Year: 2023

Facing the markets head-on

Posted on by itsupport

As CEO of the well-established, global brand HYCM International, Stavros Lambouris leads a firm with offices in the world’s leading financial centres, providing forex and CFD trading via a group of individual entities in different jurisdictions. Boasting access to over 45 years’ cumulative operational experience, the group is known as one of the most reputable and trusted experts in the industry, with its UK entity being regulated by the FCA since 1998. Lambouris spoke to World Finance about the state of the US economy, the impact of the recent banking crisis and the prospects for the cryptocurrency market in the wake of the collapse of FTX.

What has been the dominant theme in the markets this year and how is HYCM positioned to serve traders as these themes change?
In the first quarter of 2023 we saw a reversal of last year’s equity story, which was big tech down and energy stocks up. This year, tech is the best performing sector to date with almost 90 percent of the gains in US equities coming from the top 10 stocks. Meanwhile, the energy sector is trading roughly where it was back at the beginning of the year.

This is all taking place against a backdrop of uncertainty regarding whether the US is sliding into a recession. We are also much closer to the end of the Fed’s tightening cycle, which is why the question of hard-landing, soft-landing or no-landing has been so prevalent in recent months.

Inflation is still high; the Federal Reserve is indicating that it plans to stay the course, but market expectations have become disconnected from this reality. Markets not only appear to expect a pause but a pivot to looser monetary policy before the year is out. This uncertainty can be seen in the outperformance of technology stocks but also in the price action of assets like gold, oil and bitcoin.

HYCM aims to be a single trusted venue for investors to gain exposure to all the markets they require. The recent launch of our mobile app, HYCM Trader, is a step in this direction as now our products and services are accessible through a modern, easy-to-use mobile interface.

What do you make of the recent banking crisis, and how has it figured in the market trends you describe?
Recent banking turmoil has heightened fears that monetary policy has become too tight. While these fears have eased recently, there is still concern that the Fed will overtighten, causing something else to break, and then have to quickly reverse policy as it has done in the past.

Tech stocks seem to be anticipating lower rates ahead. Oil appears to be pricing in a reduction in economic activity with OPEC’s recent output cut, perhaps in an attempt to keep prices from sliding lower. Bitcoin surged as regional US banks were failing, which is unsurprising considering it was created as a hedge against the existing banking system. Also, appetites for gold at this time are being driven by this uncertainty, having recently attracted capital both as inflation hedge and safe-haven play. HYCM’s investors appear to have anticipated this dynamic, with gold having been one of our most traded symbols in 2022.

Generally, if 2022 was about markets adapting to the reality of higher rates, then 2023’s narrative has yet to properly emerge because there’s still so much uncertainty regarding the path ahead.

However, I will say that technology is a big theme running through the recent banking turmoil.

Fintech developments over the past decade or so have put us in a completely different world. The speed at which capital can move nowadays is just a few taps on a screen. This appears to have come as a surprise to the US banking system when it came under stress recently. Also, recall that bitcoin hardly existed during the 2008 financial crisis, and today it’s a $500bn alternative.

At HYCM, we are very conscious of being a big part of this movement towards the democratisation of financial access, and the frictionless movement of capital. But we’re also very aware of the risks involved, so it is very important to choose a trusted and regulated provider.

What are your thoughts regarding the possibility of a US recession, and how does this affect HYCM’s plans going forward?
A fight against inflation is also a fight against economic activity. Federal Reserve chair Jerome Powell has probably been the most clear about this fact among his central banking peers. The goal may not explicitly be to cause a recession, but it’s certainly one of the possible outcomes of the fight against inflation. And while inflation remains elevated, the data do suggest some signs that the US economy is deteriorating.

We have recently seen the third biggest miss on record for job openings, according to the US Bureau of Labour Statistics. Unemployment claims have surprised to the upside, and both services and manufacturing PMIs are in contraction, having surprised to the downside. This is all occurring as lending standards tighten, which Powell has acknowledged as effectively a form of tightening in its own right. You also have OPEC’s recent actions, which are inflationary, and likely to make the central bank’s job even harder. It’s important to pay attention to whether the Fed remains resolute regarding inflation as its primary concern, or whether its priorities appear to shift in the coming months.

The upcoming earnings season should also provide more clarity. If there is to be a repricing of equities lower, then disappointing earnings, as well as forward guidance from CEOs to prepare investors for slower growth ahead, could be a catalyst for recession.

At HYCM, we plan to expand our product portfolio and add the possibility of trading stocks with zero commission. This will allow investors to trade within the broader stock market trend by gaining access to individual companies from a diversity of sectors. It also comes at the perfect time: with stocks off their highs, there’s more of an opportunity for our investors to do their research and allocate to the right sectors in advance of the next trend change.

What are your thoughts on the prospects of cryptocurrency markets, and does crypto feature in HYCM’s plans?
Crypto was probably the worst performing asset class of 2022, punished by its correlation to risk assets in a higher rate environment. It also suffered a great deal of negative publicity following the collapse of FTX. Recent activity does suggest that sentiment among crypto investors is warming, but it’s uncertain whether this can be sustained in the current market environment.

Recent rallies have been underwhelming in terms of volumes, suggesting that not much new capital is currently entering the space. Despite bitcoin’s recent performance, it’s difficult to imagine a scenario where US equities make new lows, while cryptocurrency prices remain elevated. This is especially the case given how tightly correlated the two asset classes have been. So it appears that the Fed is in the driving seat here too.

The excesses of the previous bull market, which include several prominent failures including the FTX scandal, have also put the asset class under the spotlight of regulators. The current US administration has generally taken a hostile stance towards the entire market, which will act as a ceiling on its potential growth, at least in the short-to-medium term.

HYCM’s strategy regarding crypto has been to offer exposure to a select group of names that we have vetted. The sheer size of the market in terms of individual symbols makes such an approach necessary. As the cryptocurrency market grows and continues to evolve, we will continue adding standout names to our crypto offering that are sufficiently liquid to suit the preferences of our investors.

We also understand that appetites for crypto derivatives are growing, and that CFD providers like HYCM could be uniquely positioned to provide this access in a secure environment.

Finally, how do you view the prospects of the online trading industry as a whole?
We’re in a new world since the pandemic: a more financially literate general public and more demanding demographics. The goal we have always had, of making investing a lifestyle product that’s available to everyone, is closer to being a reality than ever before.

Our aim now is to continue building HYCM as a trusted single point of access for the world’s markets in a safe and regulated way. We are also focusing on innovation, ensuring that however the global macro picture develops, modern investors can have the right technology and products to position themselves appropriately in the market with a reliable provider that is here to support them.

Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71 percent of retail investor accounts lose money when trading CFDs with this provider. Cryptocurrencies and zero-commission stocks are not available for trading under HYCM (Europe) Limited and HYCM Capital Markets (UK) Ltd.

Reforming Peru’s pension industry

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Between 2020 and 2022, nearly $24m was withdrawn early from Peru’s private pension system, resulting in a significant reduction of pension funds for millions of affiliates. Early withdrawals can have a detrimental effect on fund performance, and part of our commitment is to provide transparency regarding the amount of pension that affiliates will receive in the future. Currently, more than two million affiliates have no funds remaining for their retirement. Moreover, affiliates who still maintain a fund but have made partial withdrawals run the risk of not having a minimum pension for their retirement.

These issues are among the reasons Credicorp – the leading financial services holding company in Peru, to which Prima AFP belongs – is calling for reform. We believe the current model needs to be readjusted to adapt to the needs and demands of each individual, and we believe it’s our duty to put forward ways to improve the system and ensure its sustainability in the future. Alongside efforts to boost financial inclusion and address the gender gap, it’s one of several actions we’re taking to help support the private pensions system in Peru.

Proposed reform
Our proposal for reform is based on three main pillars, and our aim is to achieve a fairer, more flexible pension system. We want to reformulate how funds are saved and managed, and encourage more voluntary contributions from informal and formal workers. For informal workers, we propose a matched contribution scheme.

Simply put, for every S/1 ($0.27) contributed by the informal worker, the state would also contribute S/1. For formal workers, we propose deductions of up to four UIT in voluntary contributions, applied to their work income (UIT, or Unidad Impositiva Tributaria, is the reference unit set each year by the Peruvian Ministry of Economy, equivalent to S/4,950 ($1,350) in 2023).

We believe the system should be flexible, allowing public and private entities to be permitted to offer the fund management service, under the same regulatory conditions. We’re also calling for a shared risk pension system, in which the fund manager gets paid when returns are generated. These payments would have a fixed component to guarantee the quality of operations and investments, as well as a variable component to provide an incentive for fund profitability.

Financial inclusion: an ongoing obstacle
Action needs to go beyond just addressing the pension system itself, however. Financial inclusion remains a key obstacle in Peru, and we believe the private sector and government need to work together to enhance understanding of, and participation in, the financial system. Unfortunately, a significant number of Peruvians lack awareness about their financial situation and have limited understanding of financial management.

This lack of knowledge contributes to a low level of interest in financial products and services among the population, with the pension system being one of the areas least understood. As a result, fewer Peruvians are able to benefit from access to financial products and services, hindering their ability to achieve their financial goals. The country has made some improvements compared to last year’s figures, but it still lags behind the regional average in terms of access to financial products and services.

In Credicorp’s 2022 Index of Financial Inclusion, the country ranked sixth among the seven Latin American countries surveyed. According to the Financial Inclusion Index in Peru IIF 2022, seven out of 10 Peruvians do not have a credit product, and 43 percent do not have any financial product for savings. The findings also show that three-quarters of Peruvians face barriers when trying to obtain financial products.

The pandemic further highlighted these issues; as a result of the ensuing economic crisis, 73 percent of Peruvians did not save last year, according to the 2021 Credicorp survey. During the crisis, the government provided financial support to hundreds of thousands of people in the form of subsidies for low-income families, but the low level of participation in the banking system made these efforts challenging.

While the financial sector has implemented initiatives to improve access over the years, one of the main challenges lies in the informal nature of the Peruvian labour market; according to data from the National Institute of Statistics and Informatics, the informal employment rate in Peru stands at 76.1 percent of the employed population. This poses a significant obstacle to financial inclusion, while rising inflation and the current economic crisis have also compounded the issues.

Taking action
At Prima AFP, we believe we have a role to play in helping to improve financial inclusion, and in strengthening the financial knowledge of both clients and non-clients. Providing education on the country’s private pension system is a key aspect of our sustainability pillars, and over the years we’ve collaborated with various platforms to achieve this.

One example is ‘El Depa’ – a web series on financial and pension education that we introduced six years ago. Made up of 27 episodes, the series has garnered more than 80 million views on social networks and covers various topics, from fund types to profitability, in a light-hearted way. We also recently launched a new website, ‘Ahorando a Fondo’, designed to inform users about pension basics, address common doubts, dispel myths around the private pension system and provide access to training courses and free workshops.

Promoting gender equality
Financial inclusion differs considerably between urban and rural areas and different socioeconomic levels and age groups – and there’s also a gender gap. Although there has been improvement over time, men still have higher levels of financial inclusion than women. According to the latest Credicorp Financial Inclusion Index, 21 percent of men in Peru have reached a level of financial inclusion, compared to only 14 percent of women.

It’s not only around financial inclusion that this gender gap exists – it’s seen in pension savings too. A recent study by the Pontificia Universidad Católica del Perú revealed a 37 percent gender gap in pensions. This issue is not unique to Peru; research published in 2021 found that women over the age of 65 in OECD member countries received on average 26 percent less retirement income than men, indicating a global trend.

These disparities reflect the broader gender inequality present in the Peruvian labour market, where women earn nearly a third less than men for performing similar work. Addressing these gender gaps and promoting financial inclusion for women is crucial for achieving greater equality and empowering women economically.

Prima AFP is dedicated to promoting gender equality and has taken significant steps to address the gender gap and combat sexual harassment in the workplace. Among the key initiatives is our Equality Now programme, designed to ensure our recruitment processes are as fair as possible and promote diversity within the organisation.

