THE NEW GEOPOLITICAL WORLD ORDER
Natixis Investment Managers Summit November 6-7, 2018
PROGRAM HIGHLIGHTS
VIDEO HIGHLIGHTS
OPENING REMARKS
THE HEART OF THE MATTER
CLOSING REMARKS
OUR ACTIVE THINKING APPROACH
BY THE NUMBERS
Who said what
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MESSAGE FROM THE CEO
Rising populism, accelerating technological advancement, and global monetary policy are reshaping the world as we know it. Our inaugural Natixis Investment Managers Summit put these and other critical issues at the center of a discussion of what the “new geopolitical order” means for investors across the globe.
SESSION HIGHLIGHTS OPENING REMARKS
WATCH THE FULL SESSION
09:08
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Master of Ceremonies Ayo Akinwolere asks Jean Raby why Natixis organized the Summit.
INTERACTIVE Q&A
Held at the historic Palais Brongniart in Paris on November 7, 2018, the Summit brought together world leaders, public policy experts, leading minds in innovation, technology, energy, and security, and capital market experts to examine political and economic realities and challenge conventional thinking about the world as we know it. As a firm built on the guiding principle of Active Thinking , Natixis Investment Managers is uniquely able to construct a program that diverges from traditional investor conferences. We’re a multi-affiliate asset manager: Seeking out diverse opinions and divergent analysis to gain deeper insight is imprinted in our DNA. Each of our investment affiliates applies Active Thinking in its own way. Each follows its own rigorous investment process. Each frames decisions within its own long-term view. And while unique in their approach, our affiliates share one thing in common – the relentless pursuit of alpha on behalf of clients around the world. Even with a wealth of investment talent within our organization, we know it’s critical to look outside our own walls for clarity on the vast range of political, social, and economic trends influencing markets across the globe. There were no macro outlooks at the Summit, and no sessions outlining where we find opportunity. Instead, our panelists offered compelling perspectives on the future of Europe, insight into the thinking behind post-crisis regulatory reform for financial markets, instant analysis of the US mid-term elections, and pointed discussions about global energy security. Our Summit allowed nearly 500 delegates to experience Active Thinking for themselves. I am pleased we can now share that experience with you. Jean Raby Chief Executive Officer Natixis Investment Managers
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François Riahi Chief Executive Officer Natixis
SESSION HIGHLIGHTS Closing REMARKS
12:32
Speaker opinions may not necessarily be those of Natixis Investment Managers. Not all speakers are employed by Natixis Investment Managers, but may receive compensation for their services. Content should not be considered a solicitation to buy or an offer to sell any product or service to any person in any jurisdiction where such activity would be unlawful. The Natixis Investment Managers Summit was hosted by Natixis Investment Managers. Natixis Investment Managers includes all of the investment management and distribution entities affiliated with Natixis Distribution, L.P. and Natixis Investment Managers S.A. Additional Disclosures I Appendix
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ABOUT THE NATIXIS INVESTMENT INSTITUTE
The Natixis Investment Institute applies Active Thinking to critical issues shaping the investment landscape. A global initiative, the Institute leverages expertise in macroeconomics, investor sentiment and portfolio construction within Natixis Investment Managers, along with the unique perspectives of our affiliated investment managers and experts outside the greater Natixis organization. Our goal is to fuel a more substantive discussion of issues with a 360° view of markets and insightful analysis of investment trends.
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APPENDIX
BUZZ AROUND TOWN
See what delegates had to say about the Summit
“I was very impressed by the level of speakers and attendees; it was a lot more interesting than the typical [financial services] conferences we usually attend…I am very grateful and humbled to have been part of the eminent list of speakers. Thank you and bravo!”
“Better than Davos…”
“The best private sector event I have ever seen…”
“A massive success, by any measure. Congratulations most of all on the strong, collegial and forward-thinking culture that came through so loud and clear in Paris.”
“A really outstanding event, an opened window on our global and dynamic world.”
“Discussing subjects outside the pure financial area, still impacting both our future professional and personal lives, was refreshing and inspiring. Thanks for having provided this opportunity.”
“The most thoughtful, well-orchestrated client event I have ever witnessed…truly a standout on so many dimensions of quality and experience!”
“Amazing speakers, numerous insights, balanced program, wonderful ambience, fantastic networking opportunities, and superb organization. Nothing left to chance. Overall, a top-notch memorable event, setting a high bar in thought leadership. I felt honored to be part of it.”
“This was our first Natixis Investment Managers Summit, and we feel that it comes at a crucial time. The world is facing greater uncertainty today than at any time since the end of the Cold War, and what will be the new normal is still very much unclear. The world is also facing structural long-term challenges that require coordinated global action, such as climate change, migration, aging societies and disruptive technology. It is the responsibility of all of us: finance and the corporate world, NGOs and academia, listed companies and start-ups, to come together with governments to work towards solutions to global problems.”
“For those of us in the financial world tasked with investing and financing a long-term horizon, the uncertainties and rapid changes we are facing require us to constantly challenge and reassess our assumptions. I hope that this Summit, which had that purpose, helped you to move forward in this respect, nourishing your ideas and informing the decisions you will have to make in the coming weeks and months.”
“A good Summit is about having the best possible agenda, with the most fascinating speakers discussing world-defining topics. However, this is only the framework. The true success of our Summit has been and will be the interaction it has engendered, the conversations it allowed and will allow, and the ideas it sparked.”
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SESSION HIGHLIGHTS
“You change governments but you don’t change people,” said Nicolas Sarkozy. “In the end, it’s always people who are right.” The former French President was discussing the future of Europe in an extraordinary panel with former Italian Prime Minister Matteo Renzi and former German Chancellor Gerhard Schröder. In a conversation ranging from Brexit to migration, the leaders sometimes agreed and were sometimes at odds. They did not hesitate to poke fun at one another – Schröder joking that it was impossible to be to the right of Sarkozy – and they rarely pulled punches.
Europe’s problems are not all internal. Migration from Africa, an ascendant China and a hostile American administration all present external problems that need to be faced. Three former European heads of state discuss how these and other issues are reshaping the political landscape.
The conversation opened with the elephant in the room, Brexit – which all agreed is a nightmare for Europe and a bigger one for the United Kingdom. But it is not a uniquely British problem, said Sarkozy. It is indicative of a greater malaise – that Europe is stuck in a model from the past: “You could have asked the same question in any one of the 27 other countries and gotten the same answer.” Sarkozy suggested we offer the British a new treaty, asking them “not to vote again on Brexit but to vote on whether they want to construct the future of Europe with us.”
Renzi noted that the battle for Europe is largely cultural. “It is a question of identity. What is identity today, what are the reasons for a feeling of belonging, why you are an Italian citizen, or French, or German, or European. What are your values?” For every euro spent on defense or policing, he explained the same amount should be given to schools, museums and theaters.
Rethinking Europe’s future
Migration loomed large over the discussion. When asked what he thought of his successor’s immigration policy, Schröder responded that Angela Merkel should have discussed it with the rest of Europe first. “She had a lot of heart at that time but no plan or interior policy,” he said. “In Germany now we have a lot of problems with populist parties because of this decision.” Renzi, the only one still practicing politics, explained that Italy’s current support for anti-migrant policies comes from a message of fear spread by the populist government – when in fact Italy has among the lowest percentage of migrants in Europe. Reality, he said, is the populists’ main enemy. And because this government won’t be able to fulfill its campaign promises, he predicts Italy’s populist experiment will end sooner rather than later. “The migration crisis has not even started,” Sarkozy said. “You haven’t seen anything yet.” In 30 years, Africa’s population is expected to grow to 2.5 billion people, and if Africa does not develop, “we’re cooked.”¹ Sarkozy said Europe must help Africa by building major infrastructure there, with the expectation that the continent do business with Europe rather than China in return.
Migration and populism
In order to compete politically and economically with China and the United States, all feel that Europe needs to be stronger, more independent and more integrated. Of the current US administration, Schröder said, “We cannot accept in Europe that the US – friends, allies – tell us with which countries we can deal and do business.”
Europeans standing together
POLITICS
Featured Experts from the Natixis Investment Managers Summit: • Matteo Renzi, Italian Prime Minister (2014–2016) • Nicolas Sarkozy, President of the French Republic (2007–2012) • Gerhard Schröder, German Chancellor (1998–2005) • Moderators: Marie Drucker, Broadcaster & TV Host; Jean Raby, Chief Executive Officer, Natixis Investment Managers
THE WORLD IN THE MAKING: A PRESIDENTIAL PERSPECTIVE
As Jean Raby explained, this conversation was meant to reflect the varying perspectives of the Natixis Investment Managers Summit: “We thought that the perspective of a European leader – each in their own time, each in their own era, from different countries – was exactly embodying that spirit.”
Sarkozy agreed, shocked to see French companies now refusing to do business with Iran out of fear. He said it’s primordial for Europeans to stand up and defend all that their parents and grandparents have built. “People are not easy to govern, but we can’t do anything without you. You have more power than you imagine.”
Speaker opinions may not necessarily be those of Natixis Investment Managers. Not all speakers are employed by Natixis Investment Managers, but may receive compensation for their services. Content should not be considered a solicitation to buy or an offer to sell any product or service to any person in any jurisdiction where such activity would be unlawful. The Natixis Investment Managers Summit was hosted by Natixis Investment Managers. Natixis Investment Managers includes all of the investment management and distribution entities affiliated with Natixis Distribution, L.P. and Natixis Investment Managers S.A. Additional Disclosures
CHANGE DRIVERS
FINANCE
NEXT FRONTIER
1:02:25
Featured Experts from the Natixis Investment Managers Summit: • Juan Manuel Santos, President of Colombia (2010–2018) and Nobel Peace Prize Laureate • In conversation with: Prince Zeid Ra’ad Al Hussein, Former UN High Commissioner for Human Rights; Prince of the Royal Hashemite Kingdom of Jordan
The arc of history provides a global perspective on the origins of conflict. Juan Manuel Santos finds three threats in the current political and economic matrix: environmental destruction, the rise of nationalism and populism, and weakness in the institutions that provide checks and balances. Zeid Ra’ad Al Hussein believes the greatest threat comes from a generation of leaders playing with fire. Both draw parallels to the 1920s and 1930s, “when the law of the jungle became the law in the long term,” according to Santos. An optimist, Santos believes society will ultimately return to the center. To achieve success, leaders must create the right conditions, and this is where the private sector and media have a role to play.
Us vs. them is the mindset that’s served as a catalyst for social and political conflict sweeping the world. In this dynamic conversation, Nobel laureate and former Colombian President Juan Manuel Santos says the first step to solving critical conflicts is to treat opponents as adversaries, not enemies.
How did Santos achieve peace in Colombia when all others had failed? “You have to be a hawk and then you have to be a dove,” he said, attributing the advice to a retired general, who also told him to treat “adversaries as adversaries, rather than enemies”: “We achieved it by respecting your adversary, giving him dignity, building a bridge and creating the conditions.” For this, working with regional neighbors is key, he said. In addition, in reconciliation processes we see the positive flipside of the “emotions” that populists can manipulate – the healing power of “apologies” and “truth.”
Today’s mounting anxieties come from national elections that have a global impact, said Al Hussein. “We have players in the political field who are not playing by the rules…. After the experience of the Second World War you have recognition for two generations that there is a set of tools you don’t touch: generate fear through half-lies and mistruths, point it at a
defined category of people, and build anxieties into a political platform.… A generation of new politicians are dipping their hands into this toolbox, otherwise prohibited, because it’s so successful and dangerous.” His question to Santos was: How do we stop this? For Santos, a former journalist, the media must reclaim its role as “intermediaries of information” – a role that has been eroded by the power of social media and an atmosphere where emotions speak louder than logic. In Venezuela, Brazil, Mexico, “we see the extremes did not work.” But he is hopeful the US mid-terms could indicate “the pendulum is swinging back to center.”
