Summary:

6 September 2023, The architecture of global governance is more fluid than at any time over the past half-century. With good intentions and good planning, and perhaps just a little good luck, policymakers have the opportunity to create a global infrastructure that is more equitable and inclusive, and which more accurately reflects the economic and political realities of the 21st century.

The governance structure put in place at the end of the Second World War – largely by the victorious USA and its European allies – is unravelling. The crowning feature of that edifice was the United Nations, which so far has succeeded in preventing another world war, but which has fallen short of its goal of saving “succeeding generations from the scourge of war” in conflicts from Korea to Iraq through to Ukraine.

If the political machinery for international governance has been found wanting, so too has the economic and financial infrastructure. The Global Financial Crisis of 2008-9 exposed the inherent weaknesses of western-style capitalism and its susceptibility to boom-and-bust cycles, and tarnished the image of the American financial system, where the crisis originated.

New economic models emerged to challenge the orthodoxies of the past 50 years. The dynamic export-led growth of China – which enjoyed double-digit GDP growth for many years and rapidly rose to challenge the USA as the world’s biggest economy – showed that there were alternative economic models to the Washington consensus for developing nations.

All the while, rising inequalities in wealth and prospects, which were actually exacerbated by the crisis, seemed to demonstrate to many in the emerging markets that existing economic and financial infrastructure would not be trusted to do the job of enhancing global development.

Financial flows from the west to the east, or broadly from the northern hemisphere to the “Global South”, have stagnated, causing many in the developing countries to reconsider their reliance on north America and Europe as trading partners and investment providers.

The Middle East – at the geographical crossroads of the world between east and west – is increasingly regarded as the pivot on which this great realignment is turning.

According to consultancy Asia House, trade between the Gulf Co-operation Countries (GCC) and Asian emerging markets is set to surpass commerce with the “developed” world by 2028. GCC-China trade reached a record high and surpassed GCC trade with the US and Euro Area combined for the first time in 2021.

And it is becoming increasingly diverse. What began as a simple swap of Arabian oil for Asian manufactured goods has become a sophisticated exchange of advanced technology, refined energy derivatives, infrastructure investment and high-value consumer goods like electronic vehicles.

This global realignment offers the possibility of creating a new global architecture that is more suited to the needs of the whole planet, not just the traditional powers in the west, many of whom were former colonial occupiers and resented as such.

On a whole range of strategic issues – from infrastructure investment to wealth inequalities, through to social, health and educational development – these new orientations could be the conduits for a more just and inclusive model of international development.

On perhaps the biggest issues of all, climate change and global warming, it seems impossible to imagine a global solution without the core involvement of the Global South.

The recent expansion of the BRICS organization to include important members of the emerging markets – notably Saudi Arabia and the UAE – could be an indicator of how this realignment might go. But the BRICS is still very much work-in-progress, and it will have to seriously step up its game if it is to become a serious challenger to the existing, creaking world order.

The urgent need is for a more just and inclusive global governance structure, not one that will further divide the world into mutually hostile camps with their agendas set in Beijing and Washington.

Those who are fashioning this new global reset should perhaps bear in mind that other aim of the United Nation’s Charter from half a century ago: “to practice tolerance and live together in peace with one another as good neighbours.”

The Future Investment Initiative’s flagship conference, FII7, takes place 24-26 October 2023 in Riyadh, Saudi Arabia, six weeks after the G20 summit in New Delhi. 

It will address global governance arrangements, with an emphasis on equitable and positive outcomes for all corners of the globe; the macroeconomic headwinds faced by all societies; climate finance and government action in the weeks before COP28; and it will address what policy makers must do to harness technology, education and health to make the planet fairer, safer and more prosperous, ensuring all humanity can flourish.

FII Institute’s partnership with HEC Paris is one that thrives on the hopes of furthering one agenda: making a positive impact on humanity. 

FII Institute’s THINK Pillar, which is guided by experts, partnered with esteemed academia, and run through a passionate team, aims to empower the world’s brightest minds to identify the solutions that make a difference in lives globally. 

THINK achieves this by collaborating with high-caliber partners, such the reputable HEC Paris, to build momentum towards change and pursuing thought leadership in the service of humanity.

To that extent, Daniel Halbheer, an Associate Professor of Marketing and the Academic Director of the Climate & Earth Centre at the HEC Paris S&O Institute at HEC Paris was chosen as the holder of the FII Institute research chair on “Business Models for the Circular Economy”.

Business leaders, consumers, and governments alike are increasingly becoming aware of the enormous resource and waste footprints resulting from the “take-make-dispose” approach of the linear economy. The resource and waste footprints are key drivers of the world’s most pressing environmental problems, including global warming, biodiversity loss, and pollution.

