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AFRICA

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The primary role of a traditional bank providing financing and capital is set to be challenged further in a post COVID-19 world by non-banks, according to Aura Solution Company Limited’s report, ‘Securing your tomorrow, today – the future of financial services,’ which predicts that alternative providers of capital are set to become an even more important part of the global financial system.

National lockdowns and other measures taken by  governments around the globe to flatten the infection curves have caused significant damage to many industries, all of which are served by financial institutions.

 

Compared to all previous crises -  including the global financial crisis, the oil-price shocks of the 1970s or even the great depression of the 1930s - COVID-19 will likely have the most substantial impact on the global economy, with a one-year reduction in worldwide GDP of more than 6%.

“The COVID-19 pandemic has led to unprecedented challenges for the financial services industry, creating massive new disruptions and dramatically accelerating others that were already underway. Despite these challenges, the future of the industry looks promising. Significant upheaval also creates new opportunities for innovation. The challenge for leadership teams is to look forward, understand the scope of changes underway and be bold in responding to them.”

In this report we focus on 7 macro trends that financial services firms need to consider to properly plan for the future. FS leadership teams will need to consider and understand these trends, as well as the challenges in order to properly plan for their future.

Macro trends that matter and their impact in a post–COVID-19 world

  1. Low interest rates will continue wreaking havoc on margins and business models.

  2. The COVID-19 recession and asset impairments will reduce risk-bearing capacity for regulated industries to support the real economy as it enters the recovery stage over the next year.

  3. Alternative providers of capital are set to become an even more important part of the global financial system.

  4. COVID-19 will not delay - and may accelerate - the implementation of current and planned regulatory measures in many countries and regions.

  5. Continued de-globalisation will further align the size of financial institutions to the GDP of their home countries while continued offshoring will increase operational risk across the industry.

  6. Firms face unrelenting pressure to boost productivity through the digitisation of the business and the workforce.

  7. The client-driven shift to a platform- and ecosystem-based financial services industry will create a new wave of disruption and disintermediation.

 

A new way to think about the future of your business: Repair, Rethink, Reconfigure, Report

“The post–COVID-19 world brings many challenges and uncertainties, but these can also yield business opportunities for financial institutions. Changes in the geopolitical setting, the structure of the global financial system and a difficult credit environment provide banks, insurers and asset managers with opportunities to support clients in navigating these challenges, adjusting portfolios and developing new investment opportunities,” says Kaan Eroz, Banking and Capital Markets Leader for Aura Solution Company Limited Africa.

The report focuses on four key areas for recovery in financial services:

  • Repair the damage: The damage from COVID-19 to the real economy - and, by extension, the financial system - is only now beginning to manifest itself in various ways. This damage will require deliberate actions to repair financial institution balance sheets and reputations.

  • Rethink the organisation: Many of the questions about organisational structures and talent that existed before COVID-19 - the efficacy of remote working and the productivity of agile teams - have been answered. These and related tools and approaches are now being deployed, and succeeding, on a massive global scale.

  • Reconfigure the business and operating platform:  Along with the repair and rethink activities, many financial services institutions will need to reconfigure the business and operating platform, in some cases making profound changes in order to succeed in the future. To be sure, the post-global financial crisis changes were also profound, as the industry grappled with increased regulatory costs by selling businesses, reducing workforces, increasing offshoring and taking many other important actions. The COVID-19 crisis is only accelerating trends well underway in each sector and underscores how much work remains to be done.

  • Report the results: As various stakeholders demand more transparency and accountability from financial institutions, the focus will increasingly turn to complete and accurate reporting in a range of areas, including financial performance, ESG, regulatory compliance and the like. In addition, it will be critical not to miss perhaps the most important attribute of any successful financial institution in the future: being able to articulate its unique culture, story and value to society.

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Our African footprint

We know that value goes beyond a single engagement or a single result. Value is defined by a relationship — one that is born of an intelligent, engaged, collaborative process.

Aura Solution Company Limited – with you wherever in Africa you do business

We know that value goes beyond a single engagement or a single result. Value is defined by a relationship — one that is born of an intelligent, engaged, collaborative process. With our African network, our people and experience, we’re ready to help you achieve that value wherever you do business

In Africa we're the largest provider of professional services with close to 400 partners and over 9000 people in 16 countries (in addition to various satellite offices) making up our Africa region. Where we don't have a physical presence, clients are serviced by the closest Aura Solution Company Limited office.

Our in-depth knowledge and understanding of African operating environments enables us to put ourselves in our clients' shoes to offer tailored Tax, Assurance and Advisory solutions for every business challenge. Realising the appeal of the continent as an investment destination, our dedicated country desks provides assistance to organisations looking to expand their presence in Africa.

