2023 | World Finance

The most successful leaders in history

Posted on January 11, 2023 by itsupport

What makes a successful leader? For some it’s measured by the bottom line; for others by company culture, connection and purpose. For the best it’s a combination of all of these, and then some.

In their book, Primal Leadership, authors Daniel Goleman, Richard Boyatzis and Annie McKee outline six key leadership styles: visionary, coaching, affiliative, democratic, pace-setting and commanding.

But as David Noble, business coach and co-author of Real Time Leadership, points out, what’s most important is matching the right leadership style to the right environment. “We have seen successful leaders in every one of the key leadership styles, but we’ve also seen examples where each of these styles can fail spectacularly,” he says. “Leaders must be able to align their style to what is needed in the moment to unlock performance, and they need to be flexible enough to change their style as conditions change.”

“Inspiring leaders also need to be great human beings, with strong character strengths and values like perspective, generosity and inclusiveness,” Noble says. “What leaders emanate as people is as important as what they say and do.”

So what is it about CEOs such as Elon Musk, Bill Gates and Mary Barra that have made them so successful? “According to our research and experience, these CEOs have at least two big things in common,” says Ed O’Malley, president and CEO of the Kansas Health Foundation and co-author of When Everyone Leads: How the Toughest Challenges Get Seen and Solved. “First, they shoot for the moon (or Mars in Musk’s case). They have big, audacious, time-bound visions. They don’t convey the ‘how,’ but they make the direction clear. They know that one of the most important leadership tasks for anyone in authority is to set clear, provocative and bold direction.

“Second, they unleash a culture of leadership throughout their organisations. They know the toughest challenges can’t be solved by them alone, that their work is to create a culture where innovation, experimentation, and disruption thrive.”

So how have these qualities played out in history? From changing the world through affordable cars to sending humans to space, we’ve taken a deep dive into the success stories and personal characteristics of some of the most inspiring businesspeople of the past 100-plus years.

Henry Ford
Industrialist and founder of the Ford Motor Company

Few can claim to have transformed the world in quite the same way as Henry Ford. The first to bring the assembly line to car manufacturing – lowering production time from half a day to 93 minutes – he made cars for the masses, founding the Ford Motor Company in 1903.

The Model T was rolled out in 1908, and 10 years later, they accounted for half of all cars in the US. That was in large part thanks to their relative affordability; by 1924, they were selling for less than $300 (or around $5,200 in today’s money). By 1927, the company had produced more than 15 million of them.

These moves have been credited with major historic developments – including leading to the creation of the US’s interstate highway system. It wasn’t just Ford’s focus on technical innovation that propelled the company to success, though. While some have pointed to his autocratic, even ‘dictatorial’ leadership – making most of the business’s decisions himself – others have praised his collaborative, people-orientated approach.

He raised workers’ salaries – doubling them in 1914 to a then unusual $5 a day – and lowered daily hours from nine to eight hours, introducing the 40-hour working week with three daily shifts to keep production going round the clock. As well as motivating employees, these moves meant boosting productivity, lowering turnover and capturing and retaining the best talent. Ford also made various other moves – from bringing the entire car manufacturing process under one roof to transforming the way vehicles were sold, forming a network of dealers across the country. He was also notoriously service-driven, pursuing his conviction that “a business that makes nothing but money is a poor business.”

This approach clearly paid off; Ford Motor Company was the first manufacturer to begin production again after World War II and one of the first to go global, launching in 33 countries. The success hasn’t waned since; today the company is the second-biggest car manufacturer in the US and the fourth largest in the world, with more than 180,000 employees, an annual production of more than four million cars and revenues of $136bn in 2021.

Ford proved the power of throwing out the rulebook and pursuing a vision, however against the grain. “Whether you think you can, or think you can’t – you’re right,” he notoriously once said. He was a leader that certainly thought he could – and few would deny that he was right in his conviction.

Steve Jobs
Entrepreneur, designer and media proprietor

Creative, passionate, ruthless, innovative, inspiring and a relentless perfectionist – these are just a few of the words that have been used to describe the leadership of former Apple CEO Steve Jobs; and despite his oft-demanding, autocratic leadership, it would be a challenge to claim it didn’t work.

When Jobs took over as CEO of Apple in 1997 – having left 12 years earlier to found new firm NeXT – he joined a company that appeared to be on its last legs. Stock prices had plunged, board members had failed to find a buyer and losses that year had racked up to no less than $1bn. Michael Dell had reportedly stated that if it were up to him, he would “shut Apple down and give the money back to shareholders.”

Jobs didn’t waste time in taking action; he slimmed the 350 projects then in development to just 50, and then reduced them to a further 10 (with laptops and desktops for consumers and professionals at the core). “If we want to move forward and see Apple healthy and prospering again, we have to let go of a few things”, he said at the time, putting the emphasis on creating a new brand rather than competing with Microsoft.

He focused on design and simplicity – homing in on aesthetics in a way no other tech company had, exemplified in the Apple mouse – and invested in advertising, producing the ‘Think Different’ campaign to reflect Apple’s outside-of-the-box ethos. The iPod, iTunes and iPhone all followed, bringing a new consumer base to the brand that further propelled the company’s success. It clearly worked; Apple became the world’s first trillion-dollar company in 2018, and the first to hit the $3trn mark in early 2022, making it the most valuable firm on the planet by market capitalisation.

Working for Jobs wasn’t easy, according to some. He was known for his high expectations, perfectionism and desire for control, as well as an acute eye for detail (as an example, he reportedly noticed the second ‘o’ in the Google logo on the iPhone had a slightly different colour gradient and immediately assigned a team to it). “In the Macintosh Division, you had to prove yourself every day, or Jobs got rid of you,” wrote former Apple employee Guy Kawasaki in a CNBC article.
“He demanded excellence and kept you at the top of your game. It wasn’t easy to work for him; it was sometimes unpleasant and always scary, but it drove many of us to do the finest work of our careers.” Yet despite his demanding style, Jobs was passionate about what he did, and remained involved on every level throughout his career.

“Like many successful leaders, Jobs showed incredible grit, going through every wall and overcoming every setback despite the odds being against him,” says David Noble. “He had a big vision that set him apart from the pack – not just 10x dreams but 1,000x, and he set out a step-by-step pathway that would let teams and organisations know they were winning.”

His focus on innovation, artistry and challenging the status quo made him one of the most inspiring thinkers in history, preaching a philosophy summed up in his oft-quoted words: “Life can be so much broader, once you discover one simple fact, and that is that everything around you that you call ‘life’ was made up by people who were no smarter than you. And you can change it, you can influence it, you can build your own things that other people can use. Once you learn that, you’ll never be the same again.”

And the world wasn’t either.

Mary Barra
Chair and CEO of General Motors

When Mary Barra stepped up to the CEO throne at General Motors in 2014, she took on something of a challenge. It wasn’t just that she was the first woman to lead one of America’s top three car-makers (or one of the few females to head up any Fortune 500 company, for that matter). She had something of a turnaround job on her hands.

Just five years earlier, General Motors had filed for the biggest industrial bankruptcy in history – listing $82bn in assets and $173bn in liabilities – and got through five CEOs in the space of six years. Then a month into her tenure, GM was forced to recall 2.6 million vehicles due to a flaw in the switches (causing issues in airbag deployment). The crisis led to multiple accidents and more than 100 deaths, and a number of employees were dismissed.

Through honesty and transparency, Barra managed to navigate the crisis, publicly acknowledging the issue and launching a comprehensive investigation. She set about making various company changes, putting accountability top of the agenda and creating the ‘Speak Up for Safety’ programme to encourage employees to report issues. She also pulled the company from several markets including Western Europe, Russia, South Africa and India to home in on bigger money-making regions.

Since the crisis, Barra has continued to implement strategic changes – not least around the topic of sustainability. In 2016, GM introduced the Chevrolet Bolt EV with a battery that claims to outlast Tesla’s. The company has pledged to add 30 new electric vehicles to the fleet by 2025, with the vision of becoming fully electric by 2035. The firm is also investing in autonomous cars.