We have also partnered with the ELSA programme, a digital project developed by GenderLab with the support of the Inter-American Development Bank. This is targeted at preventing and addressing sexual harassment in the workplace. We’re also committed to addressing the gender pay gap, actively working to ensure roles and responsibilities are appropriately valued and compensated, irrespective of gender.

Investing responsibly
Our social responsibility efforts extend to wider issues, too – not least climate change. Since 2016, we have been strengthening our commitment to the Sustainable Development Goals (SDGs) and integrating environmental, social and corporate governance (ESG) criteria into our investment processes.

We implemented a climate change policy designed to measure the impact of climate change on our portfolio. These are aligned with the recommendations provided by the Task Force on Climate-Related Financial Disclosures (TCFD) – a working group established by the Financial Stability Board that gives recommendations on climate-related information that companies should disclose to their stakeholders.

We have been strengthening our commitment to the Sustainable Development Goals

We have also implemented a Responsible Investment Policy, which applies to all assets under management. This involves four key tenets: negative screening (not investing in certain activities in order to avoid incurring unnecessary risks in the portfolio); integration, referring to our analysis of ESG factors in our investment decisions; impact investments; and active engagement. By the end of 2021, 62 percent of our portfolio had undergone ESG analysis, which increased to 97 percent by the end of 2022. Our target is to have 100 percent of our portfolio undergo ESG analysis by the end of 2023.

Additionally, we have been actively working on incorporating climate change into our risk analysis through the implementation of a dedicated policy. Separately from this, we also implemented a Relationship Policy, designed to enhance our relationships with companies in which we invest; and a Voting Guidelines Policy, established in 2019 to encourage active engagement from stakeholders.

A global vision
Since 2016, we have also been part of the Responsible Investment Programme (PIR), which seeks to promote responsible investment practices, contributing to the sustainable development of Peru and the wider region. We also became signatories to the Principles for Responsible Investment (PRI) in January 2019 – an international network of investors backed by the United Nations that aims to understand the impact that ESG issues have on investment, and encourage integration of these issues into the investment decisions of its signatories. As signatories, we are obliged to report on our fund management annually; in 2020, we received the highest rating for our integration process in governance and strategy.

In January 2020, we became members of the Carbon Disclosure Project (CDP), a non-profit organisation that seeks to promote the disclosure of information on the impact of climate change, water management and forest management. And in 2021, we joined the Sustainable Development Goals Advisory Committee (SDG Advisory Committee), which provides advice on issues related to investment aligned with the Sustainable Development Goals.

Through these efforts, we hope to not only create resilience in our portfolios and boost our long-term financial performance, but also do our bit for the planet and build on our efforts to support society at large – setting a positive example for others to follow both in Peru and beyond.

The perfect blend for building brands

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This year I celebrate 25 years at Wilfa, with the last five as its chief executive. It has been a bumpy ride at times but with each new challenge the company has picked itself up and returned stronger than ever. Most recently we have been attacking export markets with gusto, starting Wilfa Germany in 2020, and opening up distributors in multiple territories including the UK, the Netherlands and Spain in recent years.

I joined Wilfa after graduating from the Norwegian School of Economics and the University of Trier. From working as a controller in Hong Kong, learning how the factories operated that made the products Wilfa sold, I returned to Norway, taking on a string of roles including product manager, key account manager and marketing manager.

This breadth of experience has given me a complete understanding of the whole company, which I have used to create business where others have been unable to recognise opportunities. Tuning into the needs of consumers, retailers and our factory partners, I have been able to find new categories, develop products at a quicker pace and give confidence to our retailers that we are the experts to be listened to.

Those skills have come in very handy not just in the good times, but also during difficult periods when a couple of our market-leading brands that we’d built up decided to go it alone. We’ve had a bumpy ride, with some years of strong profits and others with heavy losses, but we’ve come back each time, more resilient in the face of future challenges.

As part of that, we decided to focus on building our own brands, launching E-way electric scooters, a full assortment of kitchen knives and pots and pans under the name of EGO, and a host of other new Wilfa products. Our strategy now is not to have too much risk in foreign brands, only taking them on in categories we can’t do ourselves. But these relationships have given us a good understanding of the market, knowledge we can implement in our own practices, combining the positives of larger companies with the flexibility of smaller ones.

I am a leader who is very much involved across the organisation, especially in recent years, as the team has grown to help us achieve our goals. By sharing both our strategic aims and the challenges facing the business with every staff member we ensure that everyone is clear on their contribution and therefore able to pull together most effectively for the good of the company.

Making better coffee
Wilfa has an extreme focus on customer experience. While most of our competitors are just making another coffee maker, we ask ourselves, ‘How can we help consumers make better coffee?’ Less focused on cost than we are on finding the right solution for customers, we often end up with a more upscale product, but this strategy has paid off: in 2022 we won 32 ‘best-in-test’ awards.

Our focus on the environmental sustainability of our products is another way in which we stand out from our competitors

Wilfa still sources and distributes products made by other firms but are doing so less and less. With Chinese factories going direct to market, such a strategy is becoming unsustainable. For those products we do import, we strive to challenge the market leaders within each category, whether that’s Oral-B on electric toothbrushes or Kenwood on kitchen machines, to bring consumers the best possible product. Wilfa is already the market leader in many categories, from waffle makers – nine years in a row – to coffee grinders, blenders and humidifiers.

Our focus on the environmental sustainability of our products is another way in which we stand out from our competitors. We implemented FSC paper on all our instruction manuals, gift boxes and cartons, improved our products so as to be able to offer five-year guarantees and removed 18 tonnes of polystyrene. We are also doing life-cycle analysis on our products in an attempt to become CO2-neutral by 2025.

There are many challenges currently facing the global economy: freight costs are extremely high, raw materials are getting more expensive and the current situation in Ukraine is putting pressure on energy and petrol prices. Even so, I’m optimistic about the future of our business. In 2021, we had a turnover of €55m and our target for 2025 is to reach €100m. This growth will be driven mainly by new markets, new categories and taking market share by launching more products. We will also move many of our products over from mechanical products to app-based products with a consumer-friendly solution. Even after 25 years at Wilfa, I can’t imagine a better place to be.

Standard Insurance: ‘It’s our life purpose to really be there for you when we’re needed’

Posted on by World Finance

When COVID hit the Philippines, the islands shut down. The country instituted one of the world’s longest and strictest lockdowns, resulting in a GDP contraction of 9.6 percent in 2020. But for Standard Insurance it was – uncomfortably – one of their most profitable years. Patricia Chilip, chairman and CEO of Standard Insurance, explains how the company has been performing since the country reopened, how Standard is channelling that growth back into the local community, and how it is leveraging technology to be there for its customers through difficult times for another 65 years.

In the first half of this interview Patricia explains how Standard takes on the challenge of Filipino NatCat.

Patricia Chilip: I don’t think anyone was ready for COVID. Nobody knew what was going to happen the next year, or the next day. Our first response was really to make sure that the employees were okay, make sure that everyone wasn’t sick, or if they were to get them to the hospitals.

But actually, my brother, who was running the company at that time, had a year before put all the systems on the cloud. Which meant we could issue policies, and deal with claims. So in that sense, we were actually ready.

World Finance: When COVID hit the Philippines, the islands shut down. The country instituted one of the world’s longest and strictest lockdowns – meaning that in 2020, the Philippines’ GDP contracted 9.6 percent. Nobody was going anywhere or doing anything – so for the non-life insurance sector, sales plummeted – but so did claims. For Standard Insurance, it was – uncomfortably – one of their most profitable years. I met with Chairman and CEO Patricia Chilip to find out how the company has been performing since the country re-opened.

Patricia Chilip: From 2022 we’ve been seeing like double digit growth, 15 percent, sometimes 20 percent. You know, there’s like pent-up demand because nobody bought anything during COVID. So now like, people are buying new cars, and people are travelling again because they haven’t travelled in two years. So it’s a surge of growth, and we’re using technology to keep up with it.

What’s exciting for us now is all the AI. We’ve been using that for our claims. We’re using chatbots to be able to answer frequently asked questions, ocular character recognition to be able to read receipts,. As well as doing some things for our value based adjudication of our claims.

Customers also engage with us now through fintech. So, we meet them digitally and we like to be present in all those platforms, whether it’s through fintech payment systems or online banking – we try to be at every touchpoint.

World Finance: When you’re seeing the kinds of success you’ve described, how important is it that you put some of that growth back into the community?

Patricia Chilip: Well it’s very important to us, you know. We are a Filipino company, and our customers are Filipino, and we want to give back to the Philippines.

We have a lot of advocacies. Our group chairman, my father, is a big supporter of the Philippine coastguard. We’ve donated speedboats to be able to patrol the Manila Bay, as well as make sure that the coast is clean.

We support a lot of scholars, young violinists. We make sure that they are educated in the best schools, like Giuliard, or in Vienna.

We’ve also supported nutrition for children and mothers. We’ve supported kindergartens for kids from three to five – that’s my favourite one, because that’s really when the brains of the kids are sponges, so we partner with MoveEd, and they teach as well as feed the kids at the schools.

For me personally because I care about the environment, I love that we planted 12,000 trees for our 60th, and we hope to plant more now that we’re 65. You know, you plant a tree… it’ll benefit the generation after us. So that’s what’s important for me. But everything we do is really for the development of the Philippines.

One of the values of Standard Insurance is really a passion for excellence. So all our advocacies make sure that the community has what they need to be able to have that passion, so you have to have the right nutrition, the right education, the right avenues, if you want to grow and excel. So that is really our passion, to bring Philippine excellence to the world.

World Finance: Finally, 2023 marks Standard Insurance’s 65th anniversary – how are you working to ensure that the company enjoys another successful 65 years?

Patricia Chilip: I’m happy to be here. Helming a company that has been of service to the Filipino for 65 years. And I’m just grateful for the officers and for the employees who have taken us this far. Really they are the heart and soul of this company.

Our people really have a compassion to help, you know. It’s tireless service. every day they wake up, Respond to claims, respond to clients in need. They make sure our systems are all working. And now it’s 24 hours, I mean service is 24 hours. So they really are there for you, they’ll pick up your call when you’re like stuck in Madrid, or you’ve freaking had a heart attack, we will pick up the phone and take care of you. Really somebody got hit by a bus in Italy, and I swear this team didn’t sleep for like two weeks, to make sure that she came back to Manila okay. So that’s really how we do it.

It’s our life purpose to really be there for you when we’re needed. we’re here in difficult times, whether it’s typhoons, catastrophes, or whether you had a medical emergency abroad, I’m proud to be working with employees who will pick up the phone at any time at night to help a customer in need. And if we keep doing this for 65 years then, then our company will evolve and change and still be a relevant one that responds to all the customers needs.

So that is really what we’re here for.

Peace of mind for all mankind: How Standard Insurance takes on the challenge of Filipino NatCat

Posted on by World Finance

‘The Philippines gets about 18-24 typhoons a year. We sit at the Pacific ring of fire, so we also have earthquakes. We have flooding. And with climate change, they’re more and more frequent,’ says Patricia Chilip, chairman and CEO of Standard Insurance, one of the Philippines’ leading non-life insurance companies. She explains how the business manages all that built-in risk, balancing customer needs with shareholder expectations, and how the company is working to become one of the world’s top 10 general insurers.

In the second half of this interview she explains how Standard Insurance is channelling its growth back into the community, to help bring Philippine excellence to the world.

Patricia Chilip: The Philippines gets about 18-24 typhoons a year. We sit at the Pacific ring of fire, so we also have earthquakes. We have flooding. And with climate change, they’re more and more frequent.

On the ground that feels like a lot of, sort of, distress, when the event happens. You know, life can come to a standstill.

It happens every year, so, we’re kind of used to it. But you just want to be able to sleep at night knowing that someone’s got your back.

It’s really our life purpose to be there for them, when they need us the most.

