ISSUE 1-2/2021 / YEAR 24th - PRICE 5,00 € / $6,00
SPECIAL REPORT A FISH OPERA IN THREE ACTS
KAMALA HARRIS FOR PRESIDENT. BUT WHEN?
THE SLOW DEATH OF SCHENGEN ENTERPRENEURSHIP THESE ARE THE TOP RISKS FOR BUSINESS IN THE POST-COVID WORLD
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Athanase Papandropoulos Publisher & Editor-in-Chief
Christos K. Trikoukis EU & International Correspondent
N. Peter Kramer
‘Conference on the Future of Europe’: two years of EU navel-gazing?
Long-term EU thinking: a history of abandoned think tanks
14 EU POLICY
Margrethe Vestager: “European industry more competitive if digital transition investment made now”
2020 was a breakthrough year for electric vehicles
26 SPECIAL REPORT
A Fish opera in 3 acts
The Fourth Globalisation and EU business families
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Can the Subscription Economy Save Financial Services?
The world has lost one-third of its forests, but an end to deforestation is possible
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Giles Merritt, Urmas Paet, Fabian von Heimburg, Douglas Broom, Kees Lankester, Carolina Klint, Radu G. Magdin, Wolfgang Ulaga, Michael Mansard, Yori Kamphuis, Stefan Leijnen, Philip Meissner, Christian Poensgen, Alexandra Papaisidorou, Hannah Ritchie Correspondents
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by N. Peter Kramer, EU & International Correspondent
‘Conference on the Future of Europe’: two years of EU navel-gazing? With the usual ‘Brussels’ fanfare, European Commission President von der Leyen, European Parliament President Sassoli and Portuguese Prime Minister Costa for the rotating presidency of the European Council signed, March 10, the Joint Declaration of the Conference on the Future of Europe
ith the usual ‘Brussels’ fanfare, European Commission President von der Leyen, European Parliament President Sassoli and Portuguese Prime Minister Costa for the rotating presidency of the European Council signed, March 10, the Joint Declaration of the Conference on the Future of Europe (read: European Union).
The conference is an idea of French President Macron to have a series of debates and discussions with people from the 27 member states about the shape of the EU’s future. It took a long time before the Conference could be set in train, allegedly because of COVID-19 obstacles, but really due to answering the question who should chair the operation. Macron promised the position to Belgian MEP Verhofstadt after he had dethroned him as president of the Liberal group in the EP. However, for many member state leaders, Verhofstadt was a bridge too far due to his outspoken ‘federalist’ ideas for the EU. The construction ultimately chosen for the presidency of the conference is too complicated to explain in brief; but it comes down to putting the presidents of the three main EU institutions in the lead. During the launch of the conference, President von der Leyen said: ‘today we are inviting all Europeans (read: EU citizens) to speak up’. But the same day, the official EU survey, the ‘Eurobarometer’, showed that in 13* of the 27 member states a majority of people do not want to participate in the initiative. The highest number of ‘no’ was found in Portugal, Prime-Minister Costa’s country at 64 per cent. Also, the initiator of the conference, President Macron, was dealt a significant blow, with 58 per cent of people in France suggesting they do not want to take part. Wouldn’t it be wiser to follow the advice of Prof. Timothy Gartner Ash, a well-known and obdurate Europhile, to stop the conference? He wrote: ‘Scrap that Conference on the Future of Europe and let the EU focus on what it can really do for its citizens. Only then it will have a future’. ‘The EU is facing one of the greatest challenges of its life’, he continued, ‘EU leaders should not waste time with a navel-gazing conference. On their doors in Brussels, they would better nail the motto of Nike: just do it’. * Austria, Bulgaria, Denmark, Estonia, Finland, France, Hungary, Latvia, Lithuania, Malta, Poland, Portugal and Spain 8 | EUROPEAN BUSINESS REVIEW
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Long-term EU thinking: a history of abandoned think tanks How far ahead does the EU think? In today’s fast-changing world is the European Commission’s responsibility to head off tomorrow’s crises, or to focus on hugely disruptive troubles brewing over the horizon? by Giles Merritt* 10 | EUROPEAN BUSINESS REVIEW
ow far ahead does the EU think? In today’s fast-changing world is the European Commission’s responsibility to head off tomorrow’s crises, or to focus on hugely disruptive troubles brewing over the horizon? How far ahead does the EU think? In today’s fast-changing world is the European Commission’s responsibility to head off tomorrow’s crises, or to focus on hugely disruptive troubles brewing over the horizon? Obviously it’s both. The grim post-Covid geo-economic outlook will require far greater intra-EU cohesion than seen for many years, but what about 2030 and beyond? The shifting tectonic plates of global economic power and political influence are plain to see. Less so, perhaps, are the ineluctable changes taking shape within ageing Europe. The EU’s demographic upheaval is going to demand sweeping new policies, yet the difficult choices involved are insufficiently highlighted by the Brussels commission. The EU needs blue-sky, out-of-the-box thinking that can counter-balance its conventional roles With its wealth of resources, the commission should be setting out the options available to its 27 member states in a future that will see markedly fewer working age people, fewer taxpayers and many more pensioners. Southern and eastern Europe will be hit the hardest, so unless ageing is tackled determinedly it risks creating divergences that could tear the EU apart. But the commission looks to be backing away from identifying these challenges. For reasons never satisfactorily explained, when she took over as president Ursula von der Leyen scrapped the in-house think tank set up to do precisely that by her predecessor Jean-Claude Juncker. The European Political Strategy Centre was established to cut through red-taped reporting lines and give advice directly to the top. Run by Ann Mettler, a commission outsider who had worked for the World Economic Forum that organises the Davos meetings, it quickly gained a reputation for incisive and forthright analysis.
The EU needs blue-sky, out-of-the-box thinking that can counter-balance its conventional roles. But its track record on doing so is patchy, spanning four decades of unending bureaucratic tussles. A key part of Jacques Delors’ drive to shake up the EU was the ‘cellule de prospective’ inside his private office. Headed by the brilliantly iconoclastic Jerome Vignon, its favoured target was conventional thinking – the “pensee unique” that Delors derided.
Later, Jose Manuel Barroso revived an in-house advisory unit, but perhaps because his Bureau of European Policy Advisors was largely staffed by fellow Portuguese, it lacked wider impact. Much the same fate risks being shared by IDEA, von der Leyen’s brainchild. Its acronym stands for Inspire, Debate, Engage and Accelerate Action, but judging by the commission’s website it has so far has failed to embody these ambitions. These should be a model for other EU researchers, but their succinct and unambiguous style is all too rare The EU knows how to get tough messages across to the general public, but it uses this skill selectively and avoids areas that risk embroiling it in political conflict. For instance, its recent blunt warnings of the dangers of global wealth concentration contrast with a far blander analysis of the perils of European ageing. “Ten companies control most of the world’s food supply; four airlines control 80% of the market, five banks control 50% of the industry; six companies almost the entire mixed-media industry,” the commission’s Joint Research Centre (JRC) reported not long ago, adding that on present trends the world’s top 0.1% will by mid-century own more wealth than the entire global middle class. The JRC’s chief focus is science and innovation, where it often does useful and original work. Another ideas factory is the European Parliament’s Research Service, which publishes accessible and highly readable reports. These should be a model for other EU researchers, but their succinct and unambiguous style is all too rare. A newly published JRC report on the territorial diversity of ageing across the EU could arguably have had a major impact if it had been couched as robustly as its global wealth study. Instead, its lengthy analysis lamely concluded that “policy actions have a limited ability to affect demographic trends.” To up its game on forward thinking, the commission should take to heart the comments of John Hawksworth, PwC’s chief economist. “A long-term view is crucial,” he has warned, “when planning for issues like pensions, healthcare, energy and climate change, housing, transport and other infrastructure investments…..long-term growth projections can actually be more reliable than short-term forecasts.” *Giles Merritt Founder, "Friends of Europe
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The slow death of Schengen The continuing spread of the Coronavirus in Europe has led to a situation where there is no longer any point to talk about the free movement of people in the Schengen area by Urmas Paet*
he continuing spread of the Coronavirus in Europe has led to a situation where there is no longer any point to talk about the free movement of people in the Schengen area. In essence, it has collapsed, writes Urmas Paet. Last spring, when countries quickly began closing borders for travel without coordinating it with their neighbours, let alone coordinating it with other European countries, it was somehow understandable. Back then the situation was new and frightening. But now that this situation has been going on for a whole year, not much has changed for the better. Countries are still making decisions separately and only in the light of their own interests. Their uncoordinated decisions take effect very quickly, cause confusion and affect many people’s movements. This is kill-
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ing Europe’s greatest achievement – our common principle of the free movement of people. This is by no means acceptable. There used to talk about coordinating national decisions and about the coordinating role of the European Commission. In reality, there is no such thing. The result is that today’s Europe is like a quilt made out of different colours and materials. There are countries that have essentially banned citizens of other EU countries from entering. For example, Estonia’s northern neighbour, Finland, does not allow even people who have a negative COVID-19 test to enter the country. The entry conditions in the so-called EU free movement area vary hugely from country to country. Starting with whether or not it is necessary to show a nega-
tive test result. In some cases, a test is required, which must not be older than 72 hours. In other countries, the test must not be older than 48 hours, in some cases even 24 hours.
very much present and it might not disappear when the virus recedes. This mistrust will unfortunately leave its mark for a long time to come.
In some countries, quarantine is required for seven days. In some ten. In some countries, another test must be done within a few days. Some countries can only be entered by representatives of limited categories, others only by their own citizens. Europe has not seen such a mess of rules for decades.
To sum up the travel restrictions in Europe, it is clear that nothing has been learned from the spring 2020 experience of breaking up the Schengen area of free movement. In a year, virtually no mechanism has been put in place to create a basis for countries to respect their neighbours and other countries by imposing restrictions together in a harmonized manner.