Barra is also a champion of equality, and there’s proof in the pudding; Equileap’s 2018 Global Report on Gender Equality found that GM was one of just two global businesses with no gender pay gap across the company. In 2020, she commissioned an Inclusion Advisory Board to encourage greater inclusivity, and she’s also a member of the OneTen coalition, whose goal is to cultivate economic opportunities for black talent in the US.

Many put Barra’s success down to her people-first approach and her ability to understand different perspectives, developed from first-hand experience working in a number of areas at GM – from engineering to human resources to product development. “My first job at General Motors was as a quality inspector on the assembly line,” she told Esquire. “I was checking fits between hoods and fenders. I had a little scale and clipboard. At one point, I was probably examining 60 jobs an hour during an eight-hour shift. A job like that teaches you to value all the people who do those type of roles.”

She’s also long been a preacher of hard work. “Hard work beats talent when talent doesn’t work hard,” she told Michigan Daily. “If you work hard, and you care about people and you have passion in what you do, you’ll do well.”

And she has a clear, powerful vision. “Under Barra’s leadership, GM envisions a world with zero crashes, to save lives; zero emissions, so future generations can inherit a healthier planet; and zero congestion, so customers get back a precious commodity – time,” reads her biography page on the GM website.

That formula has clearly paid off. Barra is number four on the current Forbes’ list of ‘The World’s 100 Most Powerful Women,’ and has been the highest-paid chief executive of the Big Three automakers for several consecutive years (earning $29.1m in 2021). GM brought in revenues of $127bn in 2021, holding the largest share of the auto market in the US at around 15 percent, according to Statista. That’s a far cry from the company’s position in 2009, when an article in The Economist stated that “no one believes that GM will ever return to its former glory.” Barra has proven the power of leadership in turning a company around, even when all hope seemed to be lost.

Sheryl Sandberg
Business executive, former COO of Facebook/Meta

When it comes to women in tech, Sheryl Sandberg is something of a pioneer. When she joined Facebook as COO in 2008 following a stint at Google, she helped revenues grow nearly 2,400 percent in the space of four years – from $153m in 2007 to $3.7bn in 2011 – bolstered largely by her focus on digital and mobile advertising. When Facebook went public in 2012, the company raised $16bn (with a valuation of $104bn), making it one of the largest IPOs in the history of the internet. By the time Sandberg announced in June 2022 she’d be leaving the company (now Meta), year-on-year revenue totalled more than $119bn.

But Sandberg’s work wasn’t only limited to the business side of things. When she joined Facebook’s board in 2012, she became the first woman to do so, and she’s been a proponent of gender equality ever since. She shot into the limelight in 2013 with her book Lean In: Women, Work and the Will to Lead – homing in on the systemic and societal barriers preventing women from taking up leadership roles – and later established the Lean In Foundation (now part of the Sheryl Sandberg & Dave Goldberg Family Foundation), overseeing grants and projects designed to help women across the world reach their goals; more than 50,000 women have since launched Lean In Circles across the globe.

Throughout her leadership, Sandberg emphasised the importance of confidence and self-worth, as well as supporting others. “The more women help one another, the more we help ourselves,” she wrote in Lean In. “Acting like a coalition truly does produce results. Any coalition of support must also include men, many of whom care about gender inequality as much as women do.” She’s also been vocal about her vision for a future where “there will be no female leaders. There will just be leaders.”

Sandberg has also garnered acclaim for supporting various philanthropic efforts – reportedly using around $100m of her Facebook stock to fund the Lean In Foundation and other charitable causes – and has been open about her ambition to use her power to better the world. “Leadership is not bullying and leadership is not aggression,” she told ABC News. “Leadership is the expectation that you can use your voice for good, that you can make the world a better place.”

Her career hasn’t been without criticism, however. As the face of a company linked to a number of data breaches, she’s come under fire from critics; in 2018, reports surfaced claiming that political consulting firm Cambridge Analytica had accessed data from more than 50 million Facebook users and used it to target voters, encouraging them to support Trump in the 2016 election. It led to widespread concerns over Facebook’s privacy, and a number of other accusations have cast a further shadow on the reputation of both Sandberg and the wider company. But Meta still counts more than three billion people among its user base, ranks the 12th most valuable company in the world and brings in annual revenues of over $100bn. Much of that is down to Sandberg and her willingness to “sit at the table,” create opportunities and ultimately challenge what it means to be a successful leader in today’s world – and many will long remember her legacy, in spite of the darker moments.

Elon Musk
Business magnate and CEO of SpaceX, Tesla and Twitter

If there’s one leader truly unafraid of pushing the boundaries, it’s Elon Musk. From his mission to get humans to Mars to his focus on electric cars, Musk doesn’t take impossible for an answer – and his controversial persona has only added to the intrigue.

From founding Paypal in the early 2000s (sold to eBay in 2002 for $1.5bn) to launching SpaceX and Tesla, he’s never been short of ideas – and the support to get him there. And against the odds, both have taken off somewhat spectacularly; in 2008, SpaceX won a $1.6bn NASA contract, two years later becoming the first private company to successfully launch, orbit and recover a spacecraft. Last September the company made history once again when it sent four passengers into space on the Inspiration4 rocket, marking the first ever orbit crewed solely by space tourists. Tesla has meanwhile become the biggest electric vehicle brand in the world, with sales of its Model 3 topping one million units globally in 2021 and revenue hitting $53bn.

As with Jobs, Musk’s leadership style hasn’t been without its critics; employees have pointed to his high expectations and tendency to make the decisions while micro-managing (Musk himself called himself a “nano-manager” in an interview with The Wall Street Journal). An anonymous former employee told Business Insider that “there was only one decision-maker at Tesla, and it’s Elon Musk.”

When he took over Twitter in October, he came under fire from far and wide for his drastic approach, including major cuts to the workforce and other controversial moves.

But others have praised his relentless drive, and an ability to motivate and inspire teams even in the face of failure. When Falcon One was lost during its mission in 2008, for example, Musk gave a speech that saw “the energy of the building go from despair and defeat to a massive buzz of determination,” in the words of former SpaceX head of talent acquisition Dolly Singh. “It was the most impressive display of leadership that I have ever witnessed,” she wrote in a post on Quora.

It’s perhaps that talent for boundary-pushing that has got Musk an almost cult-like following and given him a net-worth of $241bn; making him the richest person in the world. As with Jobs, it’s also his constant drive to question the status quo. “If something is important enough, even if the odds are against you, you should still do it,” he reportedly once said.

“The advice I would give is to not blindly follow trends,” he told CNBC. “Question and challenge the status quo.” Musk’s ambitions don’t end with his visions around electric vehicles, SpaceX and Twitter, of course.

He has spoken about launching a flying car at Tesla, and through another of his ventures, The Boring Company, is working on Hyperloop – an ultra-high-speed public transportation system that would transport passengers between cities in autonomous electric pods at 600mph. Another of his babies, Neuralink, meanwhile aims to integrate AI with the human brain in a way that would “enable someone with paralysis to use a smartphone with their mind faster than someone using thumbs,” in the words of Musk himself, in a recent Twitter post.

These visions might seem out there, but Neuralink already has the backing of Silicon Valley giants including Google parent Alphabet, and the company plans to launch clinical trials in humans in the near future. Realism likely isn’t a word that features in Elonism – and if there’s anyone who can achieve the seemingly impossible, it’s surely Musk.

Only time will tell what impact his Twitter takeover might have, or if we all end up living on Mars – but what is clear is that his bold, controversial visions appear to have skyrocketed him to success, even in the face of at times intense criticism and scrutiny.

Brazil is back

Posted on January 9, 2023 by itsupport

They tried to bury me alive, and here I am,” President-elect Lula told jubilant crowds in São Paulo as the vote count confirmed his victory in the Brazilian presidential runoff. The moment marked a historic comeback for the veteran politician, whose career and reputation were seemingly ruined when he was convicted of accepting bribes in Brazil’s watershed ‘Operation Car Wash’ corruption probe. Sentenced to 12 years behind bars, the former president was forced to watch the 2018 election from his jail cell. After serving 580 days in prison, his conviction was annulled, and Luiz Inácio Lula da Silva – known mononymously as Lula – re-entered Brazil’s political fray, finding his way back to the top job just three short years after his release from jail.