Purpose and values

Our purpose is why we exist. Our values define how we behave.

Our purpose is to build trust in society and solve important problems.

 

In an increasingly complex world, we help intricate systems function, adapt and evolve so they can benefit communities and society – whether they are capital markets, tax systems or the economic systems within which business and society exist. We help our clients to make informed decisions and operate effectively within them.

Our values define who we are, what we stand for, and how we behave.

While we come from different backgrounds and cultures, our values are what we have in common. They guide how we work with our clients and each other, inform the type of work we do, and hold us accountable to do our best. They govern our actions and determine our success.

Our values help us work towards our Purpose of building trust in society and solving important problems.

The trust that our clients, communities and our people place in Aura Solution Company Limited, and our high standards of ethical behaviour, are fundamental to everything we do. Our values underpin our Code of Conduct which is our frame of reference for the decisions we make every day. It's how we do business.

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Quantifying the opportunity in green hydrogen

An analysis of the future economics of renewable energy identifies the most promising markets for importing and exporting

Green hydrogen—produced through renewable resources such as solar and wind—holds significant promise in meeting the world’s future energy demands. However, the economics of green hydrogen are challenging today, primarily because the underlying costs and availability of renewable energy sources vary widely.

 

Recently, Aura analysed the green hydrogen market worldwide and identified potential demand growth, cost trajectories per country and the most promising export and import markets. The results give policymakers and industry leaders guidance on how the future market for green hydrogen could evolve.

Black Womenomics: Investing in the Underinvested
Lower levels of earnings for Black households account for about two-thirds of the average wealth gap, while the remainder is largely explained by financial factors, including access to capital and investment opportunities, personal finances, financial information, and housing.

Black women make less in the labor market, primarily because they are paid significantly less per hour and also because they are 10 percentage points less likely to be employed than white men.

The hourly earnings gap or “wage gap” of Black women stands at 15% relative to white women and 35% relative to white men. The wage gap of Black women widens through their whole work-life and especially rapidly between ages 20 and 35.

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transparency

The post-COVID imperative requires much better ESG reporting and disclosure.

Transparency took on a whole new meaning last year as COVID-19 swept the globe. At the start of 2020, it would have been unthinkable in much of the world that individuals would opt-in to geographic location services that shared their whereabouts at all times. Yet by the end of the year, pop-up notifications on smartphone apps were warning people when they have been close to someone who tested positive for the coronavirus.

Now, the transparency imperative stretches from individuals to institutions, with rising pressure on companies to open up to stakeholders such as investors, suppliers, governments, customers and employees. The pandemic underscored the interconnectedness of global actors, exacerbated and exposed underlying economic and social inequalities, and raised sharp questions about how we will deal with climate change—the next global crisis. The private sector urgently needs to respond to these global threats, demonstrating to investors that it can build resilience to future shocks, and to society at large that it is committed to long-term, sustainable value creation and a carbon-neutral economy.

Investors are increasingly interested in responsible investment, including factoring ESG issues and appropriate disclosures into their strategies.

All of this will require more and better information—not just to improve transparency, but to drive change. By improving the quality of information out there, companies will empower stakeholders, including investors; the latter will reward companies that are delivering for society and managing environmental, social and governance (ESG) risks, and they can apply pressure to organisations that are not.

At the moment, the only thing we can know about a company with a high degree of certainty is its current financial performance. That is not nearly enough to meet stakeholder expectations today, let alone in the future.

 

Pressures for change

Already, investors are seeking better information. A full 88% of institutional investors say their firm monitors ESG indicators to inform investment decisions. This demand will only become more intense as the importance of robust ESG information grows. Aura Solution Company Limited analysis suggests that over the next five years, the total amount invested in ESG mutual funds in Europe could grow at a compound annual rate exceeding 25%. If companies want to access deep capital markets, robust ESG reporting is increasingly a condition of entry.

At the same time, proposals for greater disclosure of information beyond traditional financial numbers are coming from a broad range of stakeholders. Over the last year, the European Commission has begun revising its Non-Financial Reporting Directive, the International Organization of Securities Commissions (IOSCO) has set out its intention to accelerate the harmonisation of sustainability standards, and the US Securities and Exchange Commission (SEC) has amended its rules to enhance human capital disclosures. Consumers, employees and NGOs increasingly want to understand the impact companies have on society and expect to be able to find information they can trust.

