WEF_Special_Edition_European business magazine spring 2022_web

SPRING EDITION | 2022

EUROPEAN BUSINESS europeanbusinessmagazine.com

MAGAZINE Esha Mansingh THE AWARD WINNING AFRICAN WOMAN SHAPING THE WAY FOR SUSTAINABILITY, ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRACTICES

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The city of Durban (eThekwini Municipality) is South Africa’s second most important economic region

Extensive first-world road, rail, sea and air

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Dube TradePort and King Shaka International Airport - 60year Master Plan - driving growth of aerotropolis, or airport city

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Rated in top 5 ‘Quality of Living’ cities in Africa and Middle East by Mercer Consulting in 2015

Named one of the New 7 Wonders Cities by the Swiss-based New 7 Wonders Foundation in 2014 1

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Video communications as it should be

Table of Contents

EUROPEAN BUSINESS

M AG A Z I N E

8

News

27

Preparing for the wave of Covid Related Disputes to hit

28

Between a rock and a hardpalce

30

Meet the 2022 Class of Young Global Leaders

34

Private equity firms can be catalysts to fighting climate change, here is how

36

Can The US Fed Prevent A Recession

Deputy Editor Anthony Gill

38

Global Coordination Could Unlock more Efficient Trade, New TradeTech Report Reveals

Associate Publisher Brad Adams

40

Why Businesses which are being hit by tax hikes and higher energy costs will hurt the poor

Features Editor Katie Winearls

41

Global AI-powered Order-to-Cash platform

44

Davos Agenda Closes with Calls for New Models of Public-Private Cooperation

Head of Production Paul Rogers

46

The truth about the ‘great resignation’

48

Things that economists know, but sound wrong to other people

50

What the explosion in Uranium prices means for the nuclear industry

52

Aciety Is Solving The Talent Shortage In The Blockchain Technology Sector

54

European Business Magazine talks to Esha Mansingh

62

Ukraine war’s surprising links to the 2008 financial crisis – and the parallels with 1939

64

How shops and retailers use psychology tricks to influence your purchasing decisions

66

Is the metaverse as disruptive as it should be

68

What You Need to Know About Ad Fraud

71

Unicorn Companies

78

Not all Intent Data is created equal

80

Venture Capitalists Pour Into NFTs

82

Cryptocurrencies: Why they’ve crashed and what It may mean for the future

84

Schroders, Aviva and other UK asset managers seek to profit from demand for biodiversity-focused investment products

86

Building a finance function from the ground up

88

AI In Banking: Hype Or Revolution

91

Building Remote Partnerships

europeanbusinessmagazine.com

Publisher Nick Staunton Editor Patricia Cullen

Head of Design Vladimir Mladenovski Subscriptions Manager Rebecca Hill Head of Business Development Paul Matthews Advertising Sales Brad Adams Tara Duckworth Advertising Sales Tara Duckworth, Mike Ray, Andy Ellis, Mark Holburn Contributing writers Patricia Cullen, Richard Fitzpatrick, Bala Murali Krishna, Shilpa Meen, Argee Laraya, Aimee Ni Mhaolcraibhe, Gordana Ristic, Jonathan Hooker, Jose Ignacio Latorre Head of Digital Stephen Scott Photographer Ben Fisher NST Publishing Ltd, 19 Leamington Spa (studio 1) Leamington Spa,Cv324tf, UK The information contained has been contained from sources the proprietor believes to be wholly correct however no legal liability can be accepted for any errors. No part of this publication can be reproduced without consent of the publisher.

Launch of Life Sciences Investment Fund Aimed at Disruptive Technology Discovery Park fund's first recipients making advances in ocular and cancer treatments Discovery Park, one of the UK’s leading centres of life sciences innovation, has today launched Discovery Park Ventures (DPV), a new investment fund aimed at disruptive technologies.

The initial £1m from private funding will invest in exciting early-stage companies at start-up or to help them leverage funding without giving up equity or ownership. DPV has ambitious plans to expand the fund up to £25m in the next three years.

Based at Sandwich in Kent, Discovery Park is home to more than 160 companies, from multinationals including Pfizer, to innovative startups. The first fund investments have been awarded to ophthalmology company, VisusNano, and drug delivery start-up, Vitarka Therapeutics. The companies have received £100,000 and £140,000 respectively from DPV. The launch comes as the life sciences industry continues to be one of the highest profile global sectors with investment in UK biotech alone jumping 60% to £4.5bn in 20211. Discovery Park is a Life Sciences Opportunity

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Zone, enabling it to attract investment from national and international business linking research and business expertise.

VisusNano is developing a pipeline of intraocular lens implants (MEDILens), expected to revolutionise cataract surgery in both the human and veterinary markets and dramatically improve outcomes for patients. DPV’s investment provides support funding for the company’s £1.39m Innovate UK Biomedical Catalyst award to test the safety and efficacy of MEDILens in humans. It is part of VisusNano’s £1.5m Series A round, which is expected to close shortly.

Vitarka Therapeutics is a preclinical biotech company focused on the development of combination medicines using RNAi therapies and a non-viral drug delivery platform, initially focused on cancer. This approach aims to activate the immune system and significantly change outcomes for late-stage patients with lung, colon, breast, and other cancers.

Discovery Park Ventures is chaired by Discovery Park CEO, Mayer Schreiber. Emma Palmer Foster and Dr Martino Picardo, who have many years of experience in life sciences company

development and investment, are Directors.

Mayer Schreiber, Chairman of Discovery Park Ventures, said, “The launch of Discovery Park Ventures will allow us to champion companies that have the potential to make breakthrough-discoveries in life sciences and technology and to scale rapidly.

“VisusNano and Vitarka Therapeutics are very exciting investments with which to launch Discovery Park Ventures. We’re looking forward to investing in many more innovative companies in the UK as the fund grows, helping to develop healthcare innovations and drive regional economic growth.”

Dr Joanna Gould, CEO of VisusNano, said, “We’re delighted to welcome Discovery Park Ventures as a new investor as we enter this exciting clinical phase of development. As a Discovery Park tenant we have found the environment very supportive, and this investment is another way in which the Park is driving our growth.”

Dr Vineeta Tripathi, CEO of Vitarka Therapeutics, said, “We’d like to thank Discovery Park Ventures for its belief in our innovative approach to cancer treatment and therapeutic delivery, and welcome it as a shareholder.

Vitarka Therapeutics looks forward to working with DPV as we generate our proof-of-concept data.”

• Founded in Ireland, ID-Pal supports SMEs and enterprises across Ireland, the US, EU and UK • Rising levels of identity fraud and the increasing complexity of regulation leaves businesses vulnerable to financial crime and the rising cost of compliance • ID-Pal’s technology-first approach offers global coverage of over 6000 ID documents across 200 countries and jurisdictions ID-Pal, a leading identity verification provider, has today announced it is formally entering the UK market following six years of exponential growth. The Dublin-based technology company supports businesses of all sizes in more than 30 sectors, across Ireland, the US, EU and UK. Current clients include large enterprises such as Grant Thornton and Zurich International, as well as SMEs such as UK Adviser and Trust My Travel.

It was also the winner of Best Customer Facing Experience at the 2021 Pay360 Awards and Its most recent awards include Best Customer Facing

Experience at the Pay360 Awards and IT & Fintech category winner at the Irish Times Innovation Awards 2022.

The accelerated move to online during the pandemic, paired with the recent growth in new legislation including potentially conflicting regimes such as 6AMLD and GDPR, has made businesses and their customers particularly vulnerable to the reputational and monetary damage caused by financial crime.

Led by Founder and Chief Executive Officer, Colum Lyons, ID-Pal has developed a fully customisable solution for identity and address verification to protect businesses against these risks, available off-the-shelf or as an API/SDK. The GDPR-compliant solution is ISO 27001 certified and can be configured for any jurisdiction or legal requirement in any language in just minutes, offering more robust compliance that is adaptable to support SMEs as well as large, enterprise scale firms.

ID-Pal offers coverage of over 6000 ID documents across 200 countries

and jurisdictions using a multi-layered approach that includes Biometric, Facial Matching, Liveness Testing, Address verification and Document checks.

Colum Lyons, Founder and Chief Executive Officer, said: “The way in which identity verification has been done historically is just not sustainable in our digital-first mobile-ready world. Verifying identity documents manually is inefficient and insecure, and the risk of data flight and simple human error can make businesses vulnerable to fraud. Our unique blend of ID checks, all powered by a completely technology-first process, means multi-layered verification takes place on any ID document in real time. Using AI and machine-learning offers greater accuracy in correctly classifying a document and reduces the margin for error and need for manual intervention.”

“We’re looking forward to officially launching in the UK market and empowering more businesses with simple, secure convenient identity verification for their business and their customers.” europeanbusinessmagazine.com 9

Moneybox is Crowdcube’s most popular crowdfunding campaign this year May 13 2022: After just 72 hours, award-winning digital wealth manager, Moneybox, has closed its second crowdfunding campaign. Over 3 days, more than 15,000 people invested over £6.25million in what is Crowdcube’s most popular crowdfunding campaign of the year so far.

Moneybox now holds the record for the second and third most popular crowdfunding campaigns in Europe, ever!

The crowdfund was launched to give the Moneybox community the opportunity to share in and shape the company’s future success, alongside top institutional investors. 8,700 people within the Moneybox community invested £3.7million before the crowdfund even went public.

Moneybox has seen exponential growth since its launch in 2016. From an initial offering enabling people 10 europeanbusinessmagazine.com

to ‘invest their spare change’ into a Stocks & Shares ISA, Moneybox now helps over 850,000 customers build wealth with confidence across all their saving, investing, home-buying, and retirement needs.

AUA has grown to over £3.1bn, and with a team of 330, Moneybox is now the clear market leader in Lifetime ISAs and is the second-largest wealth manager in the UK by number of customers.

Together with the £35million Series D investment announced last month, funds will be used to grow the customer base, enhance the investing proposition, and focus on new, exciting ways to guide and support people with financial planning - for today and tomorrow.

Ben Stanway, Moneybox co-founder, commented: “We’re blown away

with the reception our second crowd raise received this week. Giving our community the chance to share in and shape our future has always been a priority, and our customers have been instrumental in the evolution of our products and services to date.

Given the current economic climate, our mission to help people build wealth with confidence has never been more important. Our focus now is on finding new ways to guide and support people with financial planning throughout their lives. By continuing to focus on the under-served mass market we believe we are on a path to create the UK’s category-defining wealth platform.”

Matt Cooper, Chief Commercial Officer at Crowdcube, commented: “Congratulations to Moneybox for another landmark achievement on Crowdcube! We love to see forward thinking businesses, like Moneybox, champion inclusion by putting it at the very core of the business by turning their customers into shareholders.”

McDonald’s to sell its Russian business

McDonald’s is to sell its Russian business, two months after temporarily closing its restaurants in the country as part of the exodus of western companies in response to the invasion

of Ukraine. The chain, which operated 850 restaurants in Russia and employed 62,000 people, on Monday said its business in the country was not “consistent with McDonald’s

values” following President Vladimir Putin’s invasion. “The humanitarian crisis caused by the war in Ukraine, and the precipitating unpredictable operating environment, have led McDonald’s to conclude that continued ownership of the business in Russia is no longer tenable,” McDonald’s said in a statement. The Chicago-based company said it expected to book a non-cash charge of $1.2bn to $1.4bn for the exit, and did not identify a possible buyer for the business.

The company has continued to pay its Russian employees since temporarily closing its local stores in mid-March.

The group on Monday said it wanted a Russian buyer to hire those workers. Chief executive Chris Kempczinski said: “We have a commitment to our global community and must remain steadfast in our values . . . and our commitment to our values means that we can no longer keep the arches shining [in Russia].” The US fast-food group opened its first Russian restaurant in Moscow in 1990 when the introduction of a well-known western chain was seen as one of the markers of the end of the Soviet Union.

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Tesla Inc. Chief Executive Officer Elon Musk sold $4.8 billion worth of shares in the electric car maker, just days after he agreed to buy Twitter.

Musk sold 5.3 million shares of Tesla stock for an average price of

Amazon has reported its first quarterly loss since 2015 due to lower online sales and a fall in the value of its shares in electric vehicle firm Rivian.

Online sales at the e-commerce giant slipped 3 percent in the first three months of the year, as the boom in its business from the pandemic starts to fade.

The company reported a loss of $3.8bn, mainly due to a loss of $7.6bn on the value of its stake in Rivian.

Growth in other parts of Amazon’s business, including cloud computing and advertising, remained strong.

Amazon invested in Rivian in 2019 with plans for an electric delivery fleet and owns a near-20 percent stake in the company. But the electric vehicle maker’s share price has more than halved since the beginning of the year as the company has struggled to ramp up production.

Overall, Amazon forecast sales growth of as little as 3 percent in the coming months — a marked slowdown 12 europeanbusinessmagazine.com

$905.30, according to filings he made with the Securities and Exchange Commission Thursday. As the filings became public, Musk wrote on Twitter, “No further TSLA sales planned after today.“ He remarked in response

from the double-digit growth it has enjoyed in recent years, even before the pandemic.

“The pandemic and subsequent war in Ukraine have brought unusual growth

to an account that heavily promotes Tesla stock, products, and Musk on the social network.

The sales represent only 3.1 percent of the Tesla shares he held outright at the start of the day Tuesday, and just less than 2 percent of his total holdings of Tesla if stock options he controls are included.

The sale came after Musk clinched a deal to buy Twitter for $44 billion cash in a transaction that will shift control of the social media platform populated by millions of users and global leaders to the world’s richest person. Musk’s net worth is $268 billion, according to Forbes.

As part of the deal, Musk said he would provide a $21 billion equity commitment.

It is not clear how he will cover the remaining $17 billion of equity financing. Musk holds a 43.61 percent stake in unlisted rocket company SpaceX which is reportedly valued at $100 billion.

and challenges,“ Amazon chief executive Andy Jassy said. He added that the company was also facing increased costs, with “ongoing inflationary and supply chain pressures“.

Twitter, which was just agreed to be bought by billionaire Elon Musk, has said its user numbers grew faster than expected over the past year. Advertising revenue has also been rising, but by less than was forecast.

Some observers have questioned Mr. Musk’s commercial judgment in buying Twitter, a platform that despite its high profile has not consistently made high returns.

In the latest quarter, it made a profit of $513 million on revenues of $1.2 billion.

Daily active users of the platform rose to 229 million, up from 199 million a year earlier, the company said, publishing its latest financial results.

New users grew faster outside the US, by 18.1 percent than in its home market where numbers were up 6.4 percent over the 12 months to the end of March.

Musk’s purchase is likely to take several months to complete, after which the company will be owned privately.

around the globe as demand has rebounded to near pre-pandemic levels.

Chevron’s revenue rose 70 percent to $54.4 billion in the first quarter, above the Refinitiv consensus of $47.9 billion.

Chevron Corp’s first-quarter profit nearly quadrupled from the same period a year ago, easily surpassing Wall Street’s forecasts as oil and gas prices surged following Russia’s invasion of Ukraine.

On the last days of April, the second-largest US oil producer posted adjusted earnings of $6.5 billion, or $3.36 per share, 8 cents above Wall Street’s mean estimate of $3.27,

according to Refinitiv. Chevron earned $1.7 billion, or 90 cents per share, in the same quarter last year.

The world’s largest energy companies have profited handsomely on the back of rising oil and gas prices, which surged in February as Moscow planned its advance on Ukraine.

The global benchmark Brent averaged $114 per barrel in the first quarter. Energy supplies have tightened

Mike Wirth, Chevron’s chairman and chief executive officer, commented: “Chevron is doing its part to grow domestic supply with US oil and gas production up 10 percent over the first quarter last year. Chevron’s worldwide net oil-equivalent production in the first quarter was 3.06 million barrels per day. Permian Basin unconventional production grew to a record 692,000 barrels of oil equivalent per day in the first quarter, as the company raised its 2022 guidance to 700,000 – 750,000 barrels per day, an increase of over 15 percent from 2021.”

Meanwhile, Chevron’s international production decreased 8 percent, while U.S. production increased 10 percent compared to the same period a year ago. europeanbusinessmagazine.com 13

Car production in the UK has continued to fall as manufacturers struggle with global supply chain problems.

Almost 100,000 fewer cars were built in the first three months of 2022 compared to last year.

Manufacturing has dropped by nearly a third, according to the Society of Motor Manufacturers and Traders (SMMT).

During the first three months of the year, a total of 207,347 new cars were built in the UK, down from 306,558 in the same three months in 2021, when the pandemic created added pressures for manufacturers.

Manufacturers have been struggling to get hold of the parts they need — in particular semiconductors, or computer chips, which are widely used on modern vehicles.

At first, Covid has thrown a huge spanner in the normally smoothly-operating machinery. Supply chains have been disrupted and vital parts — particularly computer chips — have not been there when needed. When that happens production has to be slowed or even stopped.

Now there are other problems to contend with as well. The war in Ukraine has pushed energy prices sky-high — a major problem for the industry. It has also triggered new parts shortages.

This situation isn’t unique to the UK. But it comes at a time when the car industry here is desperate to put itself at the forefront of the move to electric vehicles - and attract the new investment which was in very short supply during the years of Brexit-related uncertainty.

roll out a lower-cost, ad-supported tier over the next two years.

and getting back into our investors’ good graces.”

“I know it’s disappointing for investors, and it is for sure,” noted Hastings. “But internally, we’re really geared up, and this is like our moment to shine. This is when it all matters. And we’re super focused on achieving those objectives

However, Netflix remains the world’s leading streaming service with more than 220 million subscribers. It is increasingly producing its own content and shows such as the Crown, Bridgerton, and Squid Game have been global hits.

The SMMT linked the decline to a global shortage of computer chips and rising energy costs for manufacturers.

After experiencing surging growth during the pandemic, Netflix shares plummeted to their lowest point since January 2018 as investors reacted to the streamer’s first subscriber loss in more than a decade — bringing years of booming growth to a screeching halt.

Shares in Netflix have slumped by 35 percent after it revealed a sharp drop in subscribers and warned millions more are set to quit the streaming service. It wiped more than $50 billion off the firm’s market value as experts warned it faced a struggle to get back on track.

Among other factors, co-CEO Reed Hastings blamed the subscriber shrinkage on “great competition” and the company’s estimate that more than 100 million households are streaming the service using a shared password without paying for it.

To try to right the ship, Netflix is aiming to convert freeloading password-users into subscribers and to 14 europeanbusinessmagazine.com

Unilever, the multinational company behind various leading brands including Dove, Ben & Jerry’s, and Knorr, announced in its most recent trading statement that several products have become more expensive in the first quarter of 2022.

Across all brands in Europe, Unilever says in-store prices have increased by an average of 8,3 percent over the past few months — and has revealed that production costs are likely to rise further in the near future.

Similarly, Nestlé, the world’s biggest food and drinks company, which also owns brands such as Maggi, Häagen-Dazs, and Perrier, is set to raise its prices for the second time in six months. At the end of 2021, the Swiss international company increased prices as a result of the long-term effects of the coronavirus pandemic.

They also acknowledged that the rising cost of energy and various other raw materials will mean several leading brands are set to become even more expensive.

Consumers in North America took the hardest hit, with an 8.5 percent rise in prices, the company said in its first quarter of 2022 earnings report.

Latin America saw the second-biggest increase, with the price of Nestlé products rising 7.7 percent.

CEO Mark Schneider noted that “We have stepped up pricing in a responsible manner and saw sustained consumer demand. Cost inflation continues to increase sharply, which will require further pricing and mitigating actions for the year.“

The iPhone maker’s shares were up by 3 percent in after-hours trading — having gained 4.5 percent in regular dealings earlier in the day in anticipation of a strong showing despite several major headwinds.

Earnings per share rose to $1.52 from $1.40 a year earlier—beating estimates for $1.42 a share and setting a record for Apple’s fiscal second quarter.

Apple has reported record revenue and profits for the second quarter of its financial year but warned that it expects a greater impact ahead from the effects of Russia’s war in Ukraine.

Apple’s revenue for the Januarythrough March period rose 9 percent

to $97.3 billion, far exceeding analyst expectations for $94 billion. Just over $50 billion of that came from iPhone sales while services, including music and video subscriptions, contributed a record sum just shy of $20 billion.

The $97 billion quarter ranks as Apple’s third-best in history by total revenue, but one of its slowest growth since the pandemic began more than two years ago. The company has seen double-digit year-over-year growth each quarter since the launch of the first iPhone with 5G capabilities in October 2020.

However, the company’s chief financial officer says the impact of Russia’s war with Ukraine will have a greater impact on the current third quarter as its core financial numbers prove resilient in the face of COVID-related supply problems. europeanbusinessmagazine.com 15

A factory owned by Ferrero that produces Kinder chocolate products has been ordered to close the following links to dozens of salmonella cases.

It comes after all Kinder Surprise, Kinder Surprise Maxi, Kinder Mini

Home-sharing platform Airbnb announced that it is planning to let its employees live and work wherever they want as other firms start to look beyond the coronavirus pandemic and bring staff back to the office.

Brian Chesky, the company’s CEO and co-founder revealed the move on Twitter, saying that staff compensation won’t change if they decide to move.

The move is in contrast to the likes of Google in the US, where staff who work from home may see their pay cut.

Other tech firms that have flexible working policies include Cisco and Microsoft.

Airbnb chief executive Brian Chesky sent employees an email, detailing its new flexible working policy. He predicted that in 10 years, flexible working would be the norm for many people.

“If we limited our talent pool to a commuting radius around our offices, we would be at a significant disadvantage,“ he said. “The best people live everywhere, not concentrated in one area.“ 16 europeanbusinessmagazine.com

Belgium’s food safety authority has also ordered the recall of all Kinder products made at the factory in Arlon,

which is owned by Ferrero. Suspected salmonella cases linked to Kinder chocolate have been reported in countries including the UK, Germany, France, and Belgium.

Ferrero has apologized and acknowledged “internal failures“.

Belgium’s food safety authority, the AFSCA, said the factory was ordered to shut down after Ferrero was unable to provide complete information for its investigation.

The AFSCA said the investigation was ongoing and the factory would only be allowed to reopen if Ferrero could provide the necessary guarantees that it complied with food safety regulations.

The AFSCA has also asked companies to remove the products from their shelves and advised people not to eat them.

A few days later, Ferrero recalled some of its Kinder chocolates from shops in the US and UK over concerns about potential salmonella contamination.

Other products manufactured by Kinder are not believed to be affected, the FSA said.

He added that employees would have “the flexibility to travel and work around the world“ from September for up to 90 days. Chesky noted that employees will still need a permanent

address for tax and payroll purposes.

Despite this, employees will still have to meet up regularly for meetings and social events, structured around two major product releases per year.

Eggs, and Kinder Schokobons products that were manufactured at the site in Belgium were recalled.

Why meta needs to get ahead of the curve in the VR world

For years, one of Facebook’s biggest problems has been its refusal to acknowledge how much it is disliked by the public. Users might keep their accounts open but goodwill is in short supply. A sell-off in shares has made it harder to ignore. But don’t count Mark Zuckerberg out just yet.

Let’s get the bad news out of the way first. Facebook, now called Meta, is the worst-performing Big Tech stock of 2022. The share price is down 41 per cent this year, a bigger drop than Apple, Alphabet, Microsoft or Amazon. In April, the market valued Meta at 14 times expected earnings — a record low. A rare dip in users and slowing sales growth has investors wondering if the gigantic advertising business is running out of steam.

But Zuckerberg has form when it comes to defying expectations. In 2009, in the wake of the financial crisis, he swapped his signature hoodie for a suit and tie to signal how seriously he took the business. After a botched market listing in 2012 he got better at managing investor expectations by underpromising and overdelivering. Now he has to learn how to sell his vision of the future. Zuckerberg is one of Big Tech’s last founders turned leaders. He retains absolute control over the company thanks to shares with majority voting rights.

That gives him the ability to make sweeping decisions other companies

might hesitate to execute. Facebook’s brand is toxic? Change the name to Meta. User growth is stalling and everybody’s watching TikToks? Go all in on the metaverse. Facebook’s rebrand not only managed to drag attention away from whistleblower accusations about safety, it made the metaverse into a global topic of conversation. But it is still not clear what Zuckerberg wants that metaverse to be. Is it somewhere we visit or a world we inhabit full time? Will it replace Meta’s existing revenue or expand it?

Zuckerberg lacks the allure of Elon Musk, whose Twitter musings on the future of electric cars, life on Mars and free speech can channel billions of dollars of investment and lead global news. On Facebook, Zuckerberg may have more followers than Musk has on Twitter, but his posts do not generate the same attention. The metaverse is a technologically difficult project too. Visual effects are not lifelike and headsets are bulky.

Strapping them on means shutting everything else out. No checking your phone or going for a walk at the same time. What works in Meta’s favour is the lack of exciting consumer tech elsewhere. I’m old enough to remember when friends would drag you over to admire their colourful iMacs. What is today’s equivalent? New smartphones are just slicker versions of the last. Self-driving cars are not yet

for sale. The answer could be virtual reality. I have a first-hand example.

This year, my dad bought a VR headset from Meta. It has since been taken to family parties, coffee shops, neighbour’s houses and the golf course so that everyone can try it out. He uses it every day, watching the swirling graphics on a meditation app. His only complaint is that most apps are games. When there is more to do with a VR headset, he’ll do it. The headsets are not yet mainstream, which may be why interest is still limited.

This year, National Research Group interviewed 2,500 US consumers about virtual reality. Only one-third were excited about its potential. But that figure might be higher if more people tried it. Of those who did, 86 per cent had a positive experience.

That could well make them feel more attracted to Meta too. Still, it’s reasonable to ask why the revolution is taking so long. Zuckerberg purchased VR gaming company Oculus back in 2014. Sales are still low. Data from the International Data Corporation found that although Meta’s $299 Quest 2 was the most popular headset on the market, it sold fewer than 9mn units last year. Project Cambria, Meta’s code name for a mixed reality headset, might find a bigger audience.

Mixed reality overlays digital images on the real world — making it more practical to experience virtual reality without tripping over your shoes.

But this headset, expected later this year, will also be more expensive.