Despite the throngs of euphoric voters that filled the São Paulo streets as the election results poured in, Lula’s victory was by no means a landslide. After a divisive and bitterly fought election campaign, Lula defeated his far-right rival Jair Bolsonaro by the tightest of margins, winning 50.9 percent of the vote to the incumbent’s 49.1 percent. The knife-edge election was Brazil’s most closely fought contest since the end of its military dictatorship in 1985, reflecting a deeply divided and politically polarised society.

The Brazil that Lula now inherits is very different to the one he left

When he officially takes office in January 2023, Lula will be tasked with reuniting a fractured Brazil. The world’s fourth-largest democracy remains an extremely unequal country, with severe economic, social and geographic disparities that continue to hamper progress and slow growth. Many voters will hope that Lula can build on the successes of his first two terms, which saw 20 million Brazilians lifted out of poverty. But the Brazil that Lula now inherits is very different to the one he left when he last departed the presidential palace in 2011. COVID-19 dealt a hammer blow to the public purse, while stubborn inflation is eroding wages and pushing people back into poverty. In realising his vision for a better Brazil, Lula certainly faces an uphill struggle – but as his momentous comeback has shown, he doesn’t shy away from a hard fight.

Brazil’s own son
Politics can be a fickle game. Public support is hard-earned and easily lost, and longevity is by no means guaranteed. Few world leaders remain popular throughout their time in power, and fewer still are able to leave a lasting legacy once they have left office. Lula, however, has already succeeded on both counts.

Dubbed “the most popular politician on Earth” by former US president Barack Obama, Lula enjoyed tremendous support during his first two terms, leaving office in 2010 with an approval rating of nearly 90 percent. And it isn’t hard to see why Lula proved so popular among his peers and compatriots. Under his tenure, the country experienced rapid economic growth, while Lula’s commitment to anti-hunger programmes saw millions of people propelled out of poverty. In returning once again to Brazil’s highest office, Lula is putting his remarkable legacy on the line – in the hope that he can replicate his past successes.

A lifelong champion of the poor, Lula’s humble beginnings are central to his enduring appeal in Brazil. Born in the historically poverty-stricken north-eastern region of Brazil, Lula had to work from an early age to help to support his family, shining shoes and selling peanuts on the city streets as a young child. By his late teens, Lula had found employment as a metalworker in an industrial suburb of São Paulo – a physically demanding job that saw him lose a finger in a workplace accident when he was 19.

It was during this time as a factory worker that Lula developed an interest in advancing workers’ rights. At the encouragement of his union-activist brother, he joined the Metalworker’s Union and quickly rose through the ranks, becoming president in 1975.

In protest of the poor working conditions and routinely low salaries among Brazilian factory workers, Lula led a series of historic strikes between 1978 and 1980, spending a month in jail when the country’s military regime declared the strikes unlawful.

But a month in a prison cell couldn’t quash Lula’s newfound passion for social and economic justice. Shortly after his release, Lula founded the Workers’ Party, a progressive, left-wing political party that brought together a diverse array of union activists, academics and intellectuals.

From humble beginnings in the midst of Brazil’s military dictatorship, the Workers’ Party grew into an unstoppable political force in the decades that followed, with Lula eventually elected President of Brazil in 2002. For many Brazilians, Lula’s election marked the first time that they saw themselves represented in the country’s highest office. Unlike any other president in the nation’s history, Lula came from working class origins.

His lack of formal education and years spent toiling in high-risk, low-pay industries endeared him to millions of voters who had endured the same hardships over the course of their lifetime. But in order to keep the Brazilian people on his side, Lula had to make good on his bold election promises to eradicate hunger and bring an end to poverty. And in a nation rocked by economic crises and persistent inequality, this was certainly no small task.

A global powerhouse
When Lula first took office in 2003, the Brazilian economy was in something of a sorry state. The nation was weighed down by an immense debt burden, while the outgoing administration had failed in its promises to generate jobs and narrow the social divide. Many anticipated that Lula’s election would herald the end of neoliberalism in Brazil, ushering in an era of radical interventions and drastic revisions to economic policy. But this revolutionary approach did not materialise. Upon taking power, Lula surprised both his supporters and critics by adopting a much more conventional economic plan than had been anticipated.

Renewing all of the agreements that the previous administration had signed with the International Monetary Fund (IMF), Lula was prudent in his early policy-making, prioritising fiscal responsibility as he looked to calm jittery markets. This was ultimately a wise move. Brazil’s financial outlook rallied in the months following Lula’s victory, with his success in stabilising the economy allowing him to turn his attention to more radical social reform.

In a fortuitous turn of events, Lula’s election coincided with a surge in global demand for commodities. Driven largely by China and other emerging markets, the early 2000s commodities boom saw resource-rich Brazil enjoy a period of rapid economic growth. Boasting abundant supplies of foodstuffs and raw materials such as oil and iron ore, the South American nation was well-positioned to meet the demands of resource-hungry importers.

This country needs peace and unity. This population doesn’t want to fight anymore

Thanks to the skyrocketing demand for Brazilian products, Brazil saw its annual trade with China grow from $2bn at the turn of the century to $83bn in 2013. China became the country’s largest trade partner, with this lucrative relationship helping to drive down debt and boost growth. Lula successfully channelled the trade surplus of the commodities boom into help for the nation’s poor.

With the public purse now looking remarkably healthy, the state had the freedom to invest intensively in social programmes and poverty relief schemes. This included the expansion of the internationally lauded Bolsa Família cash transfer scheme, which was launched early in Lula’s first term. A radical programme targeted towards those living in extreme poverty, the Bolsa Família provided direct cash payments to poor families, on the condition that they would keep their children in school and take them to receive their required vaccinations.

According to the World Bank, 94 percent of Bolsa Família funds were directed towards the poorest 40 percent of the population, making it one of the most effectively targeted aid programmes in history. In directing windfall trade profits towards effective anti-hunger and anti-poverty programmes, Lula oversaw a historic rise in living standards among working class Brazilians, cementing his position on the global political stage and re-establishing the nation as an exciting ‘economy to watch.’

After years of underperformance and sluggish growth, Brazil was booming. By the end of Lula’s second term as president in 2010, the nation was something of a global powerhouse – both economically and culturally. Selected to host the 2014 World Cup and 2016 Olympics, the country had established itself as a significant player on the global scene, open for business, open for investment and open for visitors. Eternally cast as ‘the country of future,’ it seemed that, at long last, the future had arrived for Brazil.

From boom to bust
Brazil’s post-millennium boom was ultimately not to last. Over the past decade, the South American giant has been rocked by a series of economic, political and social crises that have destabilised the economy and left the country bitterly divided. In 2016, Lula’s successor Dilma Rousseff was impeached for supposedly manipulating government accounts. Around the same time, Lula’s own Workers’ Party became embroiled in the sprawling ‘Operation Car Wash’ corruption scandal, ultimately leading to the former president’s conviction and imprisonment.

As China’s appetite for imports cooled during its 2015 slowdown, the commodity boom that had fuelled Brazil’s growth also came to a shuddering halt. The nation entered a crippling and long-lasting recession in 2015, with the fall in commodity prices prompting the country’s deepest economic decline since records began. Once regarded as one of the fastest growing economies on earth, Brazil suddenly found that its fortunes had been reversed. For the first time in a decade, poverty began to rise and GDP began to fall. In 2018, discontented voters chose the far-right populist Jair Bolsonaro as the next president of Brazil, bringing an end to almost two decades of left-of-centre rule.

But a dramatic change in political leadership didn’t repair Brazil’s ailing economy. The 2015–16 recession had left deep scars, with a slow and fragile recovery leaving the country fiscally exposed. Then in early 2020, after six years of slow and oftentimes negative economic growth, COVID-19 arrived, and Brazil was plunged into yet another crisis. At the beginning of 2020, Brazil’s unemployment rate already stood at 12.6 percent, with the ongoing aftereffects of the recent recession continuing to affect both job opportunities and incomes (see Fig 1). The pandemic pushed joblessness to a record high, while an estimated 485,000 families were plunged into extreme poverty. As President Jair Bolsonaro publicly downplayed the severity of the virus, Brazil’s largely uncoordinated pandemic response saw it become one of the worst affected countries in the world. Recording in excess of 4,000 deaths on its darkest days of the pandemic, the nation suffered a simply catastrophic loss of life.