Travel restrictions are at times decided on the basis of the national average infection rates over the last two weeks. However, in many cases, regional differences within one country are many times greater than they are according to these averages between countries. For example, in Estonia, the corona situation is rather even throughout the country by now, but only a few weeks ago, Tallinn had a way higher rate than many other regions of Estonia. The situation is similar in Finland, where the infection rate in Helsinki and nearby is many times higher than in Lapland. But what is used to justify the entry restrictions is the national average, which is very misleading to get an objective picture. I am not very optimistic that, even with the best of intentions, the European Commission or the EU Council will be able to harmonize the rules within Europe anymore. The longer-term concern is that the mistrust between neighbours, and also more widely between European countries, is
Nothing like that is happening. There is still hope, that the pace of vaccination will increase and the virus will recede, and as a result, it will be possible to return to pre-pandemic times. Although, once again, the damage that has already arisen in Europe from mistrust cannot be abolished in a few days or weeks or even longer. Thus the minimum that we should expect from the EU Council and the European Commission is to prevent the EU area of free movement from completely collapsing. After all, European countries are not so different that they could justify the current mess and continuing overnight surprises about new rules and requirements. In such unconstructive spirit, the Schengen area of free movement would have never been possible in the first place. *Urmas Paet vice-chair of the European Parliament’s Foreign Affairs Committee (AFET)
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Margrethe Vestager: “European industry more competitive if digital transition investment made now” European Commission executive vice-president Margrethe Vestager recently stated that European industry would be “even more competitive in a digital future” if it starts investing “now” in people, technology and the right regulatory frameworks by EBR
argrethe Vestager, responsible for a digitally ready Europe in the EU executive, reiterated the will expressed by European Commission president Ursula von der Leyen on the first day of the fourth edition of the Industry Days to ensure that “European industry will lead the green and digital transition”. “Now that change is happening at a faster pace, we have to make sure that European industry is really equipped to lead this change,” Vestager said at the end of the third day of the main EU event on industry, which this year took place remotely. There is a “clear consensus” within the European Commission on this issue: “We want a digital future that is fair, accountable and of course under our control”, she said. To achieve this, the European Union needs to start investing in people “now”, in technology and in the right regulatory frameworks, she said, adding that this goal would only be achieved with the effort of all member states. Investment in people “goes beyond the economic issue”, she said, as it is necessary to guarantee “a certain level of digital competence” to European citizens. Otherwise, “new challenges for social cohesion” may arise, she warned. Vestager said “digitalisation can become a powerful platform for social convergence” by equipping “more disadvantaged regions and communities”. In relation to investment in technology itself, she de-
fended the need for public investment “when technology depends on public infrastructure”, giving electric cars as an example, which “will only make sense if they have access to a network of charging stations on European roads”, she pointed out. The third investment, of a correct regulatory framework, is “the most important” for Vestager, as it allows “the economy to operate fairly”, giving the example of the EU’s competitiveness rules under the common market. She recalled the European Commission’s proposal for regulatory change through the Digital Marketplace and Digital Services Acts, which set rules of conduct for large ‘gatekeeper’ platforms in order to “create a safer digital space in which users’ fundamental rights are protected”. “If we make these three investments now, I am convinced that European industry will be even more competitive in a more digital future,” she adding that this is a double objective, as the digital transition promotes the green transition and therefore also allows the EU bloc to meet its environmental objectives. Vestager was speaking at the end of the third day of the fourth edition of the EU Industry Days, the main event on industry organised every year by the European Commission. This year’s event took place virtually and featured a packed programme of workshops, talks, business presentations, podcasts and more from several EU countries. EUROPEAN BUSINESS REVIEW | 15
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Tech regulation: waiting for Biden? Germany, Denmark, Estonia and Finland “want to be more self-determined with democratic partners around the world” and to build “on a strong transatlantic relationship,” the country’s leaders said in their letter to the Commission by N. Peter Kramer
ermany, Denmark, Estonia and Finland “want to be more self-determined with democratic partners around the world” and to build “on a strong transatlantic relationship,” the country’s leaders said in their letter to the Commission. It means for these EU member states that the U.S., under President Joe Biden, is still the preferred global partner on tech regulation, as it is on other things. Ben Scott, a former aide to presidential candidate and former first lady Hillary Clinton and at the moment director of Reset, a group that lobbies for digital democracy, gives the EU the advice’ don’t bet on Washington’. “Biden genuinely wants to legislate, but there are other priorities and U.S. politics continues to be paralysed by polarisation,” Scott said in a recent interview, adding that an American version of the EU’s Digital Services Act will likely not see the light of day anytime soon. In his opinion, “the Republicans have not even managed to clearly distance themselves from QAnon, which is a symptom of the very disease regulation should help
cure,” referring to the conspiracy theory which has grown into a militant cult on platforms like Facebook. It seems to be the other way around. “In Washington D.C., many are hoping that the EU can solve the problem for America,” Scott thinks. “The sunk costs of EU regulation would be huge for tech companies, but they would only occur once. The EU could therefore trigger a cascade effect, with platforms adapting their business model not just in Europe, but everywhere.” The main challenge for the Biden administration “is therefore to adjust the priorities of U.S. economic diplomacy,” according to Scott. He acknowledged that Washington, as many governments, is often expected to defend domestic industries abroad. But, he said, a good example was set by Barack Obama, who managed something quite similar with his support for the Paris Climate Agreement, which was (and still is, after Biden’s restoring of the US support) quite unpopular in the US.
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Europe needs to learn from Asia to stop falling behind in tech "When I started my technology company in China 7 years ago, everybody in the West thought China was just copying European and US technology and there was no real innovation taking place" by Fabian von Heimburg*
hen I started my technology company in China 7 years ago, everybody in the West thought China was just copying European and US technology and there was no real innovation taking place. The overriding theme in the media and at conferences
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– where I spoke about the daily reality of operating in the Chinese startup world – was always belittling Chinese innovation, while South East Asia was not even mentioned. But what I saw seven years ago from my daily experience is that China was already very innovative in many areas – from e-commerce to social media
– and had created a unique ecosystem. The world was surprised when China was suddenly recognized as being innovative and leading the way in AI, IoT and electric vehicles – areas where the West thought it was ahead. The problem was an inability and unwillingness from western observers to understand or acknowledge the tremendous development that was taking place.
1) Europe needs to learn how to build up its startup ecosystem fast Europe’s tech ecosystem is lagging far behind the US, China and, in some areas, South East Asia. In the last five years, Europe invested less than $100 billion in venture capital – the same amount that was invested by the US and China annually over the past couple of years.
The West is frankly not used to learning from others. Europe and the US are mostly looking at each other, or worse, just internally for innovation and progress. Many Asian countries on the other hand, are used to observing very closely what is happening in Europe and the US in terms of innovation and progress.
In terms of innovation and big tech exits, Europe also lags far behind the US and China. In 2020, five of the top 10 Tech IPOs came out of China (with the top 3 all Chinese); the rest were from the US. China is years ahead in areas such as fintech, e-commerce and social media; and equal or also leading in AI, e-mobility and Internet of Things technologies and adoption.
The West’s judgement of the rest of the world is more and more clouded by judgement based solely on differences in values. If Europe wants to keep progressing like it has in the last 50 years, it needs to finally start learning from Asia, just as Asia has been doing from Europe for decades. Our future depends on cooperation and mutual learning, avoiding conflict and solving the world’s biggest problems, such as climate change, together.
For Europe to stay a strong global player in the world and promote its values, it needs to invest equal amounts in the startup ecosystem and learn how China, Singapore, South Korea and other countries were able to build startup ecosystems in such a short amount of time. The lessons are clear for everybody to see: huge amounts of investment, developed independent capital markets, and clear protection and direction from government towards the creation of European startups.
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society that has learned from its surrounding countries and the US. In the past decade however, whether it’s about managing the coronavirus pandemic or building a strong, independent financial sector and startup ecosystem, China and many parts of Asia have been doing a better job in a shorter space of time than Europe. The mentality I have witnessed over the years in China and many Asian countries, is to have bold visions but also to learn and adapt quickly were necessary. In the past, Europe has profited greatly from its diverse and multicultural history, facilitating learning and close exchange with different countries in and outside of Europe. In the next decade, it is crucial that Europe starts learning from Asia, where much of the world’s progress is occurring and one of the key lessons is in how to adapt and innovate quickly. Conclusion 2) Europe needs to learn how governments can accelerate startup ecosystems Both the US and China have used clear, long-term strategy and involvement from the government to attract the best tech talent, raise the most capital, as well as protect their own startup ecosystem and companies. Europe, on the other hand, has left its markets completely open and vulnerable in this key area. The result is that Europe is now dominated by US players and more and more Chinese players will enter and do the same in the future (for example TikTok, Nio). Furthermore, Europe has overregulated its own startup ecosystem, with laws ranging from putting high taxes on startup investments and making it difficult for employees to own stocks. China has left startups a lot of legal legroom, as well as supported them actively from within the government, creating a startup ecosystem to equal the US, in less than half the time. In order to catch up, Europe needs to learn from China, Indonesia and other South East Asian countries that have succeeded in creating an ecosystem so quickly. Europe also needs to reevaluate the role the government and the legal system plays in terms of managing innovation and progress. 3) Europe needs to adopt the fail fast and change fast mentality from Asia
Europe already has a world-class scientific infrastructure, leading social policy, and one of the largest and most developed markets in the world. If it wants to continue to provide its citizens with the protection and prosperity they currently enjoy, it finally needs to acknowledge that Asia (being home to around 60% of the world’s population) is doing many things better than Europe in many different areas. Europe should not fall into the same trap as China in the 19th century, in which an inward-looking political system led to the eventual decline of the Chinese economy. The rise of Asia provides a unique opportunity for Europe to improve itself and create a win-win situation for the world. Therefore, instead of falling into black and white thinking, dismissing mutual learning opportunities based on ideology, or trying to reinvent the wheel where others have done better, Europe should seek to improve its own system of government, tech ecosystem and mentality to enable the world to tackle future challenges such as climate change, which will require innovation and global cooperation on a scale never seen before in human history.