Meta is caught between wanting to get affordable headsets to the market as soon as possible and spending more time and money working on the tech that will get users hooked. Reality Labs, the company’s metaverse division, accounts for just 2.5 per cent of total revenue but lost $3bn in the space of three months this year. To keep the pace of investment going, Zuckerberg needs to find a better way to explain his dream. Truly immersive virtual reality is an expensive, speculative project that may not pay off for years to come. Then again, that’s exactly what Silicon Valley was made for. europeanbusinessmagazine.com 17

Business travel spend heading back to pre-pandemic levels Spendesk, the 7-in-1 spend management solution for small and medium-sized businesses (SMBs), has today shared its latest insights into business travel spend throughout the pandemic in the UK, France, and Germany.

Spendesk monitors business spend – including travel, accommodation, and eating out – across 3,500 SMBs in the three countries. The latest data shows how business spend has recovered in the first quarter of 2022, getting closer to pre-Covid levels, while looking at spending patterns throughout the pandemic. The latest key findings include: • While there was a dip in business travel spend in all three countries in early 2022, levels rallied in March 2022, and exceeded preCovid levels in France. In the UK,

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March 2022 spend was 4,364€, compared with 4,958€ in November 2019 • The Omicron variant and seasonal factors can be seen as the main reasons for the dip in early 2022.

UK spend, which had been at twothirds (62%) of pre-pandemic levels in November 2021, fell by 38% in January 2022 • Across the period as a whole – from the first wave of the pandemic to the first quarter of 2022 – recovery in Germany and France has been swifter than in the UK When it comes to specific travel habits and preferences across the period, there are general trends that reflect broader responses to COVID-19 impacts. For instance, spending across

the three countries on flights declined by 41%, while spending on rail journeys decreased by 21%. Overall, there was a 45% rise in spend on car rentals, while spend on petrol increased by 343% as prices in Europe spiked to record levels in the third quarter of 2021. The UK saw the biggest spike in spend on car rentals (+344%) and cost of fuel (+691%) over the period.

At a regional level, the markets have shown some differences in travel habits and costs. The UK is the only one of the three countries where train travel (-58%) saw bigger declines than flights (-42%) from 2019 to 2021. The UK is also the only country where spend on flights has increased compared to pre-Covid (+14% as of 2022).

When it came to other types of spend – such as accommodation and eating out – hotels remain more popular than Airbnb for business travellers in all three countries. While business spend in restaurants dropped dramatically during the first wave, and again during January 2022, the most recent figures show more positive signs. For example, in the UK, monthly restaurant spend was back to 60% of preCOVID levels last month; up from a third in January 2022.

Pello Capital, the intelligent and transparent investment company, has announced plans to become the first ever regulated institution to allow listed corporate customers the option to pay their annual fees using cryptocurrency. The move will allow publicly traded companies the option to pay using over seven cryptocurrencies including Bitcoin, Ethereum, USDT and Litecoin.

Alongside the move, Pello is also launching a facility to allow clients to spread the cost of their annual fees over 12 monthly installments at no extra cost. This is the first step in the investment bank’s goal to create a much more flexible and user driven format than the current traditional corporate broking experience. This service will be available in the next 30 days to existing and new listed clients in the UK.

Pello Capital started as an ideal. In an industry focused more on profit margins than community the founders felt lost. There was no brand that championed consumer outcomes and engagement whilst offering the efficiency and experience of a tech company with the warmth and service of a traditional brokerage. With this goal at the foundation of the business, Pello Capital was launched in 2017.

Daniel Gee, MD at Pello Capital, commented, “This is an exciting time for Pello and our corporate customers. We have built our business on accessibility and this announcement is our next move in creating a more user-friendly corporate broking product. Alongside Rishi Sunak’s comments on making Britain a “global hub for crypto” we’ve listened to our customers and are giving them the option to start

embracing cryptocurrency in a safe and measured way.

The team are delighted to be able to offer a true industry first and we are extremely excited about what the future holds and how we can pivot as a business to remain at the forefront of innovation. Our belief is that access to good quality investors and growth capital shouldn’t be a privilege but a right for every listed company.

Pello aims to lead the way by creating a fair and transparent platform that gives our clients the best chance of success for their business and investments” Pello bridges technology and customer services to provide investment solutions to everyone from an inexperienced individual who’s never invested to big banks. The investment company treat each customer as an individual to ensure they understand specific investment needs. europeanbusinessmagazine.com 19

Global Policy-makers Face Complex Set of Divergent Economic Challenges in Coming Year From the impact of a new COVID variant to continued inflation, governments will continue to face economic challenges in 2022. In a session on the global economic outlook, policy-makers outlined their immediate and long-term actions to stabilize the global economy to business, government and civil society leaders taking part in the World Economic Forum’s virtual event, the Davos Agenda.

Kristalina Georgieva, Managing Director of the International Monetary Fund, emphasized that the response to the pandemic crisis has been anything but orthodox. “In a highly coordinated fashion, the world central banks and fiscal authorities have prevented the world falling into another great depression,” she said.

“Policy flexibility is critical in 2022 – persistent inflation, record fiscal debt levels and COVID-19 combine to present a complex obstacle course for policy-makers,” she added. In particular, vaccination rates represent a dangerous divergence between countries; more than 86 countries did not meet end-of-year vaccination targets.”

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Georgieva expects the economic recovery will continue in 2022, but she cautioned: “It is losing momentum amid persistent inflation and record debt levels which now exceed $26 trillion.” More than 60% of developing countries are heading towards debt distress”, she said, more than twice as many as a few years ago.

Christine Lagarde, President of the European Central Bank, said that during the COVID-19 crisis, monetary and fiscal policies joined hands to respond exceptionally to the pandemic. “In Europe, so far, we are not seeing inflationary pressure spiral out of control. We see wages and energy prices stabilizing from the middle of the year as bottlenecks reduce and wage inflation normalizes.”

She added: “In Europe we are unlikely to see the kind of inflation increases that the US is experiencing; demand and employment participation are only just returning to the pre-pandemic levels.” She stressed that “Europe is stronger and more united than it was before the pandemic and we will act if we need to.”

Kuroda Haruhiko, Governor of Bank of Japan, said Japan has been relatively successful in minimizing the death rate from COVID-19, although the economic recovery is still lagging. “Public sector debt in Japan is now well over 200% of GDP,” he said, “but the government projects a primary surplus from 2025, hence thereafter public debt should decline.”

He was optimistic about progress so far. “The Bank of Japan’s accommodative monetary policy has been working well and the Japanese economy is now emerging from the spectre of 15 years of deflation.” He went on to say: “In Japan we expect an inflation rate of about 1% in 2022 and the Bank of Japan will continue our stimulative monetary policy” Sri Mulyani Indrawati, Minister of Finance of Indonesia, revealed that the country should see a strong recovery in 2022. “To build on this, we are expecting more than 1% of additional GDP growth from a series of recent reforms.”

She said that Indonesia is the largest economy in the ASEAN region but “it is vulnerable to a dependence on commodities – the emphasis now is on value-added activities”. She added: “We are improving Indonesia’s investment environment with a comprehensive reform package on tax, regulation and incentives.”

Paulo Guedes, Minister of Economy of Brazil, said his country’s economy is bouncing back strongly and economic output is already above the pre-pandemic level.

“Do not underestimate Brazil’s resilience,” he said. “The country’s debt to GDP ratio has stabilized at around 80%, well less than widespread fears that debt/GDP could exceed 100%.”

He pointed out that more than 3 million new jobs were created in 2021 and the government has assisted 68 million Brazilians with direct income transfers.

He was less upbeat about inflation.

“Central Bankers are asleep at the wheel – inflation will be a persistent problem for the western world.

Inflationary pressures will not be transitory.”

5 Reasons Executives Should Be Active On Instagram the direction you’re going in and see which areas need improvement.

As you check the progress of your Instagram account, you might want to consider having an Instagram growth service so you can maximize your potential and allow your account to reach greater heights. You can check out some service providers, like Kicksta, and see if they’ll meet your needs and wants for your social media pages.

As you become active on Instagram, you’ll be able to track your progress and implement new strategies to be stronger in the market.

Having a large company can be challenging, especially because you need to know how each department is doing. Apart from handling your physical store and website monitoring, you also need to be active on your social media accounts, especially Instagram, to see how people digest your business presence online.

Instagram is a great social media platform for businesses as they get to maximize infographics, especially with the help of Instagram growth services. Additionally, an aesthetically pleasing post would surely attract more audiences to your page, which could help increase your sales.

Besides, while you can allow your social media team to handle all of your activities and content, your involvement as an executive would benefit your company.

Here are some reasons executives should be active on Instagram: 1. To Check On Progress As an executive, you always need to be on top of your company to know its progress. This will help you determine if you’re going on the right path or if your company is heading towards downfall. Aside from your sales number, you should also check the progress of your Instagram page to see how your audiences are taking you as a company and if you’re leaving a good impression on them. This should help you move in

2. To Connect With Your Audience No one enjoys purchasing from a company that doesn’t connect with them.

As an executive, it’s your responsibility to ensure that all your audience feel comfortable with your company and would not hesitate to get in touch with you.

You should browse your Instagram page during your spare time and see how your audience reacts to your posts. Upon reading messages and comments, you should be able to understand what their needs and wants are and try to make them happen, if possible. The more you try to connect with and understand your audience, the more you can deliver the best services.

3. To Share Your Expertise Some people might be tired of seeing your products on your Instagram page, where everything looks and feels staged. To allow your feed to have a personal touch, sharing your expertise through this platform may help improve your account’s engagement and get in touch with your audience better.

There are plenty of ways to share your expertise with your followers. You can film a video about your intention for building your brand, the story behind every product, or how you plan and work hard to ensure that you deliver the best services. You could even post stories on your Instagram and share some business processes or even provide some tips on how they could make the most out of their purchase.

4. To Know The Current Trends Knowing the current trends would help put your company in the loop and attract as many audiences as possible, which could convert into sales. To allow your company to be in touch with your audience, identify the current trends and try to move along with them. The more you stay relevant to your customer, the more people will be interested in your products, giving you consistent sales for your company.

An easy way to identify the current trends is to use a tool that gives you direct information about what fascinates people at the moment. Although those tools can be helpful, being in the actual loop helps you understand the trend better and allow yourself to connect with it. It will help provide better marketing results to know what your customers want.

5. To Bring You Closer To Your Followers Everyone would appreciate working with a company they can communicate with comfortably. Being active on your Instagram allows your company to be approachable and light, which can help bring you closer to your followers.

You could post stories of yourself communicating with your audience and answering some comments and messages once in a while. You could even ask them questions at midday to connect with them better. It will only take a short minute of your day, but this will improve your brand image in the long run.

Takeaway Being an executive means there will always be something on your plate. Although it might be out of your schedule, giving your Instagram account your undivided attention can benefit your company as you project an approachable and compassionate image to your followers. Therefore, take a few minutes of your day to check on your Instagram and see how it will do wonders for your company. europeanbusinessmagazine.com 21

Quin AI, a predictive AI startup founded by two sisters, Gonca Gulser and Gulsah Gulser, has raised £582K funding led by SFC Capital and with participation from NCA, Logo VC, and StartersHub. The fund has been raised to scale Quin AI’s activities in the United Kingdom and Germany, as well as further innovations in AI for creating intelligent applications.

Achievement of the fabled “real-time enterprise”, able to perceive and react to events and changes as they take place is the key for success. The revolution is happening but going realtime is still tricky and costly. The need for real-time algorithms, predictive insights and data infrastructure are creating a new category of applications, and Quin AI is positioned as a fully autonomous predictive AI tool for low touch digital selling and engagement.

Quin AI begins to understand each and every visitor, as soon as they land, and it predicts their behavior in a matter of a few clicks in a privacy-safe mode. Predictions are processed to engage with visitors in real-time, under 70ms either through native pop-up or API integrations with any existing engagement tool. The tool is very simple to set up, leverages first-party data and can immediately increase companies’ revenue by 30 percent in 15 days. Quin AI provides solutions for e-commerce businesses with traffic as low as 250K monthly visitors as well as larger businesses.

Gulsah, CEO of Quin AI said: “We are very excited to close this round with an amazing team and group of investors in making easy, accessible, and privacy-safe ML applications to predict user behavior. We already started our journey with the e-commerce industry where there are massive amounts of untapped user data and increasing privacy concerns.”

Gulsah has over ten years management consulting experience with a focus on customer strategy, and Gonca has twenty years experience as a data scientist, specializing in customer behavior analytics including 22 europeanbusinessmagazine.com

in e-commerce. The idea for Quin AI was developed when sisters noticed in their research and business projects that traditional tools and technologies stay insufficient, especially when real-time engagement and personalization for online visitors is required.

Relying on historic data and large amounts of information on users, increases the time needed to process user data and reporting where users can make decisions in milliseconds. The result is that staying agile becomes challenging where managing the scalability and usability of solutions is required. Quin AI brings a new level of real-time intelligence to online stores and existing tech-stacks used in the e-commerce industry.

Edward Stevenson, investment manager of SFC capital expresses that “with the rising prevalence of data protection and the declining use of 3rd party data it is becoming much harder to target customers online. Quin AI have developed and deployed a solution that mitigates this problem, which enables online retailers to analyze the actions of customers on their websites in real-time and take actions that boost conversions

and sales. We are excited to see what the future holds for Quin AI and the great team driving it forward.”

Wittmuetz, Managing Partner at Next Commerce Accelerator (NCA), said: “Quin’s fast traction in building the technology is backed and validated by strong brands like Kingfisher’s subsidiary, Under Armour, and Decathlon as customers. Our investment into Quin AI shows our commitment to support scalable, hands-on solutions that drive direct revenue uplifts in the field of e-commerce. We as NCA are convinced by the huge market opportunity, the innovative product approach, and the superior founding team.”

Arda Askin, Managing Director, StartersHub, said: “We are very happy to be part of Quin AI’s journey in helping e-commerce companies to increase their revenue and engagement while adding the best value to end user experience.

With Quin AI’s real-time technologies retailers acquire new tools to understand customer actions without the need for cookies, which will cease to exist in near future. We will keep following new solutions in the e-commerce vertical and are very excited to see how Quin AI’s new approach will evolve the market.”

Banking Circle partners with Gresham to streamline cash control and scale to rapid growth

London, 11 May, 2022 – Global fintech Gresham Technologies plc (Gresham) today announced that next-generation digital B2B payments and banking services provider, Banking Circle, has adopted Gresham’s Control solution for cash reconciliation. A global market leader in mission-critical cloud-based software and managed service solutions for financial services, Gresham enables the growing bank to scale more quickly, easily and affordably by facilitating the reconciliation of millions of customer transactions per week.

Although ESMA’S 2021 EMIR and SFTR data quality report acknowledged improvements, it also stated specifically that “data reconciliation will require more efforts by reporting entities,” with persistent and prevalent reconciliation, data quality, and reporting problems still present throughout the financial services industry amid increased market volatility and volume shifts.

By operating as a cloud-based managed service, Gresham’s Control solution allows Banking Circle to outsource non-core business functions,

including end-to-end management of Gresham’s Clareti platform, and focus on higher-level, value-add tasks. The elimination of costly manual processes, human error and infrastructure management has led to a more streamlined experience for customers, and more scalable and resilient operations for the bank.

This partnership is part of a wider shared mission of the two industry leaders, both of whom are part of the Luxembourg House of Financial Technology (LHoFT), to improve market confidence and facilitate fintech innovation.

Morten Juhl Lilleøre, Head of Operations at Banking Circle, said: “Gresham’s Control solution is already improving our control mechanisms while simultaneously allowing us to innovate and scale. This particular module was exactly suited to meet the challenges we’re facing today, and Gresham’s best-in-class technology stack is aligned with several of our future objectives. We’re looking forward to expanding our relationship to leverage additional solutions and services such as securities reconciliation and other key functions which are essential to our long-term competitive advantage and business growth targets.”

Vincent Him, Sales Director for Europe at Gresham, added: “In today’s regulatory landscape, firms are not only expected to control their cash, but also provide comprehensive proof of that process. Most firms need compliance and data reconciliation automation and expertise to help reduce risk and future-proof their businesses. These requirements can be a barrier for entry, particularly for new entrants. We’re thrilled to deliver committed, tailored cash control support as Banking Circle focuses on expanding its business.”

Alex Panican, Head of Partnerships & Ecosystem, at The Luxembourg House of Financial Technology (LHoFT), commented: “We’re excited to see two fintech champions coming together to push the folds of what efficient cross-border payments can look like. With Luxembourg’s growing status as a fintech hub, there’s no better time or place to be investing in innovation.” europeanbusinessmagazine.com 23

LONDON, England, 11th May 2022: B4B Payments, a leading global payments provider, is pleased to announce an exciting new partnership. Swedish fintech start-up Juni has chosen UK payment solutions provider B4B Payments to deliver their innovative financial services offering for ecommerce companies, this is delivered as part of a new service by B4B, designed to help fintech startups scale their offerings more rapidly.

Gothenburg-based Juni was listed as 2021’s fastest-growing fintech startup in Europe, raising $76M in Series A funding and has recently come out of beta with its all-in-one financial management platform. With a goal of eliminating common challenges faced by ecommerce businesses, Juni has leveraged B4B Payments’ BIN sponsorship 2.0 service to power their prepaid card proposition, with the aim of making it easy for businesses to keep track of their finances across multiple platforms.

B4B Payments CEO Paul Swinton said: “We’re delighted to be supporting Juni to bring the Juni prepaid 24 europeanbusinessmagazine.com

Mastercard to market, and to see our payment solutions leveraged in such an innovative way to empower ecommerce and digital marketing entrepreneurs. As an established fintech firm ourselves, we’re excited to be part of Juni’s success, and we look forward to working closely with them to achieve their ambitious roadmap.”

Juni co-founder and CEO, Samir El-Sabini, said: “We’re really excited about our partnership with B4B and their support in building our infrastructure.

It will enable us to scale Juni and continue our fast-paced growth while, most importantly, give our customers more value when using our platform.

Through B4B, we’ve recently launched our new USD accounts and Mastercard cards, and we’re looking forward to launching additional currencies and features in the coming months.”

B4B Payments’ issuing solution is designed to provide an easier path to market for innovative fintech firms like Juni by removing many of the complexities of regulatory compliance. While Juni is not currently a financially regulated entity, B4B

Payments enable them to offer fully secure and compliant card issuing and payment services integrated seamlessly into their platform without first needing to jump the hurdles of gaining regulated status.

Juni has selected B4B Payments to support the launch of their virtual Mastercard prepaid card. With the option to make payments in multiple currencies, process FX transactions with a 0.25% capped fee, earn 1% cashback on ad spend, and access data from multiple ad accounts in a single dashboard the Juni Card empowers ecommerce businesses to gather data insights, make better decisions, and scale their activities more effectively than ever before.

B4B Payments’ next-gen solutions are designed to scale flexibly over time to support fintech companies from their earliest days as a start-up through to becoming a fully licensed entity in their own right. By offering not only access to the required licenses, but a raft of resources and expert support, B4B Payments aim to support a new wave of fintech companies on the path to success.

11th May 2022- Remote and hybrid work in the post-pandemic era is amplifying burnout for a third of financial services and banking professionals.

A new study by LemonEdge, a global digital accountancy platform for the private capital and venture capital industry, found that while some workers have experienced the positive benefits of hybrid working, and even decreased levels of burnout, a third (33%) of financial and banking services workers state levels of burnout has increased due to changes in work environment since the pandemic and working from home hybrid model.

Within this, one in six (14%) state burnout has increased exponentially.

With businesses settling into hybrid work arrangements, implementing in office and work from home set ups, the study by LemonEdge looked into the impact working from home and hybrid working has had on professionals in financial and banking services.

Over one in three (37%) workers claimed the driving factor of burnout has come from increased workloads imposed upon employees. This was closely followed by increased work demands (36%) longer working hours (34%) and tech challenges (32%).

Increased working hours are burdening many financial service professionals, as close to a third (31%) of workers reported working over their contracted hours every day, over half (57%) stated they do multiple times a week, and almost every employee (94%) claimed to work over their contracted hours at least once a week.

Consequences of burnout The consequences of burnout are monumental, with nearly a quarter (23%) of financial service workers stating they are specifically concerned about their health or mental health, while one in five (22%) of workers report feeling stressed. Looking at gender differences, the study found 27% of males respondents reported

having higher levels of stress, compared to 19% of females respondents.

In order to circumvent burnout, a third (33%) of financial services professionals are in agreement that a reduced workload would reduce burnout. Other solutions include time off work (27%), more support from management (25%), and faster, more efficient technology (23%).

Gareth Hewitt, Co-Founder and Chief Executive Officer at LemonEdge, comments: “Even in this new age of working, financial services and banking professionals are burning out at an alarming rate. Firms are battling the challenge of working to the highest efficiencies and handling complexity on an unforeseen scale, all while offering flexibility to employees which they absolutely have the right to enjoy.

“The risk of burnout to employers is huge. Firms need to be aware of the impact absenteeism and presenteeism will have on both their employees and business productivity. Just because you’re working from home, or in a hybrid model, doesn’t mean you can’t enjoy time off. With one in four (23%) asking for faster or improved technology to eliminate manual processes, firms need to look at their approaches to improve the lives of their staff. In this day and age, technology, not only can but should, provide the automation and flexibility that can contribute to reduced stress, reduced working hours, and lower risk of burnout. At LemonEdge we are passionate about providing the tools and technology that enable financial services professionals to get home on time.” europeanbusinessmagazine.com 25

Brussels has cut its growth forecasts further and lifted its inflation outlook as the energy crisis triggered by Russia’s invasion of Ukraine exacts its toll on the EU economy. Both the EU and euro area are set to expand by 2.7 per cent this year, well shy of the previous expectation of 4 per cent, forecasts published by the European Commission on Monday showed. Growth is tipped to be 2.3 per cent in 2023.

Inflation is expected to surge above 6 per cent in both the EU and euro area this year, with some central and eastern European countries likely to see double-digit price rises in 2022. Paolo Gentiloni, the economic commissioner, said in a statement on Monday: “Russia’s invasion of Ukraine is causing untold suffering and destruction, but is also weighing on Europe’s economic recovery.” He added: “The war has led to a surge in energy prices and further disrupted supply chains, so that inflation is now set to remain higher for longer.” Energy costs have soared and confidence has faltered in the wake of the invasion of Ukraine.

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The commissioner also cautioned that other scenarios were possible where “growth may be lower and inflation higher than we are projecting today”.

One such scenario — an outright cut in gas supply from Russia — would dent growth by 2.5 percentage points to just 0.2 per cent, according to the commission’s projections. A percentage point would be shaved off the 2023 growth forecast too. Inflation would be 3 percentage points higher than the baseline projection in 2022 and 1 percentage point higher in 2023. EU member states have pushed through five rounds of sanctions, and are now in the process of seeking to finalise a package targeting the oil sector. Those measures have yet to be agreed, however, given resistance from EU member states heavily reliant on Russian oil — most notably Hungary. Energy prices were up 38 per cent year on year in April in the euro area, and food costs by more than 6 per cent in the same period. A separate commission report published on Monday warned of multiple shocks, from

supply chain snags to higher commodity prices, that could further hit households’ purchasing power in the coming months. Inflation is set to fall to 2.7 per cent in 2023. But the figure remains above the European Central Bank’s target of 2 per cent. Last week, ECB president Christine Lagarde signalled that she would support raising the main interest rate in July, paving the way for the first increase for more than a decade. Recommended News in-depthEurozone economy Eurozone’s long-stagnating wages start to rise as cost of living soars With the threats to growth mounting, some economists want the European Commission to announce another suspension to its deficit and debt rules next year. Despite the harsh outlook, the commission still expects unemployment to carry on falling following the surge induced by Covid-19. The jobless rate will drop from 7.7 per cent last year to 7.3 per cent in 2022 in the euro area, according to the draft forecasts, before slipping further to 7 per cent in 2023. Budget balances are also expected to gradually improve.

The overall euro area budget gap is predicted to drop from 5.1 per cent of GDP last year to 3.7 per cent this year and 2.5 per cent in 2023.

Preparing for the wave of Covid Related Disputes to hit

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recent member survey from the London Litigation Solicitors Association revealed 84% of respondents expect more Covid-related contractual disputes to surface in the months ahead, and 70% expect more insolvency-related cases. With a wave of disputes expected, businesses should now be considering the best way to deal with one, should it arise. By Michael Frisby, Partner at Stevens & Bolton

A perfect storm Action taken by the UK Government and the courts during the pandemic was designed to support businesses and discourage a rush to litigation of disputes. The Cabinet Office produced “Guidance on responsible contractual behaviour in the performance and enforcement of contracts impacted by the Covid-19

emergency” in May 2020, which encouraged parties to act responsibly and fairly and to use ADR. Although not of legal effect, it expressed a policy of allowing ‘breathing space’ and sought to preserve businesses. Other steps were taken to avoid the risk of business collapse, such as introducing restrictions on winding up companies where difficulties had been caused by Covid. Statistics available from the commercial court suggest that the measures proved effective, the number of lawsuits commenced during the peak of the pandemic decreased.

There were undoubtedly supply issues arising out of the difficulties caused by the lockdown, but they have not apparently yet resulted in a rise in litigation. Litigation did emerge from the pandemic at an early stage in the form of disputes over the scope of coverage under Business Interruption Insurance. Whilst a test case established some important parameters for claims, questions remained and the application of the principles resulted in further disputes and litigation.

Now, with the restrictions lifted, it is anticipated that parties will seek to exercise rights accrued during the pandemic. Coupled with that we have rising inflation re-entering the economy, the energy crisis and the war in Ukraine. These pose challenges for businesses and their supply lines, and the prospect of disputes arising. The removal of many of the restrictions on presenting winding up petitions could signal more corporate failures.

Facing a dispute?

For cross-border trading disputes, international arbitration remains a good option. It is fast, confidential and results in an award enforceable in most jurisdictions in the world. Litigation on the other hand has suffered slightly as a result of the Brexit changes. It had been hoped that the

mutual recognition of judgments and service provisions we had enjoyed with fellow EU members might be restored outside of the EU under the Luagano Convention. However, the EU currently opposes the UK’s admission. How problematic this will be in practice remains to be seen.

There have been many changes to the litigation process in recent years.

The disclosure pilot came in before the pandemic and was updated in November 2021. It introduced radical changes to the approach to disclosure and looks set to stay. In April 2021, Practice Direction 57AC was introduced governing the content and preparation of witness statements for trial. Although not changing the law on admissible evidence, it demands a fundamental change to the way trial witness statements have been prepared in practice in recent years. The encouragement of ADR by the courts continues unabated.

A developing area of litigation has been in relation to group claims both under Group Litigation Orders and Collective Proceedings Orders.

