Category: Finance

With the outlook for the global economy highly uncertain due to the Russia-Ukraine war, supply disruptions and rising inflation, high net worth individuals in Asia and the rest of the world are bracing themselves for a sustained period of heightened market volatility. Against this backdrop, HSBC Global Private Banking aims to help its clients manage these risks by leveraging their international connectivity and comprehensive capabilities to pursue investment opportunities and diversification.

“With the ongoing uncertainty, whether it’s the inflation threat, more aggressive Fed rate hikes, or the Russia-Ukraine war, global diversification and risk management become extremely important for our investors. HSBC Global Private Banking aims to help our clients diversify their portfolios across assets and geographies in the most optimal way possible,” says Abhishek Mehrotra, Managing Director and Senior Desk Head, Philippines and Japan at HSBC Global Private Banking.

This strategy of diversification sits well with high net worth and ultra-high net worth clients in the Philippines, who have traditionally been firm believers in such an approach, not just when it comes to investing, but in their personal and professional lives.

“Clients in the Philippines tend to have footprints in multiple locations to capture the strengths that each place has to offer. And this is where HSBC’s international connectivity and universal bank model can benefit them, as we are comprehensively covering both the East and the West,” says Siew Meng Tan, Regional Head of HSBC Global Private Banking, Asia Pacific.

“We are present in the key financial centers globally, in Hong Kong, Singapore, London, Switzerland and the US, enabling us to support our clients as they expand their businesses, and as their families look towards living in different parts of the world. Many successful Filipinos send their children overseas for education, or to invest in real estate abroad, and the US is one of their favorite markets,” she adds. “We have a dedicated Asia coverage team based in the US, which is comprised of relationship managers, investment counsellors, credit advisors and wealth planners with extensive experience relevant to clients from the US-Philippines corridor, and who have great interest in international mortgages and geographical diversification.”

Meeting Changing and More Sophisticated Wealth Needs

The needs of Asian ultra-high net worth families are likely to evolve over time, with much of the wealth accumulated by entrepreneurs who built, and continue to run, successful businesses.

“We have supported many of these entrepreneurial families through the years, developing an intimate understanding of their needs across businesses, private wealth, and even generations. This is especially true in the Philippines, where HSBC first established an office in 1875 offering financial services to communities of exporters and merchants,” explains Mehrotra.

Today, HSBC Global Private Banking clients in the Philippines can tap on the full capabilities of the entire group—from personal transaction banking services to commercial banking services—to meet their ever-changing needs at every stage of the clients’ wealth journey. In particular, there is a growing demand for solutions that can help ultra-high net worth families manage a seamless transfer of wealth to the next generation.

“Wealth preservation is a key priority for our Philippines clients, and HSBC has been very instrumental in inter-generational wealth transfer for ultra-high net worth families in the country. HSBC Trustee, which has been around for over 75 years in Asia, is very well versed with managing family dynamics, and well placed to support our clients in succession planning and transferring wealth to the next generation,” says Mehrotra. “We can help our clients find solutions to a broad range of wealth planning needs including family governance and family business succession and working with next generations. Philippines clients have a strong sense of community and believe in giving back to the society in various ways. We can help secure a wider legacy and make a positive change regardless of where our clients are on their philanthropic journey.”

Engaging through Digital

As private banking clients become more comfortable utilizing technology for their wealth needs, HSBC is engaging them through multiple digital channels. These include mobile apps that enable remote transactions, or through secured communication platforms via WhatsApp and WeChat.

Reflecting the bank’s commitment to digitalization, HSBC Global Private Banking is investing more than US$100 million in Asia over a two-year period to build and innovate its core banking and digital platforms.

“This investment is very timely, and we accelerated it over the last 12 to 18 months as engaging with our clients through digital channels became critical due to Covid-19 lockdowns in countries such as the Philippines,” says Tan.

“When we launched our chat applications on secure platforms such as WhatsApp and WeChat, one of the first clients to adopt this solution was a key Philippines client,” she recalls.

Investing in the Future

As the next generation of Philippines clients come to the fore, there has been an increasing adoption of investment trends related to the New Economy, ESG (Environmental, Social and Governance), and alternative investments.

In the area of sustainability, HSBC is keeping pace with its clients by committing to provide between US$750 billion and US$1 trillion of sustainable financing and investments over the next 10 years to support the net zero transition.

In recent years, there has also been growing interest in private assets and alternative investments, as high net worth investors in the Philippines seek to reduce volatility and improve yields in their portfolios. With its global expertise in alternatives, HSBC is well-positioned to serve investors in this emerging space. In 2021, trade publication Asian Private Banker named HSBC Global Private Banking as the “Best Private Bank for Alternative Advisory” for the third consecutive year.

HSBC’s success is also being recognized in other aspects of the private banking world. Among the seven awards HSBC Global Private Banking received from Asian Private Banker last year were the “Best Private Bank for Wealth Planning Services” and blue-ribbon “Best Private Bank in Asia Pacific”; accolades that reflect the progress it has made in delivering industry-leading client offerings and services.

These awards reflect HSBC Global Private Banking’s ongoing mission to support its high net worth and ultra-high net worth clients in the Philippines and the rest of Asia as they seek to navigate a highly volatile landscape, while looking to capture opportunities that may emerge.

“The challenges we are witnessing come with their fair share of opportunities, and many of our Philippines clients are actively looking towards HSBC to help them navigate through these times and tap those opportunities,” says Mehrotra.

As the net zero transition becomes top of mind for business leaders and policymakers around the world, affluent investors in Asia are gradually recognising the importance of incorporating sustainable solutions into their portfolios.

In Thailand, high-net-worth (HNW) and ultra-high-net-worth (UHNW) individuals and their families are beginning to incorporate ESG (Environmental, Social and Governance) factors into their investment decisions, says Saranya Arunsilp, Country Head, Thailand, Global Private Banking and Wealth Management at HSBC.

However, as the bank ramps up its efforts to educate clients on the importance of sustainable finance, awareness of ESG is growing.

“ESG investments are gaining popularity among Thai investors as HSBC has been educating our clients and offering them relevant sustainable finance solutions,” explains Arunsilp.

“Our clients are starting to understand that sustainability is important for growing their business and investments, but it will take some time before they see the performance associated with sustainable products.”

A more conducive regulatory environment is also expected to fuel demand for sustainable investments. Earlier this year, the Stock Exchange of Thailand introduced a Sustainability Reporting Guide for listed companies, together with ESG metrics for each industry group.

HSBC is well-positioned to capture a big slice of this growing green market as it has established an enviable track record of completing sustainable finance deals in Thailand. The bank recently supported a prominent global petrochemical company in issuing its debut THB10 billion (US$283 million) Sustainability-Linked Bond (SLB). This deal was the largest THB SLB issuance in Thailand. 

