in some dimensions, but significant gaps, or at least question marks, remain.

safety net has improved in some dimensions, but significant gaps, or at least question marks, remain. A key innovation since the GFC has been the multiplication of swap lines between the People’s Bank of China (PBOC) and thirty-some EM and DM counterparts around the globe. The network of swap lines among major DM central banks has become permanent. And the Chiang Mai Initiative bilateral swap agreements have been multi-lateralized and expanded. Furthermore, FX reserve holdings are up 70% globally since Q42007, with a dollar share of around USD 7 Trillion (62%). In other words, the global financial system is not short of dollar liquidity as a whole. But can the current set up guarantee that this liquidity will find its way promptly to where it is needed in a crisis? That seems likely among DM actors, but much less so for EM. The criteria used by the Federal Reserve, the ECB, and others to extend swaps to certain EM and deny them to others were never made explicit—although sound macroeconomic fundamentals, credible policies, and importance to the domestic banking sector were clearly key. It is not even clear that these central banks consider such swap lines as an established part of their toolkit. Likewise, PBOC has on

deal with systemic or exogenous FX liquidity shortages, unrelated to a country’s policies or fundamentals. The EPG’s goal of securing the benefits of interconnected financial market for all would be closer at hand if central bank swap line policies were permanently on the books with clear activation criteria. This would provide positive incentives in normal times and prompt reassurance in crisis time, thereby containing systemic risk. ◆ occasion shown willingness to turn its RMB swap lines into dollar loans, but again the conditions under which its vast pool of dollar liquidity might be made available to others are unclear. And would the ECB be willing to use its access to a Fed swap line to onlend dollars to EU counterparts in need to them, much like the Swedish Riksbank onlent euros obtained from the ECB to CEE central banks in the GFC? It could be argued that this uncertainty about central bank swap line policies is a not a problem but a feature—to make sure financial supervisors and market participants in emerging markets do not take excessive FX risk. But this moral hazard argument is unconvincing. The insurance policy need not be unconditional: FX liquidity swap lines are only an appropriate remedy to

Isabelle Mateos y Lago, Managing Director, is Deputy Head of BlackRock’s Official Institutions Group and a member of the firm’s Global Operating Committee and Geopolitical Risk Steering Committee. Prior to joining BlackRock, Isabelle was a senior official at the IMF, where she worked for 15 years in a range of positions straddling economic analysis, policy making, strategy, and global governance (including as G20-liaison and as a Member of the Executive Board). She started her career at the French Ministry of Finance. Isabelle regularly contributes her views on financial markets and how geopolitics impacts them in a variety of global media outlets. She is a member of the Board of Bruegel, a leading European policy think tank. She is also a member of the Inspection Générale des Finances and a graduate of the Ecole Nationale d’Administration (ENA) and Sciences Po, Paris. She earned a master’s degree in economics from the University of Cambridge.

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LSE GLOBAL POLICY LAB

Making the Global Financial Safety Net “Fit for Purpose” Erik Berglof, Giorgios Papaconstantinou & Jean-Pisani Ferry

The ongoing review of the contributions and associated voting rights of individual countries in the IMF—an opportunity to reinforce the global financial safety net (GFSN) – has stalled. The US claims that it does not need more resources – the IMF is “right-sized” – and like Europe does not want voting rights to change. China and other emerging economies, on the other hand, are willing to provide more resources in exchange for increased influence. The GFSN is essential to prevent or contain the risk and impact of economic and financial crises, and promote economic stability. Whether it consists of national reserves, bilateral support, regional schemes, or multilateral assistance mechanisms, its operation spurs investment and sustainable growth, helping the global financial system work for all. Ensuring it remains “fit for purpose” and effective is an important part of the reforms to the global financial architecture and governance proposed by the G20 Eminent Persons Group on global financial governance. Financial globalisation has enhanced and reshaped interdependence and increased the demand for a global financial safety net. The IMF-centred safety net of the post-war decades was quantitatively and qualitatively adequate in a world of limited capital flows and mostly national banking. In its current state it does not however respond to the needs of a world of unfettered capital flows, global value chains, market interdependence and international banking. Under such conditions, a global financial safety net must have several coordinated layers which combine to match the potential needs of countries.

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Economic and political reasons explain why the IMF alone cannot respond to such needs. Tackling crises may require amounts of financial assistance that exceed by a wide margin what it can realistically mobilise. Whereas the overall pool available has tripled relative to world GDP, IMF permanent resources represent only one-eight of the total resources available, excluding national reserves. In addition, IMF governance also restricts the availability of precautionary support. Similarly, the IMF is not well prepared to provide liquidity support to commercial banks operating in foreign currency – an extension of the traditional role of central banks acting as lenders of last resort in domestic currency. Massive accumulation of reserves at national level reflects pervasive distrust in the multilateral Bretton Woods system. Reserves-to-GDP and reserves-to-trade ratios have reached unprecedented levels. Preference for such costly self-insurance emerged,

most notably in Asia, in reaction to the Asian crises of the late 1990s and the IMF programmes that followed. This reserve buildup was the first major departure from the principle of mutual insurance embodied in the IMF articles of agreement. It signalled that several emerging countries regarded the Fund as excessively driven by the perspective, and even the interests, of the advanced Western countries. In a significant departure from the established multilateral regime, a three-layered system has come into existence. In addition to national reserves, it consists of: ■ Bilateral support schemes, especially through swap lines. Such swap lines may serve as confidencesignalling devices, macro-financial support, trade- or currency-promoting instruments, or channels of provision of international currency liquidity to banks; ■ Regional safety nets to provide financial assistance to participating countries. There are by now seven such arrangements, uneven in terms of size, institutional infrastructure and potential effectiveness, developed in part for resources, in part in response to IMF mistrust; ■ Multilateral financial assistance through the IMF, in the form of traditional conditional assistance or liquidity provision schemes granted to prequalified countries. Such a system is necessary in a world of deep financial integration with private financial institutions, not only states, needing access to liquidity and with regional spillovers, especially in currency unions, justifying mobilising resources from neighbours and partners. As things stand, however, this network does not constitute

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a coherent system, in terms of coverage, resources, capabilities and predictability. It is a question whether it will evolve into a coherent system, or degenerate into fragmentation. Within the current GFSN, coordination problems are being addressed pragmatically, but difficult issues remain unsolved. Coordinating them raises issues of: ■ Availability: Commercial, political or geopolitical considerations weigh on the choice of countries to which liquidity lines are being provided by major central banks; ■ Conditionality: Even if institutions share the same philosophy, the aims, maturity and scope of loans may differ, and so will the associated conditionality; ■ Terms of lending: Whereas IMF lending conditions are broadly uniform across countries, bilateral or regional lenders may tailor theirs to programme countries; ■ Debt relief: Multilateral debt relief granted to insolvent borrowers is in principle based on objective criteria and broadly uniform across countries; this is less true for bilateral or regional lenders, which normally have stronger ties and may be based on economic or strategic interests and even seize collateral instead of participating in a multilateral restructuring; ■ Seniority: The hierarchy of official creditors raises difficult issues of principle, especially when loans were provided at the same time and on the basis of tightly coordinated conditional programmes. While the central role of the IMF in the global financial architecture is

generally regarded as essential, its future cannot be taken for granted. In the current heterogeneous network it is neither dominant nor indispensable. This may affect fundamental principles of the international financial architecture such as equality of treatment and transparency. More fundamentally, the IMF was part of a post-war order characterised by a monetary and financial architecture dominated by the US. Whether this can evolve into a more symmetric multipolar architecture where several currencies coexist and power is more evenly distributed is highly uncertain. Architecture issues and governance issues cannot be separated. As the dominant veto player, the US exercises overwhelming influence over the IMF but is not willing to increase its resources significantly. China, India and other emerging countries are unlikely to invest much into the future of the institution as long as they feel massively underrepresented in its governance. Europe is a staunch supporter of the Fund but is unwilling to reduce the influence that it currently enjoys within it. Unless addressed as a matter of urgency, this configuration portends the risks of a persistent deadlock in the reform of the international financial architecture and its eventual fragmentation.◆

Jean Pisani-Ferry holds the Tommaso Padoa Schioppa chair of the European University Institute in Florence and is a Senior Fellow at Bruegel. He is also a professor of economics with Sciences Po and the Hertie School in Berlin. In 2017, Pisani-Ferry contributed to Emmanuel Macron’s presidential bid as the Director of programme and ideas of his campaign. From 2013 to 2016 he served as Commissioner-General of France Stratégie. From 2005 to 2013 he was the Founding Director of Bruegel. Before creating Bruegel, he was Executive President of the French PM’s Council of Economic Analysis (2001-2002), Senior Economic Adviser to the French Minister of Finance (1997-2000), Director of CEPII (1992-1997), and Economic Adviser with the European Commission (1989-92). Pisani-Ferry has taught at University Paris-Dauphine, École Polytechnique, École Centrale and the Free University of Brussels.

George Papaconstantinou is an economist (Ph.D. LSE) who has served government as cabinet minister, member of parliament and MEP. As Greece’s Finance Minister at the outset of the Eurozone crisis, he played a key role in the design and negotiation of Greece’s support programme by the EU and the IMF with its associated economic and financial policies. Subsequently, as Minister of Environment and Energy, he pursued policies to advance Greece’s sustainable growth agenda. In the earlier part of his career, he was a senior economist at the OECD, taught at the Athens University of Economics and Business and consulted for the European Commission and international think-tanks. Since leaving public office, his work has focused on economic and financial policy-related analysis and governance issues. He is currently part-time Professor at the School of Transnational Governance of the European University Institute where he is co-directing the Transformation of Global Governance project, whose aim is to decipher the transformation of global governance under way in a series of fields and assess the effectiveness of the emerging global governance arrangements.

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IFC and Amundi’s innovative partnership to finance green projects in Emerging Markets Xavier Musca

Deputy Chief Executive Officer to Crédit Agricole SA, Chairman of Amundi Group

Frédéric Samama

Head Institutional and Sovereign Clients Coverage, Amundi Long-term investors are increasingly becoming aware of climate change risks and the need to take measures that will curb them. Despite this growing awareness, however, there is still a lack of products to help clients align their portfolio in the low carbon economy and finance the massive needed green infrastructure. This constitutes the foundation of Amundi Planet Emerging Green One (AP EGO), launched in February 2018 by Amundi and International Finance Corporation (IFC). To date, it is the largest green bond fund in the world having raised $1.4 billion from institutional investors and expected to deploy $2 billion by 2025. The fund’s sole focus is emerging markets. The origins of the strategy are rather notable, with both Amundi and IFC having decided to collaborate and develop a game-changing approach with multiple facets. To begin with, IFC and Amundi wanted to raise the largest green bond fund ever, a feat that would send an important message to market participants on the untapped investment opportunities in emerging markets. By raising $1.4 billion, AP EGO became the largest green bond fund ever. Secondly, AP EGO addressed the costly gap between the low yield environment in developed markets and the financing needs for extensive green infrastructure in developing markets. By taking note of the most common bottlenecks that impeded institutions from making investments in emerging markets’ green assets, Amundi and IFC were able to design pragmatic solutions to overcome these challenges. The most common bottleneck

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was the perception that investing in emerging markets led to high levels of risks for institutional investors. To respond to this, IFC implemented a risk-sharing mechanism through a junior tranche in order to offer private institutional investors an appropriate risk-return from the senior tranche in line with emerging market debt premiums. Investors had also expressed their hesitance to having risks associated with infrastructure projects in general and even more so in emerging markets. As a solution, it was decided that AP EGO would have a strategic focus on financial institutions issuing green bonds who, in their capacity as intermediaries, would repackage the proceeds into relevant financing for green projects. Financial institutions would play an important role by offering some diversification, doing the due diligence, implementing the necessary currency swaps, and so forth. As a result, the investor’s counterparty risk lies with the financial institutions and not the projects themselves. Both the aforementioned mechanisms allowed investors to engage in emerging markets and in the financing of infrastructure, both investment opportunities that have been long deemed as “too risky”. Another important aspect in the

launching of AP EGO was the mobilization of institutional investors. The fundraising campaign conducted jointly by Amundi and IFC saw a total of $1.4 billion committed from sixteen institutional investors. The investor base was largely diversified and included other notable development institutions such as EIB, EBRD and Proparco and large European and private investors (representing 77% of the subscriptions) such as Alecta, AP3, AP4, APK Pensionkasse, Crédit Agricole Assurances, ERAFP, LocalTapiola, or MP Pension. This was a sign of strong commitment from institutional investors and, for some, a first move into emerging markets and green bonds. Third, IFC developed a technical assistance facility aimed at building innovative supply streams to compliment the fund’s investments. IFC’s Technical Assistance Facility fosters the development of green bonds aligned with international standards, notably the Green Bond Principles, through three pillars. Firstly, it seeks to deliver training to emerging market bankers on the issuance of green bonds and the expectations from market participants during the asset’s life. Secondly, IFC provides transaction support, notably for external reviews and impact reporting of green bonds. Lastly, the program organises global and regional events that gather local banks, investors, market practitioners and policy makers. This makes AP EGO the first comprehensive program focusing on both the supply and the demand for green bonds in emerging markets. Fourth, the Amundi-IFC partnership in AP EGO is a novel way of participating in the new business

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model of development finance institutions. Traditionally, these institutions have been limited to financing projects using their balance sheets. Today’s model, however, revolves around unlocking the capabilities of other investors by leveraging their capital and creating markets with impact. This follows the realization of the need to revisit the way multilateral development banks are organized; and further develop financial innovation when it comes to public-private partnerships. For infrastructure spending, such innovation and collective cooperation is required to address the critical infrastructure situation in emerging markets. Ultimately, institutional investors, multilateral development banks and regulators have a responsibility to recognize this potential alignment of actors and act on it. Public money will not be replaced by institutional investors but instead should be reallocated and focused in a pragmatic way in order to leverage private capital that will benefit society as well as institutional investors. The success of this new business model for development institutions became evident when AP EGO achieved its ambitious fund raising objectives in a short period of time, won multiple awards, and received early attention from the likes of Lord Nicholas Stern or Christiana Figueres; both applauding the growing efforts of the public and private sectors in complementing each other’s climate finance efforts. For all parties involved, welcoming this new paradigm requires courage, innovation, and leadership. In conclusion, Amundi and IFC are proud to have brought the proof of concept on how to finance green

infrastructure in emerging markets. By supporting the new business model for development institutions, AP EGO played a part in tackling future infrastructure challenges in emerging markets while simultaneously creating new opportunities for market participants that go beyond the current international financial and monetary systems. Indeed, this complements the work of the G20 Eminent Persons Group on Global Finance Governance by furthering its objective to recommend reforms on the global financial architecture and governance of the system of international financial institutions. Reforms and financial innovations, hand to hand, will pave the path for stability and sustainable growth. ◆

Xavier Musca: After becoming adviser to the head of the Inspection Générale des Finances in 1988, he joined the French Treasury in 1989, and in 1990 became head of the European Affairs Bureau. In 1993, he joined the cabinet of prime minister Édouard Balladur as technical adviser, before returning to the French Treasury in 1995, successively as head of the Financial Market Bureau and then as Deputy Director for Europe and Monetary and International Affairs in 1996 and head of the Division for the Financing of the Economy as of 2000.He was appointed Principal Private Secretary to Francis Mer, Minister of the Economy and Finance, from 2002 and 2004. In 2004, he was made Director General of the Treasury and Economic Policy (DGTPE), a newly created body bringing together the French Treasury, the department of external economic relations and the department for forecasts and economic analysis. He became Deputy Secretary General of the French President’s Office in 2009, in charge of economic affairs, becoming Secretary General in 2011. He has been a Knight of the National Order of Merit since 2000 and the Legion of Honour since 2008 and is also a Knight of the Order of Agricultural Merit.Mr Musca is a graduate of the Institut d’Etudes Politiques in Paris (Sciences Po) and the École Nationale d’Administration (Léonard de Vinci class).

Frédéric Samama: Head Institutional and Sovereign Clients Coverage, joined Amundi in 2009. He is the founder of the SWF Research Initiative. Formerly, he oversaw Corporate Equity Derivatives within Credit Agricole Corporate Investment Banking in New York and Paris. During his tenure, he developed and implemented the first international leveraged employee share purchase program, a technology now widely used among French companies. He has advised the French Government in different areas (employee investing mechanisms, market regulation, climate finance, etc.) and has a long track record of innovation at the crossroads of finance and government policy. Over the past few years, his action has been focused on climate change with a mix of financial innovation, research and policy making recommendations.

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The New Space Race: Who Will Take the Lead ? The new era of space exploration is more international, with more players, and more advanced than ever. By Ana C. Rold

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Fifty years ago,

when we landed the first men on the moon, the symbolism of the achievement for humanity was the result of a space race that played out primarily within the geopolitical struggles between the United States and then USSR. Today, the new era of space exploration is more different than ever: itâ&#x20AC;&#x2122;s more international, with many more nations setting moonshots (or plans to land to Mars), more players overall with private sector individuals and companies entering the fray, and more advanced than ever, with the advent of groundbreaking new technologies. As human exploration into space continues to advance forward, the dream of sending humans to colonize the moon, explore Mars, and travel beyond our solar systemâ&#x20AC;&#x2122;s outermost reaches will soon become a reality. But instead of governments pioneering on this front, it may very well be private companies that lead the future into space flight. Indeed, while colonizing planets and travelling to far off galaxies may not be possible for quite some time, sending private citizens into suborbital space to take a snapshot of the earth from above may become a reality within the next year. In fact, with NASA partnering with private companies such as SpaceX and Blue Origin on projects based around the creation of reusable spacecrafts capable of carrying both payloads and human passengers to and from the International Space Station as well as other similar â&#x2020;&#x2019;

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As human exploration into space continues to advance forward, the dream of sending humans to colonize the moon, explore Mars, and travel beyond our solar systemâ&#x20AC;&#x2122;s outermost reaches will soon become a reality.

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→ missions centered around sending humans into the deeper reaches above, the personal spaceflight industry may very well be on the verge of taking off. While government agencies have traditionally been the leaders in ventures into outer space, the gradual increase in commercialized space enterprises clearly shows that this paradigm is shifting. According to Scott Hubbard, an adjunct professor in the Department of Aeronautics and Astronautics at Stanford University, somewhere around 75 percent of the space enterprise industry is already commercialized. And with NASA’s Commercial Crew Program—a program in which NASA partners with commercial companies to develop U.S. spacecrafts designed to transport astronauts to and from the International Space Station—the experience and know-how that NASA provides combined with the speed and agility of private companies may very well be the catalyst needed to launch the private spaceflight industry. Similarly, with NASA’s budget nearly five times larger than the next biggest national space agency, funding is also no longer an issue for private companies, and NASA itself can begin making a business case not only for sending humans into suborbital space, but eventually deeper space explorations as well.