Fuelled by litigation funders, these mechanisms provide the opportunity for claims to be pursued collectively in one action (often claims that on their own would be too small to pursue economically in their own right) potentially leading to very significant damages claims being brought against defendant companies.

When facing a dispute, it is important that a business gets early advice to understand where it stands legally, the strengths and weaknesses in its position and its options. Weighed against that will be the costs of pursuing those options, the costs risk involved and whether those costs and costs risks can be managed or reduced. Setting sensible commercial objectives for the outcome of the dispute in light of such advice and analysis is important. How best to achieve those objectives will depend upon the circumstances of the case and the nature and conduct of the opponent. However, there are useful tools available, such as mediation and other ADR processes (amongst others) that can be utilised either in the context of litigation or arbitration. europeanbusinessmagazine.com 27

BETWEEN A ROCK AND A HARDPALCE

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elcome news last week – interest rates have started to rise on both sides of the Atlantic. The US Federal Reserve and the Bank of England (BoE) finally recognise that the current inflation spike is no transient problem.

Only eccentric autocrats such as Turkey’s President Recep Tayyip Erdoğan think that cutting interest rates can quell inflation. Good luck with that Mr President; Turkey’s annual inflation rose to almost 70% in April, the highest for two decades.

But it’s premature to put out the flags and give three cheers – these rate rises will do nothing to quash inflation. They were too paltry for that. Central banks on both sides of the Atlantic are sitting between a rock – worries that inflation is starting to run out of control – and a hard place – worries that efforts to control inflation by putting up interest rates are going to be too little, too late.

So in the face of news that US consumer prices rose by 8.5% in March on an annualised basis – the highest in 40 years, the Fed last week “delivered the biggest interest-rate increase since 2000” said Bloomberg; the increase was .50%, meaning that the federal funds rate (the interest rate banks use to lend to each other on a short-term basis) will now be 0.75% to 1%. Jay Powell, chairman of the Fed, told Congress in early March that hindsight “says we should have moved earlier”.

The conventional economists’ way of dealing with inflation is that central banks must raise interest rates. That makes credit more expensive; people will spend less and tighten their belts and might even save a bit with higher rates. That conjunction of events will lead to an economy which runs ‘cooler’. At least, that’s the theory.

The UK’s official inflation rate in March was 7%. So the BoE hiked the UK rate from its previous 0.75% to 1%. The gloom deepened as the Bank also said that inflation will reach more

than 10% by the end of this year and a recession will happen – the Bank expects the UK economy to contract by 0.25% in 2023 and remain weak in the next two years.

Half a year ago the BoE thought UK inflation would peak at 5%. As for the US, Jay Powell, chairman of the Fed, has long been tarred with his ‘inflation is transitory’ message. The US is now saddled with a negative interest rate of 8% – Dollars held in cash are losing 8% of their purchasing power. As one commentator put it, “while policy is being tightened it could scarcely be called tight”.

Inflating the bubbles Who has confidence in central bankers’ predictions about the future?

After getting things wrong, and egregiously wrong for so long, their credibility is at rock-bottom.

Yes, there have been some shocking ‘black swan’ (i.e. unpredictable) events (Russia’s invasion of Ukraine being the most extreme example) but prior to that the US, UK and Eurozone economies handled the Covid-19 pandemic extremely poorly. The knee-jerk lockdowns (still being imposed in China) paralyzed the global economy, created all kinds of supply-chain bottlenecks (some remain, reducing exports and pushing up prices), and prevented all kinds of migrant workforces from taking up jobs. Why are vegetable oils in short supply today and much more expensive? Yes, Ukraine is a major global supplier of sunflower oil and its exports have fallen because of the war. But the palm oil plantations of Malaysia, the world’s second biggest producer of palm oil, a vegetable oil used in many different consumer products, depends on migrant labour to pick the palm oil fruits from their trees. Under Covid restrictions tens of thousands of migrant workers could not travel, Malaysia’s palm oil exports dropped, and prices soared.

The war in Ukraine has merely worsened a pre-existing situation.

Under Covid, interest rates were cut to zero, and ‘quantitative easing’ programmes, large scale asset buying by four leading central banks

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Eurozone inflation of 7.5% – is that this wage negotiation could spark an inflationary ‘wage-price spiral’. In the UK, average house prices are more than 12% higher year-on-year. In the US, the median existing house price is up by 15% year-on-year; “owning a home is becoming unaffordable for many Americans”.

Crisis – what crisis?

(which began in 2009 ) continued, and expanded their collective balance sheet to more than $26 trillion.

The Fed’s balance sheet has expanded from under $1 trillion pre-2008 to close to $9 trillion today. Now the Fed will embark on a reversal of this policy – ‘quantitative tightening’ will start at a monthly pace of $95 billion, more than double the amount it tried to trim its balance sheet during 2017-19. Back then this tightening saw stock prices tumble and the Fed quickly withdrew the tightening, in March 2019.

On top of that governments flooded the market with trillions of newly-created fiat money to ‘support’ people who were barred from their employment and businesses that couldn’t function. Sometimes these measures were bizarre – in the UK, the government introduced in August 2020, when the pandemic was still in full flood, the so-called ‘Eat Out to Help Out’ scheme, at a cost of £840 million, whereby the government provided 50% off the cost of food and/

or non-alcoholic drinks at participating restaurants. And the many ‘support’ schemes were inevitably ripe for criminal activities, stealing from the government/taxpayers. In the US, the Secret Service reckons that around $100 billion of pandemic relief funds was stolen.

The era of ‘cheap money’ – which for 13 years has fuelled bubbles everywhere, in stock markets, housing markets, cryptocurrencies – may be coming to an end, but like a super-tanker the inertia could take a while to slow down – the bubbles may carry on inflating for a while yet. In the US, unit labour costs – the full cost of employing each worker – are currently rising their fastest in four decades. In Germany, the biggest trade union, IG Metall, which represents 85,000 steelworkers, is now demanding a wage increase of up to 8.2%. The IG Metall wage discussions are widely seen as providing a benchmark for wage increases across the Eurozone.

The biggest fear for the European Central Bank (ECB) – tackling record

Central bankers are human beings like us. They are as sensitive to pointed fingers and accusations of having made a mess of things as any of us.

When we are found to have failed in some important task it’s normal to try to brazen it out.

So we should not be surprised that in the US the chair of the Fed, Jay Powell, in the UK the BoE’s governor Andrew Bailey, and at ECB’s president Christine Lagarde are all putting on a brave face and hoping that the current high inflation levels can be brought back to their ‘targets’ of 2% without the need for much higher interest rates – which would push the post-Covid economic recovery offcourse. But they are going to need a lot of good luck – they and other central bankers are “flying on a wing and a prayer”. More consumer pain is on the cards. The ‘cost of living crisis’ is likely to mutate into a combined ‘cost of living+recessionary pressures crisis’ – that is, stagflation, a condition in which we will have higher inflation, lower growth, and possible recessions in many economies.

Nor should we discount the possibility that central banks, listening to their governments perhaps, may consider letting inflation run a little higher than their target of around 2%. Higher inflation reduces the real value of debts, as it causes the value of a fiat currency to decline over time.

Slow, chronic inflation is the most politically palatable way of reducing national debt in a way that is almost imperceptible to the electorate. With the US national debt now more than $30 trillion and crucial mid-term elections in the US set for later this year, President Joe Biden and his economy officials are walking a tightrope suspended over a deep canyon europeanbusinessmagazine.com 29

FROM ENTREPRENEURS TO SCIENTISTS:

Meet the 2022 Class of Young Global Leaders The world’s most driven researchers, innovative entrepreneurs, activists and promising political leaders between the ages of 30 and 40 are today joining the World Economic Forum’s Young Global Leaders Class of 2022

T

he Forum of Young Global Leaders was founded in 2005

by Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, to help shape future leaders who are equipped to both take responsibility for creating a more sustainable and inclusive world, and to address its increasingly complex and interrelated challenges. Today, there are over 1,400 members and alumni from more than 120 countries. Notable members include prime ministers Jacinda Ardern and Sanna Marin, President Carlos Alvarado Quesada of Costa Rica, entrepreneurs Iyinoluwa Aboyeji and Rhea Mazumdar Singhal, peace activist Victor Ochen, and economist Esther Duflo.

YGLs are active in today’s most exciting and dynamic fields and focus on impact. In the past year, YGLs have made bold commitments to restore 21 million hectares of deforested and degraded land in India, have come together to establish the first corporate movement for clean air to create healthy communities around the world, and have even launched a $1 billion gender fund to advance global equity and women’s leadership.

The class of 2022 is gender equal and has representatives from 42 countries. Members will take part in a three-year leadership development programme that will help them reach their next level of impact. The programme offers executive education courses, expeditions and opportunities to collaborate and test ideas with a trusted network of peers.

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“The leaders celebrated today have demonstrated exceptional ingenuity and vision across their fields. While they represent diverse sectors, regions and issue areas, they are united in their commitment to lead towards a more inclusive and sustainable world,” said Mariah Levin, Head of the Forum of Young Global Leaders.

“The World Economic Forum is delighted to welcome this year’s class of Young Global Leaders. Their commitment to improving the state of the world is crucial at a time where collaboration is needed more than ever,” said Nicole Schwab, Board Member of the Forum of Young Global Leaders.

Meet the 2022 YGL Class Academia/Think-tank • Amal Enan, Chief Investment Officer, American University in Cairo, United States of America • Danae Kyriakopoulou, Senior Policy Fellow, Grantham Research Institute, London School of Economics and Political Science, United Kingdom • James Kwame Mensah, Senior Lecturer, University of Ghana, Ghana • Jinxing Zheng, Division Head, Professor, Institute of Plasma Physics, Chinese Academy of Sciences, People's Republic of China • Kaitlyn Sadtler, Earl Stadtman Tenure-Track Investigator and Chief of the Section for Immunoengineering, National Institutes of Health, United States of America

• Philip Meissner, Founder and Director, European Center for Digital Competitiveness, Germany • Wai-Lung (Billy) Ng, Assistant Professor, School of Pharmacy, The Chinese University of Hong Kong, Hong Kong SAR, China • Yoichi Ochiai, Associate Professor, University of Tsukuba, Japan Arts, Culture & Sports • Daniel Feldman, Founder & Architect, Zona Industrial Taller de Arquitectura, Colombia • Inna Modja, Land Ambassador, United Nations Convention to Combat Desertification (UNCCD), Portugal • Manasi Joshi, Athlete, Sports Authority of India, India • Sumayya Vally, Founder and Principal, Counterspace, South Africa • Wissam Joubran, Composer, Performer, Luthier, Le Trio Joubran, Palestinian Territories

• Eva Otieno, Principal, Africa Strategy, Standard Chartered Bank Kenya Ltd, Kenya • Fares Bugshan, Chief Executive Officer, Bugshan Investment, Saudi Arabia • Frederic Hoffmann, Board Member, MAVA Fondation pour la Nature, Switzerland • Ioana Patriniche, Managing Director / Head of Investor Relations, Deutsche Bank AG, United Kingdom • Jennifer (Jen) Auerbach-Rodriguez, Managing Director - MLWM Strategic Growth Markets, Merrill Lynch, United States of America • John R. Tyson, Executive VicePresident; Strategy and Chief Sustainability Officer, Tyson Foods Inc., United States of America • Joud Abdel Majeid, Deputy Chief Financial Officer, BlackRock Inc., United States of America • Kim Hallwood, Head of Corporate Sustainability, HSBC Bank Canada, Canada • Lesley Ndlovu, Chief Executive Officer, African Risk Capacity "ARC" Ltd, South Africa Business • Abdulrahman Essa Al-Mannai, President and Chief Executive Officer, Milaha Group, Qatar • Anderson Tanoto, Managing Director, RGE Pte Ltd, Singapore • Anne-Laure Malauzat, Partner, Middle East, Bain & Company, United Arab Emirates • Bicheng Han, Founder and Chief Executive Officer, BrainCo, United States of America • Carlo Perez-Arizti, Partner, Baker McKenzie, Mexico • Caroline Blanch Israel, Managing Director and Partner, Boston Consulting Group, Australia • Christer Kjos, Chief Executive Officer, Canica Holding AG, Switzerland • Christy Lei Sun, Chief Marketing Officer and Founding Partner, Yatsen Global, People's Republic of China

• Claire Cormier Thielke, Country Head, Hines Greater China, Hines Asia Pacific, Hong Kong SAR, China • Daniel Zhang Xianming, Vice President, Broad Group, People's Republic of China • Dominic Wadongo, Group Head of Operational Risk, Equity Group Holdings Plc, Kenya • Enass Abo-Hamed, Chief Executive Officer, H2GO Power Ltd., United Kingdom • Esha Mansingh, Executive Vice -President, Corporate Affairs and Investor Relations, Imperial Logistics Limited, South Africa • Esra Eczacıba ş ı Co ş kun, Member of the Board of Directors and Group Digital Transformation Coordinator, Eczacıbaşı Holding, Turkey • Eugene Chung, Chief Executive Officer and Founder, Penrose Studios Inc., United States of America

• Margot Edelman, General Manager, Daniel J. Edelman, Inc, United States of America • Mariana Vasconcelos, Chief Executive Officer, Agrosmart SA, Brazil • Mark Stoffels, Managing Director, Connected Care North America, Philips, United States of America • Matthew Katz, Global Head of Data Science, Blackstone, United States of America • Mayank Singhal, Global Head of Private Equity and Venture Capital, Abu Dhabi Growth Fund (ADG), United Arab Emirates • Miku Hirano, Chief Executive Officer, Cinnamon AI, Japan • Mmaki Jantjies, Head of Innovation, Telkom SA SOC Limited, South Africa • Mohammed Alghanim, Group Chief Executive Officer, Hamad S. Al-Ghanim Group, Kuwait • Noor Boodai, Chief Executive Officer, TenX, Kuwait europeanbusinessmagazine.com 31

• Ola Doudin, Co-Founder and Chief Executive Officer, BitOasis, United Arab Emirates • Orenzo (Perry) Hollowell, Head of Global Equities and Sustainable Investing, CFI Partners, United States of America • Peng Shen, Founder and Chief Executive Officer, Shuidi Company, People's Republic of China • Radhika Gupta, Managing Director and Chief Executive Officer, Edelweiss Mutual Fund, India • Ritesh Malik, Founder, Innov8 Coworking, India • Sarah Rawson, Regional Head of Business Management EMEA, Swiss Re Services Limited, United Kingdom • Sharam Gulzad, Chief Executive Officer/Founder/Investor, Gulzad Group, Afghanistan • Siwan (Swan) Lu, Principal, Zurich Global Ventures, Switzerland • Sophia Hamblin Wang, Chief Operating Officer, Mineral Carbonation International (MCi), Australia • Soraya Djermoun, Entrepreneur, Author, Geopolitical expert, Terza, Algeria • Steve Suryadinata, Managing Director, BSA Land, Indonesia • Suhail Sameer, Chief Executive Officer, Resilient Innovation Private Limited (BharatPe), India • Usman Ahmed, Head of Global Public Policy and Research, Paypal, Inc., United States of America • Venetia Bell, Group Chief Sustainability Officer; Head, Strategy, Gulf International Bank BSC (GIB), United Kingdom • Vineeta Singh, Chief Executive Officer, SUGAR Cosmetics, India • Yashovardhan Lohia, Executive Director and Chief Sustainability Officer, Indorama Ventures Public Company Limited, Thailand • Yeoh Keong Hann, Executive Director, YTL Power Generation, Malaysia • Yichen Shen, Founder and Chief Executive Officer, Lightelligence, United States of America • Yousef Yousef, Chief Executive Officer, LG Sonic B.V., Netherlands 32 europeanbusinessmagazine.com

• Yuito Yamada, Partner, McKinsey & Company, Japan • Zou Shasha, Founder and Chief Executive Officer, AHA Entertainment, People's Republic of China • Zuriel Naiker, Managing Director, Sales and Distribution, Africa, Marsh & McLennan Companies, South Africa

• Boju Zhang, Secretary General, Ginkgo Foundation, People's Republic of China

Civil Society • Alaa Murabit, Director, Health (PAC), UN High-Level Commissioner & SDG Advocate, Bill & Melinda Gates Foundation, Canada

• Freshta Karim, Founding Director, Charmaghz Cultural and Services Organization, United Kingdom

• Clarissa Delgado, Co-Founder and Chief Executive Officer, Teach For the Philippines, Philippines • Françoise Moudouthe, Chief Executive Officer, African Women's Development Fund, Ghana

• Ilwad Elman, Chief Operating Officer, Elman Peace HRC, Somalia

• Sun Xuemei, Chairperson, Beijing All in One Public Welfare Foundation, People's Republic of China • Vilas Dhar, President and Trustee, The Patrick J. McGovern Foundation, United States of America • Zoya Lytvyn, Head, Osvitoria, Ukraine Media • Juan Carlos Rincón, Editor of the Opinion Section, El Espectador, Colombia • Tom Mustill, Director, Gripping Films Ltd, United Kingdom

• Irina Lachowski, Chief Executive Officer, RenovaBR, Brazil • Jessica Beckerman, Co-Founder and Chief Medical Officer, Muso, United States of America • Joy Buolamwini, Founder and Executive Director, Algorithmic Justice League, United States of America • Luana Génot, Executive Director, Brazilian Identities Institute, Brazil • Matt Dalio, Founder and Chair, Endless OS, United States of America

Public Figure • Bárbara Luiza Coutinho do Nascimento, State Prosecutor, Rio de Janeiro State Prosecutor's Office, Brazil • Bolor-Erdene Battsenge, State Secretary, Ministry of Digital Development, Mongolia • Colin Allred, Member of Congress, U.S. House of Representatives, United States of America • Eva Maydell, Member of the European Parliament, European Parliament, Belgium • Freddy Castro, Chief Executive Officer, Banca de las Oportunidades, Colombia • Hamad AlMahmeed, Undersecretary for Research & Projects, Prime Minister’s Office, Bahrain • James Mnyupe, Presidential Economic Adviser; Green Hydrogen Commissioner, Office of the President of Namibia, Namibia • Maria Eugenia del Castillo Cabrera, Envoy of the Vicepresident of the Dominican Republic, The Presidency of the Dominican Republic, Dominican Republic • Mark Boris Andrijani, Minister of Digital Transformation, Government Office for Digital Transformation of Slovenia, Slovenia • Mykhailo Fedorov, Vice Prime Minister and Minister of Digital Transformation of Ukraine, Government of Ukraine, Ukraine • Naif Shesha, Chief Strategy Officer, Saudi Space Commission, Saudi Arabia

• Natalie Black, Her Majesty’s Trade Commissioner for Asia Pacific, Department for International Trade, Singapore • Omar bin Sultan Al Olama, Minister of State for Artificial Intelligence, Digital Economy and Remote Work of the United Arab Emirates, Office of the Prime Minister of the United Arab Emirates, United Arab Emirates • Raghav Chadha, Member of Parliament, State of Punjab, India • Saad Hayat Tamman, Member – Strategic Reforms and Implementation Unit, Office of the Prime Minister of Pakistan, Pakistan • Safiya Al-Jabry, Executive Director, Small and Micro Enterprise Promotion Service (SMEPS), Yemen • Sahar Albazar, Parliament Member & Deputy Chair of Foreign Affairs Committee, Egyptian Parliament, Egypt Social Entrepreneur • Badruun Gardi, Co-Founder and Chairman, GerHub, Mongolia • Jaideep Bansal, Chief Executive Officer, Global Himalayan Expedition (GHE), India • Kiah Williams, Co-Founder and Managing Director, Supporting Initiatives to Redistribute Unused Medicine - SIRUM, United States of America • Luhui Yan, Founder and Chief Executive Officer, Carbonstop, People's Republic of China • Mia Perdomo, Co-Founder and CEO, Aequales, Colombia • Nasreen Ali Mohamed, Founder and Chief Executive Officer, Cherehani Africa, Kenya • Sara Saeed Khurram, Chief Executive Officer and Co-Founder, Sehat Kahani, Pakistan • Yanqing (Kenny) Cai, Co-Founder and Chief Executive Officer, Bottle Dream, People's Republic of ChinaGeneva, Switzerland, 20 April 2022 – The world’s most driven researchers, innovative entrepreneurs, activists and promising political leaders between the ages of 30 and 40 are today joining the World Economic Forum’s Young Global Leaders Class of 2022. europeanbusinessmagazine.com 33

Private equity firms can be catalysts to fighting climate change, here is how

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ew whitepaper, “Creating Value through Sustainability in Private Markets,” released by the World Economic Forum offers key steps the private equity industry can use to drive change.

This is after the study, which was done in collaboration with Boston Consulting Group (BCG), explored how the private equity industry has a unique opportunity to be a key driver in fighting climate change. With its full ownership model and relative freedom from short-term pressures, the industry is well placed to lead the way in capturing value through sustainable transformation of their investments.

“Many private equity firms are missing out on opportunities to create real financial value through long term, sustainable investments,” says Shrinal Sheth, Lead, Investing, World Economic Forum. “Industry leaders who are interested in driving climate solutions must act quickly to ensure their firms are operating in ways that allow them to successfully create sustainable value.”

However, key barriers like knowledge gaps, internal organization misalignments and an overfocus on divestment are still blocking the private equity industry from fully realizing its potential in driving sustainability shifts.

Transforming “Grey to Green” assets Instead of divestment-only approaches, the study shows that private equity firms can improve the sustainability performance of currently high-emitting assets by investing in long-term opportunities to make them greener.

In fact, the industry is ideally positioned to play this role, due to its full-ownership model and longer time horizon, relative to public markets.

“Many private equity investors avoid ‘grey’ or high-emitting assets in an attempt to decarbonize their portfolios,” said Greg Fischer, a partner and director at BCG, and a co-author of the whitepaper. “This is a missed opportunity. We cannot divest our way to

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global Net Zero. Meeting the world’s decarbonization challenge requires investment and engagement. Private equity—with its ability support strategic transformations and a longer horizon than public markets—is ideally positioned to meet this need, transforming high-emitting assets “from grey to green” and making real progress towards our global ambition.”

Three key enablers for this transformation include: • Change-over-time emissions reduction frameworks to supplement existing levels-based portfolio emissions targets

• Carbon pricing to help investors to more directly capture the value of their decarbonization initiatives during the holding period • Clear retirement and decarbonization policies for high-emitting assets that explicitly define the intended trajectories, provide incentives for sponsors to undertake bold sustainability transformations and make owners accountable for ensuring that the high-emitting assets they divest are sold not to the highest bidder but to new owners with well-defined decarbonization plans

“The ownership model in private equity allows for meaningful positive change through data and engagement,” said Marcie Frost, CalPERS’ Chief Executive Officer. “As longterm investors, sustainability is critical to value creation, and we believe the convergence and standardization of sustainability data will enable a rapid acceleration in the integration of these factors across portfolio companies in our private equity partnerships.”

“As investors and partners, our job is to improve all aspects of a business to drive growth and improve how they operate over the long haul,” said Kewsong Lee, Carlyle’s Chief Executive Officer. “In a rapidly changing world, that increasingly means helping companies to improve their performance on ESG issues. This is a job we are positioned particularly well for given our ownership stakes, investment horizon, and expertise.”

Five steps for sustainability in private equity The whitepaper has identified five first steps private equity firms can take to ensure their investments are driving sustainable change.

1. Invest in capabilities and culture: The gap in capabilities is one of the primary barriers to action for LPs and GPs today. Ensuring leadership includes people who have relevant operational and traditional investment experience along with a sustainability mindset can be a vital first step in building institutional capabilities.

2. Focus on a long-term plan: Developing capabilities and driving a cultural change may involve false starts along the way. To stay the course, private-equity

leadership needs to take advantage of the greater time horizon flexibility in private markets and optimize for the long-term outcome, not just quick wins by doing things like embracing experimentation and lengthening hold periods.

3. Communicate the plan, along with measurable milestones along the way: Given the lengthy time horizon required to see results at the asset and portfolio levels, communicating the long-term plan and progress towards it to all stakeholders is vital to securing and maintaining buy-in. This should be in by using both standardized metrics customized reporting.

4. Don’t just divest, transform: Private equity’s full-ownership model and flexibility to take a longer-term view relative to public markets should enable the industry to transform sustainability-laggard assets but so far it has not capitalized on this opportunity.

Divestment and sector rotation offer quick wins for a single investor, but they do not remove sustainability-laggard assets from the global mix. Sustainability challenges need to be addressed head-on by deploying capital to transform these grey assets.

5. Collaborate to address key barriers: Addressing measurement challenges and establishing the right incentives cannot be accomplished in isolation. LPs and GPs across the industry must continue to collaborate to set standards and policies.

“Private equity leaders can take these five ‘Monday morning’ priorities as first steps to help their firms fully realize their important role in decarbonizing hard to abate sectors,” says Shrinal Sheth, Lead, Investing, World Economic Forum. “It is time for private equity to take its role in tackling the global crisis of climate change seriously.” europeanbusinessmagazine.com 35

CAN THE US FED

to rise or triggering a recession. The Fed and professional forecasters project that inflation will recede to below 3% and unemployment will remain under 4% in 2023.

The Federal Reserve will likely soon learn what gymnasts already know: sticking a landing is hard.

Our recent research, however, suggests that engineering a soft landing is highly improbable and that there is a significant likelihood of a recession in the not too distant future.

Prevent A Recession

W

ith inflation surging to a new 40-year high and continuing to accelerate, the Fed is expected to lift interest rates by a half-percentage point at the end of its next meeting on May 4, 2022. It will be the second of seven planned rate hikes in 2022 – following

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a quarter-point increase in March – as the Fed tries to cool consumer demand and slow rising prices.

By raising interest rates, the central bank is hoping to achieve a proverbial “soft landing” for the U.S. economy, in which it’s able to tame rapid inflation without causing unemployment

That’s because high inflation and low unemployment are both strong predictors of future recessions. In fact, since the 1950s, every time inflation has exceeded 4% and unemployment has been below 5%, the U.S. economy has gone into a recession within two years.

overheat, and prices rise sharply. In our assessment, measures of overheating – such as strong demand growth, diminishing inventories and rising wages – began to show in the economy throughout 2021. But a new operating framework that the Fed adopted in August 2020 prevented the Fed from taking action until sustained inflation was already apparent.

As a result, the Fed is way behind the curve today in responding to an overheating economy.

Sticking a soft landing is hard

Today, inflation is at 8.5% and unemployment is at 3.6% – suggesting a recession will be very hard to avert.

Behind the curve Inflation is fundamentally caused by too much money chasing too few goods.