HSBC was also the Joint Lead Manager and Joint Bookrunner for the first green bond issued by a Thai policy institution, the Bank for Agriculture and Agricultural Cooperatives. The proceeds were then used to fund forestry and environmental conservation projects.

In another milestone, the bank introduced the first Green Deposits in the country for two large Thai corporates. The Green Deposit aims to encourage Thai companies to fulfill their sustainability objectives by investing their surplus cash balances with HSBC, which will then be allocated to eligible businesses and projects.

Furthermore, HSBC completed a trio of firsts for a Thai client by executing their inaugural Sustainability-Linked Loan, Sustainability-Linked Supply Chain Financing Solution and Sustainability-Linked Hedge.

A Deeper Presence on the Ground

To more effectively service its HNW and UHNW clients, HSBC opened a new private banking business in Thailand last year. The move is timely as rising affluence in the country is driving demand for wealth planning, investment diversification and international banking.

The expected rebound in intra-regional trade and activity is also expected to lead to the creation of private wealth in Thailand as businesses expand. Against this backdrop, international banks like HSBC—with a global footprint and full range of capabilities to serve the fast-changing needs of affluent clients both onshore and offshore—will have a competitive edge in the country.

In recent years, The Bank of Thailand has also introduced a series of measures to relax foreign exchange regulation and encourage greater flexibility in the financial markets under the Capital Account Liberalisation Master Plan, opening up opportunities for selective offshore investments.

The new private bank is HSBC’s second onshore business in Southeast Asia after Singapore, and will provide Thai clients with access to international capital markets by leveraging its existing infrastructure of advisory, investment methodologies, controls and systems in Asia. The Thailand-based team will cover client management and advisory services, while clients’ assets will be booked in HSBC Global Private Banking in Singapore, a preferred wealth management hub for Southeast Asian HNW individuals.

“We successfully launched our onshore private banking business in Thailand last year, and second onshore private banking business in ASEAN, to offer a distinctive, onshore experience to serve growing wealth needs in Thailand. Our team is able to leverage the HSBC Group’s expertise and global network to serve our Thai friends better,” says Arunsilp.

As private banking is very much a people-centric business, Arunsilp believes that it is important to have a dedicated team on the ground to develop a more intimate relationship with clients, and better understand their unique wealth needs.

The expansion of the private banking business in Thailand is part of HSBC’s broader strategy to grow its wealth management footprint in Southeast Asia and invest in its wealth capabilities as it aims to provide best-in-class products and services for clients, and deliver on its ambition to become the leading wealth manager in Asia.

Achieving Net Zero

HSBC’s Thai businesses will also play their part in helping the bank achieve its target of transforming its operations and supply chain to net zero by 2030, and to do the same for financed emissions in the portfolios of its clients by 2050 or earlier.

This transition will involve an investment of between US$750 billion and US$1 trillion over the next 10 years. Financing of coal-fired power and thermal coal mining will also be phased out by 2030 in markets under the European Union and Organisation for Economic Co-operation and Development (OECD), and in other markets by 2040.

“Achieving net zero requires significant changes. The financial services industry has an important role in ensuring that capital is allocated to support projects and investments needed to fulfill these goals,” says Giorgio Gamba, CEO of HSBC Thailand.

“The transition to a net zero economy is the key to unlocking long-term sustainable growth, protecting the financial system from climate risk and safeguarding society,” he adds.

HSBC’s sustainability strategy can be boiled down to three key components: becoming a net zero bank; supporting customers in their transition journey; and unlocking new climate solutions. In doing so, the bank also wants to help transform sustainable infrastructure into a global asset class through the development of a pipeline of bankable projects.

HSBC views collaboration with its clients and other stakeholders as key to achieving its sustainability objectives. Says Gamba: “In partnership with our clients, we will help develop de-carbonisation plans starting with high transition risk sectors. This will allow us to understand how they are incorporating climate change into their business and to identify how we can support their transition.”

Disclaimer

The information contained in this article has not been reviewed in the light of your individual circumstances and is for information purposes only. It does not purport to provide legal, taxation or other advice and should not be taken as such. No client or other reader should act or refrain from acting on the basis of the content of this article without seeking specific professional advice. Issued by The Hongkong and Shanghai Banking Corporation Limited.

With the world facing challenges on multiple fronts, investors are increasingly looking for robust solutions and strategies that can help them make a positive impact through their investing activities. In particular, many are keen to incorporate Environmental, Social and Governance (ESG) factors into their investment processes.

Sustainable investing can come in many forms, but generally involves four main approaches. These include integrating ESG factors with traditional considerations to assess the risk/reward profile of an investment; screening out controversial companies that do not meet sustainability criteria; identifying those that are ranked highly in their sector based on sustainability factors; and investing in companies that deliver a measurable social or environmental impact.

To help their clients navigate this increasingly complex space, J.P. Morgan is enhancing its sustainable investing capabilities, and zooming in on key areas of sustainability that it believes will generate the most meaningful impact.

One such area is carbon sequestration in forests worldwide, which will play an important role in the burgeoning carbon offset market. Forests sequester carbon by capturing carbon dioxide from the atmosphere and transforming it into biomass through photosynthesis. Sequestered carbon is then accumulated in the form of biomass, deadwood, litter and in forest soils. As such, forests can help to mitigate carbon emission by acting as a carbon reservoir.

Aiming to become an active participant in carbon offsets, J.P. Morgan recently acquired Campbell Global, a leading player in forest management and timberland investing. Through this investment, the bank is able to strengthen and diversify its sustainability focus through carbon sequestration, and provide investment opportunities related to climate, conservation and biodiversity.

Campbell Global is a recognized leader in global timberland investment and natural resource management. The U.S.-based firm has more than three decades of experience, US$5.3 billion in assets under management, and manages over 1.7 million acres worldwide with over 150 employees.

Seeing the Whole Picture

Another key aspect of an effective sustainable investing strategy involves having full visibility of one’s investment portfolio, especially in terms of being able to monitor ESG risks. J.P. Morgan is helping its clients do this more effectively through its recently acquired subsidiary OpenInvest, a leading financial technology company that helps investors better understand the non-financial impact of their portfolios. The firm’s proprietary platform scrapes all manner of data so that it will eventually be able to create portfolios that are more in line with investors’ values.

This will help satisfy the growing ranks of investors who demand a clearer and more holistic understanding of the ESG impact of their portfolios, and use those insights to make more informed investment decisions that better align with their goals.

One key obstacle to higher-quality sustainability-related data and transparency, however, is the lack of a standardized regulatory framework. Creating a globally aligned taxonomy will be critical to improving the reliability of ESG data for investors.

Some progress has been made in this regard. In November last year, for instance, ASEAN released the “ASEAN Taxonomy for Sustainable Finance – Version 1”. This initiative provides a framework for discussions with official and private sector stakeholders to work together on the development of the ASEAN Taxonomy. However, a truly cohesive regulatory framework for ESG reporting and disclosure globally appears to be some way off.

