We are living in times of fundamental, and often disruptive, change. Nevertheless, the need for individual mobility has stayed the same. Never before has individual mobility provided transport for so many people.
However, the growing trend for widespread car ownership, combined with a rapidly growing population, is causing unprecedented harm to the planet. Tackling this is a challenge faced by every major player in the automotive industry. At Audi, our job is to realise our vision for the future: mobility with a clear conscience. We are working hard to achieve this, placing sustainability at the core of our operations while maintaining a focus on trust and future viability, which have been key objectives of ours for a long time.
All over the world, people are changing their attitudes and behaviour, ranging from their daily shopping habits to major decisions such as building a house, buying a car or where they want to make financial investments. In terms of global finance, sustainable investing is now a market worth more than $30trn worldwide – a trend that is accelerating. Investors are continuing to value the mutual relationship between economic success and sustainable commitments; our mission is to attract these investors once we have brought sustainable automobile travel to the market.
Audi’s Brussels plant has been carbon neutral since 2018, making it the first large-scale premium automotive manufacturer to achieve this
Four a better future
Audi’s operations strictly adhere to environmental, social and governance (ESG) targets, which we achieve by integrating ESG criteria into our long-term management processes. We are also deeply committed to upholding high standards with regards to equal opportunities, human rights and environment protections. We demonstrate transparency by allowing ourselves to be assessed whenever asked, for example, by credit ratings agencies.
The board of management is strongly committed to meeting the Paris Agreement’s climate goals – especially the two-degrees target. By 2025, we want to reduce our environmental impact from what it was in 2010 by 35 percent per vehicle. We have taken steps to reach 23.7 percent so far, and we intend to remain on target.
Right now, we are on track to meet the objectives of Mission Zero, our initiative to reduce company-wide carbon emissions. Across the entire value chain, we are working with carbon-neutral production and supply chains, closed resource loops and sustainable products. We have also established Four Rings of Sustainability – reduce, reuse, recycle and rethink – which we use in the planning of every project.
The first ring of sustainability is to reduce. We want to consume fewer natural resources, particularly in terms of our energy use. This applies to all of us – those working in the automotive industry, retailers and private consumers. Almost half of all resources consumed are for energy production and are mainly sourced from coal, oil, gas and uranium – energy sources with well-known environmental risks. Making reductions here is particularly effective in improving overall sustainability. Audi has a clear agenda – to make all our production plants carbon neutral, on balance, by 2025.
We are expanding this goal to encompass the consumption of raw materials and our own employees’ personal transport needs. Our Brussels plant has been carbon neutral since 2018, making us the first large-scale premium automotive manufacturer to achieve this. Moving forward, our plan is for the whole company to be carbon neutral by 2050.
This makes production of the Audi e-tron and the e-tron Sportback, our latest electric cars, an important reminder of what we are striving for. Outside of Brussels, our other plants have also made great progress: in Györ, Hungary, for example, Audi utilises geothermal and solar energy to power our operations. In addition, Europe’s largest roof-mounted photovoltaic system has just gone into operation at our Hungarian production site. This alone will reduce CO2 emissions by approximately 6,000 tons each year.
As a result of these measures, we have reduced CO2 emissions by more than 23,000 tons at our four European plants each year since 2010. Similarly, our use of rail for transport between plants in Germany and North Sea ports has been powered by green electricity for an impressive amount of time. We became the first company in Germany with carbon-neutral rail logistics in 2017, avoiding 13,000 tons of CO2 emissions every year.
Everyone on board
To be truly sustainable, our efforts cannot stop at the factory gate. That’s why we also want to reduce CO2 emissions in our supply chain. We have developed a sustainability rating system for our suppliers, involving a dozen criteria concerning environmental and social factors. We have already checked and assessed more than 1,100 companies at their sites. Since these ratings were introduced earlier this year, they have proved decisive in how partner contracts are awarded.
Regarding the second ring of sustainability (reuse), many of the resources we need, such as water and air, remain in use for as long as possible. For example, our factory in Mexico now produces no excess wastewater. We have achieved this by cleaning the water we use so it can be consumed again in production. Other Audi plants are optimising their water consumption as well to meet this end goal and decrease the by-products of our plants. We are working hard to further develop the technology behind electric cars. For instance, we are currently testing concepts for how we can reuse lithium-ion batteries. These are extremely valuable as they can be used for storing electricity from renewable sources such as solar, wind or hydropower.
The third ring of sustainability involves recycling. More businesses need to grasp the notion that waste is not worthless, as recycling can actually bring many benefits. At Audi, we have regarded waste products as valuable raw materials for a long time. We sort and separate waste products by their type, reuse what we can, and recycle the waste while ensuring material quality is maintained. We are already developing new recycling processes for our electric car products, and in lab tests, we have managed to recycle 95 percent of the materials used in high-voltage batteries, such as cobalt, copper and nickel.
We are conscious of the negative impact that comes from the production of aluminium, which is why we act where we can to exert a direct influence on recycling the material. To minimise its impact, we separate it from any steel it may be welded to and press the waste metal to save space in transportation. It is then reused at in-house factories. We make sure none of our waste steel and aluminium is thrown away, as they are both recyclable materials. The recycling of aluminium alone prevented the release of more than 90,000 tons of CO2 emissions in 2018 – a 30 percent increase on the year before. A circular economy and efficient processes save resources, cut costs and reduce the environmental impact of production.
Last but not least
Rethink is our fourth ring of sustainability. Rethinking means reflecting beyond the company and considering how we can make a difference. At our plant in Mexico, for example, we have planted more than 100,000 trees in the immediate vicinity. At our production site in Münchsmünster in Germany, countless insects fly between our large flower meadows and help pollinate rare varieties of fruit trees. Regular monitoring demonstrates a clear increase in biodiversity. These cases are sustainability at its best, put into practice.
We are committed to the fact that the entire car industry needs to engage in sustainability, and rethinking has led to the conclusion that we need to do it together. Audi is now collaborating on sustainable solutions through its many alliances and partnerships.
To solve global challenges, we need worldwide cooperation, such as the Aluminium Stewardship Initiative (ASI). We have been strongly committed to working as a member of this group since 2013, which has resulted in a global sustainability standard with criteria set for environmental and social issues, as well as business ethics. Audi was the first car manufacturer to receive the ASI sustainability certificate, putting us ahead of others in the sector.
Managing your organisation according to ESG goals does not just involve risk management: it provides the basis for long-term economic success. It also includes activities that are not reflected in the bottom line on financial statements. Nevertheless, they contribute to our strength as a brand, our strategy and our path to achieve our vision.
Take the Audi Environmental Foundation, which celebrated its 10th anniversary in 2019. The foundation promotes innovative ideas for environmental protection, using ideas from the fields of science and education, as well as from the public and our own employees. This non-profit foundation is globally connected, helping innovative ideas become reality – for example, working out how we can remove plastic waste from rivers before it reaches the sea. The Audi Environmental Foundation empowers those who seek knowledge, resulting in projects that aim to create a better world – one in which all of us can live a good life with a clear conscience.
It is evident that Audi is changing rapidly. By 2025, our portfolio will include more than 30 electrified car models, with 20 of them expected to run solely on electric power. These cars will account for around 40 percent of our worldwide revenue, demonstrating that we are serious about a sustainable future, caring for the environment and building a future we can all share.
We truly believe that companies managed according to ESG principles are more successful and secure valuable market share. Sustainability has become a key element of corporate management, and thus a value driver instead of just a trend. That’s why we are working to create new Vorsprung durch Technik – advancement through technology – for our customers. The four rings of sustainability and Mission Zero are the key elements of our sustainable strategy, and they demonstrate that the entire company is moving in one direction. Our vision is to deliver sustainable mobility to preserve the planet and deliver state-of-the-art products to our customers.
Thirty years after celebrating the fall of the Berlin Wall, Europe has gone on a wall-building spree. In its next budget cycle (2021-27), the EU plans to spend €34.9bn ($38.4bn) on border security, to help manage the tens of thousands of migrants trying to enter the region every year.
As a result, business is booming for Europe’s border security industry. A 2019 report by the Transnational Institute has revealed that a small cohort of European arms companies profit handsomely from the huge growth in the EU’s border budgets. These large companies are increasingly influential in shaping EU policy and encouraging the bloc to boost security efforts, but migration experts warn that the heavy militarisation of Europe’s borders only puts already vulnerable migrants in greater peril.
Up in arms
According to the Transnational Institute, Thales, Airbus and Leonardo are among the companies benefitting most from border security spending. For these businesses, the refugee crisis represents something of a market opportunity. Thales, which produces radar and sensor equipment, is currently developing border surveillance infrastructure for EUROSUR, the European Border Surveillance System. Meanwhile, Italian arms firm Leonardo was awarded a €67.1m ($73.7m) contract in 2017 by the European Maritime Safety Agency to supply drones for EU coastguard agencies.
To keep the cash flowing, it’s in the interests of these companies that the EU treats border security as a priority. Through lobby groups such as the European Organisation for Security – which had a declared lobbying budget of €200,000 ($220,000) to €299,000 ($328,765) in 2016 – companies like Leonardo perpetuate the narrative that migration is a security threat first and foremost, and not a humanitarian crisis. On this premise, the heavy militarisation of Europe’s borders is a necessary course of action.
Supporters of border security in Europe would argue that the spending boost is seeing results. In 2018, there were fewer than 150,000 new arrivals to Europe, according to UN data, down from more than a million in 2015. However, while the number of people arriving in Europe has fallen, the number of migrant deaths has risen, as heightened security has compelled people to reach Europe’s shores through more dangerous means.
A perilous journey
One argument for border militarisation is that it deters people from making hazardous crossings. “Walls work,” said US President Donald Trump in January 2019. “They save good people from attempting a very dangerous journey from other countries.”
In contrast, many migration experts argue that increased border security does not act as a deterrent. Nick Vaughan-Williams, a professor of International Security at the University of Warwick, has found in his research that migrants are “largely unaware” of the EU’s border security measures. “Those fleeing violence, poverty and persecution will not be deterred from seeking entry to Europe if they have no prior knowledge of these measures and the forces provoking their flight leave them with no option but to seek safety,” he told World Finance.
As well as forcing migrants to take more perilous routes and put their lives in the hands of smugglers, increased security increases the risk of human rights abuses at the borders themselves. There is growing evidence of violence against refugees by border security guards along the Balkan Route in Croatia. Although the Balkan Route may be far from Paris or Berlin, Amnesty International has released a statement to say that the EU is nonetheless complicit in these human rights abuses.
A European fortress
Militarised borders are the most visible way for a government to show that it’s acting on the public’s migration concerns, but in reality, their effectiveness is questionable. If migrant numbers were to once again reach 2015 levels, it’s likely that heavily militarised borders would just push refugees to take less conventional routes into Europe and risk their lives in doing so.