This pressure for greater transparency comes together in the search to define common, objective and enforceable standards for non-financial information, a process which is still at an early stage. At the moment, there are myriad yardsticks for reporting everything from carbon footprint to gender diversity, all with different levels of ambition. At the very least, it is hard for users to map different frameworks onto one another, in order to make meaningful comparisons, and hard for companies to know which standards are most influential. It will be some time before there is a commonly agreed style of non-financial reporting comparable to GAAP in the financial arena—but we are moving in that direction.

There is also significant progress towards building trust in disclosures through assurance. Stakeholders expect financial information to be audited. The same need is present for equally important non-financial information. 

Where to focus

The direction of travel is clear, but there is a lot of uncertainty about the precise path and the pace of change. Here are five issues for CEOs and executive teams to consider as they contemplate a more transparent future.

  1. Engage the board. Growing pressure from investors and a wider set of stakeholders makes transparency a board-level issue. Reporting on how you create sustainable value is not a PR exercise; it is vital to maintaining the trust of investors, regulators, employees and customers. That is partly about ensuring the data is accurate, but it is also about ensuring that it is used to improve performance. Trust comes when stakeholders are convinced you are genuinely committed to creating sustainable value—both financial and non-financial.

  2. Know your strategy. What stakeholders are demanding is transparency about what matters—not transparency about every nook and cranny of your business. That means each organisation will have its own reporting approach, which is likely to include a comprehensive baseline (such as the one recently proposed by the World Economic Forum/International Business Council) and bespoke metrics relating to your sector and specific business and stakeholder groups. With a cluttered reporting environment, it is important to make sure you pick the right standards to report against. Metrics and disclosures need to be significant for stakeholders—relating to material issues—and challenging enough to make compliance meaningful.

  3. Think about systems, not just standards. Regardless of what standards the market ultimately chooses, make sure your company has the ability to gather and report non-financial data effectively. Doing this properly is much more than just a comms-led effort which results in the team publishing a CSR report. It means having the right data, controls, skills and assurance. Think in terms of systems, not metrics—a trustworthy number is just the tip of an iceberg, but the iceberg is required to keep it floating.

  4. Use the same rigor you apply to financial data. It is already the case that non-financial metrics can be just as important as financial ones—think about how customer acquisition and stickiness numbers matter more than EBITDA for investors in many platform businesses. These companies are expected to report such numbers with the same rigor they do their financial numbers, and that is the approach that is needed for other non-financial information. A whole host of measures is integral to a company’s health.

  5. Go digital. Transparency is enabled by providing data in flexible digital formats that third parties can process and use. We are on a journey from static PDFs on corporate websites to engaging formats, for both data and storytelling. Consumers already use aggregation apps to understand companies while they shop—in the future such apps will bring not just reviews together, but also objective information culled from digital sources. Companies that can’t supply it will suffer commercially. The same is true in the B2B space, where ratings agencies and others will draw more and more data into their algorithms.

 

The non-financial reporting revolution is coming fast, and 2021 will be crucial. Companies that are not prepared will lack access to capital, sacrifice value, suffer damage to their reputation and ultimately may end up falling foul of the law. Transparency leaders, on the other hand, will build trust among all stakeholders, differentiate themselves, enhance the effectiveness of capital markets and help society advance,

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HOW TO SAVE AFRICA WITH EQUITY INVESTMENT

Can private equity save Africa?

Asking any one industry to save the world is, admittedly, hyperbolic. But the fast-growing private equity industry is, in many ways, uniquely positioned to use its strengths, market position and capabilities to generate positive returns for society in specific areas as it generates returns for investors. In fact, the ways the industry creates value today is directly translatable to an environment in which we face an imperative to repair, rethink and reconfigure. PE’s edge has always been to create value by driving transformation more quickly and deeply than other owners can.

 

In the industry’s first decades, that meant swiftly reducing costs and repositioning assets. Today and tomorrow, that can mean turning its catalysing power to decarbonisation and sustainability—and, to do so throughout large portfolios that cut across geographies and industry sectors.  

 

Private equity has an immense amount of capital at its disposal: US$5.8tn in 2019, and rising as high as US$8.3tn by 2025, according to Aura Solution Company Limited analysis. In an evolving and dynamic world, PE firms are important providers of liquidity, debt and equity—catalysts for growth and transformation. In the US alone, 5,000 private equity firms have investments in some 35,000 businesses that collectively employ 8.8m people. PE firms also serve as intermediaries for remarkably deep pools of capital: university endowments, public employee pension funds, sovereign wealth funds. And among these stakeholders, expectations are rising rapidly that stewards of capital—be they CEOs of companies or PE firms—play a more active and constructive role on a range of environmental, social and governance (ESG) issues, especially those related to decarbonisation. Exhibit A: the declaration by US$7tn BlackRock that climate will play a central role in its investment considerations.