In the meantime, J.P. Morgan is helping clients navigate the inconsistent regulatory landscape through specialist teams that are dedicated to selecting specific sustainability strategies through meticulous due diligence.

Onboarding Specialist Talent

With growing interest in sustainable investing, J.P. Morgan is investing in new talent to provide the necessary expertise to guide clients on their journey. For example, it recently made two key hires from Calvert Research and Management to help grow the private bank’s sustainable investment options and enhance ESG integration.

Significantly, J.P. Morgan is one of the few financial institutions to feature a climate scientist on its sustainability team. Dr. Sarah Kapnick, Senior Climate Scientist and Sustainability Strategist for J.P. Morgan, joined the bank in 2021 to support sustainability and climate action efforts, and advise on new business and investment opportunities and risks.

“Our approach has been to start bringing in subject matter experts; climate experts like me who do climate modeling and understand physical risk, but also people with experience with integrated assessment modeling. So we’re bringing experts in across the bank with the idea that climate sits within every line of business,” says Dr. Kapnick.

Dr. Kapnick’s team not only produces thought leadership on climate, which continues to be the primary focus of sustainability strategy, but also speaks directly to clients on how climate risks can impact their portfolios, as well as identify potential opportunities in this space.

Investing in the Fight Against Climate Change

J.P. Morgan has developed a “Three Rs” approach to climate investing that investors can adopt to play a role in helping achieve a “net zero” world, where emissions from a range of sources are brought to zero or balanced out by carbon removal.

Investors can participate in these three approaches—greenhouse gas reduction, removal and retrofitting—through investment opportunities in traditional and emerging technologies.

“The main way to deal with climate change is to reduce emissions as much as possible, and get to net zero as fast as possible, through traditional methods such as clean energy. But there is also energy efficiency, a focus in Europe right now, and process transformation, which includes reducing emissions from concrete or reducing emissions from agriculture,” Dr. Kapnick explains.

“Then you also have carbon removal, either through nature-based or mechanical solutions. And then the last part is retrofit. It’s the adaptation part of climate change, where we need to adapt to the new climate that we will have now and in the future because society was built on a climate that no longer exists.”

By employing targeted strategies such as the Three Rs developed by leading sustainability experts, and combining them with cutting-edge technology, J.P. Morgan is helping investors capture opportunities in sustainability and playing a role in the urgent transition to a low-carbon world.

Says Dr. Kapnick: “With estimates of what the capital needs are for the low-carbon transition, all of that money can’t come from governments. For capital expenditures and also for new technologies that are being developed, funding has to come from the private sector as well. As a result, helping our clients understand what those problems are, and how to efficiently deploy capital, is a critical piece of the puzzle.”

Dr. Sarah Kapnick, Managing Director, Senior Climate Scientist and Sustainability Strategist at J.P. Morgan explains:

“The main way to deal with climate change is to reduce emissions as much as possible, and get to net zero as fast as possible, through traditional methods such as clean energy. But there is also energy efficiency, a focus in Europe right now, and process transformation, which includes reducing emissions from concrete or reducing emissions from agriculture.”

Where’s the Snow?

Dr. Sarah Kapnick, Sustainability Strategist and Senior Climate Scientist at J.P. Morgan, discusses the economic implications of lower snowfall on winter sports.

Climate change is currently making snow scarcer in regions where snow sports have traditionally thrived. Recent Olympics have increasingly depended on snow-making machines as insurance when holding events in previously snowy regions that no longer have reliable snowfall due to warming (Sochi) or in cold regions that support snow-making but do not typically have snowfall (Beijing).

Snow on the ground requires two conditions: below-freezing temperatures and water in the atmosphere to form snowstorms. As global warming continues, the total number of snowy days around the world can be expected to decrease. For example, in the U.S. the snow sports season could be one week to several months shorter by 2050, depending on the location and emissions scenario.

Warming and changes in storminess have also increased variability in snowy days and snowy years, with higher likelihoods for “snow droughts,” months to years in which snow does not fall at all.

Snow sports enthusiasts may thus be forced to chase snowfall around the globe. They may only visit their favorite locations when snowfall has been confirmed, or prioritize visiting locations with the most snow in the world, like Japan. An extreme response may see them forgo snow sports altogether.

Declining lift ticket sales and equipment rentals would not be the only potential sources of lost revenue. Transportation, hotels, shopping and entertainment would also likely suffer losses. This would affect resort profitability, the local economies and real estate prices unless tourism from snow sports was replaced. The snow resort industry is forming partnerships or consolidating into entities large enough to diversify snow risk by offering all-access passes to far-flung properties in numerous countries and continents.

The impact of climate change on winter sports—disappearing snow and its follow-on effects—has mobilized several groups to work on solutions, research and communications to raise awareness.

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The ranks of next generation family business leaders are swelling in Asia and beyond, with some 680,000 individuals with a net worth of at least US$5 million expected to pass on wealth to their heirs by 2030.¹ This unprecedented inter-generational wealth transfer—which represents almost one-quarter of the world’s wealthy population—is happening as a growing number of budding entrepreneurs are minting new fortunes by disrupting the status quo with innovative offerings.

Most of these young entrepreneurs are tossing out the rule book to find new areas of growth and novel ways of generating value. This often involves leveraging digitalization to drive performance, while maintaining a focus on sustainability to ensure business resilience and longevity.

Among wealthy clans, potential second and third generation members keen to run their family’s traditional businesses are few and far between. Across industries from real estate, trading and manufacturing, these new breed of business leaders aim to transform their existing businesses to create a legacy of their own, one that more accurately reflects their values and vision.

“The new generation is quite different from the patriarchs and the matriarchs who founded the family business,” says Kam Shing Kwang, CEO for Asia Private Bank and Vice Chair for Greater China Investment Banking at J.P. Morgan. “They have their own style of leadership, unique view of wealth and legacy, and the competitive environment they operate in today differs greatly from their parents’ time. Next-gen members who assume control of their family businesses today are keen to stamp their own personal character on the business. They want to be seen as leaders in their own right.”

However, pivoting a successful enterprise, often with a long history, requires the support of the existing team within the organization, and fresh talent who have the skillsets to drive change. Simply put, next generation leaders must not only find ways to gain the trust of long-time corporate leaders, but also seek out external executives amid increasing competition for the best and brightest across industries and geographies.

Preparing for Transition

A major obstacle facing next-gen leaders is the continued involvement of the previous generation even after handing the reins to their heirs. Understandably, there will continue to be a high level of deference to the patriarchs and matriarchs of the family business, even after they step aside. While it’s useful for the younger generation to consult the old guards on matters pertaining to the business, an overreliance on their predecessors may undermine the authority of the new leader.

To overcome this issue, the family should clearly identify and articulate the accountability and responsibilities of incoming leaders. The previous generation should also stay within the boundaries of an advisory role as much as possible. Until this happens, the lines between the generations will be unclear, leading to frustrations and possibly inter-generational conflicts.

