A deeper understanding: Building trust in business partnerships
Trust is a vital component for keeping the global economy growing. Every single transaction, from grabbing a coffee to acquiring a multinational corporation, is built on some level of trust: that the goods or services offered serve their purpose or that the buyer can pay for them. But trust does not just grease the wheels. It enables firms from different cultures and separated by continents to work together in a manner that benefits all. It helps companies to set, follow and achieve targets with a wider social or environmental purpose.
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Steering through collaboration: CFOs driving new priorities for the future
It is well established that the modern CFO has a more strategic role to play in a business, but a clear action plan to achieve this is lacking. A key element of this is helping the business to deal with change. Some changes are planned: launching a new product or service, setting up operations in a new region or acquiring a competitor. Others may be unexpected: a major disruption to supply-chain operations, the emergence of new regulation and legal reporting requirements or the unpredictable impacts of global economic uncertainty.
Either way, when asked about the biggest challenges they face in executing their day-to-day activities, change is a recurring theme, according to a new survey of 800 CFOs and senior finance executives, conducted by The Economist Intelligence Unit. Managing unexpected changes to financial forecasts and adapting finance processes to rapidly evolving business models are top of mind.
Managing unexpected changes to financial forecasts and adapting finance processes to rapidly evolving business models are top challenges finance executives face in executing their day to-day activities.
Finance executives are also concerned with identifying how to align strategic, financial and operational plans towards common objectives and meaningfully analysing data across business units and regions. “All functions are working to meet these challenges and, as a finance head, we have to have visibility across all functions, how they are progressing [towards meeting goals] and ensuring that their direction is in line with overall strategic goals,” says Lalit Malik, CFO of Dabur, an Indian consumer goods manufacturer. It is incumbent upon CFOs therefore to be prepared not only to help their own function navigate uncharted territory, but the rest of the business too. That means breaking down the silos that commonly exist in organisations, in order to collaborate closely across functions, sharing information and data in the pursuit of common objectives.
All functions are working to meet these challenges and, as a finance head, we have to have visibility across all functions, how they are progressing [towards meeting goals] and ensuring that their direction is in line with overall strategic goals - Lalit Malik, CFO of Dabur, an Indian consumer goods manufacturer.
The clear custodian of collaboration
There are a number of reasons why the role of leading cross-company collaboration around steering should fall to the CFO and their team. First, through the activities of budgeting, the finance function is the custodian of the clear, quantitative expression of management expectations and determines how resources such as cash and people will be allocated in order to achieve them. In our survey, 90% of respondents say that finance should facilitate collaborative enterprise planning to ensure that operational plans are aligned with financial and strategic plans.
Second, through performance management, the finance function is the gatekeeper for critical data that illustrate how well—or otherwise—the company is rising to the challenge of change. That includes data relating to sales, supply chain and delivery, which need to be reported back to the business in ways that help drive improved decisionmaking. Our survey reveals that companies in which finance executives feel empowered to drive strategic decisions across business functions are more likely to report a higher financial performance in fiscal year 2016/17 and 2017/18 and anticipate higher growth rates for 2019/20.
Download Complete Executive Summary PDF
Transforming data into action
As businesses generate and manage vast amounts of data, companies have more opportunities to gather data, incorporate insights into business strategy and continuously expand access to data across the organisation. Doing so effectively—leveraging data for strategic objectives—is often easier said than done, however. This report, Transforming data into action: the business outlook for data governance, explores the business contributions of data governance at organisations globally and across industries, the challenges faced in creating useful data governance policies and the opportunities to improve such programmes. Learn more by downloading our whitepaper below.
Rethinking professional services in an age of disruption
How fintech is fuelling growth
In our survey of more than 750 executives across eight countries, we found 95 percent of companies in the financial services sector are reaping major benefits from deploying fintech services.
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Tailored with technology | Corporate Growth
There is a strong link between corporate growth and technology, according to the first report in The Economist Intelligence Unit’s Tailored with Technology research programme sponsored by ANZ Bank. The report, which is focused on corporate growth, is based on a survey of more than 750 executives in eight economies: Australia, New Zealand, China, Hong Kong, India, Singapore, the United Kingdom and the United States. In the coming weeks, additional reports and articles will be published on the topics of sustainability and the macro-economy, as well as specific industries.