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One of the largest and most widely known private companies that has partnered with NASA is SpaceX, established in 2002 by Elon Musk with the ultimate goal of getting humans to Mars. In order to accomplish this goal in as efficient and cost-effective way as possible, SpaceX has been working on creating a new model of reusable rockets, and has already been quite successful to this end having already conducted over 20 test launches of reusable rockets into space without incident. While these rockets have been mainly used to carry payloads to and from the International Space Station as of yet, the recent test launch of the Dragon spacecraft in March of this year shows promise of sending Americans into space as early as this summer. The recent test run of the Dragon— which was built with human transportation in mind and is equipped with software and hardware such as lasers and sensors designed to safely guide the spacecraft toward the ISS and autonomously dock itself onto a newly installed port specifically designed for the project—was met with solid success on its first run, and members of the ISS team were able to successfully enter the Dragon’s chamber without issue. And while the spacecraft has yet to transport an actual human subject, the successful transportation of a mannequin named Ripley bodes well for the eventual shuttling of humans this summer and beyond. Another big contender in the private spaceflight arena is Virgin Galactic, known for their exorbitant spaceflight ticket prices capping off at $250 million per person for a 90-minute flight. Unlike SpaceX, however, Virgin Galactic isn’t concerned with colonizing Mars, but rather the creation of a whole new travel industry—suborbital tourism. And having presold over 600 tickets so far, Virgin Galactic is well on their way to launching and leading this futuristic industry, though a fatal crash during a test flight of their SpaceShipTwo model in 2014 may have set back their timeline by a few years. However, while SpaceX may be preparing to send their version of a reusable rocket into space with human test subjects within the next few

months, technically Virgin Galactic has already done so twice—though whether or not these passengers truly reached true outer space is up for debate. Reaching an altitude of nearly 56 miles above sea level, Virgin Galactic’s new SpaceShipTwo model VSS Unity flew higher than the Federal Aviation Administration’s definition of where space begins, but lower than another widely accepted boundary between Earth and space known as the Karman Line, which sets the boundary at somewhere around 62 miles above sea level. And while the three passengers onboard the VSS Unity described the Unity’s flight as high enough that they were able to see a black sky above them and the blue Earth below, the question still remains as to whether this journey was truly the first human flight by a private company into space. In fact, the question of where airspace ends and outer space begins turns out to be a rather important one. Politically, international treaties define space as being free for exploration and use by all. However, as the airspace above countries remains sovereign, in the event that nations have a different definition of where the boundary

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SpaceX has been working on creating a new model of reusable rockets, and has already been quite successful to this end having already conducted over 20 test launches of reusable rockets into space without incident.

between these two spaces is, a conflict of interest could arise between countries and private companies as the space tourism industry and other commercial space ventures continue to develop. Despite the importance of such a boundary, however, several competing definitions exist depending on different factors, such as whether you define the boundary between Earth and space based on orbital and aerodynamic forces or instead the point at which atmospheric drag becomes noticeable. Traditionally, many have prescribed to the boundary set by Hungarian physicist Theodore von Karman that the boundary between Earth’s atmosphere and space is roughly 62 miles above sea level, or around 100 kilometers. However, other entities such as the Federal Aviation Administration, U.S. Air Force and National Oceanic and Atmospheric Administration defining the boundary at 50 miles above sea level—and NASA’s mission control places this line at 76 miles above sea level, where atmospheric drag becomes noticeable. While a definition is necessary, no universally accepted formal definition has been adopted, an issue that will undoubtedly cause

many problems for the private space tourism industry as it continues to develop, unless remedied soon. Ultimately, whether or not a formal definition of the boundary between the Earth’s atmosphere and space can be agreed upon, and whether or not personal space flight finds major success within the next few months, the private space flight industry will undoubtedly continue to evolve in the years to come. With major companies such as SpaceX and Virgin Galactic— and other private entities such as Blue Origin and Orbital ATK—working continuously on ventures in privatized space flight, we are closer than ever before to finally sending not only trained astronauts, but also private citizens into space—and what was once a dream may soon become a reality. ◆ About the author ANA C. ROLD is the Founder and Publisher of Diplomatic Courier magazine and the Editorin-Chief of the G20, G7, and APEC Summit CAT Company publications. Rold teaches political science 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. OSAKA_JAPAN

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

Japan’s First Comprehensive Fishery Product Traceability System A project is about to start to address comprehensive fishery product traceability boosted by IoT(Internet of Things) technology in Japan. Through the system development utilizing the blockchain technology, it is possible to work towards the achievement of the SDGs, the challenges common to all human beings today. By Shoichiro Kawano

A South African

brand has recently taken the spotlight on the fashion scene. The crocodile leather handbags, sold by the popular South African brand “Okapi” and priced about 120,000 yen, were sold out just hours after going on sale. Hanneli Rupert, the founder and owner of Okapi, told that they have actually become a true luxury brand by ensuring the traceability of our raw materials in an interview by Forbes. She also stated that the crocodile leather is a by-product of other products and not involved in the destruction of nature. Traceability is essential to creating a sustainable society, which is the goal of the SDGs, as well as one of the requirements for improving product competitiveness. Honma Gyogyo, a fishery company operating in Muroran city in Hokkaido, stands out as having Japan’s first comprehensive fishery product traceability system which enables information about their fishery products to be traced from the sea to the consumers. The company has about 50 employees. It has four Danish seine trawlers with a capacity of 140 tons to catch Alaskan pollock and generates about 1.5 billion yen in annual sales. While the fish catches must be limited in a certain level to prevent stock depletion, the President Shinkichi Honma was considering how they could improve fishery profits in other ways. They had already introduced energysaving vessels to save on fuel cost. G20G7.COM

They had to promote innovation of fishery in order to adapt them to developed society by reviewing the misfits happening between historically practiced traditional fishery and installed technology. The President was also feeling a large innovation “gap” between the traditional fishery practiced for centuries and the developed society of today. He thought to develop a smarter fishery practice by digitalizing vessel logging and fish catch information to share them with the workers waiting for the vessels at the port. Around that time, he met Nobuyuki Yagi, Professor at Graduate School of Agricultural and Life Sciences, the University of Tokyo, who researches fishery product pricing mechanisms. The president asked “We would like to digitalize vessel logging.” Professor Yagi had known that Alaska pollock can be a good fishery product to export based on the knowledge from his research. He smiled and answered to the President “How about introducing a comprehensive traceability system for Alaskan pollock? I’m sure that such system can be an innovative system for our future fishery.” It was at that moment that the fishery company in Hokkaido and the leading technology of the University of Tokyo decided to cooperate to develop Japan’s first comprehensive fishery product traceability system. The challenge to achieve it was a distribution channel of Alaskan pollock.

Alaskan pollock are sometimes exported as they are, but often seperated into the body and roe and are used to make boiled fish paste. They are distributed to consumers via a chain of many actors, such as brokers, processing firms, transportation, and retailers. Logging all deals in the food chain is required to achieve traceability. Masazumi Akazawa, once a researcher at the University of Tokyo, who now researches blockchain, was identified. CREATORS COIN Corporation, the company he founded, is now in charge of the system development for this project. His vision is to log date/time and locations of vessels when Alaskan pollock are caught and also log all deals through the distribution process including fishery ports and processing firms, utilizing the blockchain characteristics that enable stakeholders to own their appropriate right to access blocks of information (this technology is called Smart Contract) while logs are safely sealed to avoid inappropriate information leaking or being illegally manipulated. Consumers are able see all the information through the distribution process using the Timeline feature, for example, by just tapping a dedicated app on their smartphones. With this system, consumers will be able to buy safer food with a transparent distribution channel. This would also make it easier to locate the cause in case of food poisoning. The system will have further benefits

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in addition to the great efficiencies mentioned above. It has been pointed out that the system is also expected to prevent fish poaching. According to the report in 2016 by the Food and Agriculture Organization of the United Nations (FAO), it is suspected that 30% of the fish catches in the world are illegal. A report published in Japan last year, “Sakana to Yakuza” (written by Tomohiko Suzuki), stated that half of the sea cucumbers caught in Japan, which are treated as a luxury foodstuff in China, are caught illegally. Fish poaching of sea cucumbers, abalones, sea urchins, and eels could be a business of over 10 billion yen. If there were only fish with traceable logs in the market, it would be possible to prevent illegal fishery deals, saving fishery resources which are managed with great effort by local fisheries from overexploration. Furthermore, the 2020 Tokyo Olympic requires “all of its fishery products to be made of fish caught in a sustainable and environmentally friendly way.” It is also virtually impossible to export to Europe without obtaining international certification. The blockchain system will help Japan to establish an eco-certification system that is also applicable overseas. Akazawa, who is in charge of system development, also points out, “For example, if a fisherman uses a fishing net that is friendly to the environment, it is possible to add information about

Japan’s Fisheries Agency has begun to make efforts to improve the fishery industry, such as working on a drastic revision of the Fisheries Law in 2018, which was the first in 70 years. the fish net to the fish caught by the fisherman. Using the characteristics of the blockchain to convey useful records to consumers, the seafood itself can obtain additional value. “ Japan’s Fisheries Agency has begun to make efforts to improve the fishery industry, such as working on a drastic revision of the Fisheries Law in 2018, which was the first in 70 years.

Furthermore, if a comprehensive fishery product traceability system that links the sea to consumers using blockchain technology can be put to practical use, the value of the Japanese fishery industry may increase internationally. In addition, cooking with fish connected to their source in this way may provide an opportunity for people to experience the spirit of SDGs. ◆

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G20 Japan Attracts Millennials for their SDGs Innovation Hubs By a Co-representative Mentor for CePiC

1. G20 Japan and its aiming “human-centered future society” Japan hosts its first ever G20 Summit and Ministerial Meetings in 2019, a decade after the 1st meeting on the 2008 financial crisis. Japanese PM announced that Japan is determined to lead global economic growth by promoting free trade and innovation, achieving both economic growth and reduction of disparities, and contributing to the development agenda and other global issues with the SDGs at its core, incluring quality infrastructure, global health, climate change, ocean plastic waste, digital economy, aging and diversified society, etc., and through these efforts, Japan seeks to realize and promote a free and open, inclusive and sustainable, “human-centered future society.” G20 Summit and 8 Ministerial Meetings are, at the same time, perfect opportunities for people from all over the world to see and experience not only a newly revitalized and transforming Japan but also the wide-ranging appeal of the various regions that will host these consequential discussions. Fukuoka, for example, hosts G20 Finance Ministers and Central Bank Governors Meeting (G20FM&CBG), “G20 Week” or other G20 related events in Fukuoka, G20 Young Entrepreneurs’ Alliance (G20 YEA) Summit and Digital/ Data 20 (D20), which is the first Cief Digital/Data Officer (CDO)s’ International Conference in the world. G20FM&CBG and FM (Depity PM) himself represents the very G20’s role and history. In November 2008, he was in Washington, D.C. to take part in the very first G20 Leaders’ Summit as the PM of Japan. It was in response to the Global Financial Crisis. To prevent a repeat of the Great Depression, The G20 Leaders gathered with common purpose and joint resolve. Since then, G20G7.COM

G20 members have agreed and implemented decisive policy actions, including financial regulation and expansionary fiscal policy. Japan’s presidency will focus on the following three themes. First, we need to act on the “risks and challenges to the global economy”, including long-term structural issues such as global imbalances and aging. Second, we will discuss how the G20 could accelerate concrete actions to strengthen growth potential. Here, we cannot do without discussing: (i) investment in high-quality infrastructure and human capital, as well as (ii) how to ensure debt sustainability in low-income countries. And third, we will take up “economic and social structural changes stemming from technological innovation and globalization”. Specifically, we will discuss how to address issues regarding the tax challenges of digitalization, financial market fragmentation and financial innovation.

2. Introduction of Junior Chamber International (JCI) Japan for G20 Junior Chamber International Japan (JCI Japan,) an organization holding members between 20 and 40 years of age, has aimed to build a bright and prosperous society since its establishment in 1951. Throughout Japan, there are 694 Local Organizations with about 35,000 active members promoting and carrying out nonprofit projects. JCI Japan is officially affiliated with Junior Chamber International (JCI), whose World Headquarters is located in St. Louis, Missouri, in the United States of America. JCI Japan members are

cultivating relationship with approximately 155,000 JCI members all around the world, and are working together toward the same goal. JCI Japan makes direct recommendations to the national government and is developing a movement to promote specific national interests in response to a wide range of social, national and international regional issues. Directivity of this year’s Junior Chamber International Japan With the goal of achieving a society where no one is left behind, JCI Japan promotes Sustainable Development Goals SDGs that are also a common goal of the United Nations. JCI Japan has adopted the “SDGs Promotion Declaration” and is promoting projects that look to the world. The projects include G20YEA’s holding in Japan, business matching between Japan and China, and ongoing projects such as Japan-Russia exchange and “SMILE by WATER” campaign. Approach to SDGs of JCI Japan JCI Japan has been working on the spread and enlightenment of SDGs and the achievement of SDGs since the 2015 JCI Kanazawa Conference. This year, with the aim of becoming the best SDGs promotion organization in Japan. JCI Japan is promoting projects with SDGs goals based on partnerships in all projects. First of all, we concluded the “SDGs Tie-up Declaration” with the Ministry of Foreign Affairs, which leads the SDGs policy as a nation, and by collaborating with the government, we are promoting SDGs to individuals,

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areas and companies. Then, the Declaration of SDGs promotion” is adopted by the consensus of 694 areas in Japan, and projects for achieving SDGs are implemented throughout Japan. Furthermore, in order to solve social issues in Japan where have a high gender gap index, SDGs goal 5 “Achieve gender equality” is as the key theme, and more than 4,000 participants from all over the world gather together, “JCI Kanazawa Conference” has been held. At this international conference, we have announced an action plan to achieve Goal 5 by individuals, organizations, and entrepreneurs as a JCI Japan in cooperation with the social solidarity movement “HeForShe” promoted by UN Women. In addition, we implemented a training program to create “SDGs ambassadors” that lead to the promotion of specific SDGs in small and medium-sized companies and regions that account for about 99% of

3. SDGs Innovation Hubs and CePiC SDGs is the common goals set in 2015 by all steakholders who got togather in UN Headquarter and agreed to realise sustainable development and a world where no one is left behind in 2030. The leaders of SDGs, people in civil societies, people in industries, governments and

the total number of companies in Japan, and we were able to create human resources which lead SDGs promotion unprecedented in the world The achievement of these many projects will be transmitted at the “Summer Conference” where the “World SDGs Summit” is themed on the summit, more than 10,000 members and many companies and organizations that have formed partnerships will gather. As JCI Japan, we will build partnerships with many companies and organizations, and strongly lead SDGs promotion in Japan toward achieving SDGs. G20YEA Summit: An organization of G20 member countries that promotes and develops youth entrepreneurship as a driving force for economic revival, job creation, innovation, and social change is the G20 Young Entrepreneurs Alliance (G20 YEA). Alliance members are represent more than 500,000 youth entrepreneurs, and every year the G20

academia, like UNU, get together, learn from each other and take action for better World Shifts at SDGs Innovation Hub with a SMART mom, Mother Earth with Geo Voice (MEGV), for your living Innovation. You can have innovative best practices, visions, real and virtual information as Block Chained Data to make your living life SMART vivid and

YEA holds a summit of hundreds of youth entrepreneurs from around the world, we have made recommendations to the G20 conference, the government and related organizations in each country sharing national initiatives and examples. JCI Japan is a member of this organization as a representative of Japan, and in May 2019, in conjunction with the G20 Summit in Japan the following month, we held the G20 YEA Summit in Fukuoka City, Japan. In this summit, discourse various functions such as lectures of researchers who are gathering attention from around the world and sessions by leading entrepreneurs were set up under the theme of “Imagination Economy ~ for a Sustainable Future ~”which how the new technology raise what kind of innovation. The joint proposal of 20 countries born at this summit also incorporates JCI Japan’s “self-decision right of information concerned by rapid evolution of the latest technology represented by AI, blockchain and IoT” and the solutions to social issues that young powers of 20 countries have considered will cause global change.

through GPS IDs “Geo Voice” on “Mother Earth” on the Earth. SPACE: We use Real and Virtual Space MATCH: We match government, civil society, industry and academia AMORE, LOVE: We’re always with Love REALISATION: We realise our Vision, Mission and Value TIME: We communicate our Past, Present and Future SPACE: SDGs Innovation Hub uses Real and Virtual Space. Mother Earth authorial Data currating HUB with “Geo Voice” GPS Mapping and Block Chain System, your SMART mom. All the authorial Data on Mother Earth, virtual earth on the internet, are registered in Block Chains as “Geo Voives” on the GPS Mapping System, and are currated and shared with all the creatures as accumulated wisdoms of history, culture, society, science, → OSAKA_JAPAN

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→ economy, nature, environment and geology, as your loving SMART mom full of love and innovation.

MATCH: SDGs Innovation Hub maches government, civil society, industry and academia. MEGV as a vertual space, togather with the Hub as a real space, maches government, civil society, industry and academia who get togather, communicate, learn, teach, nurse and act togather. The lead of MEGV and SDGs Innovation Hubs for our world where no one left behind in 2030, people in civil societies, and the lead to make their innovation and co-creation sustainable, peaple in industries. We will tell the world best practices of our OWN SDGs in Blue Mountain - Aoyama, Tokyo, Asia-Pacific, we will co-describe our vision and load map for current UN SDGs, we will manage and evaluate our development and progress, and we will co-create Next SDGs with people all over the world. AMORE:：We’re always with LOVE. We’re developing ex-change e-Book “Biografy of my Love” joint authorship system on “Geo Voice” to find your new and better life that match your vision, value and mission. This e-Books express how each has been born, grown up and loved, are registered as copyrighted works in Block Chains on “Geo Voice” and deliver their emphacy with lovaly life of all the creatures from your foot print and community to the world. Everybody can be authoers of e-Books, find their new strength, ability and possibility and exploit them through joint authorship system that they currate and consult their parents, children, friends, colleagues or customer each other or one another via currencies, they exploit their partners or own new ability via this “Recurrrent” G20G7.COM

ed-tech system and “Johari window” theory, and they lead their loves to the world foll of love and innovation where no one left behind. REALISATION:：We realise our Vision, Mission and Value. We will kick-off a global synposium in 2020 to describe our accurate vision and roadmap for 2030 SDGs with collaborated groups, and we will accumulate activities and outcomes of small workshops and forums. We will co-describe our accurate vision and road map for current UN SDGs in this symposium, manage and evaluate our development and progress, and co-create Next SDGs with people all over the world. TIME: our Past, Present and Future. In the United Nations UNESCO presents World Heritage, World Cultural, Natural and Industrial Heritage, full of Wisdoms of History, Culture, Society, Science, Economy, Nature, Environment and Geology, which will lead us to everyday in Living Innocation with loving. SMART: mom full of Love and Innovation, and to peaceful and sustainable international society and civilization where no one is left behind.

The Common earth Park International Community (CePiC) is non-profit “place-making” organization, based on cross-sectoral and international collaborations with business, government, academia and civil society. At the 3rd UN World Conference on Disaster Risk Reduction 2015 in Sendai Japan, CePiC members organized the panel forum, “Japan’s Disaster Resilience – sharing its secret and challenge with the world”, and at the G7 Ise-Shima Summit 2016 in Mie Japan, they declared to global leaders that they will make any park, virtual or real, place for a visitor’s Resilient Life and its Sustainable Development, for people’s National Resilience and for their UN Sustainable Development Goals (SDGs) with their own SDGs Innovation Hubs/Parks. G20 Japan attracts millennials for their SDGs Innovation Hubs/Parks. Japan is aiming “human-centered future society” as the PM said, in every SDGs Innovation Hubs/Park, every millennials lead us all, young and old, to realize our own SDGs, vision, mission and value thorough our Living Innovation with our SMART mom. The CePiC aims to co-create SDGs Innovation Hubs/Parks as real places with millennial leaders like the JCI Japan, and to co-create Mother Earth with Geo Voice (MEGV) as a virtual place or a SMART mom with all the social and digital innovators in governments, international organizations, civil society, industry and academia all over the world, as we declared in G7 Japan 2016, from here in G20 Japan 2019. ◆ We’ll wait for your participation and assistance. Please see this CePiC web-site: cepic.net Contact us via e-mail: cepic.info@gmail.com CePiC Tokyo Office: Minami-Aoyama, Mi nato-ku 107-0062 Tokyo, Japan

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

Governance in the Age of Ignorance: The Role of Knowledge Infrastructures By Franz Waldenberger

Corporations

and research institutions worldwide are constantly adding to the stock of knowledge. The information uploaded in the world wide web or shared through social networks is growing exponentially, while smartphones and other connected devices are generating trillions of data ready to be analyzed by ever smarter algorithms. Better knowledge and more information should enable us to solve many of the problems we are facing. The potential for a bright future in the digital age is enormous. However, seen from a liberal and humanitarian perspective, there are also fundamental risks. Connectivity increases interdependence. We concede control over our lives. Our wellbeing is increasingly determined by decisions made by others. This loss of control is further aggravated by our growing ignorance. Our cognitive abilities have long since been unable to keep pace with the growth of knowledge and information. We know less and less about the world we live in—a truth we tend to ignore, because it can be frightening. How can humankind exploit the potential created by the growth of knowledge and information, while containing the ensuing risks? This is not only a question of governance. People with the best of intentions make mistakes. Legislators for example have to decide about financial system

stability, energy reform, genetically modified food or self-learning algorithms. They normally have no special education in the respective field. They cannot but rely on experts. However, experts seldom agree, and advice is often mingled with vested interests. We cannot be sure that decision makers get the best advice possible. However, we can try to increase the likelihood of adequate information. A key factor is decision makers’ access to knowledge infrastructures. Knowledge infrastructures comprise content, institutions and personal networks. At the content level, they connect past and present scholarly work, research findings and layers of expertise spanning the boundaries between specialized fields of knowledge, organizations as well as professionals and laypersons. Institutionally, they consist of schools, universities, research institutions, think tanks, libraries and various providers of media content. Last but not least, knowledge infrastructures depend on how people as explorers, bearers, transmitters and users of different pieces of knowledge and information are connected. Quality and vitality are essential performance parameters. Quality refers to openness, accessibility, transparency and verifiability of information. Vitality includes the constant adjustment to new issues, new knowledge and new technologies.