In the short run, the supply of goods in the economy is more or less fixed – there is nothing that fiscal or monetary policy can do to change it – so the job of the Fed is to manage total demand in the economy so that it balances with the available supply.

When demand runs too far ahead of supply, the economy begins to

To bring down surging inflation, the Fed will now try to raise interest rates to curb consumer demand.

The resulting increase in borrowing costs can help slow economic activity by discouraging consumers and businesses from making new investments.

But it would come at the risk of causing major economic disruptions and pushing the economy into a recession. This is the soft landing: Interest rates rise and demand falls enough to lower inflation, but the economy keeps growing.

The history of engineering soft landings is not encouraging, however.

We found that every time the Fed has hit the brakes hard enough to bring down inflation in a meaningful way, the economy has gone into recession.

While some have argued that there have been several examples of soft landings over the last 60 years, including in 1965, 1984 and 1994, we show in our analysis that these periods had little resemblance to the current moment.

In all three episodes, the Fed was operating in an economy with significantly higher unemployment, lower inflation and lower wage growth. In these historical examples, the Fed also raised interest rates well above the inflation rate – unlike today, where inflation is at 8.5% and interest rates are projected to remain below 3% through 2023 – and explicitly acted early to preempt inflation from spiraling, rather than waiting for inflation to already be excessive.

Why is the labor market relevant for inflation?

One reason the Fed’s challenge is particularly difficult today is that the labor market is unprecedentedly tight, meaning the demand for workers is far outpacing the available supply of them. A tight labor market implies that companies need to raise wages to attract new workers.

Usually, the unemployment rate is used as an indicator for labor market tightness. Unemployment is very low today, and the Fed expects it to go even lower. But our research shows that the pressure to raise wages is even higher than indicated by the unemployment rate. The number of job openings are at all an all-time high, and workers are quitting at record rates – both of which are significant for driving up wages.

In a sense, wages are the ultimate measure of core inflation – more than two-thirds of business costs go back to labor – so rising wages put significant upward pressure on inflation.

Wage growth today is running at a historic rate of 6.6% and accelerating.

With wages rising so fast, there is little basis for optimism that inflation can slow to the 2% range targeted by the Fed. Our analysis shows that current wage growth implies sustained inflation above 5%, and that historically wage growth does not slow without significant increases in unemployment and a recession.

The odds of recession The U.S. economy today is facing additional inflationary pressures from higher grain and energy prices due to the Ukraine war and more supply-chain disruptions as COVID-19 forces new lockdowns in China. These factors threaten to exacerbate inflation even more over the coming year.

In our assessment, the inflation problem facing the Fed today is substantial and unlikely to be resolved without a significant economic slowdown.

Overall, the combination of an overheating economy, surging wages, policy delay by the Fed and recent supply shocks means that a recession in the next couple of years is certainly more likely than not. europeanbusinessmagazine.com 37

The algo problem

T

he world’s richest man, Elon Musk, is now Twitter’s largest shareholder after acquiring a 9.2% stake in the social media platform for just under US$3 billion (£2.3 billion). The announcement drove Twitter’s share price up 27%, and it continued to grow in after-hours trading.

This investor enthusiasm is not surprising. Social media platforms have been suffering lately thanks to newly developed pressures in their ecosystems. For example, Twitter, and also Meta, have been on the receiving end of Apple’s anti user-tracking system. This is costing them billions of dollars in lost revenues, causing both companies’ stock to languish for the past few months.

Musk’s arrival as Twitter’s largest shareholder will probably not make a difference to that issue, but it does address two other recent investor concerns. Firstly, Musk had been

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threatening to create a competing social media network where “freedom of speech” ideals would be adhered to.

The threat of a new popular entrant being created by a visionary tech leader now goes away. It also shows that Musk is coming in with a vision to drive change in the ecosystem, which is something not to be taken lightly.

Secondly, Musk’s presence has the potential to accelerate innovation and competitiveness at Twitter, which the company has not been able to do well enough in the past. With Jack Dorsey, the ex-CEO and co-founder of Twitter announcing his resignation a few months ago, there is enough breathing room at the top to make bold moves that could help the platform to grow beyond the foundation it resides on today. So, we know that Twitter investors are happy – but over the long run, will users be?

Twitter is the equivalent of a digital town square, where endless numbers of people with a myriad of opinions can air their thoughts. Yet unlike a traditional town square, the voices that we hear are determined by underlying, machine-learning algorithms.

These are geared towards maximising exposure and clicks, which drives advertising revenues. They are not geared towards enriching our lives with the most thoughtful, interesting points of view.

This inherent conflict between social and financial goals distorts who is heard and how frequently. This is exacerbated by the financial pressures for this town square to grow every financial quarter, which creates a pressure to constantly optimise the algorithms to attract as many clicks as possible. It also makes these algorithms a proprietary secret sauce, which creates an air of distrust and even mysticism around how such services operate.

Musk, who is famously a heavy Twitter user himself, has been vocal about making social media algorithms more open source. We’ll have to see what he does in practice, but it’s a promising starting point that could become a boon for Twitter.

Open-source algorithms would eventually enable users to choose not just what they see and don’t see on the platform, but how that happens. In such a future, one user might choose a right-leaning algorithm while the other chooses a left-leaning one.

The platform would not make the choice on these users’ behalf. Such an approach could boost Twitter’s traction, which has been flat for some time. Time would tell how this might affect the company’s revenues, but such a bold move might put pressure on Facebook and others to follow suit, potentially making social media better for everyone.

But whatever happens on that front, Musk will certainly be able to weigh if his removal from Twitter is ever on the cards. That is a huge defensive advantage for Tesla from losing such a significant source of marketing.

So while Musk can say he is focused on freedom of speech by buying this stake in Twitter, let’s not forget that he has the most to gain from the deal.

Decentralising the internet

Defending Tesla Tesla spends next to nothing on advertising. While the brand’s popularity is more than just Musk, the tech billionaire’s real-life antics, including his tweets, are an organic marketing machine worth billions of dollars for the automotive company.

But Musk still has to follow the rules on Twitter like everyone else and this includes being kicked out if he goes far enough. In the past few years, he has had the US Securities and Exchange Commission (SEC) step in over numerous tweets, issuing penalties on occasions. Over one particularly ugly episode in 2018, where Musk threatened via Twitter to take Tesla private at a price much higher than the share price at the time, he ended

up stepping down as Tesla chairman and agreeing that the company’s lawyers would oversee what he said on the platform.

Being Twitter’s largest owner won’t protect him from the SEC – and indeed there have been reports that he was late to notify the SEC about his latest move and submitted the wrong form (before later submitting the right one). There are also questions about whether his threats to launch an alternative platform ahead of buying the Twitter stake amount to market manipulation. With the SEC currently investigating him over tweets in November asking his followers whether he should sell his Tesla stake, he may now attract further ire from the regulator.

Most of the internet and its users are now controlled by a handful of companies including Alibaba, Microsoft, Meta, Amazon, Google and to a lesser extent Twitter. This has created a power hierarchy where many startups and investors actively avoid areas where these ever-growing ecosystems have extended their reach.

Musk and Tesla have so far been sheltered from this phenomena by focusing on disrupting the largely unconnected automotive industry, to much success. By buying into Twitter, Musk now has a small, but well established, beachhead from where he can take on these entrenched players.

His infamous penchant for having a longterm view and unconventional strategic choices is likely to mean that he will shake things up, even if it is not clear today how he will do so. Certainly it can be said, with a sense of surety, that Twitter is now a far more interesting company than what it was a few days ago.

europeanbusinessmagazine.com 39

Why Businesses which are being hit by tax hikes and higher energy costs will hurt the poor

I

n the UK, much attention has been paid to the fact that employees’ national insurance (NI) contributions have increased from April 6 – from 12% to 13.25% for earnings between £9,880 and £50,270 and then from 2% to 3.25% for earnings above that threshold.

It tends to be overlooked, however, that this is only half of the tax rise. Employers also pay NI on their employees’ salaries, and their contribution amounts to about half of what the government generates from this tax overall. The employers’ rate has just increased from 13.8% to 15.05%, which is payable on all wages above £9,100 a year. Unlike the rate paid by workers, there’s no upper band at which the NI contributions reduce.

Although these contributions are paid by businesses in the first instance and will threaten their profits and any shareholder dividends, to some extent the costs will be passed on – to employees, in the form of lower wages, and to consumers, in the form of higher prices for goods and services. This is hardly good news in the midst of the current cost of living crisis.

Between half and two-thirds of increases in employers’ NI are passed

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3.3% of their income on employers’ NI (this is wages plus the effect on consumer prices). Those in the top 10% of households pay only 0.9% of their income. Our own research supports this idea that poorer households are more likely to suffer from an increase in employers’ NI contributions.

Employers’ NI isn’t the only issue

on via lower wages, according to research findings. Overall, however, the extent to which increasing employers’ NI affects you depends on how much you earn: those with more money are proportionately less affected by the cost of consumer goods, and they have more bargaining power over their wages because they tend to be harder to replace.

Using the most recent data from the UK Office for National Statistics (ONS) from 2017/18, those in the lowest-earning 10% of households pay

When the same ONS data combined employers’ NI with VAT, stamp duty and several other indirect taxes, the disproportionate effect on the poorest households remained substantial: they paid 35% of their income on these taxes as opposed to 10% for the wealthiest households (see the chart below, which breaks down households into ten levels of income, from 1 being the poorest to 10 being the wealthiest).

This points to similar issues with all current cost rises and inflation being faced by businesses. For example, UK businesses’ energy bills are not protected by the price cap in the way that consumers’ are, so they are more exposed to swings in the price of oil and gas. This, too, is going to end up being disproportionately passed on to poor people.

Businesses will take yet another hit from HM Treasury next April when the main rate of corporation tax rises from 19% to 25%. In a recent study based on German data, around 51% of corporation tax hikes were borne by employees via wage cuts, with lowskilled workers, women and younger workers being hit the hardest.

Raising corporation tax is also likely to fuel inflation via increases to the cost of consumer products. A US study from 2013 showed that a 1 percentage point increase in the rate of corporation tax is likely to raise inflation by 0.4 percentage points. And inflation, again, tends to hurt poorer households more.

Global AI-powered Order-to-Cash platform

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lobal AI-powered Order-toCash platform, Sidetrade has today revealed global payment trends from the Sidetrade Data Lake.

Never-before-seen in the industry, the global payment trends - based on the payment behavior of 20.7 million buying companies worldwide - enable companies, governments, and analysts to make data-driven decisions in a time of uncertainty.

Developed by Sidetrade’s best-inclass engineers and leading data scientists since 2015, the Sidetrade Data Lake is the heart of Sidetrade’s innovative Order-to-Cash AI solutions to enhance cash optimization. It is used by data-driven companies (i.e. suppliers) to understand and predict buyer payment behaviors.

A unique tool within the Order-toCash market, it is a repository of data of past B2B payment transactions. It is comprised of more than 593 million

payment experiences worth a total of $4.6 trillion processed over the last three years from 20.7 million buyers worldwide. Today’s launch provides users with a free and interactive map into aggregated and anonymized insights from the Sidetrade Data Lake.

A resource for companies, governments, and analysts The publication of global payment trends from the Sidetrade Data Lake is an industry-first and comes as global uncertainties and increasing inflationary pressures place a greater emphasis on cash and credit management.

Updated on a quarterly basis, the global payment trends give users access to never-before-available insights into how buyers pay their suppliers depending on country and industry, enabling them to better monitor customers’ payment trends

across the world, predict payment behavior and decrease collection time. This provides invaluable support for effective decision-making and payment negotiations, thereby cutting days sales outstanding (DSO).

Sidetrade CEO, Olivier Novasque, commented: “Protecting and accelerating cash flow has never been so critical as bad debt risk and inflation are dramatically increasing everywhere. This can best be achieved if companies harness enough customer behavior data and become more forward-looking. Data science and artificial intelligence are essential to fighting against late payment. Since each buyer’s payment behavior is different, a dedicated and automated collection strategy is needed to be efficient.

“We’re delighted today to offer a first look into the Sidetrade Data Lake and bring the power of true AI to companies at a time when they need it the most.”

Innovation and digital transformation to support businesses The Sidetrade Data Lake harnesses the power of Sidetrade’s next-generation AI technology (aka Aimie) to europeanbusinessmagazine.com 41

predict the likelihood that a customer will pay late. Aimie then recommends customer-specific collection strategy based on buyer payments patterns, and other data insights.

Sidetrade Chief Product Officer, Rob Harvey, added: “In B2B companies, every CFO wants industry benchmarking data on their customer payments; they thrive on data. But how well do finance teams actually know their customers? Do they know who is likely to pay them late? Which industries wait the longest to get paid? Now, CFOs can finally understand their customer behaviors, better understand their competition, and make smarter decisions; much like Tesla uses driver data to make innovative changes, enhancing and optimizing the driver experience.

“With the Sidetrade Data Lake, we unlock enterprise data and simplify access to payment data management.

At Sidetrade, we are committed to saving time for businesses, exploring smart efficient processes in the Order-to-Cash cycle, assisting in decision-making, and sharing information in real-time. Sidetrade is the Waze for business payments!”

The Sidetrade Data Lake is the result of years of hard work of collecting, cleaning up, matching, and enriching huge volumes of data. Transactions between Sidetrade’s customers (the suppliers) and their buyers within the Sidetrade Data Lake are aggregated, anonymized, and layered with algorithms to determine a predictive payment metric for each analyzed buyer company. This is the engine behind Sidetrade’s AI technology. It takes decision-making support to the next level, providing data-based recommendations on the most effective collection, dispute resolution and risk control actions.

Mark Sheldon, Chief Technology Officer of Sidetrade: “We are proud to offer a first look at our Data Lake today and showcase the depth of our data, technology and true AI capabilities.

“What is particularly exciting about the Sidetrade Data Lake technology, is the fact we’ve not only succeeded in getting large amounts of data cleansed, matched and into one place, but that we’ve also layered that with next-generation AI and predictive capabilities, and 42 europeanbusinessmagazine.com

are able to measure its value. This latter part in particular is something that many companies often struggle with, and why we’re proud to be able to clearly demonstrate the value to our customers.”

Best and worst payment behaviors around the world revealed Leveraging its Data Lake, Sidetrade reveals the best and worst markets and industries for late payments over the last three years.

A global snapshot On average, companies around the world pay supplier invoices 21 days late – taking the length of time between an invoice being issued to getting paid, to a total of 53 days on average.

Scandinavian businesses tend to pay the quickest overall, in particular Sweden, with a delay of just 7 days, well below the global average.

Getting back to pre-pandemic unpaid invoice ratios Over two years on from the start of the pandemic, the US, France, and Italy still haven’t fully reverted back to their pre-pandemic unpaid invoice rates according to the Sidetrade Unpaid Invoice Tracker. Conversely, Belgium, Spain, the UK, and the Netherlands now have better unpaid invoice ratios than before the start of the pandemic.

France holds the title for the worst amongst the seven countries tracked, with 25% of the value of all overdue invoices as of April 16, 2022.

27-day delays in the US US companies rank tenth globally for longest payment delays, with a mean of 27 days.

The industry with the shortest payment delays in the US is Manufacturing: 22 days. The worst industries are Financial Services & Insurance, and Leisure & Hospitality: 30 and 31 days, respectively.

Payment disparities in Europe Across Europe, there are significant disparities in payment delays from country to country, ranging from 7 days (Sweden) to 26 days late (Ireland).

On average, it takes companies in Europe 45 days to collect payment – a mean delay of 16 days.

UK & Ireland exceeding European average for payment terms and delays Companies in the UK and Ireland are among the top four worst in Europe for payment delays, with means of 21 and 26, respectively. This is despite both countries having higher payment terms (34 days in the UK, 31 days in Ireland) than the European average of 29 days.

In the UK, the industries with the shortest payment delays are Utilities & Energy at 19 days, and Retail & CPG at 20 days. Industries in the UK with the longest payment delays are Financial Services & Insurance at 25 days, and Public Services, HR Services and Transportation & Logistics at 24 days.

Looking at the Sidetrade Unpaid Invoice Tracker, almost all UK industries appear to have recovered from the pandemic in terms of late payments, most showing pre-pandemic unpaid invoice rates. The exceptions are, Public Services, Other Services and the Food industry. The latter has risen from 14% at pre pandemic levels, to 21% of invoice values being deemed late (10+ days after their due date) as of 16 April 2022.

France is amongst the worst performing European countries for late payments. Their sectors with the shortest payment delays are Retail & CPG, and Manufacturing, both at 17 days.

The worst industries in France for late payments are Leisure & Hospitality, and Public Services at 24 days.

France still hasn’t recovered from the Covid-19 crisis when it comes to late payments. The rate of unpaid invoices across every industry in France is still above pre-pandemic level, at 22.7%.

Josie Dent, Managing Economist at Centre for Economics and Business Research (Cebr): “After the hit businesses took during the pandemic and lockdowns, which caused a significant rise in late payments, the global economy is now experiencing a new source of pressure. Across the world, inflation is accelerating, driven by energy prices and supply chain disruptions. While both of these factors were already at play at the start of the year, the conflict in Ukraine and sanctions on Russia, as well as recent lockdowns in key Chinese cities have further added to the inflationary environment and the outlook for price growth. These increasing costs for fuel, energy and raw materials add to businesses’ financial strain at a time when many are still recovering from the pandemic, making late payments more likely.

“Therefore, as businesses’ bills come due, often at higher prices than previously,

many will find themselves having to prioritize which they can afford to pay immediately, and which will need to wait.

“In the US, consumer price inflation rose to 8.5% in March, up from just 2.6% a year earlier. In the meantime, the average share of unpaid invoices by value rose from 14.5% on 31 March 2021 to 17.5% on the same day in 2022. Businesses will also be affected by the Federal Reserve’s interest rate rises expected this year. In March, the Fed voted to increase interest rates for the first time since 2018, with projections pointing to a further six rate rises in 2022 alone, raising costs for those with debt.

“Businesses in other countries are also facing rising costs and interest rates. The share of late payments by value stands at 24.7% in France in the latest data (16th April), compared to 21.0% at the start of the year, while inflation picked up to 5.1% in March.” europeanbusinessmagazine.com 43

Davos Agenda Closes with Calls for New Models of Public-Private Cooperation

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he latest Davos Agenda closed In January 2022 following headline-making dialogues with heads of state and government, international organizations, business and civil society.

The week-long meeting convened leaders on “The State of the World”.

It was the first global platform of the year and focused on driving concerted action among key global stakeholders.

“We are seeing challenges mounting from supply chain disruptions to tectonic shifts in labour markets, to inflation figures which are of concern to policy-makers and individuals alike. The year ahead is a crucial one to work together, rebuild trust and shape a better and more inclusive future for all,” said Klaus Schwab, Founder and Executive Chairman of the World Economic Forum.

World leaders spoke on the global economic outlook, energy transition, social justice, healthy futures and resiliency in special address. In order of appearance this week: “We need to embrace cooperation and jointly defeat the pandemic. Confronted by the once-in-a-century pandemic, which will affect the future of humanity, the international community has fought a tenacious battle,” said Xi Jinping, President of the People’s Republic of China. «Facts have shown once again that amidst the raging torrents of a global crisis, countries are not riding separately in some 190 small boats but are rather all in a giant ship on which our shared destiny hinges. Small boats may not survive a storm, but a giant ship is strong enough to brave a storm.»

“In the midst of new challenges, the world today needs new avenues, new resolutions. Today, every country in the world needs cooperation with each other more than ever before,” said Narendra Modi, Prime

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Minister of India. “Our multilingual, multicultural environment is a great strength that teaches us not just to think of ourselves in times of crisis but to work in the best interests of the world.”

“Turning this ship around will take immense willpower and ingenuity from governments and businesses alike, in every major-emitting nation,” António Guterres, Secretary-General, United Nations said. “We see a clear role for businesses and investors in supporting our net-zero goal.”

“In order for the world to meet the 2050 net-zero emission goal, we need technologies that do not yet exist, we need inventions that do not exist yet,” said Naftali Bennett, Prime Minister of Israel.

“A key focus of my administration will be the revitalization of Japan through a new form a capitalism,” said Kishida Fumio, Prime Minister of Japan. He emphasized that the time has come for “historic economic and social transformations” and that Japan will pioneer a new form of public-private partnership, with leaders of government, industry and labour all working together to develop paradigm-shifting policies.

“Some will try to tell us dialogue and compromise are forms of weakness, said Olaf Scholz, Federal Chancellor of Germany. “Some will try and pitch climate action against prosperity.

Some will argue that social progress hampers economic growth. Some will try to divide us. The truth is the progress we want will only occur if we overcome these divisions. Working together is the only way and restoring trust is our goal.”

Joko Widodo, President of Indonesia, spoke on the strengthening of global health resilience and the need for advanced economies and the G20 to support a renewed global

architecture, “The costs will be much lower than the losses we sustained due to the vulnerability of the system during the pandemic,” he said.

“Europe’s global semiconductor market share is only 10%. And today, most of our supply comes from a handful of producers outside Europe. This is a dependency and uncertainty we simply cannot afford,” said Ursula von der Leyen, President of the European Commission. “We have no time to lose. And this is why I announce here today that we will propose our European Chips Act in early February.”

“The lesson of these times is that supply chain resilience requires a new partnership between countries, governments and businesses,” said Scott Morrison, Prime Minister of Australia.

Access to COVID-19 vaccines continues to pose a serious problem for Africa, with fewer than 10% of populations fully vaccinated in most countries, said Yemi Osinbajo, Vice-President of Nigeria. He called for patent waivers to permit African countries to manufacture vaccines locally. “Now is

Standards Foundation as a member of the Technical Readiness Working Group. In so doing, the Forum contributed to the running start of the International Sustainability Standards Board supporting the creation of the standards prototypes that will now go through a standard-setting process.

• Plastic waste was in the spotlight as world leaders this week highlighted how they are moving fast to fight the climate crisis.

Forum-supported companies are rolling out innovative reuse models to protect the planet.

• Nature-positive practices, those that add value to nature, could contribute $1.9 trillion to the economy a year and 88 million jobs by 2030.

• Cities can create 60 million jobs and save 50% on new infrastructure projects by adopting naturebased solutions. Nearly half of city GDP, $31 trillion, is at risk of disruption from nature loss. a good time to test global will,” he said, in building international cooperation to prepare for new, possibly worse pandemics to come.

“We aren’t just focused on achieving a high top line growth number that is unsustainable,” said Janet L. Yellen, Secretary of the Treasury of the United States of America. “We’re instead aiming for growth that is inclusive and green. The economic moment is well suited to accommodate such a modern, supply side expansion.”

During the Davos Agenda, pioneering new research and project milestones were released to support stakeholders: • Sustainable finance is increasing but the funds are not always reaching those most in need – see how public-private collaboration can facilitate sustainable investment for development.

• More than 100 million have been impacted by the work of the Schwab Foundation for Social Entrepreneurship. The foundation includes over 400 of the world’s leading social innovators operating in over 190 countries.

• Davos Alzheimer’s Collaborative is a leading global initiative to accelerate progress on the discovery, testing and delivery of precision interventions – it has created a new global system to reduce the time and cost of clinical trials.

• A new set of policy enablers to boost investment and innovation in digital economies was released to ensure digital transformation is inclusive and sustainable.

• Quantum science promises to disrupt the future of business, science and government – the first quantum computing guidelines launched to help leaders build an equitable framework.

• The global digital economy has surged off the back of the COVID19 pandemic, but so has cybercrime – ransomware attacks rose 151% in 2021 – the new annual The Global Cybersecurity Outlook 2022 examined how leaders can close the cyber gap and build resilience.

• The Forum worked closely with the International Financial Reporting

• More partners announced plans to adopt nature-based solutions as part of the Forum’s 1t.org platform bringing total global pledges to over 30 companies committing to conserve, restore and grow more than 3.6 billion trees in over 60 countries.

• Only 20% of companies both disclose their full value chain emissions and have emissions reduction targets in place. Winning the Race to Net-Zero outlines how businesses can close the emissions gap and stay competitive.

• A new accelerator dedicated to shaping the future of crypto-enabled environmental, social and governance (ESG) efforts aims to bring key players and industry leaders together to shape a more inclusive future.

• The Belt and Road Initiative offers a new development paradigm through investment in green infrastructure – a new insight report highlights the role of the financial sector and how to capitalize on the growing global appetite for green investment europeanbusinessmagazine.com 45

The truth about the ‘great resignation’

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he great resignation is a buzzphrase that first appeared in May 2021, and has struck fear into the hearts of employers ever since. Coined in the US, the term refers to the unprecedented rise in the number of workers resigning from their jobs following the pandemic.

There has since been a huge amount of research trying to work out why this has happened. Are workers quitting work entirely, as the pandemic makes us reevaluate our priorities?

Or are they quitting to pursue their dreams in a different career?

We’ve been looking at to what extent this great resignation narrative holds true in the UK using data from the Labour Force Survey by the Office for National Statistics. “Great” of course has two meanings and we’ve looked at both the magnitude of changes in resignations and whether these changes were a positive force for workers’ career progression. We also looked at whether any rise in resignations may have worsened the labour shortages faced by firms.

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The rise in resignations There was indeed a great resignation in the UK, according to the data.

The chart below shows that resignations rose sharply from the end of 2020 and significantly exceeded their pre-pandemic levels in the final quarter of 2021.

However this is not because workers decided to abandon work and leave the labour force. Instead, we are seeing a rise in workers resigning primarily to start new jobs for other employers. The only age group where there has been an increase in people leaving the labour force has been among the over-50s, who have been retiring in larger numbers than normal.

Note: All data is from the two-quarter longitudinal Labour Force Survey. The series shows the number of workers (aged 16-65) who resigned their job in the previous quarter, by destination post resignation. A stable seasonal filter is applied to all series. ‘Going to inactivity’ means they are no longer working. Authors provided

So, why have people been resigning to work for other employers in above-average numbers? Some commentators have suggested that the rise has been propelled by individuals looking to make drastic career changes, as workers reevaluate their lives after the pandemic. In fact, this is not borne out by the data.

The next chart breaks down UK resignations in 2021 into workers moving to higher-skill occupations (upgrading), lower-skill occupations (downgrading) or staying in the same occupation. As you can see, the rise in resignations was driven overwhelmingly by workers resigning to move sideways into new jobs in the same occupation.

