Putin’s Arctic ambitions

Posted on August 11, 2025July 30, 2025 by itsupport

When a thunderous Russian voice announces Vladimir Putin’s entrance, the setting is typically expected to be imposing – carefully staged to project power and dominance. But this time was different. As the familiar voice echoed through the hall, the Russian president stepped onto an unexpectedly modest stage. The occasion was an international Arctic forum in Russia’s far northern Murmansk region. Held on March 26–27, 2025, the forum ran under the slogan ‘Live in the North!’ In a lengthy speech, Putin reaffirmed the strategic importance of the Arctic for Russia and emphasised its rising global relevance.

“Unfortunately, geopolitical competition and the struggle for influence in this region are also intensifying,” he said. Putin added that Russia is closely monitoring developments and responding by boosting its military capabilities and modernising infrastructure across the Arctic. The Arctic has ranked high on the Kremlin’s strategic agenda for more than two decades. Following the collapse of the Soviet Union, state support for the region dwindled, and in the 1990s, the Russian Arctic was largely seen as a socio-economic liability. Substantial reinvestment resumed only in the 21st century. As climate change accelerates the retreat of Arctic ice, new shipping routes and untapped resource opportunities are enhancing the region’s strategic value. Rich in rare-earth elements and home to vast oil and gas reserves – much of which remains under-explored – the Arctic has become central to Moscow’s long-term ambitions. In the wake of Western sanctions over the war in Ukraine, it holds even greater economic and geopolitical significance.

“The Arctic is economically important,” Pavel Devyatkin of the Arctic Institute tells World Finance. “A large share of Russia’s oil, gas and natural resource exports originate from the Arctic.” Around 10 percent of the country’s GDP can be traced to the region. But its significance goes beyond economics. “From a security perspective, the Arctic constitutes Russia’s entire northern border,” Devyatkin adds. “Given the growing competition with Western Arctic states, it is critical for Russia to maintain control over the area and protect those economic projects there.”

According to Russian sources, while other nations pursued maritime expeditions to discover new lands, Russian pioneers advanced steadily overland toward the continent’s northern and eastern edges. Today, the Kremlin portrays itself as a global leader in Arctic exploration. But with the Arctic now a frontier of intense competition, a critical question emerges: does Russia possess a technological edge – and if so, can it sustain it?

Sergey Sukhankin, a Senior Fellow at the Jamestown Foundation, believes that – for now – Russia maintains a technological edge over the West in the Arctic. However, he points out that this advantage is mostly limited to one area: icebreakers. “Russia’s main strength lies in its superiority across various classes of icebreakers,” he says. “This includes both civilian vessels, like the Sibir, and so-called military icebreakers – smaller ships that can be equipped with a range of weapons systems, including Zircon and other types of missiles.”

Moscow’s real Arctic superpower
Russia currently operates 42 icebreakers, including eight nuclear-powered vessels, according to Russian media. Prime Minister Mikhail Mishustin recently announced that the fleet will soon be bolstered by five additional nuclear-powered icebreakers. Among them is the Rossiya, a vessel from the ‘leader project,’ boasting a displacement of 71,380 tons and a power output of 163,150 horsepower – capable of escorting ships through ice as thick as four metres.

New shipping routes and untapped resource opportunities are enhancing the region’s strategic value

Speaking at the International Arctic Forum, Putin reaffirmed Russia’s dominance in this field, stating that the country already possesses the largest icebreaker fleet in the world. “No other country has such a fleet,” he declared, adding that Russia must continue to build next-generation vessels, particularly nuclear-powered ones, to consolidate its leadership. While the scale of Russia’s icebreaker fleet is often framed in geopolitical terms, experts emphasise its primarily commercial role. “Icebreakers are one of the greatest technological capabilities that Russia has in the Arctic,” says Devyatkin. “But they have very limited military applications. Even though sea ice is melting, icebreakers are still important for moving through the Arctic because there is still a lot of ice.”

Beyond logistics, Russia has also sought to monetise its icebreaking fleet through tourism. Nuclear-powered icebreakers now ferry travellers to the North Pole, with cruise operators marketing the experience as a unique journey through ancient ice floes. Promotional materials on Russian websites proclaim: “You will be travelling on one of the most powerful nuclear-powered icebreakers in the world, capable of overcoming centuries-old ice up to three metres thick.”

Still, beyond their commercial and even tourism uses, the Kremlin views these vessels as central to its strategic goals in the Arctic. By enabling year-round navigation through Arctic waters, icebreakers support Russia’s ambition to transform the Northern Sea Route (NSR) into a major global trade artery – one that could ultimately rival traditional shipping lanes such as the Suez Canal.

Strategic asset or symbolic display?
Russia’s ambitions in the Arctic are not limited to its formidable icebreaker fleet. During a recent ceremony, Putin hailed the launch of the Perm nuclear submarine – armed with Zircon hypersonic cruise missiles – as a significant milestone in the advancement of the Russian Navy.

“Yasen-M-class submarines are equipped with modern navigation, communication and hydroacoustic systems. They carry high-precision weapons and are fitted with robotic equipment,” the Russian supreme commander-in-chief said. However, some experts remain sceptical about the strategic utility of such weaponry in the Arctic context. Sukhankin argues that, while dangerous under specific conditions, these systems are unlikely to be deployed without triggering full-scale conflict. “In most scenarios, this type of weaponry is more dangerous than it is useful,” he explains. “Its deployment would likely mean an all-out war between Russia and NATO.”

Even within Russian military discourse, the likelihood of conventional warfare in the Arctic remains low. “When Russian strategists talk about potential conflict in the region, they usually refer to hybrid tactics rather than open confrontation,” Sukhankin notes.

The Kremlin also boasts of developing extreme cold-resistant drones capable of operating in harsh Arctic conditions. In parallel, Russia started working on robotic systems to mine the Arctic Ocean floor. In a surprising and ambitious development, Russian media reports that the country is now exploring the use of nuclear submarines to transport liquefied natural gas (LNG). According to these reports, Russia has begun designing nuclear-powered submarines to export LNG from the Arctic to Asia, aiming to significantly reduce shipping time along the NSR.

Sukhankin notes that this idea dates back to the early 2000s, when elements within the Russian business and political elite sought to impress Putin. “The concept was eventually shelved because it could not withstand basic scrutiny from a security standpoint,” he says. “How can you store the necessary volume of LNG on a submarine in the first place?” Sukhankin asks. “If you run the numbers on break-even costs, it simply does not make sense. What kind of submarine would you build? Russia does not have the capacity to build such vessels – and no one would build them for Russia either.”

He adds that it remains unclear whether this initiative is a genuine project or merely another attempt by Russian elites to curry favour with Putin. “At this point, it’s difficult to tell whether this is aimed at a domestic audience or designed to impress internationally,” he concludes.

Putin’s call for Arctic cooperation
In a modest hall in Russia’s Murmansk region, Putin opened his speech not by celebrating Russia’s achievements, but by stressing the urgent need for renewed collaboration with various countries.

“Russia is the largest Arctic power. We have advocated and continue to advocate for equal cooperation in the region,” Putin said. “Moreover, we are ready to work not only with Arctic states, but with all those who, like us, share responsibility for the planet’s stable, sustainable future and are capable of making balanced, long-term decisions,” he added.

Devyatkin points out that Russia has a centuries-long history of operating in the Arctic and possesses deep expertise in resource extraction and navigating the region’s harsh environment. However, he emphasises that cooperation with other Arctic states remains valuable, as these partnerships bring in capital, advanced technologies, and access to export markets.

Some analysts argue that there may be a strategic calculation behind the Kremlin’s cooperative rhetoric. While Russia has demonstrated an edge in certain technologies and weaponry, doubts remain over its ability to sustain systemic production and long-term growth. “Russia’s own internal domestic capabilities to modernise are quite questionable,” says Sukhankin. Accordingly, Russia is seeking greater collaboration to advance its technological ambitions in the Arctic region.

Each time Russia announces the production of new drones, nuclear submarines, or other vessels, alarm grows over Moscow’s apparent lead in this strategic competition. Yet, according to Sukhankin, this perception is deliberately cultivated. “This is exactly what Russians want. If you read the basics of what Russians are writing about information psychological warfare, this is exactly what they mean,” he says.

15 years later

Posted on August 8, 2025July 30, 2025 by itsupport

I wrote my first Econoclast column for this magazine 15 years ago, in the spring of 2010. The economy at the time was recovering from the deepest recession since the 1930s. As I argued in the column, the recession had been blamed on many things, but the real reasons could be traced back to a set of economic myths which have been cultivated and maintained over the last century and a half, ever since economics was invented. These myths include the ideas that markets are stable, self-regulating and efficient; the idea of rational economic man; and even the idea that the economy can be described in terms of mathematical laws.

Today of course things have moved on. For one thing, I see that the number one song in March 2010 (by Kesha) was called ‘Tik Tok’ but it had nothing to do with an app! In the world of economics, though, we still seem to be stuck in the past. Nobel laureate economist Paul Krugman wrote in 2018 that “Neither the financial crisis nor the Great Recession that followed required a rethinking of basic ideas” and most economists seem to agree.

For an update from the front line, I contacted Cahal Moran, who was a co-founder of the Post-Crash Economics Society, a student group set up in 2012. He now runs the YouTube channel Unlearning Economics and is a Visiting Fellow at the London School of Economics. In his opinion, “equilibrium approaches still dominate modelling” although organisations such as the Bank of England “supplement their approaches with some more heterodox or historical analysis.”

And while there is more interest today in areas such as behavioural economics or data-driven approaches, an economics education – the famous Econ 101 – is still biased towards the core concepts, or economyths as I called them, of rationality, equilibrium and efficiency. Perhaps though we shouldn’t expect things to change so quickly.

After all, while the field of neoclassical economics has only been around since the late 19th century, the underlying myths go back much further.

Finding the level
The focus of that first 2010 column was the myth of equilibrium, as acted out by ye olde ‘law of supply and demand.’ This imagines markets as consisting of suppliers on one side, and consumers on the other. The propensity of the former to supply the good is represented as a function of price by a line going up, so the dearer the good, the more is produced. The propensity of the consumer to buy the good is represented by a line going down.

The point where these two curves intersect represents the optimal price which gives a stable equilibrium between buyer and seller, and in theory optimises the utility of both buyer and seller. Or, as the neoclassical economist William Stanley Jevons put it in 1871, both parties then “rest in satisfaction and equilibrium, and the degrees of utility have come to their level, as it were.”

The picture is therefore of an economy in a state of happy equilibrium where everything finds its proper level. It was later formalised by Eugene Fama’s efficient market hypothesis – variously described as ‘the best established fact in all social sciences’ and ‘probably the best-tested proposition in all the social sciences’ – which claimed that prices effectively adjust instantaneously to new information.

This view of the markets as stable and optimal would be familiar to any first-year student studying economics in 2010 or equally 2025. But the idea that everything finds its level would have been equally acceptable two millennia earlier.

According to Aristotle, whose word was considered sacrosanct well into the Middle Ages, the universe was made up of the four elements earth, water, air and fire, plus the fifth element, ether, which was reserved for the heavens. Each element had its place, so earth would tend to sink and air would rise.

In a vacuum, each element would find its level instantaneously, which was why ‘nature abhors a vacuum’ (Medieval philosopher: ‘probably the best established fact in natural philosophy’). In neoclassical economics, the perfect vacuum exists, and it is the market. Prices always find their proper level, and dynamics don’t really matter, although they are sometimes included as a kind of friction to slow adjustment, just as in Aristotelian physics.

New information
Now, one would think that an event like the 2007–08 financial crisis would be enough information to shake economics out of its own Aristotelian state of happy equilibrium. As I pointed out in 2010, other fields – such as computational biology – don’t try to model a complex, organic, dynamic, living system by using an equilibrium model. In biology, if a system is at equilibrium, it is dead.

And speaking as an applied mathematician who has worked in diverse areas including engineering, weather forecasting, and drug development, I can report that the approach of modelling such a system as the intersection of two lines, as in the law of supply and demand, is …unusual.

But if there is one other thing that we can learn from the endurance of Aristotelian philosophy, it is that once ideas become established, they can be very hard to get rid of. Let’s just hope this equilibrium doesn’t last another 15 years, let alone 2,000.

What is eating Europe’s food system?

Posted on August 7, 2025July 30, 2025 by itsupport

Food prices have surged in recent years across the European Union. In March 2023, food-price inflation hit a record high of 15 percent. In Germany, consumers are paying nearly 30 percent more for food than they did in 2021, even though energy and production costs have declined. Some economists have attributed this to food processors and retailers reaping windfall profits at the expense of low-income households. Meanwhile, the share of retail food prices reaching farmers keeps shrinking. German producers, for example, received just 21.7 percent of retail prices in 2021, and this figure continues to decline. The fall in farmers’ share of bread prices is a striking example: in 1970, farmers earned 19.2 percent of the shelf price; by 2022, that share had plummeted to five percent.

Milk producers face similar challenges. Between 2014 and 2024, milk prices consistently failed to cover rising production costs. As a result, many farms operate at a loss and depend on subsidies to survive. Farmers are expected to produce high-quality food while also providing – often under burdensome bureaucratic requirements – environmental, climate and animal protection. But as value creation shifts away from producers, profits are increasingly concentrated among a few powerful processors and retailers.

The widespread farmers’ protests of early 2024 revealed deep-rooted frustration across the EU’s agriculture sector. The political response was underwhelming. Meanwhile, the core issue – ensuring fair prices along the value chain – has not been sufficiently addressed.

Four key reforms
Fixing Europe’s broken food supply chain will require more than cosmetic changes. Prices must be set from the bottom up, which implies four key reforms, starting with the enforcement of contractual obligations. Dairy farmers, in particular, often deliver their products without knowing the price – an arrangement that would be unthinkable in most other sectors. EU law already provides leeway for reform, as seen in France and Spain, where binding written contracts are mandatory. Spain even prohibits sales below production costs. In Germany, however, attempts to introduce similar measures have been blocked by the agricultural lobby and its conservative and liberal allies.

Second, contractual obligations must extend to farming co-operatives. Although founded on progressive principles, many of these co-operatives now operate like conventional large corporations, prioritising the lowest possible purchase prices over the interests of milk producers. Yet in countries like Germany – where co-operatives account for 70 percent of milk processing – they remain exempt from such requirements.

Fixing Europe’s broken food supply chain will require more than cosmetic changes

Third, the rights of producer organisations must be strengthened. While dairy giants like Arla and DMK would control up to 13 percent of the EU’s milk volume following their planned merger, current EU rules cap the market share of farmer-led producer organisations at just four percent. Despite years of intensive discussions, this imbalance persists, hindering fair negotiations.

Lastly, EU policymakers must curb market concentration in food retail. In Germany, just four retailers control 85 percent of the food market. The food processing sector is also highly concentrated. A 2024 report by the German Monopolies Commission warned that rising market concentration is harming both producers and consumers.