World Finance: Patricia Chilip is Chairman and CEO of Standard Insurance – a leading general insurance company in the Philippines, with a mission to bring peace of mind to all mankind. But what does that mean in practice?

Patricia Chilip: Peace of mind for all mankind is really our hope for everybody, what we wish for everyone: happiness, a sense of contentment, a sense of security. We really want to make sure that our clients can sleep well at night knowing that their assets are covered properly, that they have what they need. That’s what we hope for everyone.

Our job is really to be on the ground, to answer those calls when they need us. We have branches in 65 provinces nationwide, so we have somebody on the ground to help you tow your car, or help you assess your damages, or just pick up the phone and answer all your questions. Because we want them to sleep well at night knowing that they’re covered with us.

One of the challenges we face is that when an event does hit, they realise they haven’t updated their values in 10 years. Even three years ago – you know, after COVID, construction costs have gone up 30 percent, 40 percent.

So it’s so important to update your values, because if you haven’t updated your values then it’s going to be a struggle when you make a claim. Because even if you get totally paid out, you’re like: oh, it’s not enough to reconstruct my house.

That’s our campaign for 2023, to make sure that our clients have updated their values that their property’s insured for, so that when a big event hits, they’re really covered properly.

World Finance: That must be incredibly challenging as a business – taking on and managing all that risk.

Patricia Chilip: Well you know we have a really good team of underwriters. We also have all the technology behind us – we have a catastrophe risk monitoring system, a CRMS, which, you know, you can plot a GPS point and it gives you whether a place is high risk for a typhoon or flood or earthquake, and it helps us advise our clients as well, in terms of how to rebuild or mitigate their risk.

Of course we have excellent reinsurers. We have a couple of decades of relationship with them, and they know our underwriting, and they always respond so quickly. We have some of the best ones in the world. So, that kind of helps us respond to Philippine cat.

World Finance: So how do you find that balance between your customers’ needs and your shareholders’ expectations? How do you grow a successful, sustainable business?

Patricia Chilip: Well, we grow organically with our partners. We’re happy to be partners with the biggest banks in the Philippines, and the biggest automotive companies in the Philippines. And because we share a customer base, if they grow we grow.

So we’re grateful that people have approached us for partnerships, like travel regionally, pet health globally, and now we have a new partnership for automotive collision in the US. So we’re very excited about all these like, global initiatives.

You know, we find that if we put one foot in front of the other then things will take care of themselves. We do our best every day, and we find that if we do a small job well, bigger jobs come.

People in the Philippines are big on social media, so if you do a good job everyone knows. And if you do a bad job everyone knows as well. So it keeps us on our toes. And it aligns our customer expectations with our shareholder expectations. If the customer is happy, the shareholders are happy.

World Finance: Your vision for 2035 is to become one of the world’s top 10 finest general insurers. How do you earn that position and acclaim?

Patricia Chilip: You know, the customer experience has to be great. Our customers are millennials and Gen Z. And they want everything faster, everything digital. Everything seamless. So we want to be a 21st century insurer, on the cutting edge of technology, able to respond to customers’ needs. Because they need us constantly.

We want to be part of their lives. We want to be someone who makes life less stressful. And if – God forbid – a typhoon happens, we want to be there for them as well.

Our vision for the Philippines is to see a country that is prosperous, a country that is abundant, a country that is resilient from all of these nat cats. And everything we do is working towards that. Being there, to help our countrymen build and rebuild.

By taking care of them, and taking of their needs, we will find our way to becoming one of the world’s finest insurers.

Financial inclusion in a digital world

Posted on by itsupport

The fintech revolution is promoting financial inclusion and democratising access to global markets by providing users with cutting-edge trading tools. According to the World Bank, digital payments saw significant growth in 2020, particularly in emerging markets and developing economies, where the volume of transactions is growing at an impressive rate. Sub-Saharan Africa emerged as a leader in mobile money transactions, fuelled by non-bank entities like fintechs, brokers and more.

As users transition from basic phones to smartphones, app-based financial companies are replacing older interfaces, offering enhanced functionality, speed and convenience. This rapid expansion of digital finance is making global financial markets more accessible to individuals from diverse backgrounds, fostering financial inclusion and democratising opportunities for wealth creation.

However, this financial inclusion also brings with it certain risks and challenges, both for the financial system as a whole and for individual users. While easier and faster access as well as lower costs all benefit users, it is essential to address potential issues such as security, privacy and financial literacy. In this article, we will explore the advantages and challenges associated with the growth of financial inclusion driven by digital finance and examine ways of harnessing its potential while mitigating the risks involved.

Financial inclusion for a global economy
Traditionally, participating in global financial markets has been the exclusive privilege of institutional investors and high-net-worth individuals. However, advancements in technology have made it possible for the average person to access these markets, increasing financial inclusion and levelling the playing field.

The rise of digital currencies and blockchain technology has opened new doors for financial inclusion

In this new environment, the democratisation of financial services and education is crucial in fostering financial literacy and responsible investment practices. An OECD survey from 2020 reveals significant variations in financial competencies across economies and groups. Low levels of financial literacy and high financial stress highlight the importance of integrating educational elements into fintech services.

By developing comprehensive educational resources such as webinars, articles and video tutorials, fintech companies can help users build a strong foundation of financial knowledge, empowering them to make informed decisions and take control of their financial future. By making these resources accessible to a broader audience, fintech firms are helping to create a more financially inclusive and equitable global economy, allowing individuals from all backgrounds to seize the opportunities presented by global markets.

At Olymp Trade, we’re creating a platform that caters to both experienced traders and newcomers. Our research on users in South-East Asia and Latin America showed that a majority of them want to achieve additional income through trading. Even though most of these people estimate their income as average, trading expenses account for a significant portion of their budget.

A failure in trading can have dire consequences for such households, so they must be aware of the risks associated with being active in the financial markets. That’s why we believe it’s essential to maintain a robust educational resource centre while promoting risk management and mindful trading.

Even though there’s already a wealth of information online about common trading mistakes and position sizing, traders still suffer from reckless decision-making and overconfidence. That’s why trading platforms should engage users in financial education. We are constantly working on new innovations, such as trade analysers and in-app tips, so our users can more easily gain the knowledge required for trading safely. As a result, we ensure that as barriers to entering the financial market break down, people get guidance that helps them explore and use this new world to their advantage.

Harnessing the power of AI
The evolution of trading analysis has come a long way since the days when individuals relied on printed or hand-drawn charts to interpret market trends. As technology has advanced over the years, computer-based indicators have revolutionised the way traders analyse data, by streamlining the process and providing more accurate insights. Now, we have entered the era of artificial intelligence (AI), which is transforming the trading landscape once again. Harnessing the power of AI has the potential to optimise trading strategies, enhance decision-making and improve the overall efficiency of financial markets.

In today’s fast-paced financial landscape, access to real-time data and analysis is crucial for making informed trading decisions. Innovative platforms are already taking advantage of AI and machine learning to provide users with advanced analytical tools and insights that can help them stay ahead of market trends. For instance, AI-driven sentiment analysis evaluates news articles, social media posts and other data sources to gauge market sentiment and predict price movements.

Beyond delivering real-time market insights, AI is also revolutionising the way investors manage their portfolios. By leveraging AI-driven algorithms, fintech companies are offering users access to robo-advisory services and automated trading solutions.

These tools can evaluate large datasets, identify patterns, and develop tailored investment strategies based on an individual’s financial goals and risk tolerance. This level of personalisation and automation not only saves time and effort for users but also helps minimise the impact of emotional biases on trading decisions. As a result, investors can enjoy a more efficient and objective approach to navigating the complex and ever-changing financial markets.

By incorporating AI-powered features, companies like Olymp Trade ensure that users receive timely and relevant market analyses that can enhance the performance of their trading strategies. Additionally, these platforms offer customisable risk management tools, enabling traders to minimise potential losses while maximising their potential gains.

As AI technology advances, the boundaries of autonomy may widen, allowing for more sophisticated trading strategies. Along with these successes, however, come potential issues. For example, AI trading machines are trained on past data and may lack a broader perspective.

In addition, the algorithms may evolve so much that human developers can only partially understand them. Finally, regulatory challenges will undoubtedly arise as lawmakers step into uncharted territory. As a result, it is essential to recognise and respect the limitations of AI, ensuring that human oversight and understanding remain integral parts of the trading process.

Embracing digital currencies
Digital currencies and blockchain technology are benefiting individuals from all socioeconomic backgrounds, including those with limited financial resources, by providing access to essential financial services and opportunities. Faster, more affordable and accessible remittance services enabled by digital currencies are particularly important for low-income individuals relying on remittances from abroad.

Blockchain technology allows for the creation of decentralised finance platforms that remove intermediaries like banks and lower costs and barriers to entry. This democratisation of access enables people with limited resources to participate in saving, lending and borrowing programmes, which were previously restricted to those with traditional banking access. Digital currencies also offer financial privacy and autonomy, empowering individuals to manage their finances without third-party involvement, and providing an alternative store of value and means of exchange for those in countries with unstable financial systems or high inflation rates.

The rise of digital currencies and blockchain technology has opened new doors for financial inclusion, allowing people from all walks of life to participate in the global economy. Fintech companies are increasingly embracing these innovations, offering traders and investors access to a wide range of digital assets and decentralised financial services with lower financial barriers for entry.

We have entered the era of AI, which is transforming the trading landscape

They are staying ahead of the curve by continuously expanding their offerings to include popular digital currencies and incorporating blockchain technology into their infrastructure. As a result, users can diversify their portfolios and tap into the growing potential of this emerging market. With Olymp Trade, for example, it’s possible to make deposits and withdrawals in cryptocurrency as well as trade some of the most popular crypto assets.

Overall, it is essential to acknowledge the challenges that blockchain technology faces, such as scalability, energy consumption, security, complexity and interoperability. Addressing these problems is vital to ensuring that blockchain can fulfil its potential as a game-changing technology. By understanding and working towards resolving these issues, fintech companies can contribute to creating a more sustainable and efficient financial landscape for all users.

The future of financial inclusion
As fintech continues to revolutionise the financial industry, more and more people will have the opportunity to access and participate in global financial markets. Companies like Olymp Trade are setting the stage for a more inclusive and democratised financial ecosystem, paving the way for a brighter and more financially empowered future for individuals across the globe.

By embracing the latest innovations and focusing on user-centric services, fintech companies are transforming the world of finance, breaking down barriers, and giving more people the tools they need to create wealth and achieve financial freedom. It is important to note that there is still a significant way to go, as a considerable portion of the global population — 35.6 percent as of January 2023 — still lacks access to the Internet.

Addressing this digital divide is essential to ensuring that the benefits of fintech innovations can reach all individuals, regardless of their location or socioeconomic status. By working towards bridging this gap, fintech companies can play a crucial role in fostering financial inclusion and democratising opportunities for wealth creation worldwide.

The impact of a sustainable approach to investment

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At KBC Asset Management, sustainability is so important that it is not part of a separate strategy, but is instead integrated into our overall corporate philosophy. We have embedded our beliefs about sustainability into four distinct pillars. Our priorities are to put our clients at the heart of everything we do, to offer our clients a unique bank-insurance experience, to focus on our group’s long-term development and aim in that way to achieve sustainable and profitable growth. We take our responsibility towards society and local economies very seriously.

At the core of our day-to-day motivation lies our motto: ‘Everyone invested all the time.’ We are passionate about our mission to make investing easy, personal, valuable and reliable. We always ensure that our clients’ interests are our main focus and strive to offer them a high-quality service and relevant solutions at all times. Close collaboration between the asset manager and the bank allows us to deliver a better and faster service to our clients.

Our unique strategy, powered by our business culture and the contributions made by our people, is instrumental in earning, keeping and growing trust day by day, and therefore helps us to become the reference in our core markets.

How we make a difference
We want to go beyond the typical corporate culture of sustainability and really make a difference to society. By going the extra mile, we can create added value and respond to actual societal needs. As part of our sustainability strategy, we have pledged to limit our negative impact on society by implementing strict policies and sustainability guidelines, by reducing our own environmental footprint and by focusing on our approach towards socially responsible investments.