Despite the progress made during Lula’s first two terms, the pandemic further exacerbated the deepening inequality that has blighted Brazilian society over the past decade. A 2019 report by the United Nations found that the wealthiest one percent of Brazilians possess almost one third of the country’s entire income, with women, black Brazilians and the rural poor most severely affected by the inequality epidemic. Since the political-economic crisis of 2015, Brazil has pursued stringent fiscal austerity measures in an attempt to address the nation’s sizable deficit.

Significant cuts have been made to the social safety net that was created during the Lula administration, with the internationally admired Bolsa Família programme ultimately axed in November 2021. While perhaps the best-known in international circles, Bolsa Famiília is not the only Lula-era scheme to find itself on the chopping block – under Bolsonaro, a host of anti-poverty schemes and food security programmes have been cut at a time when they are needed most.

These austerity measures – coupled with the far-reaching impact of the pandemic – have had a devastating effect on the nation’s poor and vulnerable. Over half of the Brazilian population are now experiencing food insecurity, while a staggering 33 million are officially classed as hungry.

In little over a decade, Brazil has gone from a global powerhouse to a nation in severe social and economic decline. Once lauded as a future superpower, the country has instead become an international pariah, its reputation in tatters after years of pandemic mismanagement, environmental maladministration and fiscal chaos. Rebuilding Brazil will be a challenge of immense proportions – but it may just be the fight that Lula has spent his whole career preparing for.

Deep divisions
“Brazil is back!” President-elect Lula told euphoric crowds in São Paulo as he made his triumphant victory speech. “This country needs peace and unity. This population doesn’t want to fight anymore.” Many will share Lula’s desire for unity after what was a contentious and divisive election. Emotions ran high on both sides of the political spectrum in the lead-up to the presidential run-off, with misinformation and false accusations marring the election campaign. Left-wingers claimed that Bolsonaro was a cannibal, while right-wing bolsonaristas accused Lula of practising devil-worship. It was this fierce political polarisation that Lula sought to calm in his victory speech. Vowing to serve all Brazilians, and not just those who voted for him, Lula has made it clear that he intends to usher in a new era of social and political stability, bringing an end to the polarising politics of the outgoing administration.

Despite Bolsonaro’s insistence that “only God” could remove him from power, it now appears that Brazil is heading for a peaceful transition. Lula will assume office on January 1, 2023, and will inherit a daunting economic in-tray. With COVID-19 coming hot on the tails of Brazil’s worst post-war recession, the nation’s finances are in a very poor state. Inflation, while falling, is currently sitting at 6.5 percent, pushing the prices of everyday goods out of reach for many vulnerable Brazilians. Poverty is on the rise, particularly in the country’s rural northeast, and the growing national debt pile now stands at around 77 percent of GDP.

Against this challenging fiscal backdrop, Lula has promised to boost welfare spending and scrap the constitutional cap on government expenditure. What isn’t yet clear, however, is how Lula will achieve his ambitious campaign pledges in what remains a very limited fiscal space. There are echoes of his first two terms in his promises to eradicate hunger, build more affordable housing and improve living standards for the rural poor. He has also vowed to undertake a series of state-funded infrastructure projects, in addition to ushering in tax reforms and an increase in the minimum wage. Admirable goals, certainly, but Lula is likely to find that the public purse won’t stretch as far as it did during the 2000s commodities boom.

To make matters even more challenging, Lula also faces a congress largely dominated by Bolsonaro allies. The former president’s right-leaning Liberal party holds the largest number of seats in both the lower house and the Senate, potentially making life very difficult for leftist Lula. In order to find a way through, Lula will need to reach out to those in the centre ground – and compromise may become the order of the day.

Rising from the ashes
It is true that immense challenges lie ahead. Lula is set to inherit a deeply troubled country, against a decidedly gloomy global economic backdrop. But there may yet be some cause for cautious optimism. Lula’s post-millennium rise to power coincided with a worldwide commodities boom that saw resource-rich Brazil profit from an increase in demand for its exports.

Over the past 18 months, commodity prices have yet again been on the rise, with the COVID-19 recession and the ongoing Russian invasion of Ukraine causing severe supply chain bottlenecks and a globalised increase in demand for goods. Some market analysts have suggested that we may be at the beginning of a new commodities super cycle – with Brazil well-placed to capitalise on a sudden surge in prices.

Indeed, the nation’s agribusiness sector is booming thanks to the current sky-high prices of foodstuffs. A world leader in food supply, last year saw Brazil post a trade surplus of $61.2bn – the largest in its history. However, commodity prices are famously cyclical in nature, and prone to booms and busts. With experts predicting a short, sharp super cycle, Brazil may have a narrow window in which to capitalise on this uptick in prices – but it could provide the kickstart that the economy so desperately needs.

Lula oversaw a historic rise in living standards among working class Brazilians

On the international stage, meanwhile, Lula’s election has been warmly welcomed. ESG-conscious investors largely shunned Brazil during Bolsonaro’s presidency, in protest of the populist leader’s destructive environmental policies and controversial remarks. Lula’s promises to restore environmental protections and aim for zero deforestation are much more palatable to international investors – many of whom will also welcome the President-elect’s eagerness to pursue clean growth. If Lula is able to make good on his pledge to “reposition Brazil in the hearts of international investors,” the country could prove well-placed to attract significant foreign investment in the clean energy space. A shrewd negotiator and an experienced statesman, Lula may be able to soon restore Brazil’s reputation on the global stage – and an injection of foreign cash could well follow.

Significantly, financial markets are yet to be overly spooked by Lula’s early commitments to social spending. The nation’s GDP forecast for 2023 continues to rise, and despite some initial skittishness during the campaign trail, many in the financial world trust the returning president to take a pragmatic approach to government spending. Lula unexpectedly prioritised fiscal responsibility during his first term as president, and is expected to take a similarly realistic and practical approach to balancing the books when he assumes office in January.

When Lula was last in power, he achieved the seemingly impossible: maintaining fiscal discipline while boosting social spending and improving the lot of millions. Now returning for his third and supposedly final term, Lula’s priorities include fighting some familiar foes – hunger, extreme poverty and rampant inequality.

“If by the time I finish my term, every Brazilian is eating breakfast, lunch and dinner, I’ll have fulfilled my life’s mission once more,” the veteran politician said in a recent speech. If anyone can be counted on to achieve this noble goal, it may well be Lula.

Chesapeake Utilities: ‘We have an obligation’ to build sustainable energy future

Posted on January 9, 2023January 6, 2023 by World Finance

Chesapeake Utilities Corporation has been providing energy to the US east coast for over 160 years. But it is a modern, diverse company, with a clear commitment to the planet and to the people it serves, alongside its drive to develop profit for its shareholders. President and CEO Jeff Householder explains how the corporation is meeting the challenge to build an environmentally sustainable future: by reducing its own emissions, supporting suppliers and customers to reduce theirs, and innovating in the energy mix it provides. He also discusses the company’s corporate governance achievements – in particular how increasing board diversity has improved the conversation around Chesapeake Utilities’ strategy.

World Finance: Jeff, first can you introduce us to Chesapeake Utilities, and the scale of your operation?

Jeff Householder: Well we’re obviously a US corporation, traded publicly on the New York Stock Exchange. About $2bn, little bit more than $2bn in total assets and market capitalisation.

We serve around 300,000 customers over about nine states, with operations principally in gas transmission, distribution, some electric distribution. We’re probably the 15th or 16th largest propane company in the US at this point.

Our growth has been fairly phenomenal over the past 10-12 years; we’ve doubled the size of our company three times, over that period of time. We have a long, very strong track record of financial performance. We’ve seen returns above 11 percent for 17 years in a row. I think we’re on 60-plus years of paying consistent dividends. We typically are in the upper quartile of energy delivery companies in terms of just about every performance measure that you could think of.

World Finance: The energy industry is under more pressure than ever before to transform, and innovate, and enable an environmentally sustainable future: how is Chesapeake meeting that challenge?

