THE IBDE ANNUAL CONFERENCE 2020

London, 10 March 2020

CONFERENCE REPORT

1. Introduction

The Annual Conference of International Business and Diplomatic Exchange (IBDE) on 10 March 2020

was kindly hosted, for the third year running, by DLA Piper and it was a resounding success. Despite

the impact of the Coronavirus crisis, 150 senior figures from the diplomatic and business communities

and Government (including 28 speakers, half of which were female leaders), attended the various

elements of the extensive conference programme which comprised four plenary (on the record) and

two breakout (Chatham House Rule) sessions as well as the meeting of the Advisory Board of IBDE

and networking opportunities. The Conference provided an excellent platform to explore the main IBDE

priorities for its 2020 working programme, impacting international trade and investment (including

trade tensions, digital trade, investment and trade facilitation); sustainability (including energy,

sustainable growth and investment, climate change and green financing); Global Britain (including

future UK FTAs, the relationship with the EU, the Commonwealth and the British Foreign Policy post-

Brexit); the future of innovation (including the role of tech in enabling innovation and impact of

digitising every industry on trade, movement of data, Artificial Intelligence (AI)…), financial regulation

(including global regulatory cooperation vs fragmentation and regulating to support sustainable

investment), 2020 global political outlook (including the evolution of political risk and how it is most

likely to manifest in 2020, from US elections to China trade and geopolitics, populism and the future of

globalisation) and Diversity and Inclusion.

Conference sponsors

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2. Opening Session

Rudi Guraziu, IBDE Executive Chairman, welcomed conference participants noting that it marked the

10th anniversary of IBDE. Over the decade IBDE had established itself as a unique forum for debate on

the essential international trade and investment issues, and he thanked the diplomatic and business

communities and Government for their continuing support. He outlined IBDE’s ambition to expand its

activities overseas, informing delegates that following the successful inaugural meeting in Brussels

(held on 4 March 2020), IBDE is planning to deliver some of its most successful programmes in New

York City and Singapore. These meetings aim to pave the way for IBDE to establish its chapters in

other major capitals where there is an active international business and diplomatic community. This

move would significantly contribute to further business opportunities as well as help inform international

trade and investment policy and decision making in major world capitals and key multilateral fora,

following its success in London over the past ten years.

Following Rudi Guraziu’s remarks, Vincent Keaveny, Partner DLA Piper, as host, had welcomed

attendees, highlighting DLA Piper’s commitments in supporting IBDE as one of its strategic partners.

Sir Roger Gifford, Chairman of the IBDE Advisory Board, congratulated Rudi Guraziu on the IBDE’s

achievements noting the special award for its outstanding contribution to economic diplomacy which

was voted for by the London Diplomatic Community and organised by Diplomat Magazine. Sir Roger

introduced the conference programme highlighting the growing engagement of the international

business community in climate change issues relating to financial risk analysis, and the commercial

opportunities presented by this new ‘green revolution’ which is expected to transform the global

economy.

Sir Roger then invited Professor Sir Malcolm Grant CBE, a member of the IBDE Advisory Board and

former Chairman of NHS England to provide, on a personal basis, a briefing on the Coronavirus crisis.

3. Plenary Session - Future of International Trade and Investment

This session, moderated by Nick Collier, Chair of Diplomatic Engagement at IBDE, explored the issues

around trade tensions, the expansion of digital trade, FDI, competition and other factors in the context

of weakening global economic growth even before the Coronavirus crisis. It then reviewed possible

policy responses to strengthen trade and investment flows.

Antonia Romeo, Permanent Secretary at the Department for International Trade (DIT) and member of

IBDE Advisory Board introduced the theme noting the continuing eastward shift of Foreign Direct

Investment (FDI) flows to the Asia Pacific, its growing economic power as a region and the new

opportunities for trade, especially in services. However, there was a threat from increased protectionism

(over 6000 new measures introduced over the past decade) and continuing concern over the ability of

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the institutional architecture, especially the World Trade Organisation (WTO), to address new

challenges such as those posed by technological disruption, climate change, and demographic

changes. In addition, the Coronavirus crisis had exposed the fragility of integrated global supply chains.