The long-term success of a family business requires striking a delicate balance between honoring tradition and embracing change. Therefore, it is important for patriarchs and matriarchs to discuss plans with their children for modernizing the business while not disregarding the family’s core values. One way to achieve this is to involve next-gen family members in the day-to-day business operations well before handing over control.

Proving their Worth

Despite their best efforts, however, some next-gen leaders may find it difficult to convince their parents to hand over full control. One solution is for potential leaders to run one aspect of the business to showcase their leadership skills, before assuming control of the entire enterprise.

For instance, next-gen entrepreneurs could establish a new business line, seek to improve the performance of an existing one, or even manage the family office. If successful in these endeavors, the heirs can earn the trust and respect of not only their parents, but also their employees.

Furthermore, Kwang believes that communication is the key to winning over employees. “Don’t be afraid to over communicate and share with your people what you are like, what your expectations are, your visions and your strategies, so that your team knows exactly where you are coming from.”

She also advises new leaders to be humble and empathize with employees, helping them achieve their goals whenever possible. “I often ask my team ‘How I can help?’ And if you’re able to help them solve some of their problems, you gain trust and credibility. At the end of the day, if you’re the leader, you have to demonstrate that your team can rely on you as much as you on them.”

Attracting the Right Talent

With technological disruptions becoming the norm for many businesses, organizations will need to regularly acquire new skills and knowledge to succeed. This is even more crucial for family businesses moving into new sectors or seeking to transform the way their companies operate.

To attract the right talent, new leaders must clearly articulate their company’s vision and values. This is especially important when hiring younger employees, as they tend to look up to leaders whose values are aligned with their own.

“It’s important for an organization to be visible, so that people know what you stand for,” says Kwang. “At J.P. Morgan, we have a distinct culture and values that mostly only people within the firm know. So we’ve decided that we need to come out and articulate our values to our existing and potential clients, as well as prospective employees. This will help especially in attracting younger talent who want to work for an organization with similar values to their own.”

For instance, the bank has made its stance clear on climate change by declaring its intention to become carbon-neutral by 2030, and to help companies on their own journeys towards that goal. J.P. Morgan’s employees are also given the opportunity to spend up to three months abroad working on charitable projects that help to bring about positive social change.

“These efforts help employees feel that their values and the organization’s are aligned, and that this is an employer that can help them realize their personal goals,” says Kwang.

Designing effective compensation and incentive programs is also important to attract and retain employees, especially if the business is pivoting to new areas or changing their processes.

When compensation is based on meritocracy and is managed carefully, it aligns people’s behavior with the company’s strategy and generates better performance.² “When it’s managed poorly, the effects can be devastating. For example: the loss of key talent; demotivation; misaligned objectives; loss of client confidence and poor shareholder returns.”

Furthermore, companies must implement training and development initiatives to ensure that the skills and career progression of their employees remain relevant.

Kam Shing Kwang, CEO for Asia Private Bank and Vice Chair for Greater China Investment Banking at J.P. Morgan says,

“The new generation is quite different from the patriarchs and the matriarchs who founded the family business. They have their own style of leadership, unique view of wealth and legacy, and the competitive environment they operate in today differs greatly from their parents’ time. Next-gen members who assume control of their family businesses today are keen to stamp their own personal character on the business. They want to be seen as leaders in their own right.”

Fostering Innovation

Amid a fast-changing business landscape, innovation and agility have become key competitive advantages for companies. To succeed, next-gen leaders will need to foster a culture that promotes these attributes.

Kwang advises rewarding employees who are stepping up to drive innovation within the organization. “One way you can encourage innovative thinking is to prominently recognize people who have contributed to innovation,” she says. “This will help inspire others to think out of the box [to come up with] different ways of working. It’s also important that you give employees the time and space away from their usual work to work on projects that help improve performance.”

Next-gen leaders should also strive to adopt best practices gleaned from the experiences of other businesses, or by engaging external advisors or mentors. Through an annual initiative called the FLEX program, J.P. Morgan provides next-gen clients an exclusive platform to exchange ideas and network with their peers as well as access to expert advice.

The bank, in partnership with 6E Capital, has also created a special event series called E+ Circle that brings together industry veterans, financial advisors and entrepreneurs to network and exchange views and insights on topics such as growth, innovation and leadership. Kwang advises next gen leaders to be open to soliciting support from external parties, which could help develop a more dynamic and innovative organization.

“We like to play a role in helping the next-gen because we want to make sure they are aware of all the opportunities as well as challenges ahead and that we are here to support them with the right network and solutions, just as we have done with their parents,” she says. “So we spend a lot of time thinking about how we can help them chart their unique path forward.”

SUPPORT FOR NEXT GENERATION LEADERS

J.P. Morgan offers its next generation clients a number of programs that aim to advance their learning and development.

Tsinghua University School of Economics and Management:

J.P. Morgan partnered with Tsinghua University School of Economics and Management on two programs designed to develop next-gen leaders.

In the first program, J.P Morgan specialists and MBA students from the School of Economics and Management worked jointly on consulting projects. With the bank’s specialists serving as mentors to the students, the aim of the program was to promote a two-way exchange of ideas and skills.
The second program was a classroom partnership with the Tsinghua YES Program that focused on family succession, with the aim of preparing the next generation of Chinese business leaders.

Campus Recruitment:

Every year, J.P. Morgan offers summer internships that provide penultimate year students with on-the-job training and experience.

They will attend senior speaker events, skills-building workshops and networking opportunities. Interns who complete the program may receive an offer of full-time employment.

E+ Circle – Entrepreneurs & More:

An exclusive invitation-only platform for next generation business leaders and entrepreneurs created by J.P. Morgan in partnership with 6E Capital. The initiative features a series of special events that bring together industry veterans, former C-suite executives, financial advisors and entrepreneurs to network as well as exchange views and insights on topics such as growth, innovation and leadership.

This intimate and private forum addresses top-of-mind questions to build businesses and improve performance through achieving operational excellence, talent, financial, capital management and innovation.

FLEX Program:

J.P. Morgan offers an invitation-only summer event series designed to equip next generation participants with the necessary skills to be effective leaders. Featuring internal and external speakers, topics of interest range from sustainable investing to blockchain and digital finance.

1. Wealth-X Family Wealth Transfer Report 2021. Data as of 2021.
2. Harvard Business Review. Data as of January-February 2021.

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“Although the West may have driven many of banking’s evolutions, its future is in Asia,” says Philip Kunz, Head of Global Private Banking for South Asia at HSBC. Kunz’s career in finance spans 20 years in Asia, and he has witnessed first-hand the remarkable transformation of the region’s banking sector.

Backing Kunz’s two decades in the region are roots that stretch even deeper. In March 1865, HSBC opened its doors for business in Hong Kong, helping to finance trade between Europe and Asia.