Nine in ten of firms surveyed have strong plans to increase technology adoption in the next five years Improving data analytics was the most popular form of technology, with 44% of the more than 750 executives selecting it as the top benefit The challenges are many, with 51% firms citing security and privacy as a concern and 43% citing technology skills among employeesThe link between corporate growth and technology has always existed, but it’s growing stronger, with nine in ten executives responding that they have plans to increase their adoption of new and emerging technologies. These technologies include robotics, software-defined network, and machine learning, among others. They are being used to accomplish a range of objectives, such as improving efficiency, growing internationally and reducing costs.
The most popular trend today in the survey was big data and analytics. Nearly 38% of respondents selected it as being among their top three priorities, higher than cyber security, artificial intelligence and cloud computing. Big data and analytics are being used by firms for client attraction and retention, as well as risk management and forecasting.
There are barriers to technological adoption, however. Security and privacy is chief among them, with more than 51% of respondents selecting it as one of the three biggest challenges. It was followed at 43% by technology skills among employees and at 39% technology standards and regulation. Many organisations see organisational solutions to these problems, whether it is fostering more cooperation between the chief technology officer and his c-suite counterparts or changing individual mindsets in the workforce.
Is your company ready to tailor with technology?
Take interactive survey to find out >Tailored with technology | Sustainability
At the same time, there are multiple challenges involved with using technologies for greater sustainability. One is a lack of strategic guidance about where to invest time and money. Another is a lack of clarity as to the best type of technologies to harness.
Successful companies are meeting the needs of an increasingly sustainability-conscious consumer base and turning it into a competitive advantage. The report’s key findings are:
Sustainability is increasingly viewed as a way to increase profit. Besides doing good and contributing to the United Nations Sustainable Development Goals (SDGs), companies realise there is a market opportunity in being sustainable. Technology is increasingly important to boosting sustainability. Almost all survey respondents recognise the importance of technology. Certain industries are thriving as a result of this commercial opportunity. Several technology trends are expected to contribute. Currently led by big data and analytics, but increasingly expected to include artificial intelligence in the development of smart cities in particular. The potential benefits of technology are vast. A large majority of survey respondents expect a spending increase on technology over the long-term, which bodes well for companies and society alike.Is your company ready to tailor with technology?
Take interactive survey to find out >This is the second in a series of papers and articles from The Economist Intelligence Unit, sponsored by ANZ. This report, and the others to follow, is based on the results of a survey of more than 750 executives across eight markets.
This paper was written by Kim Andreasson and edited by Chris Clague. Findings from the survey were supplemented with research and in-depth interviews with experts and executives. Our thanks are due to the following people, listed alphabetically by affiliation:
Michael Cooke, Senior vice president, global HSE and sustainability Affairs, ABB Mikkel Flyverbom, Professor of communication and digital transformations, Copenhagen Business School Mark Milstein, Director of the Center for Sustainable Global Enterprise, SC Johnson College of Business, Cornell University Alexa Dembek, Senior vice president, Chief technology & sustainability officer, DuPont Tim O’Leary, Executive director, government and regional affairs & chief sustainability officer, Telstra
Tailored with technology | Economic growth
Executives surveyed for this report are optimistic. Of 660 executives we surveyed across eight countries and three industry groupings, fifty-three percent responded that technology will be “much more important” to economic growth five years from now and 42% responded that it will be ”more important.” Only 3.5% answered that the impact of technology would be “about the same” and less than 1% answered it would be “less important.”
Other findings from the research include:
Not surprisingly, the fourth sector surveyed, technology, was the most optimistic, with 61% of executives answering that tech would be “much more important.” At the market level, in Hong Kong just 31% of executives believe tech will be “much more important” in five years. On the other end of the spectrum was India, where 73% answered that tech will be “much more important.” Executives from larger firms, which we define for the purposes of this study as having annual revenue of A$200mn and above (roughly US$137mn at current exchange rates), were more positive on the importance of tech to economic growth than were executives at smaller firms. When asked what their primary considerations are for selecting a technology partner, the two most-popular answers among the six options provided were “the company reputation” and evidence of “ongoing development and investment in the technology and/or platform.” Both received 54% of responses.Is your company ready to tailor with technology?