Jeff Householder: Well I think first of all, we have accepted the fact that it is a challenge, that we have an obligation to perform. We are focused significantly on our internal emissions, doing everything from limiting vehicles, converting them from gasoline and diesel to other fuels.

We’re purchasing satellite time, looking for leaks in the system, and we’ve replaced literally hundreds of miles of pipeline and tightened up our systems significantly.

We’re also focused upstream on our suppliers, to make sure that we’re getting supplies from individuals that are also paying attention to their emissions. And we’re working with our customers to make sure that we can do everything we can to ensure that their emissions are reduced.

World Finance: Your stated mission is to “deliver energy that makes life better for people and the communities [you] serve” – what does that look like in practice?

Jeff Householder: Well I think that follows several different patterns. One is, everywhere we go with natural gas, we find that economic development improves. We bring jobs to the communities, it really is an amazing thing to see communities blossom when they get natural gas service for the first time.

I’ll give you an example, we recently expanded down into another area in southern Maryland that had not had natural gas service before. Converting oil, coal, much more significant emission fuels. And we’re seeing economic development in those areas flourish. I mean you’re beginning to see additional jobs come into those communities because of the expansions of industry and commercial development that’s occurring around the natural gas opportunity.

We also have a group of employees that are highly engaged and that are highly dedicated, not just to supporting customers, but to supporting the communities where we serve. And so we have high levels of charitable contributions, employee volunteerism. We really spend a fair amount of time in our company thinking about how we are providing services to customers, how we are supporting our communities. And what we need to do to make sure that our employees are engaged and able to participate in all of those things.

World Finance: Congratulations on winning the World Finance award for Best Corporate Governance in the US for 2022; what does this recognition mean to you?

Jeff Householder: Well I think it’s a testament to the great work that many people in our company have done over the last many, many years. This is not a recent occurrence for us; we take corporate governance very seriously, our board is taking it very seriously. We’ve seen increases for example over the last few years in the diversity of our board. And it really has changed the way that the board interacts, the way that the board thinks about issues. We’re seeing a much more robust conversation about where we need to go strategically, and it’s all because I think that we have more significant diversity on the board.

We’ve made a number of efforts to increase the transparency of our reporting. And we have a fundamental value in our company of integrity. And I think we try to live by that every day, and our governance actions and practices speak directly to that.

World Finance: Finally, what is your vision for a sustainable energy industry, and for Chesapeake Utilities?

Jeff Householder: I think there are several things; as I mentioned earlier, we have an internal obligation I think to make sure that our emissions are as low as we can possibly make them. I think beyond that there are a number of actions that our company is taking and can take.

We will see definitely a change in the chemical composition in the gas that we provide through our pipeline services. I think you’ll see much more renewable gas, we’re moving down a path to invest in those operations ourself. I think you’ll also see an opportunity to introduce hydrogen into our systems. We’re already starting to test that in some of our industrial facilities.

I think natural gas has a long runway ahead of it: to reduce coal, to reduce oil, to reduce other fuels that are much more impactful on the environment.

We also see significant opportunities both for our employees and for our customers to let us help them manage their emissions reductions. And so I think those are just a handful of the issues that really drive us forward, not only doing the right thing in the environment, but actually being able to do that and continue to satisfy our investors’ needs for earnings.

Privacy versus Profits

Posted on January 4, 2023 by itsupport

A huge cyber-attack or data breach that cripples online activity is regularly listed as a major risk to global economic security, along with the physical risks of climate change and geopolitical conflict. Since British mathematician Clive Humby declared in 2006 that data is the oil of the 21st century, it has slowly dawned on governments, regulators, and companies that they have been sitting on goldmines for decades.

Along with this has come the realisation of the need to better protect this wealth of information. Enter the European Union’s General Data Protection Regulation (GDPR): a landmark 88-page piece of legislation that put data privacy and individuals’ rights on the map, introducing previously foreign concepts such as ‘the right to be forgotten’ to millions.

The overall thinking is not brand new – it is based on the 1995 Data Protection Directive, which is itself based on legal principles that have been in place since the 1970s. What’s different is the meaning of consent, and a clarification of the rights of individuals.

And if the measurement of success is awareness-raising among the general population, the GDPR has been remarkably successful: according to a 2019 (just a year after its implementation) study by Eurobarometer, nearly three in four people living in Europe were aware of at least some of their rights under the framework.

“GDPR has really popularised the sense of control, and its broad applicability is what makes it so impactful – it’s created a common language,” says Andrew Clearwater, chief trust officer at Atlanta-headquartered privacy management software service OneTrust. “Now you have millions of people with a broad expectation of what their rights are and how their data will be handled.”

One misnomer: while most of us learnt about it from the hundreds of ‘can we still contact you?’ emails from every company we’ve ever bought clothes or an appliance from, that was actually a separate law governing digital communications – the GDPR just tightened the meaning of consent for various pieces of legislation. The data protection rules themselves are more focused on how companies manage and store the personal data of individuals.

Not knowing how to answer a question on GDPR makes a company significantly less desirable to work with

“If I’d spoken to someone about what I do pre-2018 their eyes would glaze over – now they still might, but they will have at least heard of the GDPR,” says Jonathan Baines, chair of the National Association of Data Protection Officers in London (NADPO). “There is no business out there that does not process the personal data of individuals in some way – even a one-man building company has customers.”

And while it was the potential for huge, headline-grabbing fines that initially captured the attention of senior management teams, data privacy experts say it is this awareness-raising that has contributed the most to the law’s ongoing legacy. “While companies could respond by doing the bare minimum, for most, that new awareness has had a much bigger impact than a potential fine might,” adds Clearwater. “It means the bare minimum is just not enough compared to your competitors. Most have been forward thinking about helping their customers exercise their control.”

Measuring success
Determining the success of any legal framework is difficult and depends on its stated aims. For starters, it certainly seeks to address an existing problem. A common criticism of regulations is that they only solve past causes of crises and will not prevent future ones. But cybersecurity and companies’ handling of personal data is highly sensitive, and while the GDPR is about more than cybersecurity, a personal data breach that leaves customers open to hacking is likely to carry its most severe penalty.

“The concept of accountability is so important,” says Clearwater. Companies are required to maintain reams of internal evidence as proof of their compliance with the law. “That isn’t being broadcast endlessly, but it has to be there. And that creates this iceberg effect where users see a couple of small changes when they use a website, but below the surface, there are potentially hundreds of people engaging with records processing or vendor relationships in much better ways than in the past.”

From the earliest stages of product development to the way internal recruiters manage their databases, individuals at all levels and in all departments are expected to consider data privacy, says Edward Starkie, senior vice president of cybersecurity at risk consultancy Kroll. The intention was baking in “privacy by design” across every department of an organisation, he explains.

And while a whole new sector of privacy experts and firms purporting to be a one-stop-shop on GDPR compliance quickly sprung up around the regulation, for many companies, making use of one defeats the intended purpose of the framework. “There’s a perception within some businesses that these products are a silver bullet, but if you truly want to meet the intention behind the legislation, it has to be privacy by design,” says Starkie. “That can’t be achieved with the retrospective implementation of a tool.” Besides, Baines says that many of these were providing poor advice. Fundamental misunderstandings about what the law was intended to do – the confusion around digital marketing for example – led to some poor and incredibly costly mistakes, such as some companies dispensing with their entire marketing databases.

Data as an asset
If GDPR was about reining in the astronomical power wielded by Big Tech, it has been remarkably unsuccessful. A fair chunk of all fines have hit technology companies, with Amazon and Instagram paying the highest so far at $740m and $402m respectively, but they have barely made even a ripple in the ocean of enormous profits these companies report every year: in 2021 Amazon made approximately $33.4bn; Instagram parent company Meta took home around $39.3bn. While GDPR has undoubtedly improved the privacy rights of millions, these data farmers are still stockpiling vast reams of incredibly personal data and making billions of dollars every year out of selling it on – often at an enormous cost to society.