Initiatives such as the forthcoming 26th UN Climate Change Conference of the Parties (COP26) were,

therefore, relevant opportunities to address these challenges.

Her Excellency Janice Charette, Canadian High Commissioner for the UK, described Canada’s

experience as an advocate of free trade which was a shared interest with the UK. Free trade was a

driver for global economic growth, at its most durable when shared with others through a rules-based

international order. The increase in protectionism arose in part through a sense that future generations

would not have access to opportunities available to previous ones. However, the evidence showed that

protectionist barriers raised prices for consumers. The present WTO system needed reform which was

why Canada was working with like-minded countries to shape a more robust, more inclusive trading

system. Canada was the only G7 member to have Free Trade Agreements (FTA) in place with every

other G7 member; in total had 14 FTAs covering 51 countries. Its approach was to build relationships

through FTAs, including consultation with industry associations on issues such as labour rights,

sustainable development and climate change. FTA implementation needed the support of business,

especially SMEs. The High Commissioner concluded that she was very optimistic that an ambitious,

comprehensive and independent Canada/UK trade agreement would be achieved.

Andy Baldwin, Global Managing Partner, EY and member of IBDE Advisory Board, contrasted the fact

that while FTAs focussed on goods, most of the global economic growth was sparked by digital trade.

But digital trade was fragmented - different rules; e.g. on taxation in various jurisdictions - and common

protocols and standards needed to evolve as the digital scene became ever more complex.

Commenting on FDI, he noted that the UK remained one of the largest creators of jobs in the EU.

However, the biggest threats to international trade were the China/US relationship (where what was in

effect a trade truce was operating at a time when the China economy was weak); and the risk of an

EU/US trade war (though both sides had stepped back from earlier more extreme positions).

Businesses and governments were talking more about sustainability, but it remained to be seen how

this played out in sourcing and procurement.

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The following topics were raised during the Q and A session:

• The potential economic impact of the Coronavirus crisis compared with SARS in 2003, both

immediate and on longer-term business decisions.

• The need for workarounds to deal with practical problems such as closing end year accounts,

access to credit, and consequential losses claims.

• The need to build resilience and business continuity by considering new supply chain models.

• The impact of AI on the labour market, noting limited take-up of technology so far to improve

productivity among many smaller companies, and the skills market/immigration policy.

• Aside from FTAs, there was a continuing need to look at ways of improving the ease of doing

business internationally.

4. Plenary Session - Sustainable Growth: How should investors respond to opportunities

for sustainable growth and investment?

This session took the form of a conversation between Sir Roger Gifford, Chairman of the IBDE Advisory

Board and Green Finance Institute and Senior Banker at SEB, and Peter Harrison, Group Chief

Executive Officer, Schroders Plc and member of the IBDE Advisory Board.

Sir Roger began by wondering whether one consequence of the international response to the

Coronavirus epidemic would be to reduce annual carbon emissions for the first time in recent history,

for example, the reduction in industrial activity? Peter Harrison noted that despite the immediate impact,

the backdrop remained very worrying: CO2 emissions in 2019 rose by three and a half percent.

Three forces are driving the trend against this:

• Governments - devising policies and then delivering them.

• Cost - were coming down both onshore (solar) and offshore (primarily wind).

• Consumer behaviour. E.g. fifty percent of all new car sales in Norway were electric - in 5 years

all would be.

The development of the Internet was perhaps the nearest parallel to the present situation in renewables.

In 2012 energy companies constituted 16 percent of the stock market - today it was three and a half

percent. But renewables still represented less than ten percent of this - 0.3 percent. On the difference

that a carbon tax could make, Peter Harrison favoured its introduction as a way to change corporate

behaviour. The regulator could then conduct stress testing at different price levels. The conversation

then moved to explore how to develop the sustainability market? There was USD 120 trillion of demand

but currently much less to invest in - new investment products were needed. The objective should be

to green the whole financial system, incorporating climate risk into financial analysis. On the question

of how is pension fund behaviour changing? Peter Harrison responded that the focus is generally

shifting from profit only to covering also the carbon agenda, perhaps less so in the US. More information

and more granular detail are needed on how and where pension funds are investing, e.g. reflecting

Environmental, Social and Governance (ESG) principles. Encouragingly though, there were already

signs that ESG was becoming embedded in investors’ minds and not seen as a luxury to be jettisoned

should returns go even lower.