This, coupled with the climate emergency the EU is currently facing and the global economic downturn, makes it hard to justify the EU’s €34.9bn expenditure on borders. Many analysts argue that border security measures pander to the desires of populists and the far right, and do not necessarily reflect wider public opinion. “There is growing evidence that many EU citizens want accurate and trusted sources of information about migration rather than increased spending on border security – particularly in times of austerity,” Vaughan-Williams said.
Border security firms only skew this narrative further. Through their powerful lobbying position, they use paranoia to push for greater militarisation at the edge of Europe’s territory. In doing so, they fuel a vicious cycle where fear justifies higher walls and an increased border guard presence.
The World Economic Forum (WEF) Annual Meeting seems to have lost its mojo – particularly in the West, where globalisation is being rejected in favour of a more protectionist outlook. What’s more, most observers of the 2019 meeting found that it fell a little flat. Headline speakers were underwhelming and failed to live up to the box-office acts of previous years, which included the likes of US President Donald Trump and his Chinese counterpart, Xi Jinping. If future editions of the gathering are to prove their worth, they will need to consider the concerns of a world growing more antagonistic to the globetrotting elites who have become synonymous with the event.
For the business leaders and government figures assembled at Davos, resolving the US-China dispute will no doubt be a priority
Nevertheless, many of the chief talking points from previous years remain unresolved and are likely to dominate the agenda in 2020. Finding the right regulatory balance that can rein in the excesses of Silicon Valley’s tech giants without stifling innovation will undoubtedly be up for discussion once again. Trade tensions, meanwhile, don’t appear to be going anywhere, and climate change looks as difficult to solve today as ever.
But the WEF’s yearly showpiece has never claimed to be able to single-handedly solve the major issues facing our planet. Instead, the gathering of business elites, experts and heads of state in Davos, Switzerland, simply aims to better understand and engage with these challenges. Each year, even if the forum only manages to spark one idea that makes the world a better place, surely it must be deemed a success.
US against the world
In 2018, when Trump was in attendance at the WEF Annual Meeting, few would have predicted that the trade war wrangles between China and the US would still be plodding along today. Tariffs remain in place on billions of dollars’ worth of goods, forcing businesses in both countries to explore new markets, make cutbacks or simply shut up shop. In fact, the only thing that seems to be traded freely between the two superpowers these days is insults.
The IMF’s latest estimates indicate that the US-China trade conflict has wiped as much as $700bn off the global economy to date. It has reportedly already cost the technology industry $10bn and could end up setting back the average US household $460 a year, according to an analysis by London-based economists Kirill Borusyak and Xavier Jaravel. In China, meanwhile, the spat has contributed to an economic slowdown that has taken even the most pessimistic analysts by surprise. For the business leaders and government figures assembled at Davos, resolving the US-China dispute will no doubt be a priority.
Fortunately, the WEF has always been unashamedly pro-globalisation. Shortly after the Trump administration extended its tariffs on Chinese goods in 2018, the WEF’s Aditi Verghese and Sean Doherty criticised the decision in an article entitled Trade Wars Won’t Fix Globalisation. Here’s Why. They wrote: “Short-sighted, protectionist measures ignore and erode the opportunities that [global value chains] provide for driving inclusive and sustainable growth and do nothing to optimise outcomes.”
But while some parts of the world wait to see what these two global superpowers will do next, others are keen to get on with things. In Africa, for example, countries are refusing to pull down the shutters and are instead opening themselves up to more international trade. Plans are afoot to launch the African Continental Free Trade Area (AfCFTA), a tariff-free continental market for goods and services that, according to the WEF, would instantly become the world’s largest trade bloc.
The AfCFTA will be implemented gradually, but it already has the support of 54 members of the African Union (AU), with the only exception being Eritrea. It’s hoped that the free trade area will boost intracontinental trade, which remains far below that found in other parts of the world: according to the African Export-Import Bank’s African Trade Report 2019, intracontinental trade in Africa sits at just 16 percent, far below the figures seen in Asia (52 percent) and Europe (73 percent). Preliminary estimates cited in the report suggest the establishment of the AfCFTA could see cross-border trade rise by 52 percent within 20 years if exports in each subregion reach their full potential (see Fig 1).
“[The AfCFTA] will create jobs and contribute to technology transfer and the development of new skills; it will improve productive capacity and diversification; and it will increase African and foreign investment,” explained UN Deputy Secretary-General Amina Mohammed at the formal launch of the AfCFTA. “Perhaps most important of all, the [AfCFTA] demonstrates the common will of African countries to work together to achieve the vision of the [AU’s] Agenda 2063: the Africa We Want. It is a tool to unleash African innovation, drive growth, transform African economies and contribute to a prosperous, stable and peaceful African continent, as foreseen in both Agenda 2063 and the 2030 Agenda for Sustainable Development.”
At the WEF on Africa event held in August 2019, there was much discussion as to why Africa is choosing to integrate its economies at a time when other parts of the world are adopting a more isolationist approach. Crucially, the leaders of the AU are already discussing ways to ensure that the continent’s less developed economies – and, indeed, its poorest citizens – are not negatively affected by a more liberal approach to trade. It’s a topic that will undoubtedly be returned to in Davos at the end of January.
AI opener
Silicon Valley’s technology giants had their toughest year for a long time in 2018: Facebook CEO Mark Zuckerberg faced a grilling from US Congress; Google saw several employee walkouts over the firm’s inadequate response to sexual harassment claims; and Apple had to navigate reports that some of its products were susceptible to Spectre and Meltdown security vulnerabilities. Scrutiny of said tech firms continued into 2019, albeit not to the same degree. In June, Facebook decided that its dominance of the social media space was not enough and began eyeing the financial services market. Its unveiling of a new digital currency called Libra, however, was met with a less-than-enthusiastic response.
Companies in Europe and the US should be wary of pushing regulators to place technological progress ahead of ethical considerations
Reactions to Libra have ranged from the indifferent to the indignant. Some predict the currency will have little impact when it launches later this year, with detractors (such as The Week’s Jeff Spross) suggesting that it offers few points of difference from existing mobile payment apps. For others, the currency poses a threat to the monetary sovereignty of nation states. That’s certainly the view of the French Government, which has moved to block the development of Libra in Europe.
Regardless of whether Libra goes on to change the world or not, the conflict between Facebook and France touches upon a broader challenge presented by today’s rapidly advancing digital economy: how to legislate on new developments in a way that protects citizens without stifling innovation. In addition to Silicon Valley’s heavy hitters, a number of entrepreneurs and pioneering start-ups are busy trying to create the next big thing in areas like self-driving vehicles, the Internet of Things and quantum computing. It is becoming increasingly clear that regulators will need to grapple with these developments sooner rather than later.
Deciding just how obtrusive regulations should be is becoming more difficult. Not only is technology advancing rapidly, it is developing all over the world and in different regulatory climates. US institutions may determine that artificial intelligence (AI) needs another decade of research before it can be employed in, say, the medical field, but if China thinks such delays are unnecessary, the US risks falling behind. In today’s winner-takes-all economy, coming second is the same as not being in the race at all.
Already, China’s less stringent regulatory approach is paying off. The country has quickly become a world leader in genome editing, overtaking the likes of Japan and the US, where obtaining government approval for human trials is more difficult. Similarly, China is making impressive strides in terms of AI development. To function effectively, the technology requires reams of data that will allow it to ‘learn’ the correct way of acting, whether that concerns autonomous vehicles, natural language processing or facial recognition. China, which has a very different attitude to online privacy than countries found in the West, has an advantage here, too.
“Organisations should work on a responsible privacy programme,” Paul Breitbarth, Director of EU Operations and Strategy at Nymity, told World Finance. “That means looking at which requirements for privacy and data protection apply to you, in all the jurisdictions where you operate, and to implement policies and procedures to deal with them.”
In China, however, a responsible privacy programme places national interests above individual ones. According to a national intelligence law introduced in 2017, organisations must support and cooperate with government authorities when they request information that relates to national security issues. Critics believe the wording of the law is vague enough to permit widespread state surveillance. Businesses all over the world may be trying to win the tech race, but they are not all playing by the same rules.
Still, companies in Europe and the US should be wary of pushing regulators to place technological progress ahead of ethical considerations. Instead, markets need to clearly state that they will not use Chinese technology – regardless of how cheap or effective it is – if it has been developed using morally dubious means. That would send a clear message, while also giving firms a financial incentive to adopt sound principles.
If this approach works, then perhaps the future could see western and Chinese firms collaborating on new technology. This may seem unlikely at present, but this is the sort of long-term ambition that those present at Davos should be striving for – integrating China more closely with the global community.
Climate activist Greta Thunberg protests global warming at the 2019 WEF Annual Meeting
Keeping a cool head
As is the case every year, those gathered at the WEF Annual Meeting (many of whom arrive by private jet) will be set the unenviable task of trying to win the fight against global warming. While it is easy to sneer at the jet-set elite for not practising what they preach, finger-pointing will achieve little – the time for action is already long overdue.
Throughout 2019, a number of natural disasters provided a reminder of just how urgent the situation is. In September, Hurricane Dorian became the strongest storm to ever hit the Bahamas, resulting in billions of dollars’ worth of damage and leaving at least 67 dead. While rising global temperatures do not cause storms like Dorian, they can boost their intensity. For the strongest storms, climate scientists have found that the sustained wind speed increases by approximately eight percent for every one degree Celsius of warming. The surface sea temperatures measured in the area where Dorian formed were higher than usual (especially when compared with pre-industrial levels), but such figures – and the disasters they engender – are likely to become the new normal if humans fail to cut their carbon emissions drastically and without delay.
Although the Paris climate accord has been criticised for its ineffectiveness, all hope is not lost. Greta Thunberg, a speaker at the 2019 WEF Annual Meeting, continues to galvanise her supporters by preaching the importance of sustainability. It’s a message that national governments have increasingly been espousing themselves. In both the US and Europe, environmental policies are now firmly part of the political conversation: for instance, new European Commission President Ursula von der Leyen has made the European Green Deal a central part of her plans in office, which also include making Europe the world’s first carbon-neutral continent by 2050.
Although the Paris climate accord has been criticised for its ineffectiveness, all hope is not lost
“We must go further; we must strive for more,” von der Leyen said in a speech during her candidacy for the commission presidency. “A two-step approach is needed to reduce CO2 emissions by 2030 by 50 – if not 55 – percent. The EU will lead international negotiations to increase the level of ambition of other major economies by 2021. Because to achieve real impact, we do not only have to be ambitious at home – we have to do that, yes – but the world has to move together.”