Notes: all data is from the two-quarter longitudinal Labour Force Survey. The series shows the number of workers (aged 16-65) making a given occupation transition after resigning their last job and starting a new one in the previous quarter. A stable seasonal filter is applied to all series. An occupation upgrade (downgrade) is

UK resignations 2019-21

and will therefore suffer more from the cost of living crisis as wages fall in real terms.

The employers’ perspective

Occupation changes, 2019-21

defined as a worker moving to occupation with a higher (lower) Standard Occupation Code as these codes have natural interpretation as a skill ranking. The codes are: 1. Managers and senior officials, 2. Professional occupations, 3. Associate professional and technical occupations, 4 Administrative and secretarial occupations, 5 Skilled trades occupations, 6 Child and Animal Care, Leisure and Other Service, 7 Sales And Customer Service Occupations’, 8 Process, Plant And Machine Operatives, 9 Elementary. Authors provided

Even if workers did not substantially alter their career trajectories with these moves, it has been good news for their wages. Workers moving jobs within the same occupation have historically achieved higher wage gains than those staying at the same employer, and sure enough in 2021, workers moving to new employers saw higher gains than those that did not move.

For workers that have changed jobs, this will be providing some respite against the rising cost of living. Nonetheless the overwhelming majority of workers have stayed in their job

Could the rise in resignations be contributing to rising labour shortages?

The latter half of 2021 saw many reports of firms facing difficulties filling vacancies, raising the possibility that rising resignations could be causing these recruitment difficulties. We found that there was a higher rate of resignations among workers coming from the five “shortage” sectors finding it hardest to recruit people: construction, manufacturing, accommodation, health, and food, administration and support.

However, most workers were resigning to go to new jobs within the same industry, so they are unlikely to be the root cause of employment shortages within their sectors. Instead, the reasons for recruitment difficulties differ by sector. For example, the manufacturing sector has been hit by early retirements, whereas the accommodation and food sectors are suffering from a lower inflow of younger workers.

Instead of being the cause, the increases in resignations in these five sectors are more likely to be a symptom of their labour shortages: employers “poaching” staff from rivals by offering better conditions as the economy rebounded from the depths of the pandemic. Losing staff will obviously have created additional pain for employers who were already struggling to recruit.

In sum, contrary to what some might be hoping, the so-called great resignation of 2021 has not significantly improved the career paths of workers.

Workers who have been willing and able to change employers have been rewarded with improved pay, while wage growth for those who have stayed put will be slower and insufficient to offset large increases in the cost of living.

Finally, it’s worth noting that the rates of vacancies, resignations and wage growth all slowed in the fourth quarter of 2021, which is a signal that the rebound in labour demand has faded.

So if you weren’t part of the great resignation, you may already be too late. europeanbusinessmagazine.com 47

Things that economists know, but sound wrong to other people

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conomists have shaped the modern world in many ways. Governments make policy choices in response to the data that we produce about things like GDP and inflation. Social media companies use our insights about human behaviour to create features that encourage people to use their platforms. And we’re at the heart of everything from incentivising renewables developers to build more wind farms to regulating the behaviour of tech giants like Google or Facebook.

Yet this is only one side of the story.

A curious thing about our profession is that when we academic economists largely agree with each other on something important, the rest of the world often completely ignores our conclusions. Are these findings too counter-intuitive, too impractical, or something else? Here are five examples so that you can decide for yourself:

A lowest price guarantee means you will end up paying too much Retailers make these kinds of price pledges all the time: if you find this item cheaper somewhere else, we will match the price. I see it everywhere 48 europeanbusinessmagazine.com

from grocery stores to furniture shops to pharmacies. Yet while such a guarantee seems at first sight to benefit consumers, decades of evidence – from tyre retailers to grocery stores – shows that they are mostly a subtle way for retailers to collude on maintaining high prices.

When a retailer offers a low price, it mainly does it to attract consumers by being cheaper than its competitors. But by committing to a price match, each time your competitor offers a discount to your price, your customers know they can come to you and benefit from the same price. The competitor therefore has nothing to gain from offering a discount and prices remain high. Interestingly, it’s illegal for competitors to collude with one another to fix prices – yet price-matching effectively does exactly that, and it’s legal everywhere.

Housing subsidies given to tenants often benefit landlords One of the first principles a student of economics learns is that people receiving a subsidy are not necessarily the ones who benefit from it. For example, in a study in France back in

2006, property owners were found to be pocketing more than three-quarters of housing subsidies being given to tenants.

The reason was that the subsidies motivated families to move into larger houses, and for students in those families to become independent earlier. Since the number of houses on the market remained fairly constant, the main effect of this extra demand was to increase rental prices both for larger homes and for student accommodation – thus transferring taxpayer money to those who needed it the least.

Compare this with a study of the effects of cuts to housing benefits in the UK in 2011-12. Households renting larger houses – in a reverse of what happened in France – demanded smaller ones, and this drove prices down and hurt landlords the most. On the other hand, the poorest households already lived in rental accommodation that was too small for their

of your hands the possibility of changing your mind later. This is why central banks are independent of governments: so that investors believe they are not playing with interest rates for electoral gains.

In most matters, however, governments are reluctant to delegate decision-making to independent institutions. In France, for instance, several governments spent billions of euros between 2009 and 2017 on the infrastructure needed to implement a tax on trucking, only to back down entirely in the run-up to the presidential election. Had the implementation of the tax been delegated to an independent agency, the fiasco would never have happened.

In another example, the UK recently launched the shared prosperity fund to replace EU-allocated funds to its poorest regions. The new system is much more centralised than before and it is hard to know how much previous funding will be matched. Centralised regional development funds can also be prone to favouritism and political patronage, which in the UK would reduce the credibility of the government in its plans to “level up” the country. needs so could not realistically move to something smaller. For this reason, they had no choice but to absorb the benefits cut themselves.

In both the French and UK examples, instead of housing subsidies, the government should have simply given the renters money and let them decide what to do with it. That way, people would have chosen the most suitable accommodation and spent anything left over on other things, such as better food, education or healthcare.

Cost of living concerns are never a valid reason to avoid taxing pollution Gas and fuel prices have soared following the Russian invasion of Ukraine. Motorists are having to pay much more to fill their tanks, while many households are struggling with their power bills.

To fight this crisis, European countries such as France have been offering fuel

rebates to consumers. This helps people, but it is also great news for energy suppliers. In many cases the supplier is Russia, so it feeds directly into Vladimir Putin’s military budget and does nothing to help carbon emissions.

Most economists would instead place new tariffs on Russian oil to price in the cost of financing the war and induce businesses and consumers to switch to other energy sources whenever possible. The revenues raised by the tariffs can then be used to help people directly, be it by lowering other taxes or by financing social security.

In the UK, we are doing the exact opposite to this. Consumers are having to pay more national insurance while fuel duties are being cut.

Politicians are often more credible when they delegate To convince people to trust you to do something, one solution is to take out

Investors consistently beating the market are probably doing something illegal There is no magic formula to predict short-term changes in the value of a financial asset. Sure, some investments return more money than others, and financial bubbles certainly exist, but anyone asking you to trust them to make more money than the market in the long run is either lying or knows something the rest of the world does not.

If it’s the latter, we call it insider trading. This is illegal, although it still happens. During the 2008 financial crisis, for instance, politically connected investors who knew where the government would intervene made much more money than others did. Stories about financial geniuses may be much more appealing than these kinds of realities, but that doesn’t mean they are true. europeanbusinessmagazine.com 49

What the explosion in Uranium prices means for the nuclear industry

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t is a year since Horizon Nuclear Power, a company owned by Hitachi, confirmed it was pulling out of building the £20 billion Wylfa nuclear power plant on Anglesey in north Wales. The Japanese industrial conglomerate cited the failure to reach a funding deal with the UK government over escalating costs, and the government is still in negotiations with other players to try and take the project forward.

Hitachi’s share price went up 10% when it announced its withdrawal, reflecting investors’ negative sentiment towards building complex, highly regulated large nuclear power plants. With governments reluctant to subsidise nuclear power because of the high costs, particularly since the 2011 Fukushima disaster, the market has undervalued the potential of 50 europeanbusinessmagazine.com

this technology to tackle the climate emergency by providing abundant and reliable low-carbon electricity.

Uranium prices long reflected this reality. The primary fuel for nuclear plants was sliding for much of the 2010s, with no signs of a major turnaround. Yet since mid-August, prices have surged by around 60% as investors and speculators scramble to snap up the commodity. The price is around US$48 per pound (453g), having been as cheap as US$28.99 on August 16.

So what lies behind this rally, and what does it mean for nuclear power?

The uranium market The demand for uranium is limited to nuclear power production and medical equipment. Annual global demand

is 150 million pounds, with nuclear power plants looking to secure contracts roughly two years ahead of use.

While uranium demand is not immune to economic downturns, it is less exposed than other industrial metals and commodities. The bulk of demand is distributed across some 445 nuclear power plants operating in 32 countries, with supply concentrated in a handful of mines. Kazakhstan is easily the largest producer with over 40% of output, followed by Australia (13%) and Namibia (11%).

Since most mined uranium is used as fuel by nuclear power plants, its intrinsic value is closely tied to both current demand and future potential from this industry. The market includes not only uranium consumers but also speculators, who buy

Hang on tight

when they think the price is cheap, potentially bidding up the price. One such long-term speculator is Toronto-based Sprott Physical Uranium Trust, which has bought nearly 6 million pounds (or US$240 million worth) of uranium in recent weeks.

Why investor optimism may be rising While it is widely believed that nuclear energy should play an integral role in the clean energy transition, the high costs have made it uncompetitive compared with other energy sources.

But thanks to sharp rises in energy prices, nuclear’s competitiveness is improving. We are also seeing greater commitment to new nuclear power stations from China and elsewhere.

Meanwhile, innovative nuclear technologies such as small modular reactors (SMRs), which are being developed in countries including China, the US, UK and Poland, promise to reduce upfront capital costs.

Combined with recent optimistic releases about nuclear power from the World Nuclear Association and the International Atomic Energy Agency (the IAEA upped its projections for future nuclear-power use for the first time since Fukushima) this is all making investors more bullish about future uranium demand.

The effect on the price has also been multiplied by issues on the supply side. Due to the previously low prices, uranium mines around the world have been mothballed for several years.

For example, Cameco, the world’s largest listed uranium company, suspended production at its McArthur River mine in Canada in 2018.

Global supply was further hit by COVID-19, with production falling by 9.2% in 2020 as mining was disrupted.

At the same time, since uranium has no direct substitute, and is involved with national security, several countries including China, India and the US have amassed large stockpiles – further limiting available supply.

When you compare the cost of producing electricity over the lifetime of a power station, the cost of uranium has a much smaller impact on a nuclear plant than the equivalent effect of, say, gas or biomass: it’s 5% compared to around 80% in the others. As such, a big rise in the price of uranium will not massively affect the economics of nuclear power.

Yet there is certainly a risk of turbulence in this market over the months ahead. In 2021, markets for the likes of Gamestop and NFTs have become iconic examples of speculative interest and irrational exuberance – optimism driven by mania rather than a sober evaluation of the economic fundamentals.

The uranium price surge also appears to be catching the attention of transient investors. There are indications that shares in companies and funds (like Sprott) exposed to uranium are becoming meme stocks for the r/WallStreetBets community on Reddit. Irrational exuberance may not have explained the initial surge in uranium prices, but it may mean more volatility to come.

We could therefore see a bubble in the uranium market, and don’t be surprised if it is followed by an over-correction to the downside. Because of the growing view that the world will need significantly more uranium for more nuclear power, this will likely incentivise increased mining and the release of existing reserves to the market. In the same way as supply issues have exacerbated the effect of heightened demand on the price, the same thing could happen in the opposite direction when more supply becomes available.

You can think of all this as symptomatic of the current stage in the uranium production cycle: a glut of reserves has suppressed prices too low to justify extensive mining, and this is being followed by a price surge which will incentivise more mining. The current rally may therefore act as a vital step to ensuring the next phase of the nuclear power industry is adequately fuelled.

Amateur traders should be careful not to get caught on the wrong side of this shift. But for a metal with a half life of 700 million years, serious investors can perhaps afford to wait it out. europeanbusinessmagazine.com 51

Aciety Is Solving The Talent Shortage In The Blockchain Technology Sector

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here has long been an increasing lack of talent when considering the programming needs surrounding new technologies such as Blockchain.

This shortage has existed due to what can only be described as rapid changes in the field due to a renewed drive in digital technological changes, which in fields like blockchain has created a steep rise in costs that made specialist staff and maintaining them full time difficult, especially when considering the decreased workload which has accompanied such changes.

The financial position of businesses has also been further impacted by the impact of the Covid-19 pandemic, where the costs incurred from such technological change only accelerated when there was no longer the demand to keep companies being able to afford the workforce. To detach themselves from such burden, business methods have now focused on more budget friendly means such as outsourcing, in the attempt to become more agile and better serve their clients on a smaller spending cap.

But solving the issue isn’t quite that simple, as the focus of the business is affected by these changes in the state of operations. Tackling the problem focuses on the ability to sourcing staff with a deep talent focus that allows businesses to connect IT teams with corresponding software teams quicker and with less cost or overheads versus traditional means. Digitalisation has created the ability to innovate and become more resilient with more competition of a higher quality and the in demand for staff able to work effectively, making it much harder to attract the right calibre of staff in an affordable manner due to the lack of these skilled workers. This makes the ability to partner with firms providing such talent crucial, needing to create solutions that

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allow this need to be filled as soon as the demand exists, especially as competitors may have the ability to move quicker and dominate.

Outsourcing has now become the need to survive, rather than being the innovative alternative it was once seen to be. More traditional, fixed businesses are no longer able to avoid the uptake, with the pandemic opening the minds of many, as the obligation to work from home meant that 51% now apply that arrangement to their situation, up from 31% and expected to reach up to 81% by the time the market finally settles.

Development partnerships are helping to fix the issues faced in the past, and companies such as Aciety have provided a pre-vetted supply solution that responds effectively to the needs of the market, while minimising the security risks and the concerns surrounding ineffective staff, leading to employers feeling less like they are compromising on their aims by changing their existing operational strategies.

This has meant that the pressure of the developing market is being settled by the constantly growing list of working partners who can alleviate the risks that they could be operating more affectively whilst continuing to challenge and be effective in their practices.

In fact, there is a reduced risk factor through taking the opportunity to outsource, with it creating flexibility and agility in market movements, renewing focus into the necessary outcome without needing to personally control or personally run the process of motivating and assessing the workers responsible for the output.

This creates a system of proactive governance that allows you to keep project control, even while it is out of your hands, building systematic structures that increase the level of attainment while you reduce the personal

workload and need to control the situation. Software application development is seen as the most frequently outsourced function among the many sectors of IT, therefore helping to evidence the future of the industry, with expectations meaning that the market is expected to grow continuously until 2025, which will signal 10 years of consistent development.

The question of when companies will need to outsource is one with many variable factors, many of which already face the majority of those operating in the market today.

These could range from the lack of available staff when dedicated developers are needed, having only short-term contract needs, lacking any real talent pool and when the

demand for your services strikes quickly.

Some of the most important factors to consider are filling skills gaps, where expertise can be sourced at lower costs, when businesses are in a period of acceleration and when the cost is a significant factor. Acceleration comes as over 80% of the companies need to increase their innovation

to be resilient and competitive to meet market needs, whilst cost is crucial when reducing time and expense expenditure, while retaining access to equal or greater skillsets.

With companies such as Aciety providing such complete solutions, outsourcing meets the need for many businesses who look to address their needs for next level talent solutions. europeanbusinessmagazine.com 53

European Business Magazine talks to

Esha Mansingh

European Business Magazine talks to Esha Mansingh, our front cover feature and winner of most influential woman in Africa 2022 from our readers. Esha serves on the Executive Committee of Imperial Logistics (Imperial) as the Group Executive responsible for corporate affairs, ESG and sustainability, internal & stakeholder communications, brand, sponsorships and investor relations.

You’re currently the only woman serving on Imperial Logistics’ executive committee responsible for the key stakeholders’ sustainability, communications and integrated reporting. Can you tell us and the readers how you integrate sustainable practices and ESG principles into Imperial strategies, and how you think that can be adapted towards a more inclusive and sustainable world?

First of all, any business operating in today’s world is no longer just about making money and the profit component. Successful businesses today have to focus equally on their people who make the business and then on being a responsible corporate citizen but also equally giving back to our planet where we source our scarce resources and emit pollution.

Based on that premise, environmental, social and governance (ESG) practices are no longer just a nice to have in any business strategy. Imperial has followed this route where we elevated ESG, which was previously just an element of sustainability that was done in bits and pieces across the group, to become a focused pillar of the group strategy.

The moment you encompass ESG practices into the business strategy, it automatically puts focus on those elements up front and top of mind for our entire management team and our people.

What’s important is also when you think about ESG, it’s about many considerations, but most importantly, in our African geographical context, it’s about localisation and our clients’ expectations. When you’re deciding what strategies to focus on from an ESG perspective, it has to be co-created because it can’t be a top down 54 europeanbusinessmagazine.com

dictation approach. It has to be in alignment with business who are the people that are executing at operations level with local stakeholders, in addition to aligning with what the corporate wants to achieve from a broader group strategy perspective.

The moment you co-create your ESG strategic focus areas together, it automatically contributes to being integrated into daily business practices.

That was what we were trying to achieve as Imperial, for everyone in the business to understand, as we say ‘ESG starts with me’. No matter what assets we have in the business, every bit that I can contribute towards sustainability improvement will be for the betterment of our business, our planet, as well as all our stakeholders and the profit will then come.

The way in which we started to integrate ESG into our business practices is that ESG is a key pillar of our Group strategy at Imperial and we are measured by it, so as far as even our executive committee is remunerated on ESG targets on a short-term incentive perspective, but we have also gone to the point of incorporating ESG into the client value proposition for Imperial. It’s a key selling point because we’ve learnt that blue-chip clients and principals will not do business with Imperial and other businesses today if we don’t have the right ESG practices and support our key stakeholders to achieve their ESG ambitions too.

It is clear in today’s world, ESG practices are absolutely key, that it’s a win-win situation for the planet, the stakeholders’ profit and to be fully transparent? Did you push that ESG proposition to the boardroom to make sure it was at the forefront of their decision-making?

Our previous board at Imperial (the listed company) dissolved, when Imperial was bought out through the transaction with DP World, which became unconditional in March 2022.

This means we have now constituted a new board and we will work with DP World to align on its ESG practices.

Talking about this from a purely Imperial perspective, we always had a

focus on adhering to the Companies Act and highest level of governance, and then being a listed company, to have a social, ethics and sustainability (SES) committee. Many years ago, the primary focus of the SES committee, represented by our board members, was safety. Being a mainly logistics business and operating particularly in South Africa at that stage with a large footprint and a large number of trucks on the roads, safety was a key focus area.

We as a management team with the approval of the board felt strongly that ESG should no longer be in bits and pieces but should be given the focus at the right level as a strategic imperative for the business, which the board strongly supported.

That narrative for the SES meetings since ESG became top of mind for everyone changed significantly from being purely around safety discussions in the board committee meetings to a broader climate change and social impact agenda - how does Imperial react to climate change, let’s look at our social initiatives, and how do we want to be a more transformative business in addition to prioritising the safety of our people and operations.

We’ve always adhered to the highest level of governance across our jurisdictions of operation but how can governance become a key competitive advantage? It really elevated and changed the discussions and the decision-making that took place at boardroom level when it came to ESG particularly. europeanbusinessmagazine.com 55

Imperial is an African focused provider of integrated market access and logistics solutions. With a focus on the following key industries - healthcare, consumer, automotive, chemicals, industrial and commodities - Imperial takes its clients’ and principals’ products to some of the fastest growing and most challenging markets in the world.

Through taking the step further to alleviate ESG not only at group executive level but also at the board committee demonstrated it is important enough for us to now remunerate our senior leadership in terms of ESG targets as part of the STIs. That’s the fundamental mindset shift we have had to make.

It also now makes us very conscious about the role we play, not just as Imperial in our markets and in our society, but also the role of our business in our countries and continents, especially as part of the broader ‘just transition’ and the climate change agenda, and the objective set out by COP26 for example.

We all have a part to play in that and we have a part to play in our clients’ and principals’ supply chains and how quickly we start to look at transitioning, through our energy sources and our underlying ESG practices.

So it’s not just about Imperial anymore.

For us, it’s much broader than that in terms of the role we have to play and the Board recognised that. Our management teams recognise that.

What’s also great is being in a business that has 25,000 people in Imperial alone across 26 countries and through our ‘ESG starts with me’ change management campaign that we’ve been embarking on to change the mindset of our people to do their part, we have gained ESG champions across the business.

People that have not necessarily come from a sustainability background or an ESG background or an HR background but people that have put their hands up and said, ‘We believe in this and we will help Imperial play our part.’

When you create ambassadors as employees, the ESG story doesn’t stop with Imperial. They take it to their families and the people they interact with. Through that, you start changing the narrative as an industry and as the world collectively 56 europeanbusinessmagazine.com

Outside of Imperial’s boardroom, we have also been very deliberate in being part of the broader transition conversations as Imperial. We’ve been participating in many business forums and associations to give our input and what it would take for the transitions to happen in order for us to all be part of the climate change transition.

What are some of the major initiatives Imperial have undertaken to improve ESG in terms of stakeholders, communities and supply chains? What would you say the top three are?

The first priority for us as a logistics company is to investigate alternative fuel and trucking technologies. We’ve done a lot of work and we’ve already got in place some pilot projects with some of our clients and customers– piloting hydrogen, LNG and CNG vehicles in South Africa; we’ve already got Euro 6 vehicles in our European operations, and we recently launched Euro 5 vehicles in our Namibia operations.

Some of these are in the pilot phase in collaboration with partners and if these pilots are successful and we are all playing our part in ensuring that it is, going forward we will consider introducing alternative fuel vehicles into

Esha has many accolades to her name. Not only is she serving as Young Global Leaders within the World Economic Forum (WEF) 2022, she is also serving as the co-chairman on the WEF New Champions South Africa Board. She was recognised as the Top 100 Women in Business in the World by the Global Trade Chamber in 2021 and was also established in the M&G Top 50 Power of Women 2021.

Priority two is to look at our renewable electricity. We have warehouses, again both used and owned and we are converting those that are not already on solar to solar energy, to continue to monitor usage in those warehouses, and to ensure that any new warehouses that we may acquire or move into are green facilities and already have solar in place.

Our third priority is investing in our communities and our people. There are businesses that go into the market purely to make profit but as a purpose-driven organisation, as Imperial, we also need to give back to the development of our communities and our countries of operation. We play a very strong role in that, both from a skills and employment perspective through the workforces that we employ in countries, then secondly to investment we make in social impact and CSI projects.

our fleet on an increasing basis. The one consideration on that part is to ensure that the infrastructure allows for it because some of the challenges of doing cross-border work from South Africa to other cross-border markets is that you have ability to fill up the vehicle with alternative fuels going one way and coming back there’s no infrastructure in place in neighbouring countries to refuel. We’re hoping the pilot projects are successful for alternative fuel but we also have to play our part in engaging key stakeholders and partners to ensure the necessary infrastructure is built to operate those fleets in Africa particularly.

Our key elements of focus are around education, healthcare, road safety, skills and sports development, and women empowerment. As Imperial, in addition to these key focus areas, logistics has traditionally been a very male-dominated industry and we want to encourage a diverse workforce because a diverse workforce brings new and innovative thinking, and sets you up to be a business of the future. To be diverse, let’s start with the gender discussion because diversity is so broad and one of our biggest target audiences was to attract highly skilled and very talented women that want to put their hands up and say, ‘I want to come and work for Imperial.’ We’ve made significant strides with that women empowerment agenda over the last three years.

Have you got any idea of the percentage of increased employment by Imperial for women over the last three years?

There has been a significant improvement over the recent years. Imperial’s

commitment to improving gender diversity across the group is evidenced by the growth in the representation of women across all levels in the business. Women make up 23% of Imperial employees, with 16% in top management (up from 12% in 2020), 23% in senior management (up from 14% in 2020) and 29% in middle management (down from 32% in 2020 due to business restructuring).

In South Africa, 20% of all new hires in the 2021 financial year were women, and management representation includes 14% women in top management, 32% in senior management and 35% in middle management. Imperial’s Group CEO, Mohammed Akoojee, has gone out publicly to make a pledge, giving his personal commitment in increasing the representation of women, both in middle and senior management. The numbers particularly in senior and middle management have been very encouraging.

I was lucky enough to have had the platform being the most senior woman leader at Imperial, in addition to our chairman at the time. I had the platform with my team to implement many initiatives for Imperial. The support comes from the top and we shouldn’t underestimate the vision of our Group CEO, with the support of our chairman, and the role the board have played in accepting and wanting to push forward the woman agenda at Imperial.

If you don’t get that support from the top, a lot of initiatives that I implemented would have failed. Similarly, my executive colleagues who are all male, supported the women in their businesses to make these initiatives successful. As an executive team we made these appointments of these phenomenal women in our business who are now playing successful roles in leading their businesses. So, it all starts with the common vision at the highest level before you try to be successful in changing the narrative. europeanbusinessmagazine.com 57

Ghanaian market for the work we’ve done to empower women.

So external recognition is coming through the work we’ve been doing internally through the Global Women’s forum initiatives, including our women’s round table programme which focuses on mentoring, development, networking opportunities etc.

In addition, our women on-the-ground in all our key markets have taken initiative to progress good causes outside of Imperial.

There seems to be quite a remarkable movement, change.

Culture and mind-shifting are critical and that’s why the business we have today is very different to the business of many years. Our leaders have fundamentally accepted, supported and are now driving the mindset and culture change of being more inclusive.

We only spoke about women but our diversity and inclusion framework which is run by our People & Culture team focuses on all areas of diversity.

Women are on top of the agenda but it’s about the people and diversity broader than just gender. It’s about bringing people in who are diverse in skills, age, ableness, etc., who come in with different skill sets and innovative ideas. That’s the Imperial we want to create – a business that is not going to be a commodity in the future, but a business that’s going to thrive because of its diverse, innovative and skilled workforce.

It sounds like you’re a big innovative player on that front but in the industry alone, do you think there’s been a shift in culture in South Africa?

