A new global survey of companies and institutional investors commissioned by ING, the multinational banking and financial services corporation, shows the pandemic, as a ‘white swan’ moment – perhaps an unintended positive outcome – which has accelerated the majority of companies’ green banking and financial services corporation plans.
At the same time, investors are demanding more hard environmental targets be put in place by companies. Despite this, companies, investors, and governments must move faster and further in making environmental, social and governance (ESG) progress as the pandemic raises the bar for ambition, the ING report notes.
Looking back, 2020 was a wake-up call for corporates, investors, and governments alike.
Not only were they dealing with the impact of lockdowns, supply chain disruptions and loss of business, but the year was also marked by social unrest and extreme weather events – systematic risks that could have been foreseen. To prevent this from happening in the future, it is imperative to move even faster and further on sustainability initiatives, the study notes.
“It is now or never for the world to solve the climate crisis. We have 10 years, at best, and that is not a lot of time. The pandemic has only reinforced our resolve for the speed and breadth of what we need to do on sustainability,” said PepsiCo’s Roberta Barbieri, VP Global Sustainability, a top corporate executive, and part of an expert group who contributed to the report.
According to the new report, ‘Now or never: A new bar for sustainability’, 57 percent of companies say they are accelerating green transformation plans, and 62 percent will likely tie executive compensation to environmental targets in 2021.
Currently, less than one in 10 companies in the survey have linked executive compensation to ESG targets. From the investors surveyed, 74 percent have increased commitments for portfolio alignments to the goals of the Paris Climate Agreement and 72 percent are adopting more ambitious targets for sustainability outcomes of ESG investment.
In would seems the stars are beginning to line-up among investors wanting climate sustainability and corporate culture that will place executive compensation in accord with more comprehensive green banking goals that in past.
“The pandemic has demonstrated that individuals, companies, investors, and governments can make rapid environmental and social changes for the good, but closer alignment is necessary to rapidly accelerate progress in addressing the climate crisis,” said Gerald Walker, Chief Executive Officer for ING Americas.
“Our (collective) actions are under the microscope like never before and as the report shows, coordinated action and convergence on areas such as ESG standards and policy are essential for accountability and meeting ambitious targets.”
The ING report surveyed executive and senior management respondents about their organization’s ESG priorities, how they are embedding accountability for progress and performance, and the evolving influence of capital markets on sustainable transition. The findings include:
Companies elevate the ‘S’ in ESG, with 50 percent expecting to issue a “social bond” in the next 12 months
Employee health and wellbeing (33 percent) will take precedence for corporates over the next year, even ahead of emissions reduction (30 percent). Investors cite this as a top ESG priority too, behind only climate and sustainable supply chains.
Furthermore, over 80 percent of companies across each region expect new government sustainability policies to intensify action on improving access to healthcare, significantly more than any other area, including renewable energy projects.
Momentum behind social bond issuance and subscription rates is set to continue over the next 12 months with, 50 percent of corporates likely to issue a social bond in this time frame.
Finding include the following: Asia-Pacific (53 percent) and North American (51 percent) respondents are more likely to issue a social bond in the next 12 months than European (44 percent) respondents.
Despite short-term momentum on social issues, only 17 percent of investors would like to see companies making more externally focused social targets a top priority; investors see more ambitious environmental targets as a bigger priority (38 percent).
62 percent of companies have effectively integrated ESG information within corporate reporting, but better alignment with investor demands is needed
73 percent of those that had issued sustainable finance instruments in the past say the process improved their ability to put robust metrics in place and 62 percent say ESG information is strongly integrated within corporate reporting.
However, when it comes to disclosure, there are still misalignments between information being reported by companies and information investors believe is most material. The top challenges for companies trying to improve ESG accountability are the lack of common industry standards and integrating ESG issues with financial targets.
For other regions, finding include European (45 percent) companies highlighted the chopping and changing of ESG KPIs as the most significant challenge in improving ESG accountability, in comparison to North America and Asia-Pacific (34 percent each).
66 percent of companies say expansion and innovation in the sustainable finance market improves relevance and accessibility
The industry saw an expansion of different financing instruments, including social bond issuances, with 66 percent of companies saying the expansion of the sustainable finance market makes it more relevant and accessible for them. Companies cite the strongest appetite to issue social bonds over any other sustainability financing instrument.
The financial instrument of the social bond – as noted above – emphasizes the health and wellbeing of a company’s workforce, based on the toll exacted on workers’ health by the pandemic and the tangible fact for corporates that without a healthy workforce, they lack a viable company in many senses.
ING found that that demand for a social bond was uniform with exception of European companies where there is a marginally stronger appetite to issue green bonds over social. First-time issuers view sustainability-linked financing to test the market and learn from the process, value, and data.
According to ING: European investors (49 percent) have by far strongest appetite for sustainability-linked instruments compared to North America (26 percent) and Asia-Pacific (13 percent). Investor appetite for transition bonds is reversed with stronger appetite in Asia Pacific (47 percent) and North American (40 percent) in comparison to Europe (17 percent).