On the other side of the Atlantic, figures on the political left, such as US Representative Alexandria Ocasio-Cortez, are pushing their own version of the European Green Deal that would reshape the US economy. The Green New Deal, as it is known, promises to decarbonise the manufacturing and agriculture industries, build a national energy-efficient smart grid and turn green technology into a major US export. These proposals are ambitious, but that’s because they have to be – according to the Carbon Brief website, even if the global temperature is limited to 1.5 degrees Celsius above pre-industrial levels, sea levels will rise some 40cm by 2100, freshwater availability in the Mediterranean will fall by nine percent and the intensity of heavy rainfall will go up by five percent. If temperatures increase to a greater extent, the outcomes are even worse.
Despite the efforts of politicians around the world, the most pessimistic estimates indicate that it will not be possible to reduce the planet’s CO2 emissions quickly enough to avoid catastrophe. Instead, states may need to deploy less conventional solutions to meet their environmental goals. One option would be to invest more heavily in carbon capture and storage technology. This can be used to greatly reduce the CO2 emissions produced by the burning of fossil fuels and, when combined with renewable biomass, can even lead to carbon-negative energy. Similarly, several organisations have developed methods to remove CO2 from ambient air using an absorption-desorption process.
It is depressing that humanity has treated the planet in such a way that simply reducing fossil fuel usage is unlikely to be enough to sidestep disaster. At this year’s WEF Annual Meeting, talks will once again focus on efforts to cut down global greenhouse gas emissions. Ultimately, though, new technology may have to come to the rescue.
A new course
Making things more difficult is the fact that these challenges must be tackled at a time when political and economic stability is far from guaranteed. More than 10 years have passed since the global financial crisis, but the world economy is still suffering a hangover. “Current economic momentum remains weak, while heightened debt levels and subdued investment growth in developing economies are holding countries back from achieving their potential,” World Bank Group President David Malpass said in June 2019. “It’s urgent that countries make significant structural reforms that improve the business climate and attract investment. They also need to make debt management and transparency a high priority so that new debt adds to growth and investment.”
The eurozone, for example, is expected to grow by just 1.2 percent across 2020 (see Fig 2), while US-China trade tensions threaten to dampen business and investor confidence in both markets for the foreseeable future. Political change may provide a path away from this stagnation: the US presidential election is scheduled for later this year, while the EU has recently appointed new heads of the European Commission and European Central Bank. However, as we are all well aware, politics is always rife with uncertainty. Change can be both positive and negative.
Attendees at the 2020 WEF Annual Meeting will be hopeful that fresh leadership can set the planet on a course for closer economic collaboration, stronger financial stability and longer-term environmental sustainability. If discussions at Davos can help in any of those areas – even in some small way – then perhaps the event can recapture some of its lost spark.
In 1971, the German business professor Klaus Schwab brought leading executives from Western Europe to a small town in the Swiss Alps. Schwab asked these corporate leaders to consider the impact of their businesses on all of their stakeholders – not just customers and investors, but the societies within their sphere of influence. This ethos of responsibility would form the foundations of a new non-governmental organisation committed to economic and social betterment: the World Economic Forum.
There is a growing understanding that wealthy individuals can meet their financial goals while also safeguarding the planet for future generations
Since that first meeting in Davos almost five decades ago, the need for corporations, governments and society at large to take responsibility has only grown. The World Bank estimates that $4trn worth of investment is needed every year to achieve the UN’s Sustainable Development Goals (SDGs) by 2030. With current annual funding from multilateral organisations amounting to just $1trn, the continued contribution of the world’s wealthiest people is more crucial than ever.
The urgency of global issues has challenged high-net-worth individuals (HNWIs) to consider how they can leave a legacy greater than just financial security to the next generation. It is the responsibility of their advisors to support them in doing so.
The new face of wealth
Finally, the misconception that responsible investments don’t bring high returns is being broken down. There is a growing understanding that wealthy individuals can meet their financial goals while also safeguarding the planet for future generations. August 2019 data from Morningstar showed that 73 percent of funds in its environmental, social and governance (ESG) index outperformed equivalent non-ESG funds over the past three years. This has led to HNWIs increasingly deploying capital to responsible investment opportunities – funds that preserve and grow their financial assets, and build a sustainable future.
This has contributed to the soaring popularity of sustainable investing in recent years. According to research carried out by UBS, 34 percent of family offices globally are already engaged in sustainable investing, and a further 25 percent are engaged in impact investing. Of the latter, 62 percent are focused on fighting climate change. Further, a Standard Chartered Private Bank survey showed that 84 percent of HNWIs were open to shifting their funds from philanthropy to sustainable investing.
Another major driver of ESG integration is the shifting high-net-worth demographic, with more women and Millennials joining the group than ever before. These groups are highly attuned to the broader social and environmental impact their investments have.
For example, research by Morgan Stanley found that 86 percent of Millennials and 84 percent of women are interested in sustainable investing, compared with 67 percent of men. This has contributed to an influx of sustainable and impact-focused investment funds and strategies, and the number of options available in this space is only growing. After increasing just one percent in 2018, assets in this sector rose 15 percent to $52bn during the first half of 2019, according to research by Fitch Ratings.
Global goals
Although interest in sustainability from HNWIs is driving the investment management industry to assess how it can meet financial goals and address global issues, the urgency of the situation requires more rapid action. Currently, three quarters of wealthy individuals knowingly hold shares in companies that are not aligned with their ethics.
This disconnect highlights the increasingly important role advisors play in mobilising the high-net-worth community to pursue sustainable investment opportunities. The first step in achieving this is improving communication and clarity around ESG funds. Advisors must explain the options that are available to their wealthy clients so as to capitalise on the growing interest in aligning investment portfolios with personal concerns.
The growing popularity of responsible investing presents an opportunity for advisors to fulfil their fiduciary duty to their clients by considering sustainable investments while understanding the unique nature of the footprint their clients wish to leave behind. Service providers must understand that wealthy individuals have a responsibility not just to their families, but also to their employees, the causes they support and the communities they live in.
The contribution of HNWIs is essential to achieving the UN’s SDGs and to creating a fairer, safer and healthier society for a sustainable future. Personal advisors must take the necessary steps to ensure that their clients’ financial and wider objectives are both met.
Across the globe, there is a growing awareness of the urgent need to restore and protect the natural environment. Mitigating climate change through the reduction of greenhouse gases is at the heart of discussions between businesses, regulators and communities. As a result, environmental consultants are now in high demand.
As one of the world’s leading professional services firms, WSP understands how important it is to deliver ecologically sound solutions to clients. This can be seen at each stage of every project we undertake: for example, the company cleans up environments and restores natural habitats that have been disturbed in the past, such as forests, streams and wetlands. We also improve our clients’ processes to minimise their carbon footprint and waste generation, as well as help them achieve a net positive impact on biodiversity.
On top of this, WSP advises on the design and construction of a future-proof world. Through our Future Ready programme, we account for coming trends in climate change, society, technology and resource use, and integrate these trends into our services. In this way, we provide solutions that prepare our clients for today and the years to come.
Meeting today’s challenges
With many clients adjusting their business strategies to include carbon neutrality as a top priority, global warming not only affects the way we operate, but also the types of services we offer. Through our environmental consultancy practice, Future Ready programme, company culture and purpose, we are positioned to become one of the leading firms supporting clients facing the huge climate challenge.
Our environmental consultancy services feed into our core role, which is to plan, design, manage and engineer our communities to thrive. We believe these services are as strategically important as our other engineering and professional services. At WSP, we place our environmental offering at the forefront of our strategy to ensure clients have access to high-quality, multidisciplinary advice.
Furthermore, we are committed to minimising our carbon footprint: we aim to achieve a 25 percent reduction in the market-based greenhouse gas emissions produced across our global operations by 2030.
Empowered by purpose
Environmental consultancy services are offered by large multidisciplinary firms, and by ‘pure-play’ consultancy firms of all sizes. Many consultants, however, position their environmental services as a support function for construction or as a commoditised service to secure permits and achieve compliance, rather than as a strategic benefit. At WSP, we stand out by offering an integrated strategic approach, leveraging the breadth of our services to take advantage of large multidisciplinary projects that pure-play consultants have difficulty accessing, while building the same renown for our environmental practice as said consultancies. We also offer those services on any scale, in any part of the world.
WSP’s environmental services have enjoyed very strong growth, expanding 22.5 percent annually over the past five years – including six percent organic growth. We have also welcomed many firms to the WSP family, strengthening our services in the sector through partnerships with the likes of Orbicon in Denmark and Lievense in the Netherlands.
Our rapid growth can be attributed to the innovative work being carried out by our teams, which continue to step outside their comfort zones, penetrate new markets and grow relationships with existing clients. There is a strong sense of enthusiasm, dynamism and energy among our employees, largely because they all believe in WSP’s key purpose: to future-proof our cities and environments.
Challenging the status quo
Our data shows that laws and regulatory frameworks have historically determined around 80 percent of market drivers in environmental consultancy services. Today, however, we are seeing a shift away from a highly regulation-driven market towards one where compliance alone is not enough. Businesses must go the extra mile – to stay competitive, we must show we can go beyond the minimum requirements.
At WSP, we are extremely excited about the future of the environmental consultancy services sector. We were named among the top 10 environmental consultancies by Environment Analyst and ranked in the top five of Engineering News-Record’s list of top 20 environmental firms working in non-US locations. In the future, we plan to become the world’s premier environmental consultancy. For us, success isn’t defined by the size of our workforce or revenue sheet, but by market recognition and the positive influence we have within the sector through our value proposition and the quality of projects we deliver.
India’s love of gold goes back centuries. The precious metal plays an important role in traditional ceremonies, such as weddings and festivals, and it is such an important asset that households typically pass down gold jewellery and trinkets from generation to generation. So when Indians begin pawning their gold, it is a sign that the country has fallen on hard times.
Many workers in India are selling off their family gold amid a credit crunch that has brought the country’s real estate and automotive sectors to a standstill and left hundreds of thousands without work. In a country that has been hailed as the world’s fastest-growing economy for decades, GDP growth is now at its lowest in six years (see Fig 1).
Analysts have blamed the liquidity crisis on a range of factors, including clumsy policy moves, an unforgiving business environment and a tepid global economic climate. But few could deny that the credit crunch predominantly stems from India’s $42bn shadow banking sector, where an ongoing crisis has left many individuals and businesses unable to secure loans.
As shadow banks are left unable to lend, some of India’s major sectors have found themselves strapped for cash
A moment in the sun
Since the 2008 financial crisis, the number of non-banking financial companies (NBFCs) – or ‘shadow banks’ – has grown rapidly around the world. The success of these entities, which include hedge funds, insurance companies and pension funds, was partly due to increasing regulatory pressure on traditional banks. Today, total lending to NBFCs stands at $7trn globally. Unlike normal banks, shadow banks can’t borrow from central banks and don’t insure customer deposits – they use short-term sources such as commercial paper to borrow from banks, mutual funds and insurance firms in order to fund long-term projects.