Amid these challenges, promising models are beginning to emerge. One example is Germany’s recently piloted three-party contract, which is based on the French model. Instead of producers blindly delivering products to processors, who then sign separate contracts with retailers, all three parties agree in advance on suitable partners and enter into long-term agreements – typically lasting three to five years – with clearly defined pricing structures.

Such three-party contracts contain clauses mandating quarterly reviews to adjust for market and cost fluctuations. Beyond pricing, they address product layout, marketing strategies, and standards for animal welfare and environmental sustainability. By fostering a sense of shared responsibility, these agreements promote quality improvements and fair compensation. They also help shield producers and consumers from market volatility, create added value throughout the supply chain, and offer a foundation for best practices that can be scaled both nationally and regionally.

Given that European agriculture can remain viable only if farmers are able to cover their costs, the European Milk Board sees three-party contracts as an important step toward a fairer and more sustainable market structure. These agreements could provide income stability and planning security, benefiting all stakeholders: farmers, processors, and consumers, who currently overpay for low-cost, mass-produced food.

Fair pricing would also enhance Europe’s resilience to crises, war, and climate change. Today’s artificially low prices are made possible by the overexploitation of natural resources – both in Europe and globally – alongside poor animal welfare, precarious migrant labour, and the relentless financial pressure placed on farmers. With many EU farmers facing crushing debt and rising input costs, it is no surprise that under 12 percent are under the age of 40. If Europe wants to feed itself in the future, it must make farming economically and ecologically sustainable – not by increasing subsidies, but by establishing fair market conditions and introducing robust sustainability standards. Market-based solutions like three-party contracts show that positive change is possible, so long as Europe stays the course.

Gaming the market

Posted on August 6, 2025July 30, 2025 by itsupport

Xbox and Playstation to the rise of mobile games and e-sports, gaming has become a significant part of people’s lives. The gaming industry, which includes the development of software, hardware, game development, e-sports and game streaming platforms, is evolving rapidly like any other mainstream industry in the world. Valued at around $300bn, the gaming industry has become a multi-billion-dollar industry, surpassing both the music and movie industry. The year 2024 was tough for many industries, mainly for two reasons: one is global economic instability and the other is the emergence of AI. However, the gaming industry proved resilient. It appears the owners of gaming studios know how to stay in the game. According to Deloitte’s 2024 Report, the gaming industry will reach a value of $485bn by the year 2028.

Financial strategy is playing a critical role in the success and growth of top gaming companies. Investors now understand that games are not just made for entertainment but it is a serious business that requires effective investment forecasts, well-planned business strategies and market adaptability. Therefore, game developers and producers across the globe are focusing on financial strategies that boost revenues without disrupting users’ gaming experience. These strategies are changing the canvas of conventional financial strategies and re-shaping business ideas about investment and long-term planning.

From entertainment to enterprise
Today, gaming companies place emphasis more on operating as a tech company rather than focusing merely on entertainment. Many are either investing in games development or launching their own games. They recognise that the gaming industry is now based on data, engagement and diversified revenue streams. Even Netflix, a well-known entertainment platform, has introduced a separate section for games, while Meta, which owns Facebook, Instagram and WhatsApp, has also launched different VR headset games.

Modern games earn money through in-app purchases, virtual rewards and optional ad-skipping

The primary aim of gaming companies has traditionally been to produce games that will stand the test of time and keep gamers coming back again and again, driving a continuous revenue stream over the years. Their monetisation strategies are now considered some of the most innovative in the digital world, as they continue to evolve and explore different revenue channels.

As a result, a conventional one-time purchase by gamers is now an old tale. Modern games earn money through in-app purchases, virtual rewards and optional ad-skipping. Subscription services and in-game video ads have also increased the revenues of video game producers.

Where play meets profit
Many of today’s games come with vibrant in-game virtual economies. Unlike other companies that follow traditional financial models, gaming companies emphasise diversified revenue streams. Diversification has enabled the gaming companies to shift their risks effectively.

Introduction of virtual assets and virtual currency is a part of that financial strategy. Gamers use virtual currencies to buy virtual items like tools, costumes and power-ups. This motivates players to purchase and sell in-game assets to improve their gaming experience and upgrade their gaming profile.

In many cases gamers spend real money to purchase virtual assets. While these virtual assets hold no real-world value, they can significantly enhance the gaming experience. Some games allow the players to sell their virtual assets, enabling gamers to earn profit from their in-game investments. This shift has removed the difference between digital and physical economies, creating a new economic model now being observed closely by many financial institutions and researchers.

In addition to that, earning from virtual purchases has become a major part of gaming companies’ revenues. This is a marked changed from traditional financial transactions that usually require formal agreements. So on one hand players are playing, socialising and engaging, but also using virtual currency to upgrade their gaming experience. Furthermore, virtual currency in games has also enabled gaming companies to enhance their CSR strategies.

A new economy
Apart from the birth and exploration of this digital economy, a parallel economy has taken investors by storm. NFTs and the Metaverse are the latest technological developments that are boosting the spread of virtual economies. NFTs allow gamers to own unique virtual assets, enabling them to develop new value chains in games. Moreover, the Metaverse is changing the gaming industry by implementing Virtual Reality (VR) and Augmented Reality (AR) and thus offering players a unique and therefore valuable gaming experience. According to a Statista report, the Metaverse market alone is expected to reach a market volume of $490bn by 2030 (see Fig 1).

There are many companies that are involved in the Metaverse and NFTs, and these NFT-based platforms are created to grab the attention of gamers. A few of the prominent ones include: Axie Infinity, Gods Unchained, The Sandbox, Meta(Facebook), Epic Games and Decentraland. These platforms allow players to invest in virtual assets, trade assets and characters that hold value in the real economy. This creates opportunities for both players and investors.

The rise of ETFs and gamification
As the gaming industry turns into a proper economic force, investors and entrepreneurs alike are responding by creating financial instruments like ETFs and experience-driven processes like gamification. However, developing new games and related technologies requires heavy investment and naturally comes with a degree of risk. The success of a new game hinges on its reception upon launch.

Gaming ETFs are quite similar to mutual funds and are spread across a variety of different companies. Some of the famous gaming ETFs are VanEck Video Gaming and eSports ETF (ESPO). When it comes to making financial decisions, ETFs are also easy to invest in because, unlike individual stocks, even a casual investor can evaluate which ETFs are better to invest in.

Additionally, gamification strategy is being adopted by various companies across the globe. Game mechanics are being included in some form within nearly every company’s app. Even the banks and trading apps now include game-like engagement features. The reason behind introducing these features is that it makes the whole process, that which was previously considered tedious, more fun and interesting. Gamification also helps new investors to understand stocks and investments. Apps like Robinhood offer simple features and rewards to assist users trading stocks, which is again quite similar to games rewarding gamers for levelling up.

Beyond finance, this strategy is adopted by food delivery services, online shopping apps and fitness apps. These apps offer a certain level of gaming experience. Even Temu, the popularity of which has skyrocketed, now offers in-app games to improve engagement and spending. The aim of this strategy is to engage their consumers to stick to their apps for a longer time because the longer the stay, the more likely they are to spend.

Apart from the gaming industry’s monetisation strategies, their social media strategy is also different from other industries. For gaming studios, this shift has changed the conventional gaming formats and given rise to social gaming platforms. Social platforms such as Discord and Steam have provided gaming companies a path to showcase their social media presence in a whole different way. It has transformed gaming into more of a social experience. Many online games like PUBG, Call of Duty and DOTA are not just focusing on games but also on building a gamer community. So for gamers, the game becomes not the only attraction; they also go to the platform to interact, share experiences and connect.

Now this is a paradigm shift for gaming studios because it enables them to not only promote their games but also increase players’ engagement, something previously unheard of in the first days of games consoles.

Today, some gamers do not see games as purely a hobby. For them it can also be a business opportunity and a potential way to earn a living. Developers are earning money by selling their games and in-game items, while players are monetising their skills by live streaming their video games on platforms like Twitch and YouTube. Both platforms allow a wide range of monetisation options, including subscriptions, Bits, live stream ad revenue and affiliate marketing. Through these avenues, the gaming industry is influencing individuals to act as digital entrepreneurs. It teaches players how to invest, save, exchange and develop items that can earn them money.

The future is playable
Gaming isn’t just changing entertainment; it is transforming mindsets about finance, investment and digital economies. The gaming industry has in fact helped to reshape financial strategy by incorporating a perfect combination of user engagement, innovation and technology.

From virtual currencies and NFTs to ETFs, and to the gamification of finance, the impact of the gaming industry has branched out to both players and investors. It has allowed players to become digital pioneers, investors and entrepreneurs, all while indulging in their favourite hobby.

Because of these developments, the financial strategies pioneered by the gaming industry are likely to become a blueprint for the next generation’s business models. As gaming continues to influence each and every industry, one thing is certain. The future of business will be more interactive, engaging and play-driven.

Europe can’t rearm its way to security

Posted on August 5, 2025July 30, 2025 by itsupport

As Russia’s war on Ukraine rages on Europe’s eastern frontier, the continent’s leaders are finally willing to admit they have the power to revive their ailing economies. After decades of austerity, they are ready to spend again – but not to end poverty, accelerate decarbonisation, or reverse the collapse of essential public services. Instead, Europe’s fiscal firepower is being directed toward tanks, missiles and fighter jets. Reorganising the economy around state-supported defence spending is known as military Keynesianism, though John Maynard Keynes – who rose to prominence by condemning the punitive post-World War I peace treaty that was imposed on Weimar Germany, which ultimately helped set the stage for Hitler’s rise and another war – would probably not have endorsed the term.

The reasoning behind the resurgence of military Keynesianism is not entirely without merit, as the pursuit of austerity policies has left many European economies punching below their weight. European productivity, which has grown at half the pace of the US over the past decade, declined by one percent in 2023. Real wages fell by 4.3 percent in 2022 and 0.7 percent in 2023, following a decade of stagnation. Meanwhile, investment is nowhere near where it needs to be to tackle the twin crises of inequality and climate breakdown. Europe’s self-defeating commitment to austerity is epitomised by the German doctrine of ‘schwarze Null’ (black zero).

Even when Germany’s economic miracle was in full swing, politicians refused to invest in long-term growth. As a result, Germany – like most of the continent – has suffered from chronic underinvestment in physical and social infrastructure, constraining productivity.

The arms industry
Against this backdrop, rearmament may look like an easy fix. Unlike social expenditure, defence spending faces little political resistance. It enables politicians to appear tough – a valuable asset in an age of strongman politics – and keeps the arms industry, a powerful lobby with deep ties to political elites, flush with public money.

Modern militaries are among the planet’s largest institutional fossil-fuel consumers

But military Keynesianism is a dead end – both economically and politically. For starters, it is a weak engine of long-term growth. Modern weapons production relies on advanced manufacturing processes that use relatively little labour, so the industry has low multipliers compared to investments in health, education or green energy. It creates fewer jobs per euro spent and contributes little to the broader economy’s productive capacity. Military Keynesianism also deepens Europe’s dependence on fossil fuels, given that modern militaries are among the planet’s largest institutional fossil-fuel consumers.

Expanding defence capabilities means locking in demand for carbon-intensive technologies at a time when Europe should be phasing them out. Worse still, prioritising defence over decarbonisation sustains the very system of petropolitics that gives regimes like Russian President Vladimir Putin’s the resources to wage war in the first place.

As the Guardian reported earlier this year, the European Union has spent more on Russian fossil-fuel imports over the past three years than it has on financial aid to Ukraine. If the EU is serious about defeating Russia – not just on the battlefield, but geopolitically – then the bloc must confront the real source of the Kremlin’s power: oil and gas exports. Russia, after all, is a petrostate, and its war machine is financed by the revenues that flow from Europe’s addiction to fossil fuels. Oil and gas revenues have accounted for 30–50 percent of Russia’s federal budget over the past decade and still represent roughly 60 percent of its export revenues. These industries provide the vital dollars that enable Russia to import military technologies and other critical inputs. Without that income, the Russian economy would quickly collapse under the weight of hyperinflation.

A green transition
The most effective long-term strategy for countering Russian aggression, then, is not to ramp up military spending but to accelerate the green transition. What Europe needs is a real Green New Deal: a democratic, continent-wide mobilisation to decarbonise the economy, ensure energy security and create millions of well-paying green jobs. To be sure, this would require massive investment in renewable energy, public transit, retrofitting, and industrial electrification. It would also mean reshaping supply chains, restoring public ownership of key infrastructure, and breaking the stranglehold of fossil-fuel capital on European politics. But a Green New Deal would do more to strengthen the EU’s geopolitical standing than any number of new tanks and artillery shells. A Europe that produces its own clean energy, builds resilient green industries, and reduces its dependence on volatile global commodity markets is a Europe that cannot be held hostage by petro-tyrants.

Europe’s political elite faces a stark choice: continue propping up a broken growth model by funnelling public money into the military-industrial complex, or invest in a liveable future rooted in solidarity, sustainability and democratic control. In the long run, building an inclusive green economy is the only way to counter the rage and alienation fuelling the rise of far-right forces – the greatest and most immediate threat to Europe’s democracies.

Jensen Huang: All in on AI

Posted on August 4, 2025July 30, 2025 by itsupport

It would be virtually impossible to find a member of the public, let alone one who works in business and finance, who could not recognise six of the seven so-called ‘Magnificent Seven’ technology stocks. These companies – Apple, Microsoft, Google-parent Alphabet, Amazon, Facebook-owner Meta and Tesla – have long been household names. They are makers of products and software that millions of consumers use on a daily basis. But the seventh and most-recent entrant into the ranks of the most valuable tech companies is still unknown to many, despite being at the very centre of today’s most explosive market.

Nvidia is a trillion-dollar company that still manages to fly under the radar. A swift acceleration in its share price, from around $14 per share at the start of 2023 to more than $153 this year, has sent its valuation soaring, but the company is no newcomer to the tech world – and neither is its CEO, Jensen Huang.

Huang has been at the helm of Nvidia since its founding more than three decades ago, steering the company through economic shocks, near collapse and, finally, to wild success. What started as a maker of computer chips designed to render realistic 3D video game graphics now provides the technology that trains the world’s most powerful artificial intelligence (AI) programs.

Many attribute Nvidia’s success to Huang’s leadership and vision. “Nvidia’s rise from a small graphics chip maker to the AI giant it is today is nothing short of remarkable, and the success story has a lot, if not everything, to do with Nvidia’s co-founder and CEO, Jensen Huang,” Kate Leaman, chief market analyst at AvaTrade, told World Finance.

For some CEOs, a little bit of luck can lead to overnight success. But despite achieving this in the most literal sense – Nvidia’s market value increased by about $200bn in one day alone after it became known that its chips powered ChatGPT – Huang’s slow and methodical rise is a different story.

Still, critics question whether the AI boom, which has powered Nvidia’s growth, is sustainable. And as chips become prized national assets, geopolitical tensions are ramping up over these precious materials, but a fragmented market could be a problem for a company with global ambitions. Is Huang, who is tasked with walking the line between the world’s largest global powers all while staying at the cutting edge of a rapidly growing industry, the man for the job?

