First, the economic decoupling of US/Europe from the rest of the world will likely continue short term as we see a return to the value-based system – or, for those who take a cynical view of such things – a return to national interest vs multilateralism. This is not because our version of capitalism has failed, but simply because once companies shift their workforce, capital, operations, supply chains, it can take years to build confidence to return to those markets. The Ukraine conflict will accelerate this decoupling. The US and Europe together account for more than a third of global GDP and the two regions are the single biggest foreign direct investors in each other’s markets. While concerns about growth remain founded, in this changing macro and geopolitical environment, we need to remind ourselves that there is a huge depth of opportunity to continue to grow within our core markets. At Greentarget, we are fortunate to work with some of the most sophisticated financial institutions in North American and Europe and we take great pride in choosing clients that thrive in open, efficient, and transparent markets. We are optimistic about their ability to continue to grow in this new world order.
Second, the concept of decentralised finance, something which has dominated the debate in the industry in which we operate, is being severely tested by the conflict. The global coordinated financial response to the conflict was only possible because our financial system is interconnected. The post-financial crisis response has sought to ensure that this interconnectedness does not compromise financial stability, and it has broadly succeeded in doing so. This is not to say that the financial system cannot continue to innovate – the US and Europe are the largest contributors to global financial innovation. What it means is that new entrants will increasingly aspire to be part of this integrated financial ecosystem, which will result in more collaboration between traditional and new finance. The crisis is also accelerating innovation in other areas, for example digital currencies. The Biden administration is seeking to explore a US Central Bank Digital Dollar; regulators in the US, UK and the EU are increasingly looking to bring the digital asset space into the fold. All this is to say that, with financial stability as well as geopolitics becoming key factors in the future of finance, regulators will likely be back in the driving seat, similar to the post-2008 crisis. Now, as then, Greentarget clients will likely be at the centre shaping the future of financial markets.
Last but not least, the conflict in Ukraine will change the lens on the ESG debate. Given the climate emergency, understandably, firms had been focusing much of their efforts towards reducing their carbon emissions. This was never going to happen overnight, but the expectations of public opinion for swift change meant that any such efforts would be seen as a failure. The conflict has reshaped those expectations and forced us and the companies to think long term. It has also highlighted the importance of other aspects of the ESG debate – the societal impact and governance – linking companies’ activities to purpose in a much wider context. This is, in my opinion, a positive and will allow us all to have a much more realistic debate about how companies can embed ESG principles in this new economic and geopolitical reality.
As corporate communications professionals, we are privileged to work in a fast paced and evolving environment. The tragedy unfolding before our eyes asks that we look deeper into our values and beliefs as key drivers of business moving forward. These are principles that Greentarget fully embodies and a challenge that we willingly accept.
Dafina Grapci-Penny is managing director at Greentarget.
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