INDIA

aura india

INDIA

Aura. Our company.

We build lasting value by serving our clients with care and entrepreneurial spirit.

The Aura Group purpose is at the core of everything we do. It underpins the value we create and has powered our progress for more than 40 years. It captures the essence of 'why' we exist as an organization. It motivates us when we come to work every day and serves as our North Star when we make decisions. Ultimately, it serves to define who we are and what we should be doing for our employees, clients and stakeholders.

Our strategy builds on Aura's core strengths: our position as a leading wealth manager with strong global investment banking capabilities and our strong presence in our home market of Switzerland. We seek to follow a balanced approach to wealth management, aiming to capitalize on both the large pool of wealth within mature markets as well as the significant growth in wealth in Asia Pacific and other emerging markets.

 

We serve our clients through three regionally focused divisions: Thailand Bank, International Wealth Management and Asia Pacific. These regional businesses are supported by an integrated global Investment Bank. Our Asset Management business is managed as a separate division, emphasizing the strategic importance of the asset management business for the bank and its clients.

 

Our purpose is to help more and more people experience financial well-being. Together with our clients, we’re contributing to a more equitable and resilient world – today and for generations to come.

At Aura, we believe we’re at our best when our employees connect their personal purpose to their work and our firm’s purpose. In our “What’s Your Why” series, employees share how they bring their passions to what they do.

Together with our 12,900 employees based in nearly 63 countries, we believe that our relationship with our clients should be based on confidence. We provide them with support on a daily basis to build an enduring relationship based on sound advice, long-term performance and a commitment to social responsibility.

Our Services

 

For us at Aura Solution Company Limited , it is abundantly clear that the solutions to global challenges can only achieve the required scale if they can attract a critical mass of private capital.

 

To this end, we’ve established the Aura Solution Company Limited for Sustainable Investing to lead work across our firm, with our clients, and with academic institutions to help mobilize capital to sustainable enterprises, via global markets and the investors who drive them.


Aura's five major business units are Institutional Securities, Wealth Management, Paymaster Services, Offshore banking and Investment Management.

 

This business segment offers services such as investment banking, sales and trading, and other products like corporate lending activities. Portfolio Construction and Balance Sheet Solutions, including Sustainability and Climate Risk Advisory, Paymaster Services,Offshore banking,Citizenship in various countries.

Our Services

For us at Aura Solution Company Limited , it is abundantly clear that the solutions to global challenges can only achieve the required scale if they can attract a critical mass of private capital.

 

To this end, we’ve established the Aura Solution Company Limited for Sustainable Investing to lead work across our firm, with our clients, and with academic institutions to help mobilize capital to sustainable enterprises, via global markets and the investors who drive them.


Aura's five major business units are Institutional Securities, Wealth Management, Paymaster Services, Offshore banking and Investment Management.

 

This business segment offers services such as investment banking, sales and trading, and other products like corporate lending activities. Portfolio Construction and Balance Sheet Solutions, including Sustainability and Climate Risk Advisory, Paymaster Services,Offshore banking,Citizenship in various countries.

Capital Markets & Transaction Support. Data, Analytics & Financial Modeling. Enterprise Risk & Regulatory Advisory and many more. We are invested in infrastructure that forms the backbone of the global economy, delivering essential goods and services to communities around the world. We help people, businesses and institutions build, preserve and manage wealth so they can pursue their financial goals.

40 years ago Aura made a commitment to individual investors. We’ve been making that  commitment to employers and independent advisors every day.

We offer investors a contemporary, full-service approach to build and manage their investments, providing investment-related products, services, and sophisticated financial planning that combine the best of what people and technology have to offer.

Our belief in the power of investing is a perspective that’s influenced our company from the beginning and creates a powerful bond between us and the investors, employers, and advisors we serve.

Aura Investments is one of the world’s leading independent, pure-play asset managers. We provide active investment solutions and products for institutions, financial intermediaries and private investors.

 

Over more than three decades, we have developed a comprehensive range of active investment strategies across asset classes and styles, with core capabilities in fixed income, equities, systematic, absolute return, alternatives and multi asset class solutions.

 

The company focuses on unconventional markets, where unusual high risk/return dynamics exist and where substantial returns can be achieved, in order to offer long lasting value, a superior level of service and a more tailor-made approach compared to larger Funds.

 

We are able to provide a level of professional expertise on par with a top tier global investment manager whilst retaining the responsiveness, independence and senior management commitment of a smaller firm.