A vision of the future
Invariably dressed in his iconic black leather jacket, Huang’s uniform is reminiscent of Steve Jobs’ plain black turtleneck or Mark Zuckerburg’s casual T-shirts. But while he looks the part of the CEO of a $3trn tech company today, he was not entirely confident of Nvidia’s success from day one. About the company’s early days, Huang is said to have described its prospects with his typical down-to-earth sense of humour, saying it had a “market challenge, a technology challenge, and an ecosystem challenge with approximately zero percent chance of success,” according to a report by Quartr. What, then, led him to overcome those challenges to reach such great heights?

Building a company turned out to be a million times harder than any of us expected it to be

“Huang is a visionary,” Leaman said. “He saw, since 1993, the year of Nvidia’s inception, a bigger future for the company than just chips for gamers. Today, Nvidia’s chips are used to train and run some of the most powerful AI computing systems in the world.”

Indeed, under Huang’s leadership, Nvidia has capitalised on the explosive interest in AI. Today, more than 35,000 companies use its AI technologies, including most major tech firms, from Amazon to Google to Microsoft. Tech heavyweights and even world leaders court Huang as they jostle for a larger share of Nvidia’s sought-after chips.

Huang bet on the right technologies to propel Nvidia to success. But there is more to it than his vision alone, according to Alex de Vigan, founder and CEO at Nfinite, a Paris-based tech firm that works with Nvidia. “For me, what sets Jensen Huang apart isn’t just vision – it is patience and precision. Nvidia didn’t pivot to AI overnight. They invested in developer ecosystems, scientific computing and graphics at a time when few others saw the throughline.”

From dishwasher to CEO
Huang has attributed the resilience that helped him build one of the world’s biggest tech companies to his childhood. Born Jen-Hsun Huang in 1963 in Taiwan, Huang arrived in the US when he was nine years old and soon became the youngest child at a boarding school in rural Kentucky. His first working experience was a typical teenager’s first job, working as a dishwasher at a local Denny’s restaurant. This experience has stayed with him, and he has claimed his ability to stay calm and perform under pressure is down to spending his formative years working through long rush hours at the diner chain. Huang worked his way up from dishwasher to waiter, and, years later, in a Denny’s booth outside of San Jose, he, along with Chris Malachowsky and Curtis Priem, founded Nvidia. Huang’s connection with the diner chain has been immortalised with a commemorative plaque on the booth where it all started. After graduating high school early, Huang attended Oregon State University to study electrical engineering. There, he met his wife Lori, and the pair eventually moved to Silicon Valley to join the fast-growing market for semiconductors. Before starting Nvidia, Huang gained industry experience with a short stint at AMD, working on microprocessors, and climbing the ranks at LSI Logic, a semiconductor manufacturer. AMD and Broadcom, which bought LSI Logic, are now rivals of Nvidia.

From the Denny’s booth, Huang and his two co-founders named their company after the Latin word for envy, invidia, and competitors today would surely agree it was a prescient word to choose. But Nvidia’s road to success wasn’t easy or straightforward. Just a few years after its founding, Nvidia came dangerously close to bankruptcy, but it was saved by the launch of the RIVA 128 graphics card in 1997.

This was the first chip that put Nvidia on the map. “Building a company, and building Nvidia, turned out to be a million times harder than any of us expected it to be,” Huang said on the podcast Acquired, which covers tech listings and acquisitions. “If we had realised the pain and suffering and just how vulnerable you are going to feel and the challenges that you are going to endure and the embarrassment and the shame and the list of all the things that go wrong, I don’t think anybody would start a company.”

But those struggles paid off because Nvidia built more than a product. “Nvidia has succeeded because it didn’t just build chips, it built an ecosystem,” said de Vigan. The creation of CUDA, Nvidia’s computing platform, in 2006, was “brilliant,” he said. CUDA allowed graphics processing units (GPUs), which were then only for gaming, to be used more widely, thus expanding Nvidia’s potential market size. “By enabling developers early on to build and scale (machine learning) workloads on their architecture, they locked in relevance before AI was mainstream.”

This strategy is one Huang continues to employ. “Today, their edge is not just silicon, but platforms like Omniverse,” de Vigan continued. Omniverse, according to Nvidia’s website, “plays a foundational role in the building of the metaverse, the next stage of the internet.” De Vigan said this platform “speaks directly to where AI is going: physical simulation, robotics, and digital twins. They are not selling hardware, they are really enabling the future of machine perception and autonomy.”

Breaking conventions
Nvidia’s company culture is as eye-catching as its product, and another likely cause of its success, yet Huang receives almost as much criticism for it as he does praise. In an interview with CBS News’ 60 Minutes, Nvidia employees labelled Huang as ‘demanding’ and a ‘perfectionist’ and said he wasn’t easy to work for. Huang, who is known for his angry outbursts, didn’t disagree with this assessment. “It should be like that,” he told journalist Bill Whitaker. “If you want to do extraordinary things, it shouldn’t be easy.”

Start-ups are known for challenging conventions in workplace culture and company structure, but it is much less common to see large companies like Nvidia bucking trends. Huang has made a point of doing so as Nvidia’s size has grown exponentially. For example, Huang has as many as 50 direct reports, compared with most CEOs, who have a dozen or fewer. The reason? To do away with unnecessary management and keep the company agile. However, it could also be seen as an attempt to micromanage rather than delegate.

As well as keeping up with dozens and dozens of direct reports, Huang receives tens of thousands of emails per week detailing employees’ priority areas. The T5T, to ‘top five things’ emails are brief, bullet-pointed notes where employees can discuss what they are working on or most interested in, and they have become a way for Huang to keep his finger on the pulse of the business. It all feeds into his vision of constantly being on the lookout for the next big thing. He reads each email, and it is not unusual for him to reply.

It is evident that Huang still enjoys being deeply involved in the day-to-day operations of Nvidia. “More than just a CEO, Huang is an engineer,” Leaman said. “He likes to get involved in the details.”

“To me, no task is beneath me,” Huang said in an interview with Stanford Graduate School of Business, harking back to his days at Denny’s washing dishes and cleaning toilets. “If you send me something and you want my input on it and I can be of service to you – and, in my review of it, share with you how I reasoned through it – I have made a contribution to you,” he said. He doesn’t simply jump into his reports’ projects and take over. “I show people how to reason through things all the time: strategy things, how to forecast something, how to break a problem down,” he said. “You’re empowering people all over the place.”

Huang is known for explaining difficult tech in simple words and for creating a company culture where taking risks is part of the job, Leaman said. “Inside Nvidia, it is common to hear people say ‘fail fast.’ They know that trying, failing, and trying again is how breakthroughs happen.” Indeed, Huang frequently asks employees to act as if the company has only 30 days until it goes bust.

It is this culture – reminiscent of Mark Zuckerberg’s famous motto, ‘Move fast and break things’ – that has driven Nvidia to where it is today. “In the 2000s, during the tech crash, while his counterparts were cutting back, Huang went all-in on research, a move that surely helped propel the company to where it is today, a member of the trillion dollar club,” Leaman explained.

While his leadership style may be unconventional, his longevity and many loyal employees speak to its success. Still, his greatest asset may be his ability to predict the next big thing in tech. “What makes Huang stand out is his ability to see 10 years ahead and build the tools the world will need when it catches up,” Leaman said. If he can leverage this skill today, when uncertainty is on the rise worldwide, the coming years could prove another pivotal point for Nvidia.

A bubble?
With the artificial intelligence sector in the midst of rapid growth, the question experts are asking now is how much more room it has to grow. The US remains the hottest market, with private investment in the sector growing to $109.1bn in 2024, nearly 12 times China’s $9.3bn, according to Stanford’s 2025 AI Index Report. More and more companies are integrating AI into their systems, with 78 percent of organisations reporting using AI in 2024, up from 55 percent the previous year. As AI remains in its early development phase, there are still opportunities to take a slice of the market, and companies continue to crop up in the sector.

Between 2010 and 2023, the number of AI patents has grown from around 3,800 to more than 122,000. In the last year alone, the number of AI patents rose 29.6 percent. For some critics, the AI industry’s ballooning growth is ringing alarm bells. Jim Chanos, the founder of Kynikos Associates, a short-selling specialist, pointed out to Reuters that tech capex in the US contributed almost a full percentage point to gross domestic product (GDP) in the first quarter of 2025. The last time it did that was just before the peak of the dotcom bubble.

“There is no question we are in a phase of inflated expectations,” said Neil Cawse, founder and CEO of Geotab, a Canadian creator of fleet management technology. “But calling it a bubble misses the point. AI isn’t a passing trend; it is infrastructure. Like electricity or the internet, it is becoming part of the baseline of how work gets done.” Cawse admits there is a lot of hype surrounding AI, and not every start-up or use case for the technology will succeed. “But the core technology is already delivering. At Geotab, we are starting to see 30–50 percent efficiency gains. That is not speculative; it is real, measurable output. A potential game changer on the scale of the Industrial Revolution,” he said.

De Vigan believes that AI is not a bubble but a “restructuring of the value chain.” While he agreed that some speculative capital will “evaporate,” he called the overarching changes “foundational.” “AI isn’t a single product category – it is becoming the operating system of both the physical and digital economy.”

Yet even if there is no bubble, more challenges will arise as companies like Nvidia are forced to keep pace with competition. With companies like AMD snapping at Nvidia’s heels and threatening to take more GPU market share, and growing ranks of new start-ups entering the sector, AI will remain a fiercely competitive industry. Meanwhile, the very foundations of the sector are being shaken by geopolitical forces.

AI gets political
As the go-to chipmaker around the world, Nvidia has seen demand soar, but the US government is attempting to put the brakes on some avenues for growth – namely, the Chinese market. “Chips are now strategic assets, sitting at the intersection of national security, industrial policy, and economic sovereignty,” de Vigan said.

With much at stake in this still-young industry, geopolitics has the power to reshape AI, especially in semiconductors and AI infrastructure, said Cawse. “We are seeing a new kind of race: not just for economic dominance, but for technology, data, algorithms, and talent.” In an aim to restrict China’s military from accessing advanced US technology, president Donald Trump, like Joe Biden before him, has sought to limit China’s access to the technology by blocking exports of key microchips. Huang called these export controls “a failure,” as they cause more harm for US businesses than China.

Losing access to the world’s second-largest economy, essentially abandoning a $50bn market, would cause Nvidia to take a huge hit, Huang has said. Speaking at the Milken Institute annual meeting, he said it risks letting Huawei step in to take Nvidia’s place, allowing it to become a significant competitor and cutting American technology – currently the world standard – out of a huge market.

De Vigan agreed that the block on exports puts Nvidia in a tough position. “I think the challenge will be continuing to lead globally while navigating increasing pressure to localise or decouple,” he said. Beyond this, the sector could see more fragmentation as regions of the world, such as the US, China and Europe, create their own regulatory and computing backbone.

As Cawse sees it, there are positives to be found even in the challenging outlook. “The China–West dynamic is pushing investment and competition, which isn’t necessarily a bad thing. It is driving innovation. The key is that this can benefit everyone if we maintain open access to models, new AI algorithms, model training innovations and responsible AI safety standards.”

A bright future
While challenges remain, Nvidia is nearly untouchable thanks to its novel position of market dominance. “Today, Nvidia finds itself at the very heart of the AI revolution,” said Leaman. “The world’s biggest tech players – Microsoft, Amazon, Google, and Meta – are not just customers; they are partners, relying on Nvidia’s GPUs to drive everything from cloud computing to the next breakthroughs in generative AI.

“Nvidia isn’t competing with companies like OpenAI or Google to build AI apps or chatbots,” Leaman continued. “It plays a different role. You could think of Nvidia as the engine under the hood as its chips are what power the AI models these companies create.” With AI finally delivering in real, measurable ways, Nvidia now has countless pathways to further growth. “It doesn’t matter if it is a chatbot, an image generator, or an autonomous car. Behind the scenes, chances are Nvidia is providing the hardware – and increasingly, the software – that makes it all possible.

“And it is not only tech giants in Silicon Valley using it,” Leaman said. “Hospitals are using Nvidia’s AI for medical imaging. Car companies are using it to develop self-driving vehicles. Industries far beyond tech are now part of what Nvidia calls multibillion-dollar AI markets in areas like automotive and healthcare.”

Huang, as the architect of this success, is now tasked with continuing to steer the company on an upward trajectory. Based on the amount of money big tech firms have pledged for investing in computing infrastructure in the coming years, analysts at the Bank of America calculated that Nvidia’s data centre networking solutions stand to benefit significantly, with the stock expected to rise to a whopping $190 per share. Elsewhere, however, questions are rising over Nvidia’s near-monopoly of the sector.

Yet, Huang’s unique position of power in the AI space gives him the authority not only to negotiate with geopolitical forces but also to look into his crystal ball to see where the sector is headed next – and have a hand in steering it there, too. One day in the coming years, Nvidia’s many fans and loyal employees may begin to worry over the company’s lack of succession planning, but for now, they are all in on Huang.

The $15trn question: who will pay for tomorrow’s infrastructure?

Posted on August 1, 2025July 30, 2025 by itsupport

With fiscal constraints a dominant feature of the economic landscape across major economies, politicians’ eyes are increasingly alighting on the trillions managed by financial institutions. They are knocking on the doors of banks, pension funds, insurance companies, sovereign wealth funds and asset managers in a drive to persuade them that investing in a wide range of infrastructure projects would be good for their balance sheets, their investors and their policyholders.

The sums are huge. McKinsey & Company has estimated that globally an average of $3.7trn of infrastructure investment will be needed every year just to keep pace with economic growth. A large slice of this will be financed by governments, but this will only go so far, according to the Global Infrastructure Hub, a G20 initiative supported by the World Bank. In a recent report it estimated that by 2040 the world faces an investment gap of $15trn. However you look at the challenge, the sums needed from the private sector to address it are huge.

Institutional money is there and is constantly seeking the most appropriate assets to invest in, but the willingness to commit it to massive public infrastructure projects is very restrained, according to Manpreet Kaur Juneja, an infrastructure specialist with the World Bank: “Despite their ample resources, private financiers often view infrastructure investments as high risk. These perceived risks are the result of a complex set of issues, such as large asset sizes, long project life cycles, complex structuring, large initial irrecoverable costs, political and regulatory changes, wariness of citizens to accept privately run services due to perception of higher prices, and the lack of tradability of infrastructure assets,” she said in a recent World Bank blog.

The shopping list of projects debt-constrained governments are seeking injections of vast amounts of private sector finance for gets longer every time a finance minister is forced to answer the question: how are you going to pay for that?

Many of the projects seeking private sector finance have been talked about for several years and some have already found a place in investment portfolios, either through direct participation or through one of the many infrastructure bond offerings (see Fig 1). So, what do these projects look like and why might they appeal to private investors?