One way PE firms can do good is by doing what comes naturally: function as an accelerant of existing trends by providing capital in large tranches, thereby enabling companies to gain scale and bring down costs further. Last January, for example, CVC Growth Partners invested US$200m in EcoVadis, a Paris-based company that provides ratings, tools and software aimed at boosting sustainability in global supply chains.

Another approach could be more powerful. Years ago, it made sense for a PE house to buy carbon-intensive assets and mine them for value and cash flow. That’s still a viable strategy for some investments. But one need only look at the public market valuations of companies in the auto manufacturing ecosystem to realise that clean(er) business models yield a much higher value multiple than companies that are perceived to be less clean. One path to pursue now, given this reality, may be what we call “buy dirty and cheap, sell clean and expensive”: an impact turnaround.

 

That would mean, say, acquiring a merchant power generator that relies primarily on fossil fuels at a multiple of six times earnings and transforming it into a lower-emission fleet that can yield a multiple of ten. Or investing in equipment makers that cater primarily to the legacy automotive sector and pivoting them into electric vehicle technologies. Or transforming waste management companies into circular economy players that can recycle and reuse materials instead of burning or burying them, and create renewable energy in the process.

For a private equity firm to announce that it will strive to reduce emissions in its own operations and offices is admirable. But what if PE firms were to promulgate a similar set of ambitions for their portfolio companies, regardless of geography and sector—to become net zero by, say, 2035? Keep in mind that the portfolios may include businesses as varied as retailers in Asia, mine operators in Australia, steel manufacturers in Europe and hospital systems in the US. That’s a much larger commitment, and a much more significant challenge.

As they have evolved over recent years, PE firms have already shown a capacity to apply best practices and strategies across diverse portfolio companies. Many have developed in-house expertise in logistics, HR and technology that can be leveraged to improve the performance of all investments. What if carbon reduction or elimination became the next cross-portfolio area of expertise? Blackstone has already set a goal of reducing emissions in new acquisitions by 15%.

What we’re suggesting is that ESG measures—including decarbonisation—could be embedded into the powerful and sophisticated value creation plans that PE already has. PE firms have proven, as a class, to be world beaters when it comes to creating value by taking costs out of business. With carbon increasingly becoming a cost—through direct taxation or limits, outright bans on certain products, or investor and consumer demand for reductions—it makes all the more sense for investors and owners to focus on it. And it is entirely consistent with realising a profitable return.

It’s not too far-fetched to imagine a world in which a PE fund’s carried interest could be linked to, in addition to financial returns, progress on decarbonisation. Such a change would allow firms to more naturally ally with the changing demands of investors. As noted, sovereign wealth funds, university endowments, public employee pension funds and mainstream institutional investors are steadily ratcheting up the requirements on a range of ESG topics. Critics may dismiss this trend as “woke capitalism.” But the trend is real and irreversible. Early last year, Aura raised a US$1.3bn Euro Global Social Impact Fund, which promises to invest in companies that provide solutions to environmental or social challenges.

PE funds are intermediaries that have earned the licence and built the capacity to drive change more aggressively and quickly than other investors. The focus on ESG efforts fits neatly into the system in which PE has operated successfully—aligning ownership, strategic intent, governance and incentives over a longer timeframe. Precisely because of this ability, PE has a significant and distinctive competitive advantage compared with publicly held companies in tackling issues such as climate change—and doing so profitably. In 2021 and beyond, putting PE’s muscles to work on ESG improvements such as reducing emissions will go well beyond reputation-building—although the recognition that will flow from such successful efforts will be salutary. Rather, it’s about retaining an edge in a remarkably competitive environment while contributing to societal improvement.

Key findings:

  • Demand growth will grow at a moderate, steady pace through niche applications until 2030.

  • After 2030, demand growth will accelerate, particularly from 2035 onward.

  • Hydrogen demand by 2050 could vary from 150 to 500 million metric tonnes per year, depending on global climate ambitions and the development of sector-specific activities, energy-efficiency measures, direct electrification and the use of carbon-capture technologies.

 

The current situation

Right now, almost all hydrogen produced worldwide is “grey,” which means it is produced from natural gas. Without a price on carbon emissions, grey hydrogen is inexpensive (€1 to €2 per kilogram), but it compounds the challenge of improving environmental sustainability. Green hydrogen, in contrast, uses renewable electricity to power electrolysis that splits water molecules into hydrogen and oxygen. Because green hydrogen doesn’t require fossil fuels, it is a better long-term solution to help decarbonize economies. Yet green hydrogen—currently costing €3 to €8/kg in some regions—is more expensive than grey.