We prioritise increasing our positive impact on society and actively look to make a difference to local communities through our everyday activities. We are conscious of the impact of our operations on society, and respond to societal needs and expectations in a balanced, relevant and transparent manner. In doing so, we acknowledge the special approach in each of the local economies of the core markets in which we operate.

Our people represent our ‘human capital’ and are one of the main drivers to creating sustainable value as a bank-insurer. We encourage all our employees to behave in a way that is responsive, respectful and result-driven.

We consider integrity, honesty and responsible behaviour among our employees as one of the most vital tenets of our business, to the extent that the mindset of all KBC staff should go beyond regulation and compliance.

Our sustainable client offering
We offer more than 200 sustainable and responsible investment funds, which gives our clients the opportunity to invest in companies and countries that recognise their social and environmental responsibility. This allows us to jointly contribute to a more sustainable society and to help limit the adverse impact that businesses have on society. Growing awareness of social, governance and environmental issues has led to interest in responsible investing products among private and institutional investors.

Responsible investing is a way of allowing clients to combine their financial goals with their concerns for the environment, society and corporate governance. KBC has been a pioneer in this area since 1992, the year it launched the first responsible investing fund in Belgium. Since then, we have regularly brought new solutions to the market and our methodology has become increasingly stringent.

In recent years, clients have increasingly wanted to make a positive contribution by investing in a socially responsible way. Currently, KBC Asset Management manages €32bn, or nearly 30 percent of assets, in responsible investing funds. In Belgium, around 70 percent of gross sales in funds go to responsible investing funds. In fact, they are the first option offered to clients. In our other core countries, namely the Czech Republic, Slovakia, Hungary and Bulgaria, responsible investing plays an increasingly important role. We are pioneers in this area and aim to build upon our track record of responsible investing.

In the future
KBC Asset Management moves together with the markets and the preferences of our clients to keep its services up to date. We are constantly striving for innovation and exploring various routes that can help us and our clients. We want to be the reference point and to stay one step ahead of the competition.

Our innovative and personalised approach not only allows us to acquire new investors, allowing people from all walks of life to benefit from capital markets, but also ensures all our clients feel welcome and well looked after as they navigate the markets with us.

The past, present and future of trading

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Gone are the days when trading was exclusive to the richest of the rich, the likes of JP Morgan, George Soros and Warren Buffet. The internet has been the key factor in opening up the world of brokerage to a broader community. Before the dawn of the digital age, trades were made via telephone. An individual would wait for the newspaper to arrive to check the stock prices and then make a phone call. By then, the prices would have shifted, and there was no accurate way to tell whether your positions were making a profit.

Today, powerful online trading platforms have transformed this process almost beyond recognition. Now, anyone can open or close a trade anytime, anywhere, as long as they are connected to the internet. Traders can also closely monitor the live prices of instruments and can thus react in a timely manner to sudden price changes. Stock trading as we know it may have begun with the historic Buttonwood Agreement, created by New York City’s leading stockbrokers to set out the rules of trade in 1792, but we’ve come a very long way since then. With open access platforms such as ThinkTrader, trading is now, finally, available to all.

Global reach, local touch
Established in 2010 by brothers Nauman and Faizan Anees, ThinkMarkets is committed to revolutionising the trading world with cutting-edge technology, world-class service and industry-leading trading conditions. Our aim is to become the largest multi-asset trading and investing platform of choice across the globe. “Our focus has been to make trading accessible to anyone around the world,” says Nauman Anees, who co-founded the company with his brother after becoming intrigued by combining his technology background into the financial markets.

“The mission is to provide beginning-to-end trading solutions that offer a superior trading experience to all.” In our dedication to make trading more accessible, we have expanded our trading services to over 150 countries.

With headquarters in the US and Australia, we have set up regional offices and local hubs in Asia, the Middle East, Europe, and Japan to create a local presence and tailor our services to meet the needs of our clients. Traders, for example, can now fund their accounts using convenient payment solutions exclusive to their location and receive a tailored experience.

ThinkMarkets is currently regulated by nine leading global regulatory bodies including the Financial Conduct Authority (FCA) in the UK, Cyprus Securities and Exchange Commission (CySEC) in the Eurozone and the Australian Securities and Investments Commission (ASIC) in Australia.

In the last 12 months, we have also expanded our services geographically into Japan and New Zealand with authorisation from the Japanese Financial Services Agency (FSA) and the Financial Markets Authority (FMA) to offer CFD trading services in Japan and New Zealand, respectively.

Cutting-edge technology
In the past, trading was a pretty straightforward affair, the interaction between broker and client limited to an order to buy or sell certain instruments and an accompanying confirmation of whether the trade made a profit or a loss. In more recent times, however, brokers have turned trading into an interactive and immersive journey for their clients.

With trading platforms such as our proprietary ThinkTrader, an individual can fit the world of trading into the palm of their hand. They can browse market news, monitor live prices, analyse charts, execute trades, subscribe to Trading Signals and even back-test trading strategies in one powerful trading platform using our Traders Gym feature. Equipped with multiple innovative features, ThinkTrader is transforming trading.

Brokers have turned trading into an interactive and immersive journey for their clients

Whether you’re a beginner or experienced in this world, ThinkTrader can enhance your trading experience, letting you inside the market in a way that hasn’t been possible until now. Our proprietary platform enables manual traders all over the world to access over 4,000 financial instruments including FX, indices, commodities, stocks and more.

Individuals who are always on the go can trade using the mobile app. Downloaded over 550,000 times and awarded over 15,000 five-star reviews, it lets you monitor four charts in real time on one screen. Those who prefer to monitor even more charts might prefer the web or desktop versions of the platform. Either way, all platforms share a single login and consistent interface, making ThinkTrader one of the most convenient ways out there to manage your trading.

ThinkTrader has a wide array of technical analysis tools found inside our mobile platform that has our in house built charting library and platform that is designed to help traders build a data-driven trading strategy.

With 20 chart types, 120 technical indicators and 50 drawing tools to utilise, traders can customise their charts depending on their trading strategy including creating alerts. Traders’ Gym is ThinkTrader’s latest upgrade. This market simulator can be used for back-testing trading strategies using historical data, allowing traders to determine the accuracy of their tactics in a past timeframe of their choosing.

Available to use even during periods when markets such as forex, stocks and indices are closed, such as on the weekends, it’s a great way to hone your instincts, and also to experiment in a fun and totally risk-free way. Another way we look to minimise risk at ThinkMarkets is with TrendRisk, our automated scanning tool, exclusive to the ThinkTrader app, that continuously scans the markets to identify potential trades based on reward/risk ratio.

Knowledge, of course, is key when it comes to trading. That’s why, in addition to the learning opportunities available via Traders’ Gym, we provide a steady stream of news, insights and market updates through our website and platforms that help our traders to make well-informed trading decisions.

For traditional traders who prefer to use a more widely distributed platform designed for automated trading, ThinkMarkets offers access to MT4 and MT5. These highly customisable platforms pair well with ThinkMarkets’ excellent trading conditions of razor-thin spreads and lightning-fast execution, and is accessed via the ThinkPortal. Those wishing to try it for size can open a demo account for free, letting you test drive all the features with €25,000 of virtual funds at no risk.

It should come as no surprise that our relentless focus on providing a high-quality trading experience has been recognised at the World Finance Forex Awards. In 2022 ThinkMarkets was named Best Trading Platform, Best FX Mobile Trading App and Best Gold CFD Provider. These accolades are just the latest in a long line of international awards wins and nominations for both our platforms and outstanding customer service.

Looking forward
But while we have come a long way in 13 short years, the journey is really only just beginning. With co-founders and brothers Nauman and Faizan Anees steering the ship, the future is bright for ThinkMarkets. As traders themselves, the founders are aware that the world of trading is constantly changing and to remain competitive having state of the art technology coupled with a highly automated operation is they key to success. We will look to build on our proprietary ThinkTrader platform and enhance it with unique features designed to cater to traders of all types.

ThinkMarkets will soon be launching ThinkCopy, its own copy trading app. With ThinkCopy, new traders who are inexperienced in creating strategies can set auto-copy orders and duplicate the positions of more experienced traders. Available on both Google Play and Apple’s App Store, the platform is expected to resonate with individuals interested in trading but intimidated by the amount of knowledge required to be successful.

The team is also working on replacing ThinkInvest with its new PAMM offering, a programme which will allow investors to choose money managers to trade for them.

One of the biggest barriers to new traders is the inaccessibility of trading education. There are myriad articles and guides available online of course, but these types of educational materials are often not as beginner-friendly as they could be and are filled with technical jargon that even experienced traders can find difficult to understand.

In response to this challenge, ThinkMarkets has gathered a team of experienced traders and educators to share their knowledge with the rest of the world. With the Trading Academy, we aim to empower a new generation of traders to easily navigate the world of trading.

Anyone will be able to browse through our extensive library of trading guides in different formats. Our regional teams will also offer regular free webinars on trading and investing. Face-to-face seminars where attendees can freely interact with our market analysts for trading tips and know-how will be taking place more regularly too.

There is no telling what form trading will take years from now but one thing is for sure: ThinkMarkets will be part of the team pioneering its future.

Mexico’s momentum for ESG investments

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Investments with environmental, social and governance (ESG) criteria in Mexico are growing fast and Afore XXI Banorte has been at the forefront of this movement. Issuers have attracted resources to promote projects that have sustainable impacts on the development of the country, and investors, especially those seeking long-term returns to savers, like pension funds, find it very attractive to promote projects and companies with ESG practices and objectives.

For an investor, ESG projects help in risk management, but importantly, in periods of accelerated development for such a market as we currently have here in Mexico, it can result in higher returns than other non-ESG alternatives. Additionally, companies and projects following ESG practices in general may perform better operationally, generating higher returns. And when large investors, like pension funds, adopt a cleaner and more sustainable investment strategy, former non-ESG issuers may also start adopting such criteria, which would boost their returns for investors.

Thus, portfolios incorporating ESG frequently perform better in the long term. For example, the firm Morningstar has found that over a period of 10 years, 80 percent of funds with sustainable investments outperformed traditional funds. They also found that 77 percent of the ESG funds that existed 10 years ago have survived, compared with 46 percent of traditional ones.

The issuer side
The Mexican government has greatly raised its issues of green bonds since 2020: its 131.6bn pesos ($7.5bn) of 2022 are equivalent to 16 times the amount issued in 2015. Since 2020 the public sector – federal government, state-owned enterprises and development banks – has increased its issuance of green bonds by 419 percent (see Fig 1).

Within this trend one can highlight the second issuance of BONDES G sustainable bonds by the Ministry of Finance and Public Credit (SHCP), the first issue in Latin America of a green bond by FIRA/Banxico, and Banobras’ placement of two sustainable bonds with a gender perspective, the first by a development bank devoted to infrastructure financing. The private sector has experienced a similar growth in recent years; the amount issued in 2022 represents 37 times that of 2017. In general, since the creation of labelled bonds, in 2016, they went from a share of two percent to 44 percent of the total debt issued in the market according to the Integrated 2022 annual report of the Mexican Stock Exchange (see Fig 2).

Regulation on ESG investments
This year the SHCP presented the Sustainable Taxonomy of Mexico, a key financial public policy tool that aims to encourage investment in economic activities that reduce social gaps and protect the environment in the country. The Sustainable Taxonomy of Mexico is a unique initiative worldwide, and considers social objectives in its design, defining gender equality as a priority objective.

The Sustainable Taxonomy of Mexico seeks to create a reliable classification system, legitimate, unified, and based on science that stands for the outline of economic activities that can be considered sustainable. The result will be an increasing investment in projects and economic activities that promote compliance with the country’s environmental and social objectives, reducing the risk of greenwashing. Its implementation is voluntary.