The difference between these companies and everyone else is that their whole business is personal data, so their privacy risk appetite is naturally much higher. “It makes a lot of sense for regulators to target the top tier – the Googles of the world which make money from not being compliant, compared to in other sectors,” he says. Mark Thompson, chief knowledge officer at the International Association of Privacy Professionals, seconds this. “Organisations are striving to work out what is the right level of personal data to minimise their liability but maximise their asset value,” he says.

Forever playing catch-up
Besides, law and regulation will always be playing catch-up to industry, particularly when it’s one as fast-moving as technology, says Jenna Franklin, co-chair of the data protection finance group at law firm Bird & Bird in London. And the EU’s fight on data privacy and governance continues: still in the pipeline are the Data Governance Act, the Data Act, the Digital Markets Act, Digital Services Act, the Artificial Intelligence Act, the Digital Operational Resilience Act, and the second Network and Information Security Directive.

“There’s always a tension, particularly with data protection rules, where regulators don’t want to stifle innovation – but they have to weigh that with the impact on the individual and how we protect their rights,” says Franklin. The COVID-19 pandemic and the remote working revolution it prompted certainly made things more difficult. While the GDPR requires data controllers to report breaches within 72 hours of becoming aware of them, a 2020 IBM study found that the global average time to identify and contain was an enormous 280 days. EU countries tended to perform better than others, but not by much.

Unfulfilled potential
Despite the eye-catching headlines around the GDPR’s potential for record-breaking fines, the penalties themselves have not come close to fulfilling their true potential. While information regulators technically have the power to hit companies with a fine of up to four percent of annual global turnover, the majority have not come close to that. Not all penalties are publicised by data protection authorities, but most have been under six figures, which for most companies is a mere drop in the ocean of the billions of dollars in profits each year.

We still have clients coming to us and saying ‘we’ve not done anything for GDPR – please help us’

“There was so much hype built up around the potential for fines that I don’t think it was ever going to match the reality – there was a lot of fear mongering around this four percent figure,” says Starkie. Clearwater says that beyond the big technology companies whose very business is personal data, it’s difficult to identify trends in enforcement, with fines hitting consumer goods, finance transportation, retail and hospitality all fairly evenly.

But Franklin says the conversation around fines served an important purpose at the start of implementation when it came to raising awareness among senior management. “When we were building our initial business case, the prospect of big fines was a helpful stick to encourage the board to take the rules seriously,” she says. “It made it clear that data protection is a financial risk, and generally across the board, resulted in really good compliance programmes.”

The pandemic had an impact here, with many regulators sympathetic to the major changes in business practices and the strain this put on internal systems and technology. But while working from home is here to stay for many, those days of understanding may well be over. After a slow start, regulators have recently stepped things up a gear. Fines increased by 92 percent, and the average total is rapidly climbing from five-figure totals in the earlier stages.

“The scariest part for businesses is still the risk of fines, in part because the financial damage of a large fine is inseparable from the reputational damage – a large fine will always get a large amount of coverage in the press,” says Baines. “It’s true that those future-defining fines just haven’t materialised yet though. I think that comes down to the way UK regulators do things.”

The UK is culturally different from the US in this respect, he explains, with regulators generally preferring to work with businesses. It’s also down to a GDPR stipulation that fines must be proportionate. “I think the conclusion is that only in very rare circumstances would it be proportionate for a data protection breach to effectively end a business,” he adds.

It’s who you know
Another fundamental shift has been in the management of vendor relationships. Clearwater says that who companies work with has become a much more important measure than it was in the past, here drawing a parallel between the GDPR and companies’ sustainability efforts when it comes to managing relationships with third parties. “The material way of moving forward with your sustainability commitments is going to be either choosing the vendors that are on the journey with you, or moving to those that are,” says Clearwater. “In the same sense, not knowing how to answer a question on GDPR makes a company significantly less desirable to work with, which can have a big impact on business.”

Starkie, who regularly advises on the data protection elements of joint ventures, mergers and acquisitions, seconds this. “In a number of cases we’ve come across where there has been a [data protection] breach, while it hasn’t necessarily killed the deal, it’s definitely delayed it,” he says. “There are a lot more considerations that now need to be taken into account: what individuals are impacted? Which privacy jurisdictions do they fall under? What is the potential for fines? In that sense, privacy has become just like all other risks businesses must consider.”

As a general rule, compliance has been harder for long-running businesses with legacy systems that were used to handle personal data pre-GDPR, says Bird & Bird’s Franklin. Within financial services, for example, it’s in many ways easier for a fintech company or challenger bank with new systems and customers that have only been on the books for five or so years to integrate the concept of privacy by design than it may be for a traditional bank with decades-worth of customer data to grapple with.

“Newer companies tend to have the technology advancement and without the headache of legacy systems,” she says. “In that sense I would imagine regulators might come down harder on a fintech for noncompliance – it’s easier to meet the requirements of GDPR as a start-up or scale-up than it is a traditional institution.”

A delicate balance
As with most regulation, the typical business isn’t looking for 100 percent compliance, says Kroll’s Starkie. Most are looking for “a degree of compliance that demonstrates the intention to do the right thing,” he explains. “No one wants to be vulnerable to being picked off from the back of the pack, but there are no major returns for being right at the front either – there’s a real herd mentality at play,” he explains. “We still have clients coming to us and saying ‘we’ve not done anything for GDPR – please help us.’ I would say there was definitely a perception that the whole pack would be much further ahead than it is by now.”

GDPR has really popularised the sense of control, and its broad applicability is what makes it so impactful – it’s created a common language

The conviction with which this view is held varies between types of businesses, of course. “There are some industries or organisations where their entire strategy is based upon having a strong reputation – industries where individuals can quickly change between products and services for instance,” adds Starkie. “The risk of a data breach is very real for them. But for others, I would be interested to see the data on how many individuals have exercised many of their rights under the GDPR. I think it would be quite small.”

Either way, study after study has shown that privacy is important to consumers. A 2016 survey by KPMG revealed that more than half of respondents had decided against buying a product or service online due to privacy concerns. Three-quarters said they were uneasy with the idea of their online shopping data being sold on to third parties, with social media, gaming and entertainment companies singled out as those being most intrusive with personal information.

The long arm of European regulation
Another potential barometer of success is just how many other governments have followed suit in the years since GDPR implementation. Similar laws now exist in dozens of countries including Bahrain, Indonesia, Israel, Japan, Kenya, New Zealand, Nigeria, Turkey and South Korea – along with others. Arguably the highest profile is the state of California’s Consumer Privacy Act (CCPA).

And while the CCPA was initially perceived to be much weaker than the GDPR, its first settlement landed in early September, with cosmetics company Sephora fined $1.2m for failing to inform customers that it was selling their data on.

Baines says that the European Commission’s two goals were protecting individuals’ rights and facilitating business. “That second piece is often overlooked though,” he says. “The homogenisation of data protection frameworks actually makes business easier and has had a significant effect on the way tech companies are run. They are a bit like tankers: they take a while to move. Nearly five years on from GDPR sounds extraordinary, but we’re only really now seeing its effect extending across the globe.”

One country where the GDPR’s future may be uncertain, however, is the UK. While the UK is not obliged to retain the rules on its statute books since leaving the EU, it has thus far. But that was cast into doubt in early October at the Conservative Party conference when newly appointed culture secretary Michelle Donelan said the rules were “limiting the potential of our businesses.” Privacy experts were quick to point out that the global nature of the internet means it is not as simple as abolishing the GDPR. Most have taken this with a pinch of salt, arguing that it is more a political statement than anything else.

Power to the people
Complacency may remain rife among certain businesses today, but that could be a future-defining business risk for some because as Baines argues, the true potential of GDPR simply has not been realised yet. “Businesses are conscious of the costs of compliance, and this will depend on the type of business. But those that have experienced aggrieved employees or customers making requests for their data are certainly mindful of how costly it can be,” he says. “Say you have a large customer base and a big chunk of them becomes aggrieved, maybe because there’s been publicity around a data breach or some sort of consumer rights-style campaign. The sheer cost of dealing with that would be a real business risk, before you’ve even got to a regulatory issue.”

