[MUSIC PLAYING]
ANDREW HILL: Trust is still low 10 or more years
after the financial crisis, and that seems a good enough reason
to say we need to rethink the various fixes that
were put in place after the 2008-2009 crisis
and see what more profound change can be brought through
into business and finance.
A movement to reset capitalism is already underway.
One opportunity in 2020 is that lots of business people
are now talking about purpose and the need
to instil new ways beyond pure shareholder value.
GILLIAN TETT: What you're seeing happening
today is a very necessary return to stakeholder capitalism,
if you like, i.e., the idea that business and markets should
be set within a wider social context
and a legal and political framework.
We're not just moving from a world of narrow shareholder
focus to stakeholder focus.
We're also moving towards a world where investors
increasingly recognise they need to look at the long term.
You need to have a wider sense of what context you're
operating in.
KATIE MARTIN: Investors and business executives are people
just like you and me.
They have children.
Those children are skiving schools on Friday
to go on strike against the environment.
And this really sharpens the issue for people.
Suddenly, investors are looking much more seriously at,
how do we become good stewards of the global environment?
How do we look ourselves in the eye in 20 years
time and think that we did the right thing?
ANDREW HILL: Each year that we advance into the 21st century,
a younger generation is worried about the purpose
of the corporation, the purpose of capitalism.
And that's an optimistic sign, I think,
that people will be able to lead this change in 2020 in ways
that they weren't necessarily in previous years.
KATIE MARTIN: So where is this change
going to come from over the next year?
Well, there's lots of statistics out there
that show that the younger people are,
the more they care about these issues.
These young people are going to become customers
of banks, of pension providers, of the entire financial
services industry.
The competitive pressure that's going
to come from firms looking to snag business from these people
as they develop wealth, as they become older,
is getting increasingly intense.
ANDREW HILL: There will be an increasing clamour of people
asking for business leaders to deliver on promises that they
made in 2019, notably, the Business Roundtable.
People will start asking those 180 or so signatories
of that statement, what have they actually done in 2020?
KATIE MARTIN: For the finance and market sectors
that I'm primarily focused on, the real thing
is figuring out how to get money to green projects.
How do we issue green bonds?
How do we help companies that are trying to transition away
from being dirty, oily companies into green technology?
Where does the money come from for that process?
That's what bankers and investors are definitely
grappling with now.
And they know that if they don't get this right,
that next generation, the Greta Thunberg generation,
is not going to be interested in using their services.
ANDREW HILL: On the downside, of course,
although we might hope in 2020 for there to be more regulatory
and policy change to try and reset and curb the worst
excesses of capitalism, there are
going to be distractions, notably the US
presidential election and impeachment, and also,
in the European scenario, Brexit,
and in Asia, China and Hong Kong.
GILLIAN TETT: So any investor who's looking at a company
or the corporate landscape needs to recognise that if you ignore
those risks, you're in danger of essentially seeing the value
of your assets being impaired.
So if you want to understand the reset that's
going on right now, it pays to think about fear and greed.
The fear element is pretty clear cut.
Essentially, what you have are many C-suites who are waking up
and realising that if they don't start paying attention
to stakeholders, they face regulatory pressure.
They face consumer backlash.
They sometimes face their own protest
from their own employees.
And they also face potential investor pressure.
But the greed element is important too.
Some companies also recognise that if they start looking
at stakeholders more broadly, they can build for the long
term.
If they can get ahead of the really important
social and environmental changes right now,
be that renewable energy, be that non-meat alternatives,
be that other ways that you can tap into the growing concerns
amongst consumers for sustainable products,
if you can do that, then often you
can make more money in the long term anyway.