Financing forum
When some of the world’s biggest investors gather in Los Angeles in September for McKinsey’s 10th Global Infrastructure Summit, they will be tackling a broad, ambitious agenda that embraces a wide range of opportunities:

>Delivering smart, green infrastructure: The energy and digital transitions require a huge portfolio of new assets, from chip plants to offshore wind farms and modern port terminals.

>Renewing critical infrastructure assets: While there is significant demand for construction of new projects, most of the world’s infrastructure already exists. Much of this brownfield infrastructure requires rejuvenation to become more technology-enabled and energy-efficient.

>Integrating AI and disruptive technologies: An enduring industry challenge given long asset lifecycles, technology fragmentation, and other hurdles from privacy concerns to skill gaps.

>Embracing the age of digital infrastructure: Data centres, fibre networks and semiconductor fabrication facilities will all become critical assets for investors and governments.

Transforming this shopping list into attractive investment opportunities will run into the harsh realities of geopolitical uncertainty and financial volatility, reinforcing the long-standing reluctance of potential investors.

As the world emerged from the Covid-19 pandemic, there was a burst of enthusiasm for stimulating the urgently needed economic recovery through infrastructure projects. This was typified by President Biden’s Green New Deal, with its echoes of his predecessor Franklin D. Roosevelt’s New Deal that revived the US economy so successfully in the 1930s. Biden wrapped up a range of green transport projects, such as encouraging a switch to electric vehicles and the development of sustainable aviation fuels, along with major investments into renewable energy, grid modernisation, carbon capture and adaptations to meet the challenges of climate change. These plans were launched through the Inflation Reduction Act 2022 and the Infrastructure Investment and Jobs Act 2021. These committed hundreds of billions of dollars in public funding but also touted the prospect of raising $250bn from the private sector. This process had barely started when Donald Trump entered the White House at the beginning of the year, quickly making it clear that the Green New Deal was dead and that the flow of public money into hundreds of projects underway or ready for launch could be about to dry up.

The winds of change
Inevitably, investment portfolios are being rebalanced in response to these shifting policy priorities, further complicated by the continuing shock waves from the Trump administration’s unpredictable tariff policies. It is no surprise given the shunning of net zero ambitions and the reversal of policies for reducing the use of fossil fuels that renewable energy projects, in particular, are struggling to raise finance. Some renewable-focused funds have seen reduced inflows, while traditional infrastructure assets – such as roads, bridges and airports – are regaining prominence.

This does not mean that the flow of money into renewable energy projects will dry up, says Illia Kyslytskyi, asset manager at Florida-based Yaru Investments: “The threat of the downfall of the Biden administration’s Green Deal initiatives has consequences for green infrastructure investment in America’s future. Whereas certain initiatives would be denied federal support, state governments and the private sector may still drive investment into wind and solar power, electric vehicle charging stations, and climate adaptation programmes.”

Investors will still be looking for some reassurances, however: “As far as such programmes go and whether they continue to gain institutional investors, that hinges on regulatory guarantees, tax credits, and the development of new funding vehicles.”

These shifting priorities are not unique to the US. In the UK and Europe, the need to ramp up defence spending has led to a reappraisal of government spending priorities. In some countries – Germany being the most obvious example – it has also led to long-standing fiscal and debt rules being reassessed. Such major policy shifts have consequences across other asset classes.

Germany’s shift from its historic reluctance to borrow to a ‘whatever it takes’ plan for military and infrastructure spending helped boost 10-year Bund yields to nearly three percent in March, a two-year high. This has driven up bond yields across the Eurozone, thanks to German debt’s role as the de facto benchmark for the bloc’s market.

This has led to warnings that the additional borrowing costs countries might incur relative to Germany could widen, making it much harder for some countries to borrow to support increased military expenditure. Cue yet more eyes being cast towards the private sector, along with new solutions coming on stream. It has given a fresh impetus to the development of blended finance solutions – vehicles for bringing together private and public finance in a way that delivers for both sides. These are nothing new.

A private accord
In the UK in the mid-1990s and into the current century, the Private Finance Initiative played a major role in UK infrastructure development, building many new schools and hospitals. This served its purpose at the time but needs a rethink, said investment specialist HICL Infrastructure in a recent report published by Investors Chronicle: “There is now a pressing need for a new public-private co-operation model. One that retains successful elements of past initiatives, while learning from their shortcomings. This evolved model should be less cumbersome, allowing private capital to engage more dynamically with public projects.”

Green Bonds offer viable model

The International Finance Corporation, part of the World Bank, has led the creation of a viable green bond offering. The aim is simple: to finance sustainable, climate-smart projects with a positive environmental impact, with the goal to speed the transition to a low-carbon economy. IFC green bonds were first issued in 2008 as senior unsecured debt, following that in 2013 with the first global US Dollar benchmark green bond in the market, which took green bonds from being niche products to mainstream assets.

Other multi-national institutions, such as the Asian Development Bank, have also helped grow the market. The IFC’s green bond programme is now complimented by a similar social bond programme with broader objectives, including affordable housing, access to healthcare and education, food security and clean water projects. It is estimated that by mid-2024 the global green bond market surpassed $2trn in cumulative issuance since inception, with over $500bn issued in 2023. For social bonds the cumulative issuance is now over $800bn.

The Labour government in the UK is making plenty of noise about the need for infrastructure investment, giving the green light to projects such as the Lower Thames Crossing and unleashing a series of reforms to the planning system to make it easier for major housing and industrial developments to be approved. It will have to move quickly if it wants to attract large sums of highly mobile international capital.

Across Europe, everyone is in the same position. France, Germany and the Nordics are already leveraging new models of public-private partnerships (PPP) to drive infrastructure expansion. The European Union’s Recovery and Resilience Facility is also playing a critical role by providing grants and loans for strategic infrastructure projects, providing that secure foundation of public financing private investors are looking for.

Europe, faced with the urgent need to boost its defence spending in the face of America’s equivocal attitude to maintaining its long-term commitment to European security, is also exploring the integration of infrastructure development with defence needs. Dual-use infrastructure, such as ports, railways, and cyber networks, already serve both economic and security purposes. This blending of infrastructure and defence spending is in its early days but is an attempt to address the fears of some that defence spending may crowd out infrastructure funding.

Canada has long been regarded as a PPP leader using an availability payment structure, where the government pays the private operator fixed periodic fees in return for delivering and operating the infrastructure to agreed service levels. Because the government assumes usage risk in this model, private partners enjoy a secure revenue stream as long as they meet performance standards.

According to the Inter-American Development Bank, many Latin American countries have successfully embraced PPPs to close infrastructure gaps. It says the region leads the developing world in attracting private participation in infrastructure, with an estimated $770bn of private investment pulled in over the last 30 years – roughly 25 percent more than East Asia and Pacific countries in the same period.

Tax incentives are an obvious route and have been used widely in several major economies

These PPP models mitigate some of the risk involved in infrastructure investments, but they have not been sufficient to close that huge gap. More needs to be done. The projects are there, governments are almost pleading for private sector investment, so what more is now needed to unlock those funds?
Some of the reluctance of the decision-makers controlling major investment funds to commit to large-scale investment in infrastructure has been the lack of liquidity. The long-term commitments implicit in major infrastructure projects often means the assets are locked into a portfolio, even when the promised returns do not materialise. This especially inhibits direct investment in major infrastructure projects, unless other incentives offset the liquidity concerns.

Illiquid courage
Investment via bonds provides some protection against this, but often there is no ready-made market so exit options can be very limited. Kyslytskyi says the illiquidity challenge is a significant barrier but solutions are at hand: “Liquidity remains a fundamental concern in infrastructure investment, as such assets are illiquid and long-term in nature. Investors are circumventing this issue by increasing their participation in secondary market transactions, where infrastructure stakes are traded to manage portfolio flexibility. Infrastructure debt instruments, such as project bonds and infrastructure debt funds, offer access to the asset class with greater liquidity than direct equity investment. Other investors are also matching listed infrastructure equities with private ownership of infrastructure as a means of balancing liquidity needs.”

Infrastructure bonds are not new but have been a relatively neglected asset class. The renewed pressure to attract private sector funds has led to an expansion in volume and variety, especially with the emergence of a new generation of Green Bonds designed to attract pension funds, insurance companies, and sovereign wealth funds.

These bonds are usually long-duration and inflation-linked, offering predictable, stable returns aligned with the needs of long-term investors such as pension funds. Those features need to be overlaid with government-backed guarantees or co-investment structures to reduce risk, which takes many forms with large-scale projects. The most obvious risk is abrupt changes in government policies, a fear rekindled by the gyrations in US government policy following the change in administration. Another key fear that is never far from the surface in conversations about infrastructure investment is deliverability.

Complex fragility
This was highlighted in a recent report from the Boston Consulting Group which explored the UK’s infrastructure challenge: “Announcing new projects is the easy part. Based on historical data from 2010 to 2015 we estimate that 16 percent of announced projects did not, in the end, proceed, while a further 21 percent have become stuck in the pre-construction period for over a decade.”

Infrastructure bonds are not new but have been a relatively neglected asset class

One of the key challenges – by no means unique to the UK – is the supply chain. With the global demand for materials, skills and expertise ramping up at the same time this could impose a major constraint. The Covid-19 pandemic, geopolitical uncertainties and the blocking of the Suez Canal by just one huge container ship, the Ever Given, for six days in March 2021, reminded everyone of the fragility of complex supply chains.

Fund managers will expect solutions, says Boston Consulting: “In the face of such huge demand, it is not surprising that supply chains might be unable to respond effectively. Based on a series of industry case studies we have identified five common challenges in UK supply chains which underpin this,” providing a tough list for investment managers to address before committing their funds:

1) Scarcity of key inputs across both skills and key components.
2) Lack of co-ordination and leadership at national level and within supply chains. There is no clear pipeline or prioritisation at national level and too little leadership within very fragmented supply chains.
3) The move to a seller’s market: suppliers increasingly face the choice of which clients and countries they work with.
4) Poorly scoped projects: at national and project level there has often not been proper scope optimisation.
5) Lack of effective and integrated commercial strategy.

The UK’s National Audit Office also highlighted the need for greater commercial awareness in a report – Lessons for public infrastructure investment using private finance – published at the end of March: “The government should adopt a commercial strategy to deliver successful outcomes. To achieve this, commercial expertise is needed to undertake an efficient procurement process, supplier contracts must be managed effectively, and contingency plans should include protections and alternative options to mitigate supplier risks.”

While reassurance on these key issues and the development of a more sophisticated infrastructure bond market – with its own robust indices and greater liquidity – will go some way to stimulate the flow of private money, it will have to be matched with some serious incentives.

Tax incentives are an obvious route and have been used widely in several major economies, including the US, India and Brazil, where a new law in 2024 exempts foreign investors from the 15 percent withholding tax on interest from infrastructure bonds issued abroad. Promising stable revenue streams from investments is another tool governments can use, although this comes with political risks as it raises important questions about pricing, access, and equity. As more projects move to user-pay models, such as with the mammoth Lower Thames Crossing project east of London, there is a risk of public backlash, especially if service quality does not match increased costs.

Many institutions also point to the very restrictive treatment of infrastructure assets – mainly because of their illiquidity and valuation challenges – by regulators. This has particularly applied to the European Union and the UK, where tough solvency rules have proved a heavy disincentive. Both the EU and UK regulators are looking at reducing the capital charges levied against infrastructure assets. This has been a prominent theme in the lobbying of the UK’s Prudential Regulation Authority by the sector, aided by pressure from the UK Chancellor of the Exchequer Rachel Reeves, who has brought leading financial institutions together in a new Infrastructure Taskforce. She has made it clear she expects the private sector to fill the UK’s infrastructure funding gap and has not been shy about taking a more interventionist stance if the incentive route does not produce results.

Liquidity remains a fundamental concern in infrastructure investment

The UK government is already forcing through a major merger of vast local government pension funds in the belief this will make them look more favourably at infrastructure investment opportunities. The UK Treasury is reportedly preparing to formalise an agreement – possibly backed by legislation – that would require pension funds to commit up to 10 percent of assets into private markets, with half of that required to be channelled into UK-based investments.

This has attracted some sharp criticism from advisers who sit at the interface between institutional fund managers and policyholders. “Forcing pension funds to tilt portfolios toward one geography regardless of market conditions could distort asset allocation, reduce diversification, and expose millions of future retirees to lower performance,” warns Nigel Green, CEO of deVere Group, a global independent financial advisory and asset management firm.

“It is not the job of pension managers to carry the weight of industrial policy. If UK firms are being overlooked, there is a reason for it. The solution isn’t to coerce capital into local markets. The solution is to make those markets perform better,” Green says. “People expect their pension contributions to be professionally managed in their best interests and not treated as a national piggy bank,” added Green. It demonstrates just how challenging it is going to be for governments to plug the investment gap. For every solution offered, there is a potential downside, or at least a very careful balancing of competing interests to be worked through.

Private equity eyes indie films in the age of streaming

Posted on July 31, 2025July 31, 2025 by itsupport

PRIVATE EQUITY EYES

indie films

in the age of

streaming

By Jamin Liu

Once considered too niche and risky for serious money, indie film is now luring top-tier investors with scalable platforms, breakout hits, and box office upside. As studios like A24 and Mubi reshape the business model, private equity is betting big on a cinematic future beyond Hollywood blockbusters

Indie films, long viewed as too risky and niche for private equity, have attracted a wave of equity investments from prestigious funds traditionally drawn to predictability and scalability.

Founded in 2012, New York-based indie film production and distribution company A24 raised $225m equity investment led by Stripes in 2022, valuing it at $2.5bn. Two years later, it secured an undisclosed amount of equity led by Thrive Capital, with backing from investors participating its previous round such as Neuberger Berman, at a $3.5bn valuation, a 40 percent increase.

London-based Mubi, a global streaming platform, film producer, and distributor specialising on arthouse films, just raised $100m growth capital led by Sequoia Capital in June 2025 at a valuation of $1bn, according to Variety. Prior to this, it raised an undisclosed amount of minority growth investment from Summit Partners in 2021.

Indie films are emerging as a compelling alternative in today’s ever-changing entertainment landscape

In 2024, Fortress Investment Group acquired Curzon, a UK-based arthouse film company, for an undisclosed amount of capital. Curzon operates across three business units: Curzon Cinemas, which operates 16 cinemas and 46 screens across the UK, its film distribution business Curzon Film, and streaming platform Curzon Home Cinema.

Box office hit

There is significant growth potential in the indie film market. Once seen as marginal, indie films are delivering both box office results and critical acclaim. According to Efe Cakarel, founder of Mubi, one third of the biggest 200 films over the past three years in the box office were specialty films. At the 97th Oscars Awards in 2025, six of ten Best Picture nominees were indie films, up from four in both 2024 and 2023. Moreover, the market is far from saturated. A recent study conducted by Keri Putnam, fromer CEO of the Sundance Institute, estimates that 77 million Americans are open to pay for a streaming platform focused on indie films and documentaries, compared to only 36.7 million Americans who currently engage with such content. As she told IndieWire, “people are looking for alternatives.”