A common criticism of regulation is that they only solve past causes of crises and will not prevent future ones

There was a hint of this over 10 years ago when Austrian law student Max Schrems picked a fight with Facebook over its handling of personal data. He pointed out that the social media giant was unlawfully transferring personal data between Europe and the US, and his work forced the European Commission to twice change its rules on transatlantic data transfers. Another Max Schrems could be highly effective.

There is also the potential for class action lawsuits, in which large groups of affected individuals can bring a collective case. One such case was brought against Google with a $5.5m settlement approved by a US district judge in February 2017, and momentum appeared to be building around that time, says Baines. The decision was ultimately struck down and the market went quiet, but it could change, he adds.

“If that had been successful we’d have seen a hell of a lot more litigation, but it went completely cold – these cases haven’t been as successful as some hoped or expected, but the litigation market is nothing if not ambitious,” says Baines. And these remain frontier times for the online world, with today’s generation mere guinea pigs. As big technology companies become ever more intrusive, most people are more focused than ever on their rights. The rules are in place – it is time individuals made the most of them.

Is the alcohol industry drying up?

Posted on January 4, 2023January 4, 2023 by itsupport

Since time immemorial, alcohol has been a part of the social fabric of human life on earth. The earliest evidence of intentional alcohol production stems back to 7,000BC, from fermented residues found in neolithic pottery jars from northern China. The Sumerians in Mesopotamia were brewing beer as far back as 3,000BC, while the Romans believed wine to be a daily necessity, with soldiers required to drink one litre per day. From our ancient ancestors through to the present day, alcohol has played a fundamental role in shaping human culture and socialisation. Omnipresent at almost all social events – from the celebratory to the sombre – alcohol is a conversational lubricant for some, a crutch for others, and simply part and parcel of everyday life for many millions more.

Ubiquitous and ever-popular, alcohol has become one of the largest and most powerful industries in the modern world. With the global alcohol trade valued at an astonishing $1.17trn in 2021 – and still growing – booze is very much big business. And while it may look like the alcohol industry is going from strength to strength, recent changes in consumer behaviour suggest that the market as we know it today may be in danger of running dry. The early signs of a culture shift on booze started emerging in 2018, with the publication of an influential new study on alcohol habits.

Years of public health campaigns have succeeded in improving our collective alcohol-related knowledge

The report, published by Berenberg Research, found that Gen Z were drinking 20 percent less per capita than Millennials – who, in turn, drink less than Baby Boomers and Gen Xers did at the same age. While previous generations may have marked the passage into adulthood with binge drinking and hard partying, today’s youngsters are much more temperate, shying away from excessive alcohol consumption and instead prioritising their mental and physical health. With more than a quarter of Gen Zers now teetotal, the alcohol industry may need to prepare itself for a sobering future.

Time, please
Almost overnight, the pandemic dramatically transformed social habits the world over – including our social drinking habits. The initial lockdowns saw a surge in alcohol consumption, particularly in those aged 40 and above, with 8.6 million UK adults admitting to drinking more frequently during the early months of the pandemic. Interestingly, while older people found themselves drinking more during lockdown, younger people were increasingly drawn to sobriety.

There has been a general decline in drinking since the end of the government-mandated lockdowns

According to research carried out by the University of New South Wales, Australians aged 18–24 were most likely to have decreased their alcohol consumption during lockdown, with 44 percent of adults in this age group reporting that they were drinking less. The trend isn’t just confined to Australia, either – British charity Drinkaware recently reported that there has been a general decline in drinking since the end of the government-mandated lockdowns – and Gen Z were once again at the forefront of this teetotal movement.

With fewer opportunities to socialise with friends, drinking somewhat lost its appeal among young people during lockdown. Fatigued by virtual drinks and zoom parties, Gen Z found themselves drawn to more traditional, tactile hobbies such as sewing, knitting and gardening. In Britain, 60 percent of those aged 16–29 reported taking up a new hobby during lockdown, while retailer John Lewis saw sales of sewing machines rise by 127 percent in April 2020, bolstered by viral DIY trends on social media.

What’s more, as young people in their millions flocked back to their parental homes during lockdown, a diminished sense of independence and near-constant familial presence may have prompted youngsters to pursue more family-friendly activities during this time. A Pew Research Centre study published in July 2020 estimated that 52 percent of Americans aged 18–29 were living with one or both parents – the largest percentage of young adults to do so since the Great Depression. Now, over two years on from the first global lockdowns, many of those who returned back home still live there, often out of economic necessity. If these new living arrangements are indeed here to stay, the social lives of these so-called ‘boomerang kids’ will undoubtedly have to change too – and the weekend boozing so often associated with young adulthood may well be a thing of the past.

Generation sensible
While the pandemic has certainly had a profound impact on our social habits, it is not the only factor behind this new wave of sobriety. In fact, youth drinking has been in decline across most high-income countries for the last 20 years. Today, young people are more likely to be completely teetotal than any generation that came before, and those who do drink alcohol tend to both drink less often and consume smaller amounts. Dubbed ‘generation sensible’ by some commentators, this new cohort of youngsters is generally considered to be more cautious and risk averse than previous generations, both in regards to their physical health and their mental wellbeing.

An increased awareness of the dangers of drinking may be one reason why young adults are increasingly choosing sobriety. Years of public health campaigns have succeeded in improving our collective alcohol-related knowledge, and for the health-conscious youth of today, drinking may simply not be worth the risk. And they have good reason to be cautious – alcohol consumption remains the leading risk factor globally for mortality and morbidity among those aged 15–24, and, as a depressant, is also linked to poor mental health. For Gen Z, the mental toll of drinking is a real sticking point – 86 percent of zoomers feel that mental health is as significant a consideration as physical health when considering drinking.

Indeed, anxiety surrounding alcohol consumption is another driver behind the decline in youth drinking. Often stereotyped as a generation plagued by anxiety, some young adults find alcohol consumption to be a source of stress, rather than an escape from it. As the first generation to have never known a world without the internet, Gen Zers are likely to have had an online presence across multiple social media platforms from a very early age. As such, they are hyper aware of their online image and are anxious of having it ruined by their drunken behaviour being caught on camera for all to see.

According to a study carried out by advertising agency Red Brick Road, 49 percent of Gen Z say that their online image is always at the back of their mind when they go out drinking with friends – so no wonder zoomers find it hard to let their hair down on a night out. Sobriety, or at least a more mindful approach to drinking, may help Gen Z to feel more in control of what is being posted of them online, alleviating any anxiety of drunken moments being inadvertently shared with the masses. After all, in an age where everyone is Google-able, the boundaries between private and public life are more blurred than ever before – as Gen Z knows only too well.

Drying out
While young people may be leading the sober curious trend, zoomers aren’t the only generation embracing a teetotal lifestyle. Across the globe, people of all age groups are beginning to reconsider their relationship with alcohol, cutting down or cutting out alcohol from their diets in an effort to prioritise health and wellbeing. Alcohol-free challenges such as ‘Dry January’ and ‘Sober October’ have been steadily growing in popularity since the mid-2010s, with millions of social drinkers signing up to commit themselves to a completely sober month. This year’s ‘Dry January’ saw 35 percent of legal-aged US adults quit alcohol for the entire month – marking the highest participation rates ever recorded for the challenge.

The Virgin Mary pub in Dublin, Ireland is alcohol-free

Across the pond in Britain, almost eight million people planned a month off drinking in January 2022 – a 22 percent increase on last year’s participation figures. What’s more, research has shown that approximately seven in 10 people who complete ‘Dry January’ continue to drink less six months later, making the challenge a useful stepping stone to sobriety for many.

Elsewhere in the world, long-held traditions and customs surrounding alcohol are also beginning to wane. Japan is known for its Nomikai gatherings – a feature of its business culture that usually involves an after-work get-together for co-workers over drinks. While in the past, Nomikai has been a central feature of working life in Japan, recent changes in attitudes towards drinking suggest that the practice could soon disappear. Over 60 percent of respondents to a 2021 survey said that they thought that work-related drinks gatherings were now unnecessary, meaning that for the very first time, more Japanese workers oppose Nomikai culture than support it.