Dipping into a dangerous toolbox
Lessons from the FARC
Al Hussein asked Santos about his discussions on Venezuela with Donald Trump, whose initial comment had been: “When do we invade?” Santos, who wondered if the President was “half joking or half serious,” said he saw his South American neighbor as a plane that had run out of fuel: Whether it crashes or has a soft landing depends on multiple stakeholders, and the United States’ diplomacy is
A soft landing for Venezuela
If a stronger media is one way to bolster society against worrying trends, the private sector too has a major role to play. Santos quoted the example of the Pacific Alliance trade bloc, and private-sector commitment to environmental goals. In the light of Brazilian President Jair Bolsonaro’s climate-catastrophic election promises, responsible choices by companies and shareholders are crucial, requiring decisive leadership at Board level.
When the private sector can lead
needed to get China, Russia and Cuba on board. In return Santos asked Al Hussein for his solution on Iran. For the former diplomat, the US mid-terms may be a decider, with domestic threats either making Trump more likely to strike, or the reverse.
51:29
THE FUTURE OF EUROPE
Beset by crisis after crisis, the European Union has its back to the wall, with rising populism threatening to derail the institution from within. Now – or never – is the moment for the EU to reform and address the weaknesses that the far right has leveraged for its own ends and create a narrative that can attract those who may have been disenfranchised. The good news is that Brexit actually generated a groundswell of support for the European project, offering a window of opportunity.
The shock of the UK’s Brexit vote and rising populism across the continent lead many to question the long-term viability of the European Union. Seven decades into the experience, panelists say the best way to keep the EU intact is to change.
The economic crisis, the Greek default, Germany’s refugee crisis, Brexit: From the outside, the EU looks like “chaos,” said Karl-Theodor zu Guttenberg. But it is also a wake-up call. “And I’d like Europe to respond to that wake-up call far more coherently than it does now.”
Chaos, and a wake-up call
Angela Merkel’s migrant mistake was actually a communications mistake and the assumptions she made about how other leaders would behave, said zu Guttenberg. The surge in populist parties has not yet reached its height, said expert Alina Polyakova, observing that their rise is partly filling a vacuum created by the collapse of centrist and center-left parties across
Populism surge not over
Instead of provoking a rash of other exits, Brexit has strengthened belief in the European project, said Verhofstadt, quoting a 66% acceptance level across the EU recorded by Eurobarometer.¹ Meanwhile, he notes that Merkel’s would-be successors are all pro-Europe, which will make life easier for Emmanuel Macron. In Polyakova’s view, Europe itself
So what’s the good news?
Featured Experts from the Natixis Investment Managers Summit: • Alina Polyakova, Rubinstein Fellow, The Brookings Institution; Professor, Johns Hopkins University • Guy Verhofstadt, Brexit Negotiator, European Parliament; Former Prime Minister of Belgium • Karl-Theodor zu Guttenberg, Former German Minister of Economics and Technology; Former German Minister of Defense • Moderator: Ayo Akinwolere, Broadcaster and Writer
No one on the panel argued with the “chaos” analysis, least of all Guy Verhofstadt. Visibly exasperated by the very institution he is tasked with defending, he pointed to the failure to come up with a common migration and asylum policy, and the failure to deal with the fallout from the financial crisis, among many others. “We have a problem and it’s an institutional problem,” he lamented. “If we are not capable to re-found it, to reform it, then I predict in two, three, five years the return of the populists and the nationalists but in higher figures than we see it now. That could be the end of the whole story.”
Europe. The challenge for pro-Europe politicians is: “How do we reinvigorate that central-left vision? How do we get people, especially younger people, to buy into the vision of Europe that the last generation laid?” Elections in Hesse, where there is “almost no unemployment,” bear out her theory that voting for the far right does not necessarily reflect real economic conditions, but a more abstract fear. Zu Guttenberg said the fight back demands “a narrative that really flies with those who are fearing, over-anxious regarding the future.”
underestimates its economic and soft power capabilities and needs to use them more on the global stage. For this, big changes are needed, said Verhofstadt, starting with introducing euro-securities and rethinking defense. But, he continued, “I think in 2019 there is an opportunity to make an alternative vision on the future of Europe, with a number of reforms as an alternative against populists and nationalists, and if that doesn’t happen, then the worst scenario is possible, because people are going to say, ‘Okay, you’ve got the possibility now to reform it and it didn’t happen.’” Whether his fellow Eurocrats can rise to the challenge remains to be seen.
42:39
THE US MID-TERM ELECTIONS: INSTANT ANALYSIS
“America is unbelievably tribal today, and the tribalism was not mitigated, it was exacerbated,” said Andrew Card, a former White House Chief of Staff and the Chairman of the National Endowment for Democracy, speaking the morning after the US mid-term elections at the Natixis Investment Managers Summit.
Two tribes went to the polls in the 2018 US mid-term elections and came back as polarized as ever. Meeting hours after results were tallied, panelists offer a real-time assessment of the political implications in the US across the globe.
The biggest surprise this November was that there were no big surprises, analysts said. “For all the talk of how bad the polls have been, the pollsters basically hit it out of the park,” said Dave Lafferty, Chief Market Strategist at Natixis Investment Managers. The only ones who got it wrong, according to Card, were the “pundits and the partisans.” “The blue wave was not a wave that anyone could ride on a surfboard,” he said, adding that the House majority would give the Democrats new momentum, but wouldn’t significantly alter the dynamics there. “They don't control it by enough votes to be able to mandate anything on Congress,” he said. They can, however, be expected to exert another kind of power, for example by launching investigations. And Democrats may actually be an asset to the White House if they are able to meet President Trump at the negotiating table.
No big surprises
As for the immediate market reaction in the wake of the mid-terms, there were no “major earthquakes” there either, according to Francesco Guerrera, the Head of International at Dow Jones Media Group. In the longer term, Guerrera saw three areas that might be impacted by the results. He’s already seen some bets placed on infrastructure, although he
Guerrera, however, is more wary, stemming from his general alarm about the polarization of the media and the rise of social media as a news source. “I’m heartened that more people have voted, but if the vote has been driven by tribalism, then I am worried about democracy,” he said. “Why did they vote, what were they thinking and how did they get informed ahead of that vote?”
Market watch
For all its bad reputation, tribalism can be seen to have a positive outcome. “The turnout was up substantially so it seemed like love or hate this president, he is driving engagement on both sides of the aisle,” said Lafferty of Natixis. And engagement is good for democracy, said Nicole Bacharan, a historian and political analyst, adding that Europe and other countries have
A shot heard ’round the world
Featured Experts from the Natixis Investment Managers Summit: • Nicole Bacharan, Historian and Political Analyst • Andrew Card, Former White House Chief of Staff; Chairman, National Endowment for Democracy • Francesco Guerrera, Head of International, Dow Jones Media Group • Moderator: Dave Lafferty, Chief Market Strategist, Natixis Investment Managers
That was the most important takeaway from the election results, which saw Democratic “tribes” in suburban and urban areas giving their party a majority in the House of Representatives, while Republicans, many in rural areas, helped their party hold the Senate. This tribalism is set to continue to affect politics on both the national and international stage.
noted that people “will see the fiscal deficit rise, and that’s negative for democracy.” On the healthcare front, Trump has mentioned (and Democrats support) drug pricing controls, which could be bad for pharmaceuticals. Finally, “trade will remain Trump's arena, and therefore the markets remain jittery about what could happen with China, Europe and other countries on potential trade wars,” Guerrera said.
been worried about the example set by the United States. “We didn’t know where we stood anymore,” she said. “As a European, are the United States still our friends?” After the vote, “there is a sense that checks and balances are still there, so that democracy might not be perfect but it is still happening and it will survive for – we don’t know how long, but right now it seems that it will survive for quite a while.”
44:50
IS CHINA READY TO LEAD?
As China flexes its muscles and pushes for a leadership role on the global stage, escalating tensions could lead to a new cold war, with dramatic consequences for the world economy, said Minxin Pei, PhD and professor at Claremont McKenna College. “The world is changing in front of our eyes – 26 or 27 years after the Cold War, a new cold war is about to begin,” he said. “If this trend continues, it will definitely affect the
China’s growing economic and political clout has the potential to influence global markets and supply chains. But as it assumes a leadership position, panelists consider whether China’s methods benefit everyone, or will lead to an economic cold war.
Featured Experts from the Natixis Investment Managers Summit: • Tanvi Madan, Fellow & Director, The India Project, The Brookings Institution • Minxin Pei, Professor, Claremont McKenna College • Andrew Y. Yan, Managing Partner, SAIF Partners • Moderator: Philippe Le Corre, Senior Fellow, Harvard Kennedy School
In recent years, China has moved from a low-profile, free-riding foreign policy strategy to a more aggressive stance, and many nations are beginning to push back, explained the Brookings Institution’s Tanvi Madan, PhD. He said that regional players want to continue to benefit from China’s rise, but “there is a question about whether that rise will be peaceful.”
The question for many regional countries is not whether China will lead, but how. These countries already see China as a leader, Madan said, but “they don’t want China to be the only leader – they want other options.” They seek consensus and a more collaborative approach, and they are wary that unilateral initiatives may serve China’s interests rather than the regions. China’s One Belt, One Road initiative, for example, addresses a real
Will China’s rise be peaceful?
Andrew Y. Yan, Managing Partner at SAIF Partners, played down the threat of a cold war and China’s global leadership ambitions. “I am not sure I agree that China has a rational strategy to be THE leader in the world,” Yan said. “Quite the contrary. I think the Chinese leadership is very much aware that they are not able to compete face to face with the US.” Yan believes China knows its economy depends on the United States, especially for technology. “China is arguably the largest mobile phone manufacturer in the world, but all the semiconductor chips are imported from the US,” he said. “Every year, China imports about $200 billion of semiconductor chips from the US, and it is keenly aware that China will not be able to produce this in the next 20 years.”¹
China depends on the US for technology
Yan also said that the business elites in China tend to view President Donald Trump positively, despite escalating trade tensions. “They believe all the reform impetus from inside China has been lost under Xi’s leadership, and that Trump or the US will be the only way to force China to change,” he said, adding that unlike the Soviet Union during the Cold War, China has no bloc of allies.
global markets, the supply chains, and of course, globalization. We are living in very interesting, but also very troubled times.”
need for infrastructure development in the region, but it has stoked concerns about rising debt, corruption and security issues in the countries involved.
Philippe Le Corre, a senior fellow at Harvard Kennedy School, said that China’s position could be seen as a glass half full or a glass half empty scenario. “The half full glass says that China is spreading its influence and gathering a community of friendly countries across Africa, Asia and all that,” he said, “and the half empty one says that China has no friends.”
48:49
THE DISRUPTORS
In the face of the world’s many challenges, human ingenuity and invention can offer mankind and the planet a better future. As an example, Aziz Hamzaogullari, Chief Investment Officer of the Growth Equity Strategy Team at Loomis, Sayles & Co., said it was predicted in the 18th century that half of the world’s population would die of starvation by the 1930s. But the invention of the Haber-Bosch process – an artificial nitrogen fixation method – changed the equation by turning air into bread (or nitrogen into fertilizers), and dramatically alleviated the food shortage concern. “We see innovation as an opportunity, not just from an investment perspective, but really for humanity,” Hamzaogullari said. He then introduced two particularly impressive inventors currently working on disruptions in transportation, agriculture, manufacturing and medicine.