“Over the past 12 months we have seen a mentality shift whereby companies were initially taking some steps but are now taking a much more accelerated approach to sustainability. The role of capital markets is pivotal in ensuring this approach continues, providing increased transparency around measurement and ensuring sustainability is embedded with corporate strategy,” said Leonie Schreve, Global Head of Sustainable Finance for ING.
“The expansion of the sustainable finance market as evidenced by the growth in sustainability-linked instruments is vital in making sure no company with strong ambitions is excluded from being able to transition to a sustainable business.”
Consumer confidence hitting record high, but with hangovers left from pandemic
Global consumer confidence soared to record heights in the first quarter of 2021, according to The Conference Board: Global Consumer Confidence Survey, as vaccination campaigns broadened, travel restrictions loosened, and governments and central banks continued to provide robust economic stimulus.
These factors are contributing to various geographic regions returning to a “state of normalcy sooner” including increased spending across the spectrum, but some economic hangovers persist from the global pandemic crisis.
The Conference Board is a member-driven think tank that has delivered economic insights since 1916. It released this recent global consumer confidence survey on Wednesday. Their methodology for what is comparably a business cycle index is based on a point system where a figure above 100 is considered positive, or below 100 representing decline. This survey also employs opinion polling which is expressed as percentages.
“The lightening of consumer moods globally bodes well for spending throughout the remainder of the year as economies continue to emerge from the 2020 pandemic-induced economic downturn and work toward arresting the spread of the virus,” said Dana Peterson, Chief Economist of The Conference Board.
“Nonetheless, the global economic recovery – and, consequently, consumer sentiment – is likely to continue to vary notably from region to region. Economies with greater access to vaccines are likely to achieve herd immunity, and thus will return to a state of normalcy sooner,” Peterson added.
The survey found that overall global consumer confidence shot up from 98 in the fourth quarter of 2020 to 108 points in the first quarter of 2021. That figure exceeded the reading of 106 registered in pre-pandemic 2020 Q1. Reminder, a figure above 100 is considered positive and the 108-point score is the highest recorded since the survey began in 2005.
Confidence rose in 49 of 65 markets surveyed, as economic activity resumed, COVID-19 cases peaked in many economies, and vaccine development and distribution expanded.
The vaccines contributed to that revival, so individual economies’ level of access to them will greatly affect the timing of their recoveries and boosts in consumer confidence. (For 2020 Q4 indexes, results exclude China due to data collection constraints.)
Confidence still varied across regions: Latin America (up 13 points, from 86 to 99) and Europe (up 11 points, from 76 to 87) enjoyed the biggest gains in consumer confidence. But both regions started from low bases, and Europe remains the least confident region. North America, by contrast, slipped six points, from 116 to 110, while Africa and the Middle East dropped from 101 to 97.
Growing confidence in personal finances, especially, propelled the stronger global sentiment: Consumers were significantly more optimistic about their finances in Q1 2021, with the gap between positive and negative responses standing at +29 percentage points, up substantially from +15 percentage points in Q4 2020.
Of the three key drivers of global confidence, personal finances made the largest impact, although the other two drivers also trended upward: Sentiment about job prospects were up overall around the globe and spending intentions flipped from negative (-7 ppts) in Q4 2020 to positive (+6 ppts) in Q1 2021.
Consumers are gearing up for a return to normalcy: Consumers spent more on entertainment outside of the home, clothing, and vacations. Taken together, these trends indicate that consumers are increasingly looking forward to returning to normal activities at some point this year.
Given that consumption levels significantly contribute to growth in many mature economies, such activity in anticipation of greater freedom later on supports The Conference Board’s upwardly revised projection of 5 percent real GDP growth globally this year.
However, around the world, consumers also ramped up their protective savings: 57 percent of global consumers indicated that they are putting money into savings, an increase of 9 ppts from the previous quarter. Their efforts to economize primarily reflected savings on hospitality and entertainment services.
Consumers planned to eliminate annual vacations, delay upgrading technology, and cut meals away from home. They also switched to cheaper grocery brands and drove their cars less.
The scars of the recession lingered, with health and economic concerns still looming large.
The world is not quite buzzing yet.
A strong majority of consumers (64 percent) said that their market was still in recession during the first quarter of 2021. While that figure dropped sharply from the end of 2020 (down 17 percentage points, from 81 percent) recession concerns remained elevated.
Globally, only 41 percent of consumers expected that their economy would be out of recession in 12 months, virtually unchanged from the previous quarter.
Consumers’ worries about their own health (22 percent) and economic performance (20 percent) dominated their top concerns. This trend will likely hold through mid-2021 given the continued crisis, and the time it will take to arrest the coronavirus and establish herd immunity.