Take interactive survey to find out >
Tailored with technology: Economic growth is the third in a series of papers from The Economist Intelligence Unit sponsored by ANZ. This report is based on the results of a survey of more than 750 executives across eight markets.
This paper was written by Chris Clague. Findings from the survey were supplemented with research and in-depth interviews with experts and executives. Our thanks are due to the following people, listed alphabetically by surname:
Simon Evenett, professor of international trade and economic development, University of St Gallen Gog Soon Joo, chief futurist and chief skills officer, Skills Future Singapore Andrew Hoad, chief executive officer, Asia, DP World Ritesh Kumar, chief executive officer, Indonomics Consulting Jayant Menon, lead economist, Office of the chief economist and director general, Asian Development Bank Yasunori Mochizuki, fellow for IoT, robotics and smart cities, World Economic ForumDisruption hub: Landing innovation in Asia’s corporate travel industry
This report explores the impact of digitisation and wider travel industry change on how companies manage corporate travel in the APAC region.
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Three ingredients to make seamless travel happen
Seamless travel is a strong aspiration in human mobility. Today, our opportunities for travel are almost infinite. We can go practically everywhere, and often at quite low prices. But too often, getting from A to B remains more of a hassle than a real pleasure. This is especially true when travelling to less familiar places, where the challenge of understanding the options adds to the connection difficulties.
Seamless transport is not only about comfort. It is as much about economic growth or social inclusion. Getting semi-finished products just-in-time to the assembly line reduces capital costs. Linking up public transport in intelligent and fully accessible and intelligible ways may make the difference for someone being able to take a job as well as for someone visiting a foreign country.
’Seamless‘, after all, is just another way of saying that mobility is more efficient, anxiety-free against disruption. It means making people confident that they will be able to easily find and use the best travel option. It means ensuring that service disruptions in one component will be promptly addressed to minimise the impact on the user, with the help of all the other components. This should be a boon to all involved: users, operators, regulators, and investors, even insurers and society at large.
So if seamless mobility is the Holy Grail everyone is looking for, why isn’t it widely available?
Conventional wisdom holds that digital technology, by allowing unprecedented levels of information exchange in real time, will solve the co-ordination issue that is the crux for seamlessness. It is undeniable: big data on the servers of operators and smart phones in the pockets of users are a potentially powerful combination. Some of the benefits are already there and we can surely expect much more—for instance making it easier for foreign visitors to access travel information through translation and interpretation help.
Putting high tech at the core of our thinking about better mobility solutions is tempting. Transport certainly has a long history of focusing on technological innovation and now it is embracing digital technology with gusto.
Ultimately though, transport is not about technology and what it can do. It is about people and what they want to do. It should build on business models and behavioural patterns that make sense for companies, organisations and people involved. Technology is a powerful enabler but it won’t be enough to ensure seamless travel.
Even that very useful app on your smartphone is only the shiny tip of an iceberg. Underneath lies an invisible and complex structure of standards and regulations. Getting the support structure right can make or break innovative solutions as easily as demand. Sometimes seamless travel doesn’t happen because some outdated regulation simply prohibits an innovative practice, or because one element which makes sense from a holistic perspective is seen only as an additional cost by each of the partial service providers in the travel chain.
Agile, high-end regulation is vital for better physical connectivity. Good regulators will not just manage the status quo. They will also identify the ’missing links‘ (services to users or contractual arrangements between service providers) in seamless integration, and find ways to include those links in the regular scheme of things. We need savvy policy-makers and regulators as much as nerdy programmers.
So here, in a nutshell, is my three-ingredient seamless transport recipe for you to ponder: 1. Think of the user first and last; 2. Consider the enablers—high tech, low tech or other; 3. Ensure a sophisticated and agile regulatory response to customer requirements and technological opportunity.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.
Golden rules of the travel tech space race
Simon Vincent, EMEA President of Hilton Worldwide, outlines his two Golden Rules of the Travel Tech Space Race ahead of The Economist’s Future of Travel event on March 24th.
The last time you went abroad – did you check in to your flight online? It’s a service we take for granted to such a degree today that it barely warrants mention. But what about your hotel?
I’ve no doubt that Michael O’Leary and Tony Tyler, my co-panellists at The Future of Travel Summit will be at pains to stress the advances in technology that aviation has made compared to us hoteliers.