It would be naïve to think that the quality and vitality of knowledge infrastructures could be centrally designed. The task is far too complex. G20G7.COM

It would be naïve to think that the quality and vitality of knowledge infrastructures could be centrally designed. The task is far too complex. Spontaneous order and self-governance are natural constituents of governance architectures. Knowledge infrastructures are the outcome of competition and collaboration between public as well as private for profit and non-profit organizations. This publication provides an excellent example. The three institutions presented in the following pages have been established by private initiative and private money. The same holds true for Innovative Nurture Community (inc.), a newly founded

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

social science and humanities institutes abroad funded by the Federal Ministry of Education and Research and organized under the umbrella of the Max Weber Foundation. Although small in scale, the ten institutes represent innovative answers to the need to conduct research in the social sciences and humanities with a regional and comparative focus. Their transnational research networks promote not only German scholarship, but also foster exchanges and mutual understanding across cultures and beyond national interests. Besides public money, public regulations, too, form another, though often neglected channel through which public authorities can promote the direction of innovation and knowledge accumulation as well as the quality of knowledge infrastructures. The most prominent examples are requirements to test, evaluate and document the environmental and health impact of new products. Similar regulations are needed in the case of big data and AI. The digital transformation, if managed in a responsible way, has the potential to improve the quality and vitality of knowledge infrastructures, thus giving us better reason to feel assured despite our unavoidable ignorance. ◆

independent network of influencers, which generously sponsored these pages. Together with many other similar initiatives, they are proof of the quality and vitality of knowledge infrastructures in free societies. The UWC movement grew out of the experiences of two devastating world wars and the belief in the power of education in fostering international understanding and forming ties among future leaders. The Renewable Energy Institute was founded by Masayoshi Son, a leading Japanese entrepreneur, in response to Japan’s nuclear disaster following the March 11, 2011 earthquake and tsunami. It has

effectively broken the dominance of Japan’s incumbent electricity suppliers as advisors in matters of energy policy. As an independent think tank at the intersection between technology and society, the Berlin-based Stiftung Neue Verantwortung spans boundaries between scientific research, policy makers and civil society. It fills a vital gap in the public discourse pertaining to the regulation of big data and AI. Democratic governments, too, fulfil important roles. Education, research and research infrastructures rely on public funding. The German Institute for Japanese Studies, which I am heading in Tokyo, is one of ten German

FRANZ WALDENBERGER is director of the Tokyo-based German Institute for Japanese Studies (DIJ). His research focuses on the Japanese economy, corporate governance and human resource management. He is a graduate of the UWC of the Atlantic in Wales and an active networker in the knowledge infrastructures connecting Asia and Europe. OSAKA_JAPAN

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

Global Energy Transition is Unstoppable By Tomas KĂĽberger

Energy

opportunities are growing as the industrial experience has brought down the costs of electricity from renewables. In the 20th century, resource depletion and greenhouse gas emissions appeared to set energy constraints on global human development. Today, the dramatic reduction of costs has made renewable electricity generation as the lowest cost source of new electricity in most parts of the world, in a growing number of places without subsidies. Still, we may fail to utilize these opportunities at sufficient speed to avoid the risks of unmanageable rate of climate change. In order to succeed a combination of intelligent and determined political and industrial leadership is desired. Opportunities are illustrated by the rapid development of solar and wind electricity in the United States, and even larger capacity installations in China. The economic competitiveness developments are also visible in Europe were in 2017, the first commitments by large power producing companies to deliver electricity from off-shore wind without subsidies off the German and later Dutch North-sea coast-lines. This achievement was possible after years of developments involving subsidies from governments, and development efforts by suppliers of power plants.

Important for success was the development of an off-shore wind infrastructure consisting of dedicated ships and harbor facilities. And not least, a workforce accumulating experience and know-how. Economy of scale from larger individual power plants as well as larger parks and fully deployed infrastructure made possible by a decade of expanding projects in northern Europe provide an example for other parts of the world to follow. We can see just that happening in parts of Asia and North America. While off-shore wind is often a business for established energy companies, on-shore wind is more often involving new actors and so is the development of solar electricity. Wind power plants are often owned and controlled by new sets of actors including customers, land owners and financial actors detached from the traditional energy industry. A mix of smaller and larger wind power parks contribute a growing share of electricity generation in many countries. In Denmark close to half of the electricity is generated from wind energy, and in other countries the share is growing fast, where investors no longer depend on subsidies, but instead rely on transparent electricity markets under neutral system operators which provide fair access to the new entrants competing with the incumbents.

Solar electricity is providing households cheaper electricity than the conventional power supply system in most parts of the world. The economies of scale are available in the manufacturing of the equipment while decentralized electricity production offers many advantages. G20G7.COM

Solar electricity is providing households with cheaper electricity than the conventional power supply system in most parts of the world. The economies of scale are available in the manufacturing of the equipment while decentralized electricity production offers many advantages. Blocking development is often legislation and institutionalized tradition developed in the 20th century for centralized system of large thermal power plants.

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They may soon both be proven wrong. Renewable electricity is already cheaper than crude oil per unit energy. Thus, instead of the 20th century model where fuels are used to produce electricity at a rate set to balance the electricity grid, renewable electricity may be used to substitute oil and then to produce fuels. This fuel production will be guided by the market prices at a rate that will keep the balance between production and consumption in the electricity grid. We see already a growing use of electricity in the transport sector. Increased demand for batteries for vehicles is bringing down cost of batteries with experience and economies of scale in manufacturing. This will widen the market for batteries in the electricity grid as well. Transmission of electricity with higher voltage and lower losses has taken large steps forward driven by China’s need to supply its growing economy from distant resources. Batteries, production of fuels from electricity, and ultra high voltage transmission will provide for a new era where renewables may provide a growing global prosperity beyond the 20th century resource and environmental constraints. But the speed of change will depend on political and industrial leaders who are guided by the interest of the people in the world – nothing less. ◆

Wise political leadership may provide opportunities for individual electricity customers to produce electric power while reducing the traditional market power of large electricity companies. For millions of the world’s poorest, solar electricity has provided the opportunity to get access to low cost electricity and batteries providing light in the evenings, opportunities to charge mobile phones, enjoy radio and television and a service from a

refrigeration box. This has been achieved without grid infrastructure and without the involvement of any subsidies or aid systems. A solution to the most important desires of the poor. Some claim this is insufficient as it is only solving the electricity supply without replacing the use of fossil fuels. Others say these power sources are of little value as they are not even able to keep the balance in the electricity grid.

TOMAS KÅBERGER is Executive Board Chair, Renewable Energy Institute. He is a graduate of the UWC of the Atlantic in Wales OSAKA_JAPAN

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

The Think Tank at the Intersection of Technology and Society By Stefan Heumann

Many excellent

research institutes and think tanks already contribute to the fields of foreign policy, economic policy or environmental policy in Germany. Issues related to new technologies, however, lack comparable expert organizations. The Berlin based Stiftung Neue Verantwortung (SNV) fills this gap in the landscape of German institutes and think tanks. Our work ranges from cybersecurity and cyberdiplomacy to questions regarding the impact of technologies on the future of work. We study the challenges associated with a data-driven economy, examine the tension between digital rights and national security, and develop new ideas how digital technologies can foster the transition to green energy. And we investigate how artificial intelligence has emerged as a key technology that poses new challenges for international cooperation and competition. The field of technology does not only need new think tanks with specialized expertise but also a new model for think tanks. We live in an era of rapid technological change. The Internet and digital technologies challenge governments around the globe in fundamental ways. Today new digital products and services can be rolled out

instantly to billions of users around the globe. Whether it is the emergence of crypto-currencies, digital disinformation or new cybersecurity risks, governments are struggling to quickly grasp the implications of new technologies in order to harness its opportunities and address the risks. To effectively respond to these challenges requires a different approach to policy-making: an approach that focuses on collaboration and dynamic testing and development of analyses and policy-proposals. At SNV we have developed methods for collaborative and iterative policy-development to address fundamental challenges of technological change. We bring together experts from government, academia, civil society, and tech companies to test and further refine our analyses and ideas. This collaborative working method allows for different perspectives to participate in the process early on, impracticable ideas to be quickly discarded, and policy proposals to be developed that governments and other stakeholders can actually work with. Many political issues associated with new technologies are cross-sectional issues that change at a rapid pace. The combination of expertise from different sectors and communities, continuous testing of ideas and speed thus forms the

The field of technology does not only need new think tanks with specialized expertise but also a new model for think tanks. We live in an era of rapid technological change. The Internet and digital technologies challenge governments around the globe in fundamental ways. G20G7.COM

G L O B A L B R I E F I N G R E P O RT TECHNOLOGY AND SOCIETY

core of the organization. Many technology issues do not only cut across different sectors but also across borders. We work on the national and international level. And for our projects and publications we prioritize agility and speed. We believe that it is important to publish quickly in order to move the debate forward and help governments and other stakeholders to understand emerging challenges and to find solutions. Working with experts from different sectors and backgrounds through SNV’s collaborative platform for policy-development requires a nonprofit funding model that ensures the independence of our work. Our work is funded by a variety of different sources that include foundations, public sector institutions, and businesses. ◆ For more information please visit our website www.stiftung-nv.de/en and reach out to us via email or social media

STEFAN HEUMANN is a Member of the Management Board and Co-Director. Stefan has worked and published on a wide range of issues at the intersection of technology and public policy. Currently, his work focuses on government strategies and policies addressing the economic, social, and political implications of Artificial Intelligence. Stefan is a member of the German Parliament’s Expert Commission on Artificial Intelligence. He is also a member of the advisory board of technology policy assessment of the German National Academy of Science and Engineering (acatech). He was also a member of the extended expert network of the EU High-Level-Group on Artificial Intelligence. Stefan also holds a PhD from the University of Pennsylvania. OSAKA_JAPAN

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

Uniting the World Through Education By Jens Waltermann

Our rapidly

changing world needs a new kind of leadership. Globally-minded, ethical, strong leadership. Leadership that harnesses the power of diversity and thrives in complexity. Leadership that speaks to and includes the younger generation. Leadership as compassionate as it is courageous. This is what we foster at UWC. UWC (United World Colleges) is a global movement with the mission to unite people, nations and cultures for peace and a sustainable future. We recognise that our goal - a more peaceful, just and sustainable world is an aspirational one. But since our founding in 1962 we have had a transformative impact on 60,000 UWC graduates from 160 countries simply by deploying what our late Honorary President Nelson Mandela called the most powerful weapon to change the world: education. There are 18 UWC schools and colleges and dozens of UWC short educational programmes worldwide. Each serves as an incubator for the next generation of global leadership. Many of our alumni lead in their respective fields: science and technology (there are two UWC astronauts), business (from CEOs of Fortune 500 companies to some of the most

innovative start-up founders) and politics (currently, Canada’s Chrystia Freeland and Sierra Leone’s David Sengeh are among our graduates). Along with being highly successful in their chosen pursuits, our alumni bring something special to the table: strong values, an unparalleled level of intercultural understanding, an ability to celebrate diversity and the drive to make a difference. Why? What sets UWC and our graduates apart from those of any other educational institution is, as with most things, a combination of nature and nurture. A UWC education begins with our unique way of finding and selecting students. In nearly 160 countries around the world including all G20 nations, committed groups of volunteers locally seek out and select the most promising candidates for a UWC experience. To ensure the most diverse group of students on our campuses, selections are based solely on candidates’ demonstrated potential, and are independent of their cultural, linguistic, religious or socioeconomic backgrounds. Thanks to UWC’s robust scholarship programme and with the help of our funding partners across the globe, these young people are offered places at UWC schools and colleges and according scholarships →

A UWC education begins with our unique way of finding and selecting students. In nearly 160 countries around the world including all G20 nations, committed groups of volunteers locally seek out and select the most promising candidates for a UWC experience. G20G7.COM

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OSAKA_JAPAN

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

UWC RED CROSS NORDIC Norway UWC ATLANTIC COLLEGE Wales, UK

UWC ADRIATIC Italy UWC CHANGSHU CHINA China

UWC MOSTAR Bosnia and Herzegovina

UWC MAASTRICHT The Netherlands UWC ISAK JAPAN Japan

UWC ROBERT BOSCH COLLEGE Germany

PEARSON COLLEGE UWC Canada

UWC LI PO CHUN Hong Kong USA

UWC COSTA RICA Costa Rica

UWC DILIJAN Armenia UWC THAILAND Thailand

UWC SOUTH EAST ASIA Singapore

UWC MAHINDRA COLLEGE India

UWC Map of Schools and Colleges. August 2018

→ are distributed to meet any and all demonstrated need. Once on campus, students engage with a rigorous, experiential educational programme together with their peers from around the world. Throughout their two years at a UWC college (or longer at one of UWC’s four full schools), students discover their shared humanity, become equipped with the competencies needed to be ethical leaders in a complex and interconnected world and acquire the skills to be innovators for positive social change. Most UWC students are between the ages of 16 and 19, and study the International Baccalaureate Diploma Programme (IBDP), an internationallyrecognised educational programme developed in close collaboration with

WATERFORD KAMHLABA UWC Eswatini

UWC in the late 1960s. The IBDP aims to develop students who have excellent breadth and depth of knowledge – students who flourish physically, intellectually, emotionally and ethically - and together with other aspects of the UWC experience, works to inspire the kind of thoughtful, active leadership our world needs. At UWC, students who would normally never meet - the street kid from Manila, the professor’s daughter from Manhattan and the young Syrian refugee - learn, live and thrive together. The young people who take part in UWC educational opportunities are thus given a holistic view of the world and a sensitivity for sustainable development that remain with them for life, shaping the way they interact with the Earth and with each other.

In this era of rapid globalisation, if we hope to be successful in achieving our collective goals of prosperity, justice, peace and liberty, we need leaders who are able to communicate effectively across cultures, languages and opposing political and economic interests. This is why a UWC education prioritises collaboration, intercultural understanding and empathy. Instead of turning away from their neighbours, and seeking out the “easy answers” to growing problems associated with global competition and mass migration, UWC students and alumni step into action. A UWC education encourages young people to approach issues with complexity of thought, to embrace different perspectives and to contribute to the common good - to be global bridge builders and not protagonists of simplifying populism. One cannot stress enough the importance of strong and selfless leadership in today’s world. Our students learn to exercise leadership, to embrace complexity and diversity and they know that we will only solve our problems together. ◆

JENS WALTERMANN has been the Executive Director of UWC International in London since 2015. A German graduate of UWC Pearson College in Canada and Harvard Kennedy School, he spent 18 years in major foundations and the corporate world before returning to his roots at UWC. He can be reached via info@uwcio.uwc.org. For more information about UWC, visit www.uwc.org or follow “UWC International” on Facebook, Twitter, Instagram or Linkedin. G20G7.COM

G L O B A L B R I E F I N G R E P O RT SOUTH AMERICAN JETS B R A N D E D S T O RY

South American Jets and the Japanese B20 Our Role in Society

South American Jets (SAJ) participates in the G20’s Leaders Global Briefing Report for the second time. Once again, we have the opportunity to participate for the second time, in the G20’s Leaders Global Briefing Report. We thank Mr. Christopher Atkins, publisher and president, for the chance to get involved in such an important project. Indirectly, it makes us feel part of the process, the agreement, and the decision making of the global issues, addressed annually at the G20 meetings. This occasion also gives us the responsibility to be observant about geopolitical, economic, and social changes. As distant participants in the G20, we follow the new global dynamics (Digitization) closely. However, most of all, we believe that this chance makes our role more active, which means that we should be critical and alert with the results produced by the G20’s Summit.

From the Argentine B20 Summit to the Japanese B20 Summit. A look in retrospect Let’s go back to a few months ago, at the closing of the Argentine G20. During the meetings held under the G20G7.COM

The digital era had to become a job-maker, education had to evolve and adapt to the new digital dynamic, taking into account online learning, courses attended by tutors in YOUTUBE, and others. Employment and education are issues where we, as a company, find a common place of interest. SAJ, increasingly aware of its role, evaluates, redirects and focuses its objectives on the new business opportunities present in the digital era. However, the speed in which the business changes, as digital platforms develop, creates a gap in job’s supply. That kind of skills does not exist at the academic level. What makes companies, indirectly, become preparation’s centers and developers of skills for the business professions of today.

3 Argentina B20’s framework, essential society’s sectors participated in search of finding solutions to 4 specific issues. Topics that today still generate quite a concern. Not only because these are issues affecting our present, but because these are factors that are profoundly shaping the future of what would be the society of the 21st century. We talk about: 1. The future of work 2. The crypto active 3. Digital platforms 4. Investment in infrastructure. During the meetings organized by the Argentine B20, South American Jets (SAJ) was paying attention to the ideas expressed by some of the leaders of the new business models. Leaders with whom we identify ourselves for being Argentine companies like us, such as ACCENTURE and MERCADO LIBRE. Today, these emporiums are part of the most recent FORBES list; and they are a living example of a successful business concept in digital platforms. Both companies, through their spokespersons, agreed that work and education under this new digital framework should be taken care of.

Society 5.0: The new course to follow for the XXI century society Returning to the work of the Argentine B20, the team has been working tirelessly, giving answers and generating further questions about the four main themes. Under this formidable scheme of work, other significant actors of society were integrated into the project, such as multinational companies, organizations, and representatives of the labor and business sector, and civil and governmental society. All united worked to produce a result: the creation of a report that shows the next step to achieve the evolution of the new of the 21st century’s society. So, we arrived at the G20 summit in Japan. During a ceremony held in the city of Tokyo, the B20 work team handed over a recommendation document to the Japanese Prime Minister, Mr. Shinzo Abe. The report was presented under the slogan: “Achieve a Society 5.0 and in favor of the Sustainable Development Goals”. A revolutionary idea. A concept where society stops gravitating around technological advances. Takes another direction and brings society to the center of attention. Man retakes the deserved importance. However, before going deeper into this new vision,

below the recommendations of the B20 team in the document. 1. Promote equal opportunities and inclusion 2. The sustainable use of resources 3. Boost economic growth through more investment in infrastructure 4. Ensure access to durable and reliable energy 5. Advance connectivity and eliminate obstacles to trade, including a structural reform of the World Government Organization. With all the presented information and recommendations, there is no doubt that the most powerful nations of the world and countries of emerging economies are delivering a navigation course to follow. Under this scenario, SAJ has to start thinking and re-evaluating matters. We are conscious that actions are required. It is our turn to begin to build capacities and follow the path of the society of the new millennium.

Humanity is mobilized to the new global trend: Society 5.0. What is Society 5.0? Society 5.0 is a society centered on the human being. It is the balance between economic progress and the resolution of social problems, and these problems are solved by integrating cyberspace and physical space. We are talking that, to reach version 5.0, society has had to evolve and go through several levels of growth. The previous stages are known as the hunting society (Society 1.0), the agricultural society (Society 2.0), the industrial organization (Society 3.0), and the information society (Society 4.0). The concept of Society 5.0 was presented for the first time in the symposium 5th Basic Plan of Science and Technology (2016 to 2020). It is a project that recognizes the authorship of the Japanese nation, and which aims to complete its final stage in 2020.

How does SAJ fit into the model of a new society? Where do we stand? As a provider of exclusive private jet services, the commitment with our clients has led us to be industry leaders as reference. In our case,

we work continuously, taking into account that: We are immersed in a large volume of information with the Big Data, with the algorithms of a society that is accelerated to be a 5.0 society. From the point of view of the organizations, we see the need to align ourselves to this trend of a fifth revolution proactively. In our case, we work continuously, taking into account that: 1. To have great agility in the handling of information, in any organization, is a challenge and a competitive advantage. The availability of this information and its use is what allows us to achieve a high level of execution, making the right decisions in an environment of high uncertainty and making constant resolutions of concerns. Also, it gives us the possibility of riding on the trends, approaching opportunities of national and international markets of various kinds that continually arise. At SAJ, we work permanently to strengthen ourselves in it. 2. Part of our success as a company is to have clear behavior policies, adapted to current changing environments. The globalized markets have allowed us to guarantee our customers high standards of aeronautical service. 3. In our case, we established a communication policy with all the interested parties; from political leaders and public administrations to unions and citizens. 4. Society, version 5.0., Involves new paradigms. As an organization, we assume a role of CSR (Corporate Social Responsibility) with fundamental aspects such as education, health, enjoyment, integral well-being and high standards of aeronautical safety, networking and productivity in our services. 5. Our organization is characterized by the promotion of energy saving measures and low impact on the environment; both compatible with economic growth, quality, and safety of our high level of private air transport service.

Then, what is our role? Our role has always been to adapt successfully to new technologies. Understanding the changes that occur and act proactively, becoming agents of change in our immediate environment: with our customers, our collaborators, the community, and civil society with which we interact. However, we also must be critical of the results. We assume the responsibility of being alert, of becoming the voices to be heard when results are similar to negatives consequences and stop being positive factors for the community and the environment. Society 5.0, in our opinion, is the guide to a control process that allows order, focus and positive results for the emerging technologies such as Artificial Intelligence (AI), the internet of things (the T), the BIG DATA, Information, and Communication Technology (ICT) — making these tools, accurate instruments of development and benefit to the evolution of man and his society.

