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Industry roundup: 22 July

ICC global survey on trade finance finds industry optimism

The International Chamber of Commerce’s (ICC) 11th annual Global Survey on Trade Finance has revealed that banks are optimistic about the evolving nature of trade finance, though unsurprisingly expect various industry-wide challenges and disruption as a result of the COVID-19 pandemic.

Supply chain finance and digital trade are confirmed as key growth priorities for banks, with 86% and 84% of respective respondents calling them an ‘immediate or near-future priority’. However, there is a divide between global and non-global banks on their supply chain finance offerings and investments in digitalisation. Some 64% of global banks surveyed currently offer SCF platforms, compared to just 13% of local banks and 38% of regional banks. Similarly, while 83% of global banks have a digital strategy, only 46% of local banks report having one - highlighting a growing gap between players of different scale and reach.

Other topics are also gaining traction with participants – such as sustainability and financial inclusion, whereby some 67% of respondents indicated that their bank now has a sustainability strategy. What’s more, the majority of banks surveyed are also integrating sustainability risks into their credit risk management procedures.

In terms of ongoing challenges, banks of all sizes remain concerned by the obstacles to their trade finance businesses’ growth posed by regulation and compliance policies, with 56% indicating ‘significant concern’ regarding regulatory requirements.

 

Investors see ESG investments as a safe-haven

Sustainable and responsible investments that adhere to environmental, social and corporate governance (ESG) principles are now regarded as ‘safe havens’ by the majority of investors, according to deVere Group. 

The firm has reported that 56% of clients that seek to include ESG-orientated investments into their portfolios do so citing that such sustainable funds offer financial protection in times of uncertainty. A safe-haven asset is a financial instrument that is expected to retain, or even gain value during periods of economic downturn.

“The data shows that the view held by traditionalists who claim ESG investments are ‘nice to have’ but not ‘a need to have,’ falls apart under scrutiny in the virus-driven global economic downturn," said Nigel Green, deVere Group’s CEO and founder. “And whilst this short time frame is not determinative, those investors citing ESG’s safe-haven credentials are, for now at least, being proven right.”

 

Imperial and Citi launch centre to help create responsible business leaders

Imperial College Business School has announced that it aims to help businesses redefine their approach to leadership through the work of a new research centre, launched in collaboration with Citi. The Centre for Responsible Leadership aims to help businesses and organisations identify practices that will improve their approach to leadership and boost overall performance.

Drawing on both academic theory and business practice, the centre will focus on generating meaningful change in businesses through evidence-based research that addresses the key economic, social, environmental and technological challenges facing organisations today. These challenges include how companies need to rethink the way they conduct business following the novel coronavirus crisis. Other areas include the role of leadership in mitigating damage to the environment, and how leaders can provide opportunities to increase equality, inclusiveness and diversity in their employment practices.

The failure of some companies and leaders to behave ethically, including creating social purpose that goes beyond profit, is another area that Imperial and Citi are seeking to address through this initiative. The centre aims to help leaders leverage the opportunities made available through digital transformation, including the use of AI, machine learning, blockchain and robotics.

The research of the centre is categorised under the following themes:

  • Excellence in leadership – exploring how to change the culture of an organisation and support its transition to new models of leadership.
  • Disruptive technologies - when the potential of new technologies is undermined by its socio-economic context.
  • Public realm - when safeguarding public good collides with privacy rights and private incentives.
  • Business decisions - when ethically sound choices collide with shareholder interests.

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