Anime has already emerged as a major alternative to mainstream Hollywood blockbusters. Netflix reported that more than half of its 150 million household subscribers watched anime on the platform, tripling over the last five years, and the number of anime titles featured in the platform’s rotating Global Top 10 (Non-English) list in 2024 rose to 33, more than double the number from 2021. Dentsu, a Japanese advertising company, claimed that nearly one third of US anime fans watch them due to “fatigue with Hollywood sequels and remakes”.

Netflix reported that more than half of its 150 million household subscribers watched anime on the platform

Indie films are emerging as a compelling alternative in today’s ever-changing entertainment landscape when traditional big-budget model turns increasingly risky. Anecdotally, a manager of a major Hollywood film studio once said that their business could go on if they have at least three profitable movies each year but if they don’t have one single profitable movie for three consecutive years, they will go bankrupt.

When Disney grossed $2.8bn from Avengers: Endgame at a production cost of $356m and a marketing cost of $200m, it also only earned $205m from Snow White, barely enough to cover the production cost of $270m. In contrast, indie film economics offer greater resilience and the freedom to take creative risks. As the poster child of indie films, A24 have redefined the playbook by leveraging creative and cost- efficient distribution strategies. One example is the pop-up shop they launched in Manhattan in 2017 called A Ghost Store to promote A Ghost Story. They eventually grossed nearly $2m at the box office from this film with only a $100,000 production cost, a 20x return. As Cakarel said to Financial Times, the indie film industry are not competing with Netflix as they are completely different businesses.

We’re going to need a bigger boat

That said, the exit paths for investors in indie films remain uncertain. In the post-Covid M&A boom, Hello Sunshine, a studio that puts women in the centre of every story and is founded by actress Reese Witherspoon in Los Angeles in 2016, raised an undisclosed amount of majority investment from Blackstone-backed Candle Media. The deal reportedly evaluated Hello Sunshine at $900m, signalling strong investor interest in this sector.

Reese Witherspoon, founder of the Hello Sunshine studio, Source: Eva Rinaldi

However, as central banks hiked interest rates and geopolitical risks escalated, this path became less viable. Founded in 2017, another New York-based arthouse film studio Neon, often viewed as the strongest rival of A24, has distributed every Palm D’or winner since 2019’s Parasite, which has earned both box office success and critical acclaim. Despite its strong track record, a sale to the owner of Criterion Collection, Steven Rales, rumoured at over $100m, collapsed in 2023 amid the tightening M&A market.

The more systematic challenge for the industry lies in carving out audience engagement in a landscape dominated by major film studios and streaming platforms. Putman observes that one key obstacle for indie content to is the lack of a centralised platform. When audience browse different streaming platforms, the front pages are full of blockbusters, while niche titles are difficult to discover.

Two door cinema club

A24 and Mubi exemplify the potential paths for content-rich but capital hungry indie film studios. By tapping external capital, they are expanding beyond traditional production and distribution to build a direct-to-consumer platform. A24, for example, offers $9.90 monthly membership that includes a ticket to each new release, among other perks such as a quarterly magazine. Similarly, Mubi’s $19.99 premium membership delivers one cinema ticket per week across the US, the UK, and Germany.

Indie film economics offer greater resilience and the freedom to take creative risks

According to Variety, Cakarel sees this strategy as a way to bring people back to cinemas. A24 also bought the Cherry Lane theatre in New York for $10 million in 2023, in the hopes of building an integrated and omni-channel network.

If the platform narrative proves successful and replicable, we may witness a structural shift in the media and entertainment landscape, which could catalyse a new wave of indie film studios and more strategic M&A activity in the foreseeable future.

For more information

Jamin Liu

yiming.ykln@gmail.com

The looming global debt disaster

Posted on July 31, 2025July 30, 2025 by itsupport

Despite a succession of shocks since 2020, the global economy has held up remarkably well – so far. But the margin for error is dwindling. Total global debt is now nearly 25 percent higher than it was on the eve of the Covid-19 pandemic, when it already was at an all-time high. This overhang could undercut all economies’ ability to shield themselves against the latest shock: higher trade tariffs.

Although debt is crucial for driving economic growth, it should be understood as a form of deferred taxation. By borrowing rather than taxing, governments can make long-term investments that will benefit future taxpayers without burdening the current generation; or they can prop up national growth and incomes during an economic emergency, when hiking taxes would only deepen the downturn. Eventually, however, the piper must be paid, and if national income does not grow faster than the cost of borrowing, taxes must be raised to repay the debt. Persistently high debt thus becomes a barrier to economic progress. That barrier has seldom been higher. Over the last 15 years, developing countries got hooked on debt, which they amassed at a record-setting clip: six percentage points of GDP per year, on average. Such rapid debt buildups often end in tears. Indeed, the odds that they will trigger a financial crisis are roughly 50-50.

Moreover, this particular surge has been punctuated by the fastest increase in interest rates in four decades. Borrowing costs doubled for half of all developing economies, with net interest costs as a share of government revenues rising from less than nine percent in 2007 to about 20 percent in 2024. That alone constitutes a crisis. Although the world has so far managed to dodge a ‘systemic’ financial meltdown of the 2008–09 variety, too many developing economies are now in a doom loop. To service their debts, many are cutting the investments in education, health care and infrastructure that they need to assure future growth.

Future global workforce
This is especially true of the 78 poor countries that are eligible to borrow from the World Bank’s International Development Association. These countries are home to one-quarter of humanity, representing a large slice of the 1.2 billion young people who will enter the global workforce in the next 10–15 years. Yet policymakers around the world have opted to tempt fate. In another triumph of hope over experience, they are betting that global growth will accelerate – and that interest rates will fall – by just enough to defuse the debt bomb.

The world cannot afford yet another decade of drift and denial where debt is concerned

Such passivity is understandable. It has been extremely difficult to devise a 21st-century system capable of ensuring global debt sustainability and swift debt restructuring for countries that need it. In the absence of such a system, the progress that has occurred has been too slow to avoid rising debt dangers. But the world cannot afford yet another decade of drift and denial where debt is concerned.

Under current policies, global growth will not speed up anytime soon, which means that sovereign debt-to-GDP ratios are likely to climb for the remainder of this decade (see Fig 1).

Gloomy forecast predicted
Today’s trade wars and record-breaking levels of policy uncertainty have only made the outlook worse. At the start of 2025, the consensus forecast among economists was predicted 2.6 percent global growth this year. That number is now down to 2.2 percent – nearly a third lower than the average that prevailed in the 2010s. Nor will interest rates fall. In advanced economies, interest rates set by central banks are expected to average 3.4 percent this year and next, more than five times the annual average between 2010 and 2019. This will compound developing economies’ difficulties. In an era of scarce public resources, it will take an all-out mobilisation of private capital to boost growth and development over the next five years. But foreign private capital is unlikely to flow into highly indebted economies with weak growth prospects.

Private investors will correctly assume that any gains from economic growth will simply be taxed to pay off the debt. Thus, reducing debt should be the top priority for developing economies with persistently high debt-to-GDP ratios. But we also need a clear-eyed view of the broader problem: the global apparatus for assessing the sustainability of a country’s debt urgently needs to be upgraded. The current system is too quick to decide that countries merely need loans to tide them over, when most low-income countries today are in fact insolvent and will need debt write-offs. Governments also will need to ditch the habit of borrowing from domestic creditors; the rise in domestic debt is strangling domestic private-sector initiative.

The tariffs issue
After reducing debt, the next priority is to accelerate growth. It is foolish to pretend that growth will magically return. Policies that impede trade and investment – like tariffs and non-tariff barriers – should be rolled back as soon and as much as possible. For many developing economies, cutting tariffs equally with respect to all trading partners could be the fastest way to restore growth. Developing economies also have much to gain by fostering a more investment-friendly regulatory environment. And those gains can be used to shift the national focus back to development, particularly by ratcheting up investments in health, education, and infrastructure.

The current system is too quick to decide that countries merely need loans to tide them over

As the saying goes, when you are in a hole, it is wise to stop digging. An era of extraordinarily low interest rates encouraged too many countries to spend far beyond their means. A string of catastrophes – both natural and man-made – made it impossible for them to do anything else in the last five years. But prudence is now essential. Governments should revert to previous norms on what constitutes excessive sovereign debt. Call it the 40-60 maximum: 40 percent of GDP for low-income economies, 60 percent for high-income economies, with everyone else in between.

From profit to planet: how big-name brands are redefining responsibility

Posted on July 30, 2025July 31, 2025 by itsupport

From profit to

planet:

how big-name

brands

are redefining

responsibility

As global temperatures continue to rise and consumers become ever-more conscious of their footprint, companies across the board are upping their sustainability measures

2024 was the first calendar year to see global temperatures average more than 1.5°C higher than pre-industrial levels, according to data by the Copernicus Climate Change Service – leading experts to fear we are one step closer to reaching the longer-term 1.5°C rise the 2015 Paris agreement has long attempted to prevent. “We must exit this road to ruin – and we have no time to lose,” UN Secretary-General António Guterres said in his 2025 New Year message, describing the last decade – which marked the 10 warmest years on record – as “climate breakdown.”

While the spate of record-breaking highs doesn’t necessarily mean we are doomed, it is certainly a wake-up call to countries and corporations to take action (and fast). Many businesses are doing their bit – for the sake of their bottom line as much as the planet. Consumers are demanding sustainability and accountability from corporations in ever-increasing numbers, and as Gen Z and Millennials continue to take on an ever-increasing slice of the pie, organisations that don’t take genuine action are likely to get left behind.

According to a recent report by AI platform First Insight, 62 percent of Gen Z shoppers prefer to buy from sustainable brands, and 73 percent would pay more for sustainable products. A recent Morgan Stanley survey meanwhile found that 99 percent of Millennials and 73 percent of Gen Z are interested in sustainable investing.

“Both Gen Z and Millennials expect sustainability to be part of the baseline – not just a brand add-on,” says Philippa Cross, Founder and CEO of sustainability collective Marshall Sustainability. “Research also shows the vast majority of Millennials and Gen Z want to work for companies with strong environmental values,” she says. With these two groups set to make up 74 percent of the global workforce by 2030, according to research firm Forrester, it is crucial for businesses to adapt if they are to attract top talent.

“In response, we are seeing more businesses set net-zero goals, create greener workplaces and support employees with education, incentives and Employee Resource Groups focused on sustainability,” she says. Adriel Lubarsky, Founder of Beehive Climate, believes ESG in business is about managing risk. “Companies excel at handling cyber, geopolitical and operational risks – sustainability should be no different,” he told Forbes. “To win with Gen Z, companies need to understand the risk of inaction or inauthentic action, weigh that against the risk of lost market share, and lean into ESG and sustainable values hard, all underpinned by transparency.”

Because if doing the basics or simply waxing lyrical once cut it, it doesn’t now. “Thanks to frameworks like EU CSRD and growing scrutiny, brands are being held to account for where they truly impact and influence,” says Cross. “As sustainability matures, the focus is shifting from glossy commitments to real delivery – especially at the product and service level.”

Cross continues: “The key is honest, proportional storytelling. Recycled packaging is a start, but real credibility comes from tackling the biggest impacts – like raw material sourcing in the core product.” So how are companies across the globe meeting the challenge? From IKEA to Apple, we have profiled a handful of businesses taking steps in the right direction to reduce their carbon footprint, embrace a circular economy and support communities across the world.

Patagonia

Adventure clothing brand and B-Corp, Patagonia, has been a sustainability pioneer since its California beginnings in 1973. Under Founder Yvon Chouinard – a pioneering rock climber and long-time environmental champion – the company began donating one percent of its sales to environmental preservation in 1985. Chouinard then encouraged other businesses to do the same by co-launching ‘one percent for the planet,’ a global network that now has around 5,000 members following suit.

Under the scheme, Patagonia has pledged more than $140m to grassroots environmental groups in the US and beyond, adding to a whole raft of other initiatives. These include carbon-cutting measures such as using only ‘preferred materials’ – namely organic cotton and recycled polyester and nylon – and using 100 percent renewable energy for its owned-and-operated stores and offices. The company has also partnered with organisations to fund residential solar units, and with local communities to protect natural spaces.

It launched a ‘Worn Wear’ programme, enabling customers to trade in and buy second-hand clothes, established Patagonia Action Works to connect individuals to organisations targeting environmental issues, and regularly petitions; in 2017, Patagonia even attempted to sue President Trump in coalition with other groups to protect Native American land. But the most drastic measure of them all came in 2022, when Chouinard donated ownership of the entire $3bn company to trust and non-profit organisation Holdfast Collective – meaning all profits would be used to fight climate change and protect the planet.

“We are going to give away the maximum amount of money to people who are actively working on saving this planet,” Chouinard told The New York Times. “I didn’t know what to do with the company because I didn’t ever want a company,” he said. “I didn’t want to be a businessman. Now I could die tomorrow and the company is going to continue doing the right thing for the next 50 years, and I don’t have to be around.”

Patagonia is a winning example of sustainability and philanthropy at its best. And if the numbers are to go by – revenue reportedly exceeded $1bn in 2024 – it has certainly paid off from a business standpoint, too.

IKEA

It might sound like a paradox for a company long centred on fast, disposable furniture to be truly sustainable, but the Swedish furniture brand has taken significant strides in going green.

Circularity is at the heart of many of its initiatives, including a buy-back and resell programme which means customers can return used furniture in exchange for store credit. The company is also transitioning to clean energy (75 percent of its production was already running on renewable electricity in 2024), and is investing more than €7.5bn in renewable energy projects, including wind and solar farms.

Electric vehicles have also been introduced to its delivery fleet to help meet its environmental goals – which include cutting greenhouse gas emissions from its value chain by 50 percent by 2030 compared to 2016, and reaching net-zero emissions by 2050.

Working with local communities is also a key focus for the brand. “In 2024, IKEA supported over 81,000 people through community programmes, and expanded efforts in refugee employment and biodiversity,” Karen Pflug, Chief Sustainability Officer, told World Finance. Last year in the US, the firm even constructed and donated a sustainably built home to a small village in Texas that would house vulnerable residents, using “trauma-informed design” to support wellbeing.

Experts agree IKEA is doing things the right way. “I often point to IKEA as a sustainability leader,” says Marshall Sustainability’s Cross. “They don’t shy away from the tough conversations – including the role that affordable goods can play in driving overconsumption,” she says.

“Instead, they have tackled it head-on with initiatives like sourcing FSC-certified wood, improving product durability and experimenting with circular models. I also appreciate their transparency; they openly share the challenges they face and invite feedback, which is key to building trust and real progress.”

Pflug, meanwhile, says making sustainability more accessible is a key focus for the company. “We know that people want to take more climate action, but often face barriers like cost and convenience,” she says. “We are focused on making sustainable living more affordable and accessible – through services like buyback and resell, and by continuing to improve how we bring products and solutions that help people live more sustainably every day.”

Where things go from here remains to be seen, but the furniture company certainly looks set to be trailblazing a promising path.