*Fabian von Heimburg Co-founder and Managing Director, Hotnest
Since the Second World War, Europe has been an open
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Kamala Harris for President. But when? by N. Peter Kramer
fter 65 days in office, US President Joe Biden held his first press conference in the White House. It is remarkable that he expects to run for re-election in 2024, at the age of 82. This announcement and, finally, the press conference, came after increasingly loud rumours that President Biden was visibly deteriorating. His appearances were limited to pre-written announcements and carefully orchestrated conversations with political allies. Since taking office, he has not given a single press conference, a record. And last week Biden stumbled three times in a row walking up the airstair of Air Force One. ‘Is the US Presidency one political job too much for 78-year-old Joe Biden?’, was the big question. But, on Thursday March 25 good old Joe was there! Alive and kicking, especially the Republicans of course. Although Biden told reporters that Vice-President Kamala Harris will be his running mate again in 2024, his announcement must have been a disappointment for her. The expectation was that Kamala Harris would compete for the Presidential nomination in 2024, because almost everyone assumed that President Biden would not run for re-election in three years. Didn’t she give up her prestigious Senate seat, a lifetime appointment to a Democrat in California, to have the big chance? In 2020 during the Democratic primaries Kamala Harris accused Joe Biden of having been in cahoots with advocates of racial segregation during his career in the Senate and also not being able to take part in the election because of (alleged) sexually transgressive behaviour. But, a few months later, she accepted Biden’s invitation to be his running mate, with a big smile. Practice has shown that Democrats (and Republicans!)
rarely deny a Vice-President the party’s Presidential nomination. Last in line was Joe Biden, who was Barack Obama’s right-hand from 2009 to 2017. With his victory over incumbent President Donald Trump, he became the 15th Vice President to serve in the Oval Office. The last one before him was George H.W. Bush in 1988, after being Ronald Reagan’s VP 2 terms. Will Kamala Harris be nr 16? As sitting Vice President, potential opponents in the Democratic party will see her as difficult to beat. In addition, many white and/or male Democratic heavyweights will turn down the idea that they would try to ‘steal’ the party nomination from the first female and black Vice President. In a political party that is increasingly dominated by identity politics and intersectionality, that would be swearing in church. Kamala Harris (1964) is a radical left-wing politician. In 2018, according to non-partisan GovTrack, she was the fourth most progressive Senator (out of 100), to the left of Elisabeth Warren for example, who is usually labelled the female Bernie Sanders. However in 2019, she even threw the latter in the dust when GovTrack named her the most progressive member of the US Senate. Compared to the volatile Donald Trump on his right and firebrand Bernie Sanders on his left, Joe Biden seemed like a return to the political centre. But with Harris as the standard bearer, that façade would disappear. The question is whether the American people are ready for it. In 2028? In 2024? Or before, if anything were unfortunately to happen to Biden?
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ENERGY & INFRASTRUCTURE
2020 was a breakthrough year for electric vehicles After years of hopeful signs, 2020 may well have been the year we reached a tipping point in the adoption of electric vehicles, according to new research by Douglas Broom*
fter years of hopeful signs, 2020 may well have been the year we reached a tipping point in the adoption of electric vehicles, according to new research.
The number of electric cars, buses and even trucks on the world’s roads hit a new high last year and analysts at JP Morgan believe we just passed the point of no return on the global journey to zero-emission motoring.
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CHINA LEADS THE WAY Globally, electric car sales reached 2.3 million in 2020, an almost four-fold increase in just five years. China continues to lead the world in the adoption of electric vehicles (EVs) – nearly 1.2 million were sold there in 2019 and there were 3.35 million EVs on China’s roads by year’s end.
ENERGY & INFRASTRUCTURE
In Europe, 2020 saw electric power surge ahead. Norway led the way with zero-emission vehicles accounting for over half of new cars registered in the year to the end of November 2020. To be fair, Norway had a head start. Over a quarter of a million of Norway’s 2.8 million registered cars were already electric at the start of 2020. Electric cars of all types accounted for 6% of the cars on Europe’s road in 2020, according to JP Morgan, up from just 1.6% the year before and making up 27% of all new sales in France, Germany, Italy, Spain and the UK. Analysts attribute part of the rise in EVs to subsidies introduced in some countries to stimulate demand during the COVID-19 crisis, such as the $8,550 (€7,000) discount on offer to electric car buyers in France. In Norway, EV drivers enjoy a 90% discount on road tax. EVEN THE HUMMER GOES ELECTRIC In the US, only 4% of cars were electric in 2020. The market share of electric vehicles has risen at a steady one percentage point a year since 2017 when it stood at 1%. But times are changing. General Motors recently announced a range of new EVs, including two electric Hummers. Tesla is working on its Cybertruck pick-up as its entry into the commercial vehicle market. JP Morgan expects electric vehicle sales to grow by up to 30% as China’s economy recovers from the effects of the pandemic. Cheaper batteries and longer-range vehicles, rather than government subsidies, are driving the growth, analysts say. FURTHER, FASTER Across the world, car manufacturers are introducing new electric models in 2021 with improved range and performance. Volkswagen is in the process of delivering the ID.3, its first purpose-built electric car across Europe. Volvo began production of its first fully electric car, the XC40 Recharge, in October 2020 and says half its global sales will be fully electric by 2025. In December 2020, Volvo made its first delivery of electric trucks and construction vehicles. The company expects over a third of its commercial vehicle sales to be electric by 2030.
Key to the sales success of EVs is the price and performance of their batteries and both are improving. The average price of a vehicle battery pack fell from $1,160 in 2010 to $156 in 2019 and VW recently set a range record of 531km on an ID.3 test drive. The World Economic Forum has convened the Global Battery Alliance, bringing together 42 global organizations including manufacturers and raw material producers. They say batteries have a key role to play in reducing the carbon footprint of the transport and power sectors. But EV infrastructure also needs to be in place if these technological advances are going to be effective. By 2040, around 290 million charging points need to be deployed, requiring about $500 billion in investment globally.
*Douglas Broom Senior Writer, Formative Content *first published in: www.weforum.org
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Alarming global overfishing: tragedy or happy ending? Dwindling fish stocks at sea as a result of overfishing are alarming. Floating fish factories the size of an Olympic Stadium compete with small fishermen in poor developing nations who scramble to mop up the last remaining fish. Kees Lankester, an international sustainable seafood councellor, has written for European Business Review A FISH OPERA IN THREE ACTS. The first two acts feature governments and markets, both contributed to slowing down global overfishing but were not able to reverse it. In the third act the finance industry stars, decisive in whether the global fisheries opera will finish in tragedy or with a happy ending.
The Vladivostock 2000 (ex-Damanzaihao) is the largest fishing vessel in the world, measuring 228 metres.
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Wooden canoes (pirogues) on a Senegalese beach
A Fish Opera in three acts Act one – A tragedy unfolds by Kees Lankester*
lobal fisheries are a grim example of the tragedy of the commons. In search of new fishing grounds, fishermen ventured further away over the oceans that cover 70% of our blue planet. With ever decreasing catches, man went to greater depths, in search of new species. For 200 years new technology brought more efficiency, from the Brixham trawler in the 19th century and steam engines and fish finders in the 20th century, to present-day ultrafreezers. Combined with more fishermen, they left no escape route for the fish. Today, more than 50% of the oceans are being fished, far greater than the agricultural pressure on land
ter world. The SDGs have become a mantra, but the reality is less rosy. SDG 14 on ”life under water” includes four targets for fisheries by 2020, but none of them were actually achieved. It shows that intentions and targets are not enough, credible, instead verified performance is needed. Government authorities are in a continuing battle of compliance to rules and regulations. According to the UN Food and Agriculture Organisation, 34.2% of global fish stocks were overfished in 2017, while another 59.6% were fished at the maximum possible. The FAO-graph shows that society has yet to reverse a looming disaster.
The largest tuna vessels can scoop up 300,000 kilos of tuna in a single haul. Fish factories the size of an Olympic Stadium compete with small fishermen in poor developing nations, who scramble up some of the last remaining fish in wooden pirogues.
All fisheries in the oceans, small and large, need to maintain fish at healthy levels and with minimal effects to their ecosystems. Fish are renewable resources, as long as the stocks are kept at a healthy level. So what is keeping us then? We could start with abolishing illegal fishing. No self-respecting person likes to be associated with illegality. It still pays off in fisheries to circumvent laws and regulations. Governments feel responsible for the exploitation of natural fish resources. But much fishing takes place unseen beyond the horizon, attracting crime and misdemeanour.
The single, fatal cause of the global fish collapse is too much fishing pressure. Giant vessels are not unsustainable by default, they could comply with limiting fishing rules. Nor is small always beautiful. Thousands of small fishermen may have a seriously damaging effect on fish populations. And when they all hunt for the same, last remaining fish like in West Africa, it comes as no surprise that catches dwindle and local food supplies become sparse. In 2015, the United Nations adopted the Sustainable Development Goals (SDGs), with ambitious targets for a bet-
In 2014, a mobile phone was left in the backseat of a Fijian taxi. It disclosed a sickening video with a case of the alleged murder of four fishermen at sea. The footage is still online. Seychelles-flagged vessels of Taiwanese origin were identified. Without consequences for the owners, after all, who would press charges and which laws would apply? Another
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it becomes a free for all. Sometimes the fishing industry itself takes the helm. The tuna purse seine industry demands 100% observer coverage on the vessels, an admirable case of self-control.