In India, where there are more than 11,000 shadow banks, this sector has come to play a vital role in the economy. The rise of these institutions can be traced back to the 2000s when there was a boom in large-scale infrastructure projects. Some developers struggled with repayments and left state-owned banks saddled with non-performing loans. As a result, these banks began shunning riskier borrowers. “For about five or six years, banks basically stopped lending to real estate,” said Harsh Vardhan, a senior advisor at Bain & Company.
Shadow banks moved to fill the void. These entities went on a lending binge in the 2010s, accounting for nearly a third of new loans in India between 2015 and 2018. Their lending allowed for the huge rise of small to medium-sized businesses during this period. “SMEs were able to draw money from NBFCs as they have traditionally had a good reach in the interiors of the country and have expertise in things like vehicle finance, machinery [and] service equipment,” said Madan Sabnavis, Chief Economist at CARE Ratings. In this way, shadow banks contributed significantly to India’s rapid economic growth.
Turn for the worse
This party came to an abrupt end when IL&FS, a major Indian infrastructure lender, ran into trouble. The institution, which until then was AAA-rated, defaulted on an INR 10bn ($140.14m) bond repayment to the Small Industries Development Bank of India in June 2018. Over the following months, the trouble came thick and fast: IL&FS defaulted on five bank loans, prompting the government to step in and take control of the firm.
The default rocked India’s financial markets. The Economist called it India’s “Lehman moment”. Amid the panic, investors shunned NBFCs, concerned about their hidden risks. “Even other entities [that] had no direct issues suddenly found that they could not raise funding very easily,” Vardhan told World Finance. “The cost of their borrowing had gone up.”
More than a year later, the crisis is far from over. In the financial year that ended in March 2019, credit by shadow banks fell 30 percent from the year before. Businesses that relied heavily on shadow banks have been left struggling to secure funding. Not only has this prompted a liquidity crunch among India’s real estate and automotive sectors, but it’s also created problems for the rest of the banking sector – after all, shadow banks are among India’s biggest borrowers.
“Roughly 50 percent of their financial funding comes from banks, which means that there is a solvency issue with this,” Vardhan said. “If they start defaulting, then obviously some banks will default.” On this basis, S&P Global Ratings has warned that India’s financial sector now faces “a rising risk of contagion”.
Feeling the pinch
As these financially important institutions are left unable to lend, some of India’s major sectors have found themselves strapped for cash. One of these is the real estate sector. When mutual funds and insurance firms stopped lending to shadow banks, many of the infrastructure projects that took off in the 2000s skidded to a halt. According to Anarock Property Consultants, there are currently $63bn worth of stalled residential projects across the country. Without sufficient financing, many developers are going bankrupt.
The credit crunch has also delivered a serious blow to the country’s automotive sector. Its current slowdown is one of the worst India has seen, with passenger vehicle sales experiencing their steepest fall in 18 years. The government has been reluctant to accept responsibility, with Finance Minister Nirmala Sitharaman blaming the slowdown on “the mindset of Millennials, who prefer to use ride-hailing services such as Ola and Uber”. However, the main reason car dealerships are going under is because they are struggling to secure finance. Since shadow banks lent to less creditworthy borrowers, banks are wary to take their place, which only adds to the woes of dealerships. Across the country, firms in the industry have laid off about 350,000 workers; as more people lose their jobs and see their income slashed, consumer spending drops, sending the economy into a vicious downward spiral.
As well as being an important source of credit for many industries, shadow banks are fully integrated into India’s financial services sector. Many shadow banks lent from state-owned banks, mutual funds and insurance firms, meaning a collapse could have a domino effect on the wider banking sector. A report by the Reserve Bank of India suggests that the failure of any one of the top five shadow finance companies could trigger defaults in up to two banks. If this happened, the government’s ability to support depositors would be limited, owing to the increasingly narrow leeway for dealing with any such collapse. This increases the risk of a full-blown financial crisis. It’s this threat that led ratings firm Moody’s to lower India’s outlook in early November from stable to negative, citing concerns about the country’s access to funding.
Vardhan is optimistic that such a financial crisis is far from inevitable, as long as the government takes appropriate action. “As of yet, nobody has had a solvency issue,” he told World Finance. “As long as that is the case, then we don’t have a contagion risk.” Meanwhile, Sabnavis points out that not all NBFCs are at risk of defaulting – it’s only those with a history of “incorrect practices” that have exacerbated the crisis. “There are several large NBFCs [that] have prudent and viable models, and have not been affected by this crisis,” he said.
As unlisted entities, shadow banks have so far come under less scrutiny than India’s state-owned banks. However, the current crisis has made it clear that these institutions need more regulatory oversight. “The lesson learned is that we need to have more supervision,” Sabnavis said. “Just as we have had an asset quality review for banks, so should it be for NBFCs, whose loan book is around 18-20 percent the size of banks and hence has an important position in the financial system.”
Under the spotlight: Indian Prime Minister Narendra Modi has been accused of making hasty decisions that have damaged the country’s economy
Into the light
India is taking steps to improve the supervision of these institutions and minimise the risk of contagion within the sector. The government recently amended its insolvency and bankruptcy rules to give the Reserve Bank of India the ability to refer shadow banks to insolvency courts. The first shadow bank to go into insolvency proceedings will be the real estate lender Dewan Housing Finance: after a series of defaults in 2019, it stopped taking deposits and delayed some of its debt payments. Like IL&FS, the lender was taken over by the Reserve Bank of India after it racked up debts of $14bn owed to banks and mutual funds. That it will now be moved into bankruptcy proceedings marks an important step forward for the sector as a whole.
“We have seen a major clean-up operation [that] will lead to the weaker firms being gradually moved out from the system,” Sabnavis said. “This will lead to greater prudence on the part of NBFCs in terms of re-evaluating their business models. Some of them may even pitch for banking licences, as this would be the right way to grow.”
The Indian Government is also determined to tackle the credit crunch brought about by the crisis: in November, Sitharaman announced that $1.4bn would be put towards restarting unfinished infrastructure projects. India will also sell stakes in five state-owned companies, including one of its largest public oil companies, in order to attract much-needed foreign investment to boost growth.
However, the shadow banking crisis and the shockwaves it sent through the wider economy have cast doubts over the government’s ability to salvage the situation. On the campaign trail, Prime Minister Narendra Modi claimed he would make India a $5trn economy by 2024, but since taking office in 2014, Modi has been accused of making hasty decisions that have damaged the country’s economy. The most high-profile example of this was when he abruptly pushed through demonetisation in 2016, wiping out 86 percent of the currency in India’s market and leaving many cash-reliant businesses struggling to stay afloat. It’s another reason why the real estate and automotive sectors are as vulnerable as they are today.
With that said, these economic issues – including the shadow banking crisis – cannot be blamed entirely on Modi. The crisis has exposed a number of systemic weaknesses in the financial sector, such as the lack of a legal framework around a financial institution’s insolvency. In this respect, Modi’s error was neglecting to prioritise reform of the financial system he inherited. Now, he desperately needs to push for change if he’s to get economic growth back on track. He’s promised to boost infrastructure spending and financial support for agriculture, but keeping the financial sector afloat may be his most urgent responsibility.
Once the fastest-growing economy in the world, India is now in the midst of a steep economic slowdown. As much as the government might want to blame its misfortunes on the uncertain global economic climate, the fact that it is not a major exporter of manufactured goods means the country is less exposed to the US-China trade war and global manufacturing slowdown than other export-reliant nations. The roots of India’s economic woes go much deeper. Modi must tackle the financial sector’s weaknesses and improve regulation of its shadow banks if he’s to kick-start growth, create jobs and fulfil his promise of modernising India’s economy.
Since the introduction of a new operating model in 2017, CSX has become a leader in the US rail industry, offering top-quality efficiency, safety, fuel economy and customer service. CSX is better positioned than ever to transition freights from the highways of America to the railroad – the most fuel-efficient mode of land-based transportation.
In recent years, we have modernised our operations, all the while maintaining a commitment to our foundational principles. If we remain true to these, we will continue to deliver the best service to our customers.
Safe and sound
The security of the employees and communities supported by CSX is our top priority. In the first three quarters of 2019, CSX maintained the lowest personal injury rate of all major US railroads, while also reporting the fewest train accidents in company history. Through focused improvements, we have strengthened existing safety programmes, and the results have been undeniable. We educate staff before taking disciplinary action, using every opportunity to help our teams learn for the future and utilise advanced technological capabilities to enhance our safety programme.
CSX is raising the bar by providing a new level of service and transparency in the railroad industry
CSX has not only improved our safety protocols over the last two years, but also the way we approach our business and customers. A fundamental difference between traditional railroading and our new way of operating is that the former focused on meeting train schedules, whereas CSX has developed a trip plan for each car. The company provides intermodal customers with personal, real-time trip tracking, and has recently rolled out the service to merchandise customers. We are raising the bar by providing a new level of service and transparency in the railroad industry.
CSX was also a leader in terms of train speeds and dwell time in 2019, according to metrics reported to the US Surface Transportation Board. Quicker trains and reduced journey times resulted in a more reliable service for CSX customers. Not only does this allow us to achieve unprecedented efficiency, but it also makes us a more competitive option for freight shipments, which provide immense sustainability benefits.
Less is more
CSX President and CEO Jim M Foote has affirmed the company’s commitment to constant improvement, stating that CSX is “never done with creating efficiency in the organisation”. As such, we are always looking to remove any unnecessary aspects of our operations and change processes that could be conducted more effectively. As rail travel becomes more efficient, CSX is taking a leading role in the transport sector.
After years of lagging behind the rest of the industry as a result of high operating costs, over the past three years we have reduced our locomotive count by over 30 percent. On average, CSX can transport a ton of freight 492 miles on a single gallon of fuel. This is 228 percent more efficient than the average truck, which moves a ton of freight about 150 miles on a gallon of fuel.
Our CEO set out a goal of establishing CSX as the best-run railroad company in North America – the most efficient, safe, reliable and sustainable. Guided by Foote’s vision, CSX continues to set company and industry records in each of these areas, including recently being named as the only US Class I railroad on the Dow Jones North America Sustainability Index for the ninth consecutive year. It is clear that the employees of CSX have a unified drive for continuous improvement.
Beyond corporate goals, CSX operates a robust community engagement programme – Pride in Service – through which we are committed to having a positive impact on the lives of more than 100,000 US military service members, veterans, first responders and their families by the end of 2020. This dedication to sustainability, safety, operational performance and social responsibility is driving CSX towards a successful future.