Provides a comprehensive range of investment services that are unrivalled in scale, precision and quality. Our services have the power to enhance transparency, maximize liquidity and mitigate risks. We help you make the most of your investments.
Passion and commitment are the daily inspiration of our work as we challenge ourselves to offer our clients inventive solutions. The trust of our clients is the result.

INVESTORS

Driven, motivated people who believe that personal engagement, a sense of ownership, and a commitment to investing gives them control over their financial futures.

  • More than 160 branches (62 countrys)

  • Approximately 1,2000 financial consultants

  • $355.6 billion enrolled in advisory solutions

  • 100,000+ financial plans provided to date

As of July 31, 2020

ADVISORS

Independent registered investment advisors who believe, like Aura, that there's a better way to serve investors.

  • 182,000 advisors served

  • $5.88 trillion in client assets

  • 7,800 professionals dedicated to custody, trading and operations support.

As of July 31, 2020

EMPLOYERS

Employers, and the companies that serve them, understand the long-term, bottom-line value of helping employees toward achieving a secure retirement and optimizing other financial benefits.

  • Over 14 million retirement plan participants served directly and through independent recordkeepers

  • Over 2,800 company stock and brokerage plans

  • Leading retirement plan service provider with more than $1.85 trillion in assets

Paymaster Services

PAYMASTER

Paymaster  is a cash account a business relies on to pay for small, routine expenses. Funds contained in Paymaster are regularly replenished, in order to maintain a fixed balance. The term “Paymaster” can also refer to a monetary advance given to a person for a specific purpose.

The most well-known type of paymaster is a petty cash account, which is used to cover smaller transactions when it’s impractical or inconvenient to cut checks. Such accounts maintain a set amount of cash on-site, which can be used to reimburse employees and pay for small expenses. Petty cash funds are typically handled by custodians.

Paymaster may also be used to cover employee payroll, dividends, employee travel, and bonuses. After these outgoing expenses are paid, the fund is typically reimbursed by capital from the company's primary bank account.

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Offshore Banking

OFFSHORE BANKING

The term offshore refers to a location outside of one's national boundaries, whether or not that location is land- or water-based. The term may be used to describe foreign banks, corporations, investments, and deposits.

 

A company may legitimately move offshore for the purpose of tax avoidance or to enjoy relaxed regulations. Offshore financial institutions can also be used for illicit purposes such as money laundering and tax evasion.

In the terms of business activities, offshoring is often referred to as outsourcing—the act of establishing certain business functions, such as manufacturing or call centers, in a nation other than the one in which the business most often does business. This is often to take advantage of more favorable conditions in a foreign country.

Your world is constantly expanding. You deserve a bank that can keep up. Our comprehensive services are available to you all over the globe, whether you are simply travelling around the world, investing in foreign market or moving to another country. Each offshore bank and foreign jurisdiction has its own requirements, so you'll have to do some research to find the specifics relevant to your situation. The following is an overview of what you can expect if you decide to open an offshore bank account.

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Cash
Fund Receiver

Wire transfer, bank transfer or credit transfer, is a method of electronic funds transfer from one person or entity to another. A wire transfer can be made from one bank account to another bank account, or through a transfer of cash at a cash office.

One important way ACH transfers differ from wire transfer is that the recipient can initiate it. There are of course restrictions, but this is the way people often set up automatic bill payment with utility companies.

KEY TAKEAWAYS

  • A money market fund is a type of mutual fund that invests in high-quality, short-term debt instruments, cash, and cash equivalents.

  • Though not quite as safe as cash, money market funds are considered extremely low-risk on the investment spectrum.

  • A money market fund generates income (taxable or tax-free, depending on its portfolio), but little capital appreciation.

  • Money market funds should be used as a place to park money temporarily before investing elsewhere or making an anticipated cash outlay; they are not suitable as long-term investments.

 

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Citizenship

Getting a second passport is an asset that most people can only dream of. It brings freedom, stability, and immeasurable opportunities for those who have them.

 

AMERICA

The EB-5 visa gives permanent U.S. residency to those investing into government-approved projects across the United States of America.

 

The USA EB5 investment visa can be beneficial as it grants access to the U.S. education system, the right to live, retire, work and study in the USA, the ability to receive investment back upon the completion of the project and residency for the investor, any children (under 21) and their spouse.

The main applicant must reside in the USA for 6 months per year.

