I have been to the World Economic Forum in Davos every year since 1999, except two. And yes, this time it seemed very different. I was not here last year, but there is no doubt that the certainty about the future voiced by participants last year, has gone.
No one is willing to do anything but guess about the effects of Brexit and Trumponomics. And then comes the geopolitical uncertainty, which is perhaps now greater than any time since the Cold War. And, by the way, we are already several years into Cold War II, which is fought digitally.
I nowadays wear two hats: my old one as the owner and chair of Ferd, a single-family investment group, and for the last two years, my new one as chair, council on ethics for the Norwegian Sovereign Fund. This fund is in the neighbourhood of $800 billion – a quite decent neighbourhood – and my account will be coloured by both hats.
Beyond the fourth industrial revolution
Artificial Intelligence, Big Data and the Internet of Things are all fantastic opportunities for investment while simultaneously bringing a set of risks that could return us to the stone age. There are great advances being made in health care, research, finance and a host of other areas using one or all of these technologies. Unfortunately, some of their promising civilian applications can also be converted into fully autonomous weapons – that is weapons that make their own kill-decisions. We also see exciting new solutions in catching energy, upgrading the grid, and new storage solutions, which will be very important as much needed energy projects are undertaken.
The evolution of impact investments
In the area of impact investment, several new initiatives are underway to coordinate efforts done by many parties. I heard of several new social impact bonds initiatives that deal with everything from finding immigrants work, to giving people in war-torn countries new limbs.
Nevertheless, there is still some confusion, especially from larger companies, about what exactly impact investment is. Often it’s mixed up with responsible or sustainable investment. The definition of impact investment used by the WEF is something like this: It is an investment (not an asset class) that intends to make a social difference while creating a financial return. The most important word is INTENT. It is intent that makes capital flow in this direction, not previously made investments, advisors or greenwashing ambitions.
Human trafficking and slavery-like conditions in some workplaces are still a chronic issue, with an estimated 46 million people suffering. This is something I see also from the council on ethics at the Norwegian Fund, and it is our duty to be vigilant investors, owners and managers to combat these practices. I believe family owners probably are already active on this issue, but we still need to be on the alert.
Globalisation and China
The speech by President Xi Jinping stood in stark contrast to signals given by President Trump. The possible roles of who is mostly supporting global trade could be reversed. But as with all politicians, words come cheap, and never have they been cheaper than today. So we will have to see, but perhaps if you have been putting off having a China strategy for your company, now is the time to change that strategy.