It is impossible to predict what the future holds for financial markets – volatility is always lurking around the corner. Nevertheless, choosing the right broker can significantly help investors trying to make sense of the industry.
With more than 40 years of group experience, HYCM is able to deliver first-class trading services to its clients regardless of where they are based or which industries they wish to target. The company’s heritage has cemented it as one of the most trusted and transparent brokers in the forex space.
World Finance spoke to Giles Coghlan, a hedge fund trader and Chief Currency Analyst at HYCM, about his personal trading strategies and his expectations for the markets going forward.
The important news is the news that surprises the market and changes the status quo
What are your favourite markets to trade and why?
Some of my preferred markets to trade include the major currency pairs alongside gold and US oil. The major currency pairs (GBP/USD, USD/JPY, USD/CHF and EUR/USD) have competitive spreads and plenty of liquidity, which means orders are easily filled with minimal slippage.
Gold is a great risk asset at the moment and has been strongly bid all though 2019 on the US-China trade war negotiations and a low-interest-rate environment.
What is your trading style and what type of analysis are you using?
I am a fundamental trader who looks for fundamental news releases to drive markets. Ultimately, all markets are fundamentally driven, so when you know the news story driving prices, it gives you more conviction in your trades.
Having decided on the fundamental outlook of a currency pair and chosen a weak currency to trade against a strong currency, I apply technical analysis for my entries and exits. My main technical tools are the 100 and 200 exponential moving averages, the relative strength index, stochastics, price action and trend lines. My view is that traders should ideally have both aspects of technical and fundamental analysis in their trading.
There is a lot of news. How do you filter out the noise and figure out what’s important?
First, you need to find out what the baseline is for a currency. So, as a hypothetical, let’s say the market is expecting the Reserve Bank of Australia (RBA) to cut interest rates at its next rate meeting. This is the baseline – the RBA is expected to cut.
If the RBA then has the meeting and announces it is not going to cut rates but raise them instead, you would expect the Australian dollar to rally strongly. The important news is the news that surprises the market and changes the status quo.
What is your trading strategy? Do you use the same strategies over different asset classes, geographies and time frequencies?
No, I use a variety of different technical strategies across different asset classes. The one aspect that all my trades have in common is that there are fundamental reasons for taking them. My message to traders is that the technical system is not as important as having a fundamental reason for trading.
Do you have a trading plan and how important is it to have one?
Yes, I have a five-point trading plan that keeps me on track: look back, look forward, look at the charts, look at my risk and look at the outcome of my trade. There is obviously detail to each of those sub-headings, but those five simple questions form the core of my trading plan.
It is more convenient to trade multiple markets from one broker than to have different terminals for different brokers
Do you have a certain risk management strategy as well?
At present, I do not risk more than one percent of my account on any single trade and have a maximum of four positions open at any one time. However, I have rarely had more than two positions open at a time. I only use leverage at a rate of 1:2 and generally trade without any leverage.
What do you look for in a broker?
Regulation is very important to me as it reassures me that certain strict monetary procedures are being followed. Personally, I like a broker with a good range of markets across indices, currencies, commodities and shares. It is more convenient to trade multiple markets from one broker than to have different terminals for different brokers.
Finally, I want costs to be competitive across the instrument that I am going to trade. HYCM is a good example of a broker that fits these criteria; it is multi-regulated and possesses an excellent range of markets.
What sort of risk advice do you offer to clients?
There is an element of risk involved with any investment. With regards to contract for difference (CFD) trades, we provide a ‘high-risk investment warning’. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
Approximately 67 percent of retail investor accounts lose money when trading CFDs with HYCM. Each investor should consider whether they understand how CFDs work and whether they can afford to take the high risk of losing their money.
Many of the major cities in Eastern Europe are blessed with picture-perfect spaces that have delighted residents and visitors for centuries. But while these cities have historic charm in abundance, they are sometimes found wanting in other areas. The modern global economy means that urban spaces are no longer just competing domestically to secure the best talent and the most investment – they are up against international rivals, too. For cities in Eastern Europe that possess outdated infrastructure and lack modern amenities, this can make it difficult to win the race.
In 1991, Belarus was the second-most developed post-Soviet country in terms of GDP per capita, after Russia. The country boasted well-developed infrastructure and substantial industrial capacities that enabled it to supply consumer goods to other former Soviet states. However, the economic growth that was experienced in the early 1990s proved difficult to sustain. Some of the country’s struggles can be attributed to an overreliance on Russia; delays in expanding the private sector did little to help matters. In 2015, Belarus’ economy contracted by 3.83 percent (see Fig 1).
Today, though, things are taking a turn for the better: Belarus is revamping its economy to focus on a more diverse range of industries, encompassing everything from IT to agriculture. Ambitious construction projects are creating modern business hubs that sit comfortably alongside the country’s more traditional attractions. Similar developments are taking place in other Eastern European markets as well.
Although governments have played their role in the turnaround, several of the most impressive projects being launched in the region owe their existence to Dana Holdings. As one of Europe’s leading investment and construction firms, Dana Holdings has plenty of experience when it comes to creating world-class business and residential complexes. Having emerged as one of the earliest examples of private enterprise in the former Socialist Federal Republic of Yugoslavia, the company has first-hand knowledge of what it takes to thrive as a new business in this part of the world.
A city for everyone
One of the approaches that Dana Holdings has pioneered is the ‘city within a city’ concept, which involves creating large multipurpose complexes that combine residential, business, cultural, educational and entertainment facilities. So far, the concept has been warmly received, attracting state-of-the-art businesses with premium infrastructure and first-rate amenities.
The developments are part of Dana Holdings’ broader plan to use real estate and construction to support economic development in Eastern Europe. These markets possess huge growth potential, but often require a helping hand to make their voices heard in today’s highly competitive global business climate. The developments being pioneered by Dana Holdings ensure that investors can no longer ignore this part of the world.
Dana Holdings’ city within a city approach allows tradition to sit beside modernity. One of the places where Dana Holdings is planning to implement its new type of urban project is the Belarusian capital. Dubbed Minsk World, the development will have an international financial centre at its heart and will be fully integrated with the city of Minsk and its infrastructure.
Due to the sheer size of modern cities, the commute between home, work and other destinations has become a major obstacle to enjoying a good quality of life
“The financial centre of Minsk World has been modelled on the examples of Dubai, Singapore, Hong Kong and other world-class financial hubs,” Dana Holdings President Nebojsa Karic told World Finance. “The ambitious project started with a vision to allow Belarus to take a leading role in the region’s economic development. Though part of the country’s existing economic zone, the international financial centre will enjoy a special system of benefits and incentives to attract capital and provide financial services. We believe that thanks to these incentives, Belarus can become the most competitive and interesting country for investments on the continent.”
In addition to world-class financial services, Minsk World will also contain residential areas, shopping malls, entertainment centres, schools, hospitals and hotels. Nestled among parks and gardens, the site will be fully integrated into the urban environment of the dynamic city. The project’s location in the centre of Minsk reflects the city’s position in the very heart of Eastern Europe. Belarus’ sustainable development and diverse investment options – from agriculture to IT – were also important factors in deciding the project’s location. Minsk World is set to strengthen the role of Belarus as a bridge between Western Europe and the growing economies of Russia, Eastern Europe and Asia.
At three million square metres, Minsk World is one of the region’s largest and most ambitious construction schemes to date – not to mention the biggest single development project in the whole of Europe. It is no coincidence that it has been compared to projects in Dubai and Abu Dhabi, the leaders of modern urbanism. Minsk World combines residential and business amenities to provide a new level of friendliness, comfort and quality of life to residents and guests.
Sustainable growth and increasing prosperity lie at the heart of Dana Holdings’ vision for Minsk World – a complex that comprises 24 residential quarters named in honour of different countries, people and achievements. A new city park will be at the centre of the project to support a green way of life, while a system of pedestrian zones and vast green spaces will connect the park with the new urban, eco-friendly environment where contemporary and historic designs are fused into one.
A rendering of Chelyuskintsev Park
Home sweet home
The residential areas of Minsk World will boast a highly developed and complex infrastructure composed of social, cultural and educational facilities, as well as robust transportation links, including a new metro line. With its modern boulevards running along the main residential areas – which comprise walkways and cycling tracks, as well as fully equipped playgrounds – Minsk World is set to become a great place for business and recreation for both residents and visitors.
“Multifunctional complexes, with their city within a city format, have swiftly become extremely popular across the world,” Karic said. “The main reason is that time has become the most valuable commodity in modern life. There is only a limited supply, yet we still want to experience and accomplish as much as possible within any given 24-hour period.”
Due to the sheer size of modern cities, the commute between home, work and other destinations has become a major obstacle to enjoying a good quality of life. The city within a city concept allows real estate developers to organise and plan each project to give the end-user everything they need on their doorstep. In Karic’s words, it allows Dana Holdings to “fight the commute with the community”.
Minsk World is a next-century city looking at a bright and confident future, but it is not alone. In fact, Dana Holdings’ work in the Belarusian capital is not confined to Minsk World: the real estate developer also has plans to create a multifunctional complex called Mayak Minska. The complex was conceived in 2008 to operate as a separate neighbourhood unit, prioritising family values.
“Dana Holdings is an example of strong family relations being used successfully within the enterprise management system, and we put a similar idea into action with Mayak Minska,” Karic said. “We have focused on creating an environment that caters for couples looking to build a bright future together, as well as people who prefer a quiet, measured life surrounded by beautiful European architecture. The indisputable advantage of our multifunctional complex is its unique location opposite the National Library of Belarus – one of the country’s most enduring symbols – and along the main road connecting Minsk and Moscow.”
Shopping opportunities are also provided nearby. The largest regional shopping and entertainment centre, Dana Mall, is located on the territory of the multifunctional complex, where there are schools, supermarkets, fitness clubs, spa centres and food outlets to enjoy as well. Covering an area of 200,000sq m, Mayak Minska is the first of Dana Holdings’ residential projects to offer apartments with fully decorated interiors. These apartments, renovated in accordance with the highest principles of design and using the best materials and equipment, are ready for occupancy immediately. This allows individuals to move in as soon as possible, which should mean that a sense of community builds up rapidly in the area.
A safe investment
Situated near Minsk city centre and not far from the M1 highway, which leads to Minsk National Airport, is Dana Holdings’ premium business hub, Dana Centre. The complex encompasses guest parking and several fitness centres, provides direct access to the Dana Mall and offers 24-hour security. It is also an ideal place to host small and medium-sized businesses, as well as already being the headquarters for large international companies.