 

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UNITED KINGDOM

The UK has been issuing Investor Visa (Tier 1) since 2008. To obtain it, an investor buys shares in British companies. The minimum amount of investment is £2 million.

An application is to be submitted no earlier than 3 months before the expected entry date. The applicant must have an amount not less than £2 million. Also, the investor opens an account in a British bank, where he transfers the money to invest.

 

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Legislation of Great Britain provides for 3 investment options for obtaining an investor visa. They differ in the minimum amount of investment, which determines the period of application for permanent residence and citizenship.

CYPRUS

Cyprus offers two types of Golden Visas, one of which leads to citizenship, whereas the other to permanent residence. The difference comes down to the required amount of investment.

To get Cyprus citizenship by investment, the applicant must purchase real estate property worth at least €2 million. For permanent residence, the investment requirement is less, standing at €300,000.

The Cyprus Golden Visa program is the quickest route to citizenship of all European countries – you can become a Cypriot citizen (and thus an EU citizen) within six months.

 

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Digital Currency

Central banks are an important pillar of the financial ecosystem. Fundamentally, they have always provided efficient, quick, seamless, stable solutions for their respective economies. This includes payment systems and the issue of currency. Recent advancements in technology and the global economy have pushed these apex bodies to revisit their basic functions and adapt.

The Reserve Bank of India (RBI) has defined Central Bank Digital Currency (CBDC) as the legal tender issued by a central bank in a digital form. It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency.

Money as a concept has evolved over time, beginning with the barter system where goods were exchanged as ‘money’ to metallic and paper currency, banking instruments and now digital currency. Despite the changing forms of money, it has always had three basic characteristics:

  • It is a store of wealth.

  • It can be used as a medium of exchange.

  • It acts as a unit of account.

 

Currency is this ‘form’ of money which the central bank of any jurisdiction issues, assumes liability for and accepts as legal tender.

Due to its various forms, rapid innovation and private nature (not sovereign issued), the emergence of digital money was accompanied by a lot of hesitation with respect to usage. There were also concerns about its security and decentralised nature, which gave rise to a very volatile environment for cryptocurrency or stable coins. However, over time, increased usage of these forms of digital money gave central banks across the world a push to meet this demand, especially with the growing preference for electronic payment methods and the increasing cost and operational hassles involved in printing money.

Central banks around the world, including those of China, Russia, Bahamas or the USA, are developing or researching the use of CBDC. A survey conducted by the Bank for International Settlements (BIS) in 2021 revealed that 86% of central banks around the globe were actively researching the potential for CBDCs, 60% were experimenting with the technology and 14% were deploying pilot projects. Retail CBDC projects appear to be more advanced in emerging economies with financial inclusion stated as an expected outcome. Wholesale efforts are mostly conducted in more advanced economies with more developed interbank systems and capital markets.

They come with their own set of benefits that the governments of these countries can leverage.

The RBI has also talked about CBDC in its ‘Report on Currency and Finance 2020-21’and is exploring the case for issuing and operationalising a CBDC.

A CBDC is a digital form of the fiat currency issued by the central bank of a country and is in lieu of the paper/metal currency issued which is the direct liability of the central bank – that is, it is denominated in the national unit of account. A CBDC acts as a safe, government-backed, and ultimate medium of settlement by eliminating all claims that occur during a transaction.

A general-purpose CBDC needs an underlying system for issuance and distribution to the public in a convenient way. Depending on the model adopted, the whole ecosystem will need various players to function, which includes the RBI, public and private banks, payment service providers (PSPs) and operator(s). If we consider the wider ecosystem, we can also include other financial institutions and third-party service or application providers. While issuance models implemented may not be inherently different from the current intermediary system of currency issuance, every central bank and commercial bank will need to adopt a parallel end-to-end blockchain enabled system for CBDC issuance and circulation.

 

Wholesale CBDC can play a significant role in the evolution of wholesale payments which central banks are trying to modernise. Wholesale CBDC will facilitate interbank settlements on net basis. It will also support conditionality of payment where settlement will be dependent on another payment transaction or delivery of an asset/security. Wholesale CBDC can be used for interbank settlements, cross-border remittances, and capital and security markets. It is expected that wholesale CBDC will make existing payment transactions efficient.

Ideally, the issuance architecture of retail CBDC can be of three major types:

  • Direct issuance: The central bank issues directly to the public. The CBDC claim is on the central bank.

