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  • ANDREW HILL: Trust is still low 10 or more years

  • after the financial crisis, and that seems a good enough reason

  • to say we need to rethink the various fixes that

  • were put in place after the 2008-2009 crisis

  • and see what more profound change can be brought through

  • into business and finance.

  • A movement to reset capitalism is already underway.

  • One opportunity in 2020 is that lots of business people

  • are now talking about purpose and the need

  • to instil new ways beyond pure shareholder value.

  • GILLIAN TETT: What you're seeing happening

  • today is a very necessary return to stakeholder capitalism,

  • if you like, i.e., the idea that business and markets should

  • be set within a wider social context

  • and a legal and political framework.

  • We're not just moving from a world of narrow shareholder

  • focus to stakeholder focus.

  • We're also moving towards a world where investors

  • increasingly recognise they need to look at the long term.

  • You need to have a wider sense of what context you're

  • operating in.

  • KATIE MARTIN: Investors and business executives are people

  • just like you and me.

  • They have children.

  • Those children are skiving schools on Friday

  • to go on strike against the environment.

  • And this really sharpens the issue for people.

  • Suddenly, investors are looking much more seriously at,

  • how do we become good stewards of the global environment?

  • How do we look ourselves in the eye in 20 years

  • time and think that we did the right thing?

  • ANDREW HILL: Each year that we advance into the 21st century,

  • a younger generation is worried about the purpose

  • of the corporation, the purpose of capitalism.

  • And that's an optimistic sign, I think,

  • that people will be able to lead this change in 2020 in ways

  • that they weren't necessarily in previous years.

  • KATIE MARTIN: So where is this change

  • going to come from over the next year?

  • Well, there's lots of statistics out there

  • that show that the younger people are,

  • the more they care about these issues.

  • These young people are going to become customers

  • of banks, of pension providers, of the entire financial

  • services industry.

  • The competitive pressure that's going

  • to come from firms looking to snag business from these people

  • as they develop wealth, as they become older,

  • is getting increasingly intense.

  • ANDREW HILL: There will be an increasing clamour of people

  • asking for business leaders to deliver on promises that they

  • made in 2019, notably, the Business Roundtable.

  • People will start asking those 180 or so signatories

  • of that statement, what have they actually done in 2020?

  • KATIE MARTIN: For the finance and market sectors

  • that I'm primarily focused on, the real thing

  • is figuring out how to get money to green projects.

  • How do we issue green bonds?

  • How do we help companies that are trying to transition away

  • from being dirty, oily companies into green technology?

  • Where does the money come from for that process?

  • That's what bankers and investors are definitely

  • grappling with now.

  • And they know that if they don't get this right,

  • that next generation, the Greta Thunberg generation,

  • is not going to be interested in using their services.

  • ANDREW HILL: On the downside, of course,

  • although we might hope in 2020 for there to be more regulatory

  • and policy change to try and reset and curb the worst

  • excesses of capitalism, there are

  • going to be distractions, notably the US

  • presidential election and impeachment, and also,

  • in the European scenario, Brexit,

  • and in Asia, China and Hong Kong.

  • GILLIAN TETT: So any investor who's looking at a company

  • or the corporate landscape needs to recognise that if you ignore

  • those risks, you're in danger of essentially seeing the value

  • of your assets being impaired.

  • So if you want to understand the reset that's

  • going on right now, it pays to think about fear and greed.

  • The fear element is pretty clear cut.

  • Essentially, what you have are many C-suites who are waking up

  • and realising that if they don't start paying attention

  • to stakeholders, they face regulatory pressure.

  • They face consumer backlash.

  • They sometimes face their own protest

  • from their own employees.

  • And they also face potential investor pressure.

  • But the greed element is important too.

  • Some companies also recognise that if they start looking

  • at stakeholders more broadly, they can build for the long

  • term.

  • If they can get ahead of the really important

  • social and environmental changes right now,

  • be that renewable energy, be that non-meat alternatives,

  • be that other ways that you can tap into the growing concerns

  • amongst consumers for sustainable products,

  • if you can do that, then often you

  • can make more money in the long term anyway.

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