Previously, the pension fund regulator in Mexico, CONSAR, had also carried out in recent years a series of actions to incorporate into the legal framework obligations regarding ESG factors and the ways in which these have an impact on the risks and opportunities of the investment strategies developed by pension funds. Since 2022 it is mandatory for social security pension funds to take into consideration ESG criteria in the process of investing the retirement savings of their clients.

The investor side
Regarding some of the first impacts of the regulation, according to CONSAR reports, in 2022 the AFOREs (Retirement Fund Administrators) invested 110.4bn pesos ($6.3bn) in ESG bonds, while in 2021 they had invested only 1.1bn pesos ($62m). Afore XXI Banorte, the largest pension administrator in Mexico and in Latin America, has been a pioneer in the implementation of ESG criteria, even before the new regulations, and may claim to be the leader of the industry on this aspect of investments. To start with, Afore XXI Banorte’s objective is to promote the implementation of ESG practices in the operating processes of the promoted firms and projects in its portfolio.

Thanks to this, 20 large issuers from diverse sectors have signed engagement letters regarding the incorporation of ESG factors into their businesses in order for XXI Banorte to provide long-term funding to them.

Furthermore, due to the ESG criteria implementation different social impact strategies have been promoted – educational projects, donations, workshops, development programmes, and others – that have benefited millions of people.

And it has made a difference in the Mexican economy. For instance, through investment in sustainable electricity production Afore XXI Banorte helped to generate more than 1,112mw per year, equivalent to 3.4 percent of the installed energy capacity nationwide. The company also supported the construction of 2,398km of highways and paved streets, equivalent to 1.4 percent of the National Road Network. It funded producers of 47,740 tons of harvested foods for human consumption; contributed to the generation of 1.62 million jobs (direct and indirect), that is, nearly three percent of the Mexican economically active population.

In addition, it has exhaustively promoted gender equality and equal opportunities both in Afore XXI Banorte and in the companies financed. Through its investments in Structured Equity Securities (CKDs), it has allowed the granting of credits to 2,123,695 women to start their own businesses, among other examples of the impacts of Afore XXI Banorte’s ESG investment strategy.

Afore XXI Banorte’s objective is to promote the implementation of ESG practices

Among its goals for 2030, Afore XXI Banorte considers that 50 percent of the projects in the real estate sector in which it invests will have to incorporate some kind of sustainable building certification. With regards to its carbon footprint, the Afore will increase its investments in issuers that disclose information of carbon emission practices to 80 percent, including reduction goals and strategies to reduce carbon emissions. In terms of water, the company will raise to 80 percent the selected issuers that disclose practices of water consumption and involvement in the supply chain.

And regarding the inclusion of women, 30 percent of the portfolio on corporate instruments must be on companies that have at least 30 percent of women participating in their boards, by 2030.

As of December 2022, Afore XXI Banorte’s investments in sustainable financial instruments according to ESG criteria were 22.7bn pesos ($1.3bn) in thematic bonds, 8.5bn pesos ($485m) in Sustainable Exchanged Traded Funds (ETFs) and 22.8bn pesos ($1.3bn) in alternative instruments.

All of this has helped Afore XXI Banorte position itself as the leading Afore in the market for providing competitive, reliable, and timely services, as well as for improving the performance of its retirement fund portfolios, under a responsible investment strategy. We reaffirm our position in developing sustainability by being active investors in instruments that generate positive impacts on society and the environment.

The gateway to an open financial market

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Bay areas have become important growth points to regional economies around the world, and have played a crucial part in technology innovation, talent aggregation and resource allocation. In recent years, China has attached great importance to the Guangdong-Hong Kong-Macao Greater Bay Area development strategy, which is part of the Belt and Road Initiative (BRI) and a national-level economic strategy following the Beijing-Tianjin-Hebei coordinated development strategy and the Yangtze River Economic Belt strategy. The Greater Bay Area aims to be a hub of talents, commodity and capital, to promote regional prosperity, and contribute to the transformation and upgrade of the Chinese economy. It injects new impetus into economic growth, and shows China’s determination to expand its opening-up.

Trans-regional cooperation
The Greater Bay Area has a vast economic hinterland consisting of Hong Kong, Macao and nine cities of the Guangdong Province, including Guangzhou, Shenzhen and Zhuhai. It has an open economic structure and advanced international exchange networks. In the year of 2022, its permanent residents numbered more than 80 million people, and its economic output reached nearly $2trn. The Greater Bay Area aims to establish a world-class city cluster and technology innovation centre, and set an unparalleled example of China’s high-quality development.

The financial industry is highlighted as a core sector of the Greater Bay Area, and enjoys enormous opportunities in trans-regional cooperation. Through providing services across the region, financial institutions can better meet the demand of traditional manufacturing plants in Guangdong with resources from open capital markets in Hong Kong and Macao, and facilitate the industrial application of scientific research findings at a wider range and higher efficiency by joining different parties together. The trans-regional financial cooperation will serve to establish a more competitive modern industrial system in the Greater Bay Area. It enriches the implementation of China’s ‘One Country, Two Systems’ initiative, and will bring about the opening-up of China at a higher level.

As a region consists of three separate customs territories following ‘two systems,’ the Greater Bay Area also encounters many challenges in financial cooperation. Although the three neighbouring parts within the region, Guangdong, Hong Kong and Macao, share a similar culture and have worked together in various fields, they still need to resolve the divergence on financial supervision and legislation, the restriction of cross-region capital flow, and their gaps in talents, funds and preferential policies. To promote financial cooperation across the region, all parties need to join hands together to create a highly open, unified and competitive market, and improve on related economic mechanisms and institutions.

Integrating industry
To improve financial cooperation of the region, institutions need to focus on how to better serve and benefit from the trans-regional flows of capital, information and commodity, and achieve a higher level of integration. Looking into the future, the financial cooperation of the Greater Bay Area requires greater action, as I shall now explore.

All parties need to join hands together to create a highly open, unified and competitive market

We need to strengthen the top-level design of economic institutions, and reconcile both the coordination and autonomy of market entities. Development of both emerging industries and traditional sectors is needed, and the participation of both large enterprises and SMEs, as well as integration of the competitive industries of each city to create more opportunities for financial business. For example, combining Hong Kong’s booming financial and trading business with Guangzhou’s time-honoured commerce and cultural industry, together with leading technology enterprises in Shenzhen, high-end manufacturing plants in Foshan, Dongguan and Zhongshan, and the tourism industry in Zhuhai and Macao.

We need to improve economic mechanisms to achieve coordinated governance of the market by Guangdong, Hong Kong and Macao official institutions, take full advantage of Hengqin, Qianhai and Nansha strategic platforms to promote the deregulation of cross-region capital flow including foreign exchange, and facilitate the unrestricted movement of different productive factors within the region. Establishing a coordinated supervision mechanism is important, as well as attracting different investors and improving financial infrastructure to help Hong Kong and Macao investors to participate in projects in Mainland China, and promote a more balanced development of cities along the Pearl River.

Finally, we need to foster an industrial cluster led by the high-end manufacturing sector and innovative technology enterprises, and encourage the financial industry to better support the development of real economy.

A financial gateway
Through regional co-operation, Macao will be able to create fresh opportunities for its economy, and continue to play a crucial part in both the regional and national development process. As an important platform of the group’s international business, ICBC (Macau) has seized the opportunity to play a leading role in the financial cooperation and innovation of the Greater Bay Area.

Looking into the future, Macao, a gateway between China and other BRI countries, is expected to be a commerce platform to deepen China’s cooperation with other BRI participants and Portuguese-speaking countries. ICBC (Macau) promotes its collaboration with other institutions of the group, and continues to support international cooperation through its professional services.

The financial industry in Macao is deepening its participation in the Greater Bay Area market, and especially in the Guangdong-Macao in-depth Cooperation Zone, which is designed as a pioneering area of trans-regional financial cooperation. Through establishing innovative mechanisms in capital flow and foreign bonds, and sharing similar tax policies with Macao, the Cooperation Zone aims to create a more open financial market in line with international regulations. In this way, financial institutions in Hengqin and Macao are presented with opportunities to develop further cooperation, and make attempts at cross-border capital movement, investment and financing, and a higher level of financial opening-up. ICBC (Macau) attaches importance to its development in the Greater Bay Area, and strives to develop cooperation with financial institutions in the Hengqin region.

A leading bank in Macao
As the largest locally registered financial institution with a full bank license, ICBC (Macau) plays a leading role in trans-regional financial cooperation, and optimises its cross-border financial services in the Greater Bay Area and key regions of Mainland China. It makes efforts to improve its cross-border linkage mechanism with domestic institutions of the ICBC Group to jointly provide efficient financial services, including trade financing, project financing and syndicated loans, and leverage its advantage as a platform spanning Macao and Mainland China.

In addition, serving as the flagship of ICBC Group’s overseas business, ICBC (Macau) continues to work with domestic institutions of the group to provide joint services, expand its base of key customers, and play its part in supporting the implementation of China’s Go Global strategy and a high-quality development of the Belt and Road Initiative.

In terms of business development within the Greater Bay Area, ICBC (Macau) has fully implemented the group’s regional strategy to provide local enterprises with comprehensive financial services including deposit, loans, remittance, equity investment and bond underwriting, and firmly support their participation in global business. Moreover, ICBC (Macau) also strives to provide innovative and high-quality financial services for residents of the region, and make its contribution to trans-regional integration and development of the Greater Bay Area.

Bringing the Fourth Industrial Revolution to the energy sector

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Via an increasingly valuable innovation culture, SOCAR Türkiye has a diverse support R&D programme that draws in start-ups, entrepreneurs and academics. This investment stretches back to 2008 when the State Oil Company of the Republic of Azerbaijan (SOCAR) jump-started substantial Turkish investment with a 51 percent stake in Petkim, now Turkey’s biggest petrochemical operator by some margin. Since then SOCAR Türkiye’s progress underlies the critical – and growing – economic importance between Turkey and Azerbaijan, helping cut Turkey’s import dependency decisively as well as reducing its current account deficit.

The move has also transformed the fortunes of Petkim, operating inside the strategically vital refinery and petrochemical business unit in Aliağa, underwritten by $2bn worth of investment plus an extra $1.6bn for capacity increases and operational upgrades. This investment wave now meets 12 percent of Turkey’s petrochemical raw material needs.

Even before the 2008 SOCAR takeover, Petkim – whose supply chain includes strong links to the automotive industry, textiles, cosmetics and detergents – had undergone heavy restructuring. The new investment is also deepening a two-way country relationship, strengthening the Azerbaijan economy as well as supporting Turkey’s wider ambitions to be a global gas trading hub.

SOCAR Türkiye collaborates with start-ups, entrepreneurs and digital tech engineers

Pumping out an annual crude oil capacity of 11 million tons the STAR Refinery, which became fully operational in 2019, supplies 25 percent of the country’s demand for refined petroleum products.

This facility is underwritten by $6.7bn of investment. Constructed in conjunction with Petkim, STAR represents the sole example of petrochemical-refinery integration in Turkey. Elsewhere, SOCAR Petrol Ticaret handles wholesale and retail fuel with crude oil and marine fuel sales coming under the SOCAR and Hazar brands for fuel distribution. SOCAR MARINE handles marine fuel and SOCAR AVIATION handles aviation. A tightly segmented approach is bolstered by Petkim WPP, a wind power operation with a capacity of 51 megawatts as well as SOCAR Storage, the largest storage facility in the Aegean Region supported by $500m of investment capital.

Petkim WPP was in fact completed in 2017 – French giant Alstom was a key partner – and part of a wider commitment to ‘greener’ power generation that would help to reduce CO2 emissions.

Currently SOCAR Türkiye provides an uninterrupted natural gas service to over 1.7 million customers and is one of the largest private sector players in Turkey’s electricity and natural gas wholesale market. SOCAR Türkiye’s Natural Gas Business Unit activities accelerated strongly in 2019 following the purchase of natural gas businesses Kayserigaz and Bursagaz, operational, both, from 2003 and 1992. Deepening its natural gas grip further SOCAR Türkiye is now a majority shareholder of Trans-Anatolian Natural Gas Pipeline (TANAP), extending the company’s natural gas interests. TANAP diversifies gas export routes, widening LNG market options and global energy security by providing much-needed competition to Russia. It has changed the energy map of the region by a big margin.