“HSBC was born from one simple idea—a local bank serving international needs. Since then, we have always been focused on helping our clients around the world capture opportunities. Our purpose remains true to this day, even in a new era moulded by digitisation, Environmental, Social and Governance [ESG] adaptation, shifting trade and supply chains, and rising wealth,” Kunz asserts.

Look No Further Than Home

According to McKinsey & Company’s Asia-Pacific Banking Review 2019, personal financial assets in Asia-Pacific will total US$69 trillion by 2025. “This represents three quarters of the global total,” Kunz says, adding that “two thirds of Asian households will move into the middle-income brackets over the coming decade.”

HSBC is poised to capture this new wealth to become Asia’s leading wealth manager. “To capture the opportunities across Asia, we’re adding more than 5,000 people to our retail and private banking front lines over the next three years,” Kunz reveals. “We’re also improving our digital capabilities and platform, and developing new wealth solutions, particularly for high-net-worth and ultra-high-net-worth clients.”

“HSBC was born from one simple idea—a local bank serving international needs. Since then, we have always been focused on helping our clients around the world capture opportunities.”

Growing an Intergenerational Nest Egg

With the increase in wealth in the region comes an increase in the number of family offices. “We’re seeing greater interest from Asian clients, who are turning to family offices to ensure a smooth transfer of wealth,” confirms Kunz. “The task of creating meaningful legacies for affluent families is becoming more complex and challenging.

To meet this demand, HSBC set up the new Institutional Family Office in Hong Kong and Singapore last year. The service allows single-family-office clients access to the bank’s investment banking specialists and solutions, on top of private banking benefits.

“We believe that the enhanced coverage will better serve the growing needs and levels of sophistication of family offices, especially with the increased demand for sustainable investment solutions,” Kunz says.

There is indeed a generational change in investment attitudes, and proper management of a family’s legacy cannot be achieved without bridging the gap between one generation and the next.

“The new and rising generation of wealth owners are increasingly driven to influence the world and exert a positive social impact,” Kunz shares. “Our goal is to give this unique group of individuals the support they need to plan strategically for the wealth and businesses they will come to manage or influence.”

Putting Money Where It Matters

Sustainability has become a hot button topic that permeates every aspect of society today. “When people think about going green, they probably don’t immediately think that it has anything to do with the way they bank,” Kunz admits.

In 2020, research by Ernst & Young found that 52% of banks view environmental and climate change matters as a key emerging risk over the next five years. This shift in mindset is one that reflects demand on the investor side, too.

Likewise, going green has become a strategic priority at HSBC. The bank has released ambitious plans to transform its operations and supply chain to net zero by 2030, and to do the same for financed emissions in the portfolios of its clients by 2050 or earlier, in line with goals set out in the Paris Agreement.

It’s a transition that will involve an investment of between US$750 billion and US$1 trillion over the next 10 years. Financing of coal-fired power and thermal coal mining will also be phased out by 2030 in markets under the European Union and Organisation for Economic Co-operation and Development (OECD), and in other markets by 2040.

“Climate change is a serious concern, especially in Southeast Asia,” says Kunz. HSBC research has shown that out of the 20 cities most vulnerable to rising sea levels globally, 15 are in Asia, of which five are in ASEAN. “This is alarming,” he notes, “because cities are where populations and resources are concentrated. If left unmitigated, climate change can threaten to wipe out decades of hard-won economic growth in Southeast Asia.”

HSBC is taking the initiative to lead the transition to a global net zero economy, not just by financing it, but by helping to shape and influence the global policy agenda.

Among the many regional initiatives it has a hand in are Green Deposits, a programme it launched that puts investor dollars into environmentally beneficial projects and businesses; Indonesia’s Green Sukuk, sharia-compliant bonds that finance climate change mitigation; and a partnership with Temasek in Singapore to catalyse sustainable infrastructure projects, with an initial focus on Southeast Asia.

“A bank like ours has a huge responsibility to lead on climate change—not just for our shareholders, but more importantly for our clients, colleagues and the communities we have been operating in for over 155 years.”

For the Greater Good

Green investing isn’t the only way wealth can be mobilised for good. For clients with more varied philanthropic interests, HSBC Global Private Banking has been helping wealthy individuals and families with their pursuit of important social causes for more than 65 years.

“We believe one’s philanthropy plans and charitable structures belong at the heart of the overall wealth management strategy. In turn, we’ve helped the growth of a thriving philanthropic society.”

Simply put, it is much like an end-to-end solution for investors who wish to do good but are not quite sure how—from helping the client find a focus and drawing out a strategy to running a charitable trust and reviewing outcomes, and the provision of dedicated specialists who will provide guidance, based on sound philanthropic practices, every step of the way.

“A strategic approach, with researched, planned and directed activities built around the issues that the client supports,” says Kunz, “is likely to achieve significantly more for the causes they care about.”

Disclaimer

The information contained in this article has not been reviewed in the light of your individual circumstances and is for information purposes only. It does not purport to provide legal, taxation or other advice and should not be taken as such. No client or other reader should act or refrain from acting on the basis of the content of this article without seeking specific professional advice. Issued by The Hongkong and Shanghai Banking Corporation Limited.

Wealth. It’s a privilege. And it’s a responsibility that comes with its challenges. Deciding where your personal priority lies with regard to its use may just be about the most critical undertaking for every ultra-high net worth (UHNW) family across Asia and beyond. This is particularly the case when it comes to determining how wealth should be managed during an individual’s lifetime and the strategies for its transition to the next generation.

Increasingly, many UHNW families are discovering the power of J.P. Morgan’s goals-based planning approach as they seek to resolve such issues. Its appeal is not hard to see—it’s a straightforward discipline that establishes the groundwork for delivering on long-term objectives.

At the heart of this dynamic and flexible practice are four pivotal considerations. First and foremost, there is the issue of purpose, essentially, “What do you want to achieve with your wealth?”

Secondly, there is the matter of stewardship, which seeks to focus the family on thinking about who is best suited to take responsibility for the management of their wealth over the longer term.

As a third consideration, there is a need to decide how assets should be held and how best to prepare them for any future transfer. It could be, for instance, that the founder’s intention is that the ownership of an existing family business is structured in such a way as to provide sufficient flexibility for future generations to decide how to deal with their respective share. Alternatively, the intent could be to ensure that the family business is collectively owned and managed in perpetuity.

Finally, there is the question of horizon—Is there a near-term, mid-term and long-term plan? At the key generational transition points, what are the assets that would be transferred and to whom?

Highlighting the benefits of the goals-based planning approach, Sameer Mehta, Head of Goal-Based Advice of J.P. Morgan in Asia says,

“Essentially, this process allows personal/family preferences to be considered and for a clear route map to be agreed upon by all stakeholders as a means of achieving these predetermined objectives.”

Third Party Insights and Consensus-Led Commitments

Finding satisfactory and enduring answers to these questions may require a considerable degree of reflection, but families should also be aware that their aims and preferences may evolve as circumstances change. The perspective of a neutral third party, such as advisors from J.P. Morgan, working alongside family members and their legal/tax advisors, can be of benefit here. This is especially the case when such advisors share their accumulated insights and extensive knowledge of the best practices across their field.