Conclusion

The goal is to create a society where anyone can create value at anytime, anywhere, in safety and harmony with nature, and without the limitations that currently exist. Japan Business Federation

Under this framework, the South American Jets welcomes all efforts resulting from the G20 in Japan. With great enthusiasm, we assume the challenge to be part of the creation of a “CREATIVE” society. Where equality, inclusion, justice, and welfare are for all. ◆ OSAKA_JAPAN

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

A G20 Summit with New Challenges Ahead By Christoph Leitl, President of EUROCHAMBRES

As with every year,

the 20 most influential; global leaders are poised to meet and discuss pressing international issues that will require coordinated global solutions in order to be effectively addressed. The 2019 G20 Summit in Osaka (Japan) is by no means an exception – in fact, this year calls for more international action than ever before. However, among the series of rising global challenges that our communities are facing, how should the G20 Leaders best cope with the tasks ahead? While many different elements deserve to be highlighted, the G20 meeting in Osaka, is good a platform to take stock of what has worked in the G20 and what hasn’t, and to refocus action on key priorities that most affect the global community. For EUROCHAMBRES, the following points deserve to be emphasized. First, remains crucial for G20 leaders to promote growth, in a climate where trade tensions heighten and risk escalating further. Equally a rising climate of protectionist practices around the world and especially in the G20 are further threatening growth prospects despite previous G20 pledges to reduce them. The World Trade Organization found in its November 2018 Annual Report on the G20 that approximately 40 new trade restrictive measures were applied by the G20 in 2018 alone, – a record high since 2012, and 6 times higher than the value recorded in the previous period by the WTO. This situation takes a toll on growth. In that respect, the International Monetary Fund and the Asian Development Bank have issued warnings to the international community in their recent annual reports that world economic growth is projected to drop from 3.6% to 3.3% if the current protectionist climate persists. We should hear these warnings and take them very seriously if we don’t want the global economy to lose steam. G20G7.COM

In fact, G20 Leaders should reverse that course by focusing their attention on enhancing the predictability in international trade for business, through a strengthening of the multilateral trading system and by committing to a credible path for ts reform. Today the international trading system is coming under pronounced scrutiny that risks undoing the existing framework and the underlying trust of businesses in the effectiveness of the system. All G20 economies should have a keen interest to preserve the global trading system. And none should have an interest in having the rule of strongest triumph over the common rules on which all of our businesses currently rely on. In this regard, there should be a renewed sense of urgency and realization among the G20 that challenges to the global economy are best addressed at the global level. For the World Trade Organization, the primary focus should be on resolving the deadlock at the Appellate Body as soon as possible in order to ensure its continued functioning, without enforcement of global rules there can be no predictability in international trade, and no sustained long-term growth. Yet, the Appellate Body is only one of the issues plaguing the WTO in properly addressing 21 century issues. There are a series of long-standing systemic concerns that need to be addressed such as eliminating staterelated competitive distortions, as well as improving the efficiency in the decision-making procedures and governance structures at the WTO. These need to be addressed with just as much urgency to ensure a successful overhaul of the current system. Some of the other elements that should be highlighted and deserve increased focus in the context of a WTO reform address different angles of the ongoing debate. For instance, the

extensive periods of time needed for any proceeding to be completed have raised criticisms. That is why the global community should strive to reduce the timeframes for proceedings and consultation procedures in order to deliver results quicker. If the WTO cannot deliver results in an appropriate and timely manner, the reliability of the institution will come under question, and critical members may choose to try to resort to other instruments to solve their disputes. Regarding the WTO arbitration rulings, more work needs to be done to restore confidence in its bodies to counter any claims of an alleged bias. To that end, it should be a priority to ensure the impartiality of arbitrators and Appellate Body members and improve compliance with its rulings. This also comes in conjunction with the need for significantly improved transparency and compliance with notification requirements by all WTO members – an element that is especially vital to small and medium sized enterprises engaged in cross border trade Moreover when the decision-making process at the WTO starts to become an inhibitive obstacle, rather than a legitimizing mechanism to advance issues of core interest to the global business community, it may well signal that we should start considering a qualified majority mechanism for decision making procedures at the WTO, in areas where consensus continuously fails to deliver. Qualified majority voting may be a next major step forward for the institution towards become more efficient and more flexible. In the EU, we have already seen that policy areas where decisions were originally made by consensus have gradually been replaced by qualified majority voting, which was done to ensure effective and timely decision making – so why should it not work for the WTO? The governance issues are important, as our businesses need a negotiation agenda at the global level that can match today’s business realities. This should include adapting global trade rules to the digital age and facilitating e-commerce, boosting service liberalization and achieve a

much greater inclusion of SMEs (Small and Medium sized Enterprises) in global trade. In short, for the WTO remain a driver of progressive trade policies, it needs to be brought to the 21st century with efficient and prompt deliverables. With regards to the latter, EUROCHAMBRES and the Global Chamber Platform (GCP) – an informal global business network launched by EUROCHAMBRES more than a decade ago – have been urging G20 Leaders to build on the progress made at MC11 in Buenos Aires with regards to a dedicated work plan for MSMEs at the WTO, and table a set of guidelines for an ambitious SME agenda at the global level so as to make the system more inclusive. The well-established “think small first principle” in Europe can help guide the future global work on good regulatory practice, transparency burden reduction, or in better tailoring the trade policy review to the needs of SMEs. It is crucial to remember that SMEs are the backbone of global economy and critical towards achieving more inclusive growth. As they are coincidentally the businesses most likely to lack necessary financial or legal resources, it must thus in the interest of global economic growth and stability to make policy more inclusive, targeted, and simple to use and this is a message G20 Leaders in Osaka should deliver on. Importantly and in the interest of the global business community, we much hope for the G20 meeting to be a meaningful platform for the de-escalation of trade conflicts among the G20, that are threatening to jeopardize the global economic upswing for all involved. Progress also needs to be made regarding a more sustainable use of resources by the G20 economies and in effectively addressing climate change. In this sense EUROCHAMBRES would like to underscore the role of Circular Economy for competitive industries in a resource efficient economy and the importance to our societies as a whole. Successfully implementing circular economy in regions across the globe significantly contributes to the achievement of the UN SDGs, in particular number 12 and number 15, which deal with sustainable

The governance ssues are important, as our businesses need a negotiation agenda at the global level that can match today’s business realities.

consumption and production, and the protection of ecosystems respectively. At the current rate of progress, this concept may be a key solution towards making significant progress towards a successful completion of two sustainable development goals. Beyond that, its applicability will reach even further: Circular Economy is an essential component in reaching the Climate objectives of the Paris Agreement. Putting the implementation of such a system on the agenda would enable the G20 to further promote practical and effective political economic solutions that have a direct positive impact on existing and negotiated agreements in place. For Europe, studies indicate that the EU’s industrial emissions could be more than halved by 2050 if the entire circular potential was to be exploited. European businesses have already undergone huge developments in order to become more circular. After all, resource efficiency makes perfect economic sense in times of trade constraints and volatile primary raw material prices. In order to further promote the Circular Economy worldwide and to boost innovative business models and technologies, three points should be encouraged actively with partners to discuss best practices for implementation. For one, the G20 should work resolutely towards quality control standards for secondary raw materials, which will also contribute to enhancing their usage by both businesses and consumers. Secondly, the G20 should remove key barriers, such as contradictory definitions in chemical, waste and product legislation as well as non-

harmonized end-of-waste criteria as fast as possible, given its potential to facilitate cross-border trade in secondary raw materials. Contradictory definitions inhibit the free and effective cooperation between companies and industries of neighbouring countries or regions, which then may divert to other, less resource-efficient alternatives. When these key barriers are removed, and uncertainties about the legal environment have been clarified, this will be conducive to logical cooperation with potential partners nearby. Finally, the concept of circularity shall be included in training curricula and public awareness raising campaigns. The awareness, knowledge and skills needed by the current and future labor force will thereby be greatly enhanced. Communicating the right skill set to our future workforce is a globally recognized necessity. As such, combining the commitment of transitioning towards a sustainable and circular economy with the pledge to increase employability of future generations could deliver a highly advantageous synergy between economic interests and environmental responsibility. The G20 is a unique and powerful platform whose outcomes have the potential to significantly affect the global community. In a time of looming crises and rising challenges, we need the G20 to deliver actionable and practicable recommendations for future policies. The G20 members have the necessary resources to lead the way in their regions towards a more sustainable and inclusive economic model where all can profit. They should equally make headway to solve the deadlock at the WTO and lay the path for a credible reform that with sensible and transposable recommendations that will ensure the functionality of the system. This is essential if we want to uphold the predictability of rules-based trade to our companies. Without those policies, we risk losing a big opportunity for more concerted global action to simulate growth, and smoother transition towards a more sustainable and inclusive future for our businesses and citizens. ◆ OSAKA_JAPAN

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Why Europe Should Support Africa in Adapting to Climate Change In many African countries, where millions rely on smallscale, rain-fed agriculture, water scarcity has led to more “bust” than “boom”. By Oluyede Ajayi

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Farmers

like to say that we owe our entire existence to a six-inch layer of topsoil and the fact that it rains, but with climate change bringing more frequent droughts, the adage is wearing worryingly thin. In many African countries, where millions rely on small-scale, rain-fed agriculture, water scarcity has led to more “bust” than “boom” for food production in recent years. With the continent facing the greatest impact of rising temperatures worldwide, Africa’s vulnerability and capacity to adapt to more extreme weather should be a global concern, but especially so for its close neighbors, donors, and principal trading partners in Europe. After Africa Climate Week took place in Ghana last month (March 18-22), climate adaptation in agriculture should be high on the agenda and Europe should be watching closely for several reasons. →

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→ Firstly, the recognized success of a number of “climate-smart” practices offers hope that it is not only possible but also profitable for African smallholders to adapt to a new and unpredictable climate. In our work at the Technical Centre for Agricultural and Rural Cooperation (CTA), we have seen encouraging results from a whole range of climatesmart techniques, from simple farming practices like crop rotation and minimum tillage to accurate weather forecasts sent by SMS. And these outcomes, such as higher yields from drought-resistant seeds, make African agriculture a less risky and more attractive investment opportunity. The private sector, particularly in Europe, is increasingly seeing the business case for engaging with climate-smart agriculture, which in turn is further helping to increase resilience. One example is Livelihoods Funds, which is supported by investment from 12 private companies including Danone, Schneider Electric, Crédit Agricole, Groupe Caisse des Dépôts, Mars Inc

and Veolia. It supports practical and efficient solutions that build resilient communities and sustainable businesses. Elsewhere, concerns about the global supply of cocoa outstripping supply in the near future has prompted Mars Inc. to invest in sustainable and efficient production methods in major cocoa producing countries of West Africa. And, in Zimbabwe, telecommunications group Econet Wireless entered a partnership with the Zimbabwe Farmers Union (ZFU) to provide a bundle of communication services via mobile and internet systems at a discounted rate. Within two years, 39,000 farmers were receiving crop advice, weather forecasts and information about insurance, all of which helped them to contend with new climatic conditions and safeguard their livelihoods. As a result, they were also better placed to invest more in better inputs and services for their own farms. Another reason why climate adaptation in agriculture is so important is that it can open up access to new trade markets, which

When farmer cooperatives, research organizations and companies collaborate to roll out mobile technology or drones that help smallholders make better, more informed decisions, everyone can learn from this, including those of us based in Europe.

is becoming increasingly important amid global economic uncertainty. For example, traditional livestock keepers in Namibia have been working with the Meatco Foundation to improve their management of rangelands. This has helped improve trade opportunities within Africa and into Europe by allowing farmers to sell their highquality and sustainably produced beef. And Primark, the European clothes retailer, has extended support for sustainably produced cotton following successful sales. Finally, climatesmart agriculture offers a growing opportunity for sharing and learning from innovation, particularly when it comes to new technologies. When farmer cooperatives, research organizations and companies collaborate to roll out mobile technology or drones that help smallholders make better, more informed decisions, everyone can learn from this, including those of us based in Europe. And these partnerships, which result in products like the CLIMARK weather dashboard for pastoralists in East Africa, can provide valuable insights into how to increase their reach and support yet more farmers. Investment in climate resilience, then, is not just a social venture but a sound business case because of the shared value. Progressive businesses and markets recognize that climate risks are “shared imperatives”, which they can only tackle together with those who also face them. So, it is encouraging to see the EU recognize the importance of supporting institutions like CTA and other initiatives such as Horizon2020, EDG11 and the EUTF working to scale up climate-smart solutions. Africa’s prosperity under new and extreme environmental conditions is so materially important to Europe that the EU must continue to invest in innovative, mutually beneficial and sustainable ways to address our shared climate risks to unlock value for all involved. ◆ About the author OLUYEDE AJAYI is Senior Programme Coordinator for Agriculture and Climate Change at the Technical Centre for Agricultural and Rural Cooperation (CTA).

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Simultaneous Heatwaves Caused by Anthropogenic Climate Change Without the climate change caused by human activity, simultaneous heatwaves would not have hit such a large area as they did last summer. This is the conclusion of researchers at ETH Zurich based on observational and model data. By Peter Rüegg

Many people

will remember last summer—not only in Switzerland, but also in large swathes across the rest of Europe, as well as in North America and Asia. Multiple places around the world experienced heat so severe that people died of heatstroke, power generation had to be curtailed, rails and roads started to melt, and forests went up in flames. What was truly sobering about this heatwave was that it affected not only one area, such as the Mediterranean region, but several across the temperate zones and the Arctic simultaneously. ETH researchers have concluded that the only explanation of why heat affected so many areas over several months is anthropogenic climate change. These are the findings of the recent study that ETH climate researcher Martha Vogel presented today at the European Geosciences Union press conference in Vienna. The paper resulting from this study is currently in review for an academic publication. G20G7.COM

Analyzing models and observations In the study, Vogel, a member of ETH Professor Sonia Seneviratne’s team, looked at the areas of the Northern Hemisphere north of the 30th latitude that experienced extreme heat simultaneously from May to July 2018. She and her fellow researchers concentrated on key agricultural regions and densely populated areas. In addition, they looked into how large-scale heatwaves are projected to change as a consequence of global warming. To explore these phenomena, the researchers analyzed observationbased data from 1958 to 2018. They investigated state-of-the-art model simulations to project the geographic extent that heatwaves could reach by the end of the century if temperatures continue to climb. Massive increase in the areas affected by intense heat An evaluation of the data from last year’s hot summer reveals that, on

an average day from May to July, 22 percent of agricultural land and populated areas in the Northern Hemisphere were simultaneously hit by extremely high temperatures. The heatwave affected at least 17 countries, from Canada and the United States to Russia, Japan and South Korea. By studying the measurement data, the researchers realized that such large-scale heatwaves first appeared in the northern hemisphere in 2010, then in 2012, and again in 2018. Prior to 2010, however, the researchers did not find any instances of such large areas being affected simultaneously by heat. Widespread heat extremes ever more likely Model calculations confirm this trend. As the earth grows warmer, widespread heat extremes become more and more likely. According to model projections, every degree of global warming will cause the area of land in key agricultural regions or densely populated areas in the Northern Hemisphere that is

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The food supply situation could also become critical: if broad expanses of areas vital to agriculture are struck by a heatwave, harvests could suffer massive losses and food prices would skyrocket.

simultaneously affected by extreme heat to grow by 16 percent. Should global temperatures rise to 1.5 degrees Celsius above pre-industrial levels, then one-quarter of the northern hemisphere will experience a summer as hot as the summer of 2018 every two out of three years If global warming reaches 2 degrees, the probability of such a period of extreme heat rises to almost 100 percent. In other words, every year extreme heat will affect an area just as large as the 2018 heatwave did. “Without the climate change that can be explained by human activity, we wouldn’t have such a large area being simultaneously affected by heat as we did in 2018,” says Vogel. She is alarmed by the prospect of extreme heat hitting an area as large as it did in 2018 every year if global temperatures rise by 2 degrees: “If in future more and more key agricultural regions and densely populated areas are affected by simultaneous heatwaves, this would have severe consequences.”

Heat puts food security in jeopardy Professor Seneviratne adds, “If multiple countries are affected by such natural disasters at the same time, they have no way to help one another.” This was illustrated in 2018 by the forest fires in Sweden: at that time, several countries were able to help with firefighting infrastructure. However, if many countries are battling major fires at the same time, they can no longer support other affected countries. The food supply situation could also become critical: if broad expanses of areas vital to agriculture are struck by a heatwave, harvests could suffer massive losses and food prices would skyrocket. Anyone thinking these assumptions are overly pessimistic would do well to recall the heatwave that swept across Russia and Ukraine in 2010: Russia completely stopped all its wheat exports, which drove up the price of wheat on the global market. In Pakistan, one of the biggest importers of Russian wheat, the price of wheat rose by 16 percent. And because

the Pakistani government cut food subsidies at the same time, poverty increased by 1.6 percent, according to a report by aid organization Oxfam. “Such incidents cannot be resolved by individual countries acting on their own. Ultimately, extreme events affecting large areas of the planet could threaten the food supply elsewhere, even in Switzerland,” Seneviratne emphasizes. She continued by pointing out that climate change won’t stabilize if we don’t try harder. At present, we are on course for a temperature increase of 3 degrees. The Paris Agreement aims for a maximum of 1.5 degrees. “We are already clearly feeling the effects just from the one degree that the global average temperature has risen since the pre-industrial era,” says Seneviratne. ◆ About the author PETER RÜEGG studied biology focusing on ecology, geobotany, and biosystematics at ETH Zurich before becoming an accomplished science journalist and editor. OSAKA_JAPAN

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

Inequality, Agriculture and Climate Change: From a Vicious to a Virtuous Circle A transformation is urgently needed in the world’s food system to make it more resilient to climate change and to reduce its emissions. By Elwyn Grainger-Jones

A new urgency

is being felt on climate change. Schoolchildren are striking, there are protests in the streets, and politicians across the world, including the UK, are pushing to call climate change a national emergency. A cruel irony is that climate change will not be felt equally by all—those who have contributed the least to rising temperatures are set to suffer the most. The world’s poorest economies are largely dependent on agriculture— which not only provides employment for millions of the rural poor, but produces the food required for rapidly growing populations. Climate change is however projected to have stark impacts on crop yields in these regions. The majority of areas growing the staple crop maize in Africa are predicted to suffer yield reductions between 12-40 per cent, while millet and sorghum yields are predicted to decline between 10 and 15 per cent respectively. A transformation is urgently needed in the world’s food system to make it more resilient to climate change and to reduce its emissions. For that, rapid innovation is essential. Smallholder farmers are on the frontline of climate change. There are estimated to be over 500 million of them, who still produce the majority of food in the world. Helping them cope with climate change—such as rising temperatures and increased floods and droughts—will not only safeguard food supplies but also reduce the greenhouse gases associated with food systems— estimated at around one third of global emissions. G20G7.COM

With just over a decade remaining to achieve the Sustainable Development Goals, the lowest-income countries are not on track. In 2017, in 34 countries, nearly 95 million people faced crisis levels of acute food insecurity or worse affected by climate shocks and extremes. Every organization must act with urgency. Here are four recent examples from CGIAR’s body of research work across the globe: Breeding climate-resilient crops Our planet is heading for temperatures that won’t allow us to grow the food we need. We need to breed new crops that will survive. 400 million people rely on beans for nutrition, yet climate change is threatening to reduce their growing area by up to 50 per cent by 2050. The International Center for Tropical Agriculture has been working on finding “heat-beating” genes that can be bred into bean varieties in areas vulnerable to rising temperatures in Africa and Latin America. Over 1,000 varieties of beans have been studied, revealing 30 bean types that have heatand drought-resistant traits. Work is now underway to bring heat-resistant beans to farmers. Increased bean productivity won’t only result in increased food supplies and incomes for farmers. By keeping agricultural lands productive in the face of climate change, we can prevent more land being brought under production – which accounts for almost half of agriculture’s carbon footprint as forests are cleared.

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“Ecologically-sound farm management” blends irrigation techniques with the use of crop varieties that are resistant to pests and diseases, and the introduction beneficial species.

Managing pests and disease With rising temperatures come rising threats from harmful pests and diseases. While the application of pesticide will be necessary in some cases, our research is looking into ways this can be kept to a minimum, to protect farmers’ profits (to ensure they don’t overspend on expensive inputs) but also to protect the planet. “Ecologically-sound farm management” blends irrigation techniques with the use of crop varieties that are resistant to pests and diseases, and the introduction beneficial species. For instance, a Lynx spider can eat two to three harmful leaf folders per day; damselflies and dragonflies prey on leafhoppers, stem borers, and leaf folders; and ground beetles prey on planthopper nymphs. These species can easily be attracted onto farms through ecological engineering. This involves planting flowers and fostering biodiversity on farms that will attract beneficial species that prey on pests. Biopesticides such as Beauvaria and Metarhizium and bacteria such as Bacillus thuringiensis can also control various kinds of pests. Protecting against floods In some regions, heat and pests will not be the most significant climate threat – flooding will. The International Water Management Institute is therefore trialling several options to keep farmers’ yields and profits safe from the storms. An innovative insurance model being developed in India, named “index-based

flood insurance” uses satellite data to enable quick insurance pay-outs to flood-affected farmers. The pay-outs are based on scientific data indicating the actual depth and duration of flood waters in the paddy fields. This is a major improvement on traditional insurance products that rely on surveys of damage post-flood; farmers that are hit require urgent support so as not to fall further into poverty and hunger. If the solutions proposed by the project are scaled up, by 2025, approximately 1 million farmers will have agricultural fl¬ood insurance, delivering INR 10 billion in fl¬ood protection. Low emissions technology Other agricultural research programs have direct and tangible impacts on greenhouse gas emission reductions. In the Philippines, for example, over 100,000 farmers are practicing alternate wetting and drying to grow irrigated rice, with support from the International Rice Research Institute. This technique, which relies on rice crops being irrigated intermittently, rather than constantly, uses 15-30 per cent less water while maintaining yields. As the period that the soil is under anaerobic conditions is greatly reduced, methane emissions related to rice cultivation are reduced by up to 50 per cent. For each dollar invested in projects such as these, as much as $17 dollars is returned. Investment in climate change is a global imperative. Investment in agricultural research can make those investments work that much harder, delivering adaptation, mitigation and prosperity for the developing world— a virtuous circle. The G20 has an opportunity to take decisive action—CGIAR will be a partner at this unique moment in history. ◆ About the author ELWYN GRAINGER-JONES is the Executive Director of CGIAR System Organization. Previously he held positions at the UK’s Department for International Development (DFID), the International Fund for Agricultural Development (IFAD) and the World Bank. An economist by training, he played a leading role in establishing the World Bank’s Climate Investment Funds and IFAD’s Adaptation for Smallholder Agriculture Program. OSAKA_JAPAN

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On The Radar

The Business Impact of Environmental and Social Issues Societal, technological and geopolitical change, the impacts of climate change and the interconnectedness of these issues present risks and opportunities to companies that must be understood and managed. This piece pinpoints three key trends with environmental and social implications that are already impacting businesses and capital markets.

