Political, business, cultural and other leaders attended The World Economic Forum (WEF)’s virtual Davos Agenda sessions on 17-21 January to discuss solutions to some of the world’s greatest challenges. A common theme emerged: the global pandemic has reset everything and taught us a valuable lesson about global humility and the importance of preparedness, but also the power of innovation and hope.
Whatever normal was, we are not going back to it - Annabel Spring, CEO for HSBC Global Private Banking
The future of trade is digital and green
The tech revolution will also have major implications for global trade and the future of supply chains. For example, what changes when trade is recorded on the blockchain? Trading ports become digital platforms, and physical transport becomes more transparent and trackable. It feels a world away from our current supply challenges, but these shocks revealed our dependence on each other, scarce global resources and, of course, semiconductor chips.
And when this data tracking is combined with ESG… The requirements to stop modern slavery and meet science-based targets to reduce emissions are changing the core of trade, as well as the accountability and tracking of it.
Climate innovation was also a hot topic, as speakers argued that technology will advance the green revolution faster than anyone can imagine. For example, green hydrogen as a fuel source can already be used to power ships.
“In this way, environmentalism can change the shape and cost of trade, and that is an investment opportunity,” says Spring. “If the future of trade is green and digital, we will need to work out how to change the rules of trade and modernise existing frameworks to ensure they are fit for the future.”
Corporates and nations will be tested against these scenarios in order to ensure we ‘build back smarter’ as the global economy reopens.
Investing for a resilient future
This year’s virtual WEF saw a noticeable refocus from economic and political issues to environmental and social ones. The human emotional toll of the pandemic has helped change the conversation, suggests Spring. “Recognising our shared vulnerability has led to a focus on the impact of events on people, rather than corporations or nations, and that is a big shift. There is a humility that comes with this.”
Many of the innovations we have seen recently, from vaccine R&D to green energy to satellite technology, would not be possible without entrepreneurial ambition and private sector capital. Philanthropy has a role to play too. “Innovation-based philanthropy is about being the first slice of capital to invest in new ideas and new experiments to support communities,” says Spring.
Traditionally this has often meant access to education or healthcare, but now new opportunities such as rewilding, while not immediately commercial, has been found to regenerate entire communities around diversified economic and social opportunities. “Meanwhile, the private sector’s role in investing to support the transition to a more inclusive, sustainable economy cannot be understated.”
Global powers have been humbled by the events of the last couple of years, she adds. “That lesson of vulnerability is a healthy one as we look at what’s happening around the world. We’ve been unprepared for a global pandemic; are we still going to be unprepared for climate change? I hope the answer is no, given global cooperation and technological advancements.”
As we look to the months and years ahead, we should use the lessons learned to form connections, collaborate and advance ambitious goals. To build back smarter and create a more resilient future, investor capital and business action will be a key piece of the puzzle.
The messages highlighted during the week’s panels align with many of our structural investment themes. Watch our Global CIO Willem Sels discuss investing in the year ahead, and read more investment insights here.