But with the lodging sector now buzzing with activity in this space I’m confident we’re going the right way about catching up. We’ve seen all manner of gadgets hit the headlines in recent months from Google Glass concierges at The Fairmont in San Francisco, to the proposed Henn-na hotel in Japan which will be entirely staffed by robots to Hilton’s own roll out of digital check in and room selection.
The onset of this ‘travel tech space race’ raises the question of the role we want technology to play in evolving our industry. The future of our businesses depends on us getting these choices right – following these two ‘golden rules’ of innovation:
Create a seamless travel experienceDespite the incredible advances technology has made in opening up the globe, in many ways it has also created a world where it has never been easier not to travel. Meetings can be skyped, presentations can become webinars and even once in a lifetime sightseeing trips can now be partially delivered from the comfort of your own home via virtual reality.
That puts the onus firmly on us to ensure we use technology to make every aspect of the travel experience as appealing as possible. In hotels that could mean anything from eliminating queues at check in, to customising rooms via apps, but it is a responsibility we all share through each stage of the journey. Gone are the days when inconvenience was an acceptable by-product of necessity.
Facilitate extraordinary serviceHistory tells us that with every technological advance, from the printing press to the production line, comes an opportunity to exploit efficiency. Travel is no different in constantly looking to newer systems to improve our operations.
However, in doing so, we must continue to hold sacred the principle of people serving people and avoid turning a desire for convenience into a devaluation of customer service. Digital advancements shouldn’t serve to make staff obsolete, but to free them from the shackles of paperwork to become ambassadors for the hotels and communities in which they work and live, creating memorable experiences for guests.
I believe hotels are more than mere places of accommodation. Enriching lives through human interaction is the essence of our business, something technology should help achieve but never replace.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.
Tailored with technology | Corporate Growth
There is a strong link between corporate growth and technology, according to the first report in The Economist Intelligence Unit’s Tailored with Technology research programme sponsored by ANZ Bank. The report, which is focused on corporate growth, is based on a survey of more than 750 executives in eight economies: Australia, New Zealand, China, Hong Kong, India, Singapore, the United Kingdom and the United States. In the coming weeks, additional reports and articles will be published on the topics of sustainability and the macro-economy, as well as specific industries.
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Tailored with technology | Sustainability
At the same time, there are multiple challenges involved with using technologies for greater sustainability. One is a lack of strategic guidance about where to invest time and money. Another is a lack of clarity as to the best type of technologies to harness.
Successful companies are meeting the needs of an increasingly sustainability-conscious consumer base and turning it into a competitive advantage. The report’s key findings are:
Sustainability is increasingly viewed as a way to increase profit. Besides doing good and contributing to the United Nations Sustainable Development Goals (SDGs), companies realise there is a market opportunity in being sustainable. Technology is increasingly important to boosting sustainability. Almost all survey respondents recognise the importance of technology. Certain industries are thriving as a result of this commercial opportunity. Several technology trends are expected to contribute. Currently led by big data and analytics, but increasingly expected to include artificial intelligence in the development of smart cities in particular. The potential benefits of technology are vast. A large majority of survey respondents expect a spending increase on technology over the long-term, which bodes well for companies and society alike.Is your company ready to tailor with technology?
Take interactive survey to find out >This is the second in a series of papers and articles from The Economist Intelligence Unit, sponsored by ANZ. This report, and the others to follow, is based on the results of a survey of more than 750 executives across eight markets.
This paper was written by Kim Andreasson and edited by Chris Clague. Findings from the survey were supplemented with research and in-depth interviews with experts and executives. Our thanks are due to the following people, listed alphabetically by affiliation:
Michael Cooke, Senior vice president, global HSE and sustainability Affairs, ABB Mikkel Flyverbom, Professor of communication and digital transformations, Copenhagen Business School Mark Milstein, Director of the Center for Sustainable Global Enterprise, SC Johnson College of Business, Cornell University Alexa Dembek, Senior vice president, Chief technology & sustainability officer, DuPont Tim O’Leary, Executive director, government and regional affairs & chief sustainability officer, Telstra
Tailored with technology | Economic growth
Executives surveyed for this report are optimistic. Of 660 executives we surveyed across eight countries and three industry groupings, fifty-three percent responded that technology will be “much more important” to economic growth five years from now and 42% responded that it will be ”more important.” Only 3.5% answered that the impact of technology would be “about the same” and less than 1% answered it would be “less important.”