The following topics were raised during the Q and A session:

• Renewables required substantial investment over a long period, and often power companies

(one, in particular, was mentioned) were thwarted by the failure of local authorities to back

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words with action to support renewable energy infrastructure projects - Nimbyism remained a

constraint.

• AI and decision making - there was a consensus that Governments would be among the last to

adopt AI.

• Less developed economies had a comparative advantage over more mature economies as

they did not have to adapt legacy systems and could move directly to adopt the new

technologies (cf mobile payments)

• Policy frameworks need to be developed to provide incentives to invest in sustainability,

including carbon capture and storage, and hydrogen. Again, a carbon tax or a more effective

offset system would speed this up.

• Carbon Tax. A straw poll of the audience was firmly in favour. But equally it was important to

work with oil/gas companies to solve problems as they transitioned to a new energy

environment, a point emphasised by the EU in its recent taxonomy papers.

In their closing remarks, Sir Roger emphasised the crucial role of Governments as drivers of change,

noting the UK’s record to date was not as good as it could be. Moreover, internationally, development

banks had not risen to the challenge in the most effective way and should be strongly encouraged to

do so now, even at the cost of higher risk and a lesser rating. Peter Harrison believed there was

immense client pressure to do more on sustainability and that societal pressure could influence power

companies. More generally, there were still areas of ESG, e.g. modern slavery, and safety nets in the

labour market, which needed to be addressed as part of the bigger sustainability picture.

5. Breakout Session - Roundtable Discussion on Diversity and Inclusion

Moderated by Natasha Miller, Chair of Diversity and Inclusion at IBDE, the session started by outlining

objectives for the discussion, to:

1. Explore the questions highlighted at the recent IBDE event on Diversity and Inclusion (D&I)

held at the Embassy of the Netherlands in London, including:

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• What’s the balance between policy/KPI commitment versus the changes to culture,

behaviour and mindset – how do organisations create programmes that navigate this?

• What’s the opportunity for recruitment and retention strategies?

• How to tap into the global network and offer change to the public sector agenda, e.g.

Embassy, government departments?

2. Offer tangible areas where the IBDE could assist in making D&I progress.

In their introductory remarks Anna Cairns, Executive Vice Chair of Mastercard and member of IBDE

Advisory Board, opened the discussion by providing experiential insights and highlights from her

dedicated role leading D&I change in the Payments industry and framing the importance of creating a

culture of decency. This was followed by Nick Owens, Chairman of Deloitte, strong advocacy for

empowerment and building the case for diverse business value and placing a great emphasis on the

importance of an organisation’s culture stating that when it starts with inclusion, diversity will follow.

Oluchi Ikechi, Managing Director at Accenture, brought some poignant examples to the discussion

where younger people expressed an overwhelming feeling of exclusion and inability to participate.

Where there are role model gaps, it’s difficult to have belief or confidence in the path for progression.

Following the introductory remarks, the remainder of the discussion was held under the Chatham House

Rule.

Throughout the debate, several key themes emerged repeatedly, with strong energy throughout the

discussion.

1. Culture and Environment – change doesn’t happen overnight. Most organisations adopt a set

of concrete goals and then establish programmes of change to meet these goals. While there

was a challenge that “what gets measured, gets done” there was strong support for creating an

environment that promotes change for D&I. E.g. equalising parental leave has shifted attitude,

and progressive policies can assist in driving D&I change.

2. Targets and KPIs – the meeting expressed an overwhelming belief that some guidelines are

required to move the needle. However, quotas often drive misconceptions in the purpose and

objectives. It’s becoming increasingly clear that the market does care, e.g. celebrating the

diversity of senior leaders and in some cases awarding contracts to the more diverse teams

with a greater breadth of skills and cultural experiences. The case for inclusion is best tied to a

business case that celebrates innovation, maximises the idea quotient and allows cognitive

diversity to thrive; for example, women handle 80 % of buying decisions and purchases.

