Easy to kick off 2020 with gloomy mood looking how we closed 2019 on the front of sustainability. COP 25 has been a failure overall, Brexit is spending energy that could be allocated on more pressing social and environmental fronts. Conflicts and social unrest across the globe can likely generate new geopolitical volatilities – with the major US election happening in November 2020. Well, instead, we’ve decided to kick off 2020 being optimistic, and here are 3 reasons why
#1 – Sustainability Agenda Has Never Been So Crystal Clear, and Benefits From the Gold Support of Youth
Climate, Biodiversity and Inequalities Shaping People Concerns and Priorities
The past decade has been lost making clearly insufficient progress to better align business interests with climate, biodiversity and inequalities imperatives. Whether business and political leaders like it or not, these topics will remain at the forefront of global and local agendas around the world in 2020 and beyond. Whether business and political leaders want it or not, they will have to get it and demonstrate they’re making progress on these very hot issues.
- COP 26 (climate) as well as COP 15 (biodiversity) will surface again at the forefront of the global agenda in Q4 2020. 75th UNGA will also launch a loud call in late September 2020 to encourage the very same business and political leaders to accelerate contributions to the Global Goals kicking off a critical “Delivery Decade” for our planet and societies
- #Metoo has proven to be a game changer movement for societies. The business and political worlds will find it increasingly hard to not address gender issues more seriously and not change the way they behave and make decisions driven by gender biaises
- Social unrests will continue to gain in momentum so long as better social contract between business, tax and societies remains to be found. This might come through energy transition, pension, fair access to basic services. No matter the topic: business, political leaders and civil societies will have to find compromises, or will fail to close fierce conflictual situations – which are not good for business, people nor political stability…
Youth Getting so Vocal is a Game Changer for Business and Politics
Youth needs a future. This is a basic and fundamental expectation for which elder people are to be held responsible.
- There are millions of Greta Thunberg across the world today. We meet with them at home or friends’ places. We come across them striking for climate in the streets across hundreds of big and smaller cities. We listen to them challenging business and political leaders for the poor and insufficient sustainability impacts to date across conferences
- In response, business and political leaders cannot just hide behind how complex the system is to change. They need to offer concrete sustainability perspective, supported by tangible outcomes mitigating climate risks, biodiversity depletion, as well as inequalities.
That’s how business and political leaders will be respected, and able to challenge youth for their inconsistent behavior asking for climate solutions on the one hand, while still consuming fast fashion and other unsustainable products on the other hand.
#2 – Finance is Increasingly Shifting to Fund Sustainability Transition
Levels of financial assets valuation made possible, among others, by the monetary policies of the past decade have reached all-time high levels in many sectors. Recent acquisitions by mainstream rating agencies of extra-financial agencies specializing in non-financial rating, climate risk estimation or big data processing illustrate a growing interest to include extra-financial analysis at large scale from mainstream investors, as does the multiplication of dedicated funds and the shift of an increasingly significant proportion of existing institutional investment vehicles to Green, SRI (Socially Responsible Investment) or ESG labels. In 2010, the UN PRI interested 784 signatories representing USD 22 trillions (tn) of Assets Under Management (AUM). This corresponded to approximately 10% of global capital markets (UN PRI, 2010). In 2019, UNPRI represented close to 2500 signatories and USD 80tn AUM, now corresponding to 25% of global capital markets. This sends a powerful message from mainstream investors to the rest of the market.
These examples demonstrate that the redesign of the risk/return trade-off in the assessment and definition of corporate financial analysis is underway. This recast is directly linked with the redefinition of the role of corporations in society, and in particular of the impact of its activities in the social and environmental fields. This recast is also directly linked with the evolving concept of fiduciary responsibility, for which Boards of Directors are asked to play a more active role guiding strategic protection and valuation of assets given the climate, digital and social transformations at stake.
We of course don’t want to be naive, nor too optimistic. We regularly meet with investors, including UNPRI signatories, who have no clue about what they can do about climate or biodiversity. We also meet regularly with investors who rightly feel the growing regulatory and compliance pressure on human rights, but don’t know how best to address these issues and enhance the protection of their assets. All in all, we know finance is not going to shift trillions to support sustainability transitions as rapidely as necessary, but we know how the sheep-like behavior of decision makers in this space will likely exponentially engage finance in climate, biodiversity and inequalities in the years to come.
#3 – Digital Transformations Are Truly Reshuffling the Cards of Sustainability
Digital technologies disrupt the way the world works. Innovative finance solutions are emerging, accelerating access to much needed resources to change scale and impact of the transformations needed to deliver on Agenda 2030 global societal priorities. Businesses need to embrace digital and innovative finance solutions to stay relevant and thrive.
We are not naïve nor candid. We are very well aware of the energy challenges scaling up digital solutions for instance. We are also very well aware of the multiple ethical and human right related dilemma coming with digital transformations. Science without conscience is but the ruin of the soul. And it is because we know this, and repeat it regularly, that we hope to embark on the digital transition with the least possible ignorance, while learning as we go.
Conclusions. We Need Constructive Optimism To Succeed
The 2020’s are the “Delivery Decade”. Countdown is on. Business resilience and capacity to remain acceptable and generate long-term value is at stake. We anticipate major social and environmental disruptions able to generate high risks and opportunities for business and investors able to transform and adapt to the delivery decade market and societal expectations.
It’s a matter of perspective. Instead of looking at the half empty glass, we prefer to have a constructive optimistic attitude looking at the half full glass! Our world “just” needs to convert 1% of global finance every year (USD 3-4 trillions on annual basis) to make serious progress towards Agenda 2030.
This is a journey and we’re just entering the Delivery Decade. Much more is underway. Much more will come. Much more will positively surprise us all. Growing urgency will help to accelerate change as well. We are realistic, yet we want to approach the Delivery Decade with a positive mindset.
Optimism is the ultimate ingredient we all need to deliver at the scale needed for the 2020 decade to build more resilient and inclusive societies.
Welcome to the “Delivery Decade”