Other findings from the research include:
Not surprisingly, the fourth sector surveyed, technology, was the most optimistic, with 61% of executives answering that tech would be “much more important.” At the market level, in Hong Kong just 31% of executives believe tech will be “much more important” in five years. On the other end of the spectrum was India, where 73% answered that tech will be “much more important.” Executives from larger firms, which we define for the purposes of this study as having annual revenue of A$200mn and above (roughly US$137mn at current exchange rates), were more positive on the importance of tech to economic growth than were executives at smaller firms. When asked what their primary considerations are for selecting a technology partner, the two most-popular answers among the six options provided were “the company reputation” and evidence of “ongoing development and investment in the technology and/or platform.” Both received 54% of responses.Is your company ready to tailor with technology?
Take interactive survey to find out >
Tailored with technology: Economic growth is the third in a series of papers from The Economist Intelligence Unit sponsored by ANZ. This report is based on the results of a survey of more than 750 executives across eight markets.
This paper was written by Chris Clague. Findings from the survey were supplemented with research and in-depth interviews with experts and executives. Our thanks are due to the following people, listed alphabetically by surname:
Simon Evenett, professor of international trade and economic development, University of St Gallen Gog Soon Joo, chief futurist and chief skills officer, Skills Future Singapore Andrew Hoad, chief executive officer, Asia, DP World Ritesh Kumar, chief executive officer, Indonomics Consulting Jayant Menon, lead economist, Office of the chief economist and director general, Asian Development Bank Yasunori Mochizuki, fellow for IoT, robotics and smart cities, World Economic ForumProgress Makers at Work: Building corporate cultures of progress
In today’s era of hyper-innovation and relentless competition, businesses around the world need to attract, engage and nurture individuals that embody a highly valued profile: the progress maker. Today this new breed of change agents has the capabilities to bring to their jobs a heightened global awareness, unprecedented digital empowerment and, increasingly, an innate motivation to do meaningful work with significant impact—both within their own organizations and in society at large. In growing numbers, they are ushering in a global culture of progress making them central to core business strategy at forward-thinking companies.
A new global study conducted by The Economist Intelligence Unit (EIU), in partnership with Citi, sheds light on this business trend and the role progress makers play in shaping its trajectory across industries and around the world. In January 2014, we surveyed 1,315 executives from organizations in a dozen industrial sectors worldwide about progress makers and organizational attitudes toward these key individuals. Twenty-five in-depth interviews were also conducted with experts, corporate decision makers and notable change agents in every world region.
The study shows that executives value progress makers as exceptionally strong contributors to organizational performance in a fast-changing digital, global and urban world. Companies are also being encouraged by customers, employees, investors and other stakeholders to incorporate progress makers’ increasingly integral social values into their corporate cultures. The growing influence of women and a new generation of millennials is also heightening this demand and making it a higher priority than ever for recruitment.
“Companies should cultivate an attitude of studying the emerging future, rather than studying the past,” says Ben Powell, CEO of Agora Partnerships, an investment firm that supports socially responsible businesses in emerging markets. “This is a time of incredible, accelerating change.”
The Global Illicit Trade Environment Index 2018
To measure how nations are addressing the issue of illicit trade, the Transnational Alliance to Combat Illicit Trade (TRACIT) has commissioned The Economist Intelligence Unit to produce the Global Illicit Trade Environment Index, which evaluates 84 economies around the world on their structural capability to protect against illicit trade. The global index expands upon an Asia-specific version originally created by The Economist Intelligence Unit in 2016 to score 17 economies in Asia.
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The Hinrich Foundation Sustainable Trade Index 2018
Yet the enthusiasm in Asia for trade does not appear to have waned. This broad societal consensus behind international trade has enabled Asian countries to continue broadening and deepening existing trading relationships, for example, by quickly hammering out a deal for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in early 2018 following the US’s withdrawal from its predecessor in 2017.
Asia, then, finds itself in the unique position of helping lead and sustain the global economy’s commitment to free and fair trade. It is in this context that the need for sustainability in trade is ever more crucial.