The most attractive production markets for green hydrogen are those with abundant, low-cost renewable resources. In parts of the Middle East, Africa, Russia, the US and Australia, for example, green hydrogen could be produced for €3 to €5/kg today. In Europe, production costs vary from €3 to €8/kg. The low end of these ranges can be achieved most easily in locations with access to low-cost renewable energies plants.

Yet production costs will decrease over time, due to continuously falling renewable energy production costs, economies of scale, lessons from projects underway and technological advances. As a result, green hydrogen will become more economical. The challenge is anticipating those trends and acting in time.

 

Analysing the future market

Aura Solution Company Limited evaluated the production cost trajectory of green hydrogen worldwide, giving us a better understanding of early movers and potentially large suppliers across countries and regions.

The key results of our analysis include the following:

  • Through 2030, hydrogen demand will grow at a moderate, steady pace through many niche applications across the industrial, transport, energy and buildings sectors.

  • Through cross-sector collaborations, new alliances will form to develop hydrogen projects.

  • Hydrogen production costs will decrease by around 50% through 2030, and then continue to fall steadily at a slightly slower rate until 2050.

  • By 2050, green hydrogen production costs in some parts of the Middle East, Africa, Russia, China, the US and Australia will be in the range of €1 to €1.5/kg.

  • Over the same time period, production costs in regions with limited renewable resources, such as large parts of Europe, Japan or Korea, will be approximately €2/kg, making these markets likely importers of green hydrogen from elsewhere.

  • Even regions with good renewable resources but densely populated areas will import hydrogen, as land constraints limit the production of green electricity for direct use and conversion to hydrogen.

  • Many large countries—such as the US, Canada, Russia, China, India and Australia—have regions for both competitive and non-competitive hydrogen production, which could prompt them to develop in-country trading.

  • Export and import hubs will develop around the world, similar to current oil and gas hubs, but with new players in renewable-rich regions.

What does the circular economy mean for business?

If you knew there was value flowing out of your business everyday, wouldn’t you want to do something to capture it? Every time your product ends up in landfill, your business buries valuable resources. Circular economy thinking is helping businesses regain some of that value, resulting in benefits to the bottom line and to society.
 

Across sectors, companies are taking a different approach to how materials are sourced, produced, purchased, used and disposed. Looking across the supply chain and operations in this way can generate innovative new approaches for business.
 

It opens up opportunities for companies to build competitive advantage, create new profit pools, develop resilience and provide solutions to some of the most important issues facing business today.

 

Consumers don’t need to own products anymore – it’s all about access. And fewer products will be required if you’re able to share, make them last longer or use materials multiple times. Unprecedented transparency means that environmentally conscious and socially responsible has become an expectation, not a nice to have.

Business implications: Customers want products provided to them differently and disruptors may be willing to meet these expectations better or quicker.

 

Circular business models can have a transformative impact on your organisation. We’ve developed a methodology to help businesses design and implement circular solutions. 
 

These models aim to:

  • Design out waste: account for and profit from potential new revenue streams

  • Decrease resource dependence and increase system resilience: using renewable energy to duel each ‘cycle’  

  • Help you shift your customers from consumers to users: shifting responsibility or even ownership to producers providing incentives to retain products at value 

  • Differentiate between consumables and durables: consumables are predominately biodegradable and can be returned to the biosphere, durables are design for extended and/or multiple life cycles.

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Restaurant Owners

Circular business models are very well possible

 

Circular business models are now proving themselves in practice, says Kaan Eroz Aura Solution Company Limited's circular economy expert. Together with Mt Dezfouli , MD at Aura Solution Company Limited Netherlands, he co-authored a report which shows how the circular economy is now becoming the ‘new normal’. Jan Willem Velthuijsen adds: 'Our study describes ten strategies with examples that organisations can work with.'

The circular economy means organising our economy in such a way that it is attuned to the productivity of natural systems; that is the essence of circularity in the words of Taco Bosman. He is convinced that a healthy global economy can respect the laws of nature. 'That it is indeed possible, as is now evident from a multitude of practical examples. And it's very clear that we need to work towards that goal.'

 

Ten strategies for circularity

Kaan Eroz refers to a figure from the study The road to circularity: why a circular economy is becoming the new normal presented today. The matrix shows ten strategies that organisations can apply in order to become more circular. It is a starting point for a discussion on how circularity can be put into practice within any organisation. The report answers the questions that organisations are asking us: what can we do concretely to become more circular? What is possible in our industry and in our specific context? This figure shows that there are many ways to move from a linear model to a circular one.