New Belgium Brewing Company

As the first wind-powered brewery in the US and the producer of the country’s first certified carbon neutral beer (Fat Tire), Fort Collins-based New Belgium Brewing Company is something of a pioneer in the beer field. It uses a number of innovations – from ‘sun tubes’ for natural lighting to methane produced from wastewater to generate energy – and has a goal for all production facilities to be powered solely by renewable energy by 2030.

The company also advocates for climate action as a member of the ‘We Are Still In’ movement – where it sits on the leadership circle alongside Microsoft and other giants – and co-founded the Glass Recycling Coalition to boost recycling rates. To encourage sustainable commutes, employees are even given an ‘anniversary bike’ when they have been with the company for a year. Wider sustainability efforts range from regenerative agriculture and water stewardship to responsible sourcing and land use.

The self-proclaimed ‘Human Powered Business’ also works heavily with local communities; in 2024, it invested in more than 360 non-profit organisations (and last September its distribution centre in Asheville became a drop-in for those affected by Hurricane Helene).

It was also the first brewery to join ‘one percent for the planet’ back in 2008. “This means that for every barrel of beer sold, we donate $1 to non-profits across the US,” says Meghan Oleson, Social Impact Senior Manager. “That amounts to a total of more than $34.4m put towards helping solve some of the world’s most pressing social and environmental challenges.”

But Walker Modic, Senior Director of Environmental Programs, recognises there are still obstacles to overcome. “There are many challenges to meeting sustainability goals. One such challenge is that much of our impact happens outside our operational control,” he says. “For example, our packaging materials are recyclable, but that doesn’t mean they always get recycled due to regional recycling infrastructure challenges or consumer behaviour, which are both difficult to change.

“However, by using less energy, switching to cleaner sources and collaborating across our value chain, we can do our bit to reduce costs and minimise environmental harm,” he says. “If we can be the proof point that business can be a force for good and that doing so makes it a stronger business, we believe it will be that little bit easier for other businesses to do the same.”

Workday

Workday – which provides businesses with financial, IT and human capital management solutions through an AI platform – reached net-zero carbon emissions in 2020 and has been operating entirely on renewable energy since then. The organisation is one of the first in the world to have achieved a lifetime net-zero carbon footprint, and in 2023 joined Frontier, donating new funds to help the $1bn advance market commitment targeted at supporting carbon removal technologies.

In 2024, the company also committed to a multi-year carbon credit offtake agreement to support projects in partnership with climate tech firm Patch. These range from protecting forest in the Amazon using remote sensing to carbon removal using biochar in Namibia, and plugging orphaned oil and gas wells to target methane emissions. Other efforts include donating $1m to support mangrove reforestation projects in Mexico and Kenya to sequester carbon.

Under a Green Team Leadership Programme, employees are meanwhile encouraged to lead sustainability initiatives in their local offices – from waste reduction campaigns to Earth Day activities and community projects – with budget and promotional material provided by the company.

The goal of the Green Teams is to enable employees to become “stewards of the Earth,” according to Erik Hansen, Chief Sustainability Officer. Workday Green Teams have helped a school district go green by implementing a composting, recycling and landfill system; cleaned up the coast of Bull Island in Dublin by recycling and composting hundreds of pounds of waste; and planted young trees in Auckland, New Zealand.

“We put some bold commitments in place several years ago at Workday to keep moving in a positive direction to protect our planet, and we are certainly not slowing down,” Hansen says.

According to Hansen, an internal survey found 96 percent of employees felt Workday was doing its fair share to reduce its environmental impact. DitchCarbon, a platform that analyses business’ emissions, meanwhile gives it a score higher than 99 percent of others in the industry – proof in the pudding that this is another company taking genuine steps to address some of the planet’s most pressing issues.

Renault

Sustainability and cars might not always go hand in hand, but electrification and other efforts are helping to go some way in mitigating impact – and Renault is among those leading the charge. It launched the Refactory – ‘Europe’s first circular economy factory dedicated to mobility’ – in the French commune of Flins in 2021, aimed at extending vehicle life through a ‘retrofit, re-energy, recycle and restart’ programme, in the words of the company.

Services range from repairing and reconditioning EV batteries to retrofitting combustion-engine cars into electric vehicles.

It is not the only step being taken. The group has set a goal to achieve carbon neutrality in Europe 2040 and worldwide by 2050 through a number of other measures, not least EVs; 90 percent of its vehicles in Europe are due to be battery-electric by 2030. Some progress has already been made toward the targets – Renault saw its carbon footprint fall by 28 percent from 2010 to 2023 – and the company is aiming to create positive impact in the wider industry, too. In 2022, it launched ‘The Future is NEUTRAL,’ offering recycled materials and reused parts to “support industry players in moving towards resource neutrality,” in the words of Chief Executive Jean-Philippe Bahuaud.

Renault says it is also aiming to up its use of recycled materials in production. The Scenic E-Tech, an electric family SUV launched in 2024, uses recycled materials for a quarter of its parts, with 90 percent of the car’s mass also recyclable. Innovations include floor mats made from recycled plastic bottles, recycled seat upholstery, a steering wheel coated in bio-sourced materials and cotton weft, and a cockpit that uses 26 percent recycled plastic.

The electric Renault 5 E-Tech – the ‘city car’ being rolled out this year – will meanwhile feature a slew of sustainability features, with its modules designed to have a 35 percent lower carbon footprint than those of its predecessor, ZOE, by 2030.

The automobile firm is also attempting to help mitigate impact on wildlife through various initiatives – including a project in Thailand to train local farmers in agroforestry and help reduce the impact of rubber cultivation on biodiversity (in partnership with Michelin). While there is still some way to go before the car industry could be considered the height of sustainability, Renault is among those forging a positive path.

Apple

From resource extraction to energy-guzzling production lines, mobile phone and tech manufacturers might not be the poster child for eco-friendliness, either; but many, including both Samsung and Apple, are taking notable strides to reduce their impact.In April, Apple announced it had cut its global greenhouse gas emissions by more than 60 percent compared to 2015 levels, marking significant progress towards its 2030 goal of becoming carbon neutral.

The brand introduced its first fully carbon neutral products in 2023 in the form of various Apple Watches, achieving a 75 percent reduction in emissions (with the remaining emissions offset via carbon credits invested in nature-based projects). Last October, a carbon neutral Mac mini was rolled out, made with over 50 percent recycled content, while the new MacBook Air, introduced in early 2025, uses over 55 percent recycled content.

All Apple-designed batteries are now made from 99 percent recycled cobalt – and for those looking to get rid of their old devices, Apple Trade In allows customers to bring in old Apple products to be recycled in exchange for credit. The recent Environment Progress Report outlined a series of other milestones – not least having powered every Apple facility with renewable energy since 2018. “That progress is quickly making its way across our global supply chain, and today, our suppliers now support more than 17.8 gigawatts of clean energy around the world,” wrote Lisa Jackson, Vice President of Environment, Policy and Social Initiatives, in the report.

“We are also investing in clean energy projects to match the energy our customers use to charge their devices,” she said, pointing to the company’s Power for Impact programme, which includes renewable energy projects in the Philippines, Thailand, South Africa and beyond. “By expanding access to safe, reliable electricity, we can protect the planet and support the communities most significantly impacted by climate change.”

Apple is also investing in carbon removal projects through its Restore Fund, whose projects include reforesting the Atlantic Forest in Brazil, now “filled with native tree species that could have been lost forever,” in Jackson’s words.

Waste issues are meanwhile being addressed under a Zero Waste programme; in 2024, participating suppliers redirected around 600,000 metric tons of waste from landfills. The company’s Supplier Clean Water Programme has also seen more than 90 billion gallons of fresh water saved since it was introduced in 2013, promoting water reuse at facilities around the world.

There is still more to be done – not least around flying; Apple’s corporate travel emissions were down 31 percent in 2023 compared to 2019, but this lags behind the average reduction seen by other major tech companies, according to a Travel Smart campaign by Transport and Environment.

Nonetheless, the tech giant is certainly a promising example, using innovation to drive sustainability in characteristically Apple fashion, all while benefitting the bottom line.

Revenue grew by more than 65 percent in the same period that emissions fell by 60 percent, showing that profitability and sustainability can go hand in hand if done in the right way – and as we move into the future, and watch as Gen Z takes to the stage, the first might just well become the key to achieving the second.

Shaping sustainable finance and ethical investing

Posted on July 29, 2025 by itsupport

Leading bank-insurance group KBC Asset Management (KBC AM) – the investment arm of KBC – specialises in the sale of investment funds, advisory support and the development of innovative financial products. It has more than 41,000 employees, offering a fine-tuned menu of services to millions of clients across Europe, including Belgium, the Czech Republic, Slovakia, Bulgaria and Hungary. Serving 13 million clients – including 2.92 million retail and institutional investors – across Europe, KBC AM understands the importance of tailored investment solutions. With this in mind, we have developed a diverse range of services, catering to retail investors, high-net-worth individuals and institutional clients. Our expertise in discretionary portfolio management and investment funds ensures a professional, client-centric approach – and one that is carefully customised to suit individual financial needs.

So what makes KBC AM stand out? We distinguish ourselves from our peers through continuous innovation and we strive to set industry standards rather than merely following them. By staying ahead of market trends, we help clients simplify the transition from saving to investing, making it a seamless and reassuring process.

Our well-developed digital-first approach is evident in the approximately two million active investment plans, with 59 percent of all plans sold digitally. Our focus on accessibility, meanwhile, has resulted in an impressive 92 percent customer satisfaction rate – an encouraging figure underscoring KBC AM’s commitment to service excellence.

Digital innovation with a personal touch
Our digital-first approach is key; but crucially, we are embracing the digital transformation without compromising the human aspect. Our mobile-first strategy is exemplified by KBC Mobile, an advanced app featuring the virtual assistant ‘Kate,’ who is on hand to provide personalised investment insights. Kate’s AI-driven capabilities ensure that precise recommendations are provided, making the investment journey intuitive and efficient.

As for products and services, our digital offerings include the ‘spare change investing’ feature, where daily transactions are rounded up to the nearest euro and the difference automatically invested when it reaches a certain amount. This innovative approach allows clients to invest effortlessly, reinforcing the company’s goal of making investing a natural financial habit.

KBC AM’s expertise also extends to AI-powered advisory services, and our smart advisory engine conducts daily portfolio screenings for private wealth clients. A tool designed to inspire confidence, this system analyses risk and return factors, ensuring tailored, data-driven investment strategies.

Sustainability front and centre
Sustainability has become an undeniable global priority, driven by ethical concerns, financial imperatives and environmental responsibilities. At KBC AM, sustainability is seamlessly integrated into our corporate strategy. We fully recognise that financial resilience and sustainable development go hand in hand. Responsible Investing (RI) allows clients to align their financial ambitions with environmental, social, and governance (ESG) principles. KBC AM employs a stringent RI methodology to offer investment solutions that contribute to three key missions: reducing greenhouse gas intensity (CO2), meeting the United Nations Sustainable Development Goals (SDGs), and enhancing corporate governance and social responsibility.

To reinforce KBC AM’s commitment to ethical investing, we exclude companies involved in controversial sectors such as tobacco, gambling and weapons. As a major financial institution, we actively support the transition to a low-carbon economy and a more sustainable society by collaborating with stakeholders across various sectors.

KBC AM has been a pioneer in sustainability since as far back as 1992, when it launched Belgium’s first RI fund. Over the years, the firm has continuously refined its methodology, introducing new sustainable solutions to meet ever-changing market demands.

Leading the way in responsible investing
Our dedication to sustainability is reflected in our policy on fossil fuel-free RI funds, introduced in November 2017. In May 2018, we launched Pricos SRI, Belgium’s first SRI pension savings fund, and by 2019, all our RI funds in Belgium had been certified with the ‘towards sustainability’ label, the quality standard of Febelfin, the Belgian financial sector federation.

As we are all aware, staying at the forefront of RI requires continuous adaptation. KBC AM recently updated its RI approach to place a stronger emphasis on biodiversity. The company now excludes businesses that engage in controversial land use practices or activities that negatively impact biodiversity without sufficient mitigation measures being put in place.

KBC AM remains dedicated to being a market leader in investment innovation and RI. We continuously develop strategies to reflect market trends and client preferences, ensuring that our services remain relevant and forward-thinking. By combining cutting-edge digital solutions with a firm commitment to sustainability and customer satisfaction, KBC AM is poised to remain a key player in the financial sector, shaping the future of investing.

How PPLI is helping to unlock global wealth

Posted on July 29, 2025 by itsupport

Private Placement Life Insurance (PPLI) is a form of variable universal life insurance offered privately to qualified investors. Unlike traditional retail life insurance products, PPLI can be fully tailored to address global or country-specific planning needs. Whether the goal is wealth protection or enabling strategic access to investments and currencies otherwise restricted or costly, PPLI offers a versatile, legally recognised framework for high-net-worth individuals (HNWIs) and families.

In an era marked by growing regulation, political instability and capital constraints, PPLI has become especially relevant. Countries with foreign exchange controls, limitations on outbound investment, or underdeveloped capital markets, present real challenges for globally mobile families seeking diversification and long-term preservation. Offshore PPLI, when structured correctly, can offer a compliant and efficient bridge between onshore limitations and global opportunities.

Within this context, the Geneva entities – comprising Geneva International Insurance, a Barbados-based 953(d) electing carrier, and Clarity Life Insurance, a non-953(d) PPLI provider – offer clients a dual-pathway approach to cross-border planning. While Geneva International focuses on US-connected clients seeking compliant offshore structures, Clarity specialises in addressing the needs of non-US clients, including families from regions such as Africa and Latin America. Both carriers deliver solutions grounded in regulatory integrity and built to solve real-world financial challenges such as capital mobility, investment access and long-term succession planning.

Clients no longer ask only how to protect wealth – they ask how to grow it, use it and pass it on

Traditionally, PPLI has been associated with tax deferral, estate planning and asset protection – particularly in jurisdictions like the US (under IRC 7702) and Canada (under Exempt Testing). These functions remain vital. However, today’s market has evolved. Families are now seeking more than protection; they want participation – access to and protection of private equity, venture capital, real estate, intellectual property, ESG-aligned investments and even alternative assets like art.

Imagine a successful family business in a country with outbound investment restrictions – seeking to diversify not just its corporate assets but its generational wealth. Through Geneva entities’ PPLI offering, the family may pay premiums into a Barbados-domiciled policy, appoint a globally recognised investment advisor and custodian, and structure the policy to reflect their risk appetite. The result is a globally diversified investment portfolio that complies with international standards while preserving capital, ensuring continuity and enabling intergenerational transfer. This is the core of what we refer to as participatory wealth planning – a philosophy where protection and access are not mutually exclusive but work together to serve broader family and financial goals.

Capital constraints and access barriers
Access to global assets is not guaranteed for many investors. Families in countries which often face challenges with hard currency access, repatriation of funds and institutional barriers to investing internationally. Geneva entities have supported clients from such jurisdictions by creating compliant, robust policy structures that offer both protection and participation. These policies become a gateway to managed investment portfolios denominated in USD or EUR, administered by professional asset managers outside the constraints of the client’s local financial system. This capability transforms PPLI from a passive holding structure into a dynamic financial tool – one that enables liquidity, flexibility and global reach while retaining the traditional benefits of insurance and wealth transfer.

