ARLINGTON, Va., Nov. 09, 2020 (GLOBE NEWSWIRE) — According to a poll of C-suite investment leaders, an overwhelming majority (89%) believe that organizational culture is more important than business strategy in influencing good organizational outcomes. The survey,* which involved representatives from 15 investment organizations around the world with total assets under management of over US$8.5 trillion, was conducted as part of the Thinking Ahead Institute’s Power of Culture leadership study and white paper, which is being released publicly today.
“This is tremendous validation of our thesis that a strong emphasis on culture, when synchronized with purpose, is a prerequisite for organizational success,” said Roger Urwin, co-founder of the Thinking Ahead Institute. “The importance of effective organizational purpose and actively managed culture has grown in recognition considerably of late, especially among leading investment organizations whose leaders acknowledge their key role in enhancing differentiation and resilience.”
The poll also shows how topical this subject has become recently; more than three-quarters of the group (80%) believe that more attention has been focused on organizational culture during the COVID-19 crisis. The cultural areas identified by this group as requiring the most work are inclusion and diversity (92%), people and teamwork ethos (79%), and innovation (62%).
The institute’s white paper highlights leadership commitment to elevating and actively shaping culture in an organization as the most important factor for building a competitive edge and generating sustainable business performance. It also points to the cultural considerations leaders rely on when building their value proposition, including:
- Paying sufficient regard to organizational purpose, beyond a focus on short-term business results
- Understanding and respecting the assessment of so-called soft or intangible factors
- Developing the language, facts and tools necessary to communicate culture
“Now is a very difficult period for industry leaders, perhaps the most challenging in a generation,” said Urwin. “Notwithstanding, we believe that organizations that invest proportionately more time and attention in cultural progression will be more resilient as a result, particularly if they work with a dashboard to check in on progress. Beyond that, the biggest return on time invested in culture seems to be through engaging employees at all levels on how culture works for them, followed by increasing the weighting of culture in performance management reviews and in incentive compensation. Lastly, senior leaders have the ability to guide culture by personal example.”
The white paper also contains best practice models of purpose and culture as well as best practices that are critical to improving industry resilience, sustainability and outcomes for all stakeholders.
The Thinking Ahead Institute will continue its culture research with particular focus on three areas: extending the coverage to investment organizations that have previously not recognized the benefit of actively managed culture, particularly asset owners; investigating the links between new business models, innovation and culture; and developing a deeper understanding of the nexus between culture, purpose, inclusion and diversity, and sustainability.
“This list is a tough ask of investment leaders and reflects the fact that the soft stuff — such as culture management — is really the hard stuff,” said Urwin.
Notes to editor:
*The Thinking Ahead Institute surveyed 27 decision makers from 15 investment organizations around the world on September 22, 2020.
About the Thinking Ahead Institute
The Thinking Ahead Institute was established in January 2015 and is a global not-for-profit investment research and innovation member group made up of engaged institutional asset owners and service providers committed to mobilizing capital for a sustainable future. It has 45 members around the world and is an outgrowth of the Thinking Ahead Group, which was set up in 2002. Learn more at www.thinkingaheadinstitute.org.
About Willis Towers Watson
Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.
Ed Emerman: +1 609 240 2766
Investment firms cautious on reopening plans, notification procedures – Investment Executive
Banks in particular face future earnings, ratings challenges due to pandemic
Current spending levels of 1.3% of GDP could soar to 4.2% by 2041, says report
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Takeaways from our 2021 investment outlook: Legacy of the lockdowns – Investors' Corner BNP Paribas
Here we summarise the big picture for investors at the end of 2020. This constitutes the starting point for our 2021 investment outlook.
- Since the 2008 global financial crisis, the global economy has been mired in anaemic growth and weak demand, tempered by consistently rising asset prices.
- In 2020 the global economy faced a crisis of unprecedented magnitude (see Exhibit 1 below) after the pandemic lockdowns. After a contraction of 4.4% in 2020 the IMF forecasts global growth of 5.4% in 2021. Overall, this would leave 2021 GDP some 6.5% lower than in the pre-COVID-19 projections of January 2020. The adverse impact on low-income households is particularly acute, imperilling the significant progress made in reducing extreme poverty over the last 30 years. Countering inequality is a key challenge to be met in 2021 and beyond.