One of the Belarusian capital’s newest attractions is Picasso Boulevard, which links the entire architectural concept of the Mayak Minska projects together and forms a central meeting point for all residents. The nearby multimedia fountain, Dana’s Dance, crowns the boulevard and is already a favoured location among photographers – especially during the summer months, when a host of beautiful events come to this part of the city.
“Picasso Boulevard, with its considered layout and magnificent architecture, is by far one of the most beautiful pedestrian streets in Minsk,” Karic said. “Everything is provided for the comfort and pleasure of residents. Every day, new stores, cafes, travel agencies and other service establishments open.”
In addition, Dana Holdings has launched a new wedding festival at Mayak Minska to support the institutions of marriage and family – two social values that are very important to the company. “We are building apartments in Minsk that offer everything required for a happy family life,” Karic told World Finance. “And thanks to advantageous price conditions, our apartments are available to everyone. We are sure that our wedding festival will become a much-loved tradition and that over the coming years, there will be even more couples in love.”
Every Saturday, visitors to Dana Mall – including residents and guests of the Mayak Minska residential complex – can be seen enjoying social events. On weekends, when the Summer in Mayak Minska initiative is running, Picasso Boulevard turns into a vacation spot for families, offering activities such as drawing, checkers, backgammon, inflatable rafting and a mechanical bull.
“Over the past 10 years, we have witnessed constant, stable growth, improved the wellbeing of Belarusian citizens and created an environment where new investments can flourish,” Karic said. “We believe that this was facilitated by the implementation of new government policies, which were aimed at creating a safe state. This not only created the right conditions for doing business and seeking investment, but also shaped an environment where the safety of citizens and visitors was prioritised. Today, we can confidently proclaim Belarus to be the safest country in Europe.”
Undoubtedly, the construction of new projects like those pioneered by Dana Holdings has been a major step forward in the development of Belarus. The creation of bespoke technology hubs in urban areas, for example, has greatly supported the Belarusian digital economy. As a result, the country can attract the attention of investors from around the world. The national government is aware of the importance of these new builds and recently signed an investment agreement with Dana Holdings for several large construction projects. Partnerships like these help to ensure that new projects are developed with a long-term view in mind and continue to deliver benefits to local people for years to come.
A rendering of Tesla City
The right environment
Many factors must be considered when a business is deciding where to locate its headquarters, with the physical building being chief among them. This can have a huge bearing on a company’s costs, revenues and ability to attract talented members of staff. It’s something that Dana Holdings always keeps in mind when starting a project.
This attention to detail is perhaps best shown in the BK Capital Palace business centre. Situated in the heart of Minsk, the venue boasts eight storeys of business space, a luxurious designer lobby lounge with panoramic views and a ceiling height of more than eight metres. Businesses that choose to place themselves in these glamorous surrounds will gain access to multifunctional offices with areas of between 50sq m and 2,635sq m. They will also enjoy centralised air conditioning, high-speed silent elevators and high-quality energy-saving windows. To ensure the highest security standards are maintained at all times, CCTV will be in operation 24 hours a day.
“The BK Capital Palace boasts an ideal location in the heart of Minsk, as well as amazing views across Independence Avenue and the stunning October Square,” Karic said. “It takes visitors only 30 minutes to get to BK Capital Palace from Minsk National Airport by car. There are also two metro stations and major road networks in the immediate vicinity.”
Recreationally, the BK Capital Palace has plenty to offer. There is a food court, multifunctional trading floor, cocktail bar, restaurant and lounge area. For added convenience, the complex offers two-level underground parking for 190 cars, while the palace’s favourable central location means that public transport options are plentiful. Covering a total area of 100,000sq m, the BK Capital Palace stands out even in a city with no shortage of picturesque locations. To have an office here sends a powerful message to partners, investors, clients and employees that the business is moving in the right direction.
Steppe-ing up
Dana Holdings is not focusing all of its energy on Belarus, though. Set in the heart of the Eurasian Steppe, the expansive nation of Kazakhstan has one of the fastest-growing capital cities in the world; Dana Holdings is keen to play its part in its development. The city of Nur-Sultan (previously Astana) became the capital of Kazakhstan in 1997 and has not looked back since. Futuristic buildings and towering skyscrapers now dominate the skyline, while the population has more than doubled since 2005 (see Fig 2).
With such an impressive rate of growth and a forward-thinking vision firmly in place, Nur-Sultan has proven itself to be the ideal location for Dana Holdings’ latest development project: the innovative Tesla Park. Set in one of the most dynamic areas of the city, Tesla Park will cover 1.5 million square metres and feature all of the crucial elements of a modern, liveable city, including comfortable residential areas, shops, schools and plenty of green space.
“As the project continues to advance steadily, our vision for Tesla Park is beginning to take shape, creating a vibrant hub within the rapidly expanding city of Nur-Sultan,” Karic noted. “The city’s significance within the region is only set to grow in the years to come, as it continues on its modernisation drive and capitalises further on its strategic location at the centre of the Silk Road. With Dana Holdings helping to drive innovative development in the area, the future certainly looks bright for Kazakhstan’s thriving capital.”
The main goal of Tesla Park is to conquer a segment of the market that is currently underserved – namely, property functionality and apartment design. Nowadays, dynamic lifestyles demand functional apartments at prices that are affordable for businesspeople. This is where Dana Holdings comes in: contemporary planning is the company’s main focus, as it directly impacts local economies and can help attract a young, talented workforce, supporting urban growth and development.
“Nur-Sultan was chosen as the location of Tesla Park largely because of the vast scope of the capital’s potential,” Karic added. “Over the past 20 years, Astana, as it was known until March 2019, has grown from a town of some 300,000 inhabitants to a city in which more than one million people live. Its population is expected to reach 1.5 million people in the next 10 years. Situated halfway between China and Europe, Nur-Sultan is like a mini Dubai and has great prospects both geopolitically and macroeconomically.”
The city is also extremely interesting from an investor’s standpoint: Nur-Sultan harbours ambitions of becoming one of the world’s foremost financial centres, and the national government has launched several initiatives to attract new business to the city. Its position at the centre of the Eurasian landmass is another factor in the city’s favour. Dana Holdings’ Tesla Park project, meanwhile, provides vital support to the city’s growth plans.
A rendering of BK Capital Palace
Global recognition
Dana Holdings has also attracted interest from outside of Eastern Europe. In September 2019, the company participated in the Cityscape Global exhibition in Dubai, becoming the first Belarusian company to exhibit at the event for many years. As one of the most significant forums in the fields of architecture, construction and investment, it is hoped that the firm’s participation at the exhibition will show investors that Belarus is a country worth doing business in.
“I believe that the Cityscape Global exhibition provides the most suitable platform for finding those people who are interested in investing in Belarus,” Karic told World Finance. “Here, we were able to promote Belarus as a country that is open for business, that is a safe place for capital, and that is in possession of clear work regulations and a safe environment.”
The real estate market is constantly evolving – buildings rise and fall with the changing needs of the people who inhabit them
Karic is right to put so much significance on the exhibition: the event showcased the Belarusian economy to potential investors from all over the world and provided an opportunity to publicise the country’s favourable geographical position and attractive investment conditions. Boasting a visa-free regime with 74 countries, Belarus presents a fantastic opportunity for businesses hoping to enter the European market. In particular, its relatively cool climes may provide some welcome relief from the Gulf’s summer temperatures, which regularly touch 40 degrees Celsius.
“On the first day of the Cityscape Global event, a number of negotiations were held with interested parties,” Karic said. “This is unsurprising given that we have received numerous accolades in recent years. For example, Dana Holdings is one of the few European investment and construction companies to be awarded a place on the World Finance 100 list on multiple occasions. This list traditionally includes the largest companies in the world that have shown the highest results in their field, while contributing to the global economy.”
Dana Holdings’ Minsk World development was singled out for particular praise at the Cityscape Global event, with Europaproperty.com presenting Dana Holdings Vice President Boyan Karic with an award for the successful implementation of the project. More specifically, Minsk World was recognised as the largest multifunctional complex in Europe for 2018 – a rare honour only granted to the most innovative projects in the real estate market.
“The Minsk World complex will strengthen the growing role of Belarus as a bridge between Europe and the dynamically developing economies of Russia and Asian countries,” Europaproperty.com founder Craig Smith said as he presented the award to Karic. “It acts as a catalyst for sustainable development in Belarus, Russia and the Eurasian Economic Union zones.”
Building momentum
As the residents of Belarus and other post-Soviet states are discovering, a thriving construction sector can prove a boon to economic growth. In particular, completing new projects within strategically important parts of the economy can provide indirect benefits to the wider populace.
“Dana Holdings has completed many strategically important projects throughout Russia,” Karic said. “Some of the main developments include the head office of the Bank of Russia, the Meyerhold Theatre and Cultural Centre, the Gagarin tunnel and Yakutsk State University’s Institute of Finance and Economics. These developments have enriched the social, cultural and economic lives of countless Russian citizens.”
Although Dana Holdings has delivered a host of successful projects to date, the Belarusian firm is not intent on stopping any time soon, and currently possesses a pipeline of new developments spanning more than five million square metres. Among them is the Chelyuskintsev Park residential complex, located at the intersection of Independence Avenue and Makayonka Street in Minsk.
Spanning 250,000sq m, the project is due for completion later this year and is already generating much excitement as a result of its elegant and stylish design. The facilities, which include a fully equipped concierge service, a modern interphone system, a fitness centre and underground parking, ensure that every possible detail has been accounted for. Its location near the Chelyuskintsev Park of Culture and Rest, the Minsk Botanical Garden and several other famous attractions is a bonus.
The real estate market is constantly evolving – buildings rise and fall with the changing needs of the people who inhabit them. Dana Holdings understands this better than most: across numerous projects, the company has crafted new residential and business premises that are both aesthetically pleasing and practical. As investors weigh the pros and cons of entering the still-developing markets of Eastern Europe, the glittering constructions being delivered by Dana Holdings – and the economic growth that they foster – should help them make up their minds.
With investor needs evolving towards a more digital experience, the wealth management industry has undergone a transformation in recent times. There has been a push towards an analytics-based approach to product and service offerings, leveraging client data to provide a personalised experience.
Wealth management firms are increasingly adopting a distributed agile approach to help transform customer experience. In a competitive market, wealth management firms need to be able to act on client demands more rapidly, fostering a more collaborative culture within the industry with a strong focus on service.
Remaining at the top of this industry requires constant attention and dedication to the needs of clients and these awards recognise the very highest standard of professional care shown by the recipients.