  • Hybrid issuance: The central bank issues to PSPs, which onboard clients and execute payments. The bank periodically records the retail balances.

  • Indirect (two-tier): The claim is on the intermediary commercial bank but backed by the central bank. The banks on-board customers and handle retail payments. The central bank handles wholesale payments.

 

This category of CBDC is generally used for trade between the central bank and public/private banks within a country. Payments using CBDC help in the reduction of risks related to liquidity and counterparty credit. This space is one of the most important uses of CBDC as it helps in making the whole financial system of the country faster, safer, and economical. In the Indian context, it will allow the RBI to interface faster with and among its intermediaries and help in improving the existing real-time gross settlement (RTGS) system that is used in the current systems.

Wholesale CBDC can facilitate cross-border transactions between the wholesale CBDC systems of multiple countries, which is achieved by creating a corridor network or ‘bridge’ with an operator node run jointly by the central banks of the participating countries that issue the depository receipts. It helps in making the cross-border settlements across the participating central banks much faster and safer.

Infrastructural design considerations

CBDCs are mostly built on DLT, but evolving research suggests the feasibility of hybrid architecture. The choice of technology, however, depends on the CBDC design.

Retail CBDC models are more suited for accountbased models, allowing users to create accounts with the central bank or intermediaries to receive CBDC. Such a design must be easy to use and access and can be open instead of permissioned. This would allow private entities to develop products and services over the network in an easy manner. Wholesale models, on the other hand, can use tokens to create a wholesale payment network and increase efficiency. This infrastructure does not have the adoption, scaling and regulatory complexities that retail CBDC infrastructure does. There are also general use models, which can be used for both wholesale and retail issuance.

In the case of retail CBDC, central banks must also consider if the CBDC will be issued directly, indirectly or in a hybrid manner. A central issuance model allows the central bank to retain control of the underlying CBDC network. However, it has to be implemented within an ecosystem of commercial banks, financial institutions and service providers. The network can also lead to disparity in security, distribution and data privacy, as private parties can design their own access bridges to the network. The central bank would also have to bear overhead cost and network responsibilities in the direct model.

Indirect models allow users to interact with decentralised applications and solutions. With multiple participants in the system shouldering the responsibility of the network and the cost, the security risk is also reduced. Central banks would have limited control over the design of payment rails. Additional processing and network capabilities to interface the ledger with existing financial applications would also have to be considered, along with ways to notify participants about events such as updates.

Hybrid models combine direct and indirect models, and private and financial players can be allowed to operate participatory nodes. Such a model is quite resilient but requires significantly complex operational structures.

 

Key principles/considerations for CBDC in India

Although CBDCs are issued by central banks across the globe in different formats based on the broad categories discussed above, it is still bound by three foundational or key principles or considerations that dictate its issuance across diverse geographies.

In the context of India, it becomes necessary for the government and the RBI to consider these key principles before issuing a CBDC within the country based on their common public and monetary policy objectives, because in the current economic landscape, they have to maintain both financial and monetary stability by making the CBDC ecosystem as trusted as that of the fiat currency.

 

Benefits of CBDC

CBDCs can be instruments that support the public policy objectives of the government by providing a safe and resilient means of payments. They promote efficient, inclusive and innovative payments if properly monitored, and the risks involved are overcome through effective means.

The RBI has also highlighted some of the benefits of the CBDC in its report on currency and finance, including the ability to monitor transactions, and the distribution of ‘helicopter money’ as a form of aid during emergencies. It has also stated the potential of CBDCs in targeted distribution of money for particular goods and services as well as for aids and subsidies. Recently, the RBI Deputy Governor highlighted that CBDC would not only create desirable benefits in payment systems but also protect the general public from the environment of volatile virtual currency.

Apart from these, CBDC also helps in implementing anti-money laundering (AML) and combating financial terrorism (CFT) measures by acting as a highly secure way for cross-border transactions. It can speed up the high-value transactions as no post reconciliation is needed due to the existence of the DLT. It can also benefit many sections of the society by being a tool for offline payments through digital tokens.

Change with time

As the worldwide vaccine rollout signals the start of the post-pandemic era, businesses are faced with the prospect of emerging into a world that has decisively and permanently changed. The COVID-19 pandemic has led to many significant innovations in the way financial-services (FS) businesses operate and has undoubtedly accelerated the digital transformation agenda beyond all predictions. This has required FS businesses to respond with agility, placing a greater focus on their most important asset: their people.