The Hinrich Foundation Sustainable Trade Index was created for the purpose of stimulating meaningful discussion of the full range of considerations that policymakers, business executives, and civil society leaders must take into account when managing and advancing international trade.
The index was commissioned by the Hinrich Foundation, a non-profit organisation focused on promoting sustainable trade. This, the second edition of the study, seeks to measure the capacity of 20 economies—19 in Asia along with the US—to participate in the international trading system in a manner that supports the long-term domestic and global goals of economic growth, environmental protection, and strengthened social capital. The index’s key findings include:
Countries in Asia, especially the richer ones, have broadly regressed in terms of trade sustainability. Hong Kong is developed Asia’s bright spot, recording a slight increase in its score and topping the 2018 index. Several middle-income countries perform admirably, led by Sri Lanka. For the economic pillar, countries generally performed well in terms of growing their labour forces as well as their per-head GDPs. For the social pillar, sharp drops for some countries in certain social pillar indicators contribute to an overall decline. For the environmental pillar, with deteriorating environmental sustainability in many rich countries, China, Laos and Pakistan are the only countries to record increases in scores. Sustainability is an ever more important determinant of FDI and vendor selection in choosing supply-chain partners. Companies are improving the sustainability of their supply chains by restructuring and broadening relationships with competitors and vendors.Breaking Barriers: Agricultural trade between GCC and Latin America
The GCC-LAC agricultural trading relationship has thus far been dominated by the GCC’s reliance on food imports, specifically meat, sugar, and cereals. Over the past two years, however, there has been a notable decline in the share of sugar imported from LAC, and 2017 saw the biggest importers in the GCC—Saudi Arabia and the UAE—impose a ban on Brazilian meat.
Market players on both sides of the aisle are keen to grow the relationship further, but there are hurdles to overcome. In this report, we explore in greater depth the challenges that agricultural exporters and importers in LAC and the GCC face. We consider both tariff and non-tariff barriers and assess key facets of the trading relationship including transport links, customs and certification, market information, and trade finance.
Key findings of the report:
GCC will need to continue to build partnerships to ensure a secure supply of food. Concerns over food security have meant that the GCC countries are exploring ways to produce more food locally. However, given the region’s climate and geology, food imports will remain an important component of the food supply. Strengthening partnerships with key partners such as those in LAC, from which it sourced 9% of its total agricultural imports in 2016, will be vital to food security in the region.
There is a wider range of products that the LAC countries can offer the GCC beyond meat, sugar and cereals. Providing more direct air links and driving efficiencies in shipping can reduce the time and cost of transporting food products. This will, in turn, create opportunities for LAC exporters to supply agricultural goods with a shorter shelf life or those that are currently too expensive to transport. Exporters cite examples such as berries and avocados.
The GCC can engage small and medium-sized producers that dominate the LAC agricultural sector by offering better trade financing options and connectivity. More direct air and sea links can reduce the cost of transporting food products, making it viable for smaller players to participate in agricultural trade. The existing trade financing options make it prohibitive for small and medium-sized players too. Exporters in LAC suggest that local governments and private companies in the GCC can offer distribution services with immediate payments to smaller suppliers at a discount.
Blockchain technology is poised to address key challenges market players face in agricultural trade. Through a combination of smart contracts and data captured through devices, blockchain technology can help to reduce paperwork, processing times and human error in import and export processes. It can improve transparency, as stakeholders can receive information on the state of goods and status of shipments in real time. Finally, it can help with food safety and quality management—monitoring humidity and temperature, for instance, along the supply chain can help to pinpoint batches that may be contaminated, minimising the need for a blanket ban on a product.
Resetting the agenda: How ESG is shaping our future
The Covid-19 pandemic has exposed a wealth of interconnections – between ecological and human wellbeing, between economic and environmental fragility, between social inequality and health outcomes, and more. The consequences of these connections are now filtering through, reshaping our society and economy.
In this setting, the need to integrate environmental, social and governance (ESG) factors when investing has become even more critical. Institutional investors must employ ESG not just to mitigate risks and identify opportunities, but to engage with companies to bring about the positive change needed to drive a sustainable economic recovery in the post-Covid world.