World Finance Wealth Management Awards 2019
Best Wealth Management Providers
Andorra
VallBanc Wealth
Argentina
Andes Wealth Management
Armenia
Unibank Privé
Austria Liechtensteinishche Landesbanken ( Osterrich AG )
Bahamas
Scotia Wealth Management
Belgium
Indosuez Wealth Management
Bermuda
Argus Wealth Management
Brazil
BTG Pactual
Canada
Canaccord Genuity
France
BNP Paribas Banque Privée
Germany
Hauck & Aufhauser
Ghana
The Royal Bank
Greece
Hellenic Asset Management
Hong Kong
BNP Paribas Wealth Management
Hungary
Concorde
India
Doha Bank
Italy
BNL BNP Paribas
Kuwait
NBK Capital
Lithuania
INVL
Luxembourg
Indosuez Wealth Management
Malaysia
Maybank
Mauritius
MCB Private Banking
Netherlands
Wealth Management Partners
Nigeria
Standard Bank Wealth and Investment
Norway
Pareto Wealth Management
Oman
Bank Muscat
Philippines
Bank of the Philippine Islands
Portugal
Santander Totta
Qatar
Qatar National Bank
Saudi Arabia
SABB
Singapore
EFG Bank Singapore
South Africa
Old Mutual Limited
Spain
Santander
Sweden
Carnegie
Switzerland
BNP Paribas Wealth Management
Taiwan
King’s Town Bank
Thailand
Bangkok Bank
United Arab Emirates
First Abu Dhabi Bank
United States
BNY Mellon Wealth Management
Vietnam
Prestige Wealth Management
Best Multi-Client Family Office, Liechtenstein Kaiser Partner
Brazil is one of the largest economies in Latin America, ranking ninth-largest in the world in terms of GDP (see Fig 1). But its emerging economy is still overcoming years of corruption, as exemplified by the charges filed against former President Luiz Inácio Lula da Silva and the impeachment of his successor, Dilma Rousseff, in 2016.
In 2019, Jair Bolsonaro became president, and immediately set about trying to jump-start Brazil’s economy. Today, he is encouraging foreign investment with an emphasis on the energy sector. This has certainly been welcomed by Petro-Victory Energy. We view the Brazilian market as a huge growth opportunity.
Strong commercial terms and an improving regulatory framework are helping to create an environment that is better suited to oil and gas investment. Additionally, in the wake of a corruption scandal involving state-owned oil and gas firm Petrobras, transparency in the country has increased and corporate governance has improved. These changes will all contribute to great returns for existing operators in the country.
A new competitive landscape is being created in Brazil, leading to a resurgence in the onshore upstream space
Petro-Victory Energy has identified onshore oil fields as an important prospect for expansion into the Brazilian oil and gas industry. With Petrobras historically focusing its efforts on deep-water, pre-salt projects, onshore fields in Brazil have suffered from a significant lack of investment. Onshore oil production dropped by 30 percent between 2012 and 2017, and the number of wells drilled fell by more than 70 percent between 2015 and 2017.
Now, for the first time, significant portions of Brazil’s onshore fields are available for acquisition, including the majority of Petrobras’ onshore producing portfolio. This has created a unique opportunity for an independent exploration and production (E&P) company to acquire a significant portfolio in the onshore upstream space. We are making the most of this, having already acquired 28 oil and gas licences in Brazil.
Licence to drill
On September 10, 2019, the National Agency of Petroleum, Natural Gas and Biofuels (ANP) held the initial cycle of its permanent offer round. It was the first bidding round in 20 years in which Petrobras did not participate. Petro-Victory was the biggest winner, gaining 16 oil concessions in the Potiguar Basin in the state of Rio Grande do Norte.
The success of the bidding round brought about an 11 percent increase in the number of contracted blocks in Brazil, with the round predominantly focused on small to medium-sized players. This has created a more dynamic oil and gas sector, free of the Petrobras monopoly that defined the market for so long.
We have identified the Potiguar Basin as an area of particular interest, mainly for its favourable geological features. Our technical team has experience in evaluations, from terrestrial fields to the shallow and ultra-deep waters found in this basin, giving us an unparalleled understanding of the area. Known geological conditions and quantifiable drilling and development costs make the Potiguar Basin attractive for expanded commercial oil development.
In the onshore oil and gas space, Brazil is expected to welcome more small to medium-sized independent oil and gas producers. As the ANP continues to show its support through fiscal incentives in permanent offer licensing rounds, investment activity will increase across the onshore Brazilian oil and gas industry.
A shore thing
After the 2014 corruption scandal, Petrobras started making plans to divest its entire portfolio of onshore oil and gas assets located in Brazil. It was not until 2019 that the first major Petrobras onshore divestments occurred, when 34 onshore production fields in the Potiguar Basin were sold to Potiguar E&P, a subsidiary of PetroRecôncavo, for $384.2m.
Since then, a number of onshore divestments have concluded, including Petro-Victory’s recent acquisition of the Lagoa Parda fields in partnership with Imetame Energia. The sales terms were approved in October 2019 and the deal is expected to close in early 2020. Petro-Victory and Imetame Energia plan to invest significant capital in the fields to increase production from the current rate of 180 barrels of oil per day to more than 550.
The Lagoa Parda opportunity is typical of the current onshore climate in Brazil. While many fields have considerable potential beyond their current daily production, the focus on the offshore pre-salt sector means capital resources have not been invested in fields. The last oil well was drilled at Lagoa Parda eight years ago, while many completed oil wells are currently shut due to mechanical problems that could be rectified by a simple workover programme to revitalise them. By using its technical resources and selectively investing capital, Petro-Victory plans to ramp up production, increasing government and landowner royalties, tax receipts and local employment.
Before the start of the Petrobras divestments, the state-owned company held more than a 90 percent share of the Brazilian oil and gas market. With Petrobras almost certain to exit the onshore oil and gas space soon, a new competitive landscape is being created, leading to a resurgence in the onshore upstream space in Brazil.
To take advantage of the opportunities being made available by Petrobras and the ANP, an international E&P company must become well established in Brazil. Petro-Victory has been present in the country since 2016, yet only completed its first E&P transaction in September 2019. We took our time establishing the right partners, from legal departments to accounting, operations and technical support, to ensure success in our new venture. We are now ready to expand further into Brazil’s upstream space.
Visions of success
After almost four years of activity in Brazil, Petro-Victory is being rewarded for the time it has spent in the country. In September 2019, we received final approval from the ANP for our first transaction in Brazil: the acquisition of four onshore oil fields from Brazilian service company ENGEPET. In October, we received preliminary approval from the ANP for our second transaction in Brazil – the acquisition of 50 percent of five onshore concessions from Brazilian operator Imetame Energia.
This transaction, plus the Lagoa Parda divestment and the ANP permanent bidding round, brings Petro-Victory’s portfolio to 28 onshore oil concessions and transforms the company into one of the largest licence holders in the onshore Brazil upstream sector. In addition, Petro-Victory has received certification from the ANP to qualify as a Type C operator, which means the company is qualified to operate in Brazilian blocks located in shallow water, onshore and in areas with marginal accumulations.
The senior management team at Petro-Victory, comprising myself, Mark Bronson, who serves as CFO, and Richard Lane as COO, will continue to expand our portfolio in Brazil, with ambitions to become the largest licence holder in our target geological basins. We now have an experienced cadre of geologists and geophysicists supplementing the team, with further expansions planned shortly.
The company expects to participate in future Petrobras divestments and ANP bidding rounds, as well as evaluating a number of private transactions with other operators. Based on the licences acquired already, there are plans to drill up to 30 wells and 40 workovers in the next five years, which will transform Petro-Victory into one of the leading onshore oil companies in Brazil. We are very pleased with our position in Brazil and the foundations that we have built. We look forward to advancing and growing our portfolio in the upcoming year.
As in many other parts of the world, the banking sector in Central America has undergone a profound change in recent years. Digital technologies have revamped many banks’ solutions as they attempt to keep pace with shifting customer demands. At BAC Credomatic, these changes have centred on transforming company culture to make sure customers are at the centre of its operations at all times. Becoming a customer-centric bank has been the most important initiative the bank has undergone recently, and has resulted in a significant change in organisational structure and a fundamental shift from products to customers. Now, the company’s C-suite is organised by client segments and a new chief customer experience officer role has been created.
Unsurprisingly, given its customer-centric approach, the bank continues to value its physical branches even as it embraces digitalisation. Banking is about relationships, and many clients still value this in brick-and-mortar branches. At BAC Credomatic, however, the role of the branch is changing: every day, the transactional side of the bank shrinks, opening opportunities for branches to become advisory and relational centres for clients.
In the past five years, despite serving an increased number of customers, monetary transactions carried out at BAC Credomatic branches have plateaued, while digital monetary transactions have increased by 282 percent. Consequently, branches have been redesigned to provide a more relational banking experience, drawing on digital aspects, such as full internet access and self-service kiosks, while simultaneously prioritising relational solutions like providing meeting spaces for expert advice. The bank plans to expand its network of concept branches in the coming year.
Maintaining a high standard of digital and human services will not be easy, particularly with technology rapidly evolving, but it is something that BAC Credomatic is wholly committed to
Maintaining a high standard of digital and human services will not be easy, particularly with technology rapidly evolving, but it is something that BAC Credomatic is wholly committed to. World Finance spoke with the bank’s chief digital officer, José Manuel Páez, about how the organisation intends to achieve this balancing act over the coming years.
How has the bank used technology to foster a culture of innovation and creativity among its employees?
BAC Credomatic continually invests in human talent, which remains the core of our business. Internally, we organise webinars where digital initiatives are shared company-wide and employees get the chance to hear and ask questions about recent digital releases. Our CEO regularly participates in these sessions, discussing the bank’s customer-centric strategy and the challenges we are facing.
In 2019, the bank organised a digital showroom where developers were able to showcase their innovative initiatives. All corporate employees were invited to learn about recently released and upcoming innovations, testing them firsthand. The event felt like a tech showcase: loud and busy; everyone getting their hands on the new technology. We received very positive feedback about the event and will continue to support these types of initiatives in the future.
In what other ways has BAC Credomatic digitalised its products and services?
BAC Credomatic has undertaken a number of efforts to digitalise its products and services. Internally, we are launching novel product origination processes through our newly implemented business process management solution. The focus isn’t only on creating more efficient processes, but also on redesigning the processes themselves, thinking about digital origination and self-service wherever regulation allows. In 2018, we were thrilled to release new streamlined origination processes for three credit-card-related products, and even more excited to see the extremely high adoption rates that these processes have had in all markets. Externally, we recently launched our redesigned mobile application.
Currently, three out of four digital customers use our mobile banking solution; therefore, it was critical for us to launch a completely renovated mobile experience. Further, because two out of five of our customers only use our mobile solution, we were keen to deliver a pristine application. We invested hundreds of hours researching customers’ needs and testing prototypes in order to deliver a banking solution they would fall in love with.