Real-time screenshot of fishing vessels spread over the oceans, Jan 6 – March 6, 2021 (Global Fishing Watch).
example: In 2013, the Scottish police discovered razor clams smuggle with airlines to Asian markets. The clams were caught by (illegal) electro-fishing. Organised criminals were reported to fish at a value of € 65,000 per day. Incidents like this are the tip of the iceberg. Illegal, unreported and unregulated (IUU) fishing is a notorious contributor to unsustainable fishing, valued at US$ 10 23.5 billion annually. It is not spread evenly across the globe, most takes place in tropical waters with known hotspots, e.g. in Southeast Asia. There is a powerful economic motivation to fight illegal fishing. It distorts markets and strongly disrupts economies by undercutting prices and blocking market access. The OECD spent a decade working on tax crime in fisheries. It noted the evasion of import and export duties on fish products transported across national borders; fraudulent V.A.T. reclaims; failure to account for income tax on the profits from fishing; and evasion of income tax and social security contributions. Another OECD concern is tax exemptions provided by governments, in other words, subsidies. ”There is no economic incentive for unsustainable fisheries, unless other people’s money like subsidies are included in the equation”, a Worldbank employee stated in 2020. Eliminating perverse subsidies is a second motivation for improving the economic performance of legitimate seafood. China provided US$ 7.2 billion in subsidies in 2018, followed by the EU, Japan, USA and Korea (all in the ballpark of US$ 2.8 – 3.8b; accuracy is low due to lack of detailed insight and definitions). The total fisheries landing in the USA or in the EU was valued at US$ 7.5 billion, in Japan it was about US$ 8.5 billion. This indicates that citizens already paid roughly 25 – 35 cents up front for every euro of fish they buy. China heavily subsidises a fleet of 12.500 vessels fishing across the globe outside Chinese waters. The European tuna industry recently gave a strong signal that this is false competition. China for example pays for fishing licenses in other nations’ waters, as do Japan, Russia and the European Union. But when a coastal state has no means to police its waters,
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Illegal fishing attracts other forms of crime that disrupt societies. Human trafficking and labour exploitation are the most feared in today’s fishing crime. It occurs frequently in tropical waters, but since many tropical seafood products end up in North American, Japanese and European markets, their citizens can be held equally accountable. Interpol reported in December 2020 that illegal fishing is often associated with organised crime. Interpol speaks of ”crime convergence”, citing close links between money laundering, corruption, tax evasion and forgery. In addition to such illegal practices, fishing nations have not been able to extend regulations to control fisheries. Many species, like mackerel, tuna and sharks, swim in and out of Exclusive Economic Zones (EEZs). Nations jointly manage many fisheries in international waters, with successes and setbacks. In 2012, the Parties to the Nauru Agreement (PNA), consisting of eight small island nations in the Central Western Pacific, successfully met credible 3rd-party conditions for sustainable tuna fisheries in their waters. In stark contrast, harvest control rules exist for just a few of the 23 recognised tuna stocks, despite long standing ambitions. The FAO-graph painfully illustrates that governments were not able to stop the downward trend in global overfishing. Yes, important successes were achieved. Many fisheries in the North Atlantic have recovered. Australia and New Zealand apply sustainable fisheries catch regimes. But the balance remains fragile. Recently, European nations could not resolve their quota allocation for several large fisheries in the North East Atlantic. It seems that even these well-managed operations are running out of control. In response to the limitations of regulations, market pressure surfaced in the 1990s. The next act in this fish opera will describe how the markets responded to the decreasing global fish abundance.
Tuna fishing vessels can be over 90 metres long. This Mexican vessel has a helicopter platform.
Act two – The market comes to the rescue
lobal overfishing is a major concern to the health of oceans and the health of humanity. After rules and regulations did not succeed in reversing the downhill trend, seafood markets were mobilised. In countries with a coastline, the general public is sensitive to seafood and market parties benefit strongly from it. Seafood markets can make a big contribution to sustainable fisheries and industry has a strong economic incentive to do so. And although fisheries only make up a small proportion to the gross domestic product in almost all countries, their public profile is high. Look at the Brexit negotiations, where fisheries were one of the last hot potatoes. Sketching the perspective, the Times of London pointed out that the landing value in the UK of about US$ 1 billion in 2018 contributed about 0.1 per cent of employment and 0.1 per cent to the Gross Domestic Product. This is nearly 60 times less than London’s financial services sector. The EU and the US markets show similar values. Fish is a renewable resource, a natural capital that can maintain itself with annual recruitment compensating from mortalities. Fish will always provide annual surplus, as long as the natural capital itself is left to live in healthy numbers. ”Eat the apples, do not cut the tree.” The seafood markets are more than willing to sell healthy seafood products and people are more than happy to buy them. When fish stocks would be left to thrive once again, economic prosperity could raise and allow a substantial income to fishermen. In parallel, sustainable fisheries restrict their
impact on the ocean ecosystem, with minimal bycatches and seafloor damage. In the 1990s, Unilever, at the time the world’s biggest whitefish processor, recognised it was missing out on large benefits of its fish business because of fish stock collapses. Indeed, the entire sector lost value added that was associated with reduced fish stocks, the ”natural capital” of the industry. Unilever founded the Marine Stewardship Council (MSC), jointly with the World Wide Fund for Nature (WWF). MSC developed a standard with an ecolabel for sustainable fisheries. It enacted an associated tracing standard and compliance mechanisms. Using market pressure, MSC intends to reverse the trend of dwindling fish stocks. MSC is voluntary and accessible to all global fisheries. After decades of pushing, large retailers, which are the most influential parties in the food industry, slowly switched to products with social and environmental qualities. What did the sustainable markets bring to the seafood industry? MSC is the only scheme that systematically reports on this. It is generally acknowledged that the biggest driver is market preference. When a buyer can choose between MSC and non-MSC product, it will pick the MSC-variant. Many fishermen receive a higher price for MSC-certified fish, but many others do not notice a direct difference. 70% of the seafood value is sold in the US, Japan and the EU. Retail is the strongest actor in these seafood markets and
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retailers will seldom be prepared to pay more. In that case, the supplier can opt for stable sales. Several retailers made strong commitments to only source MSC certified wild fish. Amongst the best performers today are Sainsbury’s in the UK and Aldi in Germany. Meanwhile, alternatives to MSC were triggered. The global retail industry developed an alternative standard with weaker conditions than the MSC. Although their Global Sustainable Seafood Initiative (GSSI) is presented as a benchmark of seafood standards, de facto it is an alternative standard. GSSI determines whether any seafood standard is adequate according to its own criteria. MSC is the best in class and was the first one to past the test, but GSSI also accepted domestic standards like Iceland’s responsible fisheries scheme and a regional label for Gulf of Mexico fisheries. As a consequence, a cheap and easy scheme like Japan’s domestic Marine Ecolabel can also pride itself of GSSI-recognition. But: if you pay peanuts, you get monkeys. Most schemes lack fundamental credibility characteristics, like support from a wide range of interest groups, solid verification of its claims or a functioning tracing mechanism. A credible system requires an enormous investment in time and resources. Today retailers choose amongst various GSSI-supported labels. While this sounds beneficial to retailers, it confuses the public and, more importantly, it reduces the effectiveness on fisheries. Furthermore, it is market distortion since a domestic label like the Swedish KRAV cannot be obtained by fisheries in Spain or Japan. More than twenty years after its inception, MSC stated that in 2020 about 15% of the global landings are performed according to its conditions for sustainable fisheries. MSC itself acknowledges that it is not the panacea in the fish opera. But most alternative schemes undermine the credibility of sustainable fisheries. Moreover, many seafood markets are not susceptible to market forces, for example in China and the rest of Asia. Also, new contests always appear on the horizon. In late 2020, some of the largest volume fisheries, herring and blue whiting in the North-East Atlantic, lost their MSC-certificate, because national authorities did not agree on the catch shares. This is exacerbated by shifting fish distribution patterns. In the meantime, groups like the World Wide Fund for Nature and Greenpeace claim that MSC is not doing enough. At the same time the fishing industry moans that it is too harsh on them. After 25 years, the sustainable seafood market runs into its boundaries. Just like government rules and regulations, market instruments are not strong enough to turn the tide of global overfishing.
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Act three – Will finance become the new opera star?
he first two acts of this fish opera featured governments and markets. Both likely contributed to the slowing down the trend of global overfishing, but they were not able to reverse it. In the 2020s, the curtains opened for the third act, starring the finance industry. It could become decisive in whether the global fisheries opera will end in a tragedy or in a happy ever after. Like all industries, many fisheries are structured in multinational holdings and subsidiaries that fish and buy seafood all over the world. The romantic picture of small-scale fishermen has been pushed back into history, although in many places in the world they still struggle to survive. To sketch the scene, the combined revenue of the top-100 largest seafood firms was US$ 107 billion in 2018, well over 25% of the total first seafood sales estimated by the UN Food and Agriculture Organisation (FAO). Large seafood enterprises source from all over the world. They need continuous loans and investments, which are not yet conditional to systematic, credible sustainability criteria. This opens the door for the finance sector to help restructure global fisheries towards sustainable practices. Because seafood is only a minor component in the portfolio of banks and investment firms, it has not yet attracted much of their attention. Their first and foremost sustainability concerns today are climate, climate and climate, in that sequence. On the other hand, fisheries have an oversized public profile, illustrated by the recent Brexit negotiations, when fisheries,
despite its minor contribution to the gross domestic product, formed one of the two last barricades against completion. In the wake of public concerns about climate change and food commodities, creating economic benefits from sustainable financing is a new business model. Finance is increasingly providing green/blue bonds and loans, with conditions that supposedly will contribute to sustainable production. Many investment corporations and banks apply criteria in an ad hoc manner, often using advisors that do not have the necessary skills. Green washing, both intended and unintended, is happening all over the place. Credible criteria are needed for green/blue bonds, which are prone to abuse. They should be used consistently across loans/bonds and by many lenders and investors. Only then can the finance industry succeed in its efforts to create sustainable financing, and at the same time demean false competition of those who do not stick to globally accepted conditions. Many sustainability guidelines have been proposed to seafood financing. Public and private banks, Civil Society Organisations, and large, public institutions like UN Global Compact (comprising about 10,000 businesses in 160 countries) all left their tracks. Service providers like Sustainalytics and RobecoSAM are currently the most active, ticking off banks on the basis of their own reports. Others prefer rankings, like the World Benchmarking Alliance or the Dow Jones Sustainability Index, assuming that low-ranked firms would make strides to climb higher on the ladder. The International Finance Corporation (IFC), member of the Worldbank group, issued its Performance Standards way back in 2012. The IFC PS are applied to its own clients and considered voluntary guidelines for commercial banks. Their formulation is unequivocal and appears quite adequate. The EU Taxonomy Regulation is a recent effort by the European Commission to establish a classification for sustainable activities to control climate change. Integrated in the Green Deal is an Action Plan on Financing Sustainable Growth, which inter alia refers to forthcoming measures to enhance the transparency of benchmark methods. International banks will need to report to rules set by the EU Taxonomy. Amongst the UN Sustainable Development Goals, SDG14 on Life Under Water is the most relevant for fisheries. Four out of ten targets relevant to fisheries lapsed in 2020, without having been met. Guidelines and directives continue to be presented. UNEP FI recently published its report ”How to finance a sustainable ocean recovery”, offering practical guidance on how to act on its five sustainable blue economy finance principles. But guidance alone will not resolve existing concerns, it needs to be followed by knowledgeable auditors in their assessments. The time seems ripe for performance instead of targets.