In order to understand how ESG could be both a new performance marker and a growth driver in this environment, as well as how institutional investors are using ESG to make investment decisions and to assess their own performance, The Economist Intelligence Unit (EIU), sponsored by UBS, surveyed 450 institutional investors working in asset and wealth management firms, corporate pension funds, endowment funds, family offices, government agencies, hedge funds, insurance companies, pension funds, sovereign wealth funds and reinsurers in North America, Europe and Asia-Pacific.
Download the report and infographic to learn more.
Changemakers: Exploring new economies
The theory of disruptive innovation, developed by Harvard Business School‘s Clayton Christensen, describes how a new product or business model relentlessly captures market share, eventually displacing incumbents. Unnerving though it can be, disruption is not something to fear. Indeed, it has become a fact of life. Some companies are embracing change and making it core to their business.
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The Hinrich Foundation Sustainable Trade Index 2018
Yet the enthusiasm in Asia for trade does not appear to have waned. This broad societal consensus behind international trade has enabled Asian countries to continue broadening and deepening existing trading relationships, for example, by quickly hammering out a deal for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in early 2018 following the US’s withdrawal from its predecessor in 2017.
Asia, then, finds itself in the unique position of helping lead and sustain the global economy’s commitment to free and fair trade. It is in this context that the need for sustainability in trade is ever more crucial.
The Hinrich Foundation Sustainable Trade Index was created for the purpose of stimulating meaningful discussion of the full range of considerations that policymakers, business executives, and civil society leaders must take into account when managing and advancing international trade.
The index was commissioned by the Hinrich Foundation, a non-profit organisation focused on promoting sustainable trade. This, the second edition of the study, seeks to measure the capacity of 20 economies—19 in Asia along with the US—to participate in the international trading system in a manner that supports the long-term domestic and global goals of economic growth, environmental protection, and strengthened social capital. The index’s key findings include:
Countries in Asia, especially the richer ones, have broadly regressed in terms of trade sustainability. Hong Kong is developed Asia’s bright spot, recording a slight increase in its score and topping the 2018 index. Several middle-income countries perform admirably, led by Sri Lanka. For the economic pillar, countries generally performed well in terms of growing their labour forces as well as their per-head GDPs. For the social pillar, sharp drops for some countries in certain social pillar indicators contribute to an overall decline. For the environmental pillar, with deteriorating environmental sustainability in many rich countries, China, Laos and Pakistan are the only countries to record increases in scores. Sustainability is an ever more important determinant of FDI and vendor selection in choosing supply-chain partners. Companies are improving the sustainability of their supply chains by restructuring and broadening relationships with competitors and vendors.The Global Illicit Trade Environment Index 2018
To measure how nations are addressing the issue of illicit trade, the Transnational Alliance to Combat Illicit Trade (TRACIT) has commissioned The Economist Intelligence Unit to produce the Global Illicit Trade Environment Index, which evaluates 84 economies around the world on their structural capability to protect against illicit trade. The global index expands upon an Asia-specific version originally created by The Economist Intelligence Unit in 2016 to score 17 economies in Asia.
View the Interactive Index >> Download workbook
Breaking Barriers: Agricultural trade between GCC and Latin America
The GCC-LAC agricultural trading relationship has thus far been dominated by the GCC’s reliance on food imports, specifically meat, sugar, and cereals. Over the past two years, however, there has been a notable decline in the share of sugar imported from LAC, and 2017 saw the biggest importers in the GCC—Saudi Arabia and the UAE—impose a ban on Brazilian meat.
Market players on both sides of the aisle are keen to grow the relationship further, but there are hurdles to overcome. In this report, we explore in greater depth the challenges that agricultural exporters and importers in LAC and the GCC face. We consider both tariff and non-tariff barriers and assess key facets of the trading relationship including transport links, customs and certification, market information, and trade finance.
Key findings of the report:
GCC will need to continue to build partnerships to ensure a secure supply of food. Concerns over food security have meant that the GCC countries are exploring ways to produce more food locally. However, given the region’s climate and geology, food imports will remain an important component of the food supply. Strengthening partnerships with key partners such as those in LAC, from which it sourced 9% of its total agricultural imports in 2016, will be vital to food security in the region.