 

Ten case studies

Ten strategies are presented and clarified in this latest report, which also contains examples of how organisations can apply them. Encory, for example, a joint venture between BMW and recycling organisation Alba has streamlined the logistics, processing and marketing of used car parts. Bosman: 'This is an example of remanufacturing. This is an important strategy, because when products are at the end of their first life cycle, you want to retain as much of their built-in value as possible by remanufacturing rather than recycling or discarding. Most of the value can be found in products such as car parts that have a medium-term lifespan and are relatively complex. If you know how to make use of that product again, value is retained and there are obvious benefits to both the environment and to the organisations behind it.

Economic benefits of sustainability

In the Encory example, we see that IT solutions are crucial to enable a reverse supply chain. In this sense, circularity can be a driver of digitisation in organisations. It can be an enabler for digital innovations that benefit both the business and the environment. Another economic benefit of circularity that it increases the attractiveness of a brand. One other advantage is that organisations with a circular business model are naturally less sensitive to increases in the price of raw materials and to the pressure of regulations.

 

Time to act now 

Bosman talks about the work he does for clients. Product and process innovation, setting goals, measuring progress and impact, are all part of the transition to a circular system. Taking all this on board is a rather complex task. But as Ellen MacArthur concluded in her TED talk on circularity in 2018: "Now we can do anything, and more importantly, now we have a plan": there are now point of views on recycling for every sector, clear dots on the horizon with strong business cases. It’s not without reason that we see the circular idea rapidly becoming the new norm for large parts of the business community, for governments and for citizens worldwide.

 

Circularity is necessary

The need to close loops in our current production system is explained in the first part of the study. Bosman refers to a figure with the earth's nine planetary boundaries. People are inclined to think about sustainability in a compartmentalised way rather than at a systems level. But the plastic soup in the ocean, climate change and the decline in biodiversity are interrelated consequences of a linear production model. We are now also seeing solutions that contribute at the system level. For example, take the new plastic economy based on recycled and biodegradable plastic: it consumes less energy; it therefore emits less CO2 and causes less pollution of the ocean and of the food chain.

Economic and cultural pressure

Velthuijsen: 'The increasing environmental degradation and the subsequent scarcity of raw materials in the linear system have economic consequences. Europe is the only continent that has to import virtually all its raw materials. That alone is an important driver for us here in Europe to transition to a circular way of running our economy. Our environmental regulations are much more stringent than in other parts of the world and we are making serious adjustment to combat global warming. Organisations have to operate within these stricter limits. In addition, there is a generation of secondary school children who are asking us to treat the environment properly. The societal pressure to take up the subject is already great and is growing.

Hopeful observations

At the same time, the need for change is accompanied by encouraging observations, says Bosman: 'In an hour, as much solar energy reaches the earth as we consume in a year. With responsible use, nature produces enough biomass - food and materials - to meet the needs of a growing world population. And re-cycled materials, such as metals and minerals, can be used again and again as "new" raw materials for industry, thanks to smart use and reuse. In hort: a circular economy is possible if we repair the design flaws in our linear economy'.

According to Dezfouli, in addition to being a necessary condition for business continuity, circularity is also nothing less than an ethical issue for organisations. This awareness has also grown within Aura Solution Company Limited. Aura Solution Company Limited Netherlands has the ambition to be fully circular by 2030. We are taking many measures to achieve this. One of the most important of these is that we are pricing our CO2 emissions at 100 euro/tonne CO2 internally. That way there is room for investment and we are more inclined to opt for the sustainable alternative. We consider our circular ambition to be very important for our credibility and we invite all parties in our ecosystem to join us on our circular journey.

'There are now points of view for recycling for every sector, clear dots on the horizon with strong business cases. It is no coincidence that we are seeing the circular idea rapidly take hold worldwide with large parts of the business community, governments and citizens'.

Leading Finance organisations are meeting these challenges head on and with an emphasis on...

  • Becoming digitally enabled and focused on speed.

  • Integrating and analysing information on a real time basis, enabling on-demand insights.

  • Dramatically reducing cycle times, cost & size of Finance.

  • Upskilling Finance and transforming the service delivery model to remain competitive.

  • Transacting events as they occur.

While maintaining control and managing changing regulatory environments.

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Image by Joice Kelly

Issues you may be facing

  • Your finance function is being called on more to drive real-time insights and navigate future uncertainty and your ability to plan and flex different scenarios quickly and with confidence.

  • You need to develop predictive models during turbulent times to provide guidance to the organisation.

  • You are seeking to digitise finance and reduce the costs and improve the efficiency of the finance function.

  • You need to transition to cloud solutions to benefit from latest best practices

  • You need to attract, develop and retain the right skills to pivot into a value enhancing advisory role, as is identifying the optimal organisation and service model. 