A recent analysis revealed that the existing mechanisms have not yet managed to pass serious credibility test in terms of effects at sea. Important diagnostics for credible impact are impartiality, industry buy-in, public consultation, third-party verification of compliance and in-the-water performance. These are all requirements for making the shift from advocacy based on inconsistent claims and semi-truths to real outcomes that can be measured and confirmed. Fortunately there are credible attempts to separate the wheat from the chaff amongst the available schemes. In late 2020, UN Global Compact published a reference paper defining the ”blue” in blue bonds with so-called tipping points. For fisheries, the tipping points refer to the Marine Stewardship Council (MSC) for fisheries and the Aquaculture Stewardship Council (ASC) or aquaculture. In February 2021, The Norwegian bank Sparebank executed a € 500 million green loan, of which a good portion of the assets were designated to sustainable fisheries with MSC as a benchmark. The latest fashion in the green financing sector consists of sustainability linked loans or bonds, they are an emerging market. When a client company meets predefined key performance indicators (KPIs), it will be rewarded with lower interest fees. The burden of proof is reversed and a fishery or a fish farm must show that it claims what it does and does what it claims. It appears a promising promenade. Dutch-based Rabobank issued a seven-year sustainability linked loan of US$ 100 million to Agrosuper in Chile, the world’s second-largest salmon producer. The loan came with environmental and social key performance indicators, including provisions for increasing ASC certification and getting farms into ASC improvement programmes towards reaching 100% ASC. Meanwhile, while sustainability linked loans mature, we will need to keep our eyes wide open once again for intended or unintended mishaps. In February 2021, seafood giant Thai Union announced a US$ 400m loan, categorised as a sustainability-linked syndicated loan. The syndicate consisted of mostly Thai and Japanese banks. Shortly after the announcement the KPIs were questioned in the seafood press about their credibility and verification features. Thriving fish in healthy oceans could sustain billions of livelihoods, poor and rich alike. Fish is a natural capital that can be used as long as we leave enough in the water to replenish itself. Our ”ocean commons” are under threat. Efforts by governments and markets in the last decades have slowed down the road to disaster, but not yet reversed the trend to a sunny future. This fish opera only recently opened the stage curtains for Act three. The finance industry can become the opera star and make the difference between a happy ever after or the tragic loss of our natural capital in the oceans.
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These are the top risks for business in the post-COVID world Over the past year, the business landscape has become much more precarious due to protracted uncertainty and confusion in pandemic response approaches, the challenges of vaccine rollouts and emerging virus variants - and spillover effects into other risks by Carolina Klint*
ver the past year, the business landscape has become much more precarious due to protracted uncertainty and confusion in pandemic response approaches, the challenges of vaccine rollouts and emerging virus variants - and spillover effects into other risks. Businesses have had to manage dual economic and health crises, which have driven new employee and customer engagement protocols, remote working on an unprecedented scale, the re-engineering of supply chains, and numerous bankruptcies, consolidations and creative partnerships.
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These developments and the long-term risk outlook have businesses wondering how to prepare for what may lie ahead. Foremost on their mind is their survival and building resilience. And not only in relation to ongoing pandemic impacts and their competitive positioning, but also recently unleashed cyber-attacks, catastrophic climate events and social unrest that demands workplace and community change. While many businesses have innovated and adapted to rapidly-changing circumstances - seizing market share in the process - not all have. Nor will all benefit from the
expected economic recovery. Businesses must be ready for a disorderly shakeout during this volatile recovery period. And they will need to strengthen and constantly review their risk mitigation strategies to improve their resilience to future shocks. DISRUPTION IS EVERYWHERE Industry is facing disruption from all sides. And leaders need to closely watch three critical drivers of risk – political, technological and societal. On the political side, business needs to be aware of the different trajectories of stimulus packages and how they may be skewed to particular sectors or business types along with the availability of credit. Small and medium-sized business, hard hit during the pandemic, may find the recovery cycle unkind as well. In the US alone, 43% of micro-, small, and medium enterprises (MSMEs) closed between January and April – and numerous others still face the potential of permanent closure. Many governments are also increasingly shifting towards protectionism in order to create more self-sufficient and self-sustaining economies. Partly in response to COVID-19, during which border closures, lockdowns and export restrictions choked extended supply chains, companies must keep an eye on shifts in domestic policies that focus on national security and self-sufficiency. Such policies could hamper access to foreign talent and investment, as well as future merger and acquisition opportunities. Technological drivers are also accelerating and disrupting the business landscape. The pandemic has precipitated an unheralded tech revolution for big and small businesses alike. Rapid digitalisation transformed social and work interactions overnight. E-commerce, virtual conferencing, gaming and streaming all underwent unprecedented growth. It has been estimated that worldwide internet usage in 2020 increased by 30% while e-commerce grew by upwards of 20%.
This monumental shift could create potential catastrophic risks on a longer horizon. The hasty rush towards automation, in response to the need for efficiency and reduced on-site labour, may expose businesses to unforeseen financial and ethical risks – particularly with more socially activist consumers and workforces concerned about job losses and willing to take their talents elsewhere. Societal drivers are also creating real pressure on industry. Businesses are facing enhanced societal scrutiny of their practices, particularly in relation to environmental, social and governance aspects of business performance (ESG) and climate change. These priority concerns are again reflected in this year’s Risks Report, in which environmental risks dominate the high-likelihood, high-impact quadrant of the risk landscape. More than ever, consumers, employees, and investors expect firms to reflect their values. This became apparent as the pandemic’s longer-term health, social and economic impacts manifested, as well as in the response to global social justice movements such as Black Lives Matter (BLM). For example, last summer at the height of the BLM protests, thousands of businesses stopped advertising on social media platforms. Revenue and reputation risks, and ultimately long-term value risks, are emerging over employee diversity, job security and fair pay; outsourcing, gig-work and contracting; and climate action. WORKPLACE AND HEALTH TRANSFORMATIONS The pandemic has transformed the needs and demands of workers and workplaces – whether in company or home offices, manufacturing facilities, shops, hospitals, distribution centres or transport. Greater experience
This rapid digitalisation also has exponentially increased companies’ cyber exposures and created more complex and potentially less secure networks. The Global Risks Report 2021, in fact, highlights the failure of cybersecurity measures as a top short-term risk. And throughout 2020, we’ve seen increasing cyber-attacks on government agencies and companies globally – many leveraged the COVID-19 crisis to infiltrate networks. Globally, the attack volume doubled from the second half of 2019 to the first half of 2020.
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with remote working and flexible work hours is changing expectations of how, when and where employees will work. This is challenging how firms maintain company culture, creativity, identity and the motivation of their employees. This also has big implications for the health and well-being of employees and for society at large. Firms may suffer from productivity losses and need to more carefully manage employee safety and security challenges. This was certainly true in the early days of the pandemic, where surveys showed that 55% of employees were less productive and engaged due to remote working. On a broader societal level, an ongoing global mental health crisis exacerbated by the pandemic and associated lockdowns has produced staggering impacts. Lost schooling, altered work conditions, job losses, isolation and the economic downturn have put all ages at risk of higher rates of depression, anxiety, PTSD, and lost productivity. The costs of worsening mental health could rise to as much as $1.6 trillion over the next 10 years in just the US alone . RESPONDING TO TRULY GLOBAL RISKS Beyond the public health challenges of the current crisis, governments, international agencies and companies have all struggled in multiple dimensions with their response to this global risk. All organizations can learn much from the past year. However, instead of preparing for the last crisis, they should seek to uncover transferable lessons that could apply to a range of complex, emerging threats. Consider what was accomplished when the private and
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public sector came together during the crisis. We saw: · The rapid and unprecedented development and distribution of multiple vaccines. · A repurposing of supply chains and manufacturing processes to develop PPE and critical medical equipment. · The ability to shift to remote and new ways of working in even the most heavily-regulated industries. This capability to act with single-minded purpose needs to be institutionalised – the pursuit of national and global resilience is bigger than any one organisation and any one risk. More collaboration across society – the public and private sectors, communities, and NGOs – is essential. It will involve developing stimulus programs that incentivise sustainable recovery efforts that include green infrastructure and clean energy projects. It will require partnerships between the public and private sectors to upskill workers for an exploding digital economy. And it ought to necessitate the creation of new pandemic and emerging risk insurance mechanisms that could help stabilise companies during extended crisis events. To build and maintain resilience, it is important that business keeps an eye on potentially high impact events in the short-term and on the longer-term landscape. And then be prepared to respond effectively, creatively and collaboratively. This is vital for businesses and the global community to sustainably navigate the risks and opportunities ahead, strengthen their resilience to future shocks and progress towards long-term prosperity. Carolina Klint* Managing Director, Marsh
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The Fourth Globalisation and EU business families The often-unsaid truth of European business is that it is shockingly concentrated in a relatively small number of families. Part of that is by design by Radu G. Magdin*
he often-unsaid truth of European business is that it is shockingly concentrated in a relatively small number of families. Part of that is by design. First, Europe has tended to prefer bank financing as opposed to equity financing, which tends to favour incumbents because stable, established business will enjoy a lower cost of capital than any challengers, enough to, at the very worst, make founders an offer they can’t refuse. Secondly, while the Anglo-Saxon world tends to have fairly punitive inheritance laws as well as corporate compliance regulation, Europe in general is less taxing – the German old money being the best-known example. This has actually worked out rather well for Europe as a whole, at least in the past. Bank financing focused
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on a handful of companies facilitated the post-war economic boom, and while it restored the fortunes of many plutocrats, it enabled a continent decimated by war to quickly recover and turn from what may have been a struggling group of former rivals slowly drifting towards the Soviet Union into a cohesive, prosperous place Soviet citizens ran towards. Likewise, while a certain bonhomie relating to inheritance taxes and at times Byzantine corporate structures may be looked down upon, that would be overly optimistic. For a significant period of time, it did enable a social model of low unemployment despite high welfare payments and protected companies from foreign takeover. Not ideal, but it suffices to say a lot of the Thatcherite criticism of its day proved wishful thinking.