Evolving View of the Responsibility of Business in Society Institutional investors, employees, customers, communities and governments increasingly look to corporations to: ◆ integrate societal issues into corporate thinking and ◆ take responsibility for the impacts of their operations on society1. Corporations must ask relevant questions they may not have previously considered. For example: ◆ How do urbanization and demographics, energy costs, and availability of agricultural land, create business risks and/ or opportunities? ◆ How do disease, poverty and/or illiteracy impact a company’s workforce and productivity in supply chains? ◆ What are the business risks and opportunities associated with: ● How a company’s products affect people’s lives ● How a large infrastructure project impacts communities ● How extractive companies work with local indigenous communities ● How resource limits influence decisions?

The interdependence of society, economy, the natural environment and related inherent resource limits is becoming clearer, along with the implications of this for business. It takes time to appreciate the environmental and social risks and opportunities related to megatrends. So, too, the social and environmental impacts of some business decisions and operations can take time to develop and become apparent. That is why a longer-term mindset in C-suites and boardrooms is required. An focus on short-term results can both create and exacerbate negative environmental and societal outcomes. The landscape of environmental and social risks important to business is depicted in the World Economic Forum’s annual Global Risks Report3. Some of these issues may be important to all companies and some may be more or less important to particular industries. What is key is that companies navigate both the environmental and social mega-trends, and the industry and company specific issues to the benefit of their investors and other stakeholders4. Costco: “Do the right thing. It is a philosophy embedded in our culture… members of our leadership team and beyond realize the key to long-term

To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers and the communities in which they operate2. Larry Fink, CEO of BlackRock G20G7.COM

success is not high margins; rather it is how you treat, engage, and include people: our members, our employees and our suppliers alike.5” Costco’s first sustainability principle is: “For Costco to thrive, the world needs to thrive. We are committed to doing our part to help.6”

Increasing Investor Interest in Responsible Investing Institutional investors are becoming more sophisticated in the integration of environmental, social and governance (ESG) issues into their investment decision-making (also referred to as responsible investing). This movement is growing globally.

Responsible investing in the United States grew to $12 trillion in assets under management in 2018, an increase of 38% in the past two years7. In Canada, there were over $2 trillion in responsible investment assets under management, an increase of 41.6% in two years. This represents over half of Canada’s investment industry8. As well, impact investing (a subset of responsible investing that seeks a social and/or environmental benefit in addition to financial gain), while still in its infancy in Canada9, marks a growing trend. Importantly, investors are committed to measuring and managing impact10– a trend that may affect corporate reporting.

Institutional investors are looking for reliable, comparable ESG information that will enhance their investment analysis, engagement and voting decisions. Currently institutional investors purchase selected ESG data from third parties because corporate disclosures are not always providing the evolving ESG metrics and information capital markets are seeking. →

“Risks and opportunities for long-term capital differ fundamentally from those for short-term capital. Metrics also differ: short-term metrics tend to be more accessible and reliable, but they often do not capture disruptive changes in economies or markets. These long-term disruptive changes include climate change, cybersecurity, demographics, and many other factors12.” Excerpt 2018 Summit on Focusing Capital on the Long Term

Risks can come from financial as well as non-financial factors, and that’s why analysis of ESG [environmental, social and governance] factors is integrated in our processes11. Ontario Teachers’ Pension Plan OSAKA_JAPAN

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likely to support and trust company responses. “The real difference between shareholder activists and nonfinancial stakeholders can be seen in the power of social media to shape the discussion. Non-financial stakeholders concerned with environment, social and local issues can often gather more online support for their concerns than activist shareholder can gather for theirs.19” CPA Canada Stakeholder Engagement Briefing

→ Three noteworthy developments in reporting about ESG issues include: ◆ asset owners, asset managers and companies have begun to report on climate-related matters as recommended by the Task Force on Climate-related Financial Disclosures (TCFD)13 ◆ increasingly, corporations are presenting their responses to the UN Sustainable Development Goals (SDGs) in their sustainability reports14 ◆ companies (and investors) are using the standards for identifying financially material environmental and social issues by industry sector provided by the Sustainability Accounting Standards Board (SASB)15.

The Contribution of Stakeholder Engagement to Long Term Value Knowing how environmental and social issues impact stakeholders16 and understanding stakeholders’ expectations17 of companies can contribute valuable insights for identifying strategic opportunities and risks and creating long-term value. It can also help to build trust, brand reputation and resilience. “Effective engagement with nonshareholder stakeholders is equally vital to sustain the long-term G20G7.COM

interests of an organization and to ensure that a board discharges its management oversight responsibilities.18” CPA Canada Stakeholder Engagement Briefing. Transparency and engagement are key to developing and retaining trust with stakeholders. In today’s market, attention to social media is particularly important. Information posted on social media can be misleading or even deceptive with often little time to fact-check and respond. More engaged stakeholders are more

Responding Strategically Successful companies and boards are adept at handling the interconnectedness and complexity of the business issues related to environmental and social matters. They challenge their existing models. They bring together diverse stakeholders with different points of view. They take the time to develop, adapt and test innovative approaches and behaviours. And they dialogue and report strategically with investors and other stakeholders. Boards and executives that recognize and monitor trends such as those outlined in this publication will be better equipped to provide effective oversight of how their companies are dealing with environmental and social issues. And importantly, their companies will be better positioned to create long-term, sustainable value. ◆

For more On the Radar articles please see CPACanada/OntheRadar 1 Based on a global survey of 11,000 business and human resource leaders, as well as interviews with executives from some leading organizations, a 2018 Deloitte study noted that organizations are increasingly judged on their impact on society. Deloitte Insights. 2018 Deloitte Global Human Capital Trends. The rise of the social enterprise. 2 'Larry Fink. A sense of purpose. Blackrock. January 2018. 3 http://www3.weforum.org/docs/WEF_GRR18_Report.pdf 4 Some companies are beginning to prepare scenario plans to understand better the potential impact of megatrends and issues on future business strategies, operations and results. 5 Annual Report 2017. Costco Wholesale Corporation. CEO Letter to Shareholders. 6 https://www.costco.com/sustainability-introduction.html 7 Report on US Sustainable, Responsible and Impact Investing Trends 2018. US SIF. October 2018. Page 1. 8 2018 Canadian Responsible Investment Trends Report. Responsible Investment Association. October 2018. Page 6. 9 According to the 2018 Annual Impact Investor Survey, capital invested in 2017 exceeded US$35.5 billion with growth of 8% expected in 2018. 10 Global Impact Investing Network. Annual Impact Investor Survey 2018. Page XIII 11 https://www.otpp.com/investments/responsible-investing/our-principled-approach 12 Summit 2018 Focusing Capital on the Long Term. FCLTGlobal. New York. 28 February 2018. Page 20. 13 https://www.cpacanada.ca/en/business-and-accounting-resources/financial-and-non-financial-reporting/ mdanda-and-other-financial-reporting/publications/tcfd-overview 14 http://www.undp.org/content/undp/en/home/sustainable-development-goals.html 15 https://materiality.sasb.org 16 Stakeholder categories include capital providers, customers, employees, suppliers, communities, Indigenous Peoples, and governments. Non-governmental organizations can also impact companies and stakeholders. 17 For example, millennial or Generation Z talent want to work for companies that make a positive impact in society. 2018 Deloitte Millennial Survey. Page 2. 18 CPA Canada. Director Briefing – Stakeholder Engagement. Andrew J. MacDougall, LLB and Josh Pekarshky. 2018. Page 1. 19 IBID. page 4.

Helping businesses navigate climate change

Chartered Professional Accountants (CPAs) can help your organization make more informed decisions — and increase resilience — in the face of climate change. How? By identifying climate-related risks and opportunities. By estimating financial impacts and performing scenario analyses. By advising on long-term business performance. Need a strategic response to climate change? Enlist a CPA. FIND OUT MORE AT cpacanada.ca/ClimateChange 17-0683

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The Future of Education: How WISE is Reimagining Education Through a Biological Metaphor In an effort to tackle the world’s evolving educational challenges, WISE sees advancements in education as key for addressing global issues including poverty, skills gaps, inequality, and conflict. By Allyson Berri

The twenty-first

century global economy has been drastically transformed by technological advancement. Education must transform as well to meet current social, political, and environmental challenges. However, when fields like healthcare have typically been at the forefront of technological change, education has generally fallen behind. The World Innovation Summit for Education (WISE) is reimagining the future of education in a changing world. A global initiative that brings together decision makers, teachers, and educational experts in an effort to tackle the world’s evolving educational challenges, WISE sees advancements in education as key for addressing global issues including poverty, skills gaps, inequality, and conflict. The ecosystem approach is just one such advancement that WISE sees as crucial to the future of education. After all, WISE itself is located within a learning ecosystem—Education City, an institution in Qatar that links a research university, start-up incubators, and cultural institutions. In their 2019 report produced in partnership with the Innovation Unit in the UK, “Local Learning Ecosystems: Emerging Models,” report authors explore the ways in which educational ecosystems can be used to pick up the slack where traditional modes of schooling fall short. Educational ecosystems expand beyond traditional schooling, harnessing a range of community resources, a diverse mix of social interactions, and a broad collection of technological tools to provide students G20G7.COM

with a holistic educational experience. Though the authors identify three types of educational ecosystems (knowledge-sharing, innovation, and learning), it chooses to focus on learning ecosystems in this report. Learning ecosystems are defined as “open and evolving communities of diverse providers that cater to the variety of learner needs in a given context or area.” The authors decided to focus on learning ecosystems already in existence as the networks best suited towards providing immediate educational opportunities for current students. Why Ecosystems? Educational ecosystems provide learners with a holistic education they re unlikely to receive through traditional schooling, by connecting learners to community resources and diverse educational experiences. This greater level of community connection provides learners with an education that reaches beyond the classroom and towards the collective action necessary to tackle current world problems. In their report, the authors explore nine different learning ecosystems in six different countries. From Finnish schools that use local museums as part of their curriculum to an American system that provides students with comprehensive career training, learning ecosystems clearly present several key takeaways for the future of education. Accreditation Beyond Standardized Tests Learning ecosystems find creative ways

to keep both teachers and students engaged, deviating from the stress and burnout associated with standardized assessment. Additionally, through these non-traditional modes of assessment, learning ecosystems can better evaluate the degree to which students have learned skills that are necessary for their future. At the Metropolitan Regional Career and Technical Center in Rhode Island, United States, instead of taking tests to exhibit concept mastery, students perform “exhibitions of achievement” once every grading period. Students studying at “The Met” perform these exhibitions to showcase the progress they’ve made through their individualized educational plans. Other learning ecosystems have creative digital modes of measuring student success. In the LRNG program, which operates online in 16 U.S. cities, students are awarded with “badges” they receive for completing “playlists” created by participating businesses

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and organizations. Each playlist provides students with the opportunity to learn skills relevant to college and the workplace, such as conflict resolution. Within the LRNG system, badges help verify student mastery of tangible skills while avoiding traditional modes of assessment. Learning Beyond College Preparation The education systems of the future need to go far beyond preparing students for higher education, especially if they are to prepare students for the challenges of a changing world. Learning ecosystems tackle global challenges by providing students with education that goes beyond university preparation. Curriculum within learning ecosystems can tackle anything from interpersonal relationships to comprehensive career preparation. Instead of presenting college education as the only career path, within the JumpStart program

Educational ecosystems expand beyond traditional schooling, harnessing a range of community resources, a diverse mix of social interactions, and a broad collection of technological tools to provide students with a holistic educational experience.

in Louisiana, United States, students complete relevant career training in sites outside of their traditional secondary school classrooms. And in Kuopio, Finland, schools use a system known as Cultural Paths to expose children to a different topic in arts, music, or culture each year. The program not only exposes students to the arts, but has expanded to educate students on the importance of caring for the environment and to explain the mechanisms of healthy friendships.

A Need for Community Support Community support is a must-have for learning ecosystems looking to thrive. Every single one of the nine learning ecosystems analyzed in the report relied heavily on community support to make their learning objectives a reality. “The Met” school in Rhode Island, for example, requires extensive community support to provide students with city internships as part of their individualized educational plans, whether the internships be at city hall or a local skateboard shop. → OSAKA_JAPAN

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→ And within the Culture Paths program in Kuopio, community participation is necessary if the program is really going to allow students to closely interact with the city’s different cultural institutions.

Teamwork Between Public and Private Sectors Since learning ecosystems can provide learners with a broad array of educational experiences ranging from museum visits to digital curriculum, governments currently implementing ecosystemic education face heavy funding needs. At LenPolyGrafMash (LPM), a developing ecosystem in

St. Petersburg, Russia, a mixture of private, municipal, and university funding provides educational opportunities for students interested in STEM and entrepreneurship. Mixed funding has been especially useful to LPM, since securing funding from a federal government that favors more traditional projects has been difficult. And at “The Met” in Rhode Island, public-private partnerships have allowed the institution to sustain lasting relationships in the community that have provided learners with internships and other real-world experiences.

Local Learning Ecosystems: Emerging Models Fewer young people today experience the empowerment of education through conventional schooling alone. But when they engage with a range of resources within a broader community, charged with the power of social interaction in the connected world, learners of all ages, temperaments, and aptitudes can seize greater opportunities that better meet their needs. As learners around the globe seek both the technical skills of doing and knowing, and the soft skills of management, critical thinking, and many others, the holistic approach suggested by ecosystems challenges conventional education hierarchies and decision making. In this report, colleagues from Innovation Unit have provided a valuable framing of ecosystem typologies and stages, with a review of the most salient current thinking. The core of the report features nine case study portraits that dramatize a variety of ways education ecosystems are having real impact. The authors pose key questions of each of the initiatives, seeking to identify both blockages and enablers to creating education ecosystems, as well as, most crucially, asking whether and how they might truly represent new learning paradigms, as suggested by some advocates. G20G7.COM

Increased Educational Accessibility Many of the learning ecosystems featured in the report have designed their programming initiatives to target traditionally underserved populations. In Catalonia, Spain, the inspiration to enact the Educacion360 program, a learning ecosystem that offers children “full time learning” through a digital badge accreditation system and community activities, comes from a desire to remedy the inequality between families hoping to enroll their students in extracurricular activities. And within the Remake Learning in Pittsburgh, United States, a learning ecosystem that relies on community partnerships with museums, parks, and other community centers to enhance children’s educational experiences, programming is deliberately designed to assist marginalized students. Educational accessibility is even within the curriculum presented to learners, in hopes that they will tread into the future carrying a comprehensive understanding of social inequality. For example, one of the program’s learning objectives focuses on teaching students to “dissect social systems” and “deconstruct inequalities.” The Future of Education Technology has changed the world as we knew it faster than we could have imagined. Education in the twenty-first century, too, must change, if it hopes to keep pace with technological change. And while it would be short-sighted to suggest that education alone is the key to tackling complex global issues such as poverty, conflict, and climate change, better education is necessary to meeting today’s multi-faceted international challenges. The report author’s suggestions for learning ecosystems may create rich educational opportunities that students will need in order to thrive in an uncertain future. Time will tell whether this biological metaphor is the best mode for constructing the education of future learners. ◆

About the author ALLYSON BERRI is a DC Correspondent for Diplomatic Courier magazine.

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Idaho Businesswoman Conquers the Cost of Higher Education By Freon Holderlin

Peace of mind is for sale, and Rebecca M. Carroll of Boise, Idaho, USA has it in stock and cheap at the price. Carroll is the founder and president of The Coaching Educator, now in its 11th year of advising high school students in the U.S. and abroad about college admissions and financial aid. The cost of higher education in the U.S. has risen at a furious rate in recent years, but Carroll said her company routinely finds tens of thousands of dollars for an individual client, and sometimes hundreds of thousands, while also helping students select and pursue admission to the most suitable institutions. Show me the money, you say. Carroll is happy to oblige: “We’re not vague about our claims. It’s unethical to make guarantees, but on average our clients get 25 times as much in financial aid as they pay for our services. Some have gotten a return on investment as high as 89 times. On social media we regularly post specific figures about the money we’ve saved for particular families.” Carroll said The Coaching Educator offers multiple courses and hands-on advisory packages dealing with college selection, scholarships and grants, admissions test prep, interview coaching, academic success coaching, and career advising, plus special programs for athletic and performing arts scholarships. She said that one of the biggest

challenges is keeping pace with rapid change. “Everything related to college admissions gets more challenging over time, which is very difficult for families and even for the counselors in the schools,” Carroll said. “It’s especially confusing for international students. That’s where we come in, because we can specialize in keeping up with that change and making it work for our clients. This is all we do.” A New Hampshire native with two adult offspring of her own, Carroll has a master’s degree in education with school counseling specialty from Notre Dame College and taught at Landmark College, Keene State College and Park University at Malmstrom Air Force Base in Montana while also doing school counseling. She started The Coaching Educator in 2009. “I wanted to be more creative,” Carroll said. “and there are a lot of opportunities to be creative within education. Doing this allows me to fully support schools in the way I want to, because I love the school counseling career.” The Coaching Educator employs three, including Carroll, plus multiple interns. Though everyone in the firm is a generalist and wears multiple hats, Carroll brings counseling expertise -- and the business acumen she acquired as the owner of a barber shop early in her career. IT ace Leigh Delano, a former TCE client,

“We’re not vague about our claims. It’s unethical to make guarantees, but on average our clients get 25 times as much in financial aid as they pay for our services. Some have gotten a return on investment as high as 89 times. On social media we regularly post specific figures about the money we’ve saved for particular families.” Rebecca M. Carroll G20G7.COM

is expert in math and the performing arts -- including the hunt for arts scholarships -- and Oxford-educated former humanities teacher and corporate ghostwriter Paul Culp is the writing guru. Carroll said that all three of them are certified in career advising, unlike many consultants who are credentialed in neither career services nor education. “I’m so lucky to have the team I have,” Carroll said. “I’ve really gone after creative, talented people. We’re a diverse little group, but it adds up to a specialized expertise that helps people take charge of their lives and finances.” Delano was a National Merit scholar whose parents sought Carroll’s help in maximizing her opportunities. She studied piano performance at the University of Oregon and then transferred to the Franciscan University of Steubenville, graduating with a theology degree in 2013. She joined TCE in 2017. “It’s really satisfying to be working with families that are trying to improve the lives of their children, especially with education having become so complicated recently,” Delano said. “It’s a privilege to help teens become more confident with what they want to do and who they are.” For those who want to be scholarship athletes or performing artists, Delano builds the websites that are among TCE’s services. Carroll said that Delano’s expertise with IT has been crucial to the company’s evolution into a national and international presence. “We’ve moved quickly in recent years to develop the necessary online tools,” Carroll said. “Our website, our online course offerings, and our podcasts all very much reflect Leigh’s grasp of strategy, tactics, and design.”