With the right team in place and a degree of consensus achieved, the wealth of the family can be apportioned to such priorities as liquidity, lifestyle maintenance, legacy and the perpetual expansion of an existing asset base. There are also three significant strategic areas that can be evaluated (or revaluated) via the prism of goals-based planning—investing, succession planning and family governance.

When it comes to investing, the framework allows for flexibility to be built into any growth initiatives. It also ensures that the related decision-making process is transparent for all stakeholders.

On the succession planning front, a long-term strategy should be adopted, with bespoke succession structures created to ensure the coordinated management of assets and the seamless transfer of wealth to future generations. The family governance applications, meanwhile, provide a means of ensuring all of the relevant parties remain engaged and informed. This helps minimize potential areas of conflict and paves the way for the formation of an organization dedicated to managing shared prosperity along agreed guidelines—a family office.

Family Office Founding Principles

The desire to establish and maintain a family office is frequently observed amongst UHNW families. Given that every family is different, though, there can be no one-size-fits-all solution, especially when it comes to setting up a Single Family Office (SFO)—a bespoke entity entrusted with managing the various financial and non-financial needs of UHNW family members.

Applying the principles of goal-based planning to define the structure and mandate of the SFO, the first recommended step is to agree on a set of core principles. Essentially, it enables the family to formalize the communication and decision-making process for the wider family network.

With the family’s vision and strategy already agreed in the initial stages of the goals-based planning process, three additional questions need to be asked at this juncture:
1. What functions are required from the family office on an ongoing basis?
2. Who, principally, is the family office there to serve?
3. What services does the family want (and not want) the office to provide both now and in the future?

A Joint Stake in a Shared Financial Future

With delivering clarity one of any SFO’s founding protocols, it can then address such matters as helping mitigate a family’s internal challenges (notably instances where individual family members may have incompatible wealth management objectives or needs) and preparing for any external risks that may have been identified, as well as deciding where outside support is required from third parties. This latter issue often sees specialists in legal, tax or investment sought out and appointed to provide ongoing support to the SFO.

Summarizing the importance of family members taking an active role in both the initial planning process and the formation of a family office, Amanda Lott, the Executive Director and Head of Wealth Planning Strategy for J.P. Morgan in the U.S. says, “When we have a hand in building our financial plans, we have a greater sense of ownership. The very process of building a plan makes it more valuable and drives commitment. It also highlights where the family’s strengths lie and where it is best all round to call upon the skills of specialist third parties.”

Expanding upon this, Elvin Ho, Executive Director and Senior Wealth Advisor of J.P. Morgan says,

“The first recommended step is to agree on a set of core principles, often considered the “North Star” of such an establishment. This underpinning framework should assist the family concerned when it comes to setting the policies that govern the purpose of the office, its investments and the deployment of its resources.”

1          LEGACY PLANNING FOR ART COLLECTORS

The passion involved with building a fine art collection shouldn’t preclude a thoughtful succession management strategy.

Given the passion involved with building and curating an art collection, it can be easy to forget it is also an asset requiring thoughtful organization, structuring and, ultimately, succession planning. As ever, the ideal first step is to define your goals—essentially, “What future do you envision for the treasures that you have amassed over the years?”

Initially, it is well worth considering who you would like to pass the collection on to, whether that be an individual or an institution. You also need to decide if you want the collection to stay intact, be divided among your heirs or sold and the proceeds shared with the next generation.

Next, it is prudent to draw up inventory of what you own and where it is located. It is then important to keep all of the related files updated, including any legal documents and dealer insurance estimates.

When thinking of passing a collection on, future costs also need to be factored in. This should include funding for tax liabilities, as well as for any insurance, transportation, storage or repair overheads.

If you intend to pass your art collection on to your children, it is best if you can discuss your strategy with them at the earliest opportunity. If they are too young to participate in any meaningful way, clearly outlining your preferences in your will is the most reliable fallback position.

Similarly, should you wish to pass the collection on intact to a designated institution, it is advisable to start the discussions early. Setting up a dedicated foundation or museum and establishing its governance structure is also best accomplished within your own lifetime.

You may also need to consider whether professional assistance is required in order to optimize the management of the collection.

2          PROTECTING A DIGITAL ASSET PORTFOLIO

Forgetting to properly plan for the succession management of your digital assets could leave your heirs and beneficiaries with a virtual nightmare.

It is easy to think that the term digital assets solely refers to items such as non-fungible tokens (NFTs) or cryptocurrencies. In fact, the term encompasses a broad array of online account or service protected by log-in security that may be valuable to a family, both from an emotional perspective (such as photos stored online) and in terms of operational needs (notably access to critical email accounts).

Essentially, planning for digital asset succession needs to consider how authorized access to any online account or service, social media platform, cloud storage service or subscription can be maintained following an individual’s demise. This extends to access to online payment processing services, proprietary domain names, medical records and any digital banking accounts.

When looking to safeguard the digital assets of a family, making a detailed inventory is always the first step. This should include a record of the names of all of the relevant accounts, as well as details of the information needed to gain access. It is prudent to ensure all such details, particularly with regards to financial accounts, are accessible by a trusted contact person, an individual identified as a suitable steward for your digital legacy.

Should you fail to factor your digital assets into your succession plan, your heirs may well be either barred from accessing them or face considerable inconvenience when it comes to their recovery. Lack of proper legal planning here could also result in estate or inheritance tax liabilities.

It is also advisable to plan to ensure you always keep up with the latest developments in this fast-developing area. For peace of mind, it’s also best to keep your legal representatives and wealth advisors informed of any new digital activity that could affect your financial status and your family’s future well-being.

3          ENHANCING GOVERNANCE VIA A FAMILY CHARTER

A mutually agreed charter ensures all family members are on the same page when it comes to how decisions should be made with regards to a family’s wealth.

When it comes to ongoing governance, one of the primary issues family members need to resolve is whether they wish to cooperate when it comes to managing any family business or shared wealth. This becomes more challenging when family members live in different jurisdictions, with many of them inevitably having quite distinct wealth management expectations. While some will prioritize liquidity (short-term needs), others may favor lifestyle (spending), legacy or growth.

For many families looking to take a holistic approach to the future, the first step is to define a common mission for their shared wealth, often in the form of a charter that clearly outlines collective intent.

Properly implemented, such a charter can then lead to all parties agreeing to establish other family forums, such as a family assembly or council. These bodies are designed to ensure that a fair and transparent regime is maintained with regards to family wealth-related decisions. At the same time, they are also there to keep family members informed of any relevant issues or developments that may arise.