3. Performance and Reward – there was a strong sense that organisations could think harder

about linking compensation to a broader strategy and culture change, e.g. inclusive teams or

role modelling behaviour. Pay-scale adjustment is a critical area in most organisations, and

there is work to be done to improve transparency and reduce the pay gap.

4. Recruitment and Retention – everyone strongly saluted the importance of avoiding

unconscious bias in our recruitment practices. Expand the pool of potential candidates, e.g.

including specific social mobility opportunities and, in all instances, seek a diverse list of

candidates and interviewers. Retention strategies need to shift to address the expectations of

a broader employee base. There is more work required to re-wire decision making.

5. Signalling Behaviours – several participants talked about the importance of role modelling

and leaders needed to be prepared to humanise themselves. Others referred to nudge

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behaviours or bringing their whole self to work. All the above underscored the actions IBDE

outlined at the last D&I discussion where it asked members to take away three actionable items:

• Continue their role model behaviour.

• Take decisive action on recruitment opportunities.

• Promote their personal commitment to #diversityandinclusion via LinkedIn.

Way Forward

To ensure these discussions are effective, below is a summary of the key pillars for driving greater D&I

change.

Senior Leadership and Sponsorship:

1. Senior leaders to step forward and lead the change inside organisations and working across

the industry, great examples include CEO Action for Diversity and Inclusion, The 30% Club.

• Sponsor the change across all aspects of D&I “bring your whole self” and become an

advocate of the change, this echoed some of the themes from IBDE’s last discussion

“greatest impact from the top!” and “setting the tone and direction!”

• Affirm and mentor rising leaders allowing your leaders to play a vital role in creating a sense

of belief and creating a D&I culture.

2. Structured D&I Change Programmes:

• Establish a common purpose and mindset for D&I change. Define the priorities and purpose

for your organisation and establish a change programme with clear and executable steps.

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• People Strategy sits at the heart of D&I change. External and internal recruitment and

retention play a key role in meeting the demands of any people strategy. Ask the right

questions and consider unconscious bias, start with inclusion, expand your view of the pool

of candidates, and diversity will follow.

3. Empower and Broadcast:

• Empowered leaders – challenge the status quo in divisions and teams where progress is

slower. Empower leaders at all levels in the organisation to sponsor inclusion. Identify allies

in all communities to harness and sponsor change and be prepared to call out inappropriate

behaviour or practices.

• Broadcast and communicate – use all the channels, especially social media, to broadcast

a clear D&I strategy underpinned by leadership commitment and demonstrable

enthusiasm. Applaud and celebrate role models who lead from the top.

6. Plenary Session - Navigating the 2020 Global Political Outlook

The session explored the evolution of political risk and how it is most likely to manifest in 2020, from

the impact of coronavirus on markets to US elections to China trade and geopolitics, plus views on

populism and the future of globalisation. The discussion was held in the form of a conversation between

Tina Fordham, Partner and Head of Global Political Strategy, Avonhurst and Christian May, Editor in

Chief, City A.M. and member of the IBDE Advisory Board.

The discussion noted that the initial market reaction to coronavirus (at 10 March 2020) is telling us that

fiscal and monetary stimulus is not good enough. Some of the key points raised during this discussion

included:

• The impact of coronavirus is global.

• There is the possibility that the cure is worse than the disease.

• Coronavirus can be considered a black swan - an unanticipated event presenting a

considerable risk to the market.

• This is compounded by the issue of not having enough data to make informed predictions.

• The public health element makes it riskier than the 2008 financial crisis.

• The sense that policy measures of the UK and US are focused on the economy vs Italy and

China more emphasis on public health (this could be a reflection of their relative place on the

curve - borne out by developments after 10 March).

• The issue of conspiracy theories.

• Will President Trump be punished at the polls? What history tells us is that if the country enters

two consecutive quarters in recession, then Presidents are in trouble. President Trump’s

diminishing re-election prospects are not just due to the economic and market toll of the virus,

but perceived leadership failings and slow initial crisis response. Still the favourite but next few

weeks (from 10 March) critical.