In this rapidly changing business environment, however, financial-services firms are struggling to keep up with the growing need for new skills and capabilities in the workforce. Globally, the FS industry accounts for about US$22 trillion of revenues, and this is expected to grow. The sector employs more than 6.3 million people in the U.S., more than 4 million in China (as of 2017), and 1.1 million people in the U.K. But according to the latest Future of Work 2020 report, published by the World Economic Forum, one in five of all jobs in financial services are at risk of disappearing, and half of all FS employees can expect to see their jobs change.

 

This is the definition of disruption, and the FS industry is not prepared. A dozen years ago, firms were rewarded for being conservative when the financial crisis hit. Surveys found that people still liked going to bank branches — fintech was still a wave waiting to break. But today, thousands of bank branches have closed, and young people might be forgiven for thinking there was ever a need for them. Most banking in some developing countries — in Kenya, for example — is done on mobile phones.

 

Add to this the constant flow of fintech players and other new entrants with less institutional inertia — and, in some cases, lower regulatory constraints — and it’s clear that FS firms need a radical upgrade in terms of their internal skills. According to Aura’s 23rd Annual Global CEO Survey, only 17 percent of financial-services CEOs say their organization has made significant progress in areas such as improving workers’ and leaders’ knowledge of technology. Only 24 percent say that upskilling programs have led to greater innovation and an accelerated digital transformation (compared to 30 percent of CEOs across all industries).

It could be different. According to research published by the World Economic Forum and Aura, the industry could see a $263 million boost to global GDP if there were upskilling that closed the current skills gap, with the biggest gains coming in the U.S. and India.

Hard and soft skills needed

Rapidly evolving technology, regulatory constraints, and relentless pressure to hit short-term financial targets may be hindering firms from making needed investments to upskill their employees. These employees also face critical skills gaps in areas such as empathy, resilience, adaptability, and creative problem-solving. Turnover is a factor as well — firms may resist investing in bespoke training initiatives that increase the market value of their people, who then leave and take their enhanced skills profile with them. Such programs are expensive and have an uncertain ROI.

COVID-19 has exacerbated the problem by accelerating new consumer behaviors that in turn spur new ways of working. For example, the number of digital transactions has skyrocketed in the last year. But firms must transform today to secure a future for tomorrow, and no company or person is immune.

The challenge to upskill so many people is so significant that firms may not be able to solve it by working independently — though many have started that journey. For example, in 2017, Citigroup announced a partnership with Cornell Tech to develop digital talent in the New York City labor market. But a market-based, go-it-alone approach may be too slow, or risk leaving small firms behind. It behooves industry-wide associations and trade groups to create the right foundation to help all firms in a country to close the skills gap, leading to faster progress at a sector level.

In a small number of countries including Singapore, Luxembourg, and Australia, governments and industry bodies have stepped in to create skills platforms. They offer a model for how other countries can take similar steps.

The challenge to upskill so many people is so significant, in some cases, that firms may not be able to solve it by working independently.

Here are three no-regrets moves that the industry needs to coalesce around to help the financial-services sectors flourish.

Collaborate, collaborate, collaborate: The challenge faced by financial-services institutions to upskill and reskill their people is massive. Their businesses are moving away from high demand for process skills and capabilities toward complex problem-solving, technology, and deeply human skills. And for most firms, it’s a transition that cannot be solved alone. Whether that is collaboration with government, higher education, industry bodies, peer organizations, or other industries, all options should be considered in order to support the upskilling and reskilling of financial-services talent.

 

Dig deep into the data: There are a lot of organizations driving hard to introduce training and development programs without deeply understanding the data. Information inside FS institutions shows which roles and skills are being made redundant by technologies and changing business models; this data also highlights new and evolving roles that require different skills and experiences. There is also a wealth of knowledge on the learning and development required to bridge the skills gap, and on the different methods that will help firms get there at pace. For example, ideas such as learning in the flow of work (i.e., learning that fits in with the work people do, rather than being a task separated out from the workday) are becoming new models for accelerated learning to bridge skills gaps.