Exhibit 1: Largest decline since WWII – graph shows change in world gross domestic product (inflation-adjusted, in %)
Source: BNP Paribas Asset Management, as of 26/11/2020
- Under the best-case scenario, one or more vaccines for COVID-19 become widely available by the second half of 2021. Otherwise, the disease remains a longer-term threat requiring us to ‘live with’ the virus – repeated lockdowns will not be a sustainable long-term strategy.
- In 2020, advanced economies loosened the monetary and fiscal reins most spectacularly. Debt-to-GDP ratios soared, rising for many countries by more than they did in the years after the Global Financial Crisis (GFC). Major central banks have largely financed the increase in budget deficits, monetising an expanding national debt, much as Japan has done.
- One way to understand the weakness in aggregate economic demand is to study real interest rates (the ‘price’ of money in the economy). In 2006, the real yield of the 10-year inflation-protected US Treasury bond was between 2% and 3%. Since 2010, its yield has mostly been below 1%, including a spell in negative territory both in 2012 and again in 2020. Negative real yields are now common to the G3 economies (see Exhibit 2 below) and beyond. In 60% of the global economy — including 97% of advanced economies — central banks have pushed policy interest rates to below 1%. In one-fifth of the world, policy rates are negative.
Exhibit 2: Real yields are now negative for G3 sovereign debt – graph shows changes in real yields for US, Japanese and eurozone government debt between 1997 and 16/11/2020.
Source: BNP Paribas Asset Management, as of 26/11/2020
- In 2020, these meagre interest rates, along with cheap, low-risk liquidity from central banks, led asset prices higher. Risk premia for risky assets shrank. Companies whose revenues have plummeted — cruise lines, airlines, cinemas — were able to borrow money in 2020 to survive. Investors had few higher-yield options. Will central banks continue to supply such liquidity in 2021?
- And how is all this debt to be paid for? The appropriate historical parallel is perhaps the post-World War II period, when central banks capped bond yields at levels well below the trend GDP growth rate to gradually reduce the national debt as a proportion of GDP.
- Alternatively, instead of financial repression and inflation (as post WW2), the extraordinarily low real interest rates we have seen over the past decade could help achieve fiscal sustainability. It would, however, be imprudent to count on it. No policymaker should expect real interest rates to remain persistently below the growth rate of real GDP. Indeed, forecast imbalances in planned global savings and investment could drive real interest rates higher (ageing societies save a lot, but old societies do not).
- Another risk is that improved real trend growth does not come to the rescue. Lower global growth after the pandemic accompanied by inadequate fiscal stimulus would leave marginal sections of the economy vulnerable to collapse. Such an outcome would test the paradigm of modest growth, low inflation and supportive central bank policy that has supported asset prices since 2008.
Today we face three interconnected crises – health, economic and climate. The instability provoked by the pandemic presents a window of opportunity to pivot in a new direction. Long-term environmental viability, equality and inclusive growth are essential pre-conditions to a sustainable economy. By taking a holistic, systemic, long-term view, we are less likely to be surprised by crises and better able to manage them.
For in-depth insights into what’s next for the global economy and markets, read our 2021 investment outlook, ‘Legacy of the lockdowns’
Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. The views expressed in this podcast do not in any way constitute investment advice.
The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns.
Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions).
Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.
Fossil Free Lakehead pleased with university investment decision – CBC.ca
A decision by the Board of Governors at Lakehead University to divest itself of fossil fuel investments is being hailed as a victory for one student group on its Thunder Bay, Ont., campus.
On Thursday, the board committed to not holding any investments involving fossil fuel extraction by 2023.
“Our decision to divest from fossil fuel companies reflects Lakehead’s goal of becoming a leader in sustainability as reflected throughout our current Strategic Plan and Sustainability Action Plan,” said Board of Governors Chair Angela Maltese in a statement.
Just over two per cent of the university’s investments are in fossil fuel organizations.
About 40 members of Fossil Free Lakehead have been working to convince the school since 2013, that it should no longer hold the investments.
Lakehead is the sixth university in the country, the group said, to divest itself of fossil fuel revenues.
“I think many people believe that burning and extracting is the only way forward, because that’s what we’re used to,” said Shaidya Aidid, a member of Fossil Free Lakehead.
“I think that progress doesn’t happen because we want to stay in our comfort zone,” she said, noting she got involved in the group, believing that Lakehead needed to lead the way when it came to promoting alternative fuels.
“A lot of the groups of students and members who are involved with our movement all believe in that message, that fossil fuels will not be fuelling our future.”
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