Original thinking enabled by modern technology is fueling innovation across many sectors of the global economy. Leading minds at the forefront of transportation and healthcare share new groundbreaking ideas and insights on the thinking that leads to innovation.
Ian Hunter, a professor in thermodynamics at Massachusetts Institute of Technology, has created more than 25 companies. One of his many current projects is the miniaturization of chemical analysis instruments. He displayed one, a mass spectrometer the size of a child’s toy that he pulled out of a little case. Normally these are massive and cost $1 million apiece, but his lab is producing them for just $100 each, thereby expanding the range of applications for which they can be used.
Another innovation he presented was a muscle-like actuator that has multiple uses, including putting drugs into a patient’s body (without a needle) at the speed of sound, firing seeds into soil for rapid planting, and eliminating the need for pesticides by physically carving insects in half. One invention he said is already up and running is a revolutionary vehicle. “The assumptions that we’re making about transportation in the future are largely
Needle-free drug delivery and solar powered cars
On the medical front, Jay Bradner, MD, a former clinical oncologist, said when he was in that role he “was struck by the lack of creativity of the molecules we were deploying as medicines,” and believed toxic chemotherapies and high doses of radiation were “truly medieval.” Bradner now works to find new cures for cancer. He believes most of the biopharmaceutical ecosystem still reaches for low hanging fruit, though modern technology gives inventors the chance to make medicines like we’ve never seen before.
Although it is still early days for molecular glue and other innovations, Bradner is optimistic. He did, however, have one word of caution: “We need to be the best, not just at investing in new technology, but identifying inventors with new technology.”
New class of molecular drugs ready to fight cancer
For example, researchers know how to create therapeutic molecules that fit perfectly into “pockets” in proteins associated with cancer, cardiovascular disease and neurological disorders. However, some proteins lack a pocket. Bradner used pasta as a metaphor to describe the technology: Proteins shaped like shells or rotini have identifiable pockets and are “druggable.” Other pastas, like spaghetti, are flimsy and have no pocket and are therefore “undruggable.”
Featured Experts from the Natixis Investment Managers Summit: • Dr. Jay Bradner, President, Novartis Institutes for BioMedical Research • Prof. Dr. Ian Hunter, Hatsopoulos Professor in Thermodynamics, MIT • Moderator: Aziz Hamzaogullari, Chief Investment Officer, Growth Equity Strategies Team, Loomis, Sayles & Co.
wrong,” he said, noting that he does not believe electric vehicles are the future wow factor. Instead, his bioinstrumentation lab at MIT has created vehicles whose power consumption is dramatically reduced, making a solar solution possible. Panels on the vehicle can harvest energy and even share it with other vehicles, forming their own grid.
To attack these “undruggable” targets, Bradner’s lab has created a new class of drugs – called molecular glues – that stick to target proteins and destroy them. Since 2015, he has successfully tested these glues on at least 50 proteins. “It’s open season now on these undruggable targets,” he said.
42:13
THE POWER OF MIGRATION AND DEMOGRAPHY
Unprecedented flows of migrants and an aging population are drastically changing the makeup of society and its stability. For different reasons, these two seemingly unrelated groups are getting ready to leave a lasting footprint on the world’s workforce. That’s why experts say it’s crucial that people’s skills continue to evolve over time to meet new demand for jobs.
Migration, population growth, and aging are reframing the basic assumptions that today’s world order was built on. Three experts examine the social, political, and economic implications of these forces of change.
The world’s population is growing at a rapid clip: from around 7.5 billion people today to a projected more than 11 billion people in 2100.¹ The number of migrants, however, is increasing twice as fast as the population rate and is projected to go from 250 million today to 400 million in 2050, according to the United Nations’ Office of Migration.²
Additionally, Dumont says, over the last ten years there has been a 70% increase in the number of highly educated migrants to OECD countries,³ all of which have clear policies in place for well-qualified migrants, who are likely to become relatively integrated into their new countries. For those with mid-level qualifications, however, the path is less straightforward. “We need to find a way to match the
Migrant population is dramatically rising
Another area of concern is the rapidly aging population in developed countries, where more than a quarter of the population will be 65 years or older by 2050. This will affect not only political agendas, but also the demand for new products and workers.
About a fifth of all recruitment in growing occupations is of migrants. The figure is about 22% in the EU in highly skilled sectors, such as the tech sector, but also in lower skilled occupations like security services, where there is high demand, and healthcare, where there is a bit of a skill mix.
4
5
Aging population also a workforce factor
“We need to put systems and incentives in place that effectively enable people to change jobs over their career,” Dumont said. “That equally applies to migrants, young people and everybody else. The incentives are not necessarily available yet in all countries, and this is probably a big opportunity for investment.”
Meanwhile, when aging workers do finally retire, the migrant population’s need for jobs will begin to dovetail. “It becomes a challenge for the developed world when we see those with a lack of skills looking for jobs and opportunities in developed countries,” said Ertharin Cousin, former Executive Director of the UN World Food Programme. “But as the population ages, that's a workforce that we’ll require.”
Featured Experts from the Natixis Investment Managers Summit: • Joseph F. Coughlin, Director, MIT AgeLab • Ertharin Cousin, Payne Distinguished Lecturer, Freeman Spogli Institute for International Studies, Stanford University; Former Executive Director, UN World Food Programme • Jean-Christophe Dumont, Head of the International Migration Division, Organisation for Economic Co-operation and Development • Moderator: Anne-Laurence Roucher, Deputy Chief Executive Officer and Head of Development and Operations, Mirova
increasing supply to demand,” Dumont explained. “We need to invest in skills development and integration programs for those who are already in OECD countries. We find that those who are moving are people between the ages of 20 and 60. If we look at the broader picture, migration is already contributing a lot to the dynamic of our labor market. In Europe, 92% of the growth of the labor force over the past ten years was due to migration. It was 65% in the US.”
Continual education and retraining programs also will be critical to future success in the workplace. “Do you genuinely believe the education you received from 0 to 21 years old is going to keep you going through 40 to 50 years of your work life?” asked Joseph F. Coughlin, PhD, director of the MIT AgeLab. “Technology is changing at such a velocity that you're going to have to be in education and training programs for a lifetime. Not only do we have the challenge of people retiring and leaving gaps and lost knowledge and capability, but we also have a reason to try to keep them in the workforce because of the real resources they provide, and their knowledge about what they do.”
50:29
FUTURESHIFT: VALUES AND ENGAGEMENT – TODAY’S LEADERSHIP MEETS THE NEXT GENERATION
The next generation is getting ready to make their mark on the workplace of the future. But do they champion the same values as their older counterparts? What can these different generations learn from each other? Do they agree on the importance of positive change and ethically focused business? How does technology help or hurt in getting their messages out? And what philosophies do they believe will bring them success? A panel discussion at the Natixis Investment Managers Summit brought together three intergenerational pairs of trailblazers working in the same fields to discuss these issues and compare viewpoints.
As one generation passes the baton to the next, the time is ripe for change. Some young leaders see the opportunity for social change, some see it as an opportunity for transformative thinking that leads to personal empowerment. In all cases the efforts are focused on making the world a better place.
Activist Zuriel Oduwole is only 16, but she has been working to improve education for girls in Africa since she was just nine years old and makes documentary films on the topic. Even more impressive, she has already met with 29 world
Using technology to get the message out
The next duo discussed integrating social and environmental needs into the fabric of a business, while still making a profit.
Both businesses and people can profit
Victoria van Lennep, the young co-founder of Lendable, an online consumer lending platform, admits to having lacked experience when she started, but feels that “experience can sometimes close the mind and keep you
Advantages and disadvantages of age
Pedro Tarak, co-founder of Emprendia and Sistema B, described a project in Brazil that paid people above market price to harvest leaves used to make a popular drink, but only if they were taken from standing trees. As a result, last year “over 54,000 hectares of forest were regenerated, over a thousand
Featured Experts from the Natixis Investment Managers Summit: • Lady Lynn Forester de Rothschild, CEO, E. L. Rothschild LLC; Founder and CEO, Coalition for Inclusive Capitalism • Pae Natwilai, Founder & Chief Executive Officer, Trik • Zuriel Oduwole, Filmmaker, Education Advocate and Climate Neutral Champion • Pedro Tarak, Co-Founder, Emprendia and Sistema B International • Victoria van Lennep, Co-Founder, Lendable • Her Royal Highness Princess Sarah Zeid of the Royal Hashemite Kingdom of Jordan • Moderator: Ayo Akinwolere, Broadcaster and Writer
leaders in her role as a “helper.” “I stand up for girls who are too weak to stand up for themselves,” she says. Oduwole is adept at getting her message out through technologies – from film and TV to social media. Her Royal Highness Princess Sarah Zeid of the Royal Hashemite Kingdom of Jordan, however, isn’t as confident. She worries that she is preaching to the converted when she advocates for maternal and newborn health issues on social media. “I’m not sure I’m getting people to care,” she said. “We’re not doing a very good job of using the tools we have. We have to speak to people’s heads and hearts and pockets.”
from innovating.” There are still challenges facing younger entrepreneurs, she noted, adding that their more established elders “get the benefit of the doubt, and we have to work harder.” Lady Lynn Forester de Rothschild, founder and Chief Executive Officer of the Coalition for Inclusive Capitalism, points out the importance of Millennials, who will inherit $30 trillion by 2030 in the largest transfer of wealth in the history of mankind.¹ “It’s really important to understand that group as a customer, an employee and an investor,” she says.
families from the favelas were able to return to their communities, and the company saw a 600% increase in share value in six years… It’s great business to think of society, the planet and shareholders at the same time,” he said. When Pae Natwilai founded Trik, a successful company involved in drone mapping and 3D reporting software for structural inspection, she took a holistic approach. No choice had to be made between making money and helping people. “It’s all interconnected,” she said. “We pick investors who see that we will make lots of money, and also see the benefit of enabling people with this cutting-edge technology. We actually turned down investors who only wanted the money.” She said everyone got involved in the business as a stakeholder, rather than just a shareholder. “When it’s in their heart, their brain acts on it,” Natwilai said.
56:41
Can Democracy Survive Social Media?
There was a time, not long ago, when social media was viewed as a source of good. These online forums were billed as the free exchange of ideas and a modern and effective tool in the service of democracy. But recently, many are questioning whether social media has become a threat to democracy and all that we hold dear in free societies.
We’ve gone from celebrating the power of #socialmedia to connect and unite people around the world, to worrying about the power it has to polarize, misinform and undermine democracy. Now, as the medium matures, panelists examine if it’s time to regulate the platforms.
But the popular medium’s challenges are many and varied. The biggest hurdle, according to Yascha Mounk, PhD, a lecturer on government at Harvard University, is how to combat the radicalization caused by echo chambers – meaning the natural tendency to be pulled toward the opinions of a particular group.
Social media’s reach is expansive. There are currently more than 2 billion Facebook users worldwide. “That’s more than the population of China,” said Sophie Pedder, the Paris Bureau Chief for The Economist.
Group radicalization is the biggest challenge
Another critical concern is advertising technology, the business model that powers our global information ecosystem, said Rebecca MacKinnon, Director of Ranking Digital Rights at New America.
An unreliable indicator of public opinion
“Public opinion is like an iceberg, and social media is like the tip of the iceberg. You need to understand what is beneath the water,” said Guillaume Liegey, Chief Executive Officer of Liegey Muller Pons, a European campaign technology company that develops tools to understand and engage with the population at the local level. He played down the threat of social
Personal data exploited for advertising
Liegey, who takes a liberal approach to the regulation of social media, said guidelines should be left to companies and platforms. MacKinnon agreed. “Let’s not overreact,” she urged. “Let’s not completely throw the baby out with the bathwater. There are some regulatory proposals out there that are overreacting – that are placing liability on internet platforms for everything their users do in a way that’s going to require them to censor and monitor people – that is going to kill online activism in a lot of places.”