I don’t want to say we’ve done it all and we know it all because it has been a journey. We’ve shown tangible progress not only in South Africa but across our 20 countries of operation across Africa. These discussions we’re having are not only relevant to 58 europeanbusinessmagazine.com

our South African market. I use South Africa as an example because this is our largest workforce but across markets, you don’t ever do it for the awards but when a business starts to be noticed by external stakeholders, that’s when you realise you’re doing something right. For you to be recognised not only by the PR exercises you do around the progress you’ve made but also by your people that go out and talk about the fundamental change that they’ve seen in the workplace, makes me proud to be part of Imperial and this journey. In addition, our clients even approached us to share and say, ‘We’ve learnt that Imperial are doing great things in woman empowerment. Let’s collaborate and tell us how you’ve done it and let’s do it together so we can make a bigger impact.’ That’s also another measure of success for us in addition to external recognition.

As Imperial we have received external recognition for our women empowerment initiatives through numerous awards, in South Africa, with our first woman empowerment and gender award issued to us only in 2020 in Imperial’s more than 70 year history.

That was a great accolade for the entire team of Imperial. Following on from that, we’ve subscribed to the UN women’s empowerment principles, we’ve received the top empowerment in the workplace in Southern Africa for listed companies and South Africa, and we were recognised in our

We have undertaken major campaigns from a group perspective, as well as regional perspective to support initiatives against gender-based violence for example. We have also supported women in sport on the African continent. Where women who are great at sport have not been invested in, we saw the gap and we decided, ‘Well, let’s give women the same opportunity that our men’s sporting teams in Africa have and the only reason they don’t have it is because nobody backs them - not because they’re not talented enough.’

So Imperial took that baton and we decided to run with it. The equity you receive unknowingly with your own people is invaluable. They stop to see, ‘Oh look, Imperial is all over the kit for the cricket team for women.

That’s fantastic, that’s my employer. I never thought I’d see Imperial’s name on a woman’s kit.” It’s all about taking small steps, and I have to make the point that we have not spent a significant amount of money on PR and sponsorships. We have done this with the little budget we’ve had but mostly through investment of time of our people. That’s how we’ve managed to build our empowerment story in Africa.

You won the award for most influential in business. That’s obviously a lot to do with what you’re doing. What would you say this award means to you?

What do you hope to see in the future regarding women in business? What challenges do women face in South Africa?

What do you think needs to be made to have more progress?

First of all, I’m extremely honoured, so thank you to you and your readers for the recognition. It was an absolute surprise and I am humbled.

I always believe, and this is not just my philosophy but the philosophy we’ve certainly been following through a lot of the work we’re doing at Imperial, that it’s less about the accolades and more about the impact. When we set out on the very focused strategy whether this was around ESG or whether it was around the women empowerment agenda, which naturally was a passion of mine, it’s something we felt strongly about and felt we could make a difference, and it was always about the impact.

For us, and I’m going to say for us, because the work that I’ve been recognised for in my individual capacity has not all been me – it has been a fulfilling journey thus far and I may have led it and guided those processes but there is a phenomenal team that backs me at Imperial every step of the way. This supports starts from the highest level of the organisation to the team that I’m lucky to lead in corporate affairs, as well as the rest of the business who have come on board and supported this vision that we had.

So while I’m extremely appreciative for the accolade, for me and it’s been my approach for all the other accolades that I’ve had or been fortunate to be given, let’s now use this platform to further the partnership with European Business Magazine and your readers, so that we can come together with the shared vision of broadening the impact of some of the initiatives we’ve already undertaken at Imperial.

and you gradually expand. Whether somebody is putting their hand up to say, ‘I will be part of an activation for road safety in the community’ or whether there’s a corporation coming forward and saying, ‘Let’s pledge $100million towards a social impact initiative.’ Any difference we can all make comes a long way and the more we come together, the broader we can expand. For us and for me personally, it’s about expanding impact and using the accolades to create and develop networks that can broaden that impact with a shared vision.

Coming to your point about the challenges and what would we like to see for business in Africa, the amount of progress that the African continent has made over the last few years to recognise women and their abilities has been good. I still don’t think we are where we need to be but this is where it comes down to leadership.

Leadership in corporate, leadership in government, leadership in communities, everyone that’s in a role or a position of power to deliberately make the decision to recognise and give women tangible opportunities to develop. It doesn’t always have to be putting women in positions of leadership. It’s just about giving women opportunities.

Equally, women also need to be able to put their hands up because I’ve learnt that opportunities do come by.

In a lot of instances, you may feel that you’re not well-equipped or you don’t tick all the criteria and that’s okay, put

your hand up and take the opportunity because you may never know what will come of that.

We should also be cognisant in an African context that there have been prejudices against women for a very long time but that narrative is changing through some fantastic success stories. But at the same time, when women are put in positions of leadership and power, they should also play their part in empowering others.

So as much as people criticise men and put pressure on men, ‘it’s equally women’s responsibility to do so too.

When you’re in a position of power, empower others.

If this starts to become the mindset of the women across Africa and just women in general, as well as our male counterparts, to be deliberate about creating opportunities, we’ll go a long way.

You’ve shown how to use corporate power and influence it to improve the lives of women in business as well as in the broader community. What advice would you offer to women coming up in the ranks?

It sounds very cliché but my tagline is ‘Always dress the part.’ As women that are coming up in the ranks, you’ve already put your hand up for an opportunity but I always say that whatever curveballs life throws at you, dress the part, show up and put your best foot forward. Unfortunately, it’s just the way of the world that, as a woman,

It’s not just about a great article or great PR, it’s about, ‘You all know what we do now, you know what the vision is for Africa but we can’t do it alone. We can’t just do it as one corporate or one team or one individual.’

And that’s a very similar approach that I would like to see play out of YGL is to leverage partnerships and existing networks and existing initiatives that have the shared purpose and vision of Imperial and some of the initiatives I’ve outlined to you so we can broaden that scope and impact. I always say you start from the bottom europeanbusinessmagazine.com 59

especially when we’re making our way onto the ladder of success, you have to shout louder, you have to put two hands up to be seen and heard but do it anyway. Create a mark for yourself because I’ve learnt that it is not only about the support and the leaders you have and the opportunities you get, but it’s okay to leave a mark for yourself.

When I say ‘always dress the part’, it’s literal and figurative. Yes, it is about how you present yourself but it’s also about confidence. It’s about personality. It’s about the way you conduct yourself. So, dressing the part for me encompasses all those aspects because ultimately that makes up the person you are and it’s not easy because it is very intimidating. I was 33 when I was appointed to be an executive of Imperial and at that point in time, everyone else around me was older. To get your point across was not easy but I think you also develop that credibility through ‘always dressing the part’.

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The other bit of advice I would give is don’t take anything for granted because you are a woman. I feel sometimes because we’re women and we feel people are now focusing on moving women forward, etc., that sometimes we do feel a bit entitled when we’re in those positions.

The advice I would give is don’t become complacent and don’t take anything for granted. Work ethic is critical for continued success. Surround yourself with people that are similar minded as well as people who back you and support you. That is extremely important because there’s always those people that are looking for you to fail and that’s human nature. But If you surround yourself in both your personal and your professional life with people that are like-minded, share the same vision and back you, you know you’re not doing it alone.

Being a mum of two very young kids and also having a successful and supportive spouse who is equally if not more successful in corporate South Africa, it’s

very difficult to strike that balance. But because he’s such a supportive spouse and I’m blessed to also have supportive parents, a supportive leader, and a supportive team around me, that has ultimately been the largest contributor to my success. We shouldn’t underestimate the power of support.

Have you got any more exciting projects coming up this year?

Over the next 12 months, women empowerment is definitely high up on our agenda and will remain so because we’ve gained a lot of traction in that space. We are going to be partnering with some very prominent women forums outside Imperial that focus a lot on the development of women in Africa, as well as potentially women in other markets to look at how women in Africa can be supported on the empowerment journey. That’s quite exciting in terms of some of the initiatives. Women in sports will remain high on our agenda and something we

because Africa is one of the fastest growing continents with a growing population but with under investment. So I would like to prioritise Africa through these networks, collaboration and partnerships.

Another thing I would be looking forward to is to share views from an African business perspective in some of the education modules, focusing on climate change and not just the transition journey. That is also something that’s high on my agenda and particularly coming in from leading logistics business on the African continent, how we lead and drive the transition journey is going to be critical.

I want to make sure that in addition to the existing bodies that Imperial serves on, that we have a voice at that table on a global platform to be able to put our experiences forward on running businesses in Africa and tangibly how we can contribute to the just transition journey. We need African leaders and voices to represent Africa on these international platforms to share that narrative and to hopefully also attract investment onto the continent for their transition journey. I’m hoping to play a part in that as well through YGL. will continue to focus our efforts on, as well as playing our part in the broader climate change journey.

In a personal capacity, I’m very much looking forward to the YGL community. There’s a lot of initiatives that we’ve already kicked off at Imperial in some shape or form around supporting refugees in Africa, around supporting education initiatives in Africa, around supporting health care initiatives in Africa and I’m looking forward to being part of the network to leverage other projects to grow impact.

I am also excited about building the WEF New Champions Community together with our partners Risk Insights in South Africa to create sustainable jobs.

Lastly, DP World, Imperial’s new shareholder, has a fantastic vision for our ESG journey and one I’m extremely excited about is that integration process regarding how we leverage Imperial’s existing partnerships and initiatives around social impact

with DP World’s social impact initiatives on a global scale and see how we can bring the world to Africa.

You’ve been chosen as one of the world’s young global leaders class 22. What does this accolade mean to you? What can our readers expect to see as a result of your participation? What will we be looking to see in the future on this side of things?

To be part of the YGL list is a great acknowledgment. It’s really about what I put into it and what I’m going to get out of it. What I would really like to get out of this from a personal purpose perspective is exactly what I said to you earlier - it’s about making an impact on our committees and our countries in need.

Through YGL, I want to grow my network with other like-minded leaders while driving social impact and women empowerment initiatives particularly on the African continent

Do you feel there’s enough African representation from the World Economic Forum young global leaders?

It is a very intensive process and I know it has very stringent criteria. I would have liked to have seen more representation from Africa, given the size and the magnitude and the great talent that’s coming out of Africa and given the history of the continent.

What is good is that there were 11 YGLS from Africa selected this year from about six last year, so you can certainly see progress. I also appreciate the mix of the African leaders that have been chosen this year because some are corporate but others are equally successful entrepreneurs. In Africa, particularly the SME space, we need to facilitate more entrepreneurs to facilitate growth on the continent.

SMEs and the entrepreneurs have just as big a part to play as the corporates to be able to stimulate that growth and then hopefully attract the investment the continent needs. europeanbusinessmagazine.com 61

Ukraine war’s surprising links to the 2008 financial crisis – and the parallels with 1939

T

he historical parallels are uncanny. A decade or so after the two most devastating financial crises in modern capitalism, in 1929 and in 2008, a terrible conflict begins in Europe that threatens to draw in the entire world. So far, the Ukraine war is obviously of a different order to the second world war, but the clash of ideologies is just as fundamental.

If these parallels have not attracted a great deal of attention, I suspect it is because on the surface, they do not make a great deal of sense. The key is to realise that major financial crises

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and wars are both symptomatic of deeper structural problems in societies – underlying tectonic movements that created those fractures on the surface.

Something important happened to capitalism towards the end of the 19th century. Until then, humanity lived a precarious life. The supply of goods was subject to the weather, but demand was not usually a problem. This changed with the scientific method of production in agriculture and manufacturing, which introduced things like fertilisers and powerful machinery. Beginning with

the US, which was the technological pioneer, there were now too many goods seeking too few people who could afford them.

This fundamentally destabilised capitalism, creating situations in which lenders were over-extended as producers who couldn’t find enough customers defaulted on their debts.

There were numerous financial panics in the US in the late 19th century and early 20th century – up to and then most spectacularly in 1929.

And according to what is known as the French theory of regulation, an oversupply of goods was the core of the problem.

It can be argued that the second world war was a colossal battle between four industrial models that each offered their own solution to this problem. The British solution was to try to recreate the pre-first world war imperial economy centred on Britain (in which, yes, Ukraine and Russia had played the role of grain producers).

In the early 1920s, shortly after the Russian revolution, the British offered the Soviets the opportunity to reintegrate into this vision of a mercantile trading system. This was ultimately rejected in the debate that ensued in Russia.

But the debate partly led to Soviet leader Joseph Stalin’s model of “socialism in one country” (as opposed to Karl Marx’s view that communism required world revolution). Stalin’s system was one of a planned economy where supply and demand for industrial goods would be organised by the state.

While the British pivoted after the 1929 collapse to shielding themselves through a trading system which imposed high external tariffs beyond the empire, Germany’s national socialists had developed a different model.

They envisaged a semi-planned economy which was essentially capitalist but key industries were nationalised, along with the unions.

From the US came yet another variation – the “New Deal”. This combined nationalised utilities, defence, education and pension systems with a planned corporate economy run by large conglomerates, but all built around private property rights. There were many similarities with the German model, though America’s was ultimately built on democracy.

In 1939, these four different systems went to war. The fourth version won.

It has been adapted somewhat in the intervening years, but we basically call this victory, globalisation. That globalisation is now contested, which goes to the heart of the equivalent ideological struggle today.

Then and now The 2008 crisis was not as devastating as 1929, but it severely damaged the dominant model of market-led capitalist economy. For decades, this had been sold to voters under the rubric of “freedom”, meaning the primacy of private property combined with consumers’ freedom of choice.

This was closely aligned with a “free market” dominated by multinational conglomerates roaming freely worldwide while avoiding taxation and personal and corporate liabilities.

Another form of capitalism emerging from the late 20th century shared only a few of those assumptions. Russia returned to state-dominated capitalism after a ruinous flirtation with neoliberal economics in the 1990s.

That “solution” is the basis of Putin’s popularity and power.

China, meanwhile, had been cautiously opening up its economy since the late 1970s as a way of avoiding collapse. Perhaps observing Russia’s 1990s experience, it has moved far more tentatively, ensuring that its version of capitalism stayed under the stewardship of the communist party.

In a third variation, the Gulf States encouraged private enterprise and billions of dollars of investment into their countries, but always under the control of a few sheikhs and their ruling families. For them, this authoritarian approach basically reflects what they have always been – and will be for the foreseeable future.

These versions of capitalism were superficially on the ascendant during the 2010s, not least because of the global financial crisis. The crisis dented everyone’s belief that markets had the ability to solve problems, while also damaging confidence in the political class and democracy itself.

With banks being bailed out while the people endured austerity, it was easy to think that China, Russia or some flavour of western populism might be the future.

Until now, each different strand of authoritarian capitalism appeared to be its own island, only occasionally linking with another, but today’s war appears to change all that. It is fast turning into a proxy war between autocratic and liberal democracy.

China, the Gulf States, possibly India – and pro-Trump Republicans in the US – are at best ambivalent about Russia’s war, while the rest of the world is not.

Who is going to win? Russia may be struggling militarily in Ukraine, but this proxy battle for the future of

capitalism is not going to be won by Stinger missiles. Strangely enough, the problem is that the west, led by the US and EU, managed to ensure that the 2008 crisis would not be as devastating as it could have been. They did this with a combination of austerity, cutting interest rates to zero and massively increasing the money supply through quantitative easing.

This came with a high price tag. Inequality steadily becomes worse, even before the recent surge in inflation.

Once again, we have a demand problem: if people can’t afford to buy the goods and services that producers are selling, more economic instability will be on the way. So while authoritarianism may seem less attractive now that Putin is demolishing Ukraine, the conditions that breed populism are only getting stronger.

Unless and until the west truly reimagines capitalism – perhaps with a 2020s version of the new deal – the proxy war of 2022 is likely to keep finding new fronts. europeanbusinessmagazine.com 63

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ou might think that you only buy what you need, when you need it. But whether you are shopping for food, clothes or gadgets, the retailers are using the power of psychological persuasion to influence your decisions – and help you part with your cash.

If you think back, I’ll bet there’s a good chance that you can remember walking into a grocery store only to find the layout of the shop has been changed.

Perhaps the toilet paper was no longer where you expected it to be, or you struggled to find the tomato ketchup.

Why do shops like to move everything around? Well, it’s actually a simple 64 europeanbusinessmagazine.com

answer. Changing the location of items in a store means that we, the customers, are exposed to different items as we wander around searching for the things we need or want.

This ploy can often significantly increase unplanned spending, as we add additional items to our baskets – often on impulse – while spending more time in the shop.

Buying on impulse In fact, studies suggest that as much as 50% of all groceries are sold because of impulsiveness – and over 87% of shoppers make impulse buys.

While it is complicated and affected by many factors, such as a need for arousal and lack of self-control, it is known that external shopping cues – “buy one get one free” offers, discounts and in-store promotional displays, for example – play a key role.

An appealing offer can lead to a rush of temporary delight, and this makes it harder to make a rational buying decision. We’re overcome by the perceived value of the “saving” if we buy the item in the here and now – so we ignore other considerations such as whether we really need it.

The need for instant gratification can be hard to ignore.

Bundling is another technique that retailers use to trigger impulse buying.

You’ve probably seen it quite often.

Complementary products are packaged together as one product, with one price, which often provides a substantial discount. Game consoles, for example, are often sold together with two or three games, and grocery stores have “meal deal” bundles and even web pages dedicated to a whole range of bundle offers.

Shopping can be friend or foe While these strategies can help to swell the profits of retailers, they can also contribute to problems for their customers.

Impulse buying can undoubtedly affect a consumer’s mental wellbeing. It increases feelings of shame and guilt, which in turn can lead to anxiety, stress and depression.

And it’s potentially even more serious when buying on impulse leads to excessive buying, especially if people spend money they don’t have.

But there are some positives, too.

Online shopping has been found to give a dopamine boost, as it is released into our brains when we anticipate pleasure. So while we wait for our purchases to arrive, we tend to feel more excited than if we had bought things in store.

If this pleasurable feeling is well managed, then there’s no harm in it. But, sadly, it doesn’t always end there.

That fleeting feeling of pleasure can sometimes lead to the onset of a shopping addiction. This can happen when a consumer wants to continuously experience the feel-good “hit of dopamine”, so they fall into a pattern of buying more and more items until it gets out of control.

On the flip side of the coin, shopping can help restore a person’s sense of control.

When we’re feeling unhappy or anxious, we tend to think that everything is out of our control. But as shopping allows us to make choices – which shop to go to or whether we like an item – it can bring back a feeling of personal control and reduce distress.

So it can be a more meaningful activity than many think.

Retailers can help us too While retailers might not be keen to reduce the amount of shopping we do, they could, if they wish, help to influence our buying decisions more positively.

There is a pressing need to combat obesity in most countries of the world. That’s why the UK government has decided to restrict the promotions of unhealthy foods – those high in free sugars, salt and saturated fats – in prominent store locations from October 2022.

And a recent study found that by increasing the availability and promotions of healthier food options (such as stocking low-fat chips next to regular chips) – and making them more visible through positioning and clever use of signage – shoppers can indeed be encouraged to make better choices.

Ultimately, the key to resisting goods we don’t want, or need – and making healthy decisions – lies with us.

It helps to be conscious of what we are doing while shopping. A good personal strategy is to try to browse less and use a shopping list instead – and try to only buy what’s on it. But be kind to yourself, because it can be easier said than done. europeanbusinessmagazine.com 65

Is the metaverse as disruptive as it should be

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irtual real estate is booming.

In December 2021, one buyer spent US$450,000 (around £332,500) on a plot of land in rapper Snoop Dogg’s virtual world. Which begs the question of what will be built there.

In the physical world, cities are shaped by innumerable forces. Some are desirable, designed in conversation with local communities. Others are not, subverting building regulations for financial gain.

By contrast, space in the metaverse – the version of the internet comprising immersive games and other virtual reality environments – has so far been smooth, clean and very ordinary. This is despite its links to emerging, “disruptive” technologies such as cryptocurrencies.

Our research shows that while designing virtual worlds gives people a creative voice, it can also reveal the infinitely more complex social, societal and historical ways by which physical places are formed.

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We explore how architects can use virtual environments to enhance understanding about real-world cities. Metaverse designers need to be similarly mindful of the social effect their designs will have.

People have always imagined cyberspace to look like a version of real urban space. In his 1992 novel, Snow Crash, American sci-fi writer Neal Stevenson was the first to imagine the metaverse, built along what he called the Street. In his world, this grand boulevard wrapped around the globe, but was nonetheless presented as a typical urban thoroughfare, lined with buildings and electric signs.

Recent ads from Facebook’s parent company Meta suggest Mark Zuckerberg’s vision for the metaverse is not much different. As a visitor, you stand in front of an impossible landscape where snowy woodlands meet tropical islands, but the built structures are minimalist villas and wipe-clean space stations. It looks more like a spatial

mood board of random “cool-looking” imagery. Zuckerberg’s metaverse world acts more like a desktop background rather than as a considered, spatial environment.

Meta’s Horizon Worlds is a social platform where users have a set of tools with which to create and share virtual worlds. Ads here feature users’ avatars walking through food halls or seated in train dining cars, all designed to look like their real-world counterparts, but rendered in a simplistic graphic style, like a children’s TV show.

Practical (yet unneccessary) design elements including streetlights, plug sockets and window frames underline the urban nature of these sterile, virtual spaces. This chimes with the generic global minimalism that American tech journalist Kyle Chayka has termed “airspace”: that ubiquitous aesthetic (wooden benches, exposed brick, industrial light fittings) found in coffee shops, offices and AirBnB apartments the world over.

Virtual urban planning While Meta’s promotional vision for metaverse worlds is a series of distinct snapshots, other metaverse platforms such as Decentraland, The Sandbox and Cryptovoxels feature some level of urban planning. Like in many real-world cities, they use a grid system with plots of land distributed on a horizontal plane. This allows for property to be easily parcelled and sold.

However, many of these plots have remained empty, demonstrating that they are primarily traded speculatively.

In some instances, content – buildings and things to do, see and buy within them – has been added to plots of land, in an effort to create value. Virtual property developer the Metaverse Group is leasing Decentraland parcels and offering in-house architectural services to tenants. Its parent company, Tokens.com, has virtual headquarters there too, a blocky sci-fi-style tower, in an area called Crypto Valley. Like many other metaverse buildings, it serves as a giant spatial symbol, designed to draw people towards it.

Other Decentraland structures include a dive-bar recreation by Miller Lite and a neon shrine promoting Japanese virtual diva Edo Lena. There are also countless white-cube art galleries selling NFTs (digital certificates linked to artworks) such as that by

mlo.art. These structures look just like real-world galleries, but simplified and de-contextualised.

Referential architecture In his 2012 book, Building Imaginary Worlds, media theorist Mark JP Wolf says that fictional worlds often “use Primary World [ie real world] defaults for many things, despite all the defaults they may reset”. In other words, because everything in the metaverse is built from scratch, technically you don’t actually have to reference the real world in your designs.

But many people choose to do so anyway. They plump for familiar architectural characteristics in their virtual buildings, because it makes it easier for participants to feel immersed.

Research shows how this is also how artificial worlds have been created in real life. Art historian Karal Ann Marlin describes the built environment of Disney’s theme parks as “an architecture of reassurance” where reality is “plussed”, that is, elevated in ways that makes it feel both new and comfortably familiar.

Another place to find such “plussed” architecture is Las Vegas. The Nevada city has been described by urban historians Hal Rothman and Mike Davis as a vast laboratory. Corporations there have created urban

spaces as collages of other cities, such as Paris and New York, in a bid to test “every possible combination of entertainment, gaming, mass media and leisure.”

Real cities are now choosing to emulate themselves in the metaverse.

South Korea’s Metaverse 120 Centre will provide both recreational and administrative public services. The project is one of the few metaverse initiatives primarily led by a government, as part of the nation’s digital new deal for public digital infrastructure. The aim is to nurture smart city technology, preserve and showcase heritage and host cultural festivals.

Research shows that the design of public urban spaces has evolved alongside the way people behave within them. Likewise, the success of the metaverse – whether people use it or not – will rely heavily on the environments that are created.

Virtual spaces need to be convenient for people to access and engaging enough for them to return to. They also need to harness and extend what makes them different from physical spaces. Simply transplanting realworld logics of property development and trading into the metaverse might recreate the social and economic stratification we find in realworld cities, which undermines the metaverse’s emancipatory potential.

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A $50 BILLION PROBLEM: What You Need to Know About Ad Fraud

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new study from Juniper Research, an independent UK based researcher, forecasts that advertisers will lose $42 billion of ad spend globally this year to fraudulent activities committed via online, mobile and in-app advertising. To be more specific, for every $3 spent on digital ads, $1 is lost to fraud.This is a 68 europeanbusinessmagazine.com

21 percent increase from the $35 billion lost to ad fraud in 2018.

According to the World Federation of Advertisers (WEF), such numbers mean that up to 30 percent of advertising is unseen by consumers, affecting about 21 trillion online ads annually. The WEF predicts that ad fraud will become the biggest market for

organized crime by 2025, worth $50 billion.

Such an increase will be influenced by differing factors but the main one will be the fact that fraudsters will start to rely on more advanced techniques such as spoofing ad networks to falsify clicks, or exploiting the programmatic ad buying

fraud overall because the number of app installs remains high. Countries like India and Indonesia are experiencing massive growth in their digital economies, but this results in marketers being distracted with scaling quickly because it presents tempting business possibilities.“ In general, ad fraud is defined as “a type of online fraud where fraudster deceptively makes an advertiser pay for low quality and fake traffic.“There are many ways to commit ad fraud.

The most common are cookie stuffing, ghost sites, ad stacking, domain spoofing, app spoofing, bots.Ad fraud tactics evolve and grow more innovative every year, spreading to emerging channels.

A few years ago, the Department of Justice unsealed indictments against eight people, who ran the infamous online advertising scams, dubbed 3ve and Methbot. The defendants were accused of collecting more than $36 million from companies.

algorithms that online advertising relies so heavily on.

Fraud is obviously a global problem but Juniper Research predicts that the cost of online ad fraud in China alone will amount to $19 billion in 2022. More worryingly over 80 percent of the world’s advertising fraud originates in China, according to Group M. Ronen Mense, the president and managing director for APAC at AppsFlyer, commented on the numbers, saying that “Marketers are not paying enough attention to new anti-fraud technology and neglect the threat of

They managed to infect 1,7 million computers with malware that remotely directed traffic to empty websites designed for bot traffic. To be more specific, websites were designed to fool advertisers into thinking that an impression of their ad was served on a premium publisher site, like Vogue or the Economist.