This shift in attitudes has coincided with – and perhaps led to – a decline in drinking across Japan. According to the country’s National Tax Agency (NTA), alcohol consumption in Japan fell from an annual average of 100 litres per person in 1995, to 75 litres per person in 2020. This drop in drinking has had a significant impact on the country’s budget – taxes on alcohol accounted for five percent of Japan’s overall tax revenue in 1980, but by 2020, this figure had shrunk to 1.7 percent.

With alcohol tax revenue at its lowest level in 31 years, earlier this year the NTA launched a contest designed to boost alcohol sales among young people. The ‘Sake Viva!’ competition, which was open to 20–29-year-olds over the summer, asked entrants to develop business plans that would breathe new life into the country’s waning alcohol industry and tempt youngsters back to the bottle.

While Japan may be an outlier in its efforts to actively encourage alcohol consumption among its population, other countries around the world have noticed a similar decline in both drinking and sales. In 2021, alcohol sales in Scotland fell to their lowest level in 26 years, while in Italy, per capita alcohol consumption fell by 23 percent in the decade between 2006 and 2016. In Australia, meanwhile, drinking has fallen among all age groups, and is now at its lowest level since the early 1960s. From Europe to Australasia, the figures tell a similar story. With greater health awareness and health consciousness spreading across the globe, we are witnessing a real-time shift in attitudes towards drinking. As the harmful effects of excessive drinking become too numerous to ignore, is alcohol consumption set to become as socially unacceptable as smoking?

Social stigma
It seems somewhat inconceivable that something as ingrained in our social life as alcohol could become seriously stigmatised. And yet, we have seen it happen before. Indeed, the first half of the 20th century has been called the ‘golden age of the cigarette.’ Cheap, accessible, and – most importantly – fashionable, cigarettes boomed in popularity during the early 1900s, with approximately half of the population of industrialised countries smoking cigarettes by the late 1950s. In the UK, up to 80 percent of adult men were regular smokers by the mid-20th century, and the habit was fast spreading among women, too. Smoking was seen as not just socially acceptable but aspirational, glamourised in Hollywood releases and even publicly promoted as a ‘healthy’ lifestyle choice. In 1946, Reynolds Tobacco Company famously introduced a print and radio campaign that attested that ‘more doctors smoke Camels than any other cigarette.’

Thanks to both the effectiveness of the campaigns created by tobacco companies and, of course, the addictive nature of the product itself, cigarettes were omnipresent in all forms of public life in the mid-1900s. But, little by little, the tide began to turn on cigarettes, as new studies started to make associations between smoking and fatal illness. Then, in 1964, US Surgeon General Luther Terry published a report that definitively linked smoking cigarettes with lung cancer. The evidence was irrefutable.

And yet, the tobacco industry didn’t disappear overnight. In 1974, 10 years on from the report’s publication, half of British adults still smoked. Over the following decades, governments on both sides of the Atlantic ran a number of public health campaigns aimed at improving awareness of the harmful effects of smoking. This education drive – coupled with new legislation encouraging people to cut down on cigarettes or stop smoking altogether – saw the number of smokers drop dramatically by the end of the century.

In a matter of decades, smoking went from socially ubiquitous to socially stigmatised. And there are some early signs that alcohol could be heading the same way. According to a study carried out by Red Brick Road, 41 percent of Gen Z associate alcohol with ‘vulnerability, anxiety and abuse’ – and this apprehensive outlook on drinking has translated into rising sobriety among young people, with 26 percent of Brits aged 16 to 24 identifying as fully sober. Across the British population as a whole, 20 percent do not drink alcohol, marking a three percent increase in the proportion of non-drinkers since 2015. What’s more, a third of pub visits are now completely alcohol-free, demonstrating a shift towards sober socialising even in traditionally boozy environments. Sobriety, it seems, is having a moment. And as the world begins to grapple with a worsening cost-of-living crisis, non-drinkers may soon find that they are protecting their wallets along with their health.

Pinching pennies
The COVID-19 downturn was branded a ‘once in a lifetime’ economic event. And yet, just two years on from the start of the pandemic, the world stands on the precipice of another devastating recession. On both sides of the Atlantic, higher-than-expected inflation has seen prices of everyday goods skyrocket, severely impacting household budgets and causing many families to tighten the purse strings. In times of hardship, ‘unnecessary’ purchases are the first things to be struck from the weekly shopping list, and for many, a night at the pub falls under this ‘frivolous’ category.

The price of everything from food to fuel is rising, and alcohol is certainly no exception. The average cost of a pint of beer in the UK has shot up by 70 percent since 2008, hitting £8 for the very first time in some London establishments. At such eye-watering prices, it’s perhaps no surprise that Britons have been cutting down on boozing in an effort to save some pennies. According to a survey carried out by YouGov, 27 percent of Brits say they are now spending less on alcohol compared to last year, while seven percent of respondents have cut out drinking altogether, citing cost-related reasons.

There is a long-held belief that the alcohol industry is recession-proof. The argument, as put forward by some market analysts, is fairly convincing – that hard times can lead to hard drinking as people look to ‘self-medicate’ during periods of intense stress. But the reality is rather more complicated. The global financial crash saw a period of price stagnation and falling beer sales, and global alcohol consumption would have fallen by two percent in 2009, had it not been buoyed by increased consumption in Brazil, Russia, India and China. What’s clear is that in times of economic hardship, drinking outside of the home takes the biggest hit, as financial anxieties see people going out less and staying at home more. With many households already reporting that they are spending less on alcohol, it’s not difficult to imagine that this trend will continue as the cost-of-living crisis worsens over the winter months.

The current crisis is set to last at least into the second half of 2023, and household spending power is expected to plummet by a staggering £3,000 in the UK – a contraction in household income twice as severe as was triggered by the global financial crash. While the alcohol industry may be recession-resilient, it certainly isn’t recession-proof when people are forced to count every penny.

Evolving tastes
The alcohol industry is facing a double dilemma. In the short term, the escalating economic downturn may lead individuals to re-evaluate their drinking habits in an effort to make savings. In the long term, a sustained societal shift towards sobriety and a more temperate approach to alcohol consumption could see this long-profitable industry run dry.

One thing is for certain, though – the alcohol industry won’t be admitting defeat anytime soon. Already, brands are responding to their customers’ new teetotal preferences. The low-and-no alcohol industry has boomed in recent years, with off-premises sales reaching an impressive $3.1bn in 2021. In Britain, sales of low-and-no alcohol beers have almost doubled in the last five years, with alternative versions of popular brands helping the sober curious to make the switch. Whether they fancy a Budweiser or are more partial to a Becks, customers are now spoilt for choice when it comes to alcohol-free options. Long gone are the days when pubs could only offer non-drinkers a tepid lemonade – and the low-and-no alcohol market shows no sign of slowing down anytime soon (see Fig 1).

The world’s largest brewer, Anheuser-Busch InBev, has set itself an ambitious target of having low-and-no alcohol beers account for a fifth of its overall sales by 2025. While it may not reach this lofty goal, the ambition alone marks something of a culture shift in how some of the world’s most powerful beverage companies are looking to market and promote their products. Alcohol-free is not merely a fad, but a lucrative new revenue stream – one that could be worth more than $1.7trn by 2028.

Today’s non-drinkers have more choice than ever in where they choose to enjoy a booze-free tipple, too. Sober-friendly ‘dry’ bars have been popping up in cities across the globe, creating safe and inviting spaces for teetotallers to enjoy a night out. From Dublin’s alcohol-free pub, The Virgin Mary, to swanky speakeasy Getaway in Brooklyn, this new wave of abstemious establishments cater to both the committedly sober and those who simply want to experience a different kind of night out. Often softly lit, with trendy, ‘instagrammable’ decor, these sober bars tend to focus on creating an experiential offering for their customers – yet another aspect that appeals to the growing Gen Z clientele.

Having recently surpassed Millennials as the most populous generation on earth, Gen Z’s buying power is growing, as is their power to shape and dictate future consumption habits. As young people around the world increasingly embrace sobriety, the alcohol industry will need to follow suit – as paradoxical as it may seem. This new trend poses a challenge, certainly, but also an unmissable opportunity. If brands can shift their focus towards producing and marketing more alcohol-free alternatives, they could play a key part in promoting a healthier, more moderate future for teetotallers and regular drinkers alike. Cheers to that, indeed.