However, the key to each success was never bank financing, or state and business ‘cooperation’ or any particularly European recipe of success. Each time, the key was globalisation. In fact, had these not happened in the context of rapid globalization, it is quite likely they would have failed. Today, Europe faces succumbing to what Donald Sull called ‘active inertia’. In his seminal article in Harvard Business Review, from 1999 but very much of relevance in an otherwise fast pace business world, he describes the phenomena of successful business, with every advantage at their disposal, failing to make the best of a changing environment and failing spectacularly. What needs to be stressed, using perhaps more recent terminology, is that this is not a matter of blank swan events suddenly making dinosaurs redundant. Quite the contrary, these are ‘grey rhino’ events: seen from afar, whose path may be easily extrapolated from their current trajectory. In other words, these companies were sitting on the tracks. Moreover, they were sitting on the tracks while fully cognisant of the danger and very much exercised by it. That’s the active part. But instead of actually moving, they circled ever more frantically. Europe’s business and the families behind them are currently doing the same thing. Not for not trying. That’s where the ‘active’ part comes in. Far from doing noth-
ing, Europe is abuzz with every initiative one can think of: the cacophony emanating from Brussels actually matching what is happening all across the boardrooms of European great companies. The Wirecard scandal is perhaps emblematic of this: the shine of an EU-grown fin-tech success story was so captivating that it blinded everyone of the stark accounting irregularities. In other words, European business and the great families behind it aren’t wistfully looking into the sunset. European business is trying. And failing! One may argue that the reason for this is quite simple: it overlooks a key factor in previous successes. It wasn’t actually an educated workforce, as armies of university-educated baristas can attest to. Nor was it government support in and of itself, as so many Southern European emigrating away from corruption can attest to. Instead, it was globalisation – waves of it, to be specific. To date, there were three great waves of globalisation which lifted European business’ boat and turned what could have been failing models into successful ones. Each time, in the 1950s, in the 1990s and in the early 2010s the model started breaking down. Each time, a wave of globalisation turned rot to growth. The First Globalisation happened not late after the war. While it is often overstated how damaged Europe’s infrastructure actually was, it suffices to say that growth came from rubble. Export competitiveness and access
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to American markets thus proved critical, in a model that would show up in Japan not late after. Without those markets and technological competition, the compact of state employment and investment in exchange for bank and government support may have ended up enriching would-be plutocrats rather than create an economic boom.
Soon, the inflow of labour and outflow of export goods was sufficient, and the model started wobbling again. Simply put, when everybody in Eastern Europe has sent back enough remittances to buy a VW Polo, what then? That’s when the Third Globalisation came in. By 2001 China was a member of the Word Trade Organisation and two things happened.
The Second Globalisation came with the fall of the Berlin Wall. By then, European businesses weren’t actually doing that well. Germany, the oft-touted example for many, was actually labelled sick man of Europe. Ageing populations, inflexible labour markets, corruption, a bloated administrative class, high taxes – Europe seemed to be going into the millennium rather poorly.
First, a giant market opened up. Europe could be kept busy producing Polos all year. As Ferdinand Piech, patriarch of the VW Group, is quoted to have said: “We’re going to get the Chinese off bicycles”. Moreover, a government eager to accommodate Western factories enabled globe-spanning value chains to coalesce in Chinese clusters. It should not be much of a surprise that Angela Merkel found itself at the opening of the first Confucius Institute in Germany in a smiling mood: with EUR 206 billions of trade, China is Germany’s largest trade partner.
But then, overnight, a whole new host of markets just opened up for European largest businesses. Not only that, but a cheap and relatively highly skilled labour force just became available: STEM shortages were met overnight, union demand quieted, global value chains became the norm and, suddenly, sclerotic Europe facing 80s malaise became the dynamic continent launching the Euro and, the talk of the time, challenging the United States in a multi-polar world. It suffices to say much of it elicits a smile in retrospect.
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Secondly, China’s current account surplus, as with much of Asia’s, ended up as cheap credit for Europe. Encouraged, investors bet on the convergence of Southern and Northern debt, fuelling a credit boom in Southern Europe, which proceeded to spend it fuelling Europe’s great conglomerates. It was a good time to be selling French luxury brands, Italian fashion or German cars. Much of those are over.
The First Globalisation has duly run its course. Despite the seemingly secular levels of affective partisanship in the United States, aversion to trade is one of the few things both Republicans and Democrats can agree on. The First Globalisation is now mostly coming in terms of NATO bills, offers of dearly uncompetitive prices LNG supplies under the guise of energy independence as well as the export of culture wars. The Second Globalisation has also run its course. Deutsche Bank expects Eastern Europe to face declining growth as an ageing population and falling levels of investment take their toll. Meanwhile, as McKinsey predicts, healthcare costs are set to soar by over 50% over the next decade even as otherwise often meagre pensions remain underfunded. East European labour cannot compensate for Western Europe’s ageing population and it seems to have already purchased all the VW Polos it will ever need. The Third Globalisation is also running out of steam. First, China’s Made in China 2035 project as well as massive investment in everything from renewable energy to electric cars has ensured that even as it rebalanced towards a consumer-oriented economy, those consumers will buy Chinese, not European.
choosing to invest in its Belt and Road projects which help many of the world’s future giants leapfrog ahead. Already, in 2020 ASEAN has overtook the EU-27 as China’s main trading partner even as China’s rapid recovery from the pandemic means it has become the EU-27’s main trading partner. Indeed, PwC predicts that by 2050, EU-27 will amount to little over 9% of global GDP at PPP. In other words, as Ferdinand Piech hoped would happen, the Chinese have indeed gotten off bicycles. Into Chinese-mad electric cars. Now, European business is repeating the recipe of success from its past, most pro-activity. Significant investment in R&D, green development and digitalisation are the key words in Brussels and boardrooms alike. But without another wave of globalisation, they may amount to little more than active inertia.
*Radu G. Magdin strategist on Leadership, Communications, Competition & Risk. A member of Forbes Business Councils, he authors the forthcoming book "Global Europe & Global Romania as Crisis Solutions" * this article is part of “The SuperClans Series” that celebrates models of successful global family businesses. Find the complete series online at www.europeanbusinessreview.eu
Moreover, instead of sub-zero interest rates, China is
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Can the Subscription Economy Save Financial Services? As the world waits for mass vaccination to revive economic activity, general malaise has overtaken the financial services industry (FSI) by Wolfgang Ulaga and Michael Mansard*
s the world waits for mass vaccination to revive economic activity, general malaise has overtaken the financial services industry (FSI). And things will probably worsen before they get better: US banks are expected to suffer US$318 billion in net loan losses by the end of 2022, according to Deloitte. But the extraordinary economic impact of the pandemic has only intensified mortal threats to the industry’s business model that have been brewing for years. If the global economy were to recover completely tomorrow, FSI incumbents would still be in a highly precarious position. In a new whitepaper, we argue that going back to the pre-Covid “normal” is not an option for financial services. Fortunately, the rise of the subscription economy points towards frontiers of untapped growth for the sector. SHAKY GROUND Growing regulatory pressures, low interest rates, digital disruptors (both fintech and Big Tech) and savvy customers demanding better experiences at lower costs all have put wide cracks in the FSI’s legacy business model. We’ll confine our argument here to two key revenue streams. First, the pervasive and persistent low-interest-rate environment has severely impacted profitability since the 2008 global financial crisis. As interest rates are determined by central banks, FSI companies have no control over this destructive and volatile aspect of the business. The Covid-19 fallout has increased downward pressure on interest rates, which have dipped into negative territory in many countries. It is safe to say that there is no short-term end in sight to this trend. Second, customer fees may no longer be as reliable a revenue source, due to competition from fintech start-
ups with no reverence for Big Finance’s customary practice of arbitrarily bundling popular services with less loved ones. While bundling fosters the perception among customers and regulators that the FSI’s pricing is untethered to value, fintechs have homed in on what customers really want. With tech-savvy and agility outstripping that of incumbents, they have been carving business away from established players – a trend set to accelerate amid Covid-fuelled digitalisation. An even more formidable enemy than fintech may be Big Tech. Amazon, Facebook and Google have deep and broad reserves of customer data with which to further their encroachment into Big Finance’s domain. Amazon, for example, has teamed up with banks to offer short-term business loans to platform sellers looking to scale up. The traditional FSI model, therefore, is beset on all sides by fierce competitors and sorely in need of renewal. The plummeting market caps of many large banks – outrun in recent years by fintech and cloud companies – attest to this. By contrast, subscription businesses remain on a general growth path despite the economic downturn, according to research from Zuora. SHIFTING TO A SUBSCRIPTION MINDSET The FSI’s troubles largely stem from a well-established inward-looking business model relying on high predictability, stable revenues and rather passive customers lacking bargaining power. Adopting the philosophy of subscription-based companies such as Netflix could help incumbents out of the trap. Subscription firms take customer-centricity as a core principle.