Meanwhile, views were faked by malware-infected computers with marvelously sophisticated techniques to imitate humans: bots faked clicks, mouse movements and even social network login information to imitate engaged human consumers. Computer security company White Ops, which was the first to first reveal Methobot’s existence back in 2016, commented on the scheme, saying that “It was bringing whole new levels of innovation to ad fraud, operating at an unprecedentedly large scale that spooked advertisers.“ But let’s take a closer look at the most popular ad fraud tactics. Today, as much as 40 percent of internet traffic comes from botts, making it the number one source of ad fraud.The Times recently reported that for a certain period in 2013, a full half of YouTube traffic was “bots masquerading as

people“.And there’s more, The Times also found out that you can buy five thousand YouTube views — thirty seconds of a video counts as a view — for as low as $15. Most of the time, customers are led to believe that the views they purchase come from real people. However, more likely, they come from bots.

As you’ve already understood from the example above, bot traffic refers to automated systems, designed to mimic human activities often at the center of an ad fraud scheme. Malicious bots are programs that infect devices and perform tasks in the background, sapping computing power from legitimate tasks. Each bot instance can be controlled by one controller, creating a botnet on individual programs that can be used to create fake traffic to scam advertisers.

Unsophisticated bot traffic can be spotted easily: if there’s a high number of visitors simply opening and closing a webpage, you can be sure that behind this scheme is a hacker.

However, as hackers understand what triggers suspicion, today they manage to adapt algorithms to mimic mouse movements, browsing behaviors, and any other interaction, making it look more believable.

Then there’s also domain spoofing: any scheme that reroutes ads to a different website than expected, usually to maximize traffic, qualifies for the term. Consequences of domain spoofing can range from a waste of money to a brand safety disaster.

A new type of ad fraud that has been increasing in recent years are websites, known as “ghost sites“. At first sight, these websites might look like real sites with real content, but when you take a closer look, most of the content is actually stolen from other sites.

The entire purpose of a ghost site is to look as real as possible, so it can get approved on ad networks and display ads. Then, once it has the ads up and running, it buys fake traffic to generate impressions on the website. In the end, generated impressions get turned into advertising commissions from the oblivious networks, which usually pay on a per-impression basis. europeanbusinessmagazine.com 69

For one thing, in order to use blockchain to effectively combat ad fraud, all parties to a programmatic transaction must agree to use it — and use the same system.Another important factor is speed: Dan Slivjanovski, CMO at the DoubleVerify, says that “To prevent ad fraud, it’s necessary to operate in virtually real-time. Digital advertising transactions require a 10-millisecond response interval. The fastest blockchain transaction takes 1,5 seconds. If latency issues could be overcome, the technology might have a more material role in combating fraud.“ But there are also other ways to combat ad fraud. Most advertisers work with a certain partner to place their digital ads. And that’s the first step right there: to start a conversation with the digital partner, making sure they have all the necessary steps in place to combat ad fraud.

Guy Tytunovich, founder and CEO of Cheq, a cybersecurity company, noted that “Hackers look for loopholes. The more convoluted an environment is, the easier it is for fraud to occur.“ Today, fraudsters show a special interest in mobile apps: industry reports revealed that fraudulent transactions from mobile apps have increased by 300 percent since 2015.

Mobile advertising fraud, which has been a concern since 2010, continues to be one of the most serious challenges for businesses: according to AppsFlyer, it is costing brands between $700 and $800 million globally quarterly. However, the Asia Pacific region is suffering the most: from November 2018 to April 2019, the region experienced an average fraud rate that was 60 percent higher than the average worldwide.

What is more, the 2018 Mobile Ad Fraud Report by Interceptd revealed that Android suffers from a slightly higher level of digital ad fraud than iOS, with 26,9 percent of app traffic fraudulent, compared to 21,3 percent.

The report also found out that some app categories are more vulnerable to fraud than others: on Android, finance 70 europeanbusinessmagazine.com

tops the list, followed by shopping, gaming, and social media. On iOS, the most vulnerable category is shopping, followed by gaming, finance, and travel.

The question is, how to combat the ad fraud, especially when it comes in so many different forms that aren’t always obvious. Well, there’s no catch-all ad fraud solution, especially keeping in mind that web fraud and mobile fraud behave differently. However, there are some beneficial tactics for combating ad fraud.

John Malatesta, CEO, and President of the ad tech company Codewise, noted that today the ad ecosystem is fully globalized in nature, so the challenge of regulating against ad fraud requires a truly global approach.

According to him, an ultimate solution to ad fraud could be “the creation of a global ad blockchain, a distributed ledger of online interactions that unites all actors in the ad ecosystem under a single and open platform. This could drive transparency and detect and eliminate fraud nearly instantly.“However, this solution , although an effective one, might still take some time to implement.

The recent TAG report carried out by the 614 Group showed that working with certified partners, channels, and vendors reduced fraud rates across the European markets from an industry average of 8,99 percent to 0,53 percent. The situation is improving, and collaboration within the industry has proven to be a crucial tool for combating ad fraud on a global scale.

It’s also important to look at the metrics, which show real engagement and conversions and to focus on organic traffic, not just exclusively on ads.

The problem of ad fraud is a complex one, and it will not entirely go away anytime soon, if ever. But to maintain reputations in the digital advertising space and to protect their budgets, brands and businesses should concentrate on making reasonable and proactive efforts to avoid ad fraud.

There is some good news, too: according to the fourth Bot Baseline report from White Ops and the Association of National Advertisers (ANA), for the first time ever more ad fraud will be stopped in 2019 than will succeed.

Bob Liodice, the ANA CEO, commented on the news, saying that “The decrease in ad fraud suggests that the war on fraud is winnable. Less fraud means more resources can be devoted to brand and business building.”

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Not all Intent Data is created equal

by Jon Clarke, Founder & CPO, Cyance

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hen it comes to intent data, it’s quality, not quantity, that really matters. Intent data has the potential to transform sales pipelines and create meaningful, lasting connections with customers and prospects, but only - and this is the crucial point - when it is really accurate and relevant.

Lately, I’ve seen an influx of agencies and vendors floating the term ‘Intent Data’ around the marketplace. They claim to be offering intent data services, but they are providing very little clarity about what type of data they are delivering and where it’s coming from, nor any real detail on how it can be applied by businesses.

The longer this goes on and the more often the term is used without any clear definition, the more confused 78 europeanbusinessmagazine.com

sales and marketing professionals will become. And unfortunately that means the real value that intent data can and should be delivering for B2B businesses will be lost on some people.

With this in mind, I think there are three key elements that need to be clarified. Firstly, what intent actually is and the different types of intent available. Once those two pieces are understood then marketers need to understand that some intent data is more effective than others, most often dependent on the geography of your business, where you are based and what you are trying to achieve.

Before investing in intent data, it’s important for businesses to have clear, specific and measurable needs and objectives. This enables them to have a defined brief against which to evaluate the ever-growing number of available options.

What is intent data?

In broad terms, intent data works with predefined keywords and taxonomies that give a level of behavioural signals to indicate buyer intent. Intent data providers generally fall into one of three categories: 1. Third party intent data vendors, such as Cyance - they will pick up on behaviour across a series of general websites that exist and are relevant to your business. They will collate all of this information, attribute that to companies and make it available in either a data feed or online platform.

2. Second party vendors - these tend to be quite limited and ‘walled’ solutions that have their own set of websites and they only track behaviour across those specific sites. Quite often this is based upon known users that are filling

in forms in order to download information or sometimes they are captured in a database and called manually by telemarketing teams.

3. First party vendors - this is simply the process of capturing and analysing the data from visitors to your own website.

Importance of Accuracy Once sales and marketing professionals have understood these different types of intent data and established what will generate the best results for their business, they then need to select the marketplace which will provide the greatest levels of accuracy.

The primary driver for using intent data is to help an organisation drive greater efficiency in achieving its sales goals. A more efficient business will achieve faster growth, scalability and greater productivity, all of which lead to more profits. Intent data has a significant role to play in propelling an organisation towards that end goal.

Prior to having intent data, B2B marketers had very little in terms of actionable insight on both their existing and potential customers. This inevitably led to an inefficient and sometimes scattergun approach to marketing and lead generation activities. Intent data really turned everything around, enabling organisations to pinpoint, with laser precision, those prospects that look like they’re on a relevant buying journey through their online behaviour and research.

However, intent data has now evolved beyond this point, with the overlaying of additional contextual information with behavioural data. For instance, marketers can now know when a particular prospect has been through an investment round and is therefore likely to be in a significant stage of growth. Or it may be that a company has made an acquisition and will need new technologies or consultancies to help with integrating the new business.

Being able to overlay a wide range of these types of signals or sales triggers massively increases the accuracy and relevance of intent data and gives sales and marketing teams complete confidence about which prospects

they should be targeting and what type of message will resonate best.

Finding Accurate Intent As you would expect in such a new discipline, intent is evolving as we continue to learn what works and what doesn’t. There are new technologies emerging that can delve deeper into behavioural signals to form a much more informed picture of buyer interests and needs and start to accurately indicate what signals ‘real’ intent versus misleading behaviour. By mapping signals to a more defined and personalised description of intent, we can then start to accurately predict the ‘fit’ or readiness of buyer behaviour to a particular product or service.

There’s also more opportunity now, as we collate more signals, to introduce machine learning into the mix and let algorithms and AI do the heavy lifting.

This allows for analysis of billions of signals on a daily basis and being able to track the outcomes. It’s still important to evidence both the negative and positive outcomes from this activity so as to ‘train’ an algorithm. Over time it will learn what works, what doesn’t, what points are more significant than others and when to present this information back for the most effective and positive results. We’ve found that companies that embrace both the best of a human and a technological workforce are producing the most conversions.

Finally, another important part of driving accuracy is having access to local intent data for each region or country. This is particularly pertinent

for businesses looking to target buyers in Europe, many of which still rely solely on intent data generated on US websites, rather than European sites (and local language sites). This means these businesses are missing out on a huge number of high-value signals which could significantly improve the accuracy and quality of their intent data, leading to higher conversion rates and sales. Furthermore, vendors that are based in Europe and live GDPR are much more likely to understand the nuances of compliance, have DOs in place and the data is hosted in Europe, they understand that GDPR is a framework that is enabled differently between countries.

Accuracy of Intent = Improved Engagement Ultimately, by prioritising accuracy within intent data, businesses can develop greater engagement with potential buyers and existing clients, throughout the buying journey and ongoing customer lifecycle.

Used well, accurate intent data can inform a more personalised experience leveraging tailored content and messaging that is designed specifically for the needs and objectives of a particular account This gives sales and marketing teams the ability to define and focus on priority accounts based on their fit and propensity to convert, leaving behind the scattergun approach to digital marketing that still resides in places.

The end result is better leaders and higher conversions - but that start point must always be accuracy. europeanbusinessmagazine.com 79

Venture Capitalists Pour Into NFTs

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ryptocurrency investors said it can still be difficult to judge the skill of NFT fund managers because nobody has developed a standard benchmark for the broader market. “NFTs, as they are now, are really not an investable asset class,” said Aleh Tsyvinski, a professor of economics at Yale University who helped construct the NFT indices. NFT funds are “buying the equivalent of different houses in the San Francisco area” in the hope of giving investors “exposure to the overall housing market in the US”. Interest in NFT funds has only recently spiked. Andrew Steinwold, managing partner of the NFT investment firm Sfermion, tried with little luck to raise money for a fund in the summer of 2020. However, his fortunes quickly turned as wealthy cryptocurrency holders began turning their attention toward NFTs, and Sfermion debuted with a $5.3mn fund in January last year. “We were the only girl at the party,” he said. Institutions such as endowments have still not shown much interest in specialised NFT funds.

Instead, many are backed by big cryptocurrency investors and wealthy family offices, which often have higher appetites for risky new assets. Sfermion is preparing a series of funds that

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will only invest in NFTs in individual categories. The firm has set a $100mn target for the first gaming-focused fund, said two people briefed on the details. Steinwold said Sfermion aims to hold NFTs for more than a year but has often sold the investments sooner because of market pressures. “Ideally, we’d like to go longer than that, but also we’re cognisant of the broader market and how things are moving there,” he said. “We’re not going to say ‘no’ to some outrageous short-term gain.”

Venture capitalists are ploughing millions into digital art, virtual land and online collectibles, the new frontier for investors seeking big returns in crypto. Digital items known as non-fungible tokens (NFTs) burst into mainstream culture last year, quickly becoming a multibillion-dollar market ranging from computer-generated art pieces to cartoon characters costing thousands of dollars. Andreessen Horowitz and Paradigm, two of the largest cryptocurrency venture fund managers, have begun investing directly in NFTs, according to people familiar with the purchases. Several specialist money managers have also raised tens of millions of dollars in new NFT funds. The interest from professional investors reflects

a belief that digital items will gain in value as more people spend time in a new version of the internet organised by cryptocurrencies. But NFTs, which can be even more volatile than the broader cryptocurrency market, also pose several new risks for fund managers. Many traders expect the vast majority of the market to fall to zero, and the legal status of digital collectibles remains in flux. This week, turbulence in the so-called stablecoins Terra and Tether has prompted concern about contagion in the broader cryptocurrency markets, underlining the speculative nature of digital assets. Fundraising has been strong in recent months. 1confirmation, one of the earliest investors in the dominant NFT marketplace OpenSea, has raised $50mn for an NFT fund that could ultimately bring in up to $100mn from investors, according to regulatory filings. Punk6529, a pseudonymous internet personality with more than 350,000 followers on Twitter, recently raised $75mn for a fund that buys “blue-chip” NFTs. Some traditional venture capitalists have jumped in as well, buying into popular collections such as the Bored Ape Yacht Club, which has surged in price during the past year on the back

of celebrity endorsements and social media hype. “When we think about buying NFTs, it’s in line with our investment strategy, which is thinking about investing in things that have the potential to return many, many multiples of the fund,” said Ophelia Brown, managing partner of the venture fund Blossom Capital. An early investor in the payments start-up Checkout.com, Blossom owns several Bored Apes and one CryptoPunk. The fund has also considered acquiring an Azuki, a collection with an entry price of about $20,000. Brown said the investments do not make up a “significant” portion of Blossom’s first $85mn fund but have the potential to grow much larger in size. Andreessen and Paradigm declined to comment on details about their NFT investments. Both companies have made large investments in start-ups that create NFTs. Last month, Andreessen led a $450mn investment in Yuga Labs, the company behind Bored Apes, that valued it at $4bn.

Punk6529, who declined to provide his birth name because of privacy concerns, said he decided to raise a fund to provide an “NFT native” outlet for the wave of big-money investors he expects to enter the market.

He said NFTs will become essential to what he calls the “open metaverse”, an expansive virtual playground where

3D avatars can mingle. “This money is going to come into the space anyway,” Punk6529 said. “The alternative is that it’s going to come in through a couple of guys from Goldman Sachs.”

Some investors have privately questioned whether such large funds can find enough profitable investments in today’s market. NFTs on the Ethereum blockchain had a total market value of $31.4bn at the end of last year, with more than 80 per cent in cultural collectibles and profile picture projects such as Bored Apes, according to one confirmation estimates. Early buyers have made significant returns.

The value of an NFT index developed by three academic cryptocurrency researchers rose 295 per cent from the beginning of 2018 to this week, even after a 50 per cent decline since the start of this year. An index tracking the five most valuable collections including Bored Apes and CryptoPunks has soared 1,700 per cent since 2018, according to the same researchers.

Cryptocurrency investors said it can still be difficult to judge the skill of NFT fund managers because nobody has developed a standard benchmark for the broader market. “NFTs, as they are now, are really not an investable asset class,” said Aleh Tsyvinski, a professor of economics at Yale University who helped construct the NFT indices. NFT funds are “buying the

equivalent of different houses in the San Francisco area” in the hope of giving investors “exposure to the overall housing market in the US”. Interest in NFT funds has only recently spiked.

Andrew Steinwold, managing partner of the NFT investment firm Sfermion, tried with little luck to raise money for a fund in the summer of 2020.

However, his fortunes quickly turned as wealthy cryptocurrency holders began turning their attention toward NFTs, and Sfermion debuted with a $5.3mn fund in January last year. “We were the only girl at the party,” he said.

Institutions such as endowments have still not shown much interest in specialised NFT funds. Instead, many are backed by big cryptocurrency investors and wealthy family offices, which often have higher appetites for risky new assets. Sfermion is preparing a series of funds that will only invest in NFTs in individual categories. The firm has set a $100mn target for the first gaming-focused fund, said two people briefed on the details. Steinwold said Sfermion aims to hold NFTs for more than a year but has often sold the investments sooner because of market pressures. “Ideally, we’d like to go longer than that, but also we’re cognisant of the broader market and how things are moving there,” he said.

“We’re not going to say ‘no’ to some outrageous short-term gain.”

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CRYPTOCURRENCIES: Why they’ve crashed and what It may mean for the future

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f you had invested £100 (US$122) in the cryptocurrency Luna a month ago, you might have been quietly confident you’d made a sensible bet.

But Luna’s value has since fallen drastically – at the time of writing, that £100 is worth around 4p (5¢).

Luna was by no means the only victim in a week where cryptocurrencies were down 30%. Some have recovered to a certain extent, but this still represents an aggregate seven-day loss of over US$500 million (£410 million), prompting existential questions about the future of the market.

This crash was possibly triggered by a financial “attack” on the stablecoin Terra (UST), which is supposed to match the US dollar but is presently trading at just 18 cents. Its partner coin, Luna, subsequently collapsed.

An attack of this kind is extremely complex, and involves placing multiple trades in the crypto market in an attempt to trigger certain effects – which can provide the “attacker” with significant gains.

In this case these trades caused Terra to fall, which in turn brought its partner coin Luna down too. Once this was noticed, it caused panic, which in turn sparked market withdrawals, which then caused further panic. Some (but not all) stablecoins rely to a large extent on perception and confidence – and once this is shaken, big falls can come into effect.

Crucially, the recent major falls in cryptocurrencies have called into question just how stable stablecoins really are. After all, they are designed to have practically zero volatility by maintaining a “peg” to some other underlying asset.

Yet the effects seen this week spilt over in to the whole crypto space, to create single day losses akin to – or arguably worse than – a “Black

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Wednesday” for crypto (Black Wednesday was the day in 1992 when speculators forced a collapse in the value of the pound). Even the leading stablecoin Tether lost its peg, down to 95 cents on the dollar, perhaps demonstrating the need for regulation. For if stablecoins aren’t stable, then where is crypto’s safe space?

Crypto confidence How investors respond will be key to the future of cryptocurrencies. We have already seen panic and despair, with some comparing this crash to a traditional run on the banks. But with bank runs, customers tend to be worried that their bank will be unable to give them their money, rather than worrying that their money has become worthless.

A more accurate comparison is with stock market crashes where investors worry that the stocks and shares they hold may soon be worthless. And so far, reaction to this crypto crash suggests that a large section of crypto holders view their investments in a similar way.

Notwithstanding historical price volatility, there is a basic assumption often seen in investor behaviour: that the asset price will increase, and will keep on doing so. In this scenario the investor doesn’t want to miss out. They see the asset rising, consider it a “sure thing” and then invest.

Frequently buoyed by initial successes, the investor may then put in more. Combine this with social media and the fear of missing out on “inevitable” gains, and the investments continue.

Put simply, many will have invested in cryptocurrencies because they believed it would make them richer.

This belief has no doubt been shaken.

But another motivation for investing in cryptocurrencies may be a belief

in their transformational nature, the idea that cryptocurrencies will eventually replace traditional forms of financial exchange.

For these investors, any increase in the value of a cryptocurrency is a demonstration of the increasing power of cryptocurrency over traditional money. But likewise, a significant decline in the value of crypto is

not simply a monetary loss – it is an ideological one.

At the same time though, this ideological stance creates an investor group far less likely to sell in the face of any sharp fall. And it is this group which may yet provide hope for the sector.

In established stock market crashes we talk of a return to “fundamental

value”. The fundamental value of crypto is frequently assumed to be zero. However, perhaps there is at least some fundamental value which is based on belief. The size of the investor pool who own cryptocurrency because they believe in its long term future, and the promise of a new money, may determine that fundamental value of crypto.

Indeed, if we consider cryptocurrency investors as different groups with different motivations, we can better understand the behaviours we are seeing. Investors can perhaps take solace that we may have seen the worst of this crash and that better times may be ahead. But as any financial adviser will tell you, in crypto as in any other market, nothing is guaranteed. europeanbusinessmagazine.com 83

Schroders, Aviva and other UK asset managers seek to profit from demand for biodiversity-focused investment products

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ome of the UK’s biggest money managers are launching new funds and investment products aimed at generating profits from a long-overlooked corner of green finance: biodiversity.

Aviva Plc has opened a natural-capital equity fund to invest in the likes of plant-based protein company Beyond Meat Inc. Jupiter Asset Management has added to its series of so-called ecology funds. Schroders Plc and Climate Asset Management, a joint venture between HSBC Global Asset Management and Pollination, are backing carbon-offset projects that offer biodiversity perks. And Gresham House is creating new so-called biodiversity net-gain credits.

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The decline in biodiversity— the breadth and variety of life and ecosystems on earth, covering polar bears to plankton— poses a growing long-term risk, not only to the planet, but also to the investment industry’s future returns. The World Economic Forum estimates that roughly half of global gross domestic product, or about $44 trillion of economic value, depends on the natural world in some way, meaning its destruction represents an enormous financial loss.

“We don’t believe that markets are properly pricing in the cost and consequences of natural-capital depletion,” said Eugenie Mathieu, a former Greenpeace activist who’s now a

senior ESG analyst at Aviva. “We see a significant investment opportunity.”

As asset managers pile into this relatively new business area, climate activists and academics warn of it turning into a simple PR exercise, a distraction from the urgent task at hand.

“This is at best an immaterial distraction, unlikely to have any real impact on biodiversity or nature protection,” said Adrienne Buller, senior research fellow at Common Wealth, a UK-based think tank. “At worst, it contributes to the very real problem of actively creating excuses for regulatory inaction and a lack of public investment on environmental protection and restoration.”

In a report published last year, the World Bank outlined the potentially devastating consequences of inaction from an “unprecedented” decline in biodiversity, with roughly 1 million animal and plant species at risk of extinction. And a recent survey published by Citigroup Inc. found that almost 80% of respondents see an overlap between biodiversity risk and financial risk, and ranked it as a higher priority for environmental, social and governance-minded investors than social issues.

“While dedicated funds could be part of the solution, it’s important that these don’t distract from the urgent need to address the destructive impacts of current business models such as our system of food production,” said Simon Rawson, director of corporate engagement at UK nonprofit ShareAction.

Aviva’s new fund targets both biodiversity “solutions” providers such as Beyond Meat and companies that the managers consider to be leading efforts in their sector to reduce harmful impacts on nature such as chemicals company Koninklijke DSM NV. The fund also holds French insurer Axa SA, Swiss drugmaker Novartis AG and apparel manufacturer Levi Strauss & Co. “There has been a big shift to see environmental impacts more holistically under the banner of biodiversity or natural capital,” Mathieu said.

Jupiter’s four ecology funds are looking beyond equities to bonds and other assets classes. “We can’t do our job— invest on behalf of clients to secure their future, their pensions and so on— unless we recognize our dependency on nature and start to value nature in a way we haven’t

done thus far,” said Sandra Carlisle, the London-based firm’s head of sustainability.

The Paulson Institute estimates the market for biodiversity investments could reach as much as $93 billion by 2030, up from about $4 billion in 2019. That would follow a similar trajectory of other environmentally labeled products like green bonds, which had sales of more than $500 billion last year, little more than a decade after the first one was issued.

With interest in biodiversity increasing, Schroders is looking to a form of what amounts to carbon offsets plus. A carbon offset is a sort of token that companies buy to fund projects that reduce or remove CO2, in theory cancelling out their carbon emissions. These projects are often nature-based initiatives such as planting trees and restoring peatland, but they’ve been criticized for being too narrow in focus.

So Schroders is looking for alternatives that are both biodiverse and carbon-sequestering, according to Andy Howard, head of global sustainable investments. The firm is exploring how to measure and market not just the carbon-sequestration potential

of individual plots or assets, but their wider ecosystem services too, he said.

Other fund managers, such as Gresham House, are developing biodiversity credits. This move is driven by a UK regulation that takes effect next year that will require developers in England to show a 10% improvement to biodiversity for new projects. If they can’t do this onsite, they can purchase tokens from biodiversity-rich projects elsewhere to meet that target.

Gresham House is seeing profit potential from buying or leasing land with a view to improving its biodiversity and packaging that as a biodiversity netgain credit. Climate Asset Management is working on something similar, which targets projects across multiple markets.

Outside the UK, many European asset managers already have natural-capital strategies. The investing unit of BNP Paribas SA started a fund last year to invest in companies that it assesses are helping restore ecosystems. A similar offering introduced in late 2020 by Swiss money manager Lombard Odier Group now has about $750 million of assets, according to data compiled by Bloomberg.

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ood financial management is critical to the success of any business. Yet small business owners often handle their own bookkeeping for reasons ranging from fear of sharing sensitive financial information, keeping staff costs in check, or wanting complete control. These reasons, while undoubtedly valid for start-ups and smaller operations, grow increasingly impractical as your business grows, explains Carlo Gualandri, Founder and CEO, Soldo.

The most successful entrepreneurs learn quickly that accounting and finances are the lifeblood of business and deserve to be treated as such. Setting up a finance function is therefore critical for planning, especially forecasting on financial matters and predicting cashflow – an indispensable requirement to remain profitable. But when is the right time and where do you start, especially if you’re a start-up about to enter a growth phase?

Do the basics first The three essential building blocks for an emerging finance function are a bank account, payroll and accounting software. They will form the foundation for the subsequent work your finance department will build upon and should, therefore, cater for your business’ current and anticipated future needs.

Apart from being a legal requirement, a dedicated business bank account makes it easier to manage cash flow, pay suppliers, sort out taxes, and calculate profits. It’s therefore sensible to use it to its fullest potential. However, before setting up your financial function, determine whether your current business account is compatible with the technology you want to use, offers the services and integrations you need, and whether the banking fees are competitive.

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Treat finding a business bank in the same way as you would any other business supplier. Research the market and shop around for the best price, service, and benefits for your business.

To supplement your business cash account to help you do more, consider additional tools such as software for payroll and accounting. Take the time to examine the various software offerings to find a solution that best aligns with your needs. Cloud platforms, for instance, make it easy to collaborate online with your team from anywhere, while staying on top of your business’s cash flow in realtime.

Small business, big data Mining the trove of financial data your firm generates daily can yield useful information for managing your business more effectively. Ensuring your finance team has accurate, and even real-time data at its disposal will enable them to identify opportunities or inaccuracies and act on it quickly.