208.576.6947 boise-eagle.itex.com

Culp has an International Baccalaureate teaching credential in English to go with degrees in theology, history, and political science. He started his career in the family media consulting firm, then made a mid-career transition to teaching, beginning at a Middle Eastern university. After a decade in the classroom, a year in digital news media, and a stint in corporate life that saw his work appear in Forbes and Inc., he reunited with Carroll, whom he’d met when they worked in the same school. “Rebecca has vision and an encyclopedic knowledge of this field,” Culp said. “She’s put me in a position where I can draw on pretty much everything in my professional and academic history, including the international side.” Carroll said Culp’s varied background helps TCE considerably. “Paul is a professional communicator, and I saw what he could do in the classroom,”

Carroll said. “He’s also acquainted with the educational systems of other countries and has a command of English that works well abroad.” Technology makes the personal touch possible, with The Coaching Educator team being essentially bicoastal. Delano is in the Washington, D.C., area, where she and her actor husband are performing arts professionals, while Culp and his wife, a former journalist, are also on the East Coast, nearly a continent away from Boise. “We do see a lot of clients in our Boise office,” Carroll said. “The rest we see via Zoom. The geographic distribution of the team wasn’t planned, but it works well. In terms of time zones, we’ve got the U.S. pretty well covered and are well-positioned internationally.” Carroll said her personal experience with student debt and with the education of her own children

781.899.8441 208.576.6947 boise-eagle.itex.com www.itex.com

were highly motivating for her. “As a parent, I feel for families and the pressures they face,” Carroll said. “As a businesswoman, I see an opportunity to make a living helping people from all countries and walks of life address a major problem. It’s a calling. It’s really a very satisfying thing to be doing.” ◆

REBECCA M. CARROLL, M.ED. The Coaching Educator GDCF, CCPS, CPM, CPC T: 208-277-8310 E: rebecca@thecoachingeducator.com W: TheCoachingEducator.com HECA Member HECA Area Representative 3152 S Bown Way, Ste 202, Boise ID 83706 OSAKA_JAPAN

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

The Unmissable Dividends for Gender Equality Investing in Public Services, Social Protection, and Infrastructure. By Phumzile Mlambo-Ngcuka

The recently

concluded Commission on the Status of Women, the UN’s largest gathering on gender equality, agreed this March on the need for well-coordinated and integrated infrastructure, public services and social protection that reach and impact women’s lives. Targeted and intentional investment by the G20 in these elements can stimulate economic growth, with huge potential for changing the expectations and opportunities of women, who still do nearly three quarters of unpaid care and domestic work globally. Investments in transport, electricity and piped water can reduce women’s unpaid work, free their time and connect them to health services, jobs and markets with long-term economic benefits. The ILO estimates that in developing countries, limited access to and safety of transportation is the single greatest obstacle to women’s participation in the labour market, reducing it by as much as 16.5 percentage points. Online services and digital infrastructure are also important. →

All G20 countries have endorsed universal social protection as an integral aspect of the 2030 Agenda and a component of several of the Sustainable Development Goals. But globally, despite some progress in expanding social protection coverage, gender gaps and biases in social protection systems remain widespread. OSAKA_JAPAN

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Closing the gaps will require significant financing and better targeting of resources to benefit women and girls. Phumzile Mlambo-Ngcuka, Executive Director of UN Women

→ The gender digital divide persists even as opportunities for women to own digital assets increases. 390 million women in low- and middle-income countries remain unconnected and 184 million fewer women than men own a mobile. Tackling critical infrastructure needs, including women’s access to information and communications technologies and to the Internet, is a productive investment: it can result in girls being able to continue their schooling, and in women pursuing decent jobs even if they are far from home, accessing vital health care and financial services. All G20 countries have endorsed universal social protection as an integral aspect of the 2030 Agenda and a component of several of the Sustainable Development Goals. But globally, despite some progress in expanding social protection coverage,

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gender gaps and biases in social protection systems remain widespread. Currently 71 per cent of the world’s population has only partial or no access to social protection’s transformative benefits. Only 41 per cent of the world’s mothers with newborns receive maternity benefits, the global gender gap in old-age pensions is 10.6 per cent; and data from the European Union shows that women’s pensions are on average 36.6 per cent lower in those countries. These are obvious and essential gaps to close - and it can be done. In Rwanda, there has been more than a 75 per cent reduction in maternal mortality. This can be attributed to a combination of investment in social protection, in the form of communitybased health insurance, the expansion of health posts, and investments in well-trained community health workers that cumulatively brought improvements in maternity care, including reduction in out-ofpocket costs. Closing the gaps will require significant financing and better targeting of resources to benefit

women and girls. G20 governments can positively reframe their thinking on public expenditures by recognizing the investment character of these fiscal outlays. Targeting resources to gender responsive social protection, public services and sustainable infrastructure is a long-term investment in human and social capital that ultimately contributes to inclusive economic growth by reducing the ‘motherhood and care penalty’ and opening new avenues for women’s employment. With gender responsive budgeting, budget policies and processes can be assessed and changed to address inequalities between women and men in income assets, decision making power, public service needs and societal responsibilities for care and reproduction. It can also support the targeting of public investments in infrastructure, water and sanitation, safe and accessible transportation and other services to meet the needs of women and girls. It is critical that G20 countries move ahead to disaggregate these expenditures into physical infrastructure spending that reduces women’s care burden, and social infrastructure spending to improve the productivity of labour. By raising labour productivity, such expenditures raise incomes, and generate tax revenues that in turn can finance provision of highquality public services and sustainable infrastructure. However, since 2016, the world has seen another major round of contraction in public expenditure in developed and developing countries. In 2018, 124 countries were expected to cut their budgets, eroding essential public services and social protection measures on which millions of women depend. Resources allocated to social protection, high quality public services and sustainable infrastructure must be seen as investments with both shortterm and long-term benefits that help societies and economies to achieve a more prosperous, peaceful and sustainable future, and significantly accelerate the gender-responsive implementation of the 2030 Agenda. ◆ About the authors PHUMZILE MLAMBO-NGCUKA is the Executive Director of UN Women.

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Closing the Gap o The Why and the How Today’s leaders can finally see the gap and are beginning to understand that it’s not simply unfair, but also bad for communities, companies, and countries, and bad for the environment. By Jo Andrews

In London

on tube platforms it says in large letters MIND THE GAP. It’s been a familiar part of the landscape since this design flaw was built into the Underground, just as the gender gap for men and women in the workplace has been an accepted part of the economic landscape, until now. It has been a long process, but spurred by different trends and events and new data. Today’s political and business leaders can finally see the gap and, more importantly, are beginning to understand that it’s not simply unfair, but also bad for communities, companies, and countries, and bad for the environment. A new focus on this is bringing new solutions, some of which work and some of which are, at the moment, a little more than statements of intent.

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Closing the gender gap at work is a matter of justice—women and girls are the world’s largest marginalised population—but it’s also a smart strategy and an important way for organisations to use the talents and energies of all their people, giving them new strengths and greater resilience, and handing human endeavour at all levels, from governments and big corporations, down to small community groups and families, a competitive advantage over those that don’t deploy the talents of all. A report from McKinsey’s Global Institute, called The Power of Parity crystalized this. It provides evidence that the best source of future economic prosperity for the world as a whole lies in the economic inclusion of women.

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n Gender Equality: According to McKinsey, if gender parity in each country was to equal the best in that nation’s region, $12 trillion would be added to the world economy in ten years. Taking that down a level and focusing on corporations, a report from MSCI says “our analysis looked at a snapshot of global companies in 2015 with strong female leadership, finding that they enjoyed a Return on Equity of 10.1% per year versus 7.4% for those without such leadership”. And from EY and the Peterson Institute: “the data was clear about women in top management positions. An increase in the share of women from zero to 30% would be associated with a 15% rise in profitability.” But we are stuck in a world where the World Economic Forum estimates that

it will take over 200 years to close the economic gender gap at present rates of change, the WEF’s Director of Economic and Social Agendas saying “overall gender equality has stalled.” A world where women globally are paid 63% of what men earn and where there are more male CEOs named Dave (8) or Steve (7) among the top 100 UK companies than there are women of any name (6), or where companies offer excuses for a lack of women on their boards such as: “all the good women have been snapped up” or “we have one woman already on the board, so we are done, it’s someone else turn.” What’s new is that there is a fresh will amongst global leaders to address gender inequality. But as, the muchloved author and pilot, Antoine de →

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→ Saint-Exupéry said nearly 80 years ago “a goal without a plan is just a wish.” How do we turn the goal of greater equality between men and women into achievable change? Remember those toys of coiled coloured wire called slinkies? If you set them up straight at the top of the stairs they turn over themselves neatly to reach the bottom and come to a halt. That’s what’s gender equality needs, a system that enables us to travel down the stairs elegantly and effectively. This isn’t a matter of good intentions or tinkering round the edges, it’s a matter of fitting the steps together in a system. An important first element of a system is that organisations need to know where they stand at present and where they are heading. This is why we set up Equileap three years ago with the aim of accelerating gender equality at work. We developed a detailed way to measure gender equality and gender balance in organisations from the boardroom to the shop floor and down into the supply chain, creating the Equileap Scorecard, which has 19 data clusters. This includes measures of gender balance at every level of the company, promotion ratios broken down by gender, progress towards closing the gender pay gap, flexible working, reaching international standards of parental leave for primary and secondary carers and looking for legal or regulatory cases the company is involved in that relates to gender discrimination or violence at work. We use this to score every medium and large public company in 23 developed countries (more than 3,000), providing the widest and deepest global gender equality data. It enables comparisons to be made about progress towards gender balance and equality across countries and sectors: for the first time we can compare the performance of a French beauty products company with an Australian mining company and draw direct conclusions about the performance overall of the companies, sector by sector and country by country. WWThis data forms the basis of the annual Equileap Gender Equality Global Report and Ranking, which publishes the Top 200 companies making most G20G7.COM

progress towards gender equality. The top spots here are now hotly contested as companies know that a reputation for doing well by both genders is important and likely to increase the pool of talent from which they can draw their employees. It’s important to understand that in measuring and scoring companies Equileap looks for gender balance rather than whether or not companies are female or male led. This is achieved when a company can show that it has between 40% and 60% of each gender in place. We don’t believe that women are inherently better at running companies than men, or vice versa, but the research suggests that the success of organisations with a good mix of men and women lies in the balance of diversity. Equileap’s data hands power to bring about change to the companies themselves and importantly to those who invest in them. The gender lens investing movement is tipped to be one of the fastest growing investment sectors in the next decade, as more women of wealth become investors and seek to align their funds with their values, and as institutions and sovereign wealth funds deploy their capital to lessen environmental damage and encourage equality. To enable them to use their funds effectively Equileap licences its data to the financial sector for new gender lens investing products. Its data now underpins about USD 600 million of investments in public assets, around 25% of the total global sum under investment with a gender lens. At the same time governments are also beginning to bring in new legislation seeking much greater transparency from all employers on gender pay gaps. Iceland, France, and the UK have reporting legislation in place, with Ireland and possibly the U.S. not far behind. Germany and Australia also have different forms of reporting. Some of the pay gaps disclosed have been shocking with more than 8 in 10 companies and public sector organisations paying men more than women, and in some of the highly paid sectors such as accounting, financial services, and legal firms, it is quite normal to see overall gender pay gaps of well over 60%.

An important first element of a system is that organisations need to know where they stand at present and where they are heading. Most companies say they want to change this, but as the second and third year of figures come in showing marginal progress, or in some cases a deterioration, it’s clear that this will take more than words and good intentions. Two companies that currently top the Equileap rankings in Europe and North America are the French beauty and personal products company, L’Oreal, and the U.S. car-maker General Motors. It’s hard to image two companies further apart in output, and yet they both do gender equality and gender balance exceptionally well. Here’s what Jean Claude LeGrand, Director of Corporate Diversity at L’Oreal told Equileap when L’Oreal was presented with the 2018 Equileap

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prize for the European based company making most progress towards gender equality: “We looked round and realised that we had started as a company of men, and we were still a company of men, selling products to women! This was not sustainable and we needed to change it. We took the decision but it wasn’t something we did overnight, it has taken more than 20 years for us to address every part of this system and to make sure that it works, and we are still looking for improvements: can we do this better, would this make a difference? The work never ends.” General Motors—once male dominated from the boardroom to the shop-floor is currently the only company globally that has no overall gender pay gap and has also published figures showing that it pays equal pay for equal work in all its occupational quartiles. It’s headed by Mary Barra, who was the first auto-industry CEO. In a recent interview at Duke University, she says: “To me diversity is all about the pipeline.” Adding: “One of the best kept secrets is that General Motors was working on gender diversity 20 years ago. If I hadn’t been pushed and given stretch assignments 20 years ago I

wouldn’t have been in a place where I would have been considered for the job I am in now. At GM for all of our executive positions we require a diverse slate of candidates, and if they aren’t able to have diversity—because they picked this candidate, then we say what are you doing so that in 3 years you will have a diversity of candidates.” The message from both companies is that change takes its tone from the top and that rushing around trying to find a woman to make your figures look better in the short-term isn’t going to work. Embedding change takes time and joined up systems to ensure that company pipelines are diverse. There is more evidence too, some of it surprising, from the Behavioural Insights Team at the UK Government’s Equalities Office. This unit uses behavioural science combined with evaluation of outcomes, usually in randomised trials to understand what’s effective and what’s not in the real world. Its aim is to produce evidence based actions for employers and it’s a good starting place for any organisation that wants to make progress on gender equality and closing the gender pay gap. The team have grouped actions into three categories: 1) Effective, which have been tested in the real world and have a positive impact. 2) Promising, which need more research and evaluation to improve evidence on their effectiveness; and, 3) Mixed Results, those that sometimes have a positive impact, but at others times may have a negative impact.

Effective Actions include diverse shortlists, with multiple women, for recruitment and promotion (just one woman will not work), skills-based assessment tasks and structured, rather than unstructured, interviews in recruitment, transparency on promotion, pay and rewards, encouraging salary negotiation by showing salary ranges, and finally appointing diversity managers, and/or a diversity task force. Promising Actions include shared parental leave, increased workplace flexibility, recruiting returners coming back to work after extended leave, mentoring and setting internal targets.

Mixed Results. There is little evidence to show that the following actions work, so think hard before reaching for them. Unconscious bias training or diversity training, with evidence to show that they can actually reduce the diversity of candidates selected afterwards, leadership programmes for women, which can lead to women being perceived as in need of support and less capable than their male counterparts; diverse selection panels, and performance self- assessments are also unproven strategies. Big leaps in gender equality have been made globally in the past 50 years, especially in health and education. But economic participation by women lags far behind and no nation has yet achieved equal economic participation for men and women. The World Economic Forum 2018 Report on the gender gap says that Lao PDR is the country that has come closest to eradicating the economic gap, showing that increased wealth does not necessarily go hand in hand with increased participation. Gender discrimination remains one of the prime causes of global economic marginalisation. An important part of overcoming these obstacles is to ensure that women share fairly in the economic life of a country by taking part in the workforce on a more equal footing with men, and at the same rates of pay. Moving towards this will play a vital role in helping the world achieve the UN’s Sustainable Development Goals by 2030, reducing poverty in every nation, and improving life for women and men, for their families, communities, and countries. ◆

About the author JO ANDREWS is the Co-Founder of Equileap, a social venture that aims to accelerate gender equality in the workplace using the power of investments, knowledge and donations. She was previously founding Director of Ariadne, a network for European social change and human rights donors with over 500 members in 23 countries. She was the first Director of the Sigrid Rausing Trust, a British based foundation that gives away over £20 million a year to support human rights, migrant and labour rights, and environmental justice. She is currently a board member of the Fund for Global Human Rights, and Open Democracy. OSAKA_JAPAN

G L O B A L B R I E F I N G R E P O RT F U T U R E O F H E A LT H F E AT U R E

How AI Could Spur Drug Development Using artificial intelligence in drug design would give pharmaceutical research a boost. In the medium term, computers could even carry out experiments autonomously. By Gisbert Schneider

Designing drugs

is a complex and challenging task. How do you create effective new medicines without adverse side effects to address the world’s most pressing health issues? Medical chemists have to consider an array of interactions: drugs interact with cells and organs in the human body in many ways, and these often differ widely from one patient to another. While iterative, often automated, testing methods in the lab have yielded numerous potential starting points for drug development, there are limitations when it comes to designing and selecting the most promising drug candidates. The drug designer must choose from an estimated 1060 druglike molecules that could— only theoretically—be synthesized. What’s more, it takes years of on-thejob-training to become a knowledgeable expert in medicinal chemistry. Designing ideal drugs is a complex task. This is where artificial intelligence (AI) and machine learning could come in. Deploying AI to assist chemists in the drug design process holds promise for making better decisions: It is much more efficient than the human mind when it comes to sieving through “big” data, AI generates reproducible results and supports the discovery

We can expect AI to predict the effects of substances at an earlier stage of development. G20G7.COM

process by considering many project targets in parallel.

accuracy much faster than in a lab without automation.

The perfect partner? Better drugs, discovered and delivered faster—AI sounds like an ideal partner in the lab. But while a chemistry-savvy AI system might outperform a human chemist in some respects by processing problems the human mind struggles with, it’s no silver bullet. In fact, our expectations regarding AI-assisted drug design may be too high: we have to concede our imperfect understanding of human disease mechanisms. Only when presented with appropriate data will a machine intelligence learn meaningful relationships between drug molecules and their physiological effects. This is why our scientists need not fear that computers will replace them altogether—in fact more medicinal chemists will be needed if we’re to continue making advances in this f ield. Already, AI models support our decision-making in drug discovery, but integrating AI into an automated drug design process will require new thinking: it will change the setting, just as the software and technology of recent years has done in predicting properties to a high degree of

Automating discovery With ongoing automation, we can foresee computers conducting experiments productively and autonomously with the help of robotics in three to five years’ time. This is indeed already being tested in certain places, particularly at ETH Zurich and in industry. We can also expect AI to predict the effects of substances at an earlier stage of development and suggest new chemical structures with the desired properties. This would mean that fewer substances that turn out not to be effective would need to be tested. In the long run, AI may hold the key to unlocking the door to more effective and more accessible personalized medicine. But it will take continuing research and investment in this field, and fresh interdisciplinary thinking from experts in the AI, chemistry, pharmaceuticals and biotech domain. ◆

About the author GISBERT SCHNEIDER’S research activities as a professor of Computer-Assisted Drug Design at ETH Zurich focus on the development and application of adaptive intelligent systems for molecular de novo design and drug discovery.

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

Personalized Medicine and the European Data Misery Obtaining relevant patient data for pharmaceutical and medical research in Europe is no easy task. Here is a possible way forward. By Ernst Hafen

Last year,

in order to access data on cancer patients, the pharmaceutical company Roche acquired Flatiron Health, a leading American provider of healthcare IT solutions, for 1.9 billion dollars. Meanwhile, the British pharmaceutical company GlaxoSmithKline took a 300-million-dollar stake in 23andMe, an American company which offers genetic testing and holds genome profiles. These deals show how far pharmaceutical companies will go in their quest for medical data to develop new drugs and fine-tune personalized treatment. The market-driven health data model in the USA explains why companies can find what they need there. Getting hold of such data in Europe is much more of a challenge for research and industry. In fact, it’s a data misery—for in many European countries, health data is not managed centrally but stored in incompatible formats on independent IT systems. In addition, strict data protection laws make it rightfully difficult to use data without the explicit consent of the individuals concerned.

which traditionally hold excellent electronic medical records that are also used for research. Estonia too has set up an e-government and e-health record system in the last ten years. The United Kingdom initiated the 100,000 Genomes Project to promote research in precision medicine, but attempts to make NHS records accessible were less successful, and halted after a media backlash—the main problem being that patients had been insufficiently briefed. In Switzerland, the Swiss Personal Health Network (SPHN) initiative seeks to harmonize data from various hospital systems and make this accessible for research, provided patients give their consent. But given the fragmentation of the cantonally regulated health systems and the multitude of different IT systems at hospitals, this is a formidable task. What’s more, legislation in Switzerland hampers the use of data: the new federal law on electronic patient records seeks to improve the exchange of data within the healthcare system; it doesn’t foresee a secondary use of data, such as for research purposes, even with the consent of the patient.

Overcoming hurdles The frontrunners in Europe are the Nordic countries such as Denmark,

Forging an independent path So how can Europe with its fragmented health care systems and strict data

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protection laws compete with the US market-driven health data model and China’s state-controlled one? Unless we keep pace in the international arena, our hospitals will have to rely exclusively on artificial intelligence solutions from American and Chinese companies, just like Roche. Moreover, pharmaceutical companies may relocate their headquarters and research centers to countries richer in accessible health data. One way out of such dependence lies in Europe’s faith in the autonomy of its citizens and in the new General Data Protection Regulation, which accords citizens the right to a copy of all their personal data, whether medical or non-medical. Only they can gather data from their smartphones, patient records, purchasing data and genome data; only they decide who can access the aggregated data. Precisely this puts European citizens into a very powerful position; and to realize this potential a new framework of trust is required. Empowering the citizens Switzerland is well positioned to take a leading role in establishing such a framework: world experts in data security and cloud computing are working at ETH and other Swiss universities; strong data protection

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regulations and a stable democratic government help to build trust. The non-profit MIDATA cooperative, jointly initiated by researchers at ETH Zurich and Berne University of Applied Sciences, operates a platform where people can securely store copies of all their personal data, including that from mobile sensors in smartphones5. And they decide whom to share this data with. Such platforms mean that researchers and companies like Roche and GlaxoSmithKline can access not only limited subsets of data, but also comprehensive aggregated sets, which are so valuable for personalizing preventive measures and treatment. Moreover, any financial gain here does not go to Flatiron or 23andme shareholdersâ&#x20AC;&#x201D;at MIDATA, for example, revenue is reinvested in services and research projects that benefit society at large. If we create the conditions where European citizens will exercise their right to a copy of their data, use their data for personally selected services and make it available to research, then we have the opportunity to transform our current data misery into a democratically controlled data ecosystemâ&#x20AC;&#x201D;for the good of personalized medicine and society as a whole. â&#x2014;&#x2020;

About the author As a professor and Deputy Head of Institute for Molecular Systems Biology at ETH Zurich, ERNST HAFEN has made several seminal contributions to the field of developmental biology and cell biology and as president of the Biotechnopark, Zurich he supports more efficient ways of translating scientific discoveries into products.

Unless we keep pace in the international arena, our hospitals will have to rely exclusively on artificial intelligence solutions from American and Chinese companies.