“With uncertainty around jobs and health prompting consumers to continue economizing, it seems clear that GDP returning to pre-pandemic levels will not in itself mark a return to the old normal,” said board chief economist Peterson. “Healing in labor markets may take longer, with greater potential for scarring among industries that are vulnerable to automation and digital transformation.”
Unbound by geography, CFOs look to capitalize on global talent pool
A large majority of CFOs around the world are planning to expand operations into new countries in 2021 to achieve their long-term growth strategies, according to a recent survey by CFO Research and Globalization Partners.
The survey also uncovered changing perceptions about hiring and remote work because of their pandemic experiences, with respondents saying they want to attract from the global talent pool that is unbound by the geographic restrictions of their company’s operating model.
The February 2021 survey of chief financial officers, chief executive officers and other senior finance executives also cites a common theme that they are prioritizing the need to build resiliency and although optimistic, disclose that their businesses are still stabilizing and in recovery.
Optimism towards organizational performance in 2021 varies across the regions. Asia-Pacific (APAC) CFOs are more optimistic about success in 2021 than their counterparts in the UK and North America. Since 65 percent of APAC respondents indicated that they expect to exceed goals and expectations in 2021, compared to 46 percent for UK and 47 percent for North America.
“The ongoing rollout of COVID-19 vaccines, investments flowing into the region, and momentum gained as companies accelerated their digital investments during the pandemic – all these are contributing to positive sentiments toward business in 2021,” said Charles Ferguson, General Manager, Asia Pacific, Globalization Partners. “With the ongoing shift in the global supply chain and a renewed focus of the US, UK and EU to grow alliances with APAC markets, there is an abundance of opportunity to expect from this region.”
CFOs’ global view within their hiring approaches
When asked to describe their hiring strategy over the next 12 to 18 months as, 48 percent of APAC respondents say they will attract new talent where they are based while 43 percent say they want to attract new talent that is unbounded by the geographic restrictions of their company’s operating model.
APAC CFOs have a high degree of interest in tapping into a more cost-effective, global talent pool—a concept favored by half of those surveyed –and capturing market share through global expansion, which is favored by 61 percent.
CFOs’ altered workforce management strategies
Seventy-four percent of the survey respondents in APAC anticipate operating remote and/or hybrid workforce models in the next 12 to 18 months.
Eighty-three percent of executives also say the COVID-19 pandemic fundamentally altered the way they think about hiring and workforce management and 89 percent say it altered how they consider remote employees or the work-from-anywhere model.
In parallel, CFOs are deeming global expansion as a top priority in the next 12 to 18 months.
“Implementing a strategy for global expansion and presence” was deemed a top priority in the next 12 to 18 months for 52 percent of APAC executives, compared to 38 percent of the EMEA executives and 36 percent of the North American executives.
With that in mind, 55 percent of the APAC CFOs that are expecting to achieve their goals in 2021 are already engaging a global (Professional Employer Organization) PEO, while 25 percent plan to use a global PEO within one year to support their international business strategy and 17 percent plan to engage a global PEO within three years.
Drivers wanted: Record demand at Uber as vaccinations rise
Uber is offering sign-up bonuses and other incentives for drivers as it faces record demand for rides and meal delivery.
The San Francisco ride-hailing company said Monday that total monthly bookings, including food delivery and passenger service, reached an all-time high in March.
In a government filing, the company said demand for ride-hailing, which plunged during coronavirus lockdowns last year, has recovered more quickly than expected as daily COVID-19 vaccinations exceed 3 million per day in the U.S.
Some people are still avoiding public transportation out of infection fears, potentially boosting demand for services like Uber and Lyft further.
Passenger bookings last month reached the highest level since last March, when spiking infection rates began to shut the country down. Bookings last month hit an annual run rate of $30 billion. Last year, Uber’s passenger business recorded $26.4 billion in gross bookings.
Food delivery, of course, has surged over the past year and in March Uber Eats deliveries hit an all-time high. With more regions opening restaurants to at least partial capacity, that could be a positive sign for Uber as it could signal that some habits acquired during the pandemic may stick.
Food delivery jumped 150% from last March to an annualized run rate of $52 billion, the company said.
Last week, Uber announced $250 million in sign-up bonuses and other perks to lure more drivers. Many drivers gave up last year when demand dried up, the company said. But demand now exceeds the supply of Uber drivers on call, the company said.
In another perk, Uber has partnered with Walgreens to make it easier for drivers to get vaccinated.
Driving professionally, however, may still be considered too risky by some. Last month, a woman was arrested on suspicion of pepper-spraying an Uber driver in San Francisco who was coughed at and insulted after he demanded a passenger wear a mask.
Drivers may still be holding out to see if Uber will sweeten pay and benefits. Uber was forced to classify its drivers in the United Kingdom as workers last month — not self-employed — after a Supreme Court ruling there.
The company said Monday it has begun a historical claims settlement for its U.K. drivers.
Shares of Uber Technologies Inc. rose nearly 5% to $60.40 Monday.
By DEE-ANN DURBIN
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