Transporting gas from Azerbaijan to Europe through Turkey, TANAP is a crucial milestone in the successful energy partnership between Turkey and Azerbaijan. It also stands as one of the most significant contributors to Turkey’s ambitions of establishing itself as a secure energy corridor. TANAP is additionally owned by other major stakeholders, including BP and Turkish pipeline operator BOTAS.

A portfolio response to innovation
Inside SOCAR Türkiye’s Portfolio Management Business Unit sit multiple powerful infrastructure resources that go well beyond refinery, petrochemical and natural gas operations. The first is SOCAR Terminal, the largest port in the Aegean Region, backed with a substantial $400m investment.

Another important component to the wider business mix is SOCAR Real Estate and SOCAR Fiber, plus telecommunications company Millenicom. Undergirding these multi-facing operations is a 5,300 people-strong workforce supported by more than 11,000 experienced subcontractors. SOCAR Türkiye’s objective in digital transformation is about connected enterprises and relationships as well as smarter outcomes, at scale.

Significant investments totalling approximately $70m have been made in group companies thus far, with ongoing investments in progress. Recognising the importance of employee digital knowledge and skills, SOCAR Türkiye collaborates with start-ups, entrepreneurs and digital tech engineers early on.

A tight collective approach fosters an ecosystem development and enables seamless collaboration facilitating the exchange of innovative ideas. Through dedicated efforts in digital transformation, Petkim and STAR Refinery were included in the prestigious WEF Global Lighthouse Network in 2020 and 2021.

This widely-respected network comprises only companies that have made highly skilled inroads into Industry 4.0 technologies – sometimes tagged as the Fourth Industrial Revolution – where wireless connectivity and sensors work to monitor and visualise the entire production process, often making autonomous ‘smart’ decisions en route. In other words, this type of tech changes the way we understand the world of work and productivity. Fundamental to Global Lighthouse Network values is a driving need to develop and scale innovations, creating new opportunities for cross-company learning and collaboration – and SOCAR Türkiye has made significant progress on this journey.

At the sustainable centre
Embracing sustainability as a core principle, SOCAR Türkiye is committed to cleaner solutions. Practically and operationally this means a strategy and roadmap developed to track United Nations Sustainable Development Goals. Each year, sustainability prioritisation analysis studies are conducted to collaboratively determine priorities with the entire stakeholder ecosystem. These goals revolve around societal and community benefits through social responsibility and volunteering programmes. Additionally, combating climate change, which stems from various factors such as energy consumption, greenhouse gas emissions, water usage, wastewater and waste management, and air quality, is given great attention across all operations.

A long-term sustainability strategy, carefully crafted, is anchored to three main pillars: Decarbonisation, a Circular Economy, and Green Finance. With targets set to achieve a 40 percent reduction in SCOPE 1 and SCOPE 2 carbon emissions by 2035 and attain net zero emissions by 2050, SOCAR Türkiye is resolute in its commitment to these goals. It also undertakes a portfolio of five projects funded by the EU, encompassing CO2 capture and energy transition, renewable energy, digital transformation, and environmental solutions. Further collaboration on joint initiatives with universities across Turkey helps to channel resources towards innovative solutions that foster company growth.

SOCAR Türkiye’s objective in digital transformation is about connected enterprises and relationships

SOCAR Türkiye knows that environmental technology is key to fewer emissions. The roadmap is still evolving for all in the petrochemical space and recycling is a big part of the picture, particularly with the Circular Economy.

Decarbonisation here involves several levers stretching across day-to-day company operations. More decarbonisation progress comes through capital investment but also ongoing work in production innovation as well as the offset markets, including trading carbon credits.

The Circular Economy focus pulls in chemical and engineering recycling expertise. This means close discussions with partners as well as the Turkish and Azerbaijan governments. It is increasingly sensitive to customers anticipating and expecting better transparency in the supply chain, particularly with raw materials.

Finally, green financing is a major part of the picture deploying energy-efficient fintech tools. But right across all these improvements is information sharing.

Big challenges remain and there are few one-size-fits all answers. But much circular economy progress is being made in the business-to-business space with improved product lifespans; reduced waste is increasingly attractive to a new demographic of investors and consumers demanding sustainable solutions. From a macroeconomic perspective, sustaining life on earth depends on protecting biodiversity.

In the activities SOCAR Türkiye carry out, we aim to prevent environmental pollution, reduce waste and emissions resulting from our production activities, increase resource consumption, and minimise the effects of our actions on biodiversity. With this attitude we implement the necessary practices to limit and control environmental impacts.

The next generation of financial services in Turkey

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Established in 1946, Garanti BBVA is Turkey’s second largest private bank with consolidated assets close to TL1.472trn ($77bn) as of March 31, 2023. Garanti BBVA is an integrated financial services group operating in every segment of the banking sector including corporate, commercial, SME, payment systems, retail, private and investment banking together with its subsidiaries in pension and life insurance, leasing, factoring, brokerage and asset management, as well as international subsidiaries in the Netherlands and Romania. With 18,552 employees the bank provides a wide range of financial services to its almost 24 million customers through an extensive distribution network of 825 domestic branches, nine foreign branches, seven in Cyprus and one in Malta, and one international representative office.

How does Garanti BBVA support its clients towards financial health, an idea that’s gained increasing importance in recent years?
Financial health is a key area of focus for us. We provide personalised, timely and accurate advice to our customers by leveraging big data and artificial intelligence. In today’s world, where digitalisation provides such ease, we believe that investing in personalised customer experience has become even more important. We support recommendation systems that help our customers make the right financial decisions for them, with smart solutions integrated into next-generation payment technologies. We analyse our customers’ spending habits and other financial behaviours to help develop dynamic recommendations for them.

In 2021, we launched a feature called ‘My Status’ in the Garanti BBVA mobile app. It notifies our customers of important expenses and directs them towards saving and controlled spending. With different financial recommendations and action plans developed in 2022, an average of four million customers used ‘My Status’ monthly. We have also brought a ‘Card Check-Up’ function to our mobile application for customers whose credit card applications are rejected. In the case of declined applications, we provide personalised advice to increase the likelihood of approval next time.

In branch, our customer relationship managers provide one-to-one financial advice for products such as deposits, investment funds and fixed-income securities. In the coming period, we aim to increase awareness and responsibility for accessing financial services, introduce more young people and women to banking, expand our service portfolio, develop our digital functions and maximise customer satisfaction. All this helps us differentiate ourselves in a crowded market.

How does Garanti BBVA benefit from AI in areas such as technology, digitalisation and customer experience?
We are actively incorporating advancing technologies and data sources into our business model to take a more analytical approach to customer management. By using advanced data analytics, machine learning and artificial intelligence, we aim to enhance our operational efficiency and improve business results.

Working towards our goal of making our technological infrastructure more agile and robust, in 2022 we integrated new machine-learning and deep-learning models into 77 projects. That same year, Ugi, Turkey’s first AI-powered smart assistant, successfully engaged with more than 5.1 million customers, resulting in over 53 million interactions. With its impressive natural language processing abilities, Ugi was able to increase its unique user count by over 29 percent. Our ongoing efforts to position Garanti BBVA Mobile as the primary channel for customer interaction and to continue developing Ugi’s capabilities have contributed to the system’s understanding capacity reaching over 90 percent.

We have also developed an AI-supported analytical model that automatically categorises customer feedback received through the internet banking platform. We are currently in the process of improving our voice response system to provide customers with even more personalised and efficient financial solutions. Through these technological innovations and our commitment to customer satisfaction, we are dedicated to simplifying our customers’ financial lives.

How did the Turkish banking sector – and Garanti BBVA in particular – adapt following the transition to digital onboarding in Turkey?
With the increasing importance of digitalisation and technology in our lives, digital banking, particularly through mobile applications, has become a primary channel for customers. According to TBB data, in the past five years the number of customers using mobile banking has nearly tripled in the banking sector in Turkey. At Garanti BBVA we have seen the number of active mobile users increase from 7.7 million at the end of 2019 to over 13 million by the end of 2022.

We are able to carry out almost all transactions, including the customer onboarding process, through mobile banking applications without the need for physical branch visits. We continue to work on improving and developing our digital customer onboarding process. Our focus is on increasing the variety of products and transactions, enabling all customers to access banking services through our digital channels and providing a seamless end-to-end experience.

How will the rise of open banking impact the banking industry and its customers in Turkey?
With the impact of digital transformation and regulatory changes, open banking gained momentum towards the end of 2022. Open banking enables the democratisation of data, allowing customers who want to consolidate their financial information under one roof to enjoy the convenience of viewing and managing their accounts from different banks in one place.

We have been focusing on tackling the climate crisis and promoting inclusive growth towards sustainable development

We have introduced account consolidation and initiating payments applications to our individual, personal company and corporate customers through the Garanti BBVA mobile app and website, using open banking services that eliminate boundaries in banking. Customers who struggle to manage accounts with different banks can now easily view their balances and transactions without the need for separate user information and password entries. Moreover, they can transfer money between their different accounts with ease.

As part of our digitalisation strategy in 2023, we plan to bring direct debits, bulk transfers/EFTs and supplier finance product applications to our digital channels. Additionally, we will develop API services for the infrastructure of our bulk transfers/EFTs and direct debit services. We will also complete the development of e-receipts and begin providing our customers with e-signed receipts, which will replace wet-signed receipts.

How do you create value for your stakeholders?
We focus on creating long-term value for all stakeholders with our responsible banking model. We create value in multiple ways: by providing loans, creating business opportunities, offering a safe work environment, and developing social investment programmes.

Our customer-centric service model is also key to value creation. By leveraging the possibilities of technology to design better channels of engagement, we gain a closer connection with our customers. We also conduct regular surveys to measure our performance in meeting customer expectations. In 2022, as a result of this approach, we gained 2.8 million new customers and reached 24 million in total.

Tell us about your approach to digitalisation
Our long-standing investment in digital banking and technological infrastructure has allowed us to maintain our leading position in this field. Over the past three years, our active mobile customer base has grown by more than five million, reaching 13 million in total. Approximately 80 percent of our customers actively use mobile banking, with our digital channels accounting for nearly 98 percent of basic transactions, including ATM usage. Furthermore, more than 85 percent of our product sales are made through digital channels. These figures not only help us maximise customer experience but also contribute to a more efficient business model.

Digitalisation increases the effectiveness of our branches, allowing us to create more space for value-added work. And while our branch network plays a critical role in customer engagement, it remains our most important channel for customer acquisition.

How do you integrate sustainability into your retail banking activities?
We focus on the direct impact on natural resources through our own operations, including energy, water and climate. Through social investments and partnerships, we contribute to the socio-economic development of multiple communities.

Awareness of environmental, social and corporate governance (ESG) is increasing. Sustainable investments are gaining prominence both globally and in our country. We see that the investment world is beginning to reshape around this concept. Garanti BBVA Asset Management aims to achieve both high financial performance and support for a sustainable future by investing in the capital market instruments of foreign and domestic companies that have integrated ESG criteria into their investment decisions. Our sustainability-themed funds include the Clean Energy Variable Fund, ESG Sustainability Fund Basket, Sustainability Stock (Turkish Lira, TL) Fund and Garanti BBVA Climate Index Stock (TL) Fund.

As of March 31, 2023, our sustainability investment funds reached a total of TL450m ($23m) and our Sustainability Stock Pension Investment Fund reached a size of TL1bn ($51m). These funds, which include different investment strategies and asset allocations, will be important alternatives for investors who want to invest their savings in sustainability and achieve potential returns in TL with a medium to long-term perspective.