To tackle these problems, firms must develop innovations across product design, recovery of end-of-life products, and recycling technologies that enable the transition from a linear to a circular economy. In addition to closing the loop, firms must also find new ways of extending the loop, for example through product reuse, repair, and remanufacturing. 

The purpose of this research chair on Circular Economy is thus to develop new business models that drastically reduce resource and environmental footprints and at the same time have economic and social benefits.

This report covers Halbheer’s achievements for the Chair during 2022—a year in which a lot of effort was put into research, teaching, and outreach activities.

Research

Teaching

Outreach

For 2023, a number of impactful activities are underway, taking the partnership between the two entities to new heights whilst changing the world one step at a time. The Institute believes that at the intersection of human need, technological feasibility and economic viability are the answers that will shape a better world for all.

INTRODUCTION / ABSTRACT:

Given the scale of the net zero challenge, banks and financial institutions, in particular, are in a position to play a critical role in accelerating Acheter cialis en ligne france the transition to a low carbon economy by financing activities aligned with the Paris Agreement. In addition, the financial sector has a vital role to play, especially in catalysing and mobilising capital to where it matters most, whether by creating new customised financing solutions that help with achieving environmental objectives or through thought leadership.

ISSUE AT STAKE:

It is no longer surprising that climate change is humanity’s greatest threat, especially in emerging and developing markets facing some of the most significant risks. If we are to deliver on the Paris Agreement and limit global warming to below 1.5°C by 2050 – the world must act now.

We have seen how the COVID-19 crisis was a wake-up call on the threats triggered by humanity’s impact on nature and the necessity to integrate these threats into business risk management processes. This is why, today, governments and industry movers are paying increased attention to the risks of inaction on climate change.

In Africa and the Middle East, climate change is especially critical as the region is amongst the most vulnerable regions to global warming, and most in need of funding to reduce its reliance on fossil fuels. We must ensure that the rapid ongoing economic development of our region can continue by tapping sources of clean energy such gas and solar, which the region has in abundance. This is why sustainable finance is crucial to delivering a green transition and supporting adaptation to protect against the effects of climate change that are already being felt.

SOLUTIONS:

A significant investment gap must be closed to accelerate the pace of transition in these markets. Emerging markets (of which Africa represents a large proportion) need to invest an additional USD94.8 trillion – a sum higher than annual global GDP – to transition to net zero to meet long-term global warming targets. As a matter of fact Standard Chartered’s recently issued report, the Adaptation Economy, investigates the need for climate adaptation investment in 10 markets – including five markets in Africa and the Middle East. It reveals that without investing a minimum of USD30 billion in adaptation by 2030, these markets could face projected damages and lost GDP growth of USD377 billion: over 12 times that amount. If the countries were to fund it themselves, it could reduce household consumption by an estimated 5% p.a.

This would be an especially unfair burden, given the region’s relatively low contribution to global emissions. On the other hand, if funded by public and private capital from developed countries, GDP could be higher by 3.1% in emerging markets and 2% worldwide. A dollar invested can have a significantly different impact depending on where and how it is deployed. It is with clients in emerging and developing markets that sustainable investment can have the most significant impact.

Additionally, the financial sector can be instrumental in financing developing countries’ ability to deploy sustainable solutions. Innovative financing models, such as blended finance, which can be utilised as crucial vehicles to incentivise and catalyse the private sector contribution needed to bridge this funding gap. Blended finance allows private sector capital to be funnelled towards projects of societal benefit. It also offers a valuable opportunity to attract philanthropic funds to participate in these structures. Short-term financing, although necessary, will not suffice entirely. Banks and Financial Institutions must also integrate sustainability considerations into their financing strategies and play a hands-on role in facilitating financing for sustainable projects.

At Standard Chartered, we are committed to supporting the growth of the sustainable finance market. We have announced ambitious new targets to reach net zero carbon emissions from our financing activities by 2050, including committing to interim 2030 targets for the most carbon intensive sectors. The Group’s approach is based on the best available data and aligns with the International Energy Agency’s Net Zero Emissions by 2050 scenario (NZE).

CONCLUSION / CALL TO ACTION:

To mitigate the climate crisis and minimise its threats to the world, we must be just, leaving no nation, region or community behind and, despite the hurdles, action needs to be swift. To meet the 2050 goal, we must act now and work together: companies, consumers, governments, regulators and the finance industry must collaborate to develop sustainable solutions and provide financing to speed up the adaptation of these solutions.

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