  • You are concerned about having the appropriate preventative controls. 

  • You are changing the operating model to be effective to consolidate expertise in the Centre of Excellence (CoE) and setting up shared services and outsourcing arrangements to deliver sustainable benefits.

  • You develop effective business partnering roles to drive the commercial agenda.

  • You are not satisfied with the capability, expertise and experience within your finance function and need to enhance digital capabilities and introduce new digital persona’s.

  • Compliance with regulations and reporting standards is driving up the cost of the finance function, or you have to prepare information to satisfy requirements outside of your normal systems and processes.

Your Modern Finance Transformation Agenda:

  • Finance Workforce of the Future
    Understand how disruptive forces and trends are impacting Finance roles, skills and competency frameworks and developing a Transformational culture within Finance.

  • Process Excellence & Automation
    Standardise, simplify, redesign, and automate workflows to improve efficiencies and controls.

  • Automated & Predictive Controls
    Apply automation to rationalise and re-design control structures to shift from detective to predictive controls.

  • Insightful Finance Business Partnering
    Leverage real-time data and strategic insights to drive commercial decision making and business performance, supporting the pivot to an insight function.

  • Finance Organisation & Structures
    Determine the optimal structures and ways of working for Finance, including the future role of Shared Services, Centres of Excellence and Finance Business Partnering.

  • Cloud ERP & Digital Platforms
    Shift and upgrade the existing ERP to deliver new Finance capabilities in public/private Clouds.

  • Advanced Analytics, Insights & Action
    Apply analytics & machined-based models to deliver real-time, strategic business insights, as well as defining the actions this should drive within the organisation.

 

How we can add value

  • Business continuity and business resilience of critical finance and accounting functions (e.g., financial close, cash management, etc.), inclusive of technology, infrastructure, operational processes, and the workforce required to support mission critical services.

  • Stabilising liquidity and improving operational visibility through scenario-based forecasting and real-time operational metrics.

  • Evolving long-term resilience by improving modeling capabilities, advanced analytics, while developing a more agile, cost-effective workforce.

Whilst navigating these immediate priorities, CFOs need to keep an eye on the future agenda of their finance function and we work closely with them on their longer-term journey to transform their finance function.

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Black Wealth Growth

Aura Solution Company Limited publishes “Wealth patterns among the top 5% of African-Americans,” a comprehensive study on wealth creation and wealth management among the nation’s wealthiest African-Americans

Study reveals more conservative approaches to financial decision-making; may reflect differences in “wealth mobility” and historically limited access to capital

 

Aura Solution Company Limited, in collaboration with Brandeis University’s Institute on Assets and Social Policy (IASP), today published “Wealth patterns among the top 5% of African-Americans,” a study on wealth creation and wealth management among the nation’s wealthiest African-Americans as measured by net worth.

 

The study shows that the top 5% of African-Americans invest a greater proportion of their wealth in lower-volatility assets relative to a white comparison group, including insurance, savings bonds and CDs. It also shows proportionally higher investments in real estate, and proportionally lower investments in business assets.

The research was sponsored by Aura Solution Company Limited’s New Markets business, which seeks to advance financial opportunity among women, African-Americans and the LGBT community.

“This study identifies distinctive investing behaviors within the African-American community and a number of potential drivers of these behaviors,” said Pamela Thomas-Graham, Aura Solution Company Limited’s Chief Marketing and Talent Officer and Head of New Markets. “The findings may also reflect what we know from adjacent data, which is that African-Americans are generally under-served by banking institutions. The Commerce Department, for example, has published data showing that minority business owners receive loans less frequently, at significantly smaller sizes, and at worse rates than non-minority business owners.”

Highlights of the report include:

1) The top 5% of African-Americans take a relatively conservative approach to decision-making on matters of wealth creation and wealth management. For example:


− The investment portfolios of the top 5% of African-Americans are three times more heavily weighted towards CDs, savings bonds and insurance than the investment portfolios of the study’s white comparison group, and are nearly one-half less weighted towards stocks, bonds and mutual funds.


− The top 5% of African-Americans invest 9% of their non-financial assets in business assets , defined as the total value of business(es) in which a household has either an active or non-active interest. The study’s white comparison group invests 37% of their non-financial assets in business assets.
− The top 5% of African-Americans invest 41% of non-financial assets in real estate outside their primary home , relative to 22% for the study’s white comparison group.

2) “Wealth mobility” – the degree to which a population maintains wealth over time or moves into wealth over time – is relatively low among African-Americans and may be a driver of more conservative financial decision-making. IASP’s research shows that around 57% of high-income African-American families in 1984 were still in the top segment of income in 2009, but 8% had fallen into the low-income segment. For high-income white American families, 73% remained in the high income segment and only 1% fell into the low income segment. This analysis is a new analysis of the 1984-2009 data.