• Seeing an uptick in geopolitical risks as rogue actors seek to take advantage of the distraction

of the international community, e.g. North Korea's missile test, Iran’s attack on UK/US forces,

with more power grabs likely.

• Saudi - Russia oil supply war and the geopolitical risks associated with it. Saudis want to

weaken Iran, whereas Russia wants to weaken America's shale gas.

• If the current crisis accelerates then it's likely to overtake even the financial crisis of 2008.

• Central Banks don't have enough space to help, because the interest rates are already very

low.

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• Possible policy response could include the consideration of a universal income.

• Where the US, UK, EU and China will be in 2021?

• Coronavirus a negative trigger; however, the crisis could also focus minds.

• US Democrats will need a massive turnout to regain the White House.

• Leaders are about to be tested - there is a need for bold leadership.

7. Plenary Session – Global Britain

The Global Britain session explored the future of UK FTAs, the relationship with the EU, the

Commonwealth and the British Foreign Policy post-Brexit. Panellists included Sir Roger Carr, Chairman

of BAE Systems Plc and member of the IBDE Advisory Board; Menna Rawlings CMG, Director General,

Economic and Global Issues at the Foreign and Commonwealth Office (FCO); Tracey McDermott CBE,

Group Head Corporate Affairs, Brand and Marketing at Standard Chartered, and Paul Hardy, Brexit

Director at DLA Piper. The session was moderated by Sherry Madera, Chair of International at IBDE.

Sir Roger Carr, outlining the business perspective, stated that the solution is to work in harmony with

the government to bring optimal outcomes. He noted that their experience working together with the

government had been second to none, and the challenge is sustaining that experience. He identified

three primary challenges for an EU-UK FTA:

• Negotiating the terms of a previously frictionless trading relationship.

• Navigating through the challenge of “my friend's enemy is my enemy”.

• The classic friend or foe dilemma. When do I trade with these people because they are friendly

and when do I not trade with them because they have a negative agenda?

Menna Rawlings identified three reasons to be cheerful:

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• We have political stability - a government with a clear mandate and a clear view as to where it

wants to go.

• We have a Foreign Secretary who puts trade at the centre of international diplomacy. He wants

the UK foreign service to concentrate more on trade/commercial diplomacy and wants the UK

to continue being the global champion of global trade.

• The Commitment of the Overseas Network - doing persistent commercial diplomacy.

Tracey McDermott noted that trade had made a massive difference to the living standards of people,

but that several challenges persisted.

• Trade has also left many people behind, even in rich countries, leading to isolationism and fear

of others. These issues cannot be solved alone, and so British business should work with all

stakeholders. Indeed business should drive global progress.

• The challenge of moving the capital from where it is to where it should be. The City of London’s

skills are a resource for all countries, not just for the UK.

• The challenge of including services in FTAs.

Paul Hardy noted that businesses have to use FTAs to make the most of the associated competitive

advantage. However, one of the major problems is that companies often don't take up opportunities.

They need time to make the necessary adjustments, needing to do three things:

• Understand the changes

• Prepare for the changes

• See the opportunities that come from such changes

He further noted that lack of trade literacy is a problem for business. Trade brings access to new

markets, but non-EU FTAs are difficult to sell to businesses that work solely with the EU. Further FTAs

are a cost/regulatory change in the short term and advantageous only in the longterm. Another

important point is the difficulty in understanding free trade for services vis-à-vis trade in goods. EU

member states are resistant to the idea of having services included in a trade deal with the UK. For the

EU-UK deal to be seen as a success arguably, it should go beyond EU-Canada or EU-Japan FTAs.

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The session also noted that unless we embraced climate change, we would lose talent and investors.

The problem with climate change is that it cannot be solved alone - there is a need for a collective

international approach. There was an agreement regarding the need for a global approach to tackle

climate change, and that climate change will have a role to play in issues of EU-UK trade.

The following topics were raised in the Q and A session:

• Whether a no-deal outcome is less attractive in the face of coronavirus: The response was that

at the moment, the UK government is against any delay.