Why Barbados?
Barbados has steadily built a reputation as a co-operative, compliant and capable jurisdiction for wealth structuring. It maintains economic substance requirements, has a strong bilateral treaty network and offers regulatory transparency aligned with OECD and FATF standards. The country also provides a mature legal and financial services environment supported by experienced professionals. For Geneva entities, Barbados is more than a base – it is a strategic platform. The jurisdiction enables us to meet the complex needs of globally mobile clients while adhering to international regulatory expectations. In a world where compliance and substance are as critical as innovation, Barbados offers the right blend of both.

Technology and customisation
Geneva entities are actively advancing its digital transformation to deliver a more seamless and transparent PPLI experience. From streamlined onboarding to improved policy access and compliance workflows, our goal is a responsive, tech-enabled platform. As part of this evolution, investment profiling – including ESG alignment and risk scoring – will ensure each policy reflects the client’s unique objectives and values.

The future of wealth planning
As wealth planning shifts away from secrecy toward strategy, clients no longer ask only how to protect wealth – they ask how to grow it, use it and pass it on. PPLI, especially when structured from a forward-looking jurisdiction like Barbados, offers a clear path toward that vision.

Geneva entities are proud to stand at the intersection of access and protection, helping clients around the world unlock new possibilities through a reimagined approach to private wealth.

The global trade war has just started

Posted on July 28, 2025July 29, 2025 by itsupport

When US President Donald Trump announced an unprecedented increase in tariffs against foes and allies on April 2nd, the so-called ‘Liberation Day,’ Goodfellow, a UK advanced materials and metals supplier, suffered a setback overnight. An initial review estimated that the cost base for its American sales rose by approximately 10 percent, a blow for a firm that derives 35 percent of its business from the US. “From prior experience of the Trump administration, we always knew there would be some significant measures introduced and the President didn’t disappoint,” says Andrew Watson, Goodfellow’s chief finance officer. Although Goodfellow sources a small amount of its purchases from China, 150 percent cost hikes can cause major disruption. “While we can try to re-source this, it is not always possible, particularly with some materials that can only reliably be sourced from China,” says Watson, adding: “We also have incidents of US origin products – bound for China – that cannot now be sold economically.” The company exports to over 60 countries and potential EU retaliatory tariffs would raise costs for its Baltimore-based subsidiary. “We can deal with the consequences of the ‘new normal,’ but we cannot plan for constant changes,” Watson warns. “There is no way of getting around the simple fact that even the best scenario results in higher prices for customers and changes to supply chains.”

Free but alone
Few people were surprised by the Trump administration’s embrace of tariffs as a means of reshoring manufacturing jobs. During his campaign, Trump expressed his support for an aggressive trade policy. Yet, such a massive spike in tariffs, pushing average rates back to mid-20th-century levels, surprised even the staunchest protectionists, as even traditional US allies such as Australia and Japan were affected. The method used to calculate new rates also raised questions. When Trump presented a cardboard chart with the new rates, it was assumed that they incorporated a combination of existing tariffs and other trade barriers. It later emerged that for each country the US administration had divided the trade deficit in goods by total imports and then halved the result. Even net importers like the UK were hit with minimum tariffs of 10 percent. Less surprisingly, services, an area where the US excels, were excluded.

Even the best scenario results in higher prices for customers and changes to supply chains

The US has run a trade deficit for several decades. American consumers and businesses spend and invest more than they earn, meaning that it may persist despite increasing tariffs. With many trade partners, the deficit stems from geography, for example fruit being easier to grow in warmer climates. These practicalities seem of little interest to an administration determined to overturn the status quo. “Trump wants to end up with low and balanced tariffs,” says George Calhoun, who teaches quantitative finance at the Stevens Institute of Technology, pointing to a 2018 G7 summit where Trump called for the elimination of all tariffs. “He wants to equalise or ‘reciprocalise’ the trade landscape among major trading partners. The era where the US ran a parallel Marshall plan for trade by allowing highly asymmetric trade arrangements to continue is coming to an end.”

Supporters of the US President argue that the tariffs are merely the first step in a longer-term strategy. If true, a 90-day pause on tariffs higher than 10 percent announced in late April was a strategic move to provide time for concessions from trading partners. For opponents, the climb-down signalled a major policy failure, partly imposed by turmoil in financial markets, with a recession looming as an unintended consequence. According to the survey firm Consensus Economics, economists expect the US economy to grow nearly a percentage point less than previously projected in 2025. JPMorgan Chase CEO Jamie Dimon expressed concerns that a recession was imminent, which reportedly pushed Trump to scale back the tariffs. Undoing the damage that tariffs have done to business confidence will be difficult, says Nick Rakovsky, CEO of DataDocks, a logistics software company processing US warehouse appointments. “The pause removed an immediate cost spike and helped with cash‑flow forecasts, but it hasn’t repaired confidence. Without a clear timeline, scope and escalation path, companies prefer the flexibility of short bookings and higher safety stock to committing long term.” However, revenue from tariffs could help fill government coffers ahead of any stimulus required to prevent a recession, and could also be used to pay down government debt, says Nick Baker, an expert on trade at Kroll.

Political considerations also come into play. A recession could lead to a Republican loss in the mid-term elections in November 2026. Trump’s own electorate will feel the pinch, with inflation expected to rise up to four percent if the initial tariff rates are maintained. A survey by the Cato Institute and YouGov found that 40 percent of Americans were concerned about inflation and just one percent about trade. Unravelling long-established supply chains will be difficult, given that producers will take time to switch to domestic suppliers and imports won’t drop immediately. “Many sectors rely on complex supply chains that have been forged over many years. You can’t simply rip this up, wave a magic wand and have a US supply chain that does everything,” says Goodfellow’s Watson, adding: “Rare materials often come from a limited number of global sources and any disruption caused by tariffs or trade restrictions could create bottlenecks for research and industry.” Most trade between developed economies is intra-industry, notably trade in machinery used in manufacturing, meaning that the tariffs would indirectly hit US producers too, notes Stephen Buzdugan, who teaches international business at Manchester Metropolitan University: “Tariffs of 20 percent or higher on imports from Japan, Korea, China and the EU will have knock-on effects on production costs across the US and other industrialised countries.”

Europe’s dilemma
For the EU, a key US trade partner, ‘Liberation Day’ wasn’t a surprise, given Trump’s aggressive trade policy during his first term and his accusations that the EU is “ripping off” the US. The Trump administration has claimed that the EU imposes a 39 percent tariff on US products, despite a World Trade Organisation (WTO) estimate of just five percent. For their part, European policymakers perceive the tariffs as an existential threat, given the EU’s role as a defender of a rules-based trade order. The US has imposed a 25 percent tariff on European steel, aluminium and cars, as well as a blanket 10 percent tariff on all EU imports. A doubling of the latter has been paused until July, as the two sides have exchanged negotiating documents. Although the EU suspended its initial retaliatory tariffs to leave room for negotiation, if this fails it plans to respond with a €100bn tariff package targeting imports that include Boeing aircraft, medical devices, cars and bourbon whiskey.

You can’t simply rip this up, wave a magic wand and have a US supply chain that does everything

The bloc’s response will be shaped by political calculations regarding its relationship with the US and internal divisions. Member states with strong US exports, such as Ireland and Italy, have called for a more conciliatory approach, while others are urging the bloc to stand firm against Trump’s bullying tactics. A decision will be reached through qualified majority voting, but the US has little chance of dividing its European trade partners, says Niclas Poitiers, a research fellow at the Brussels-based think tank Bruegel, pointing to Brexit and recent EU levies on Chinese electric vehicles as examples of member state alignment despite disagreements: “You want to have a broad support for your measures, otherwise they might not be credible as a threat towards the US, but there is no need for unanimity.” Some member states are cautious about antagonising the US due to security concerns, with a recent Nato summit set to discuss European defence spending amid the Ukraine war. Trump has demanded that European allies increase their defence spending to five percent of GDP and assume more responsibility for the continent’s defence.

Some observers think a scenario similar to last May’s UK-US trade deal is the most likely outcome. The UK managed to secure cuts to the 25 percent tariffs on car and steel exports but failed to reverse the flat 10 percent levy, which has left Britain facing a tougher trading relationship with the US. One ace up the EU’s sleeve is targeting digital services, an area where the US maintains a net surplus. “If you want to include services, you have to think outside of the box,” says Poitiers, adding that the EU has a new tool, the Anti-Coercion Instrument, that allows it to employ the entire toolbox of regulation available to hit US tech giants. Ireland, which hosts many of them, may face pressure to revise its favourable tax regime. “That is member competence and Ireland does not want to kill the golden goose. They will probably be opposed to any measures that will undermine their business model,” Poitiers notes, adding that the Commission could still take a creative approach. “There is a lot of retaliation potential that could escalate this beyond a traditional trade conflict.”

A side effect of strained EU-US relations might be closer ties with other major trade partners. Brussels is reviving a plan to form a strategic partnership with a 12-country Indo-Pacific trade bloc that includes Canada, Japan, Mexico and the UK. Trade relations with China may also improve, despite tariff tensions over electric vehicles. However, the trade imbalance between the two has only grown worse, despite the EU’s efforts to curb it. “The European and Chinese economic models are not compatible, and the spillover effect of China’s economic model exporting into Europe has a level of a deindustrialisation risk,” says Jacob Gunter, lead economist at the Berlin-based think tank Mercator Institute for China Studies (MERICS), adding: “There is no agreement that the EU and China could come up with that would prevent that from happening.”

China on a path to war
If the European Union hopes to meet Trump halfway, China finds itself in a different position. As the country with the world’s largest trade surplus, the Asian country is the primary target of US protectionism, which threatens to undermine its export-driven economic model. For now, the two countries have agreed to a temporary pause, reducing US tariffs from 145 to 30 percent, while China slashed its retaliatory tariffs from 125 to 10 percent. “This ceasefire is functionally a recognition that the escalation ladder was scaled too high and too quickly, and that the pace of US-China decoupling needs to be adjusted to avoid a crisis undesired by both sides – like a complete breakdown in global value chains or a recession,” says Gunter from MERICS, adding: “The fundamentals in the economic and technological relationship, to say nothing of the security and geopolitical situation, remain deeply imbalanced and increasingly irreconcilable.”

China has signalled its intention to resist unilateralism by restricting rare earth exports and agricultural and energy imports, while also issuing travel advisories discouraging Chinese tourists from visiting the US. Its strongest weapon remains its dominance of rare earths, with further export restrictions to rare earth elements and magnets potentially threatening US production of robots, fighter jets, wind turbines and cars. “China has done a lot more to prepare for a shootout like this with the US. That has been the central pillar of their economic policymaking for the last 10–15 years, especially since the first Trump administration,” says Gunter. Trump has imposed port fees of $1.5m on China-built vessels, a measure the World Shipping Council estimates could double the cost of shipping US exports. If the US wanted to escalate, it could further restrict China’s access to critical technologies. “What keeps Xi Jinping up at night is getting technologically cut off. The US could simply ban the sale of chips and specific equipment to China,” Gunter says. “That choking-off has happened in semiconductors, semiconductor manufacturing equipment and lithography machines. But it has been relatively limited and less effective than hawks in Washington would prefer.”

China has done a lot more to prepare for a shootout like this with the US

The domestic front is equally important. US tariffs will hit Chinese exports, depreciating the yuan and indirectly leading to capital flight, a serious risk to the Chinese regime, Calhoun estimates. China has more to lose since it is more committed to a global economy, says Shameen Prashantham, who teaches at the China Europe International Business School, given that its “export-oriented companies will face strong headwinds and some of them will fail to survive, leading to job losses and a drag on growth.” On the other side of the Pacific, if enough Republicans side with Democrats in Congress, they could strip the president of his unilateral tariff powers. “China might wait to see how their negotiating position improves as small companies have to fire workers and truckers and port workers have less demand because of fewer goods coming into the US,” Gunter says. “These are important constituencies that will be extremely angry the longer this goes on.”

One way for China to resist pressure is by forging ties with other trade partners, defying the Trump administration’s plan to disrupt its supply chains. The Chinese government has called for a joint response to tariffs with traditional US allies such as Japan, South Korea and India. President Xi Jinping has launched a charm offensive targeting Vietnam, Malaysia and Cambodia – countries through which China diverted exports to the US during Trump’s first term – but has also warned them against striking bilateral deals with the US.

Many experts have pointed as a desired endgame for the Trump administration a China-US agreement similar to the Plaza Accord in 1985, when the Reagan administration effectively forced its trade partners, notably a surging Japan, to appreciate their currencies against the dollar to reduce the US trade deficit. Economists believe this marked the beginning of Japan’s economic stagnation. “Chinese leadership is afraid of the Plaza Accord and will absolutely resist anything like that,” Gunter says. Another scenario is a temporary truce with a deal that makes Trump believe he won by committing China to purchases of LNG, soybeans and Boeing jets. “That would be a victory for China, because what Xi wants to do is to buy time for his agenda, which is achieving technological self-reliance from the US and becoming less dependent on exports to the US and its allies,” Gunter says.

The end of an era
The trade war rekindles a debate that started during Trump’s first term: is this the end of globalisation? Optimists argue that such forecasts are premature, given that global trade growth is expected to be driven by emerging economies. Recent trade deals, such as the EU-Mercosur agreement, demonstrate continued appetite for market liberalisation. Even if the US chooses isolation, it accounts for just 13 percent of goods imports. Booming trade in services is expected to offset a decline in goods exchanges. International supply chains remain robust, argues Poitiers from Bruegel, pointing to the pandemic as proof of their resilience: “This was an incredible shock, much larger than the trade shock we experience now. Despite all the talk about the end of global value chains, it didn’t happen.”

At the centre of the global trade war lies a surprising US grievance: the dollar’s position as the global reserve currency. In a controversial paper published last November, Stephen Miran, chief economic adviser to President Trump, claimed that the dollar’s status as the reserve currency is a ‘burden’ contributing to chronic trade deficits.

Dollar and treasuries: Still safe havens?

The paper, which is believed to have influenced US policy, concluded that the US should deliberately weaken the dollar and compel holders of US sovereign bonds (known as treasuries) to fund its defence spending. Financial market turbulence since ‘Liberation Day’ suggests that foreign investors are not convinced, effectively questioning the role of treasuries as the global reserve asset and driving up US debt refinancing costs.

The head of Congress’ fiscal watchdog has warned that this crisis could mark a tipping point in investor willingness to hold US assets, potentially sparking a capital flight crisis. China’s recorded treasury holdings have dropped below those of the UK for the first time since 2000, a sign the country is diversifying away from US assets.