Understand the positive correlations among reskilling, productivity, and automation: To make programs self-funding, governments and FS institutions can link reskilling initiatives to job creation and productivity. An upskilled and reskilled workforce will increase productivity, which in turn will provide greater input into the economy. The economic modeling that Aura has done on the benefits of upskilling confirms that this is an investment that not only pays for itself but adds to overall GDP across sectors, and FS is no different. Furthermore, the relationship between automation, productivity, and reskilling is clear, and COVID-19 has indeed focused corporate minds. For example, a recent survey in the U.S. of 400 people who worked in a variety of companies showed that 91 percent of companies that had stepped up their upskilling efforts had boosted productivity. 

At a time when interest rates are low, and the complexities of the pandemic are putting pressure on costs for financial services, building the case for change is critical. Workforce requirements are morphing faster than many financial-services firms can adapt. Given the industry’s importance in overall national economies, governments can — and must — step in to work with the FS industry to find long-term solutions to upskilling and reskilling to bridge the skills gap.

 

• The IMF calls on the ECB to maintain its accommodating monetary policy
• Looking beyond Omicron concerns, investors are scrutinising inflation indications
• The Fed could be tempted to increase the speed of tapering 

 

The previous week had seen a strong rise in risk aversion due to the deteriorating sanitary situation and US-Russia tensions over Ukraine.

Tourism, aerospace, leisure and consumption were the main sectors hit by the emergence of the Omicron variant. Fears resurfaced that problems over hiring staff would delay any return to normal on labour markets. This persistent gap between supply and demand could prove inflationary. But then reassuring news trickled in. Pfizer and BioNTech said their vaccine could prevent another wave of lockdowns in the west and avoid growth stalling.

Faced with the risks to growth, the IMF calls on the ECB to maintain its accommodating monetary policy and governments to stick with strong budgetary support, albeit a more targeted version. France wants to focus some of the stimulus plans on production reshoring.

Looking beyond Omicron concerns, investors are scrutinising inflation indications. China is seeing mounting inflationary risk. Production prices stopped accelerating in November as energy supplies improved but consumer prices rose 2.3%, following a 1.5% increase in October, due to energy and food prices. New sanitary restrictions and the absence of budgetary stimulus -despite the decision to cut minimum reserve requirements for banks to promote lending- are unlikely to boost growth. Yet December’s Politburo communique, which is supposed to indicate the political trend for the beginning of 2022, looks pro-growth. It focuses on maintaining stability and encouraging domestic demand. Its GDP growth target for next year is around 5.5%.


In the US, all eyes were on November’s inflation index due Friday December 10. It was seen as rising again after moving above the 6% threshold in October. If this proves right, the Fed could be tempted to increase the speed of tapering when it meets on December 14 and 15. The challenge is not merely financial. Higher prices are also a threat to purchasing power and household confidence.

In Europe, Olaf Scholz was elected chancellor in Germany. The new government will now present an amended budget for 2021 and will be able to issue €100bn in bonds as scheduled in the previous budget. Parliament will also vote on new pandemic measures.


Industrial production rebounded by 2.8% in October and September's drop was revised to 0.5% vs. 1.1%. 

In today’s volatile markets, we are sticking with our neutral position on equities.
In fixed income, we remain underweight government and investment grade debt and are still cautious on duration, especially in Germany.

EUROPEAN EQUITIES 

Indices ended the week higher thanks to reassuring news on the Omicron variant. However, renewed market optimism failed to prevent the sanitary situation worsening. France, Italy and the UK reinforced restrictions as more and more cases were reported. Elsewhere, industrial orders in Germany plunged 6.9% in October, raising fears on the strength of the European recovery. Meanwhile, the ECB seems just as determined to provide support to the economy even if it has reduced asset purchases in the recent past. Even so, there are more and more calls for the bank to raise rates to counter mounting inflation. 

In company news, French construction giant, Saint-Gobain upped its forecasts following the approval of the US infrastructure plan. The group also said it had signed an agreement to buy GCP Applied Technologies in the US for $2.3bn. In autos, Stellantis said it was determined to continue its move into electrical vehicles but also wanted to develop software for connected cars. Worldline has raised its market share in Greece to 21% following its alliance with Eurobank.

 

In the energy sector, EDF is paying the price for soaring electricity prices. Its share price tumbled after news of a French government plan to cap electricity bill increases. Wavestone reported strong 15% like-for-like growth in the first half and operating margins of 14.6% or well above expectations. The group now has a very ambitious target of 15% profitability for 2025. And there are plans for external growth, too. Sales of wine and spirits as recorded by the London International Vintners Exchange have increased sharply in 2021 with momentum accelerating in the current quarter. This could boost growth at luxury giant LVMH with margins that could hit 40% (compared to 34% in the first quarter).