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

While Data May Be Worth Trillions, It Is Not the New Oil Oil is a scarce asset, whereas data is not. By Dante Disparte

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GLOBAL POLICY LAB B I G D ATA

Just because

today’s tech titans are the new robber barons, does not mean data is the new oil. This oft made comparison not only smacks of convenience, it lacks imagination, which in turn leads to serious miscalculations when it comes to information security, data privacy, valuation and, perhaps most critically, public policy. Yes, countries will go to war over data and the 2015 nationbacked attack on Sony Entertainment was likely the opening salvo. Yes, the world is ravenously dependent on data and the technologies and infrastructure that pipes it like so many cars, pipelines and oil wells before it. Yes, data poses systemic risks to the global economy. However, this is perhaps where the comparison stops. For one, despite naive views to the contrary, oil is a scarce asset, whereas data is not. It was not until the advent of blockchain technology, that the concept of data singularity even became possible. A barrel of oil or the unexploited resource deep underground or trapped in shale deposits cannot have a digital twin and certainly not with a fractional cost of zero. While digital tokens can represent a share of an underlying asset such as oil, the fact of the matter is that the party that has the care, custody and control of the asset in oil’s case typically a gun-toting nation state - will ultimately have the final say on how it is monetized and apportioned. This is one of the reasons oil and natural resources are so often a casus belli and the subject of expropriation and nationalization cases. Oil, like other tangible assets, labors under a high “drag coefficient” or friction and is geographically constrained. Data, by contrast, is not only borderless, it is formless and infinitely liquid. Wars waged over oil and natural resources are subject to the doctrine of realpolitik, whereas

It was not until the advent of blockchain technology, that the concept of data singularity even became possible.

information warfare, psyops and cyber threats play to doctrine of the id and superego turbocharged by Moore’s law and globalization. Both asset classes create negative externalities, where the carbon-hungry robber barons of yore inadvertently triggered man-made climate change, today’s tech titans have opened a Pandora’s box of cyber threats. Both pose grave societal threats, the latter are tearing at the very fabric of democratic institutions and the postwar world order with frightening ease, distorting the very nature of truth, trust and fidelity leaving behind no smoking craters. Indeed, it does not augur well that Twitter, used by more than 336 million people, including the U.S. president, had over 70 million fake or suspect accounts - roughly the size of its U.S. user base. In the hands of fake news-inducing bots or politicians, data and its attendant distortion can become a weapon of mass destruction. →

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

→ The opening salvo of this cyber warfare may have very well been the Sony Entertainment cyber-attack over The Interview film in 2014. This attack, which was perpetrated by North Korean-backed operatives with the nom de guerre Guardians of the Peace, successfully crippled the firm’s entire value chain, causing an estimated $100 million in direct costs, not to mention second and third order effects. Since then, there is not a corporate board that is not at a minimum cyber aware, which has been aided by the sharp reality that GDPR, Europe’s far-reaching data privacy rules, will be equally consequential as suffering the unwanted sunlight courtesy of a cyber-attack or data breach. Boards would be well served to push the enterprises they govern to ascribe uniform and comparable economic value to their data. If nothing else, this exercise would help firms find those illusive information “Crown Jewels” that so many cybersecurity professionals speak of. Just as a financial stress test can help a bank back into its potential capital shortfall with a high degree of precision, stress testing the share of enterprise value derived from unique data assets can produce a similar outcome. For some firms the number will be equal to 100% of enterprise value. Perhaps most insidiously, the biggest departure between data and oil stems from its valuation, which flies in the face of the billions of dollars spent each year on digital transformation and data monetization efforts. A barrel of oil and its derivatives enjoy a universally accepted transparent economic value, which is part of what enables oil-rich nations to garner future value based on proven reserves. Indeed, Venezuela’s cryptocurrency, the Petro, however fanciful, aims to play at this temporal economic relationship, although the effort has failed due to hyper-inflation

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and rapidly unraveling economic and social order. For data rich firms, such as Google, Facebook, Twitter, Apple, Amazon, among others, data performs much less like oil and much more like cash liquidity in a bank. In short, you only know it matters (and how much) through its scarcity caused by a bank run, lock out or some calamitous event restricting access. Today, there is no generally accepted accounting principle (GAAP) for how firms can ascribe an economic value to data on their financial statements or balance sheets. Most publicly-listed firms will pay lip service to digital transformation efforts or outline how they are hardening their cybersecurity posture because customer privacy and intellectual property protections matter. However, ironically, given this gap in accounting standards their economic recognition of these investments and, conversely, their informational risk exposures go unrecognized and largely unhedged. This is one of the largest shortfalls of management accounting practice, investor and consumer protections and regulatory oversight leaving trillions of dollars of potential economic value at risk and unrecognized. A simple example illustrates the challenge. Thousands of companies buy cyber insurance each year making it the fastest growing segment of the insurance market. In the U.S. alone, more than 80 insurers are chasing the cyber ambulance offering customers all manner of coverage, whether it is a placebo or panacea. Compared to the clarity of insuring a home, however, the lack of a universally accepted approach in valuing data is revealed. A milliondollar home would presumably be insured for a million dollars, lest the homeowner face a financial shortfall. Today, however, due to the lack of a uniform data valuation method, the market is relegated to woefully ineffective linear math that is a function of the total number of personal records multiplied by an expected notification fine in a breach, which equals a recommended sum of coverage. This sum, however suitable, only countenances first order economic harm to an enterprise and relates more to customer privacy and notification

requirements than to second and third order impacts on an enterprise. Ask a hospital that loses access to patient records due to a ransomware attack how much they care about notification costs when a patient’s life-saving surgery is held at bay? In persistent threat scenarios, such a ransomware attack on a business with no monetary goal, much like Delta Air Line’s 2016 ground halt due to systems failures, the lack of access to data is a veritable Achilles heel for many firms. Just as financial regulators backed their way into the risk profile of systemically important banks after the financial crisis by running stress tests (pitiably, many of these rules that made the global economy safer are being relaxed), firms can similarly stress their operations to understand their data dependency and how it relates to how all other tangible or intangible assets are monetized. This Enterprise value of Data (EvD) will, in rudimentary form, provide a new read on the share of

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Permitting Venezuela to survive under Maduro will exacerbate a contagion of instability not only in Latin America but also in the U.S. due to Venezuela’s insistence on providing safe havens for the drug trade cartels and narco terrorist groups such as the Colombian ELN.

enterprise value derived from information or data and, therefore, provide a more accurate risk profile. Long-range, incorporating this type of risk metric as a real time reporting variable for publicly traded companies will greatly improve investor and regulatory protections. Just as crude oil is largely worthless to a group without the assets to refine or monetize it, not all data is created equal nor will it prove financially valuable to external parties who do not have the other assets required to exploit a firm’s “secret sauce.” It is for this reason most economically-motivated cyber-attacks demand a ransom, often incomparable to the value of informational assets they absconded with or the size of their dragnet. The WannaCry ransomware attack for example, which spread to more than 150 countries over a weekend affecting thousands of firms, only got away with a comparatively small amount of bitcoin given the global dragnet. The NotPetya

Just as crude oil is largely worthless to a group without the assets to refine or monetize it, not all data is created equal nor will it prove financially valuable to external parties who do not have the other assets required to exploit a firm’s “secret sauce.

cyber-attack exacted a much heavier toll, largely on Danish shipping giant A.P. Møller-Maersk, which even at an estimated $300 million in losses, remained a rounding error nonetheless to Maersk’s fortress balance sheet. Facing such certain economic costs due to data risks, it would seem firms should spend nearly as much time quantifying the enterprise value of their data, as they do trying to build firewalls and justifying digital transformation investments. Doing so would make the world a materially safer place. ◆

About the author DANTE DISPARTE is the founder and CEO of Risk Cooperative, a specialized strategy and risk advisory firm focused on risk, readiness and resilience. He also serves on the board of the American Security Project, where he founded and chairs the Business Council for American Security. He is a member of the Bretton Woods II Council and a fellow at New America and co-authored the acclaimed book “Global Risk Agility and Decision Making.” OSAKA_JAPAN

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

Model for the UK ETH Zurich researchers developed a feasible approach for the migration issue in post-Brexit negotiations between the UK and EU. An existing mechanism in Switzerland’s bilateral treaties served as inspiration. By Marianne Lucien

British

Prime Minister Theresa May had no easy task as she negotiated her country’s future relationship with the EU. The first part of the Brexit negotiations will be comparably manageable; the withdrawal agreement—the actual “divorce” from the EU—only requires approval from the European Parliament and 20-member states. However, the negotiations for a framework agreement regulating future mutual relations will be more complex, if only for the reason that it may require the unanimous support of more than 30 national and regional parliaments across Europe. Could the Swiss bespoke model— consisting of several bilateral agreements—inspire a flexible post-Brexit negotiation strategy between the UK and Europe? ETH Zurich professor, Michael Ambühl and researchers Daniela Scherer and Martin Gutmann think it is possible. Migration compliance with free movement The future prosperity of the British economy, among other factors, G20G7.COM

depends on access to the European Single Market. This market rests on a foundation of free movement - the free movement of goods, services, capital, and labour across European borders. However, regulating foreign labour, and thus migration, seems to be a priority among some segments of the British population. With nearly 3 million EU citizens living and working in the UK and 1.2 million UK citizens living in EU countries, the issue of migration will likely be among the top agenda topics of the post-Brexit negotiations. Migration not only influenced the 2016 UK referendum, it is possible that it will become a defining factor in the UK’s future relationship with the EU. One of the central questions that will need to be addressed is, “How will the UK regulate migration to comply with the EU principle of free movement should they wish to access the European Single Market?” Migration model with a safeguard clause Michael Ambühl, Chair of Negotiation and Conflict Management at ETH Zurich and doctoral researcher, Daniela

Scherer have developed a new and versatile migration model with a safeguard clause that, on the one hand, guarantees free movement, but, on the other hand, temporarily measures it for instances of exceptionally high migration. In EU legislation, there are existing safeguard clauses and formulas. In addition, the Swiss bilateral treaty with the EU on the free movement of persons includes a mechanism that describes the idea of a safeguard clause; however, it is not formalized. Ambühl and Scherer’s migration safeguard model provides a framework in which the UK contributes to the functioning of the Single Market, but allows for the limitation of migration when it becomes excessive. Inspiration from engineering In the development of the safeguard clause model, ETH researchers looked to the field of engineering for ideas. Engineers deal in practical solutions aiming to achieve the best results under given constraints and the existing environment. Using the “Negotiation Engineering” method—also developed at ETH Zurich—the migration safeguard

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The future prosperity of the British economy, among other factors, depends on access to the European Single Market. This market rests on a foundation of free movement - the free movement of goods, services, capital, and labour across European borders.

model breaks down highly complex problems into smaller sub-problems and expresses them using the language of mathematics. In this approach, negotiators take abstract phrases such as, “serious economic or social difficulties” and “appropriate measures” and transform them into concrete terms providing a quantitative and statistical framework as a basis for discussion. “Using mathematical models allows political representatives to turn a sometimes-emotional discussion into a quantitative and clear-headed negotiation,” says Ambühl.

Switzerland’s relationship with the EU represents a carefully negotiated and complex network of bilateral agreements. Will a similar approach work for the UK? Despite the debate over the apparent differences in socioeconomic and political realities, Scherer points out, “Switzerland and the UK share a “sovereignty reflex,” a free trade spirit, and a need to maintain a cooperative relationship with the EU.” These shared interests could make the Swiss model a source of inspiration for the UK as they negotiate their future relationship with the EU. ◆

About the author As the International Communication Officer for ETH Zurich, MARIANNE LUCIEN engages international media, designs global communication strategies, and writes on science and technology. OSAKA_JAPAN

G L O B A L B R I E F I N G R E P O RT U . S . - J A PA N T R A D E F E AT U R E

The State of U.S.-Japan Trade Negotiations Trade delegates from Japan and the United States conducted a two-day summit to negotiate a new trade agreement in April, breathing new life to the ever-important U.S.-Japan trade relationship. â&#x20AC;&#x153;boomâ&#x20AC;?. By Rong Qin

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G L O B A L B R I E F I N G R E P O RT U . S . - J A PA N T R A D E

While

U.S.-China trade negotiations dominate news cycles, another important trade negotiation took place recently. On April 15th, trade delegates from Japan and the United States conducted a two-day summit to negotiate a new trade agreement. And 12 days before the meeting, the Ronald Reagan Building and International Trade Center held a panel about the future of U.S.â&#x20AC;&#x201D; Japan trade relations in which the panelists shared their insights about where these negotiations would go. â&#x2020;&#x2019;

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G L O B A L B R I E F I N G R E P O RT U . S . - J A PA N T R A D E

→ Current trade relation between Japan and the United States are not especially positive—as viewed from the American side. After the United States withdrew from the Trans-Pacific Partnership(TPP) in 2017, Japan signed the Comprehensive and Progressive Agreement for TransPacific Partnership (CPTPP) in Santiago, Chile, along with 10 other Asia-Pacific countries in March 2018, and the CPTPP went into effect late last year. Japan also signed an economic partnership with the European Union in February this year. When the United States stood still, its competitors benefited greatly from the lower trade barriers in Japan, formerly the 4th largest goods export market for the United States. U.S. industries have been asking for a trade conversation between the two governments. To deliver the goal effectively, it is important to bridge what the experts say to the public and communicate about the cost-benefit analysis, which is what the World Trade Center (WTC) has been doing all along. Andrew Gelfuso, director of WTC in Washington, DC, spoke to Diplomatic Courier about WTC’s mission in an interview: “We are involved in facilitating trade missions, drafting trade content and publications and we host or promote 300 trade events per year.” He further explained: “By partnering with the Washington International Trade Association (WITA), we bring world-class speakers together to comment on policy and advocate on policy situations.” Presented by the WTC and in partnership with the WITA, the panel about the future of U.S.—Japan trade relations comprised two sections, looking at the trade from the policy and the industry perspectives respectively. While the first sector was moderated by Ambassador Ira Shapiro, president of Ira Shapiro Global Strategies, the second sector’s moderator was Ambassador Robert Holleyman, the president and CEO of C&M.

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The result: several of the issues addressed at the panel were successfully reflected or addressed in the subsequent meeting. First, success in the negotiations is the result of good groundwork that has been completed beforehand. According to Wendy Cutler, Vice President and Managing Director of the Asia Society Policy Institute (ASPI), although the Free Trade Agreement (FTA) might not be identical to what we agreed with Japan in the TPP, “a lot of good work can find its way in the FTA, so the negotiation should be smooth and quick.” Cutler explained that a quick meeting is in the interest of both countries. The Trump administration needs to show the public that bilateral agreements are as good as multilateral agreements to justify its move away from the TPP. At the same time, since Japan is in line with the United States in other important areas (such as national security), Prime Minister Abe really strives for agreement on trade issues where the real frictions exist. Daniel Bob, a Visiting Scholar at the Resichauer Center for East Asian Studies at John Hopkins SAIS, added his analysis based on Japan’s domestic situation. He believes that since Abe is highly likely in his last term as prime minister, his power and influence might be weakened to a certain extent, so he might want this agreement to strengthen his domestic support. The panelists agreed that several factors make this negotiation complicated, which is why it took so long for the meeting to happen. According to Daniel Bob, Senior Fellow and Director of Programs at Sasakawa Peace Foundation, since Prime Minister Abe has frequently given speeches on the importance of climate change and on himself being a “free trade fighter,” his words might decrease the possibility to have a direct trade talk with President Trump. What’s more, the United States already has other trade issues to deal with. This bilateral negotiation was expected to happen in January, but it was delayed because of the U.S. focus on trade with China. The panel stressed the need for prioritizing the negotiation over agricultural goods, which was

When the United States stood still, its competitors benefited greatly from the lower trade barriers in Japan, formerly the 4th largest goods export market for the United States.

addressed in the recent meeting. Maria Zieba, director of International Affairs for the National Pork Producers Council who represents 60,000 U.S. pork producers in Washington, DC, believes that the pork sector had gained a great deal from the TPP, which was a good starting point, and the gain could be seen more clearly if the U.S. could stay longer in the agreement. The pork industry has depended on exports so much that it exported over 25% of its production to over 100 countries last year. Under that expansion mode, the pork industry had invested in more packing plants before the United States withdrew from the TPP. When the United States no longer enjoyed Japan’s low trade barriers, the U.S. pork industry lost its largest export market, while its competitors still benefit greatly from it. “It is not only a pork issue. It is rice, beef, and dairy issues too,” she added. And there are other problems that should be addressed in the next trade negotiations. First, Japan’s current policy over pharmaceutical devices is very unfriendly to the United States. According to Ambassador Christopher LaFleur, Chairman of the Board at the American Chamber of Commerce in Japan, Japan’s fiscal policy was not

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able to fund its expensive healthcare system given the increasing need of the aging population. Thus, Japan tried to unilaterally cut drug prices and reimburse healthcare costs, which directly influences U.S. companies in Japan because the U.S. international companies have a 20% share of Japan’s pharmaceutical market and a 25% share of the medical device market. Elissa Alben, Senior Director and Head of Global Trade Policy team for Pfizer, has a similar opinion from a pharmaceutical industry perspective. She believes that pharmaceutical products are a strength of the United States, but unfortunately, Japan’s recent policies did not respect innovations. And the annual pricing systems, which moved from the previous two-year evaluation, created more uncertainties. These price cuts favor small Japanese productions more. “If U.S. therapists were not able to enter the market, it will be a loss to everyone,” explains Alben. Second, the automobile sector faces a lot more challenges in exports. As Charles Uthus explains (vice president for International Policy and a member of the Board of Directors of the American Automotive Policy Council), increasing U.S. competitiveness in the auto industry is a priority. Given that 80% of the trade deficit happens in the

auto industry, he hopes that the future agreement can change the situation. ADVERT Uthus shared his worries for the development of the U.S. auto business in Japan. The 1996 the automobile agreement was disrupted by Japan’s devaluation of yen; the same could happen again. Also, the United States has a problem in establishing distribution networks such as finding dealers in Japan, because Japanese auto businesses do not work this way. When there is not enough supply, the demand cannot be met. Despite the uncertainties, Uthus was still optimistic about U.S. auto business in Japan’s market, and believes the U.S. auto industry is in a better position than it was decades ago. Third, U.S. negotiators should be cautious about not getting a red light from Japan. Christopher LaFleur explains that Japan would want a win-win solution in which it could see flourishing economic collaborations with the United States. According to Wendy Cutler, Japan would absolutely not accept the deal if it had to unilaterally cut the tariff without the United States doing the same thing. Also, the negotiation would not work if the United States imposed a quota, “which not only does not include growth but also is less than the current trade,” she said.

Despite all this, the panelists were optimistic about future cooperation opportunities with Japan brought by the technology revolution. Emerging technologies might turn the entire market upside down, and since both Japan and the United States are innovative countries, they are highly prone to harmonize their standards and reach a regulatory coherence. By reaching an agreement with Japan, the United States can show the world that “we can do this and this is what we expect from the rest of you,” Maria Zieba said. Andrew Gelfuso echoes the sentiment, “trade will continue regardless of economic situations, and sometimes a fresh look over some outdated agreements is necessary.” We should be more confident in the trade relationship between Japan and the United States because more opportunities hide in the hardest times. That is especially true when current technologies have the power to overthrow everything agreed before; an entirely new outlook will be necessary. ◆

About the author RONG QIN is Asia Correspondent for the Diplomatic Courier magazine in Washington, DC. OSAKA_JAPAN

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The Time is Now for a Free Trade Agreement with Taiwan After 40 years of the Taiwan Relations Act, the U.S. and its allies in the G20 should foster closer ties with Taiwan. By Neil Hare

As the G20 countries assemble in Osaka, Japan this June, they should strongly consider establishing closer economic ties and more specifically a free trade agreement with Taiwan. April 10 marked the 40-year anniversary of the passing of the Taiwan Relations Act, which promoted cultural and economic cooperation between the US and Taiwan, and also provided for the security of Taiwan against military attacks. Now in the face of increased Chinese saber rattling and economic pressure on Taiwan, it is time for the US and its allies in the G20 to increase economic cooperation with Taiwan. The United States has passed several pieces of legislation within the last year, and authorized arms sales to Taiwan in an effort to forge an even closer relationship with the island nation. In December Congress passed and President Donald Trump signed into law the Asia Reassurance Initiative Act (ARIA),

which “establishes a multifaceted U.S. strategy to increase U.S. security, economic interests, and values in the Indo-Pacific region,” according to the White House. It calls for $1.5 billion in aid to the region, including enhanced economic cooperation with Taiwan. Recently, in 2018, the Taiwan Travel Act was signed into law, facilitating travel and meetings between high ranking US and Taiwanese officials. In January Congress authorized the sale of 66 F-16 fighter jets to Taiwan to increase their defensive capabilities against an attack from China. And, on April 16, the State Department authorized $500 million for maintenance and pilot training for F-16s. All of this comes against a backdrop of increased calls by US legislators to forge closer ties with Taiwan. Congressman Ted Yoho (R-FL), the ranking member of the House Subcommittee on Asia and the Pacific, recently suggested at an event at the Heritage Foundation, that it might →

In December Congress passed and President Donald Trump signed into law the Asia Reassurance Initiative Act (ARIA), which “establishes a multifaceted U.S. strategy to increase U.S. security, economic interests, and values in the IndoPacific region,” according to the White House. It calls for $1.5 billion in aid to the region, including enhanced economic cooperation with Taiwan. G20G7.COM

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→ be time to revisit the “One China” policy, which has driven the USTaiwanese relationship since the 1970’s and led to a position of “strategic ambiguity” for Taiwan. China believes Taiwan belongs to them and is pursuing its policy of “One Country, Two Systems,” in effect claiming sovereignty over Taiwan. This policy was used in the takeover of Hong Kong to arguably negative results. It is not in the interests of either the United States, nor its allies in the G20 to see China take over Taiwan now or in the future. Further complicating matters was the recent overwhelming victory of the pro-China KMT party in Taiwan’s mid-term elections last fall and the prospect of the KMT taking over the presidency in next year’s election. One way to combat this pro-China shift is to establish an enhanced trading relationship with Taiwan or even better, a free trade agreement. A recent report entitled, “A Golden Opportunity for a US-Taiwan Free G20G7.COM

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The U.S. has a vital interest in cross-strait stability, and that can only be assured if the people of Taiwan believe they will not be overwhelmed economically by Beijing.