Our mobile banking platform now presents a bird’s-eye view of all the products being used by each customer. It also allows them to easily share the result of a transfer or payment through their preferred method, whether it is an SMS, email or WhatsApp message. Improvements like these have positively impacted our customer satisfaction scores.
As part of our efforts to offer an omnichannel experience, we are pleased to have opened the first three concept branches in the region, located in Guatemala, Honduras and Costa Rica. Among other benefits, these branches offer full Wi-Fi access to customers and extensive in-branch digital solutions, integrating our technology platforms with our new business vision of a customer-centric service model.
How has BAC Credomatic embraced mobile payments?
BAC Credomatic became the first bank in the region to equip its mobile application with contactless payments functionality. Through near-field communication (NFC) technology, users can safely and easily use any NFC-enabled Android phone to pay merchants. As the largest merchant bank in the region, we have been creating an environment in which mobile payments can thrive, pushing contactless terminals and providing training for merchants.
Clients have embraced the idea of only carrying their mobile phone and still being able to pay safely and smoothly. Since its release in August, uptake has gradually increased, and only continues to do so. We are pleased to see our customers raving about how innovative the feature is.
What security features are included within the mobile app to safeguard consumer assets?
Across all our services and channels, we adhere to the strictest information security standards and protocols, which allow us to safeguard our customers’ data and privacy. For one, the app itself is obfuscated, preventing anyone from accessing the source code. We have also included risk-based authentication functionalities within our platforms. This enables us to understand, detect and prevent unwanted customer behaviour. As part of our efforts to provide a safe but convenient experience, we have enabled biometric login where the device allows.
Does BAC Credomatic offer any digital solutions that are specifically tailored to its SME customers?
We have tailored many of our digital solutions to the SME segment. In a developing region such as ours, we focus on providing solutions that support the formal economy by enabling digital payments. For example, we launched MiPOS, a Bluetooth-enabled card reader that allows SMEs to receive card payments on the go. Credit card acceptance in our region is remarkably strong, partially due to the innovative and convenient products we offer.
Another product we offer SMEs is Compra-Click, which allows small merchants that don’t have the resources to build and maintain a website to sell their products through Facebook or via email using a simple and accessible platform. The uptake of this solution has exploded in the past year. We have also created a digital portal that offers discounts and promotions to our customers and merchants. The portal extends our merchants’ reach and provides discounted benefits to our customers. This closed loop has created a virtuous cycle that has been well received by both merchants and customers.
As technology becomes more prominent, how will BAC Credomatic ensure that it keeps a human touch at the heart of its services?
At BAC Credomatic, we are dedicated to keeping the customer at the centre of our every undertaking. We constantly research our markets and make every effort to understand our customers’ behaviour in order to find solutions that resonate with them. Our user experience team goes into the field on a weekly basis to receive customer feedback on new products and prototypes. The insights we obtain from these excursions are used to make the necessary changes to ensure our products are as clear and helpful as possible.
In addition, we are implementing a new tool that will help us measure customer satisfaction at every touchpoint. We are excited to give our customers a voice to express their opinions. This will help us turn customer views into actionable insights that ultimately translate into better experiences. Technology is an enabler in many processes, but the customer will always dictate the path we will follow.
What are BAC Credomatic’s plans for the future?
We remain committed to our customer-centric culture and, with that in mind, we are moving forward locally and regionally to strengthen our value proposition. In 2020, we will continue along the same lines, delivering well-researched solutions that respond to our customers’ needs. For our retail segment, we are planning to release a solution that helps our customers better understand their financial position and therefore make better financial and life decisions. It is our goal to create deep relationships with our clients, becoming their trusted advisor.
We will continue to innovate for our corporate segment, providing digital solutions and a better experience for payroll, treasury and supplier payments. BAC Credomatic closed 2019 on a very positive note and we expect 2020 to be equally full of opportunities for the organisation.
Founded in 1895, Firmenich is the world’s largest privately owned perfume and flavour company, present across more than 100 markets. We are in the business of creating emotions through the senses of taste and smell, and our work touches billions of people around the world every day, through products such as coffee, cereals, detergents, shampoos and fine fragrances. As a family-owned company that takes a long-term view of its operations, preserving the planet is embedded in our DNA. When you consider it takes 3.5 tons of rose petals to produce one kilogram of rose oil, there is no other option than to treat nature responsibly. That’s why Firmenich has always played a prominent role in preserving the environment.
Firmenich is recognised as a global environmental leader, being one of only two companies in the world to have achieved A rankings in all three of the Carbon Disclosure Project’s categories: climate change, water security and forests. Firmenich started this journey towards sustainability in 1991 – one year before the UN Conference on Environment and Development brought sustainability into the mainstream – when we signed the International Chamber of Commerce Business Charter for Sustainable Development. We have been committed to reducing our environmental impact ever since.
Firmenich uses technology to address some of today’s greatest challenges, such as nutrition, sanitation and climate change
Three decades after our first public commitment, we continue to lead real change, placing sustainability at the heart of our growth strategy as we pursue a business model focused on inclusive capitalism. Our comprehensive approach to sustainability and track record of having a positive impact was recognised by the first ever IMD-Pictet Sustainability in Family Business Award in 2019.
Inclusive strategy
At Firmenich, we believe there can be no long-term value creation for shareholders without values. That’s why we have an inclusive capitalism business model that makes a positive difference for all stakeholders. Making our business work for everyone, we use technology to address some of today’s greatest challenges, such as nutrition, sanitation and climate change. The UN’s Sustainable Development Goals are embedded in our growth strategy and we were recently recognised as a UN Global Compact LEAD company after being an active member of the UN Global Compact for more than a decade. Today, we are the only player in our industry to be part of this elite group of 36 LEAD companies, actively ensuring that our business works for people, the planet and society.
In terms of people, we ensure we are inclusive at all times, making our business work for the many, not the few. We were recognised as a diversity and inclusion leader at Ethical Corporation’s 2019 Responsible Business Awards, due to our well-rounded and scalable approach, which is firmly embedded in our culture.
Firmenich was the seventh company worldwide and the first in our industry to be globally certified as a gender-equal employer by EDGE, the world’s leading business certification in this area. This standard goes well beyond equal pay to include gender balance across recruitment, promotion, training and mentoring programmes. Today, women represent 42 percent of our senior executives and 41 percent of our total workforce.
Being truly diverse means embracing all demographics, including race, sexuality, age, experience and disability. Firmenich has been working with people with different abilities across our business for more than 40 years. For instance, we count more than 100 visually impaired professionals in our sensory teams: visually impaired people tend to have a heightened sense of taste and smell, helping us to advance our sensory analysis. We also recently joined the Valuable 500 – an initiative committed to disability inclusion – to firmly anchor inclusion within our leadership agenda.
Healthy planet, healthy business
To safeguard the planet, we are working hard on decarbonising our operations to combat global warming. We set ourselves ambitious and measurable science-based goals as part of our vision to become carbon neutral. For example, Firmenich’s sites throughout Europe, North America and Brazil operate with 100 percent renewable electricity; the group is currently using 86 percent renewable electricity worldwide and is well on its way to reaching the goal of 100 percent in 2020.
We are decoupling our growth from our CO2 emissions, a key indicator of environmental progress. Since 2015, our manufacturing output has increased by 18 percent, while our CO2 emissions declined by 30 percent. Advancing our vision to become carbon neutral, we are taking a leading role in the UN’s Business Ambition for 1.5 degrees Celsius, a coalition of 87 companies committed to stopping global warming. Together, we have set several science-based targets to achieve a net-zero carbon future by 2050.
We also believe in the importance of responsible sourcing. At Firmenich, we have the broadest and finest ingredient portfolio in the industry, using only the most authentic and responsibly sourced natural ingredients. Whether it’s jasmine from India or Madagascan vanilla, we are committed to operating the most traceable, sustainable and ethical value chain in the industry.
Through our Naturals Together initiative, we build long-term partnerships with some of the world’s best natural ingredient producers. We are proud to support the livelihoods of 250,000 farming families at the source of our 170 varieties of natural ingredients. By working with individuals to address their most pressing challenges, we help them embrace regenerative agriculture, diversify their revenue sources and ensure access to healthcare services, education and training.
Advancing our commitment to biodiversity, Firmenich helped launch the One Planet Business for Biodiversity coalition at the 2019 UN Climate Summit in New York. Alongside 19 like-minded companies, we are stepping up our support for alternative agriculture practices to protect biodiversity.
Last year, Firmenich removed one trillion calories from products that consumers love, making healthier options taste great and helping to tackle today’s nutrition challenge
Innovating for wellbeing
Innovation is our engine of growth. We invest 10 percent of our annual revenue in research and development – CHF 390m ($390.53m) in 2019. We currently have 3,700 active patents covering a range of fields, from renewable ingredients to nutrition and sanitation solutions.
As pioneers in biodegradable and renewable ingredients, we implement green chemistry principles to reduce our carbon footprint while minimising and upcycling waste. For more than 10 years, all our new perfumery molecules have been biodegradable. As an industry leader in white biotechnology, we create renewable perfumery ingredients from sustainable biomass, such as sugar cane from Brazil.
Tackling today’s nutrition challenge, we are shaping the future of food through a number of cutting-edge solutions. More than a decade ago, we started investing in ways to make healthier food and drink options taste great. These investments have paid off, and our latest technology, TastePRINT, can reduce sugar content by as much as 100 percent without compromising on taste. Last year, we removed one trillion calories from products that consumers love, making healthier options taste great. Supporting the growing popularity of vegan and ‘flexitarian’ diets, our ‘Smart Protein’ solutions produce plant-based food and beverages that don’t compromise on taste or texture.
We are also working to accelerate access to sanitation. Today, 4.2 billion people do not have access to safely managed sanitation facilities. According to the UN, 300,000 children under five die each year from diarrhoea as a result of unsafe drinking water, inadequate sanitation and poor hand hygiene. Our most recent research found that malodour was one of the top barriers to using toilets – 87 percent of respondents in Kenya, 70 percent in South Africa, 62 percent in India and 51 percent in China.
Once we realised smell was preventing people from using toilets, we decided to become part of the solution. We engaged in a research partnership with the Bill and Melinda Gates Foundation to reinvent toilets from an odour perspective, leading us to develop a range of breakthrough malodour-control technologies to make clean toilets smell good in an affordable and sustainable way. It is clear that clean and pleasant-smelling toilets are critical levers to addressing today’s sanitation crisis.
Looking to the next 125 years, our vision is to be the indisputable leader in inclusive business. We will constantly strive to improve our environmental and social impact, tackling the climate emergency and improving the wellbeing of our stakeholders. We believe we can achieve all this while continuing to meet consumer expectations for healthy, ethical and traceable products.