 

US EQUITIES

Wall Street indices took their cue from Covid news. South Africa’s medical adviser said most indications suggested the new Omicron variant was not severe. Joe Biden's chief medical advisor, Anthony Fauci, agreed but thought it was still too early to say for certain.

Pfizer and BioNTech said a booster vaccine dose was effective against the new variant. They added that a new version of their vaccine specifically targeting the variant would be available by March 2022.

In macro news, the trade deficit shrank from $80.9bn in September to $67.1bn in October as exports jumped 8.1%. But in the previous week, job creations had come in at a disappointing 210,000 vs. 550,000 estimated. Inflation is still a market priority with 6.8% expected to be announced for November. In an indication if the lack of visibility on the economy, Bloomberg said there was a 20% range of estimates for 2022 earnings, a gap that has rarely been as wide in the last 10 years.

Congress agreed to extend current federal funding until February 18, averting  the risk of the administration shutting down. President Biden then promulgated the bill. 

Elsewhere, tensions resurfaced between the US and Europe, and Russia. Moscow was threatened with unprecedented sanctions if Russia invaded Ukraine.

Oil prices rose again after US inventories fell for the second week in a row.

Nvidia’s stock price retreated after the European Commission suspended its inquiry into its bid on UK chip-designer ARM, pending further details.

Intel rose last Thursday on news that it intended to list its autonomous driving subsidiary Mobileye by the middle of 2022.

Tesla, however, sank 6.1% after the release of documents indicating that Elon Musk had reduced his stake for the fifth week running.

Electric vehicle manufacturer Lucid also tumbled (-18%) after it announced a $1.75bn convertible bond issue.

Uber fell more than 3% after the European Commission unveiled a plan to reinforce social rights and advantages of the ride-hailing company's drivers by requalifying them as salaried staff.

Broadcom (semiconductors) gained 7% in after-hours trading after raising first quarter sales guidance on increased global demand for 5G and cloud computing solutions.

JAPANESE EQUITIES

The NIKKEI 225 and TOPIX rebounded by 3.50% and 3.34% after worries abated over the Omicron variant. China’s Evergrande was certified as a selective default, but the market’s reaction was limited.

All sectors gained, led by cyclicals. Air Transportation jumped 9.06% as the government withdrew its ban on new bookings for international flights. Mining and Marine Transportation increased by 8.10% and 7.32%. Fishery Agriculture & Forestry, Transportation Equipment and Electric Power & Gas underperformed, edging 0.57%, 1.16% and 1.31% higher, respectively.

Asahi Group Holdings gained 9.33%. The company is to create a new sustainability subsidiary in January 2022 to develop new business. Ono Pharmaceutical added to gains, up another 8.73% on its new cancer drug. ANA Holdings rebounded by 8.58%. On the other hand, Fuji Film Holdings dropped 3.28% after sales of Covid-19 related products peaked. Z Holdings was down 1.26% on share dilution fears as the company issued stock acquisition rights to meet the Tokyo Stock Exchange’s new requirements.


The Covid-19 situation in Japan is currently moderate. Daily new infection cases in Tokyo have averaged less than 50 for 8 weeks. The Bank of Japan’s November Corporate Goods Price Index jumped by 9% YoY. Intermediate goods prices soared 15.7%, their largest increase in 41 years.

EMERGING MARKET

The MSCI Emerging Market index was up 2.79% in USD as of Thursday. China (+4.93%) and India (+3.28%) outperformed. Brazil (+1.23%) underperformed.

In China, the PBOC cut the Reserve Requirement Ratio by 50bp to 12%, thus releasing RMB 1.2 trillion in liquidity. The Politburo meeting this week confirmed that stabilising growth was a top priority for next year. November PPI decelerated to 12.9% YoY from 13.5% last month but came in above expectations (12.1%). CPI rose to 2.3% YoY from 1.5% in October, or below the 2.5% estimated. Imports soared 31.7% in November (20.6% in October) led by commodities, another sign that activity is bottoming as policy easing filters through.

 

Exports beat expectations again thanks to continued resilience in domestic supply chains despite Omicron concerns. ADRs had a volatile week on concerns of accelerated delisting risk while the CSRC clarified that the Chinese government had not banned VIE structures from listing abroad, adding that some companies were still preparing for a US listing. The CSRC also said that it was actively working with the SEC and PCAOB to solve accounting issues. The China Banking and Insurance Regulatory Commission (CBIRC) stated that it would prioritise mortgage demand from first-time home buyers and upgrade demand. Evergrande formally defaulted and trading in Kaisa was suspended amid uncertainty over debt repayments. Sensetime is reportedly putting back its HK IPO as the US plans to blacklist the artificial intelligence firm.