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and renters’ insurance – as a streamlined and customer-centric experience. Through a smartphone app integrating AI and machine learning, Lemonade can onboard policyholders in a minute and a half and fulfil claims within seconds. Customers can cancel and modify policies in just as little time. Indeed, Lemonade actually refers to its policies as “subscriptions” on its website. Capitalising on digital speed and scale, Lemonade is quickly closing the data gap with established insurers, some of which had a decades-long headstart. This creates a virtuous cycle: The larger Lemonade’s data reserves grow, the more powerful its algorithms become. Beefed-up automation generates efficiencies and the ability to lower fees – which are already setting industry standards for affordability – even more and attract more customers, leading to more data, etc. Their main priorities are retaining subscribers, monitoring usage, accounting for recurring revenue and finding new ways to inspire customer loyalty. Subscription economy principles would also give the industry a reality check about demand. When you get down to it, people engage with financial institutions as the need arises, whether it be a mortgage, car loan, insurance, etc. Most customers would not drop into their local bank branch just to see what’s new. Subscription thinking would enable FSI companies to lean into customer habit, instead of ignoring or resisting it. Customers should be able to acquire and drop services, or scale them up or down, as easily as they sign up or terminate an Amazon Prime or Netflix account. It sounds counter-intuitive, but the Subscribed Institute has found that allowing customers to suspend subscriptions may prevent them from cancelling for good, in as many as 1 in 6 cases. SUBSCRIPTION ECONOMY USE CASES The FSI’s transition to the subscription economy has been slow, but there are a growing number of successful use cases nonetheless, more than 30 of which are covered in our whitepaper. The insurtech start-up Lemonade (the subject of a recent case study co-written by Wolfgang), although not an incumbent, demonstrates one strategy for leveraging the subscription economy within the FSI: reinventing an existing service – in this case, homeowners’
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Insurance is low-hanging fruit for the subscription economy, since monthly premiums are so structurally similar to subscription fees. But Lemonade demonstrates how embracing the subscription mindset can turn a boring hassle into an effortless and fun experience for the customer at a fraction of the cost. Sberbank, Russia’s largest financial institution, has gone a good deal further with the subscription economy, creating a suite of digital services (called SberSolutions) for outsourcing financial, operational, legal and HR tasks. The advantages for Sberbank in expanding into adjacent areas go beyond the revenue accrued through subscription fees. Customer engagement at this level is sure to yield actionable insights that add real value. For exam-
ple, an accounting algorithm could alert enterprise users to the likelihood of an imminent cash-flow problem, and direct them to a Sberbank loan officer. Subscription-powered expansion into adjacencies could help FSI firms beat fintechs at their own unbundling game, by spinning off popular free services into “fee”based offerings generating both revenue and data. It could also fend off incursions from Big Tech, through gaining and leveraging industry-specific customer insights that are as deep as Google’s are wide. Finally, banks that have been compelled by governments to adopt an open API infrastructure are looking at ways to monetise data and insights as a new growth area, rather than hoping to capitalise solely upon the underlying product accessed by the API (e.g. customer spend analytics, fixed income and equity indices). BECOMING THE CATALYST The most forward-looking – and probably the most transformative – way for FSI firms to take the subscription plunge is to help the rest of the economy do so. Transitioning from a one-off payment structure to a recurring one is not without its challenges. Companies will be looking for the right finance partner to help them manage risks such as: short-term deficits that may arise from a more patient business model; damage, theft or breakdown of physical equipment leased to the end consumer; the negative effect on the balance sheet caused by turning an item from inventory into an asset, etc.
For example, BNP Paribas Leasing Solutions helps companies large and small regulate the lifecycle of their assets in accordance with circular-economy principles. Its innovative financing makes it possible for firms to weather the financial ups and downs of “pay per use” and circular models. Alongside financing, FSI companies already have a number of other “building blocks” – such as payment gateways and insurance to cover new risks – that could be combined into an all-round solution for the subscription economy. As the above examples suggest, you don’t need to change your entire organisation or have a detailed, multi-year plan in place to enter the subscription economy. In fact, our recommendation is to be cautiously experimental. Start with fast-paced, narrow trials, and when you find success, expand from there. However, we’ve discovered that the heavy coordination demands of the subscription economy may challenge an industry famous for legacy structures and processes. Even a partial switch to a subscription-based model will require parallel adjustments from finance, sales, marketing, etc. Now more than ever, preparing for the organisational future means busting through silos. *Wolfgang Ulaga and Michael Mansard Senior Affiliate Professor of Marketing at INSEAD and Principal Director of Subscription Strategy & EMEA Chair of the Subscribed Institute
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Here’s what you need to know about the new AI ’arms race’ In the current geopolitical theater, a global race towards leveraging artificial intelligence (AI) should come as no surprise by Yori Kamphuis and Stefan Leijnen* hoever becomes the leader in AI [or artificial intelligence] will become the ruler of the world, Vladimir Putin once famously said.
superpower, while other economies also want a shot at becoming a top contender or, failing that, not falling too far behind.
In the current geopolitical theater, a global race towards leveraging artificial intelligence (AI) should come as no surprise. The United States has made substantial investments in AI to extend its role as a global
China announced in 2017 that it wants to lead the world in AI by 2030, strategically allocating funds guided by a national strategy for AI. China is already closing in on scientific AI publications, and has been
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filing more AI patent applications than any other country since 2013. The US and China both outpace the EU, which follows at a distance in investments and output, with Israel, India, Russia and other economic regions lagging even further behind. Let’s explore this arms race analogy and ask what it means to be ahead in this race for AI dominance. In the Cold War, the race for nuclear arms could lead either to a state of stability in the face of mutually assured destruction, or mutual destruction itself. However, in this present-day technological arms race, there is no clear race track or finish line. Whether you’re ahead or behind depends on the direction you want to be heading, or the destination you have in mind. With respect to where you’re going to end up in an open-ended future, the direction you’re facing is more important than how fast you’re going. THE THREE KINDS OF AI AI dominance can take on many forms. We tend to think of AI as a technology, but it is first and foremost an ambition to create systems that display intelligent behavior. We can roughly identify three technological manifestations of this ambition. First, programmed AI that humans design in detail with a particular function in mind, like (most) manufacturing robots, virtual travel agents and Excel sheet functions. Second, statistical AI that learns to design itself given a particular predefined function or goal. Like humans, these systems are not designed in detail and also like humans, they can make decisions but they do not necessarily have the capability to explain why they made those decisions. The third manifestation is AI-for-itself: a system that can act autonomously, responsibly, in a trustworthy style, and may very well be conscious, or not. We don’t know, because such a system does not yet exist. The past decade has seen the unfolding of a global AI arms race fueled by statistical AI. It is relevant to note here that the word statistics stems from state: the science dealing with data about the condition of a state or community. The modern rise of AI is linked to this original meaning, which helps explain why it so often raises profound ethical questions about the relation between individuals and institutions. Census data was historically used by the state to create public policies by monitoring a population that would be impossible to track on the individual level, but which can be modelled with sufficient level of detail through empirical
sampling. Uncoincidentally, this approach is also followed by market-driven corporations, institutions and other organisations that use statistical AI to model and monitor individuals online and offline. This brings us back to the geopolitical stage, where China’s state-driven approach to leveraging emerging technologies is often contrasted with a market-driven approach to technology development in the United States. In this frame, the EU and other economic regions are left to decide how to align themselves on this state-market axis. However, this frame is misleading as it overvalues the role of economical investment policies and undervalues the critical role of data ownership for statistical AI. A more productive frame would therefore contrast the state- and market-driven approaches with a citizen-driven approach to AI, where the rights of the individual are central to how and why AI is used. The EU has shown to adopt this ideal, first with its GDPR directive and now again with preliminary steps towards directives for Trustworthy AI. In doing so, the EU creates a clear distinction between the rights of the individual and the ambitions of the organisation, protecting its citizens against involuntary modelling and monitoring. Continuing on this journey, a next step for the EU should be to develop a grand narrative where ethical considerations such as privacy, transparency and accountability are foundational for sustainable, healthy and productive relationships between individuals and organisations. There are no winners in an arms race, only those who outgrow it. The race for AI dominance spills over into a more profound question of identity, asking in what kind of society we choose to live. The answer to this question should in itself provide the necessary justification for substantial investments in the citizen-driven approach to AI, pushing the gas pedal in the right direction. The EU can be a global leader in AI if it decides to use values as a steering wheel, not as a brake. Then it is only a matter of time before others will join the race on the right track. *Yori Kamphuis and Stefan Leijnen AI Researcher, yorikamphuis.nl and Professor of AI, Utrecht University of Applied Sciences
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This is what European business leaders think about the future of autonomous machines Autonomous machines, such as self-driving cars and drones, are a key future technology by Philip Meissner and Christian Poensgen*
utonomous machines, such as self-driving cars and drones, are a key future technology. They are fundamentally different from specialised devices from the field of Industry 4.0, in that they are also used outside of factories and can perform everyday tasks, such as transporting goods and people. Autonomous machines will therefore profoundly change the economy and society in the coming years and decades.
for example, delivers important medical supplies such as blood and vaccines in Ghana and Rwanda. Waymo has launched its operations of fully self-driving cars in Phoenix, US, and has just announced a new partnership with Daimler on trucks. In addition, hardware producers from Airbus to Kitty Hawk and software companies like Auterion are developing capabilities around autonomous drones. In short: a new global growth market is beginning to emerge.
