As Managing Director of Re-Define, an international Think Tank, I advise a number of governments, pension funds and sovereign wealth funds. As CEO of Court Jesters, a boutique consultancy, I work with large corporate clients.
Over the course of the year, the three biggest questions we are asked to help our clients with now are:
- How does the rise of digitization and technology affect what I do?
- How do I make what I do sustainable without losing money?
- How will technology affect society and the economy?
This shows a rising awareness amongst decision-makers that the rise of sustainability and technology are amongst the biggest secular trends that will shape business, government and society in the 21stcentury.
For the large long-term investors we advise, it is critical to understand how these two trends will affect the economic prospects and financial performance both of individual companies and asset classes, as well as that that of whole countries and sectors.
The pincer effect of technological advances in renewables and a rising focus on sustainability has, for example, put the future of coal under a question mark. A similar effect also led the $1 trillion Norwegian Sovereign Wealth Fund which I have advised on investment strategy, to decide to divest all of its oil and gas investments. Technological advances in shale oil and electric vehicles and binding commitments to limit climate change, has sharply increased risks to the long-term profitability of the oil and gas sector.
The Infotech and sustainability revolution has been a blessing to many developing economies, helping them leapfrog old methods of infrastructure delivery and public services. India’s leapfrogging from having just 2 landlines per 100 households to a mobile phone for nearly every adult, and its focus on off-grid solar power for rural communities speaks to the efficiency, effectiveness and power of sustainability, technology and financial profitability working together.
In developed economies too, these two secular forces are reshaping the industrial landscape. Germany’s Energiewende has reshaped utilities not just in Germany, but also more broadly in Europe. Technology is slowly changing the delivery of education and health care, core functions of government in rich economies, with leapfrogging being the way forwards for poorer economies that do not yet have universal access to healthcare and education services. The circular economy mindset, once again shaped by the dual forces of technology and sustainability, promises to reshape whole business models and sectors, even whole economies. Denmark and Finland have both recently adopted national strategies to that effect.
For corporates, technology and sustainability have both disrupted existing business models and opened up vast new vistas of profitable opportunities.
Beyond this, a big question that concerns both technology behemoths and governments is how technology will reshape society and how social norms and regulations will affect the landscape that technology firms face in turn.
Important questions such as how best to tax global tech giants, how the use of data should be regulated, how to increase cyber-security, how to enforce competition laws in the technology sector, which lends itself to natural monopolies, and how to manage the effect of technology on employment will have to be answered sooner rather than later.
Now is the time to explore how technology and sustainability will affect what you do, no matter if you work on investments, for a government or in the corporate world, or you run the serious risk of being left out in the cold.