There is a wider range of products that the LAC countries can offer the GCC beyond meat, sugar and cereals. Providing more direct air links and driving efficiencies in shipping can reduce the time and cost of transporting food products. This will, in turn, create opportunities for LAC exporters to supply agricultural goods with a shorter shelf life or those that are currently too expensive to transport. Exporters cite examples such as berries and avocados.
The GCC can engage small and medium-sized producers that dominate the LAC agricultural sector by offering better trade financing options and connectivity. More direct air and sea links can reduce the cost of transporting food products, making it viable for smaller players to participate in agricultural trade. The existing trade financing options make it prohibitive for small and medium-sized players too. Exporters in LAC suggest that local governments and private companies in the GCC can offer distribution services with immediate payments to smaller suppliers at a discount.
Blockchain technology is poised to address key challenges market players face in agricultural trade. Through a combination of smart contracts and data captured through devices, blockchain technology can help to reduce paperwork, processing times and human error in import and export processes. It can improve transparency, as stakeholders can receive information on the state of goods and status of shipments in real time. Finally, it can help with food safety and quality management—monitoring humidity and temperature, for instance, along the supply chain can help to pinpoint batches that may be contaminated, minimising the need for a blanket ban on a product.
Corporate Innovation: An Oxymoron?
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Steering through collaboration: CFOs driving new priorities for the future
It is well established that the modern CFO has a more strategic role to play in a business, but a clear action plan to achieve this is lacking. A key element of this is helping the business to deal with change. Some changes are planned: launching a new product or service, setting up operations in a new region or acquiring a competitor. Others may be unexpected: a major disruption to supply-chain operations, the emergence of new regulation and legal reporting requirements or the unpredictable impacts of global economic uncertainty.
Either way, when asked about the biggest challenges they face in executing their day-to-day activities, change is a recurring theme, according to a new survey of 800 CFOs and senior finance executives, conducted by The Economist Intelligence Unit. Managing unexpected changes to financial forecasts and adapting finance processes to rapidly evolving business models are top of mind.
Managing unexpected changes to financial forecasts and adapting finance processes to rapidly evolving business models are top challenges finance executives face in executing their day to-day activities.
Finance executives are also concerned with identifying how to align strategic, financial and operational plans towards common objectives and meaningfully analysing data across business units and regions. “All functions are working to meet these challenges and, as a finance head, we have to have visibility across all functions, how they are progressing [towards meeting goals] and ensuring that their direction is in line with overall strategic goals,” says Lalit Malik, CFO of Dabur, an Indian consumer goods manufacturer. It is incumbent upon CFOs therefore to be prepared not only to help their own function navigate uncharted territory, but the rest of the business too. That means breaking down the silos that commonly exist in organisations, in order to collaborate closely across functions, sharing information and data in the pursuit of common objectives.
All functions are working to meet these challenges and, as a finance head, we have to have visibility across all functions, how they are progressing [towards meeting goals] and ensuring that their direction is in line with overall strategic goals - Lalit Malik, CFO of Dabur, an Indian consumer goods manufacturer.
The clear custodian of collaboration
There are a number of reasons why the role of leading cross-company collaboration around steering should fall to the CFO and their team. First, through the activities of budgeting, the finance function is the custodian of the clear, quantitative expression of management expectations and determines how resources such as cash and people will be allocated in order to achieve them. In our survey, 90% of respondents say that finance should facilitate collaborative enterprise planning to ensure that operational plans are aligned with financial and strategic plans.
Second, through performance management, the finance function is the gatekeeper for critical data that illustrate how well—or otherwise—the company is rising to the challenge of change. That includes data relating to sales, supply chain and delivery, which need to be reported back to the business in ways that help drive improved decisionmaking. Our survey reveals that companies in which finance executives feel empowered to drive strategic decisions across business functions are more likely to report a higher financial performance in fiscal year 2016/17 and 2017/18 and anticipate higher growth rates for 2019/20.
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Transforming data into action
As businesses generate and manage vast amounts of data, companies have more opportunities to gather data, incorporate insights into business strategy and continuously expand access to data across the organisation. Doing so effectively—leveraging data for strategic objectives—is often easier said than done, however. This report, Transforming data into action: the business outlook for data governance, explores the business contributions of data governance at organisations globally and across industries, the challenges faced in creating useful data governance policies and the opportunities to improve such programmes. Learn more by downloading our whitepaper below.
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