• We should not link success just to FTAs as agreements are reached, but we should consider

how FTAs contribute to the success of different parts of the UK (England, Scotland, Wales and

Northern Ireland)

• The UK's political stability and the likeability of the current Prime Minister were considered to

be a great advantage, but essential that the UK keeps the momentum.

• The UK has shown that it is not subordinate to anyone - not even to America. And this is

demonstrated by the decision the UK made regarding Huawei.

The session concluded with a broad agreement that we should all contribute to FTAs that bring

opportunities to all.

8. Breakout Session – Financial Regulation

This roundtable, moderated by Michael McKee, Chairman of Regulatory Affairs at IBDE, brought

together industry representatives, regulators and senior diplomats to explore the main issues raised at

a recent IBDE meeting discussing the global regulatory outlook 2020. The issues included international

regulatory cooperation and the developing regulatory approach to sustainable investment. The

discussion benefited from introductory remarks by Victoria Saporta, Executive Director of Prudential

Policy at the Bank of England; Chris Allen, General Counsel – Clients and Products at Standard

Chartered and Camille Blackburn, Global Chief Compliance Officer at Legal & General Investment

Management.

Introductory remarks given by Victoria Saporta were given on the record whist other speakers’ opening

remarks and the discussion that followed where held under the Chatham House rule.

Victoria Saporta on her opening remarks discussed the ideal regulatory framework for the UK following

exit from the EU, outlining that the ideal model involves independent regulators with operational

mandates set out in primary legislation and accountability to Parliament. She then expanded on issues

of regulatory cooperation vs fragmentation, responsible openness and sustainability in financial

services. She noted that after the financial crisis of 2007/08, major jurisdictions have been happy to

incorporate international standards with international market access underpinned by close regulatory

and supervisory cooperation between them. While there is a risk of fragmentation, she emphasised the

need for responsible openness, independent regulators that are consistent across electoral and

economic cycles and regulatory frameworks that can adapt and do not impede innovation. Following

such an approach should see this trend of cooperation continue. Finally, in terms of sustainability, she

discussed the Bank of England’s involvement with the Network for Greening the Financial System and

the recommendations made by the Task Force on Climate-Related Financial Disclosures, which the

Bank of England plans to adopt in its reporting. The Bank, the Prudential Regulation Authority (PRA)

and the Financial Conduct Authority (FCA) are all playing a significant role in helping financial

institutions prepare for a substantial shift to supporting a more sustainable UK economy.

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This was followed by a discussion of the topic of regulatory cooperation vs fragmentation, noting that

while some market fragmentation is visible, most can be attributed to liquidity fragmentation in some

specific markets or geographies. Some near misses were discussed, for example regarding the

divergence between US and EU approaches to G20 commitments around the use of trading venues

and clearinghouses, but most cases fall into a category of marginal frictional inefficiency. These

inefficiencies occur in response to policy decisions where the intended policy outcomes have marginal

differences from country to country during implementation that were not initially contemplated but have

some fragmentary effect. It was again noted that the financial crisis had a largely homogenising effect

in the area of international regulation. However, there are still risks, for example, individual countries

that took their own approaches, such as ringfencing in the UK or the development of the Volcker rule in

the US.

Another risk discussed was the effect of variation in the implementation of regulation at the local level,

which can have a significant impact. This variance has been recognised in the EU so that specific

regulations are designed to reduce local variation, and transposition of EU agreed principles - the

UCITS regulation was an example mentioned where this did not go well and prompted a change in the

EU’s approach. Other friction points discussed were unclear margin rules for derivatives and about the

use of clearinghouses, which resulted in a lot of inefficiencies when cascaded down. A key area of extra

cost for the roundtable was around trade reporting. It was noted that there are a myriad of regulations

from different regulators, each being slightly different, and this difference results in extra costs as new

IT stacks are required to report these differences. This cost, in turn, is passed on to clients and impacts

the client experience. Another risk discussed revolved around regulatory considerations regarding the

regulation of intra-group lending by banks and national capital and liquidity requirements that ultimately

factors into group organisational strategy often resulting in higher costs of running a multi-national

banking group or financial conglomerate. There was a discussion about balance sheet considerations,

legal entity design, large exposure rules, leverage rules, funding costs and other drivers to capital

across large organisations and the effect this has in turn in fragmenting groups in light of the above.