Giving regulatory responsibility to the platforms
Featured Experts from the Natixis Investment Managers Summit: • Guillaume Liegey, Chief Executive Officer, Liegey Muller Pons • Rebecca MacKinnon, Director, Ranking Digital Rights, New America • Yascha Mounk, Lecturer on Government, Harvard University; Senior Fellow in the Political Reform Program, New America • Moderator: Sophie Pedder, Paris Bureau Chief, The Economist
“Normally our groups are constituted politically haphazardly… whoever your neighbor is, whoever is in your school class, whoever is in university with you,” Mounk said. “But on social media, we self-select. And it means you self-select people whose views are exactly like yours, and suddenly you start to radicalize rather than being pulled toward a more moderate position.”
Ad-tech is driven by the exploitation of personal data so that anyone who wants to spread a message on a platform can target audiences in a very granular way, in order to influence decisions and behavior. Social media platforms are optimized to create engagement, stoke outrage and make messages go viral, which creates traffic and helps advertising, MacKinnon explained. “Targeted advertising is like the fossil fuel of our information ecosystem… just as dependence on fossil fuel can kill the planet eventually, overdependence on advertising technology, and the unconstrained application of that technology and business model, could kill democracy,” MacKinnon warned.
media’s effect on democracy, adding that it is not a reliable indicator of public opinion. Liegey said he had advised campaigns he worked on, including that of French President Emmanuel Macron, to gather information from online data, but then use it to physically go door to door and engage people face to face.
46:15
SHAPING THE FUTURE OF ACTIVE MANAGEMENT
“Reports of the death of active management are highly exaggerated,” said Professor Amin Rajan, Chief Executive Officer, CREATE-Research, paraphrasing American writer Mark Twain’s comment on premature reports of his own demise. While panelists at the Natixis Investment Managers Summit recognized that passive management has gotten the upper hand in the last decade – in part due to high liquidity and low volatility – they believe a shift to active management will occur in the near future.
Featured Experts from the Natixis Investment Managers Summit: • Pooneh Baghai, Senior Partner and Global Leader, McKinsey & Company • Bruno Crastes, Chief Executive Officer, H2O Asset Management • David Herro, Deputy Chairman, Portfolio Manager and CIO, International Equities, Harris Associates • Chris Wallis, CEO, CIO and Senior Portfolio Manager – Equity Investments, Vaughan Nelson Investment Management • Moderator: Professor Amin Rajan, Chief Executive Officer, CREATE-Research
Despite the hype, low-cost investments may not present the best value to investors. Experts in the field present a compelling argument for the potential of true active management for those whose long-term outlook extends beyond today’s headlines.
Passive and active management can “coexist as yin and yang,” Rajan said. Why? Because inefficient markets create opportunities that can be exploited by active managers, which in turn creates less volatility, thereby favoring passive investors. Conversely, investment decisions made by passive managers are often unrelated to market fundamentals, creating new inefficiencies for active managers.
The panelists stressed the advantages of active management today. Pooneh Baghai, Senior Partner and Global Leader, McKinsey & Company, explained that in a volatile world active managers “can earn their keep.” Similarly, Wallis said that as an active manager, “volatility is my friend.” And David Herro, Deputy Chairman, Portfolio Manager and CIO, International Equities,
Passive and active can coexist
If central banks tighten monetary policy as expected, the reduced liquidity should favor active management. “Active managers are like longboard surfers who try to find a wave and ride it,” said Bruno Crastes, Chief Executive Officer, H2O Asset Management. Until recently, the central banks had been trying to calm the waves.
Active managers to ride the next economic wave
Active managers work in a different time frame, and clients need to understand that. “As a value investor, I have an extremely long time horizon,” said Herro. “The active manager needs to be upfront about that and communicate it.”
Time, trust and transparency
When asked about dwindling trust in asset managers, Crastes pointed to fees as one of the issues where investors often feel frustrated. “The experts understood very quickly that it is difficult to deliver returns,” he said. “There was lower volatility and lower returns, but not lower fees.” Panelists agreed that active managers should be rewarded for coping with volatility and providing better returns. “I
“I do not view passive as a threat. I view it as a benefit,” said Chris Wallis, CEO, CIO and Senior Portfolio Manager of Equity Investments at Vaughan Nelson Investment Management. “It allows me to be more active. The inherent issue with passives is they are time-dependent and not price-dependent and so they are not focused on price discovery. They are focused on making a move at a specific point in time, regardless of underlying fundamental value, and that is okay.”
Currently, the economy does not suffer from excess in most key economic fundamentals, such as labor, so “the next recession” will not be centered on them, Wallis said. “We have excess liquidity, so that is what we’re going to ‘recess.’”
Harris Associates, said that without the inefficiencies created by passive management, “I don’t have a field to play on.”
do not want a free ride. I do not want a free lunch,” said Wallis. “I would love to see fee alignment.” Yet movement in that direction is slow. “Every Request for Proposal asks if you are willing to align the fees to the outcome,” said Baghai. “The uptake is low.”
47:23
Ten Years After the Crisis: The Fallout and the Future
Despite the tsunami of financial regulation that has washed over the financial industry after the Global Financial Crisis, the world may still not be equipped to handle the next crisis. Ten years on, decreased institutional knowledge of how to manage a crisis and increased financial risk-taking have many worried about the outcome. More than half of those attending the panel session predict another financial crisis in the next three years.
Featured Experts from the Natixis Investment Managers Summit: • Alistair Darling, Former Chancellor of the Exchequer • Christopher Dodd, Former US Senator and co-author of the Dodd-Frank Wall Street Reform and Consumer Protection Act • Ann Pettifor, Director of Policy Research, PRIME • Moderator: Francesco Guerrera, Head of International, Dow Jones Media Group
The 2008 crisis tested the strength of financial systems around the globe. Looking at the events that broke many long-established safeguards, experts offer insight into the process of dealing with crisis and offer candid thoughts on the regulatory measures taken to prevent another.
Responding to questions as to whether regulation has gone too far, Christopher Dodd, co-author of the Dodd-Frank Act, said it was crucial for the government to take action. “If the question is should we not have done anything at all, I would say in a resounding fashion: absolutely not.” On the other side of the question, Ann Pettifor, a self-described Keynesian,
From his perspective, Alistair Darling believes that in times of acute crisis, “at the end of the day the government is the only one that can stand behind all that.” In illustrating the role that policy makers play in managing the crisis, Darling revealed that in October 2008 the Royal Bank of Scotland came within three hours of running out of money. “If it had gone
Governments had to and have to act
But the world has changed immensely in the past ten years, and the panelists see the financial crisis as largely responsible. Since the crisis, growth in GDP and a booming financial sector have led to increased corporate profits, but at the same time profits have outpaced wage growth. Pettifor noted “That’s why people are angry.” This explains the rise of populism and nationalism.
It’s a different world today
We need a roadmap
The panel’s message was realistic, but not pessimistic. It is vital to manage the monetary system and put better rules in place before the next crisis hits. Dodd explained that we need a roadmap and early warning systems to gather data before we find ourselves on the brink of disaster. Globalization can be valuable, Dodd said, mentioning that his father had been a prosecutor at the Nuremburg trials, a time when international institutions set a moral example. Bretton Woods kept the international financial system relatively stable until its collapse in the 1970s. In a sense, we need to go back to that again – not just to ensure peace, but also for economic security.
believes the measures taken since the crisis have fallen short. “Banking’s not like any other industry. It is a public utility. It’s like the sanitation system,” she said, which is “why it should be much more heavily regulated and in some cases probably even nationalized.”
down, it would have brought down certainly the rest of the British banks and I suspect others in Europe and America as well.”
“We’re finding countries looking towards strong men to give them protection from these global market forces which they perceive to be beyond their control and they're right,” she said. From Dodd’s view, populism was born of many reasons, such as innovation and technology which caused many to lose their jobs. “But there was a tremendous reaction to this in the US. When they heard that at 1:30 in the morning, the Bush administration sent me a bill in anticipation of the TARP legislation and said ‘Give me $700 billion’ and no court or regulator could intervene. The sense of outrage in the country was overwhelming.” Looking into the future, the panel identified a number of new threats that could spur the next financial crisis. Short memories are one of many. Darling thinks the loss of institutional knowledge, caused by the retirement of those who managed through the last crisis, is a key risk. “There will come a new generation of people, if we don't watch ourselves, who don’t remember what happened and who mightn't believe that yes it's too good to be true and [believe] you can make money,” he warned. Pettifor said the view on risk has to adapt to how the market has evolved. “The traditional banking sector, even though it is much bigger and much more profitable than it was before the crisis, is really now almost irrelevant to the next financial crisis. For me now the real problem is the shadow banking sector, which is much, much bigger,” she said.
43:27
CAN THE MULTILATERAL TRADING SYSTEM SURVIVE (AND HOW)?
The global trading system is threatening to crack under a multitude of pressures, and the world is watching with bated breath. Experts are worried that everything – from President Donald Trump’s policies, to the rise of China, to new technological developments – could have a dramatic impact on the future of trade, but they say it is essential to preserve the existing system in some form.
“Global trade has brought about a billion people out of poverty and created a very large middle class,” said Anabel Gonzalez, the former Minister of Trade in Costa Rica. “Last but not least, it has prevented the Great Recession from becoming another Great Depression, so this is very, very important.”
Featured Experts from the Natixis Investment Managers Summit: • Marc-André Blanchard, Canada's Ambassador and Permanent Representative to the United Nations • Anabel Gonzalez, Global Expert on Trade, Investment and Economic Development; Former Minister of Trade of Costa Rica • Harsha Vardhana Singh, Former Deputy Director-General, World Trade Organization; Chairman, IKDHVAJ Advisers; Senior Fellow, Tufts University • Moderator: James Mackintosh, Senior Market Columnist, The Wall Street Journal
Technology, Trump and the rise of China are rewriting the rules behind today’s global trade network. Experts offer compelling thoughts as to whether there is a new world order in trade, or whether there will be any order at all.
Trump has made trade a centerpiece of both his campaign strategy and his presidential agenda. He has renegotiated NAFTA (North American Free Trade Agreement), decisively pulled the United States from the Trans-Pacific Partnership (TPP), and threatened to leave the World Trade Organization (WTO). For him, global trade is seen as being harmful to US job creation, rather than as a wealth builder. This is an important shift that trade negotiators need to realize, said Marc-André Blanchard, Canada’s Ambassador to the United Nations and a veteran of many trade talks.
“From the US perspective, it’s actually pro-jobs, not necessarily anti-trade,” Blanchard said, adding that, in the past, it has usually been members of Congress who were against trade agreements rather than the president. He noted that even before Trump was elected, the United States opposed international dispute mechanisms such as the WTO on sovereignty
Understanding Trump’s trade decisions
Any global trade talks have to take the ascent of China as an economic power into consideration, panelists said. “One of the issues today is that the United States does not want to accept the fact that China should be treated as a market economy,” said Harsha Vardhana Singh, PhD, former Deputy Director-General of the World Trade Organization.
China and developing countries take the stage
Even if the WTO were to disappear through US withdrawal or another event, global trade still needs rules, panelists said, and regional mechanisms such as the TPP or United States-Mexico-Canada Agreement (the replacement for NAFTA) may not be sufficient. “If you feel somebody isn’t playing fairly, then you need to develop rules,” Singh said. “That’s best done through the WTO.” Blanchard called on trade negotiators to adopt an inclusive perspective, and to have patience. “We will not be able to arrive at a top-down solution,” he said. “We will have to make sure it comes from the bottom. That will take a little bit more time and discussion to get there.”