Trade Agreement,” written by Daniel Blumenthal and Michael Mazza for the Project 49 Institute, makes the following argument for an FTA: The U.S. has a vital interest in cross-strait stability, and that can only be assured if the people of Taiwan believe they will not be overwhelmed economically by Beijing. An FTA with the United States would signal that Taiwan has many economic options, and open the door for other countries to follow suit. Taiwan’s current and

future political leaders would find that an FTA allowed them to engage with Beijing, and with the broader international community, from a position of greater strength. The Taiwan Civil Government (TCG), an advocacy group under the leadership of Dr. Roger Lin, fully supports such an agreement with the United States, and the EU. With over 40,000 members, the Taiwan Civil Government is a pro-US and pro-West organization that promotes selfdetermination for the Taiwanese people. The TCG does not support the “One Country, Two Systems” policy of China and is pursuing closer ties with the United States. With the pivotal presidential election in Taiwan on the horizon and China exerting increased influence in Taiwan, the time for a free trade agreement is now. ◆ Editor’s Note These materials are distributed by Global Vision Communications on behalf of the Taiwan Civil Government. More information can be found at the U.S. Justice Department.

The Time is Now

for a Free Trade Agreement

with Taiwan. In an increasingly connected world, Taiwan’s prominent economic role cannot be ignored. On the 40th anniversary marking the passage of the Taiwan Relations Act, the US and its allies in the G20 should continue to establish closer cultural and economic ties with Taiwan.

TAIWAN’S ECONOMY AND STATURE

US’s tenth largest goods trading partner with $65.3 billion in total goods traded.

11th largest economy in the world

Trade between Taiwan and the EU-28 reached US$ 48.8 billion in 2016, an increase by 5,0 % in comparison to 2015

Trade in services with Taiwan totaled $19.4 billion in 2016.

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 SDGs F E AT U R E

Business Together for Sustainable Development How can the Sustainable Development Goals ensure that the radical shifts in the world of work and capital markets benefit everyone and not just the privileged few? By Roberto Suárez Santo

Some events

in our globalised system leave a stronger mark than others. The 2008 financial crisis was one such event. This economic earthquake exposed the darker side of the prosperity and growth story as advances in wage growth in developing countries were threatened, and toxic wealth inequalities in developed economies called into question the future of capitalism. The aftershocks of 2008 are still being felt today. The Financial Times recently wrote about the brewing worry over modern capitalism in the minds of many top American CEOs. Already in 2011, Dominic Barton, global managing partner emeritus of McKinsey, warned in the Harvard Business Review that business leaders could reform capitalism themselves or have it reformed for them “through political measures and the pressures of an angry public.” The G20 is no stranger to these discussions. The G20 Eminent Persons Group on Global Financial Governance produced a landmark report, “Making the Financial System Work for All”, where they describe the challenge of creating “a cooperative international order for a world that has changed irreversibly: one that is more multipolar and decentralized in decisions, yet more interconnected”.

So, how can we reform our economic model before people’s anger morphs into violence and even more widespread political instability. In 2015, the 193 countries of the United Nations General Assembly adopted the 2030 Agenda for Sustainable Development (SDGs). This highly ambitious agenda sets out a blueprint of 17 Goals to address the global challenges we face, including those related to poverty, inequality, climate, environmental degradation, prosperity, and peace and justice. It offers a platform that unites countries to meet shared challenges and redresses the prosperity gap by promising to leave no one behind. The SDGs are a good vehicle for business as well, helping companies create positive impact beyond profits and shareholder value. According to a “recent survey by Deloitte, millennial workers were asked what the primary purpose of businesses should be—63 percent more of them said ‘improving society’ than said ‘generating profit.’” Sustainability is becoming a pillar of corporate growth and doing business in the 21st century. Words into action Four years on from the adoption by the UN General Assembly, the governments of the G20 countries are slowly

Four years on from the adoption by the UN General Assembly, the governments of the G20 countries are slowly embracing the SDGs. With domestic appetite for multilateral cooperation extremely low, advancing the SDGs is seen as a show of support for international cooperation. G20G7.COM

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embracing the SDGs. With domestic appetite for multilateral cooperation extremely low, advancing the SDGs is seen as a show of support for international cooperation. As the five-year milestone approaches in 2020, now is a good time for the business community to accelerate promotion of sustainable practices, take the lead on advancing the SDGs and expand projects and partnerships to achieve them. The SDGs are applicable to every G20 country as well as less developed nations. Every country has their contribution to make towards achieving this goal and its targets in their own backyard. Some of the world’s largest and smallest companies are already using them to drive their corporate policies and find the balance between profitability and sustainability. In September last year, the U.S. Council for International Business organised a major panel discussion on the side-lines of the G20 in Argentina to look at how to further align business activities with the SDGs. USCIB President Peter Robinson urged governments and employers’ groups to do their utmost to foster support for the SDGs in their national business communities, including among small and mediumsized enterprises. “Many SMEs connect with larger companies via cross-border commerce, trade, and investment,” Robinson stated. “So, there can be a link and opportunity for larger companies to pass these ‘good business practice’ principles on to smaller national firms, both through supply chain links and by making expectations clear.” The Coca-Cola Company is committed to the economic empowerment of 5 million women across its global value

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chain by 2020. This initiative, called 5by20, was launched in 2010. By the end of 2018, it had provided support to some 2.4 million women entrepreneurs in 75 countries around the world. Hedge funds focused on responsible sustainable investing are some of the fast-growing in the world. A Price Waterhouse Coopers survey published earlier this year found that 91% of respondents prioritised and identified the SDGs as relevant to their investment decisions in 2018. Role of employer organisations The Business & Sustainable Development Commission published a landmark Report on the growth potential of the SDGs and the economic prize potential of pursuing them. According to the Report, up to $12 trillion by 2030 for the private sector could be unlocked by pursuing the Goals and up to 380 million jobs could be created by SDG business opportunities by 2030. The Report proposes six concrete actions for

business leaders, in the G20 and beyond, to take and stresses the fact that progress cannot be achieved alone but through partnerships and a network approach. The IOE has been working on improving social and employment issues for nearly 100 years. As a representative of business worldwide with Employers’ Organisation members in more than 140 countries the IOE has been involved in many processes and international initiatives for decent work and sustainable economic growth. We can provide practical cases in which targeted joint action with our IOE members made a huge difference to strengthen sustainable growth and decent work through proper policy action. This is the impact that we are looking forward The SDGs have a tremendous potential for creating value and prosperity for social partners and governments, of reconciling economic development and human development, of creating trust and cooperation

between layers of society, and assuring the “future of the open and competitive world order that has brought a large part of humanity out of poverty, raised living standards across nations, and provided the foundation for unprecedented global peace over the last 70 years.” The IOE calls for reinvigorated inclusive multilateralism most of all, a more agile international public sector, an improved enabling environment for business fostered by governments, and a renewed push and activity through their networks by the employers’ organisation of the world. As employers we are ready to create lasting partnerships for a better tomorrow and work together towards achieving the SDGs. It is time for action, we need to deliver. ◆

About the author ROBERTO SUÁREZ SANTO is Secretary-General of the International Organisation of Employers.

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Key Takeaways from the 2019 Global Talent Summit By Hannah Bergstrom

hange is constant and everything inconvenient will change,” declared Chris Luebkeman, Global Director of Arup Foresight at last year’s Global Talent Summit. How we prepare for that change will hinge in whether we are asking the right questions. We ended last year’s summit with more questions than answers. Now in its sixth year, GTS set out to convene cross-sector educators, experts, and public officials from around the world to answer the tough questions about the future of education. This year’s theme sought to answer where will we be in 30 years, and how can we prepare younger generations for the future? Here are the key takeaways.

The future workforce needs purpose For Generation Z, figuring out the motivations of top talent will be key in recruiting and retaining them. Global Entrepreneurial Leaders Institute (GELI) founder Annabella Peng drew attention to unique research GELI had conducted, which has found that Gen Z is dedicated to serious social causes, not mere fame or money. The employer on the panel agreed: any corporation that wants to retain top talent from this generation must invest in not only training, but in empowering employees to find meaning in their careers, said adidas Digital IT VP Sebastian Drews. Empowering employees to find a greater sense of purpose is essential to recruiting and retaining top talent from this coming-of-age generation.

Education has never been more expensive or more worthless Globally, more is being invested in education than ever before, and yet G20G7.COM

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we’re seeing less and less results. Education is ripe for disruption, and yet it hasn’t happened because key stakeholders haven’t had a source of quality, consistent educational data. But tools that use data to help fuel feedback on human capital investment exist and will help lead the charge. New technologies such as AI and blockchain will be key in this effort.

Data will change the face of education Data can help us organize, quantify, and discern the quality of education. According to Learning Economy CEO Chris Purifoy, Learning Economy will provide real-time feedback on investment in education, in a way that will influence important decisions in policy. Data will become fuel for changing the global economy, and can create a commodity based on this fuel.

Education is the new gold standard Traditionally, education has been the domain of philanthropy. But Oceanic Partners CEO Tim Sullivan believes it’s time for investors to get in and see the returns they desire. What then, can make investment in education profitable and purposeful? Data is the new oil, and educational data can power growth in educational innovation. Quality educational data will become a real opportunity for investment in education to provide a serious return, which could change the face of human capital investment. Just like a trillion-dollar economy is backed on the inherent value of gold, it may be possible to back an economy on the inherent value education and see massive economic growth.

The need for reskilling may perpetuate inequality According to Angelika Reich, partner at McKinsey & Company, as much as 14 percent of the global workforce will change industries in the next ten years. With the rise of automation, newer jobs will require more intensive training, leaving behind many of those who don’t have access to training. Automation will not eliminate jobs entirely; instead, more jobs that require emotional intelligence and soft skills will rise.

New technologies impact different economies in different ways The impacts of technological development vary from country to country. As highlighted by Tomasz Klekowski from IT Competence Council of the Polish Information

Data can help us organize, quantify, and discern the quality of education. According to Learning Economy CEO Chris Purifoy, Learning Economy will provide real-time feedback on investment in education, in a way that will influence important decisions in policy. Society, central and eastern European countries were on the receiving end of the benefits of tech development. The internet allowed global companies to move into these spaces and thrive. It’s not without downsides, however. The rise of automation puts jobs in Slovakia at a 62 percent chance for automation. Jobs in countries like New Zealand, however, only have a 32 percent chance.

The gender gap in STEM may give rise to biased AI One of the greatest challenges in diversity and inclusion in the workplace is the gender gap in STEM fields. With further developments in AI and automation technology, notes Robin Errico Chief Risk Officer and Diversity and Inclusion at EY, we’re further exacerbating the problem by potentially creating technology with implicit gender biases.

To solve the skills gap, we need to understand what skills are The modern workforce is young, with millennials being the largest group of current workers. Jacob Sherson, Founder and Director of ScienceAtHome poses a challenge: to bridge the skills gap inherent in this young workforce, we need to understand what we mean by skills. Even further, once we identify skills such as creativity or leadership, we need to ask: What is creativity? Understanding what humans can and can’t do is vital in closing the skills gap.

employers look for both hard and soft skills. And if candidates cannot display empathy, creativity, and the ability to contribute to a team, they will have a hard time finding employment. Integrating soft skills into a school curriculum starting from primary education can help mitigate this issue, which is exactly what Ji Han, Director of Curriculum and Learning at Zurich International School is working toward. Fostering soft skills, she believes students need to “learn how to learn”, which enables them to think one step ahead while approaching problems in and outside of the classroom.

Soft skills development is vital and should start from an early age Many students leave higher education, especially in STEM fields, with hard skills such as logic, problem-solving, and specialized certifications. However,

Talent is universal; opportunity is not Learning skills such as web design, coding, robotics, and engineeringbased projects are going to be a large part of school curriculums in order → OSAKA_JAPAN

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→ to prepare students to enter the modern workforce. While technology in the classroom will present incredible opportunities for certain students, it could contribute to the global skills gap—certain students will be left even further behind, and will be less prepared for the workforce. According to Manjula Dissanayake, Executive Director of Educate Lanka Foundation, “Talent is universal; opportunity is not”. Dissanayake aims to bridge access to technology and opportunity to students in Sri Lanka by involving the private sector as stakeholders in education. Encouraging collaboration between the private and education sectors could be one solution to ensure students in certain communities, cities, and countries, have better access to opportunities.

of Degreed, businesses will be able to better adapt to changes in the workforce by taking an audit of skills their employees already have, and by better understanding what skills their employees are willing to learn. Understanding people’s motivations for learning, and preparing for workplace changes now will help employers stay afloat during a time of rapid changes.

Employers must foster a growth-focused environment to retain talent Danny Laker, Lead for Innovation, AI, and Blockchain Business at Accenture, expressed the need for employers to foster an environment of learning for the people they hire by investing in the person rather than just the skillset. Most people desire to learn and grow beyond their job description instead of staying stagnant in their career. When employers support their employees’ individual passions and interests, it will encourage an environment of growth, collaboration, and constant learning in the workplace.

Video games and learning can work better together Game-based learning will be one of the key changes in the way students are educated in the 21st century. Robert Sumner, Professor at ETH Zurich and Associate Director of Disney Research and Janet Rafner, Director of ScienceAtHome at Aarhus University, both believe in the power of game-based learning to enhance logical and problem-solving skills. Gamification allows students of all ages to learn both hard skills and soft skills in a way that is fun, engaging, and accessible. Sumner pointed to the increasing need for students to be involved in computer science from a young age, as skills learned in this discipline will span a variety of fields such as medicine and architecture. Additionally, Rafner explained that game-based learning could be a way for typically underrepresented populations to become involved in computer science, as it has the potential to be more accessible.

Learning happens beyond and outside of school The way that we learn, and our motivations for learning are shifting. Students and employees are often learning skills outside of their school or place of work—through videos, apps, forums, and more. G20G7.COM

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The workforce as we know it is currently and will continue to change dramatically. Employers will be faced with automating certain jobs, retraining for certain skills, and creating new positions altogether. Employees who do not adapt to changes and learn new skills will be left behind. According to Kelly Palmer, Chief Learning Officer

Blockchain and Artificial Intelligence will usher in a wave of changes in education, learning, and the workforce. Jacksón Smith, Chief Technology Officer of Learning Economy, spoke about the potential for these technologies to augment our lives and personalize the way we learn and work.

Blockchain and AI will help map the future of education Blockchain and Artificial Intelligence will usher in a wave of changes in education, learning, and the workforce. Jacksón Smith, Chief Technology Officer of Learning Economy, spoke about the potential for these technologies to augment our lives and personalize the way we learn and work. Technology is constantly being updated to best serve our needs. According to Smith, the invention of the computer provided us the ability to store information, and the internet allowed us to transfer information. Now, AI has the ability to process and organize information, and blockchain has the ability to transfer value. These abilities will augment our educations and jobs, allowing us to personalize the way we learn. ◆ The seventh edition of the Global Talent Summit will take place the first quarter of 2020. You can continue the conversation year-round by signing up for our forums and discussions at www.globaltalentsummit.org

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An AI protocol to solve the skills gap. www.learningeconomy.io

Education is a mountain. Everyone takes a different path to the top. We measure education, online and in classrooms, into blockchain learning ledgers, then map them to Microdiplomas that quantify soft and hard skills with artificial intelligence to help us measure which courses lead to skills, workplace opportunities, and impact. The Resultâ&#x20AC;&#x201D; Real-time feedback on human capital investment and an economy that pays for education.

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Economy Corporations, Commonwealth, Sandboxes, and Shared Value We invite the global community of regulators to sandbox Economy Corporations and share your findings with the G20 and other groups of regulators focused on sustainable development. By Chris Purifoy

When I was

a kid we had our own form of currency. My friends all traded baseball cards and pogs, we traded hot wheels and comic books and action figures. Every new year brought with it a new commodity in our shared ecosystem of childhood value. Fast forward to my adulthood and value was transformed into a very different and rigid definition— my time for money. It wasn’t until the crypto bull run of January 2018, lightheaded from high altitude in Switzerland, that I would get another glowing glance at this rich and complex ecosystem of value transfer that had come so naturally to me as a child. High up in the Swiss Alps, free from the normal disposition of my narrow adult nature, we saw hidden in a pile of shiny new digital bit dimes the working tools of

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shared value capitalism. What would follow is a coming of age story about bulls and bears, markets and models, stifled crypto economies and Economy Corporations designed to scaffold commonwealth. It all began in late 2017, as almost $1 trillion in value materialized from the global diaspora one Bitcoin at a time. We realized that winter that many of the world’s problems could be solved if cryptocurrency markets could be built around the inherent values our world already shares. What if a learning economy could pay students to learn and rise into agency? What if an eco-economy could rid the world of litter? What if a market hinged on the global burden of disease could provide a shared value economy where everyone could have healthcare without the need

for institutions or government support? For us, the crypto boom was not about currency, it was about re-thinking the very definition of value. We saw clearly how inherent value markets linked with distributed integrity ledgers would reinvent the world. We learned that winter that while the computer taught the world to store information and the internet taught us how to transfer that info, blockchain moved the needle of progress another order of magnitude when it taught us how to transfer value. The importance of this can not be overstated, but because of our limited adult appraisal of value it is hard for most people to appreciate just how transformative this new pioneering technology will be. There is more to the story of value than just time and money. What about a vote that can’t be tampered with or an ID that can’t be stolen or erased? What about proof of a skill that is portable across borders or transparent financial ledgers that curb corruption? When I began to see what has real value, I saw a glimpse into the prodigious progress still to come in the next few decades as blockchain and machine learning flatten space and time around transferring value the same way the internet and AOL did for information two decades ago. But by UNGA in September of 2018, it was clear this new value transfer

G L O B A L B R I E F I N G R E P O RT E C O N O M Y C O R P O R AT I O N S

The Economy Corporation solves the conflict of interest every C-Corp faces, by realigning fiduciary responsibility to the economy instead of shareholders. blockchain paradigm couldn’t continue unregulated. The crypto market shifted violently into a bear run after the bubble burst midway through the year, leaving anyone still pedaling a crypto economy or an ICO in America labeled as either still light headed from high altitude or worse, a snake oil salesman intent to steal your savings. The adults in the room quit funding and developing cryptocurrency in America and instead refocused on enterprise blockchains. Then by the close of 2018, the SEC put a full stop to crypto coins in the U.S. while they began sorting out new regulations, leaving crypto innovation stifled and sandboxless. And so where did everything go so terribly wrong? After speaking at UNGA that year about commonwealth crypto economies

then listening to Thomas J. Donohue from the US Chamber of Commerce challenge the forum to think up new ways of structuring corporations to meet 21st century business needs, the conjunction of ideas helped us realize the issue at the heart of it all. When a cryptocurrency economy is controlled, operated, and mostly owned by a C Corporation, which had become standard practice in the U.S., eventually the corporation is forced to make decisions that undermine the market for profit because of its fiduciary responsibility to maximize profits for its shareholders. That afternoon Jacksón Smith and I joined some friends in midtown New York City after the forum for dinner but couldn’t pay attention, we realized there had to be a new corporate structure to solve this conflict of interest. And once you see it, you can’t unsee it. We saw how the complexity of this regulatory challenge stems from taking for granted the corporate structure underpinning the industry of most crypto economies. By ignoring the structure and trying to regulate a cryptocurrency C Corp, the equation simply never balances. The incentives are always out of line. There is a built in systematic conflict of interest that creates a breeding ground for collusion, corruption and dangerous clumsy corporate practices. This is a tough problem to spot, because at the onset each market and the corporation launching it have aligned incentives, the company grows and earns money as the market grows and earns money. But eventually there is an inevitable inflection point where the incentives fall out of line as the corporation is forced to make decisions to maximize profit for its shareholders instead of protecting the market, and the rest is collusive crypto history. Before the end of UNGA that year we had partnered with Rico Garcia Ondarza, a Masters of Public Policy Candidate of Harvard Kennedy School, to develop a regulatory study focused on defining the challenges and recommending a new corporate structure: Enhancing Blockchain— Innovation via Regulation, The Case for an E-Corporation. On 17 April, 2019, the foundational first leg of the study was published providing a great step

toward comprehensive blockchain regulation. The Economy Corporation solves the conflict of interest every C Corp faces, by realigning fiduciary responsibility to the economy instead of shareholders. Mr. Garcia Ondarza summarizes the study: “This policy analysis begins by explaining what distributed ledger technology is, continues by introducing a framework that describes the main regulatory challenges, and concludes with a recommendation for the creation of an Economy Corporation. The E Corp is an intermediary between private and public, providing clarity for innovators on how best to structure their blockchain-based startups in order to: 1) operate within the confinement of the law, 2) preemptively address several of the challenges that come with distributed ledger technology, and 3) give consumers and users increased confidence and trust moving forward.” The E Corporation is a theory, and this article is a clarion call for market tests. We invite the global community of regulators to sandbox Economy Corporations and share your findings with the G20 and other groups of regulators focused on sustainable development. When I was a kid we traded super heros and sports stars on books and cards and LEGOs and games. I have always valued heros who reach for the impossible. My Upper Deck Michael Jordan card was worth the same as my friend’s new stereo no different than his special edition Superman comic book was worth the same as my Super Nintendo. We traded regularly. The Economy Corporation gives this commonwealth value transfer model a corporate framework for innovation. It will take adults with curious minds like children to reinvent a world where abundance is the most traded commodity by 2050. We invite you to research and pilot Economy Corporations with us in a global sandbox of open innovation. ◆ About the author CHRIS PURIFOY is a storyteller living in Washington DC, the Cofounder and Chief Architect of Learning Economy, and Senior Editor of the Diplomatic Courier. Find out more and join the research collaboration at ecorpstudy.org. OSAKA_JAPAN

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