Things of Note - June 27, 2019

More background reading today, with the Sustainability trends report from Generation to digest plus a stark reminder that people - your organization’s greatest asset may forever be your greatest liability.

Sustainability Trends

Generation - the sustainable investment manager chaired by Al Gore - published their sustainable trends deck this week.

It’s shorter than Mary Meeker’s internet trends report and a valuable counterpoint. It starts by highlighting our entry into an age of environmental breakdown whilst our social and economic fabric is fraying.

Many countries have become more unequal - which is contributing to the rise of populism. Economic and social impacts are evident, with insured losses from catastrophes at $79bn globally in 2018 and a probable rise in climate refugees.

The main trends report is presented in six chapters - Finance, Health, Consumption, Energy, Industry and Mobility.

Innovations have boosted the wealth and income of middle-class families, and are able to reduce poverty. Improved “matching” of workers with job opportunities helps reduce underemployment and Technological innovation can help to improve financial inclusion

Technological innovation can help improve financial inclusion

Technological innovation can help improve financial inclusion

(Fintech includes “all credit activity facilitated by electronic (online) platforms that are not operated by commercial banks”)

Capital is moving towards sustainable investments - with large institutional investors notably divesting unsustainable assets.

Institutional investors divesting unsustainable assets

Institutional investors divesting unsustainable assets

With some consumers becoming more interested in buying used goods or renting them, subscription models are gaining traction globally.

Subscription models gaining traction globally.

Subscription models gaining traction globally.

Smart meters, improvements in insulation, LED lighting all help households cut emissions. Smart meters becoming mainstream, with close to 800m installed globally, but privacy and cyber security may constrain further rollout.

Smart meters have entered mainstream, but momentum may slow due to cyber-security concerns.

Smart meters have entered mainstream, but momentum may slow due to cyber-security concerns.

With agriculture consuming around two thirds of all fresh water and half of all habitable land globally, smarter solutions to reduce the footprint of food are needed.

AI and robotics are having increasing impacts in Ag-Tech - providing insights on soil health and yields, and helping monitoring and verification of agriculture and forestry.

AI and Robotics (Ag Tech) having increasing impact on Sustainable Agriculture

AI and Robotics (Ag Tech) having increasing impact on Sustainable Agriculture


Human risks

Ex-UBS compliance officer Fabiana Abdel-Malek found guilty of insider trading by UK jury this week.

The FCA successfully argued she passed confidential deal information to Walid Choucair, who then traded stocks to make over $1million dollars in illicit profits.

When UBS CEO Sergio Ermotti was on the SIBOS stage with IBM’s Ginny Rommety in 2016, he said something notable.

By then, he said, he was only minimally concerned with Market and Credit risk. For him, for UBS and for the industry, **Operational** risk was the principal focus.

In banking - where relationships are still relevant - your human capital can lyrically be considered your greatest asset. But without a strong ethics culture, your humans may remain your greatest liability.