How to find common ground
The United States also sees trade with China through a different lens, Blanchard added. “If you look at what Vice President Mike Pence said – that Chinese security agencies are masterminding the theft of US technology – it's clear that it's also a security issue for them,” he said. New discussions on what shape the WTO might take also need to account
grounds. “When you understand where they're coming from and what they're trying to address, I think it makes it easier for future negotiation,” he said.
for the rise of developing and emerging countries, Blanchard said, because their agenda will not necessarily be aligned with Western nations. Another formidable challenge is the rise of technology, such as artificial intelligence (AI) and e-commerce. “In the next five years, we’ll have a huge disruption in the labor market because of AI,” Blanchard said, noting that much of the resistance to globalization can be linked to the stagnation of middle class wealth in developed countries. “You put AI into that and we’re going to have a bigger problem.”
47:27
Making Sense of ESG
Sustainable investment is on a roll. A 2017 Natixis Investment Managers survey showed 61% of institutional investors agreeing that incorporating ESG factors will be standard practice for all managers within five years.¹ ESG’s emphasis on transparency also strikes a natural chord among the Millennials who will make up 75% of the world’s workforce in 2025.² But there’s still work to do: More companies need to be persuaded to report on their ESG performance, and sustainability criteria need greater standardization. Persuading institutional investors to incorporate ESG strategies requires sensitive handling too. But as a new generation asserts its views, sustainable investment strategies are receiving ever-wider acceptance.
Featured Experts from the Natixis Investment Managers Summit: • Scott E. Kalb, Chairman, Sovereign Investor Institute; Director, Responsible Asset Allocator Initiative, New America • Fiona Reynolds, Chief Executive Officer, Principles for Responsible Investment • Diane Strauss, Research Director, Yale Initiative for Sustainable Finance, Yale University • Moderator: Ed Farrington, Executive Vice President, Natixis Investment Managers
Investing with an eye toward environmental, social, and governance issues is not just about excluding companies that don’t measure up. In this session, panelists offer a new, multi-faceted definition of sustainable investing that looks at ESG as a potential profit driver for business.
ESG is no longer about feeling good. It’s about doing well. “It’s exciting to see that investors are starting to see why they should be integrating ESG criteria into their asset allocation,” Diane Strauss told the Natixis Investment Managers Summit. The UN-supported Principles for Responsible Investment (PRI) has seen its signatories rise from
Responsible investment: in tune with the times
“Sustainable investment should be an obvious idea. You want to invest in companies that are creating a sustainable future because doing the opposite would not be good,” said Ed Farrington. His view is shared by PRI’s CEO Fiona Reynolds, who defines responsible investment as trying to
A rational choice
And yet much remains to be done. Kalb points to findings from the Responsible Asset Allocator Initiative. ”One of the questions we ask is how many of the funds actually report on their ESG performance. Among the global group, it is about 53%, so we still have half of the funds not reporting... and in the US, it’s only about 15%,” said Kalb.
Room for improvement
Getting the message across
In addition, ESG is a subject that needs to be handled the right way. “My constituents have an important mission,” said Kalb. “They need to ensure they make an appropriate risk-adjusted return to meet their people’s retirement benefits, healthcare and long-term savings. They’re very suspicious of people who come in and tell them what to do.” Instead, Kalb informs them of the risks they could be running by not taking ESG factors into account. He also adopts what he calls a “why not” attitude: “I tell them that you can invest in a sustainable infrastructure project without hurting your performance. So why not do it?” As institutional investors feel the pressure from Millennials keen to align their investments with their beliefs, more and more of them are indeed asking: Why not?
60 twelve years ago to almost 2,000 today, representing some $85 trillion in global assets.³ Boosted by such global moves as the Paris Agreement and the UN’s Sustainable Development Goals, ESG is now a hot-button issue.
align people, profit and the planet. “The three should go together,” said Reynolds. “It’s not OK to invest money at any cost.” As an investment strategy, ESG also has a solid economic rationale. Recent academic evidence shows that companies that outperform on ESG metrics tend to outperform on economic and financial criteria too, Scott E. Kalb explained.
The indicators used to monitor ESG performance also need to be standardized, both to prevent greenwashing and to better evaluate the impact of investment decisions. “We’re never going to get identical ESG data, because different people are looking for specific issues,” said Reynolds, “but we do need some standardization around basic ESG issues.”
46:30
Will Renewable Energy Transform Global Geopolitics?
“Electricity is the energy of the 21st century,” said Jean-Pierre Sbraire, Deputy Chief Financial Officer at Total. As renewable energy sources make increasing inroads into the global energy mix, the omnipresence of electricity is fueling geopolitical change. Generated by wind farms or solar panels and stored in next-generation batteries, tomorrow’s clean energy offers a distributed model that challenges the role of nation states. At the same time,
Featured Experts from the Natixis Investment Managers Summit: • Arunabha Ghosh, Chief Executive Officer, Council on Energy, Environment and Water • Meghan O’Sullivan, Former US Deputy National Security Advisor; Professor, Harvard University Belfer Center • Jean-Pierre Sbraire, Deputy Chief Financial Officer, Total • Moderator: David Keohane, Financial Times Paris Correspondent on Finance, Energy and Industry
Electricity has engaged oil in a battle to be the dominant power source of the 21st century. Regardless of who wins, panelists say the Middle East will remain a crucial geopolitical focus.
Electricity’s new dominance will transform the international landscape, with geopolitical implications that range from the cybersecurity of connected energy to the role of the state. Mini-grids may loosen the bonds between local regions and central governments, while super-grids could drive increased international cooperation. “The geography of politics changes with the massive electrification of energy use,” explained Meghan O’Sullivan, a former US Deputy National Security Advisor.
The geopolitics of electricity
The clean energy race is also sparking fierce competition for resources. Current plans for electric vehicles call for 40,000 tons of lithium in India alone, while global production totaled just 32,000 tons in 2016.¹ The result is what Arunabha Ghosh, Chief Executive Officer for the Council on Energy, Environment and Water, calls a “Wild West” for critical minerals.
Competition for resources
So what does this brave new world mean for traditional industry players? Sbraire explained how Total has drawn three strategic conclusions. When it comes to oil, the group is reacting to flat demand by positioning itself on low break-even assets. Gas, where demand is increasing, is being developed. And electricity – whose share of the global energy mix Sbraire forecasts to rise from 45% to up to 75% – is being pursued via a dedicated low-carbon renewable strategy. When even the oil companies are getting into electricity, you know it’s here to stay.
Traditional players, new strategies
Despite this shifting context, some things remain unchanged. O’Sullivan was keen to refute the idea that fracking and a reduced dependency on Saudi Arabian oil mean the United States no longer has to care about Middle Eastern stability. As long as the country is a big oil consumer tied to global markets, production shocks will continue to impact American motorists at the pump.
America’s role on the global stage
the raw materials required by these new technologies are triggering new competition for strategic resources. Yet amid these upheavals, it would be a mistake to neglect the traditional role the Middle East has played and recognize that it matters as much today as it ever did.
“Companies think they’re safe by buying a mine in Chile or the Democratic Republic of Congo, but that didn’t work out very well with oil wells,” noted Ghosh. A new governance and security architecture for these minerals is required but has yet to be invented.
At the same time, China’s dominant role in the renewable sector is supplying the US with soft power that challenges America’s global influence. “China is positioning itself to reap the geopolitical and strategic benefits of this new technology in ways that the US hasn’t fully anticipated,” said O’Sullivan.
47:57
Blockchain: Believe the Hype?
Is blockchain a revolutionary new technology that will transform financial services and other areas of people’s lives, or is it simply the latest hype? Is it the most innovative solution today, or just a new technology looking for something to solve? While many people associate blockchain with Bitcoin, blockchain’s uses extend far beyond cryptocurrencies.
Bitcoin may be the headline, but the technology behind cryptocurrency looks to be the real story. Panelists examine the potential for blockchain to transform global business with a new system for secure transactions and asset records.
Matthieu Duncan, Chief Executive Officer for Ostrum Asset Management, described a blockchain as a database (public or private), shared by different users, using pre-existing technologies (encryption, peer-to-peer exchanges), that provides users with security, data integrity, records of all transactions, and real-time updating, and where any update of the data is distributed instantly without the intervention of a central authority.
“The World Economic Forum believes that 10% of the world’s GDP will be stored on or otherwise accounted for by blockchain by 2027,” said Liam Kennedy.¹ “Blockchain can create new architectures and trust between parties in various economic value chains. It can also disintermediate the sweep of intermediaries in the economy, including in financial services.”
What is a blockchain?
“We think the impact of blockchain on the asset management industry will be very significant,” said Duncan. “The innovation of blockchain is how it’s been put together – it’s a shared database, but without a central authority. There are many databases in the world, and many parties that deal with each other, but they have a central authority, a trusted third party. A blockchain is a great massive disintermediation mechanism of trusted third parties, and the financial services sector is chock-block full of trusted third parties.” Blockchains result in greater speed, lower costs and greater transparency, and all these are massive benefits for participants in financial services, Duncan said. It is important to get this technology out into the world as quickly as possible: “There are only positives for asset managers from this – there is no downside.” Kennedy agrees, adding, “Blockchains will enable individuals or institutions to establish trust with third parties in a more secure way, and to track the assets that are being sold and bought and traded.”
To help explain blockchain, Sally Eaves of the Forbes Technology Council used a playground as an example. “You are back at school playing a new game, and there is no referee or umpire,” she said. “If somebody scores, it would be very difficult for someone to say that goal hasn’t taken place. With a blockchain, we have an immutable
Blockchains will transform asset management
Funds DLT, the first blockchain solution for asset managers, is expected to go live in the first quarter of 2019, said Olivier Portenseigne of Fundsquare, which helped develop the solution. Because fund distribution normally involves many levels of intermediaries, it is a good use for blockchains. Offering a simple user interface, Funds DLT is based on a private ledger to guarantee both confidentiality of data and speed – up to 25 million transactions a day.
Featured Experts from the Natixis Investment Managers Summit: • Matthieu Duncan, Chief Executive Officer, Ostrum Asset Management • Sally Eaves, Member, Forbes Technology Council • Olivier Portenseigne, Managing Director, Fundsquare • Moderator: Liam Kennedy, Editorial Director, Investment & Pensions Europe
ledger of transactions. It’s synchronous – you can’t go back and change it retrospectively. If there is going to be a change, everyone has to agree on it.” A blockchain is a team game, built on consensus and embedded trust.
“An asset manager today is completely blind as to who is buying the shares,” Portenseigne said. “We create products, and cross our fingers that they will be bought.” Funds DLT will help transform the industry by providing a greater level of transparency, allowing asset managers to understand customers’ wants and behavior, and create much more targeted services and products.
47:48
Countering Cybercrime: How Companies Must Adapt to Win
Cyberattacks are becoming more and more prevalent, yet big corporations still sorely underestimate the risk. Moreover, many have not put effective security tactics into place to defend themselves against the inevitable. Although cybersecurity can be an intense, costly and sometimes uncomfortable process, experts say the risks and consequences of an attack can be mitigated by embracing a proactive and reactive strategy.
Vigilance alone may not be enough to protect companies, government, and individuals from cybertheft. Security experts say if you want to understand how those looking to breach critical systems around the world think, start by asking a hacker.
According to Ilan Graicer, an Israeli specialist in cybersecurity, a more secure company starts by first identifying its vulnerabilities. “There are only two types of companies,” he said at the inaugural Natixis Investment Managers Summit, “those that were attacked and those that don’t know they are being attacked. If you don’t know you’re under attack, there's no real pressure to improve defenses.”