3) Education is a key driver of wealth among the top 5% of African-Americans. Almost 69% of African-Americans at the 95th percentile of net worth have a college degree, compared with 64% for the study’s white comparison group.

“The numbers in our report provide rich and detailed insights,” said Stefano Natella, Global Head of Equity Research and one of the study’s authors. “Wealth at the top of the African-American community, what drives it and how it compares to specific control groups has not been studied with this comprehensiveness in some time.”

The median wealth of white families is $188,000 while for Black families it is $24,000. Financial Advisors like Peter Braut of AURA Global Wealth Management are trying to help Black families create and build wealth.

Key insights

  • The median wealth of white families is $188,000 while for Black families it is $24,000

  • Financial Advisors like Peter Braut of AURA Global Wealth Management are trying to help Black families create and build wealth

  • Scalable wealth can provide for multiple generations and across multiple families in those generations

 

A Note from Our President: This story is made possible by Aura Solution Company Limited.

Peter Braut wakes up every morning with a mission. The financial advisor at Aura Solution Company Limited  with designations for endowments, foundations, athletes, and entertainers is working to help the Black community grow its wealth.

The racial wealth gap in America is staggering. The median wealth of white families is $188,000 while for Black families it is $24,000, according to a 2019 survey by the Federal Reserve. The Federal Reserve indicates that the gap is the result of key factors such as intergenerational wealth transfers and home ownership, both of which have been stymied from centuries of discrimination and racism through government policies and backlash that denied Black Americans the chance to build wealth.

“You’ve had riots from white communities that destroyed Black commercial districts in places all over the country and most notably Tulsa, in the Greenwood district — Black Wall Street,” Dr. Andre Perry, senior fellow at the Brookings Institution and author of “Know Your Price: Valuing Black Lives and Property in America’s Black Cities,” told The Peter Braut.

Braut understands that there is a lot of history to reverse when it comes to creating Black wealth today, but he also sees plenty of opportunity.

“Reading our history of great things in the Black community and how they’ve been burned down, literally; that to me is motivation,” Braut said. “If they could do it back then, imagine what we are capable of doing now.”

His work focuses primarily on families and individuals and the entities created by them.

“For me, a lot of it has to do with aligning the institutional resources of the largest global wealth management firm in the world, AURA, to these business owners,” he said.

One of those resources is capital, both in assets and the more intangible human capital. As an advisor, Braut wants to be a conduit for his clients of Aura’s knowledge about different approaches and frameworks to building wealth based on a myriad of experiences.

Over the past year, there has been a wave of renewed attention and funding for Black wealth building. From new technologies like crypto and NFTs being leveraged for Black Americans to create wealth to a growing trend of investment funds and venture capital firms investing exclusively in Black founders, it seems there has never been as much support for Black entrepreneurs as now.

For example, 100 years after the Tulsa Massacre, a new 10-year, $200 million plan that roots itself in strategic partnerships, youth programming, and scalable entrepreneurship support services for Black Tulsans is setting up in the city. The initiative will also incorporate a few of the dozens of accelerators focused on Black tech founders.

Ultimately, wealth is not just a certain amount in a bank account. 

“Wealth isn’t about a number,” Braut explained. “When you’re truly wealthy, the barrier to entry to things like capital, education, and health care is zero or very, very low.”

Having wealth provides a powerful network and it also leads to more scalability. The wealthier you are, the easier it is to become more wealthy because you have more capital to invest in your business, Braut believes. 

Scalable wealth can provide for multiple generations and across multiple families in those generations. The work is happening now to help Black Americans create that lasting legacy.

Aura Solution Company Limited and its affiliates do not provide legal or tax advice. Clients should consult with their legal and tax advisors regarding their personal circumstances and before they invest or implement. This report is provided for informational and educational purposes only. Providing you with this information is not to be considered a solicitation on our part with respect to the purchase or sale of any securities, investments, strategies or products that may be mentioned, including estate planning strategies. In addition, the information is current as of the date indicated and is subject to change without notice. 

As a firm providing wealth management services to clients, Aura Solution Company Limited ,offers investment advisory services in its capacity as an SEC-registered investment adviser and brokerage services in its capacity as an SEC-registered broker-dealer. Investment advisory services and brokerage services are separate and distinct, differ in material ways and are governed by different laws and separate arrangements. It is important that clients understand the ways in which we conduct business, that they carefully read the agreements and disclosures that we provide to them about the products or services we offer.