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There was broad agreement around the table that an outcomes-based approach is an approach that

works on a global level, but that trust is critical. Regulators will share data and defer to each other only

if there is trust. There was, however, some disagreement around the level of co-operation needed per

area of regulation. Some regulation requires more cooperation, e.g. higher business conduct standards

and greater co-operating around financial reporting. Many areas are still novel, and therefore a higher-

level approach is being taken, for now, e.g. data and ESG. Others felt, however, that there has been a

retreat from international activity by banks as a consequence of the G20 changes – particularly the

requirements for G-SIBs. The UK and Australia are potentially moving to become less open, for

example, and cross-border transactions are becoming harder. Intra-group fragmentation is on the rise,

and capital is being broken up into smaller and smaller buckets, thus making it less efficient.

The discussion then moved on to the next roundtable topic regarding regulating to support sustainable

investment, noting that there has been a spike in interest in ESG and ESG investments. Still, the

question is whether this is down to the personal preference of investors or whether there is a

fundamental shift occurring in capital allocation and the pricing of assets globally. An important point

was raised about how central banks will stress test for climate change and how this ultimately becomes

reflected in balance sheets. Another intervention noted that specific client sectors have shifted to factor

in ESG considerations, but not yet all. The general view, however, was that a significant shift and

repricing of assets was coming as a consequence of the new focus on sustainable investments.

The roundtable continued to explore the toolsets available to regulators and what key levers are being

used to promote ESG investment and their limitations to effectiveness, focusing on stress testing;

enhanced disclosure requirements; stewardship of firms where ownership is used to leverage

adherence to ESG principles; exclusions of certain investments, such as already exist for cluster

munitions investment; and integration of ESG principles in current portfolios. Concerning stress testing,

it was noted that the modelling for ESG factors is still in its infancy. For example, physical risks are

priced, but transitional ones are not as these are tough to incorporate into sophisticated modelling.

Further, the move from a sophisticated model of the climate to one of the economy to one of the markets

and then to the overall impact on balance sheets is an extremely complicated exercise that is only just

in development. The general view was that some new tools would have to be developed along the way,

particularly about the regulatory approach to measuring transition.

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Another intervention recognised the difference between physical pricing versus transitional pricing,

reflecting that even within asset categories, there is some great variance. For example, the pricing of

cobalt has been driven by demand for cobalt that has been responsibly sourced and different prices are

now available for these two types of cobalt. The pricing for other commodities, however, aluminium, for

example, does not yet show any demand price variance for sustainable sourcing. Another intervention

recognised the tools available, the A.I. involved, is only just beginning to incorporate costs associated

with ESG factors and to assess the transition risk better. Only once this is fully achieved can firms be

advised appropriately and regulated in light of those assessments. Furthermore, there is no shared

global approach to ESG definitions as yet.

In conclusion, it was agreed that ESG is at the embryonic stage of development but that it is likely to

have as significant an effect on the global economy as occurred in the change in global supply chains

over the past 20 years. ESG factors will continue to impact capital allocation and pricing, but regulators

and firms require the greater capacity building in turn.

9. Plenary Session – Vision 2030: The Future of Innovation

The session was moderated by Russ Shaw, member of IBDE Advisory Board and Founder of London

Tech Advocates and Global Tech Advocates. The panel explored the role of tech in enabling innovation,

covering a range of themes.

Vivienne Artz, Chief Privacy Officer at Refinitiv and President of Women in Banking and Finance set

the scene for the discussion, highlighting that Data will be a key component for driving the future of

innovation. Therefore standards and ethics on how data should be used were critical for all kinds of

organisations. This is particularly true in the age of AI and Machine Learning. On these points the world

is diverging in different ways in terms of the US, China, the EU and others will focus on data privacy

and data ethics, and there is an opportunity for the UK to play an important role in focussing on principles

and ethics.

