FCLTGlobal Members convene to identify actions to drive long-term sustainable economies
In April and May 2020, FCLTGlobal hosted virtual roundtable discussions for Members to discuss how to effectively manage their organizations in the face of the global coronavirus pandemic. The current situation has accelerated the arrival and impact of many long-term trends and tested the resilience of all organizations. In these discussions, leaders focused on decisions that they are making now that will have long-term consequences.
Paul Polman, a long-time FCLTGlobal board member and the Co-founder/Chair of IMAGINE, hosted both meetings and facilitated the discussions.
Neil Cunningham, PSP Investments
Stephen Dainton, Barclays
Carmine Di Sibio, EY
Lars Dijkstra, Kempen Capital Management
Charles Emond, Caisse de dépôt et placement du Québec
Larry Fink, BlackRock
Martin Gilbert, Aberdeen Standard Investments
Ivan Glasenberg, Glencore
Peter Harrison, Schroders
Lodewijk Hijmans van den Bergh, De Brauw Blackstone Westbroek N.V.
Jean Hynes, Wellington Management
Daniel Klier, HSBC
Richard Lacaille, State Street Global Advisors
Jim Liddy, KPMG LLP
Chow-Kiat Lim, GIC
Mark Machin, CPP Investments
Afsaneh Mashayekhi Beschloss, RockCreek
Clarke Murphy, Russell Reynolds Associates
Nitin Nohria, Harvard Business School
Barbara Novick, BlackRock
Saker Nusseibeh, Federated Hermes
Eugene O’Callaghan, Ireland Strategic Investment Fund
Charles Plowden, Baillie Gifford
Paul Polman, IMAGINE
Jean Raby, Natixis Investment Managers
Olivier Rousseau, The French Pension Reserve Fund (FRR)
Dilhan Pillay Sandrasegara, Temasek International Pte. Ltd.
Kevin Sneader, McKinsey & Company
Carsten Stendevad, Bridgewater
Jaap van Dam, PGGM
Mark Weinberger, EY (fmr.)
Sarah Keohane Williamson, FCLTGlobal
Lei Zhang, Hillhouse Capital Group
Guests provided insights from different industries, sectors, and geographies, providing a unique set of vantage points on how global business is approaching COVID-19 and how it will progress in the aftermath. Among the chief observations our Members discussed:
Responding to the crisis
As one participant put it, “Our 10-year planning has suddenly turned into 10-week planning.” For many leaders, the onset of COVID-19 has taken what were once thought to be longer-term objectives and turned them into immediate needs. Specific actions include:
Ensuring people are paramount. Safeguarding employees’ welfare is the priority for virtually every company and will be important to sustaining them during and after the crisis.
Completely rethinking travel. One guest remarked that their company’s billion-dollar travel budget has dropped to zero calling into question the necessity of such extensive business travel moving forward. Not only does this make sense in the near term, but it will have a long-lasting effect on companies’ impacts on climate change.
Managing both the short and long term. Some organizations are creating distinct teams to focus on COVID-19 response and on preexisting and long-term initiatives. One participant noted that we need to “keep up the ambition” despite unfamiliar working conditions.
Acclimating to the future of work
There was broad agreement that employees will not universally revert to the old model of work once the crisis is over. Rather, companies will acclimate to a new way of working and continue the innovations borne of necessity – one participant thought about this concept as “sustaining the gain” beyond the crisis. There were a number of other ideas on how to adapt to a newer idea of work:
Embedding more flexibility into work. Many companies have responded well to remote operations and have found ways to increase productivity while operating independently. While 100% remote work will not last, there is a recognition that productivity does not necessarily require the real estate, commutes, and face time of the past.
Adapting to the increased role of government. A Member commented that this crisis will “herald the return of big government in a way that we have not seen in 20-30 years.” Today the focus is on stimulating economies, but over time the bill will come due and the expectations for government support have risen. Many are questioning the acceptance of markets as allocators of goods and services, or as one participant put it “society has accepted that financial returns no longer matter most.”
Emphasizing the benefits of global collaboration. Some countries’ responses to the pandemic have led to a rising sense of nationalism, both socially and economically. While the private sector depends on cross-border cooperation, the crisis has already sent deep shockwaves into global supply chains and trade. The implications – particularly in the case of the US-China relationship – will be far-reaching.
Preparing for future crises
Members on the call recognized that the past few months have served as a lesson for similar situations in the future. Learning more about an organization’s resilience now will help leaders prepare for whatever may come next. Actions taken today that can have a ripple effect well beyond 2020 include:
Recognizing the urgency of climate change. While this pandemic had a fairly short lead time, we are forewarned about the impact of climate change. Whether by climate-sensitive portfolios, climate competent board members, or climate aware supply chains, the question of how to mitigate the effects of climate change and bring about a greener economy must be addressed today.
Questioning the longevity of “winner take all” economies. We have seen this crisis exacerbate the existing rifts in income and healthcare inequality among populations worldwide. This raises questions over the role of a corporation, especially those in tech and healthcare sectors where access is increasingly essential. Those on the call felt that decisive action now is necessary to build sustainable economies with broader opportunities for advancement for everyone.
Building trust in leadership. Companies and investors are now drawing on the reserves of trust and culture they have built over the years. Companies need to rebuild those reserves by providing strong leadership with transparency toward all of their stakeholders – suppliers, customers, employees, shareholders, and communities.
FCLTGlobal’s mission is to rewire capital markets to support a sustainable global economy. Maintaining this focus, while at the same time incorporating the lessons of this crisis, is critical to this work. In light of our Members’ insights, several recommendations and agenda items have come to the forefront:
Pushing for non-traditional metrics that reflect a new path forward. “We must be bolder in what we do and what we report,” said one Member. Participants agreed that the way companies and investors report on their businesses – to investors, to customers, to employees – must change to suit the new social and sustainability norms that this situation demands. There was also consensus that those companies ending quarterly guidance in response to uncertain forecasts should not take it up again once the crisis eases.
Thank you to all who joined our roundtables in April and May. We look forward to continuing these critical discussions for as long as they are helpful. To learn more about our upcoming events or future programming opportunities, contact us at [email protected].