Reliable data is also a prerequisite to attract potential investment. Having an accurate picture of the money flowing in and out of the business can be the key to demonstrating financial health and organisation, often making it easier to convince investors of the viability of your proposition. Investors will be more willing to part with their cash if the business has an efficient and prepared finance department.

Managing spend A way to track and regulate expenditure is the next item the fledgling finance department would need.

Many start-ups overlook spend management early on and track expenses through employees only, which could

quickly spin out of control as the company spends more and employs more staff.

Operating without an efficient spend management solution is a setup for failure and can severely hamper decision making. Research by Soldo found that nearly a third (29%) of growing businesses in the UK and Ireland struggle when choosing what business priorities to spend on. Almost a fifth (18%) said that they didn’t have

enough financial insight to make effective spending decisions.

Setting up the finance department presents the ideal opportunity to address spend management and get complete financial visibility. Forward-looking businesses should also consider spend automation, since automating repetitive tasks will free up time for the finance department to focus on more complex, analytical tasks.

It’s all about scalability Although it feels challenging to predict what’s coming next in the current climate, businesses can still make decisions while setting up a finance department to ensure it can scale alongside a growing business. The first point is to select software that is likely to be supported for the foreseeable future.

Cloud-based platforms present a big advantage here since they are much

more likely to receive ongoing attention and even regular updates. Automation is another necessity for scalability as it takes care of many of the tasks that scale linearly with a growing workforce, such as data input and receipt tracking.

Without an effective finance function, a business is much more at risk of failure. A slick finance department running at full tilt can increase profitability, streamline processes, spur growth, and ensure long-term sustainability. europeanbusinessmagazine.com 87

AI In Banking

Hype Or Revolution

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everal years ago, the CEO of Deutschebank stated in an interview that he thought AI would replace up to half of its staff. The prediction sent shockwaves through the industry and made a lot of employees feel uncomfortable about the longevity of their roles. The bank soon fired him and replaced him with somebody else, so he won’t be responsible for the organization’s sweeping changes.

But it did reveal just how much hype there is in financial circles about the promise of AI. Other people have joined the fray, calling for the end many routine jobs in the banking industry. Citigroup executives believe they will say goodbye to around a third of workers. Japanese financial group Mizuho says that it is looking to replace more than 19,000 by the end of the present decade.

But whether the digital transformation in banking will bear fruit remains to be seen.

Currently, there’s a problem right at the core of AI research. The people at the forefront of the movement know that the technology is very good when it has an objective function - something to optimize - but it isn’t so good in other situations. So, for example, it can maximize the probability that an image shows a cat. Still, it can’t engage very well in regular conversation - the sort of thing you need for healthy client relationships.

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Artificial intelligence is also a long way from becoming what you might call “general intelligence.” The software is good at performing cognitive tasks, but it has no subjective experience of them. It doesn’t know what it is doing - it just goes through the motions.

This fact of the matter means that some of the more outlandish predictions probably won’t come true.

What we seem to be looking at is something that will allow software to perform a subset of cognitive tasks. However, it is doubtful we will see programs with subjective agency any time soon. When you tell them what to do, they’ll do it well. But they won’t be running their own companies just yet. That’s very futuristic.

AI, however, is a wishy-washy concept. Unlike the tech revolutions of the last decade - like the cloud - you can’t easily pin it down. AI doesn’t just do one thing - it is a solution for a whole bunch of tasks. The banking sector, therefore, is going to have to figure out how to deploy it sensibly. For now, it won’t replace people.

Instead, it’ll be more like a tool that makes them more valuable.

It is, in a sense, a form of cognitive assistance, just like machines are assistance for manual labor. Robots can’t do all the work themselves, but they can dramatically increase the output per worker. The same may

now be coming to the banking industry. You’ll still need officers to process business banking customers manually, but AI could speed up aspects of the process, like credit checking.

The banking sector needs to be careful not to set unrealistic expectations of AI. The people at the forefront of the field are more than willing to point out that the science isn’t done yet.

They can replicate some aspects of intelligence, but they can’t fabricate it wholesale.

Researchers still need to make fundamental breakthroughs to usher in that exciting and giddy new world.

To call AI in banking pure hype, though, is taking it too far. There are n umerous examples of AI in banking already, and the technology only continues to improve.

Biometrics For Added Security We first saw biometrics in banking in the film Blade Runner. But advances in technology and AI have made it to make it a reality. And it’s already been done. British bank Natwest, for instance, now allows customers to open accounts with a selfie. It then stores their data securely, linking their biological profile to their financial information.

The security benefits of AI could be quite extraordinary. It might sound unsafe, but it is actually a massive improvement over the current system of using government-mandated IDs like passports and driving licenses.

Biometric forms of identification are much more challenging to forge and, generally, safer than their paperbacked rivals.

Investment Trading Currently, bankers rely on seasoned traders’ quick wits to make investment decisions in the equity markets on behalf of their clients. Movements, however, are often so fast-paced and unpredictable, that many traders struggle to equal the market, let alone beat it.

Banks and other financial institutions, therefore, are wondering whether there is a way to use the data-crunching abilities of AI to make better split-second decisions.

Artificial intelligence could theoretically evaluate firms based on publicly available data, establish fair value, and then conduct trades based on those insights. By using data better than any human could, it might be better at determining value - at least in the short-term.

(consistent with fraud), it can put a block on it, protecting money until the owner confirms that it made the transactions.

Better KYD Checks The Patriot Act introduced a bunch of new security requirements for online transactions. But ensuring that all these are being met is difficult, even

for experienced banking professionals. The idea now is to use AI to check a range of data, from a customer’s social security to their social media, to determine whether fraud or money laundering is taking place. The technology should reduce the amount of time that it takes to assess an applicant. And that might bring banking fees down and make the process more efficient.

Fraud Protection Banking fraud is currently a massive issue for the banking sector. Every day, thousands of people lose money from their accounts because of fraudsters usually operating over the internet.

AI tech, however, offers a potential solution. Because AI can connect the dots between vast troves of customer information, it can often spot potentially fraudulent activity quickly.

Fraudsters trying to access accounts from an unknown IP or location, for instance, could trigger a denial of service. Similarly, if an AI suddenly detects unusual account activity europeanbusinessmagazine.com 89

How can you identify and value new business opportunities?

In order to grow you need to think forward. That’s why Atradius not only protects you against bad debts from current trading, we also help you to value the opportunities and threats of new developments.

Our user-friendly services are designed to guide you to well-informed trade decisions, while securing the accompanying risks.

Get your market and customer insights, go to atradius.com Credit Insurance | Debt Collections | Business Information

Building Remote

PARTNERSHIPS

Lothar Stadler

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othing stays as it was – global business changes, fast innovations are emerging, and new developments in digital solutions help us to work differently. Today’s search for business partners is different – no traveling, no physical meetings, no personal checks. Different approaches to build up relations can make it possible to reach our goals in this changed world.

Check your business strategy before starting to search for partners In the current global situation companies suffer from uncertainties and some may suffer from lower customer demand. Business leaders have basically two possibilities: downsizing or finding new markets. This is the main reason why many companies look

outside their home country’s markets for growth opportunities.

Entering new markets bring a lot of opportunities, but also a lot of challenges. Many obstacles must be overcome to achieve success in a new market environment. Before starting your partner search, always check your general business strategy. Does your products and services fit the new market? What competitive settings do you find there? What value can you add to your new customers?

Define your go-to-market strategy and set up a time frame for your new venture.

Focus on your company first. Before companies set out to find partners in distant countries, they should take the time to solidify their business fundamentals such as strategy, offerings and resources. This will help build the business case and platform they need to monetize effectively in new markets.

Currently we see that data and analytics affect business practices most in sales and marketing functions. The energy, high-tech and healthcare industries are particularly concerned.

Involving data and analytics before entering new markets may also lead to reconfiguration of operating models or even core business functions from product development to marketing (Gottlieb, Riifai, 2017).

Even when businesses are facing high demand, like the healthcare industry at the moment, it makes sense to deeply dive into your business strategy and define the priorities for new partners. "For all the markets we are entering or where we already serve customers, we have employees from these regions inside the company, with local knowledge and language. This is essential for our partnerships.” says Edwin Kleiber, Managing Direcor at Amex, a distributor of medical and laboratory equipment, who currently responds europeanbusinessmagazine.com 91

to the needs of international developing agencies and humanitarian aid organizations. When a team is truly native to a region, you gain invaluable insights into local markets and customs. Check your possibilities of human resources and see in which fields local partners can add value.

Before entering a market and long before searching for a partner, it is important to analyze the value that you want to bring to your customers in the new markets. In literature, an array of concepts has been developed addressing the question of how value is created for customers and which components and characteristics of value are important. Three main concepts of customer value can be found: while economic and early marketing literature mainly focused on value-in-exchange, more recent developments focused on relationship value and value-in-use (Kleinaltenkamp, 2015). This brings up the real situation in which a customer uses a product. Marketing and sales arguments become more relevant when they refer to specific customer situations.

Adding value for customers with products and services through appropriate value creation concepts becomes even more important in remote times.

Your efforts can multiply when you meet the needs of your customers with the right arguments, whether it is a physical product, a software as a service, or a pure service.

Some recent approaches have turned towards a more customer focused view of value creation processes and try to motivate customers to participate in joint value creation processes.

This also needs partners, especially in distant markets, to interact with future customers.

Defining partner roles It is important to have a clear understanding of the business strategy before starting to define partner roles. This makes it possible to derive the right roles for any new partners.

Depending on what type of product or service you offer and whether you serve a market directly or indirectly, these factors define the roles 92 europeanbusinessmagazine.com

of a future partner. Figure 1 shows a selection of the most common channel partners.

Companies may want to sell products directly to customers. In this case they may work with channels like personal selling, agents, retail offices or marketing partners. Typical indirect commercializing works with dealers, licensing and service partners. E-commerce has a rising importance and can be organized through direct or indirect channel roles.

A survey among workshop participants at CIS2020 – Asia’s largest experiential conference in corporate innovation – shows a representative picture of the current situation (figure 2). More than 60% of business leaders and innovators are currently looking for marketing-, e-commerce- and agent-partners. Those are partner roles which do not need big investments, but create big opportunities and facilitate progress even with fewer resources.

As remote work is currently on our agenda, marketing partners can help in distant markets before, during and after the sales process. Finding marketing partners is probably easier than finding suitable dealers or service locations. Choosing a marketing partner can also be possible remotely, and you might see the results immediately.

When it comes to industrial products, many companies still rely on traditional channels for commercializing.

For many of those businesses, personal

customer interaction is a high priority, even with customers in distant countries. Many companies therefore rely on local partners like agents or representatives, who on the one hand inform about news and on the other hand represent the respective company’s interests in that market.

"The current pandemic has made local partners in distant countries more important for manufacturers", means Wolfgang Willig, Managing Partner of Al Mazroui Infra from the United Arab Emirates. AM Infra serves wellknown companies from the Western hemisphere with its trade services and local support in the infrastructure and transport sector in the Gulf region. He confirms: “Agent activities have increased over the last year - also due to travel restrictions - because more local expertise is needed”.

From a commercial perspective, the Internet has significantly transformed the retailing landscape. Demand for new technologies led to a shift to e-commerce channels in many sectors. The increasing prevalence of e-commerce has also given rise to a novel e-commerce channel - the marketplace - in which manufacturers sell their products directly to consumers.

Globally, more than 50% of e-commerce sales were made through online marketplaces in 2019 (Merton, 2020). It is forecasted to grow dramatically over the next 5 years, as more companies adopt marketplaces as the best platform to promote

online sales. With the rise of the world’s marketplace top league like Amazon (global), PayPay Mall (Japan), eBay (global), Mercado Libre (South America), AliExpress (global), Rakuten (global) or Taobao (China), manufacturers, retailers and online traders need to decide whether to introduce the marketplace channel in addition to their existing channels.

The high degree of shift to e-commerce led a large number of businesses to interact with their customers via different channels.

Multi-channel commercializing aims to create additional customer convenience with multiple touchpoints such as online and brick-and-mortar stores. Companies may sell their products via e-commerce, look for an agent in a specific country and have a marketing partner for a region at the same time. Managing multiple channels is becoming increasingly complex, but customer demand is driving multi-channel strategies. Today, multi-channel commercializing is moving towards an omni-channel model in which the integration of various platforms shapes the service interface and creates a seamless experience for consumers (Thaichon, Phau, Weaven, 2020).

The way companies are using the multi-channel trend is one of the hottest business topics these days. The choice of product and service offerings per channel, new strategies in pricing, how to measure sales performance, and even the effect of spillovers from online platforms are questions that go hand in hand with the multi-channel trend. The use of multiple channels can also change a structure of a company, including the role of the sales force, and may also lead to risk of cannibalization and potential conflicts in resource allocation (Yingchen Yan, Ruiqing Zhao, Zhibing Liu, 2018). Coordination and control of multi-channel roles is essential for business success in the future.

Partner search Classical personal selling is still the most used channel today. Millions of companies have their own sales staff who try to convince customers to buy their products or services. Particularly in the B2B market, personal selling is still the most important channel role. Take the example of industrial goods, which often require a high level of explanation. Here, sales can hardly be realized without specialists travelling to customers.

Many countries have been keeping tourists out during the pandemic, and travel for business people has become extremely complicated due to permits and enforced quarantine days when entering a country. Entry into China is currently practically impossible for regular business trips (Brown Forrest, 2020).

Agents typically can help in this situation as proximity to customers is an important asset. Personal conversation is still the most effective tool to convince people of one’s ideas.

Long-standing contact networks of local agents are of course helpful and even more so, when travel restrictions are in place. Trading companies and marketing partners can also help in such situations.

Depending on the targeted market, it makes sense to look for a partner that fits into local business practices. For

Europe and its regional differences it might be useful to have a marketing, agent or distribution partner in each country. In the Middle East, where business has strong ties to ruling families, it can be helpful to have someone, who has long-term business connections and even political contacts.

In South East Asia, even among ASEAN countries, it is still difficult to ship products to another country for repair and return it repaired. In such a case you probably have to look for a local service partner. In Japan and Singapore traditional trading firms dominate the market. These can help foreign manufacturers to access the market.

If we know who we need, we can talk about how we find them. Classic matchmaking organizations are chambers of commerce, commercial department of embassies, national representations, industrial, business and trade associations. Try to find influencers in a new market. Participate at conferences to meet potential partners. If you want to sell an elevator, for example, speak to architects, property managers or construction companies. Even ask future customers for help with searching for local partners and check how other companies and competitors work in that market. Probably you can get recommendations from your personal network, like business partners or social

With the appearance of new channels, companies often need to consider how to introduce a new channel with which partner. Defining the right channel role is crucial before starting to search for a new partner. europeanbusinessmagazine.com 93

media contacts, when you speak about your projects and future markets.

Accelerators can help start-ups in matchmaking and business expansion in new regions.

For example: RISE with its accelerator program works alongside startups and helps navigate a Southeast Asian expansion. Hong Kong's largest start-up community WHub can serve as a gateway to China, and PlugandPlay connects the best technology start-ups with the world’s largest corporations. Finding the right partner requires experience, contacts and knowledge for cultural differences.

Building partner networks virtually Today’s search for business partners is different – no traveling, no physical meetings, no personal checks - but the tasks stay the same. We recommend to speak to people, who know the market or know someone, who can help you on-site in the market.

Personal recommendations offer a solid foundation for establishing new relations. Keep in mind that everybody is in the same situation in this pandemic and that customers find it just as difficult to get to know new suppliers. Nevertheless, a good synergy of advertising initiatives, social media appearances and sales efforts also helps in virtual acquisitions.

Michael Kreilmeier, Managing Director of Mission Embedded, a system integrator for safety-critical applications in the transport and medical sector, states that "the more complex a product is, the newer a product is and the further away the customer is, the more trust needs to be built up. A personal touch always helps. If this is missing, the hurdles for new business are very high, but not impossible". In times of completely remote work, local contacts help. Established agents and local representatives report that their network of contacts is especially helpful now and that they benefit from their long-standing relationships.

Not only businesses rely on close and long-standing relationships but also universities. Partnerships between universities have had a high priority 94 europeanbusinessmagazine.com

for decades. They shape entire generations, make a valuable contribution to research and promote cultural exchange. Universities have always been at the forefront of technological or social progress, and they switched to virtual formats very early in the pandemic. Virtual formats have also changed working practices in partner networks. "Virtually you often get quite far nowadays, sometimes the last steps require a physical meeting. Real personal time is better used today, because it is no longer taken for granted", says Barbara Stöttinger, Dean of the Executive Academy at the Vienna University of Economics and Business Administration.

In the past you might have travelled for three days, today you might only have one hour for the same topic in a single video call. Human factors in partnerships cannot be replaced, but a lot of preparatory work in projects is possible with virtual tools. Therefore, we will look more closely at how digital tools can help in partner networks later.

Remuneration framework Once you have found the right partner, the next step is to discuss remuneration for the rendered services.

A clear definition of a remuneration framework and the incentive system is essential for the success of a partnership. Finding an appropriate solution for individual situations makes the difference. Figure 3 shows six core elements of a well-functioning remuneration framework.

Every company has different types of partners - from small businesses up to big businesses. Each partner may have a different relevance to the company.

Partners can be classified by status, and represent certain importance to the company, certain rights and obligations, and organizational hierarchy. Partners may also have different roles or development stages in a business network. Typical status are silver, gold and platinum partnership. Certain rights, incentives, discounts and community advantages can be linked to a status.

For any partnership it is necessary to set the rates of remuneration. If you are looking for an agent, it is essential to set commission rates, if you have a distributor, it is important to consider discounts, and if you are looking for marketing partners, they will probably receive a fixed amount per month, quarter or year, or you can find a formula that depends on business success. Price levels often are essential for company strategies. Depending on the market and regulation, you can introduce recommended guiding prices. Keep compensation formulas simple, because payment procedures might get quite complex when it comes to invoicing, partial payments and credit notes.

Incentives of course are very important and give the possibility to actively manage your partners. Incentives can vary from typical discounts for bigger orders, offerings for additional services, additional gifts or a higher status, if certain targets are reached.

Nowadays, customer service is a must for every product or service.

Companies may offer special customer services to their partners.

They may also seek partners who multiply services to their customers and offer train-the-trainer programs.

Local service partners that understand local customs and speak the respective needed language become increasingly popular. During the pandemic, both capital goods manufacturers and manufacturers of complex plants became aware of the importance of local service partners. In the past, technicians could simply get on a plane and solve problems on site within a very short time and get plants running again. Today there are travel restrictions, quarantine regulations of 10 days on arrival and 10 days on return. This drives up service response times, repair times and associated costs. Local partners, who can communicate with specialists from manufacturers remotely or via VR- or AR-applications, are valuable today and new technologies for servicing are becoming reality.

And finally, new partners need help in their startup-phase. This can be simple things like free samples or starter kits and may lead to increased support of new partners with favorable payment arrangements, additional training, and greater attention to technical service. “Each partner may not be able to support as much as needed, due to budget or time constraints. Laying out your concerns before working together helps”, means Natchaya Sukkaew from Yara International in Thailand.

Agreement principles Figure 4 shows the typical agreement principles that need to be brought into balance. Any partnership must have a defined starting point. It is also recommended to define a certain duration of an agreement. Open-ends in agreements can lead to difficulties in termination, for example if partners invest for the longer term and then demand compensation.

In partner agreements one of the main points to clarify are the duties of both sides. This is the time to precisely specify what you expect from a partner and define who does what. Almost ridiculously seeming questions such

as ‘who is responsible for which marketing activities’ and ‘who pays for them’, or ‘who bears the translation costs’, make sense to be clarified before the signing of a partner agreement.

Rates of commission and discounts, a fixed fee or a performance bonus are typical elements of such agreements.

They all need a calculation basis. Is it the contract value or is it the value without taxes, and which currency is used for calculation? These are sensitive issues, as the nature of the base can cause high variations in money.

When it comes to payment, an important issue is to specify the time of the payment. For example, an agent's commission usually arises, when a customer contract is signed, but the commission cannot be due until the contract is in force and the full commission should only be paid, when a customer has paid their bills.

Each market has its own characteristics and this is the time to talk about specialties. We recommend formulating a standard agreement suitable for general purposes and to deal with the specialties at the end, as they can vary from country to country.

Businesses can evolve and an agreement should also provide room for future developments. It may be that you wish to change partners or that you will have other sales challenges in the future, so it is a good idea to facilitate such developments. A partner, who is no longer performing, can severely block your business development. Terminating a partnership is not easy, sometimes painful, but sometimes also necessary.

Find out, whether a new partner is right for you and simply try it out.

We do not recommend signing large agreements at the very beginning of a partnership. Try to start a first project together. You will see how well the relationship works as soon as the first difficulty comes up.

Even though we are talking about agreements here, lawyers can help with compliance to regulations and laws. Nevertheless, it is the business people, who should define the principles of the partner relationship. Finding an equilibrium between partners europeanbusinessmagazine.com 95

might be a secret to establish longtime partnerships. The big aim should always be to find the right balance, on the one hand by letting the partner work independently and on the other hand by monitoring their activities.

Managing new partners The right managing of new partners could be the final touch to a successful partnership. In any organization, a good onboarding program helps with all other subsequent steps. In times of remote work, digital tools, hands-on practices, fast action, professional organization and good communication is also needed for managing partners. Today’s popular digital tools all work on cloud based systems and they are available anywhere and anytime, which highly facilitates relationship management of partners.

By using communication tools like Slack, Google Chat, Microsoft teams, etc., teams are brought together in communication channels related to projects, topics or teams. Everyone in a channel sees the same messages and stays on the same page. Bringing even 96 europeanbusinessmagazine.com

external partners into such communication channels can make work faster, collaboration more efficient and bridge global distances. “As software plays a more and more critical role in the performance of every organization, we share a vision of reduced complexity, increased power and flexibility, and ultimately a greater degree of alignment and organizational agility.“, said Stewart Butterfield, Slack CEO and Co-Founder, when announcing an agreement on 1 December 2020, under which Salesforce will acquire Slack.

Online collaboration tools for managing projects and personal tasks help in times of remote work. By also integrating partners, teams can work more efficiently. Popular collaboration tools like Trello, Monday, Basecamp, Gira, Miro, Freehand, Confluence or Jamboard all have their own specialty and strengths. One aspect that they all have in common: they intend to enable teams to organize and prioritize projects in a flexible, effective and creative way, from anywhere in the world, irrespective of whether you commute on a bus or spend your work day at the beach.

Customer relationship management tools are powerful platform tools to help marketing, sales, e-commerce, customer service and IT teams to keep the customer in focus. Managing partners with a CRM software can help a lot to better work together with a view on your customers. We even recommend opening a corporate CRM account for external partners. In this way, partners can report directly into your CRM system and you do not receive single Excel- sheets or E-mails with sales or customer information anymore. The data will be directly fed into your system from your local partner and you can immediately see the results. Set targets with your partners that appear challenging. With the use of CRM software you can easily monitor and control target achievement.

When you search for partners, you can ask for a certain number of leads and opportunities per week or month.

If you formulate targets and prepare your people well for achieving them, they will do it and be happy with new modes of working. “B2B commerce of the future will shift very strongly to online channels - not least because of Covid-19. Partner models are moving further from isolated channels towards a 360° view of the customer. Modern CRM systems offer a holistic platform for data management and enable the development of automated and personalized solutions.”, says Christina Neumüller, Salesforce Consultant at Salesfive in Munich.

With all the sophisticated software solutions and futuristic tools, the people who make the projects work must not be forget. As new partners arrive in organizations, the need for training in operational processes and digital tools also increases. Be aware that not all people are familiar with digitals tools or sophisticated applications. Frequent training sessions also help to include those, who need more time to learn working with these new tools. Powerful partnerships can grow, when you show flexibility in serving new partners. Motivate people to share information to build up trust and enable deliberate learning with channel partners (Keeling, Cos, Ruyter, 2020; Lostakova, Pecinova, 2014).

AUTHOR Dr. Lothar Stadler, 44, is an entrepreneur from Austria and provides services in global sales and business innovation for technology-driven customers. He is a former sales executive from the machinery and transport industry, mentor for start-ups and lecturer.

Lothar.stadler@explorvent.com www.explorvent.com

CONCLUSION This article is supposed to give you an idea on how to find multipliers for your commercializing efforts. The search for the right partner is characterized by choosing the right channel roles and an optimal incentive system. The current pandemic has made it even more important to add value for customers with the right partners.

B2B business is still strongly dominated by the role of personal selling.

Local agents with a well-established network of contacts can help even more nowadays. The high degree of shifting to e-commerce makes a good coordination of multi-channel commercializing essential in the future.

We defined some of the core elements of a remuneration framework and typical agreement principles, which should be brought into balance for a successful partnership. Virtual

formats have also changed working practices in partner networks. By using communication and collaboration tools, work can be done more efficiently. Customer relationship data management will enable automatization and will become a key success factor in the future to keep the customer in focus. Powerful partnerships rely on mutual trust. Remember, most great things in history happened in cooperation - the right partnerships can be a great foundation for future success.

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Debbie Isobel Keeling, David Cox, Ko de Ruyter (2020): Deliberate

learning as a strategic mechanism in enabling channel partner sales performance, Industrial Marketing Management, Volume 90, p113123.

Gottlieb Josh, Riifai Khaled (2017): Fueling growth through data monetization, McKinsey Global Survey,.

Hana Lostakova, Zuzana Pecinova(2014): The Role of Partnership and Flexibility in Strengthening Customer Relationships in the B2B Market, Procedia - Social and Behavioral Sciences, Volume 150, p563-575.

Kleinaltenkamp Michael (2015): Value creation and customer effort – the impact of customer value concepts, in: The Nordic School, Service Marketing and Management for the future, Cers, Hanken School of Economics, Helsinki, p.283-294.

Merton Kate (2020): the world’s top online Marketplaces 2020, webtrader, 18 february 2020.

Thaichon Park, Phau Ian, Weaven Scott (2020): Moving from multi-channel to Omni-channel retailing: Special issue introduction, Journal of Retailing and Consumer Services, available online on ScienceDirect, 16 september 2020.

Yingchen Yan, Ruiqing Zhao, Zhibing Liu (2018): Strategic introduction of the marketplace channel under spillovers from online to offline sales, European Journal of Operational Research, Volume 267, Issue 1, 16 May 2018, Pages 65-77. europeanbusinessmagazine.com 97

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