Advising on how to optimize the effectiveness of this process, Paul Knox, Managing Director and Senior Wealth Advisor of J.P. Morgan says,

“As a means of heading off any potential future disputes, it is important to have as many family members as possible participating in the development of the vision embodied in the charter, while it is also a useful way of gauging who has the appropriate skills/emotional intelligence to take a leadership role in the management of shared assets.”

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2021 provided some clarity—economies proved resilient, markets resurgent—after the confusion of 2020. As the new year approaches, there are certainly risks to be managed—inflation, labor shortages, a persistent global pandemic.

Fundamentally, though, there is much to be optimistic about. Accordingly, J.P. Morgan’s Outlook 2022 is confidently predicting that a vibrant cycle lies ahead, with a strong foundation already in place.

Indeed, as a result of the stimulus response to the pandemic, household and corporate balance sheets have rarely been healthier, while shifts in how we work and consume are accelerating innovation. It is entirely possible that these dynamics may usher in a far more vibrant economic environment, one that dispels the sluggish growth and weak productivity that characterized much of the 2010s.

These changes could have important consequences for the markets.

Policymaker Priorities are Shifting

Of those changes, the shift in emphasis on the part of policymakers in various global jurisdictions may have some of the most far-reaching consequences. In the U.S., Congress and the White House have spent over US$4 trillion responding to the pandemic, and now politicians are debating spending another US$2 trillion over the next 10 years.

In Europe, too, fiscal stimulus will continue to be a powerful force—a marked contrast to the early 2010s, when fiscal austerity damaged already weak economies. The European Union has agreed to spend more than 2 trillion euros (US$2.3 trillion) through 2027 to rebuild after the pandemic. EU areas of focus include digital innovation, research, climate focused spending, and pandemic preparedness programs. To offset the cost: proposed financial transactions taxes, digital levies and corporate “financial contributions”. Nevertheless, we believe the spending will be a net positive for economies and markets.

On the monetary side, both the U.S. Federal Reserve (Fed) and European Central Bank (ECB) are committed to generating stronger inflation outcomes with fuller employment. The Fed’s new “Flexible Average Inflation Targeting” regime suggests its willingness to tolerate inflation overshoots to support labor market strength. We expect that the Fed will resist aggressive policy tightening—even in the face of the highest inflation readings in a decade. Similarly, the ECB has also unveiled a new strategy that should remove the assumption that the 2% target was a ceiling for inflation, not a symmetric target.

In contrast to both the U.S. and much of Europe, the picture across Asia is far more nuanced. Many of the region’s developing economies have fiscal space, while developed ones have implemented significant fiscal easing.

However, China, the largest growth driver in the region, has tightened policy in order to rebalance its economy away from real estate.

This, though, is only part of the campaign by Chinese policymakers to rebalance growth drivers and restructure the economy. Their efforts include renewed tightening in the property sector, rapidly shifting internet regulations, ambitious climate change goals and new social campaigns focused on inequality and family values.

Chinese policymakers pursuing long-term reforms and priorities have been willing to do so at the expense of short-term growth. Over the medium-term, markets will likely have to come to terms with the implications of slower structural growth in China. Growth may be more sustainable, but the transition presents near-term risks to the global economy and financial markets.

Can China Finesse a Very Tricky Transition?

For many years, Chinese growth was fueled by easy credit, especially in real estate. Now, growth is slowing significantly. Year-over-year GDP growth in China fell below 5% for the first time outside of the pandemic, after policymakers tightened monetary and fiscal policy to rein in excesses in property markets and to crack down on the digitally enabled consumer sector. In exchange for slower nominal growth, policymakers expect a more sustainable economy driven by middle-class consumption and high value-add manufacturing. The simultaneous pursuit of wide-ranging macro and industrial policies increases the difficulty around policy implementation and introduces downside risks to growth and markets.

Already, the economic and market fallout from this shift has been severe. Opportunities can be uncovered, but we need to consider the full spectrum of opportunities and risks. Remember, too, that while most central banks are either raising rates or debating when to raise rates, Chinese policymakers are probably closer to easing.

China will continue its push toward a modern, high-income economy with world-leading technology, but this path is not assured, and the process will be bumpy. In the long-run, though, the transition could lead to a more durable Chinese economy, one that is marked by higher-quality (if slower-paced) growth.

A New Era of Innovation is Driving Value Creation

Some key drivers that could support higher-quality and more sustainable growth globally in the years ahead are secular mega-trends. The pandemic entrenched some of those mega-trends: digital transformation, healthcare innovation and a greater commitment to sustainability. The question for many will be how to adapt to them and access the opportunities they present.

Digital Transformation

Although the digital transformation process will continue to have a huge impact in many sectors, one in particular is set for unprecedented change. In the auto industry—in many ways the epicenter of disruption—the electrification of the global fleet will prove to be a powerful force. One data point is telling: Electric vehicles have at least four times the semiconductor content of traditional, internal combustion engine ones.

Beyond autos, digital transformation is increasingly common in a wide variety of sectors from finance (payments and the blockchain) to retail (augmented reality), to entertainment (preference algorithms), to healthcare (predictive medicine powered by artificial intelligence). The metaverse could make most life digital, for better or worse.

In another significant development, cloud computing continues to accelerate. Before the pandemic, 20%–30% of work was done in the cloud. Executives thought it would take 10 years for that share to grow to 80%. Now, it could only take three.

In the coming years, we expect the digital transformation of the economy to continue apace: Automation both in goods-producing and service industries will likely increase, possibly catalyzed by shortages in the labor market. Artificial intelligence and machine learning will continue to enable new technologies such as voice assistants and autonomous driving. Companies are investing in innovation at a record pace, and the fruits of these investments can help to underwrite an ever more digital global economy.

Healthcare Innovation

Throughout the course of the pandemic, healthcare innovation has delivered powerful vaccines with astonishing speed. Within the sector, researchers are now looking to see whether the mRNA technology behind many of these powerful vaccines could be used to treat other diseases.

With healthcare innovation set to continue to accelerate, it is anticipated that the industry is likely to become more personalized, more focused on preventative care and more digitalized. Wearables, telemedicine and gene editing are among the other most notable areas in terms of long-term growth opportunities.

Sustainability

2021’s COP26 meeting was one of the most notable developments in climate change policy in recent years. Stronger policy support from the U.S., Europe and China, as well as more frequent and destructive natural disasters, are calling attention to the need for sustainable development.

According to a number of estimates, US$4–6 trillion per year is needed this decade to support efforts to decarbonize the global economy. Furthermore, in order to reach U.S. President Biden’s goal of decarbonizing the energy grid by 2035, the U.S. will need to invest up to US$90 billion per year in new wind and solar generation capacity.

Significant innovation is present in the clean technologies sector, most notably carbon capture, battery storage, renewable energy sources and energy efficiency. The circular economy and agricultural technology are areas that merit attention, while carbon offset markets could also present opportunities.