Stage a mock attack
Jaya Baloo, Chief Information Security Officer at KPN Telecom in the Netherlands, has started what she calls a “security lifecycle” at KPN. This means that having a robust cybersecurity policy and strategy is not enough; a company needs to take a combined proactive and reactive approach, including hacking its own systems to probe for weaknesses. Any discoveries are followed up by an emergency response team, and senior security officers continually provide oversight.
“For every new innovation, every single product, every single software release – if our Red Team says no, it’s not allowed to go live,” Baloo said. She also works with a company’s mergers and acquisitions team to make sure potential acquisition targets meet cybersecurity standards. If a company will not give her team full access, it becomes a roadblock in the security chain. “We’ll say, on the basis of this, we can't properly assess the risk that we're taking with our investment.”
A holistic approach is key
Featured Experts from the Natixis Investment Managers Summit: • Jaya Baloo, Chief Information Security Officer, KPN Telecom • Ilan Graicer, Entrepreneur, Cybersecurity Specialist, Game Designer, Maker and Wildlife Photographer • Moderator: Anne Bader, Founder, The International Cybersecurity Dialogue
Graicer went on to explain how he can help companies identify vulnerabilities by deploying a “Red Team” of attackers to probe a company’s cyber-defenses, either from outside or within the firm. “That's where we come in and show you that we can take you down.”
Hacking is the new normal, Graicer said; cyberattacks will only become more common as tools and skills once known only to experts are becoming disseminated on the Internet. “Everybody's learning them, everybody’s making copies, and making them better,” he warned. Moreover, Baloo believes the advent of super-powerful quantum computers will offer hackers a new and daunting tool. “I believe we’re far from ready,” Baloo said. “I’ll put it simply: All your banking transactions, all of them, will be broken by quantum computers.” Baloo noted that state-sponsored hacking has also played a factor. “Hackers are motivated by three things,” she said. “They start off for fun, then for profit, and finally, when they have enough profit, they realize there's a political mechanism that they can exploit by hacking.” Though some hackers may attack for fun, some cyberattacks in recent years have taken a very real toll. The 2016 Carbanak malware hack of the SWIFT (Society for Worldwide Interbank Financial Telecommunication) banking system led to the disappearance of more than 1 billion euro from ATMs and online banking platforms around the world. And in 2013, all 3 billion Yahoo accounts were hacked and compromised – information that was revealed to users only after Verizon Communications acquired the company in 2017. “Everybody’s worried about the grid going down,” said Anne Bader, founder of the International Cybersecurity Dialogue. “Do we have backups? Do we have contingency plans? Is every single person continually trained, and do they practice? These are questions that every corporation should be able to answer.” “The only thing I can absolutely guarantee is that you have been hacked, you will be hacked, and it will keep happening,” Baloo said. “And that’s OK – because security is not something you'll fix with a single project.” So what’s the answer to getting a leg up on cybercrime? “Prevent, detect, respond, verify,” Baloo said. “Keep doing that and you'll be all right.”
45:09
Law and Order on the AI Frontier
Artificial intelligence (AI) is a Wild West of sorts with many unknowns to be determined. In fact, today’s regulatory and policymaking frameworks for the new frontier of AI can be compared to those for software development in the 1980s, said Joanna Bryson, PhD, Associate Professor at the University of Bath and Researcher at Princeton University. International, regional and national agencies, including the United Nations and the European Union, are working on various AI initiatives, and much remains to be done. AI must conform to existing laws and regulations concerning liability and privacy; prosecutors and regulators need to be trained; gaps in the law must be identified and addressed by policymakers; and new ethics debates must take place.
Artificial intelligence presents vast possibilities for radical innovations that could improve the quality of life for millions. But intelligence without ethics can also present vast hazards. Panelists debate the regulatory and ethical implications presented by the rise of AI.
Bryson believes artificial intelligence boils down to the ability “to do the right thing at the right time.” Thus, AI can be identified as the transition from computation to action. “AI is not just maths and computation,” she said. “It takes up time, space and energy.” AI can also come in different forms. It can be defined as intelligence embodied in a physical entity that
What is AI?
If AI is embedded in a physical object, both the object and the software need to be regulated, van Wynsberghe explained. Moreover, legislation is required to regulate data quality, safety and privacy.
Legislating and regulating AI
1) Faulty products – for example, an algorithm designed for use in the criminal justice system, which claimed to be able to predict recidivism, turned out to be both inaccurate and racist. 2) Economic fairness and taxes – for example, people are handing over their data in exchange for services, meaning a lot of untaxed bartering is going on.
Featured Experts from the Natixis Investment Managers Summit: • Joanna Bryson, Associate Professor at the University of Bath and Researcher at Princeton University • Aimee van Wynsberghe, Assistant Professor of Ethics and Technology, Delft University of Technology • Moderator: Rob Cox, Founder and Global Editor, Breakingviews
shares our environment. Or it might be an avatar on a screen, with which people interact, but not physically. It could also be the software for an online chatbot. Human beings “are good at learning, compressing knowledge, and passing it on,” Bryson said. From this perspective, AI consists of “all of our intelligence that we have uploaded.”
3) Liability – for example, what happens when a driverless car causes injury or damage? Van Wynsberghe raised issues related to human interaction, such as the right to know if you are speaking with a human being when you contact a call center. “We need knowledgeable prosecutors,” said Bryson. “We should mandate that AI conform to present law.” Like the pharmaceutical industry, AI and robotics should be regulated “for the entire lifecycle of the product,” argued van Wynsberghe. Bryson compared eventual AI law to the construction industry, saying that 100 years ago, anyone with enough money could put up whatever they wanted. Today we have zoning laws and building codes.
47:08
HACKING SIMULATION
Hacking into a company’s server is usually as easy as a search and a click, according to cybersecurity specialist and professional hacker Ilan Graicer. Even more concerning, much of the information needed to break into a computer system is easily available on the Web, making it even easier for those in the know to wreak havoc on an unsuspecting business. Graicer is a member of Red Team, a group of volunteer Israeli cybersecurity experts who hack into critical Israeli infrastructure and public-sector targets – usually with the permission of the target – to expose their vulnerabilities. “We decided that the government was not doing enough to protect the country, so we attack targets in Israel that we think are not properly protected,” he said.
The best way to see how hackers operate is to do it yourself. Using an innovative new simulation game, Summit attendees experience the disciplined process deployed by hackers around the world to crack the highest levels of cybersecurity.
One vital example of vulnerability was the country’s hospitals, which were not considered at risk by the government. Red Team volunteers spent a couple of days one month attacking a particular hospital (with the knowledge of its administrator) to prove just how dangerous it could be.
Hospitals in need of critical aid
Once they were inside, the hackers were able to take control of patient records and make potentially dangerous changes to blood types, allergies, and other private medical information. After the Israeli government saw the report, it was convinced of the critical threat and the country’s hospitals are now protected from such attacks. While most institutions, like banks, are well protected, many other businesses are not. During a simulation session at the Natixis Investment Managers Summit, Graicer showed audience members how they could hack into an e-tailing (electronic retailing) site and have products sent to them for free, or next to nothing (how about a Rolex watch for $10? It has been done!).
Changing patient records
Since there is currently little cash reward in hacking, no major disasters have yet occurred. That does not mean, however, that they will not happen. Graicer believes the next danger will come from devices that are connected to the Internet like cars, refrigerators, robots and medical devices. Graicer’s advice to individuals? Use unique passwords for sites on which you keep vital information and change them once a year. He also advises buying an iPhone rather than an Android phone because he says Apple offers better security.
Crime doesn’t pay – yet
Featured Expert from the Natixis Investment Managers Summit: • Ilan Graicer, Entrepreneur, Cybersecurity Specialist, Game Designer, Maker and Wildlife Photographer
They hacked into the hospital’s system from the outside, through its website, and from the inside, by just walking unannounced into an auditorium and tapping into the internal servers. When questioned about their presence by a nurse, they explained that they were preparing a presentation and were offered free coffee and air conditioning.
40:27
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Blockchain: Believe the Hype? ¹ Deep Shift – Technology Tipping Points and Societal Impact. World Economic Forum. Accessed December 29, 2018. Blockchain is a distributed, decentralized, public ledger technology. Bitcoin is a type of decentralized cryptocurrency that is not issued or backed by any banks or governments. Bitcoin cash is a cryptocurrency created in August 2017, arising from a split from Bitcoin Classic. Central Securities Depository (CSD) is a specialist financial organization holding securities such as shares either in certificated or uncertificated form so that ownership can be easily transferred through a book entry rather than the transfer of physical certificates. Cryptocurrency is a digital or virtual currency that uses cryptography to secure a variety of transactions. A custodian is a financial institution that holds customers' securities for safekeeping so as to minimize the risk of their theft or loss. A custodian holds securities and other assets in electronic or physical form. Distributed Ledger Technology refers to the technological infrastructure and protocols that allows simultaneous access, validation and record updating in an immutable manner across a network spread across multiple entities or locations. Environmental, Social and Governance (ESG) criteria is a set of standards for a company’s operations that socially conscious investors use to screen potential investments. Ethereum is a public, blockchain-based computing platform and operating system that also generates its own cryptocurrency, Ether. A financial intermediary is an entity that acts as the middleman between two parties in a financial transaction, such as a commercial bank, investment banks, mutual funds and pension funds. FundsDLT is an international platform connecting Transfer Agent activities, payment systems and investors. GAFA refers to the four leaders of the internet world: Google, Apple, Facebook, Amazon. Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced in a period of time, often annually or quarterly. Independent Financial Adviser (IFA) is a professional who offers independent advice on financial matters to their clients and recommend suitable financial products from the whole of the market. An Initial Coin Offering (ICO) is a fundraising mechanism used by companies looking to create a new coin, application, or service, similar to an Initial Public Offering (IPO) in the investment world. The Know Your Customer (KYC) rule is an ethical requirement for those in the securities industry who are dealing with customers during the opening and maintaining of accounts. The KYC form ensures investment advisors know detailed information about their clients' risk tolerance, investment knowledge and financial position. MiFID (markets in financial instruments directive) is a regulation that increases the transparency across the European Union's financial markets and standardizes the regulatory disclosures required for particular markets. Robo-advisors are digital platforms that provide automated, algorithm-driven financial planning services with little to no human supervision. A social enterprise is a for-profit or non-profit that applies strategies that maximize improvements in financial, social and environmental well-being. Sustainable Development Goals are a collection of 17 global goals set by the United Nations General Assembly in 2015. A third-party distributor is the name given to institutions that sell or distribute mutual funds to investors for fund management companies without direct relation to the fund itself. Mutual fund companies often party with third-party distributors with various fees and provisions involved with the partnership. The Undertakings for the Collective Investment of Transferable Securities (UCITS) is a regulatory framework of the European Commission that creates a harmonized regime throughout Europe for the management and sale of mutual funds.
Can Democracy Survive Social Media? Ad-tech (short for advertising technology) broadly refers to the different types of analytics and digital tools used in the context of advertising. An illiberal democracy is a governing system in which, although elections take place, citizens are cut off from knowledge about the activities of those who exercise real power because of the lack of civil liberties. Liberal democracy is a form of government in which representative democracy operates under the principles of liberalism, i.e. protecting the rights of the individual, which are generally enshrined in law. It is characterised by fair, free, and competitive elections between multiple distinct political parties, a separation of powers into different branches of government, the rule of law in everyday life as part of an open society, and the equal protection of human rights, civil rights, civil liberties, and political freedoms for all persons. NGO (non-governmental organization) is any non-profit, voluntary citizens' group that is organized on a local, national or international level.