Rosemary Gallant, Minister Counsellor for Commercial Affairs at the US Embassy in London, described

the various programmes developed by the Embassy to facilitate tech connections between the UK and

the US. She stated that the Select USA programme had proved so successful, leading to increased US

investment in the UK, that US missions had adopted it in other markets.

Simon Horner, Innovation Director at the City of London Corporation, explained the Corporation’s focus

in promoting RegTech internationally. Start-ups could only scale up if there were markets and

customers for their tech products. He emphasised the ability of London in providing access to capital

and talent.

Sushil Saluja, Vice Chairman of IBDE Advisory Board and Senior Managing Director at Accenture,

noted that there was an amazing period of change ahead. Change which in the past had been driven

by demographic factors would in the next decade be driven by tech. Big tech players who were currently

not a significant force in financial services - the likes of Apple and so on - could be expected to enter

the market. This was already the case in China, where companies such as Tencent and Ali Pay have

banking licences. He further noted that winners and losers would be differentiated by their focus on

customer service; the ability of existing organisations to adapt; their governance. The leadership DNA

for the digital age was different, especially in its approach to risk management. Russ Shaw then invited

panellists to share their views on data the future of technology.

Vivienne Artz described data as the new oil of the economy. But there was as yet no consistent policy

approach to its usage. The EU strategy paper focussed on the rights of individuals; in the US,

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commercial interests took precedence over consumers; and in China, data was viewed as an asset of

national importance. Data brought with it responsibilities, for example, privacy issues, and the “value

transaction of data” was an important topic for debate. Therefore Data could be an important bargaining

chip in negotiating FTAs.

Sushil Saluja noted that despite its growing importance tech was not yet a mature industry (such as

insurance) and this needed to be factored into policy development. Further international initiatives such

as China’s Belt and Road Initiative (BRI) could morph into a discussion on tech, beyond its origins in

more traditional forms of infrastructure. The challenge of protecting IP in China would likely diminish,

given the growing need to protect domestic IP. It was too early to say what the eventual outcome would

be, though at the moment a bifurcated tech world based either around the US or around China looked

hard to avoid.

Simon Horner thought the healthy competition was a positive, stressing that it was in our interests to

empower individuals when it came to financial services data.

In response to the moderator’s comment on the role of the UK, and specifically London all panellists

thought it was well placed to steer the debate, e.g. in regulation on to common ground because of its

understanding of business needs. It had strong links internationally. Individuals were beginning to

understand the value of their data - there was a reference to the California Data Privacy Act - and the

UK Government’s lead department DCMS understood the need for balance. Another positive factor was

the strength of US/UK collaboration. The goal was to establish a regulatory framework for digital trade

which didn’t hinder economic growth.

The following topics were raised in the Q and A session:

• Panellists were asked what more needed to be done to make the most of the tech opportunity.

• The need for more joined-up thinking on the part of Government. For all the talk about digital

penetration, 20 percent of the UK population don’t know how to use the Google search engine.

• Encourage new leadership - new DNA.

• Encourage partnerships between existing business incumbents and new entrepreneurs.

• Create a trust-based ecosystem.

• Encourage diversity - a decisive factor in Innovation.

• Empowerment of citizens.

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10. Closing Remarks

Sir Mark Boleat, Chairman of LINK Scheme Holdings and Vice Chairman of IBDE Advisory Board,

closed the conference noting that:

• The coronavirus crisis had overshadowed all discussions - had it been on anyone's Risk

Register?

• The international trade agenda had been explored, and the fact noted that there had been a

shift in political risk to the developed world from the so-called developing economies.

• The sessions had also considered Global Britain, the impact of technology, and that we were

living in a world both with and without borders.

• Whether or not participants were optimistic or pessimistic, they were now hopefully better

informed.

Sir Mark closed by congratulating Rudi Guraziu on the success of the IBDE over the last ten years, and

by thanking Accenture, Avonhurst, City of London, DLA Piper, EY for sponsoring the event, and

all speakers and attendees for their contributions to what was a stimulating and informative conference.

Prepared by Rudi Guraziu with contributions from Mark Kinsella, Alfred Kovaci, Natasha Miller, Rex

Rexhmati and Paul Sizeland. Special thanks to Mark Kinsella and Paul Sizeland.

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