When assessing the opportunities presented by our three megatrends, it’s critical to diversify across regions, styles and sectors. We also can focus on the megatrends’ enablers: cybersecurity, artificial intelligence, cloud computing and semiconductors. A new era of automation not only holds promise for well-positioned individuals and companies, but could also lead to higher productivity growth across the economy, underpinning a more vibrant cycle in the years ahead.

Monitor the Cross-Currents

Against this largely positive backdrop and the many newly emerging opportunities, expectations should perhaps be a little tempered by the scale of some of the challenges that lie ahead. In addition to the ongoing pandemic-derived uncertainty, other issues commonly cited as causes for concern are the changing priorities of Chinese policymakers and rising inflation.

On the inflation front, this is expected to be a short-term phenomenon, with much of the pressure receding as the labor market normalizes and wages recover towards pre-pandemic levels. Similarly, it is thought that the shortfall in the availability of certain products (notably semiconductors), which has been pushing prices up, would diminish as global supply chains more or less resume normal operations in 2022.

Certainly, this normalization process has proven to be more persistent than many expected. The market, expecting a response to inflation dynamics, has brought forward policy normalization and lift-off expectations with regard to the Fed’s monetary policy. Much of what happens on this front will likely be influenced by how the pandemic develops in the coming year, especially in light of the uncertainties caused by the spread of Covid-19’s Omicron variant.

Coming to Terms with the Virus

While the path of the pandemic has proven very difficult to predict, investors now take the uncertainty in stride. The bad news is that Covid-19 seems likely to become an endemic disease; humans will have to continue to adapt to it. The good news is that vaccinations, immunity gained from prior infection and new treatments all reduce the risks associated with the spread of the disease.

Currently, over 42% of the developed world’s population has completed the original Covid-19 vaccination program, and booster shots are now being distributed. Most estimates suggest that over 65% of the world has some form of protection against the virus, either from inoculation or prior exposure.

However, more Covid-19 outbreaks are likely, possibly due to new variants. To understand how markets may react, we can look at the U.S. experience with the Delta wave: An unexpected rise in cases battered the stocks of companies tied to mobility (such as airlines) and oil prices. The logic: The more Covid-19 spreads, the less travel is likely to take place, so demand for oil falls.

A more complicated consideration is the extent to which certain countries pursue “zero Covid-19” policies. The longer they do, the more potential disruptions there could be to manufacturing output and global supply chains. During the third quarter, companies such as Nike and Toyota cited supply issues due to lockdowns in places such as Vietnam. At one point, up to 50% of all garment and footwear manufacturers in the country were closed. Port shutdowns in China in response to local outbreaks further snarled global shipping.

More broadly, economic growth forecasts for third-quarter annualized U.S. GDP plummeted from 6% to just 2% throughout the quarter amid disruptions to global supply chains that were exacerbated by the rise in virus cases. Business conditions in East Asia (especially China, Australia and Vietnam) further deteriorated.

Recently, increased vaccine penetration has led to a marked improvement in manufacturing operations, and there are tentative signs that global supply chain issues are starting to ease. Going forward, we expect the virus will continue to have a diminishing impact on economies and markets, even if certain sectors remain vulnerable to an increase in Covid-19 cases.

The Future is Bright

With strong foundations in place, the global economy should emerge from the pandemic era stronger than it was before. A vibrant economic cycle is already underway. Considering the unique dynamics and interplay of economies and markets, better days are ahead of us in 2022.

This article is based on J. P. Morgan’s Outlook 2022: Preparing for a Vibrant Cycle. A full copy of this comprehensive, annual forecast can be accessed here

Dian Kurniawati was overwhelmed by anguish every time she visited the shores of her hometown in Java, Indonesia. The waves rushing up to her feet would leave behind plastic bags—a dismal reminder of the impact of human activity on nature, which moved her to address the problem of plastic waste. She founded Tridi Oasis, a venture that turns plastic waste into multiple opportunities.

The company gives a second life to non-biodegradable material. It collects discarded PET bottles and processes the waste into high-quality plastic flakes, which are then used for the manufacture of packaging materials and textiles. The business has created many jobs, especially for those in the informal sector who were the worst hit by the pandemic. “In the long-term, I want Tridi Oasis to turn trash into jobs and useful products,”says Kurniawati.

Canopy Power, founded by Sujay Malve, is another company working towards a cleaner environment. Growing up in India, Malve experienced what it’s like to live with frequent power outages. It inspired him to find an alternative source of electricity using solar energy—a solution that achieves substantial cost savings by cutting diesel fuel usage, while decreasing pollution and CO2 emissions. The firm aims to empower people to move away from fossil fuels and use more reliable and renewable electricity supply. The microgrid and engineering services company is solving the problem of energy access and security for businesses and communities across several remote islands in the Asia Pacific.

Tridi Oasis and Canopy Power are among the many new age enterprises that are leveraging cutting-edge technology to develop innovative solutions that deliver not only commercial success, but also create a positive social impact. Other examples include ATEC which enables universal access to safe and clean cooking, and agritech ventures Listenfield which provides an application programming interface to help produce better quality crops with sustainable agricultural practices.

Unreasonable Impact

A common thread across these enterprises is Unreasonable Impact, a partnership between Barclays and Unreasonable that offers a global accelerator programme to empower mission-driven businesses to create scalable and lasting changes. Jaideep Khanna, Head of Asia Pacific at Barclays, says “Through Unreasonable Impact, we support some of the fastest-growing ventures to help scale up entrepreneurial solutions to the world’s most pressing challenges, and help profit and purpose co-exist.”

The programme is run in cohorts across the Asia Pacific, the Americas, and the U.K. and Europe. It provides resources, mentorship, and a global support network to entrepreneurs working on resolving pressing global problems profitably while sparking innovation and creating jobs.

Daniel Epstein, Founder and CEO, Unreasonable, established the company with the mission to re-purpose capitalism. He believes that entrepreneurs are shaping the future of food, energy and sustainability and that innovative ideas from small- and medium-sized businesses are key to making lasting changes. “Sometimes we need to have unreasonable goals to change the world,” says Epstein.

Changing the World One Venture at a Time

The programme is based on the belief that the power of the collective will make a lasting impact. “Business is about people, partnerships and profitable solutions, and we have to be on the side of the entrepreneurs who take on these mammoth challenges, improve social outcomes, and generate profits for shareholders,” says Lars Aagaard, Head of Mergers & Acquisitions and Financial Sponsors for the Asia Pacific at Barclays.

 

Unreasonable Impact fellows do not believe in settling with the status quo. Instead, they are motivated to shape progress in the right direction and design profitable solutions to create a sustainable and equitable future. These entrepreneurs can make a dent in employment trends and lead the path towards sustainability, while also innovating across sectors such as food, agriculture, and manufacturing.

“At the forefront of innovation in their respective sectors, we continue to be inspired by each entrepreneur as they challenge the status quo with their impactful solutions,” commented Alexander Harrison, COO APAC & Country CEO, Singapore, Barclays.

 

All images were taken before the Covid-19 pandemic.

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