At Garanti BBVA, we have been focusing on tackling the climate crisis and promoting inclusive growth towards sustainable development for over 17 years. Our sustainability-focused products include loans for eco-friendly vehicles and electric bikes and shopping credit opportunities for the financing of electric vehicle charging stations. With the increasing popularity of rooftop solar power systems, we also provide customers who want to charge their vehicles with energy from sustainable sources, with credits through our affiliated companies.

Furthermore, we have launched the ‘My Ecological Status’ feature on Garanti BBVA Mobile to help increase customers’ awareness of the steps they can take in their own lives to combat the climate crisis. Customers can view their carbon footprint and make suggestions about how to reduce it. Those who opt for digital onboarding, digital account statements and the like will trigger our support for planting schemes.

The rail industry is key to the low carbon economy transition

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On April 14, 2023, Canadian Pacific (CP) and Kansas City Southern (KCS) combined to create Canadian Pacific Kansas City Limited (CPKC). With global headquarters in Calgary, Alta., Canada, CPKC merges two historic railways to deliver transportation solutions across the only single-line transcontinental railway linking Canada, the US and Mexico.

At CPKC, we believe that our future growth and success are inextricably linked with our ability to integrate meaningful sustainability values and practices into our daily operations. The formation of CPKC marks a crucial moment for the company, a unique opportunity to evaluate our practices and advance our unwavering commitment to sustainable, long-term growth.

Investing in a sustainable future in all areas of our business is not only the right thing to do, but also a critical part of how we operate today and are building for tomorrow. We believe that our integration of the KCS network will advance CPKC’s ability to deliver enhanced competition and unsurpassed levels of service, safety, and environmental benefits for shippers and communities across the US, Mexico and Canada.

Rail has a vital role to play in transitioning to a low carbon economy. Transporting freight by rail is four times more fuel efficient than by truck and produces an estimated 75 percent less greenhouse gas (GHG) emissions. Anticipated environmental benefits of CPKC include the avoidance of more than 1.6 million tons of GHG emissions due to the anticipated improved operational efficiency of CPKC versus current operations and another 300,000 tons of GHG emissions with the diversion of 64,000 trucks to rail for a total reduction of 1.9 million tons of GHG emissions over the next five years.

Diverting 64,000 long-haul truck shipments to rail annually with new CPKC intermodal services will reduce total truck vehicle miles travelled by almost two billion miles over the next two decades, saving US$750m in highway maintenance costs, as previously reported in our April 14, 2023 press release: ‘Canadian Pacific and Kansas City Southern combine to create CPKC.’

Sustainably driven
This is a great start, but there is much more to do as a company and rail industry. When it comes to maintaining the safety of our people, communities and the environment, our work is never done. CP’s culture of safety, supported by its history of ongoing investments in core infrastructure and technology, aligns with KCS’s priorities, allowing the combined system to continue efforts in maintaining a strong safety focus. CPKC places safety at the forefront of everything it does.

CPKC is an industry leader in sustainability, but there is still more we can do. We are focused on further integrating sustainability policies, programmes and practices into our everyday operations.

This work is already underway, and we are making significant strides in our efforts to align business strategy with economic growth, environmental care and social well-being across our network. As separate entities, both CP and KCS have demonstrated positive actions taken to advance environmental, social and governance (ESG) performance.

KCS and CP were among several partners involved in the Save the Monarch Butterfly Tree Challenge North American Boxcar Tour. This collaborative fundraising initiative was designed to help the monarch population by purchasing and planting 60,000 oyamel trees at El Rosario Monarch Butterfly Sanctuary in Michoacán, Mexico. The CPKC rail network aligns with the monarch butterfly’s annual migration route, providing a unique opportunity to help protect and restore critical habitats. We surpassed our fundraising goal, raising more than US$120,000.

After a two-year, Covid-19-related hiatus, CP and KCS welcomed the return of their Holiday Trains in 2022. More than CAD$1.3m was raised and 121,000 pounds of food collected for local food banks in communities across the CP network. KCS’s Holiday Express raised more than US$215,000 to benefit the Salvation Army in 20 communities across eight states.

In 2022, front-line KCS leaders enhanced their safety skills and knowledge with in-depth training at one of 20 safety management workshops. Participants sharpened their analytical skills, were assessed on their understanding of safety and operating rules and took part in a critical evaluation of KCS’s safety culture. CP held quarterly system-wide safety walkabouts, providing leaders, management, employees and members of local health and safety committees the opportunity to engage in meaningful discussions aimed at creating stronger workplace safety.

Also in 2022, CP became the first freight rail company in North America to participate in the United Nations (UN) Global Compact, a voluntary leadership platform for the development, implementation and disclosure of socially responsible business practices. We are proud to commit to aligning our strategies and operations with 10 universally accepted principles in the areas of human rights, labour, environment and anti-corruption and taking action in support of the UN Sustainable Development Goals.

CPKC climate strategy
CPKC is combining forward-thinking planning with concrete measures and practices aimed at addressing the challenges of climate change. As we strategically grow our business, we will continue to focus on curtailing our own GHG emissions while supporting further actions across the broader transportation sector.

Implementing meaningful action on climate change involves continually evaluating our progress against our climate objectives. As we integrate the operations of KCS into ours, we are enhancing our approach, programme objectives and reporting of the combined CPKC. While we are in the initial stages of this process, we are making the following commitments with respect to climate action at CPKC:

1) CPKC has joined the Science Based Targets Initiative’s (SBTi) Business Ambition for 1.5°C global campaign and is committed to developing a long-term CPKC emissions reduction target aligned with a 1.5°C future within the next two years.

2) The operation of our locomotive fleet represents CPKC’s largest source of emissions. Both CP and KCS had previously adopted standalone targets to reduce locomotive GHG emissions by 2030. As part of our sustainability integration, we have established a combined science-based emissions reduction target for CPKC that was recently validated by the SBTi. CPKC has committed to reducing our well-to-wheel (WTW) locomotive emissions by 36.9 percent per gross ton-mile by 2030 from a 2020 base year.

But we’re not stopping there. Longer-term, the industry needs a transition from fossil fuels. Our industry-leading Hydrogen Locomotive Programme is developing North America’s first zero-emissions line-haul freight locomotives. This first-of-its-kind programme involves retrofitting diesel locomotives with hydrogen fuel cells and battery technology. We achieved a key milestone in 2022 with the completion of the second mainline test and the first revenue move using our first hydrogen locomotive.

We are also working towards a goal of three operating hydrogen locomotives by the end of 2023 and advancing plans to build two hydrogen production refuelling facilities in Canada. This programme has the potential to substantially reduce GHG emissions during locomotive operations and is generating critical industry knowledge and experience integral to future commercialisation and development activities.

We are also focused on near term reduction of GHG emissions from our existing fleet of locomotives and, in March 2023, CPKC initiated a biofuel trial with 10 of our locomotives operating in British Columbia. Through this trial, CPKC is working with our fuel and locomotive equipment suppliers to test renewable fuels consisting of a blend of 20 percent biofuel and 80 percent regular diesel. The addition of advanced biofuel blends to our operations has the potential to substantially reduce GHG emissions from our locomotive fleet.

Simultaneously, we have updated our carbon emissions calculator to include the combined CPKC rail network. This innovative tool is designed to provide users with the ability to estimate GHG emissions related to freight transportation by CPKC’s rail services compared to long-haul trucking alternatives, aiding in educating shippers on the environmental advantages of moving with rail versus truck. Updating our carbon emissions calculator is part of our ongoing engagement and collaboration with stakeholders on climate-related issues.

Recognition
While the climate strategy of our combined company is in the early stages, we are building on the solid sustainability foundation laid out by CP and KCS. Both companies were recognised in their own right for sustainability achievements in 2022. CP is proud to have been named to the CDP Climate Change A-List with an A rating; included on the Dow Jones Sustainability Index World and North America Indices; and recognised as one of Canada’s Top 100 Employers for 2023. KCS was also named to the CDP Climate Change A-List with an A- rating; received ISO 14001 and 45001 certifications for its Shreveport, LA railyard operations; placed sixth among Transport and Logistics companies on Newsweek Magazine America’s List of Most Responsible Companies; and was recognised with Empresa Socialmente Responsible (ESR) certification from Cemefi, the Mexican Centre for Philanthropy.

These recent accomplishments demonstrate CPKC’s commitment to maintaining operational efficiency and our focus on safety, meeting our customers’ transportation needs and supporting communities across our network. Operating sustainably remains imperative to CPKC’s future growth and long-term success as an organisation. Through a shared legacy of innovation, responsible business practices and commitment to excellence, we are building a new future to create value for our stakeholders and a sustainably driven business.

Please see our filings with securities regulators in Canada and the US for additional information and cautionary statements relating to our sustainability efforts, including factors that could affect the forward-looking information in this article.

A global gateway for Africa

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Access Bank is unapologetically ambitious. Driven by a mission to be ‘Africa’s Gateway to the World,’ the bank has in a span of two decades emerged as a powerhouse financial institution in the continent. Today, the bank boasts of $29.1bn in assets, 58 million customers and a presence in 17 countries. The secret to the unprecedented success has solely boiled down to the disciplined execution of five-year corporate plans.

In January, Access Bank launched the fifth cycle of its growth strategy for the next five years. The targets, yet again, are brave. Presence in at least 26 countries, 125 million customers and return on equity (ROE) in the range of 25 to 30 percent by 2027. During the period, the bank expects to more than double revenues and profits from its African subsidiaries, thus easing the burden on its home market of Nigeria, where it is the largest in terms of assets, controlling 19 percent market share.

The bank has established a trend of surpassing the original targets. Under the last strategic plan running from 2017 to 2022, the goal was 35 million customers. It closed at 52 million.
Thus, the bank is confident of achieving its ambitions over the next five years. Based on its foundational strategy, the bank has no plans to reinvent the wheel. Instead, it intends to continue leveraging on strong merger and acquisition capabilities and its ability to grow organically. It also plans to create value with each expansion, prioritising countries with better sovereign ratings and complementary business landscapes.

Over the next five years, Access Bank has outlined seven enablers that will anchor the growth targets. One of them is environmental, social and governance (ESG). Putting ESG as a key enabler is by design. This is because sustainability is not just rhetoric for Access Bank. It defines the bank’s DNA.

As it grows, Access Bank is privy to a fundamental fact – it has an obligation to be at the forefront in helping communities improve their wellbeing, create wealth, foster cohesion and reduce vulnerabilities to climate change. This it does by ensuring it operates within the guidelines of the sustainable banking principles.

Taking centre stage
In its ambitions of being ‘Africa’s Gateway to the World,’ Access Bank wants to be at the heart of the continent’s socio-economic transformation. In particular, the bank is determined to aid the realisation of Africa’s potential by evolving into a leader in international trade facilitation within the key trading blocs. This puts the bank at the epicentre of the realisation of the African Continental Free Trade Area (AfCFTA) goals. Currently, total trade volume in sub-Saharan Africa is estimated at $950bn. With AfCFTA expected to connect large swathes of countries into virtual trading zones, the volumes are bound to increase substantially. Being a catalyst for Africa’s transformation and link to the globe means adherence to sustainability principles will continue to be paramount for Access Bank.

The bank has adopted an all-encompassing view of sustainability, which is a means to harmoniously achieving positive economic, societal and environmental goals and creating an equitable and more prosperous world for current and future generations. For over 15 years, this transformative idea has been embedded in its vision, helping the bank channel human, financial and social resources to the advancement of society.

There are good reasons why Access Bank is prioritising doing good as the underlying factor in pursuit of growth. The bank has already managed to debunk the prevalent misconception that adopting sustainable practices equates to sacrificing profitability. Going by its performance over the period just ended, Access Bank has proved that incorporating sustainability into business operations has the ability to midwife long-term profitability by reducing costs, improving efficiency and enhancing brand reputation. Ultimately, this plays a central role in attracting and retaining customers and investors.

During the period, the bank saw its gross revenues increase from N459bn ($992.4m) in 2017 to N907bn ($1.9bn) in 2022. Profit before tax nearly doubled from N80bn ($172.9m) to N147bn ($317.8m) while ROE increased from 13.6 percent to 17.7 percent.