Can the Multilateral Trading System Survive (and How)? The Appellate Body of the World Trade Organization is a standing body of seven persons that hears appeals from reports issued by panels in disputes brought on by WTO members. It was established in 1995 under Article 17 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). Artificial intelligence (AI) is intelligence demonstrated by machines, in contrast to the natural intelligence displayed by humans and other animals. Comprehensive Economic and Trade Agreement (CETA) is a free-trade agreement between Canada, the European Union and its member states. CPTTP refers to Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Doha Declaration is the November 2001 declaration of the Fourth Ministerial Conference in Doha, Qatar, which provides the mandate for negotiations on a range of subjects, and other work including issues concerning the implementation of the present agreements. FTA refers to the Federal Transit Administration, an agency within the United States Department of Transportation that provides financial and technical assistance to local public transportation systems. G20 (Group of Twenty) is a leading forum of the world's major economies that seeks to develop global policies to address today's most pressing challenges. The G20 is made up of 19 countries and the European Union. General Agreement on Tariffs and Trade (GATT) was a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas. The Great Recession was a period of general economic decline observed in world markets during the late 2000s and early 2010s. The scale and timing of the recession varied from country to country. IPR refers to Intellectual Property Rights, which are rights given to persons over the creations of their minds. They usually give the creator an exclusive right over the use of his/her creation for a certain period of time. OECD refers to the Organisation for Economic Co-operation and Development, an intergovernmental economic organization with 36 member countries, founded in 1961 to stimulate economic progress and world trade. NAFTA refers to the North American Free Trade Agreement, an agreement signed by Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. USMCA refers to United States Mexico Canada Agreement, a pending free trade agreement between Canada, Mexico, and the United States of which negotiations have been concluded, but which has not been signed or ratified. USTR refers to the Office of the United States Trade Representative, the United States government agency responsible for developing and recommending United States trade policy to the President of the United States. The Trans-Pacific Partnership (TPP), also called the Trans-Pacific Partnership Agreement, is a defunct proposed trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the United States signed on February 4, 2016, which was not ratified as required and did not take effect. TTIP is the Transatlantic Trade and Investment Partnership is a proposed trade agreement between the European Union and the United States, with the aim of promoting trade and multilateral economic growth. WTO refers to the World Trade Organization, an intergovernmental organization that regulates international trade.
Closing Remarks Brexit is an abbreviation for "British exit," referring to the UK's decision in a June 23, 2016 referendum to leave the European Union (EU). The Cold War was a period of geopolitical tension between the Soviet Union with its satellite states (the Eastern Bloc), and the United States with its allies (the Western Bloc) after World War II. Environmental, social and governance (ESG) investing focuses on investments in companies that demonstrate adherence to environmental, social and governance (ESG) practices, therefore the universe of investments may be reduced. Gross Domestic Product (GDP) is a monetary measure of the market value of all the final goods and services produced in a period of time, often annually or quarterly. Mergers and acquisitions (M&A) are transactions in which the ownership of companies, other business organizations, or their operating units are transferred or consolidated with other entities. A non-governmental organization (NGO) is any non-profit, voluntary citizens' group which is organized on a local, national or international level.
Countering Cybercrime: How Companies Must Adapt to Win AI refers to artificial intelligence, intelligence demonstrated by machines, in contrast to the natural intelligence displayed by humans and other animals. A blockchain, originally block chain, is a growing list of records, called blocks, which are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. By design, a blockchain is resistant to modification of the data. The crypto is a decentralized Ethereum-based peer-to-peer network which helps in the computational storage and analysis of data. A cryptocurrency is a digital or virtual currency designed to work as a medium of exchange. It uses cryptography to secure and verify transactions as well as to control the creation of new units of a particular cryptocurrency. Cryptography is a type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. Enigma is a crypto platform offering off-chain storage for private data, which is attached as a second layer to an existing blockchain. Enigma tokens are the native currency of the Enigma ecosystem. “What is Enigma (ENG), Catalyst and use of the ENG token.” Accessed November 13, 2018. http://tkcryptos.com/what-is-enigma-eng-catalyst-and-use-of-the-eng-token/ Equation Group is considered one of the most sophisticated cyber-attack groups in the world. The Geneva Conventions comprise four treaties, and three additional protocols, that establish the standards of international law for humanitarian treatment in war. The General Data Protection Regulation (GDPR) is a regulation in EU law on data protection and privacy for all individuals within the European Union and the European Economic Area. Greenpeace is a non-governmental environmental organization. IOTA stands for Internet of Things Application and is a distributed ledger designed to record and execute transactions between machines in the Internet of Things (IoT) ecosystem. M&A refers to mergers & acquisitions, a general term that refers to the consolidation of companies or assets through various types of financial transactions. NotPetya is a variant of Petya, a family of encrypting ransomware, and was used to execute a large cyberattack in 2017. OPCW refers to the Organisation for the Prohibition of Chemical Weapons is an intergovernmental organization oversees the global effort to permanently eliminate chemical weapons. SECO refers to Security Officer SQL (pronounced ‘sequel’) injection is a web attack mechanism used by hackers to steal data. The Shadow Brokers is a hacker group who appeared in summer of 2016 and published several leaks containing hacking tools from the National Security Agency. The Society for Worldwide Interbank Financial Telecommunication (SWIFT) provides a network that enables financial institutions worldwide to send and receive information about financial transactions in a secure, standardized and reliable environment. Symmetric-key algorithms are algorithms for cryptography that use the same cryptographic keys for both encryption of plaintext and decryption of ciphertext. The keys may be identical or there may be a simple transformation to go between the two keys. The Tallinn Manual is an academic, non-binding study on how international law applies to cyber conflicts and cyber warfare. The WannaCry ransomware attack was a May 2017 worldwide cyberattack by the WannaCry ransomware cryptoworm, which targeted computers running the Microsoft Windows operating system by encrypting data and demanding ransom payments in the Bitcoin cryptocurrency.
The Disruptors CO2 refers to carbon dioxide. The Haber-Bosch process is a process that fixes nitrogen with hydrogen to produce ammonia - a critical part in the manufacture of plant fertilizers. The process was developed in the early 1900s by Fritz Haber and was later modified to become an industrial process to make fertilizers by Carl Bosch. Mass spectrometry (MS) is an analytical technique that ionizes chemical species and sorts the ions based on their mass-to-charge ratio. In simpler terms, a mass spectrum measures the masses within a sample. Mass spectrometry is used in many different fields and is applied to pure samples as well as complex mixtures. NIBR refers to Novartis Institutes for BioMedical Research R&D refers to ‘Research & Development’ An ubiquitin ligase (also called an E3 ubiquitin ligase) is a protein that recruits an E2 ubiquitin-conjugating enzyme that has been loaded with ubiquitin, recognizes a protein substrate, and assists or directly catalyzes the transfer of ubiquitin from the E2 to the protein substrate.
The Future of Europe ¹ Parlemeter 2018 – Taking up the challenge: From (silent) support to actual vote - Executive Summary. European Parliament. Accessed on November 27, 2018. AFD refers to Alternative for Germany, a right-wing political party in German founded in 2013. A euro-security is a security issued or traded in a country using a currency other than the one in which the security is denominated. This means that the security uses a certain currency, but operates outside the jurisdiction of the central bank that issues that currency. The term has nothing to do with the euro; the prefix "euro-" is used more generally to refer to deposits outside the jurisdiction of the domestic central bank. The Troubled Asset Relief Program (TARP) was a group of programs created and run by the US Treasury to stabilize the country’s financial system, restore economic growth, and mitigate foreclosures in the wake of the 2008 financial crisis. TARP sought to achieve these targets by purchasing troubled companies’ assets and equity.
Futureshift: Values and Engagement – Today’s Leadership Meets the Next Generation ¹ 4 Things Millennial Investors Can Learn From Warren Buffet. Accessed December 28, 2018. A benefit corporation (BCorp) is a traditional for-profit corporation with modified obligations committing it to higher standards of purpose, accountability and transparency. Inclusive capitalism is a term composed of two complementary meanings: (1) poverty is a significant, systemic problem in countries which have already embraced or are transitioning towards capitalistic economies, and (2) companies and non-governmental organizations can sell goods and services to low-income people, which may lead to targeted poverty alleviation strategies, including improving people’s nutrition, health care, education, employment and environment, but not their political power. NGO (non-governmental organization) is any non-profit, voluntary citizens' group which is organized on a local, national or international level.
Hacking Simulation Bitcoin is a cryptocurrency. A cryptocurrency is a digital or virtual currency designed to work as a medium of exchange. It uses cryptography to secure and verify transactions as well as to control the creation of new units of a particular cryptocurrency. Citrix Systems, Inc. is an American multinational software company that provides server, application and desktop virtualization, networking, software as a service, and cloud computing technologies. Edimax Technology Co., Ltd. is a Taiwanese manufacturer of data networking products. Internet of things (IoT) is the network of physical devices, vehicles, home appliances, and other items embedded with electronics, software, sensors, actuators, and connectivity which enables these things to connect, collect and exchange data. Radio-frequency identification (RFID) uses electromagnetic fields to automatically identify and track tags attached to objects. SMS (short message service) is a text messaging service component of most telephone, internet, and mobile-device systems. A SQL (pronounced ‘sequel’) injection is a web attack mechanism used by hackers to steal data. The Society for Worldwide Interbank Financial Telecommunication (SWIFT) provides a network that enables financial institutions worldwide to send and receive information about financial transactions in a secure, standardized and reliable environment. UPS refers to Uninterruptible Power Supply, an electrical apparatus that provides emergency power to a load when the input power source or mains power fails. A virtual private network (VPN) extends a private network across a public network, and enables users to send and receive data across shared or public networks as if their computing devices were directly connected to the private network. The WannaCry ransomware attack was a May 2017 worldwide cyberattack by the WannaCry ransomware cryptoworm, which targeted computers running the Microsoft Windows operating system by encrypting data and demanding ransom payments in the Bitcoin cryptocurrency.
Is China Ready to Lead? ¹ US semiconductor makers dwarf Chinese peers in market valuation as China’s chip dream remains distant. South China Morning Post. Accessed December 28, 2018. ADB refers to the Asian Development Bank is a regional development located in Mandaluyong, Metro Manila, Philippines. The Beijing Consensus (also known as the China Model or Chinese Economic Model) refers to the political and economic policies of the People's Republic of China instituted after Mao Zedong's death in 1976 by Deng Xiaoping. This fluidity has been described as an "ultra-pragmatic" approach to policy. The Belt and Road Initiative (BRI), also known as the One Belt One Road (OBOR) or the Silk Road Economic Belt and the 21st century Maritime Silk Road, is a development strategy adopted by the government of China involving infrastructure development and investments in countries in Europe, Asia, and Africa. "Belt" refers to the overland routes, or the Silk Road Economic Belt, whereas "road" refers to the sea routes, or the 21st century Maritime Silk Road. Until 2016, the initiative was officially known in English as the One Belt and One Road initiative, but the official name was changed as the Chinese government considered the emphasis on the word "one" prone to misinterpretation. Gross Domestic Product (GDP) is a monetary measure of the market value of all the final goods and services produced in a period of time, often annually or quarterly. IMF refers to the International Monetary Fund is an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. The Uyghurs or Uygurs are a Turkic ethnic group who live in East Asia and Central Asia. Today, Uyghurs live primarily in the Xinjiang Uyghur Autonomous Region of the Peoples Republic of China where they are one of 55 officially recognized ethnic minorities. WTO refers to the World Trade Organization, an intergovernmental organization that regulates international trade.