In fact, they are already revolutionising lives today. Zipline,
We wanted to understand the status quo of this important
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technology in Europe. For this, we performed a survey of key decision makers from business and politics in Germany together with IfD Allensbach, a respected opinion and market research institute. The results have recently been published in the Spotlight Study: Autonomous Machines by the European Center for Digital Competitiveness at ESCP Business School. Respondents considered the technology crucial for the future of Europe. Of those surveyed, 59% of executives and 65% of political leaders even considered autonomous machines to be part of the critical infrastructure, comparable to power grids for example. This is due to the data being used in these machines. Every autonomous machine is guided by a multitude of sensors, from cameras to radar and lidar, and thus generates a lot of data. Given these crucial data, leaders in our study also highlighted that they favour storing data from autonomous machines in the EU if generated in the EU. We found similar results with regard to hardware. A total of 93% of respondents from politics and 89% of business leaders said that it would be very important or important that autonomous machines, such as self-driving vehicles and self-controlling drones, are also manufactured in Europe. However, our results, as well as market data, suggest that Europe is still lagging behind other major regions in terms of autonomous machines. Still, unlike many consumer markets like online retailing, search engines or social media, the market for autonomous machines is still in its infancy, and the opportunity exists to create European global champions in this market of tomorrow. So, what lessons can Europe take to move forward? DIGITAL SOVEREIGNTY The European Commission has highlighted its Green New Deal and Digital Strategy as cornerstones of its efforts towards greater sovereignty. However, our results suggest that such a strategy should also carefully consider which industries and future markets are strategic to the EU’s sovereignty in terms of data and infrastructure. The ability to maintain a critical infrastructure has to be redefined in times of quick technological changes. It is no longer limited to power grids, energy or communications. A debate around the infrastructure of the future is needed – from drones to cars and hyperloops. But this is not a question that is unique to the EU. Every government should think about the question of how and by whom the massive amounts of data generated by autonomous machines are stored and used.
COMPETITION AND INTERNATIONAL COOPERATION But does this essentially mean protectionism? Not necessarily. In the software that drives autonomous vehicles, lessons can be learned from other markets, where it is in fact open source solutions that have driven a wide adaption of technology and created a level playing field for new companies in emerging industries. From Linux to Cloud, many examples exist that have enabled a successful global adoption of open source technologies. Europe should focus on open source systems to enable innovation in autonomous machines. In fact, the largest open source ecosystem for drones, PX4, has been created in Europe. Such an open source based approach can enable innovative suppliers from small and medium-sized companies to join the market and contribute to the development of individual components. This promotes competition and can create an entire ecosystem of companies in an industry, rather than fostering a winner takes all development for this important market of the future. *Philip Meissner and Christian Poensgen Professor ESCP Business School, Founder & Director European Center for Digital Competitiveness and Founder & Director, European Center for Digital Competitiveness
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EXTRAIT DE CULTURE
“Mythological Passions” launches the Museo del Prado's temporary exhibition programme Art attack is the direct reply to quarantine rules. EBR dares to keep interviewing and being inspired by well – known initiatives around the globe and opens the discussion without masks or precautions but by inserting newcoming ideas and setting a novice context of cultural dialogue and civilised contemplation around the artistic agenda and artsy meditation we are all in need of to maintain our optimism and exerce our spirit out of the stormy cataclysm of the pandemic era. Doors may be closed, but nothing can close our brains left to the hands of the Art grandeur we are still lucky to experience uninterrupted. This EBR’s “Extrait de Culture” piece proves it via Spanish mentality and fiery temper! We got into contact with the Museum’s del Prado representatives and discovered more about their Spring exhibitions... Spring is here to stay whatever happens... Madrid welcomes EBR and this exactly explains why the “el Prado” has been described as a museum of painters –not just of paintings. by Alexandra Papaisidorou*
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EXTRAIT DE CULTURE
he Museo del Prado, an institution dating back almost 200 years and one whose origins and unique nature are largely due to the collecting tastes of Spain’s 16th- and 17th-century monarchs. The Prado and its collections reflect the history of Spain, whose waning role on the international stage in the 19th century Since its foundation in 1819, the Museo del Prado has played a key role in the evolution of art history. It has been crucial for the rediscovery of the Spanish Primitives and emblematic figures such as El Greco, and for positioning Velázquez as the greatest figure in the Spanish pictorial Parnassus, while its galleries have inspired some of the most avant-garde painters of the past 150 years. The exhibition Mythological Passions, which will be on display in Room C of the Jerónimos Building from 2 March to 4 July with the sole sponsorship of Fundación BBVA, offers a unique opportunity to see one of the greatest groups of mythological paintings created in Europe in the 16th and 17th century. Organised by the Museo Nacional del Prado, the National Gallery and the Isabella Stewart Gardner Museum and curated by Miguel Falomir, Director of the Museo del Prado, and Alejandro Vergara, Chief Curator of Flemish and Northern Schools Painting at the Museo del Prado, the exhibition offers a survey of mythological love through the work of the greatest figures of European painting, represented by a total of 29 works. More specifically, Mythological Passions offers an unrepeatable survey of mythological love through the work of the greatest representatives of European painting. In Greek and Roman mythology love, desire and beauty are closely interconnected and rule the lives of the gods and men. The texts that refer to those themes, including Homer’s Iliad and Odyssey, Ovid’s Metamorphoses and Virgil’s Aeneid, were highly esteemed by Renaissance and Baroque artists who aimed to represent them with profound feeling. The works in the exhibition represent the culmination of a way of understanding painting, making them the object of veneration for centuries. According to Miguel Falomir, Director of the Museo del Prado, “The presentation of the exhibition is of twofold merit: firstly as it reunites one of the most beau-
tiful, complex and influential series within European painting, and secondly due to the efforts of the staff in making it possible during the Coronavirus pandemic”. Then, for Alejandro Vergara, Chief Curator of Flemish and Northern Schools Painting at the Museo del Prado: “Our intention with this exhibition is to come closer to ways of feeling and thinking learned from the classical writers which defined European culture in the 16th and 17th centuries. The idea that beauty, desire, love and sex are closely interconnected and that we are at their mercy, as with are with nature, is part of that culture.” It’s worth mentioning that in Greco-Roman mythology love, desire and beauty are closely interconnected and rule the lives of mortal men. The myths on these themes were highly esteemed by Renaissance and Baroque artists who aimed to represent them with profound feeling. The socially elite collectors who commissioned paintings on these subjects enjoyed their erotic content while delighting in their own classical culture. Titian was one of the painters who most influenced the rethinking of the GrecoRoman tradition in the Renaissance, for which reason he is the principal subject of this exhibition. The two series of mythological compositions that he painted for the Duke of Ferrara between 1516 and 1524 and for Philip II between 1552 and 1563 (the latter termed poesie by the artist) are among the most celebrated and influential of their time. In conclusion, the imagination of all these painters has given rise to a mythological universe of enormous variety and beauty. On the bottom line, the final brushstroke by these works of art represent that the power of passion is the only way to trace and track the routes of power for a fruitful process on the way to renaissance, an ethical, mental, sensational and most importantly spiritual so as to bring out the naiveté of that era back and turn us to regain our lost lyricism. That is our passport to sophisticate and move things forward. By reviving our motion in history and give shape again to our dreams. *Alexandra Papaisidorou *Editor-at-large/ PhD cand. University of Piraeus, Cultural Diplomacy & international Relations
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The world has lost one-third of its forests, but an end to deforestation is possible Shortly after the end of the last great ice age – 10,000 years ago – 57% of the world’s habitable land was covered by forest by Hannah Ritchie*
hortly after the end of the last great ice age – 10,000 years ago – 57% of the world’s habitable land was covered by forest. In the millennia since then a growing demand for agricultural land means we’ve lost onethird of global forests – an area twice the size of the United States. Half of this loss occurred in the last century alone. But it’s possible to end our long history of deforestation: increased crop yields, improved livestock productivity, and technological innovations that allow us to shift away from land-intensive food products gives us the opportunity to bring deforestation to an end and restore some of the forest we have lost. Many people think of environmental concerns as a modern issue: humanity’s destruction of nature and ecosystems as a result of very recent population growth and increasing consumption. This is true for some problems, such as climate change. But it’s not the case for deforestation. Humans have been cutting down trees for millennia. Shortly after the end of the last great ice age – 10,000 years ago – 57% of the world’s habitable land was covered by forest. In the millennia since then a growing demand for agricultural land means we’ve lost one-third of global forests – an area twice the size of the United States. Half of this loss occurred in the last century alone. But it’s possible to end our long history of deforestation: increased crop yields, improved livestock productivity, and technological innovations that allow us to shift away from land-intensive food products gives us the opportunity to bring deforestation to an end and restore some of the forest we have lost. Many people think of environmental concerns as a modern issue: humanity’s destruction of nature and ecosystems as a result of very recent population growth and increasing consumption. This is true for some problems,
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such as climate change. But it’s not the case for deforestation. Humans have been cutting down trees for millennia. How can we put an end to our long history of deforestation? This might paint a bleak picture for the future of the world’s forests: the United Nations projects that the global population will continue to grow, reaching 10.8 billion by 2100. But there are real reasons to believe that this century doesn’t have to replicate the destruction of the last one. The world passed ‘peaked deforestation’ in the 1980s and it has been on the decline since then – we take a look at rates of forest loss since 1700 in our follow-up post. Improvements in crop yields mean the per capita demand for agricultural land continues to fall. We see this in the chart. Since 1961, the amount of land we use for agriculture increased by only 7%. Meanwhile, the global population increased by 147% – from 3.1 to 7.6 billion.3 This means that agricultural land per person more than halved, from 1.45 to 0.63 hectares. In fact, the world may have already passed ‘peak agricultural land’ [we will look at this in more detail in an upcoming post]. And with the growth of technological innovations such as lab-grown meat and substitute products, there is the real possibility that we can continue to enjoy meat or meat-like foods while freeing up the massive amounts of land we use to raise livestock. If we can take advantage of these innovations, we can bring deforestation to an end. A future with more people and more forest is possible. *Researcher, Our World in Data *Researcher, Our World in Data
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Issue 01-02/2021 of the European Business Review (EBR) magazine