Last May, Moody’s stripped the US of its final triple-A credit rating, citing rising government debt and a growing budget deficit. For the first time in history, the US no longer holds a top rating from any of the three major credit rating agencies. “Rising protectionism and economic nationalism may lead to a gradual fragmentation of financial markets, where capital becomes more regionally concentrated rather than flowing freely across borders,” says Supriya Kapoor, who teaches finance at Trinity Business School.

“Financial institutions may face increased regulatory divergence, higher compliance costs, and restrictions on cross-border mergers, acquisitions and operations, all of which could dampen the efficiency and profitability of global financial services.

It is no surprise that in such a precarious geopolitical landscape, international organisations like the WTO have come under fire as outdated pillars of multilateralism and a rules-based trading regime in an increasingly unilateral world. Pessimists warn that the trade war could be the final nail in its coffin. “It may well be the end of the WTO as we know it. The WTO has failed to manage a fair trade regime, despite its high aspirations,” says Calhoun, adding: “The proliferation of non-tariff trade barriers has raged on, with the level of complaints surging from many countries, and mostly aimed at China.” The Trump administration has hinted at a possible withdrawal from the organisation, a radical shift from traditional policy, given that the US has historically been the main promoter of open markets. Such a move would be far from shocking though, since unilateral US tariffs violated the WTO’s core principle of the most-favoured nation (MFN) treatment, which some experts interpret as de facto US withdrawal.

“Their idea of a trade deal is not to create opportunities, but to dictate outcomes,” says Craig VanGrasstek, a trade policy expert who has written a history of the organisation, adding that current US policy undermines the MFN rule. “The US leaving would be bad for the organisation, but the US staying as a spoiler would be worse,” VanGrasstek argues, adding that there is a possibility that other members may try to expel the US. Optimists, however, believe that the tumult caused by the trade war could reinvigorate the WTO by accelerating long-awaited reforms, notably of its dispute settlement mechanism. A US withdrawal would also push other countries to work together, with BRICS members and the EU taking the lead. “China sees a lot of value in the WTO. It’s the framework through which it trades with the world,” Poitiers says. “If countries representing 85 percent of global GDP still want to use the system in its current form, it can chug along for quite a while.”

The WTO has failed to manage a fair trade regime, despite its high aspirations

The role of trade has fluctuated over time, with protectionism making an ugly comeback every few decades. Many historians draw parallels to the 1930s, when the infamous Smoot-Hawley Tariff Act raised US tariffs, prolonging the Great Depression and fuelling populist forces that led to the Second World War. However, unravelling decades of global economic integration would be much more difficult today. A decoupling of the Chinese and US economies in particular would have major consequences for the global economy, from higher inflation rates to lower growth. “Smoot-Hawley was very destructive, but didn’t increase tariffs to unprecedented heights because average tariff rates were very high back then. Current US tariffs are enacted in a period of unprecedented economic interdependence. The effects are in a league of their own,” Poitiers says, adding: “The US is withdrawing as a leading force of globalisation, but it will likely pay a high price for that.”

The real threat is not the end of globalisation, but a fragmentation of the current system into competing trading blocs, warns VanGrasstek. What is worse, we might be at an unprecedented junction of history where no superpower has an incentive to maintain an open trading system, VanGrasstek argues, given that even China’s economy is becoming less exports-driven. “Both the US and China have very strong incentives to move towards bloc formation, and that is where we may be headed. That means that we are moving into a 1930s style system, and that is very dangerous.”

Leading innovation in rare disease treatment with plant-based drug crofelemer

Posted on July 28, 2025 by itsupport

Massimo Radaelli, PhD, is a European pharmaceutical industry leader and entrepreneur who has devoted more than 30 years to the innovation of therapies to treat rare diseases. He is President and CEO of Napo Therapeutics, a pharmaceutical company established in Milan, Italy, in 2021 by California-based Jaguar Health to develop and commercialise the plant-based drug crofelemer in Europe, with a particular focus on rare gastroenterological diseases. Radaelli explained to World Finance why a drug sustainably derived from an Amazon Rainforest tree may provide a novel therapeutic option for patients with intestinal failure due to microvillus inclusion disease and short bowel syndrome.

First of all, congratulations on your recent awards. What pleases you most about the recognition?
I am extremely honoured to have been recognised by European CEO as ‘2024 CEO of the Year in the Pharmaceutical Industry,’ and also to have been named ‘Best European Bio-pharmaceutical Innovator CEO of the Year 2024’ by The European. I believe this latest award – from European CEO (sister brand of World Finance) – recognises once more, at an international level, my lifelong commitment to the research and development of orphan medicines for the care and therapy of patients with rare diseases. I am grateful both for the recognition and to have been able to spend decades focused on helping patients suffering from rare diseases around the world.

Can you tell us about intestinal failure?
Intestinal failure is a condition where the intestines cannot adequately absorb the necessary water, macronutrients – carbohydrates, protein and fat – micronutrients, and electrolytes sufficient to sustain life. Patients with intestinal failure due to the rare diseases microvillus inclusion disease (MVID) and short bowel syndrome (SBS-IF) suffer from devastating diarrhea and dehydration caused by these debilitating, lifelong conditions and often require total parenteral nutrition (TPN) up to seven days a week for more than 12 hours a day.

The Croton lechleri sap…has a long history of medicinal use by indigenous peoples

TPN is a medical feeding method where nutrients are delivered directly into a vein through an IV line, bypassing the digestive system, and chronic TPN use carries the risk of morbidity, infections, metabolic complications, liver and kidney problems and neurodevelopmental delay. Limited therapeutic options exist for SBS-IF beyond TPN, and there are no approved drug treatments for MVID.

MVID and SBS-IF are devastating, lifelong conditions. The biggest impact one can have on a patient with intestinal failure is reduction in the quantity and time of TPN. We are always concerned about the quality of life of patients with MVID and SBS-IF, most of whom are children. They are not able to eat or drink and spend most of their waking hours hooked up to an IV.

Can you explain what type of product crofelemer is, and why it may provide a novel therapeutic option for patients with intestinal failure due to MVID and SBS-IF?
Crofelemer is a plant-based drug sustainably derived from the red bark sap of the Croton lechleri tree – a rapidly growing tree species common in tropical forests of Colombia, Ecuador, Peru and Bolivia. The Croton lechleri sap, commonly known as sangre de drago – which translates to ‘dragon’s blood’ in Spanish – has a long history of medicinal use by indigenous peoples. Crofelemer works by reducing chloride ion secretion into the gut lumen and normalising the electrolyte and fluid balance. It is the active ingredient in Jaguar Health’s FDA-approved prescription drug for the symptomatic relief of noninfectious diarrhea in adults with HIV/AIDS on antiretroviral therapy, and in Jaguar Health’s FDA conditionally approved prescription drug for treatment of chemotherapy-induced diarrhea in dogs. As announced in April, the initial results of an ongoing investigator-initiated proof-of-concept trial of a novel liquid formulation of crofelemer in the UAE show that crofelemer reduced the required TPN and/or supplementary intravenous fluids – collectively referred to as parenteral support – in pediatric patients with intestinal failure due to MVID and short bowel syndrome by up to 27 percent and 12.5 percent respectively. This data also showed crofelemer reduced stool volume output and/or frequency of watery stools, and increased urine output – an indicator of improved nutrient oral absorption.

We are very excited about these initial results. While short bowel syndrome affects approximately 10,000 to 20,000 people in Europe and roughly the same number in the US, MVID is an ultra-rare condition – with an estimated prevalence of just a couple of hundred patients globally. Given this situation, initial results in a very small number of MVID patients showing benefit with crofelemer may allow us to explore pathways for expedited regulatory approval for this indication, including the European Medicines Agency’s PRIME programme and the FDA’s Breakthrough Therapy programme.

Crofelemer is currently the subject of five clinical efforts for MVID and SBS-IF in the US, EU and Middle East regions – two placebo-controlled Phase two studies that Napo Therapeutics is managing, and three investigator-initiated trials. Additional proof-of-concept results from investigator-initiated trials are expected throughout 2025.

Financial volatility and pensions: beyond market noise

Posted on July 25, 2025 by itsupport

The volatility of financial markets has ceased to be a concern exclusive to sophisticated investors. In today’s context of global interdependence, any stock market fluctuation reverberates directly through the lives of millions. One of the most sensitive and least visible links in this chain of volatility is its impact on pension funds. Indeed, the fate of future retirees is increasingly tied to the compass of global markets.

Falls, recoveries and uncertainty
On April 2, a surprise announcement of a broad package of reciprocal tariffs affecting nearly all major trading partners was unveiled in the US. The market reaction was immediate. The S&P 500 fell by 4.8 percent, the Nasdaq plunged by six percent and major European and Asian markets followed the same downward trajectory. Shares of technology giants such as Apple, Nvidia and Tesla recorded losses between five percent and nine percent. These declines reflected investor concerns over the potential for a broad-based trade conflict.

The fate of future retirees is increasingly tied to the compass of global markets

A week later, on April 9, President Trump introduced a tactical adjustment: a 90-day pause on these trade measures and a reduction to 10 percent of the initially announced tariffs, triggering a significant market rebound. However, the truce was only partial: China was excluded and subject to a 125 percent tariff, highlighting a strategy of selective negotiation that introduced both flexibility and uncertainty.
Around the same time, the President’s criticism of Federal Reserve Chair Jerome Powell intensified, particularly over the pace of interest rate adjustments. These public statements had noticeable effects on the markets, at times contributing to volatility. The Fed’s traditionally independent role – long seen as a foundation of US economic stability – faced heightened scrutiny.

Yet, the most consequential episode to date occurred on May 12, when the US and China negotiated a 90-day commercial truce. The agreement dramatically reduced bilateral tariffs and triggered another equity rally. In a single session, the Nasdaq jumped 4.3 percent, and the S&P 500 gained 3.2 percent. The dollar strengthened, the yuan appreciated and global markets rejoiced.

Is this the end of volatility? Hardly. Rather than isolated events, these developments point to the broader uncertainty introduced by a new, more assertive US approach to trade policy – one marked by bold negotiation strategies aimed at achieving more favourable outcomes for the American economy.

Investments with vulnerabilities
In this context, it is important to recall that pension funds allocate a significant portion of their assets to equities, even when regulations limit those investments. In Mexico, pension fund administrators (Afores) have 19.2 percent of their assets invested in equities, of which 70 percent is in foreign markets. For the funds targeting younger workers, that share rises to 23.7 percent.

This means that although pensions are inherently long-term instruments, short-term market shocks can cause considerable impacts. In April, for example, the Afores recorded a monthly effective return of –0.6 percent, equivalent to an annualised –6.9 percent. However, the outlook is not entirely negative. Year-to-date (YTD) returns as of April, even before the rally triggered by the US-China agreement, stood at a positive effective return of 3.7 percent, or nearly 12 percent annualised. In fact, since the inception of the Mexican Afore system in 1997, the real annual return has averaged 4.8 percent (or 10.5 percent in nominal terms), despite various financial crises over the decades: the 1997–98 Asian episode, the 1995–2002 tech bubble, the 2008 real estate global financial crisis driven by subprime mortgages in the US, the 2010–13 European sovereign debt crisis, the 2020 pandemic-induced market collapse, and now, the turbulence caused by President Trump’s trade policies.

Moreover, even in the short term, not all funds experience the same level of exposure. The Target Date Fund, managed by the Afores and designed for workers born after 2000, posted a monthly return of –0.5 percent in April, but a YTD effective return of 4.2 percent, equivalent to an annualised return of over 13 percent. In contrast, the Target Date Fund targeting individuals aged 60 and above was barely affected, recording a –0.05 percent monthly return and a 5.1 percent YTD return, equivalent to over 16 percent annualised. These differences reflect the generational structure of the Mexican system: those closer to retirement are better shielded from volatility through a higher allocation to safer assets, such as government bonds.

The good news is that Mexico’s change in scheme of Target Date Funds has proven itself effective. The bad news is that despite the recent market recoveries, the international context remains complex and uncertain, potentially hindering long-term strategies as trade tensions become structural.

Markets to the global economic model
What is at stake is not merely the health of quarterly earnings or stock performance. It is the very model of economic globalisation that has underpinned global growth for decades. The protectionist policies adopted by the US, while nuanced in their implementation, challenge core principles of free trade.

Pensions rely on sustained economic growth and positive real long-term returns

Even after the truce with China, average US tariffs remain at levels not seen since the 1930s. According to estimates from the Budget Lab at Yale, the average US tariff now stands at 16.4 percent following recent adjustments. Trading partners, including Europe, have responded by hardening their own trade barriers. The result: an international climate of mounting tension and reduced cooperation.

For now, the International Monetary Fund (IMF) has revised down its forecast for global trade growth in 2025 to just 1.7 percent. It is estimated that this year global GDP growth will outpace trade growth, implying that trade as a share of world output will decline. In this environment, global economic growth is at risk. GDP is projected to grow by just 2.8 percent in 2025, down from 3.3 percent in 2024. The US has already reported a real GDP contraction of 0.3 percent in the first quarter. Trade, historically a key engine of expansion, is now being undermined by the closing of economic borders.

The monetary policy dilemma
Moreover, the Federal Reserve has faced pressure from President Trump to lower interest rates. The objective is clear: to support economic growth and bolster stock market performance. However, Jerome Powell has resisted these calls, stressing the importance of carefully monitoring inflation, especially in the face of cost increases driven by tariffs.

This dilemma between orthodox monetary policy and short-term political considerations is becoming more common in advanced democracies. What is at stake is not merely the interest rate level but the institutional autonomy of central banks. This tug-of-war also affects markets, contributing to heightened uncertainty.

Pensions and productivity
Amid this scenario, it is worth returning to basics: pensions rely on sustained economic growth and positive real long-term returns. Achieving this requires more than short-term stock rallies: it requires investment in human, physical and technological capital.

Productivity – not protectionism – is the key to securing dignified retirements. If the world falls into a cycle of diminished cooperation, reduced trade, and heightened uncertainty, the effects will be more lasting than any temporary Nasdaq recovery. At the end of the day, international trade, by expanding markets, promoting specialisation and increasing competition, foster economic growth by creating jobs, also lowering production costs, increasing innovation and technology transfer, and therefore, improving living standards.

There is no doubt that the performance of the stock markets depends on the growth of global consumption and investment in world economic development. And the recent decades showed that the widespread surge of consumption in all regions came hand-in-hand with the expansion of international trade.

Mexico’s pension system has demonstrated resilience, achieving a 32 percent increase in assets over just two years, reaching $344.5bn as of March 2025. This is a good sign, but complacency is not an option. Global economic policy is shaping the structural conditions that will determine the viability of future pensions.

A long-term perspective
Recent market volatility is not accidental. It reflects a deeper transition in the rules of the global economic order. In this context, the Afores and pension funds worldwide face the challenge of navigating uncertainty with a long-term perspective, recognising that institutional stability, international trade, and productive investment remain the cornerstones of any viable retirement system, because they are the foundation of sustained economic growth.

It is the responsibility of long-term actors, such as pension systems, to remain anchored in the long term, because ultimately, this is not just about markets – it is about the people who, after a lifetime of work, expect to retire with dignity.