Law and Order on the AI Frontier Artificial intelligence (AI) is intelligence demonstrated by machines, in contrast to the natural intelligence displayed by humans and other animals. C-3PO or See-Threepio is a humanoid robot character from the Star Wars franchise who appears in the original trilogy, the prequel trilogy and the sequel trilogy. DevOps is a software development Methodology that combines software development (Dev) with information technology operations (Ops). The goal of DevOps is to shorten the systems development life cycle while also delivering features, fixes, and updates frequently in close alignment with business objectives. The DevOps approach is to include automation and event monitoring at all steps of the software build. Eid Mubarak or (Arabic: xxxxxxxx) is an Arabic term that means “happy holiday”. The term is used by Arab Christians and Arab Muslims. Internationally Muslims use it as a greeting for use on the festivals of Eid al-Adha and Eid al-Fitr. Eid means "celebration", and Mubarak means "blessings”. The General Data Protection Regulation (GDPR) is a regulation in EU law on data protection and privacy for all individuals within the European Union and the European Economic Area. Gross Domestic Product (GDP) is a monetary measure of the market value of all the final goods and services produced in a period of time, often annually or quarterly. HI refers to Human Intelligence. The International Committee for Robot Arms Control (ICRAC) is a not-for-profit association committed to the peaceful use of robotics in the service of humanity and the regulation of robot weapons. IP refers to intellectual property is a category of property that includes intangible creations of the human intellect, and primarily encompasses copyrights, patents, and trademarks. WALL-E is a 2008 American film computer-animated science fiction film produced Pixar Animation Studios for Walt Disney Pictures. It follows a Trash compactor robot in a deserted world, left to clean a largely abandoned city. However, he is visited by a probe sent by the Axiom ship, whom he falls in love with and pursues across the galaxy.
Making Sense of ESG ¹ Natixis Investment Managers, Global Survey of Institutional Investors conducted by CoreData Research in September and October 2017. Survey included 500 institutional investors in 30 countries. ² Defining generations: Where Millennials end and post-Millennials begin. Pew Research Center. March 1, 2018. Accessed November 05, 2018. ³ About the PRI. Principles for Responsible Investment. Accessed January 7, 2019. All investing involves risk, including the risk of loss. Alpha is a measure of the difference between a portfolio's actual returns and its expected performance, given its level of systematic market risk. A positive alpha indicates outperformance and negative alpha indicates underperformance relative to the portfolio's level of systematic risk. COP21 was the 21st “Conference of the Parties” – an annual UN conference on the subject of the climate, and climate change. The 2016 COP meeting was held in Paris from the 30th November to 11th December. It brought together leaders from around the world with the aim of achieving a legally binding and universal agreement on the climate, with the aim of keeping global warming below 2°C. This happened through discussion on emissions reductions and other measures required to avert the looming global catastrophe of climate change. CSR refers to corporate social responsibility, a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders. Environmental, social and governance (ESG) investing focuses on investments in companies that demonstrate adherence to environmental, social and governance (ESG) practices, therefore the universe of investments may be reduced. EPA refers to the Environmental Protection Agency, is an independent agency of the United States federal government for environmental protection. A fiduciary is a person who acts on behalf of another person, or persons to manage assets. The Financial Stability Board Task Force on Climate-related Financial Disclosures (TCFD) is a market-driven initiative, set up to develop a set of recommendations for voluntary and consistent climate-related financial risk disclosures in mainstream filings. Greenwashing is the use of marketing to portray an organization's products, activities or policies as environmentally friendly when they are not. Impact investing is aims to generate specific beneficial social or environmental effects in addition to financial gain. Impact investing is a subset of Socially Responsible Investing (SRI), but while the definition of socially responsible investing encompasses avoidance of harm, impact investing actively seeks to make a positive impact by investing, for example, in non-profits that benefit the community or in clean technology enterprises. Natixis Investment Managers, Global Survey of Institutional Investors conducted by CoreData Research in October and November 2016. Survey included 500 institutional investors in 31 countries. Select one response. Natixis Investment Managers, Global Survey of Individual Investors conducted by CoreData Research, February-March 2017. Survey included 8,300 investors from 26 countries. RI refers to responsible investing which aims to incorporate environmental, social and governance (ESG) factors into investment decisions, to better manage risk and generate sustainable, long-term returns. Risk-adjusted return defines an investment's return by measuring how much risk is involved in producing that return, which is generally expressed as a number or rating. Sustainable Development Goals (SDG) are a collection of 17 social, environmental and economic goals set by the United Nations General Assembly in 2015 that frame the global agenda for sustainable development. The aim is for all countries to achieve the goals and their targets by 2030. SRI refers to socially responsible investing, an investment discipline that considers environmental, social and corporate governance (ESG) criteria to generate long-term competitive financial returns and positive societal impact. Sustainable investing focuses on investments in companies that relate to certain sustainable development themes and demonstrate adherence to environmental, social and governance (ESG) practices.
The New Geopolitical World Order FARC refers to Fuerzas Armadas Revolucionarias de Colombia (Revolutionary Armed Forces of Colombia), a former guerrilla organization operating in Colombia.
The Power of Migration & Demography ¹ World population projected to reach 9.8 billion in 2050, and 11.2 billion in 2100. United Nations Department of Economic and Social Affairs. Accessed December 28, 2018. ² 2017 International Migration Report – Highlights. United Nations Department of Economic and Social Affairs. Accessed December 28, 2018. ³ World Migration in Figures. Organisation for Economic Co-operation and Development. Accessed December 28, 2018. Is migration good for the economy? Organisation for Economic Co-operation and Development. Accessed December 28, 2018. OECD Environmental Outlook to 2050: The Consequences of Inaction – Key Facts and Figures. Organisation for Economic Co-operation and Development. Accessed December 28, 2018. Capital stack is the totality of capital invested in a project, including pure debt, hybrid debt, and equity. A Genealogical Test is a DNA-based test which looks at specific locations of a person's genome in order to determine ancestral ethnicity and genealogical relationships. Results give information about ethnic groups the test subject may be descended from and about other individuals that they may be related to. The Global Compact for Safe, Orderly and Regular Migration is a non-binding intergovernmentally negotiated agreement, prepared under the auspices of the United Nations, that covers all dimensions of international migration in a holistic and comprehensive manner. Global Skills Partnership refers a concept being considered by the Global Compact on Migration intended to address skills shortages in both destination countries and countries of origins of migrants. It is an up-front agreement between employers and/or governments in destination countries and professional training centres in origin countries. These parties agree on a practical and equitable way for the benefits of migrants' professional service at the destination to finance training at the origin — training for both migrants and non-migrants. OECD refers to the Organisation for Economic Co-operation and Development, an intergovernmental economic organization with 36 member countries, founded in 1961 to stimulate economic progress and world trade. Thomas Malthus was an 18th-century British philosopher and economist famous for his ideas about population growth. WFP refers to the United Nations World Food Programme, a food assistance branch of the United Nations.
Shaping the Future of Active Management Active management (also called active investing) refers to a portfolio management strategy where the manager makes specific investments with the goal of outperforming an investment benchmark index. All investing involves risk, including the risk of loss. Alpha is the measure of the difference between a portfolio's actual returns and its expected performance, given its level of systematic market risk. A positive alpha indicates outperformance and negative alpha indicates underperformance relative to the portfolio's level of systematic risk. Beta measures the volatility of a security or a portfolio in comparison to the market as a whole. Capital expenditure, or CapEx, are funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment. CFA® and Chartered Financial Analyst® are registered trademarks owned by the CFA Institute. Intrinsic value is the value of a company, based on the net present value of fore-casted cash flows such as future earnings or dividends. Liquidity refers to the ability to convert an asset into cash quickly, with minimal impact on the price received. Passive management (also called passive investing) is an investing strategy that tracks a market-weighted index or portfolio. R&D refers to 'Research and Development’. A ‘Request for Proposal’ typically includes background on the issuing organization and its line of business. The request sets out specifications describing the solution it seeks and evaluation criteria disclosing how proposals are graded. S&P 500® Index is a widely recognized measure of U.S. stock market performance. It is an unmanaged index of 500 common stocks chosen for market size, liquidity, and industry group representation, among other factors. It also measures the performance of the large cap segment of the US equities market. Smart Beta references an investment philosophy that combines the benefits of passive investing and the advantages of active investing strategies. Time horizon is the length of time over which an investment is made or held before it is liquidated. Time horizons can range from seconds in the case of a day trader, all the way up to decades for a buy-and-hold investor or an individual who is investing in a retirement plan. Volatility refers to the range of variation in the value of a security. The 300 Club is a group of leading investment professionals from across the globe who have joined together to respond to an urgent need to raise uncomfortable and fundamental questions about the very foundations of the investment industry and investing.
Ten Years After the Crisis: The Fallout and the Future All investing involves risk, including the risk of loss. The Bretton Woods Conference, formally known as the United Nations Monetary and Financial Conference (July 1–22, 1944), was the gathering of 730 delegates from all Allied nations at the Mount Washington Hotel, situated in Bretton Woods, New Hampshire, to regulate the international monetary systems after the conclusion of World War II. The Dodd-Frank Wall Street Reform and Consumer Protection Act is a massive piece of US financial reform legislation passed by the Obama administration in 2010 as a response to the financial crisis of 2008. Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced in a period of time, often annually or quarterly. Shadow banking refers to lending and other financial activities conducted by unregulated institutions or under unregulated conditions. Troubled Asset Relief Program (TARP) was a group of programs created and run by the US Treasury to stabilize the country’s financial system, restore economic growth, and mitigate foreclosures in the wake of the 2008 financial crisis. TARP sought to achieve these targets by purchasing troubled companies’ assets and equity.
Will Renewable Energy Transform Global Geopolitics? ¹ “Report on Raw Materials for Battery Applications.” European Commission Staff Working Document, November 22, 2018. Accessed January 4, 2019. Brent Crude is a major trading classification of sweet light crude oil that serves as a major benchmark price for purchases of oil worldwide. The carbon intensity index is a measure of the emission rate of carbon relative to the intensity of a specific activity, or an industrial production process. Cryptocurrency is a digital or virtual currency that uses cryptography for security. DRC and RDC refer to the Democratic Republic of Congo. Fracking is a proven drilling technology used for extracting oil, natural gas, geothermal energy, or water from deep underground. International Energy Agency (IEA) is an autonomous intergovernmental organisation which works to ensure reliable, affordable and clean energy for its 30 member countries and beyond. The International Solar Alliance (ISA) is an alliance of more than 121 countries initiated by India, most of them being sunshine countries, which lie either completely or partly between the Tropic of Cancer and the Tropic of Capricorn. The primary objective of the alliance is to work for efficient exploitation of solar energy to reduce dependence on fossil fuels. OPEC (Organization of the Petroleum Exporting Countries) is a permanent intergovernmental organization of 15 oil-exporting nations that coordinates and unifies the petroleum policies of its Member Countries. Total acquired ENGIE’s portfolio of upstream liquefied natural gas (LNG) assets in July 2018. ENGIE is a multinational electric utility company. UAE refers to United Arab Emirates. West Texas Intermediate is the underlying commodity of the New York Mercantile Exchange's oil futures contracts.
The World in the Making: A Presidential Perspective ¹ “World Population Prospects: The 2017 Revision." World Population Prospects, 2017. Accessed December 21, 2018. Brexit is an abbreviation for "British exit," referring to the UK's decision in a June 23, 2016 referendum to leave the European Union (EU). The European Border and Coast Guard Agency, also known as Frontex, is an agency of the European Union headquartered in Warsaw, Poland, tasked with border control of the European Schengen Area, in coordination with the border and coast guards of Schengen Area member states. The eurozone, officially called the euro area, is a monetary union of 19 of the 28 European Union member states which have adopted the euro as their common currency and sole legal tender.