The numbers are a testament that sustainability brings about new dimensions to doing business, with the result being impressive growth. A case in point is the ability to develop innovative products and services that cater to the evolving needs of clients. Last year, for instance, the bank successfully closed its second green bond issuance, raising $50m. The funds will go towards financing renewable energy projects and other sustainable initiatives. It was the second green bond issuance by the bank, which in 2019 raised N15bn ($41m) from Africa’s first climate bonds-certified corporate green bonds. Part of the proceeds went to finance a low-carbon transportation system for the Lagos Metropolis. The impacts have been phenomenal. Reduction of greenhouse gas emissions by 63.5 percent, from conventional emissions annually.

Access Bank understands that positive impact on the community and the environment, particularly when threats of climate change are becoming more severe, has a ripple effect on the bank’s bottom line. This explains why the bank has taken conscious and prudent decisions on how it approaches issues like financing of sectors like fossil fuels, incorporating digital transformation and innovations in its sustainability agenda, women and employee empowerment and financial inclusion, among others.

The sustainability journey
Access Bank understands the urgency of transitioning to a low-carbon economy. For this reason, the bank is channeling financial flows to low-emitting sectors while gradually reducing its exposures to high-emitting ones. Essentially, renewable energy projects like solar, wind and hydropower are today on the bank’s financing agenda. Other key priorities include sustainable transportation, waste management and green buildings integrating affordable housing, among others.

In sustainable-linked lending, Access Bank is not only guided by internal tools but has also domesticated several global templates. The green loan book and sustainable finance toolkit, for instance, enables the bank to screen projects and identify potential environmental and social risks thus facilitating the categorisation of the bank’s green loan portfolio. The initiatives also enable the bank to attract customers who are passionate about sustainability and encourage sustainable business growth while reducing carbon footprints.

In its sustainability journey, Access Bank has seamlessly managed to intertwine digital transformation, technology and innovations. This emanates from the understanding that to allow customers to reduce their carbon footprint, they need tools that accord them high levels of flexibility and convenience.

The ultimate goal for Access Bank is to transition to primarily digital transactions by 2027 from about 50 percent currently. Among the bank’s flagship products is AccessAfrica. The proprietary payments platform has been instrumental in simplifying cross-border payments. Last year, it facilitated the movement of over $250m. This year, the platform aims to transmit approximately $700m by leveraging new corridors and use cases.

A deep dive into digital transformation is also enabling Access Bank to drive financial inclusion in Africa. The bank’s data show that today, a total of 370 million Africans do not have access to financial services. By deploying technology, the bank is not only able to bring people into the formal financial services sector but is also able to empower micro, small and medium enterprises. A case in point is Project Dominance that has seen the bank expand its reach to hitherto under-banked and unbanked areas riding on agency banking.

Apart from financial inclusion, empowerment of women is another critical pillar of sustainable banking. By ensuring that diversity, inclusion and equity form important aspects of operations, Access Bank has been able to catapult women to the upper echelons of management. Supporting women’s enterprise has been an effective contributor not only in poverty alleviation but also economic development.

While most organisations have often overlooked employees as agents of sustainability, the situation is different for Access Bank. In fact, for the bank, employees are the brand ambassadors in flying the sustainability flag. Granted, the bank has implemented watertight safeguards against vices like internal fraud, discrimination and other unethical practices. These include a code of conduct that outlines the principles of ethical conduct and professionalism.

Promoting a culture of employee empowerment through competitive compensation packages and opportunities for career advancement means that employees feel part and parcel of the bank’s successes. This explains why, despite forays into new countries with significant social and regulatory differences, ethical conduct and professionalism have remained fundamental attributes that underpin the bank’s corporate culture.

A member of the global village
Geographical expansion is a key growth driver for Access Bank. Coupled with the fact that the world has become a global village, this means the bank cannot operate in isolation on matters of sustainability. The bank, for instance, understands that despite being the least polluting region, Africa is bearing the brunt of climate change.

The realities of the interlocking sustainability issues have made Access Bank build strong partnerships to advance sustainable banking. Among the most significant is with the International Finance Corporation (IFC) that has been executed through a $162.5m loan agreement. The loan has enabled the bank to expand its green lending programme. Access Bank has also worked with the International Fund for Agricultural Development and the African Development Bank, among others.

As the first African commercial bank to be designated as a Sustainability Certified Financial Institution in 2020, Access Bank is living up to its billing as a champion of sustainable banking in the continent. Going into the future, the bank has no intentions of relenting or slowing down. Being cognisant of the complex and evolving nature of sustainability challenges, Access Bank aims to continuously improve its performance and develop innovative solutions to address all emerging issues. Luckily, the bank has over 15 years of experience.

Why ESG will be key from 2023

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Between skyrocketing inflation, bear markets galore, and geopolitical instability in both Europe and Asia, environmental, social and governance-based issues have fallen down many investors’ and companies’ list of priorities. However, as some semblance of stability begins to return to the markets in 2023 and mere capital preservation takes a back seat, the relentless ascent of ESG will surely resume in earnest. And despite over 70 percent of surveyed retail investors stating that ESG scores are an important factor for them when making investment decisions, many people are still unaware of what this latest buzz phrase even means.

Well, environmental, social and governance – or ESG for short – encapsulates a range of factors but, fundamentally, it represents a corporate paradigm shift away from mere short-term profit maximisation, towards a more sustainable business model that considers the environment, employees, the supply chain, and the broader community. Ever since the emergence of its predecessor CSR, corporations have been under intense pressure from both investors and regulators to improve their performance and, with Net Zero 2050 and Biden’s Green New Deal, this pressure is intensifying year after year.

Even if you aren’t personally sold on ESG, all the data suggest that strong ESG scores will be closely correlated with share price growth in the future. In this article, we’ll look at some of the key existing and emerging sectors when it comes to ESG-minded investment, as well as the changing regulatory framework and what it means for companies in the medium to long term.

Make green by being green
Whenever we think of ESG strength, there are several sectors that immediately spring to mind. Perhaps the most well-known of these would be renewable energy, non-ICE vehicles, and advanced recycling. We will all surely remember the unbridled growth in the share prices of such companies as NextEra, Enphase, Tesla, and Carbios in the year following Joe Biden’s ascension to the White House and subsequent announcement of his Green New Deal. This policy pledged to do away with fossil fuel subsidies, with an ambitious aim of reaching 100 percent clean renewable energy by 2035. Sadly, it seemed that many investors in the space forgot the central mantra of ESG, namely that it is a marathon and not a sprint. The valuations and P/E ratios of these companies and many like them shot up to unsustainably high levels and a bubble inevitably formed. Now, even financially sound examples like Tesla are nursing losses of over 60 percent from their November 2021 high.

But this doesn’t mean that the traditional ESG sectors are dead ducks. On the contrary, their post-crash prices could represent excellent value for money. Indeed, recent research from J.P. Morgan Asset Management has shown that capital inflows into the renewables market alone have grown by almost 1,000 percent in 15 years, rising from $33bn to $310bn. This speaks of an underlying long-term trend independent of the ups and downs of boom-bust cycles. Furthermore, this category of assets is constantly expanding, with the recent addition of carbon offsetting/credits offering an exciting future avenue for investors to participate directly in the race to net zero. For now, this space is very difficult for retail investors to access, but we are expecting dedicated ETFs along the same lines as the iShares MSCI ACWI Low Carbon Target ETF (CRBN) or BlackRock’s US Carbon Transition Readiness ETF (LCTU) to emerge in the coming years.

Crypto clean-up on the cards
Another relatively new asset class that has been enjoying massive growth both in price and investor interest is crypto. Despite being a favourite of traditionally more environmentally conscious younger generations, digital currencies are in fact extremely power intensive. The original cryptocurrency, Bitcoin, for instance, consumes more electricity in a single year than Sweden, Norway, or the United Arab Emirates – and the majority of this energy use is attributable to mining operations. However, the rise of ESG and threat of future regulation has led to an increase in the number of green mining companies, with at least 29 miners now using 90–100 percent zero-emission energy to power their farms.

At Libertex we have always strived to be responsible, ethical, and sustainable in everything that we do

In fact, there are some even more forward-thinking operators, such as Vespene, which is actually reversing the damage caused by methane pollution by converting the gas into electricity which it then uses to mine BTC. Mining using methane-vented power is far more effective at reducing carbon emissions than any other renewable energy source we have and mining with this method actually removes 13 times more emissions from the environment than coal puts into it.

And yet, the process of mining cryptocurrency needn’t be anywhere near as power hungry as this at all. The problem with Bitcoin lies in its frankly outdated Proof of Work (PoW) method of block calculation. Proof of Stake or PoS models like Ethereum (ETH), Solana (SOL), Polkadot (DOT) and Avalanche (AVAX) are much more energy-efficient and faster than their PoW counterparts. There is a seemingly ESG-motivated campaign to switch BTC mining from PoW to PoS known as Change the Code Not the Climate, which estimates that such a move could reduce Bitcoin’s carbon footprint by up to 99 percent.

Given the pressure from governments and supranational organisations – as well as the advent of financially-punitive measures for heavy polluters – Bitcoin may well be forced to make the change if it is to maintain its position as the primary digital currency in a net zero world.

Regulation, regulation, regulation
For most of its relatively short history, ESG and CSR have been largely opt-in, consisting predominantly of initiatives that companies have chosen to run for improved image or PR capital. But now marks a watershed moment as more and more countries begin to introduce actual legislation aimed at formalising corporate responsibility. The EU, for instance, is expanding its 2020 Taxonomy classification to require affected companies to report on their economic activity’s alignment with all six of the Taxonomy’s sustainability objectives. However, the German government has now gone beyond environmental concerns with the passing of its Supply Chain Due Diligence Act in what could be the first of many bills of its kind in Europe and worldwide.

The new law will require all businesses operating in the world’s fourth largest economy to ensure that their entire end-to-end supply chain is free from both environmental and human rights violations. This is key because it means that companies can no longer plead ignorance to what goes on above them in the supply chain: it is now their obligation to verify that everything they source was produced ethically.

And this is just the tip of the iceberg when it comes to hard ESG regulation. This year has also brought the EU Parliament’s highly perspicuous Corporate Sustainability Reporting Directive (CSRD) and the UK FSA’s equivalent Sustainability Disclosure Requirements (SDR), with many other jurisdictions set to follow suit in short order. As such, it is soon going to be virtually impossible for any sizeable business to operate without first implementing a sound ESG strategy to comply with the growing body of legislation.

And given mounting pressure from both ordinary consumers and institutional investors for higher ESG scores, it would be wise for companies to take steps now, so as to both stay ahead of the regulation and win the hearts and minds of their customers and potential stockholders. Meanwhile, with pay-to-pollute carbon credits on the horizon, minimising their environmental impact and emissions will go a long way towards maintaining a healthy bottom line in the near future. This will be especially important for the long-term profitability of less environmentally friendly industries like oil and gas or chemicals, for instance.

Think global, act local
The exciting thing about ESG in the modern age of business is that it will ultimately affect everybody – and that’s a good thing. This philosophy is why at Libertex we have always strived to be responsible, ethical, and sustainable in everything that we do. From the underlying assets we provide and promote to our own actions as a company.

Beyond the instruments we offer, Libertex is engaged in a number of independent charitable and sustainability-driving initiatives which form the crux of our internal ESG strategy. Our most recent charity involvement is with the ‘Hope For Children’ CRC Policy Centre (HFC), as part of which we have not only pledged financial aid but also cooperated on joint actions to protect children’s rights.

When it comes to employee satisfaction, Libertex has also earned high distinction in the form of its Great Place to Work certification awarded in December 2022. During the rigorous evaluation process, 96 percent of our employees stated that Libertex is a ‘great place to work’ – one of the highest percentages recorded by GPTW in recent years. Local initiatives like these can be undertaken by any company and often generate the best returns – and as ESG becomes obligatory in Europe and beyond – they will be increasingly linked to profitability and the ability to attract investment.