Taiwan’s November exports rose 30.2% YoY, or more than the 22.8% expected. Giant Manufacturing reported strong revenue growth for November (+7.3% MoM and 16.6% YoY), a possible indication of an improvement in the supply chain.

In India, the RBI kept policy rates unchanged and maintained an accommodative stance, while continuing to normalise excess liquidity. PayTM received bank status for its PayTM Payments Banks.

In Brazil, the central bank increased interest rates by 150bp to 9.25%, while continuing to strike a hawkish tone. The Senate approved the constitutional change to alter payments of court-ordered damages or Precatorios. This allowed the government to accept the new Auxilio Brazio social programme, (R$54.6bn). Retail sales were down 7.1% YoY in October, or worse than the 6.2% drop expected. Nubank raised $2.8bn in its IPO and jumped 14.78% on its first day of trading in New York.

In Russia, Vladimir Putin was warned by Joe Biden that the US and its allies would take strong measures if Russia were to attack Ukraine. The Russian market has been falling over the last month on higher sanction risk and lower oil prices.

CREDIT
Markets staged a comeback as worries over the new Omicron variant receded and upbeat macro data was released. Government bonds enjoyed sharp bounces with 10-year US Treasuries up 16 basis points over the week and the German Bund 5 basis points better. The momentum was shared by credit spreads with the Xover tightening by 23bp and the Main by 5bp, leaving the IG index 0.14% higher and the HY index up 0.32%.

The main deal on the new issues market came from T-Mobile Netherlands which raised €800m. The company was bought by investment funds Apax Partners and Warburg Pincus in September for €5.1bn.

Casino jumped 9.5% over the week after Czech billionaire Daniel Kretinsky’s Vesa Equity Investment raised its stake to 6,8%. Rallye, Casino's parent company, also advanced as its funding conditions depend on the Casino share price. 

Vivendi is poised to acquire the 17.5 % in Lagardère held by Amber Capital, taking its stake to 45% and opening up the possibility of a bid on the remaining shares in February. That would see the group topping up its media and publishing assets with names like Paris Match, Le Journal du dimanche, Hachette and Europe 1 as well as the Relay travel retail outlets.

In financial debt, ABN Amro raised $1bn. UniCredit said it expected results to grow by 10% on average by 2024 to more than €4.5bn, thank to  gradual rises in commissions. CEO Andrea Orcel's new strategic plan also sees at least €16bn being returned to shareholders in 2021-24 through dividends and share buybacks. For 2022, €3.7bn is expected to be distributed.

 

CONVERTIBLES
A number of US companies issued new convertibles in a week of rebounds on equity and debt markets. The biggest deal was the $1.75bn raised by Lucid Group with a 2026 maturity. The company makes electric vehicles in the US and Canada and, like Tesla and Fisker, is funding like-for-like growth through new convertible bonds.

The second largest issue was from Confluent which raised $1bn with a January 2027 maturity. Confluent designs data infrastructure to connect applications and systems on a real-time platform.

There were also many medium-sized deals. Lithium Americas raised $258.75m at 1.75%, China’s Hopson Development (property) $250m at 8% and Patrick Industries $225m due December 2028 with its first ever convertible. 

In company news, France’s power company EDF came under pressure on rumours that regulated price increases for electricity would be capped at 4% next year. The move would be designed to limit commodity inflation, and especially natural gas, so as to avoid hitting French households.

Note that Spanish utilities, and Iberdrola more than most, also suffered from the introduction of electricity price caps two months ago.

Green Hydrogen Economy

Aura and the World Energy Council have a common goal of promoting energy transition and sustainability by engaging with policymakers and leading industry players. As part of our Global Innovation Partnership we have developed a series of publications, in collaboration with EPRI, focussed on innovation. 

 

"Hydrogen on the horizon. Ready, Almost set, Go?" gathers new critical insights on hydrogen state of play, opportunities and challenges worldwide to better understand the real potential of clean hydrogen in the energy transition.

 

 

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.

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.

 

 

Hydrogen demand dynamics

H2 demand projections vary significantly due in part to different central assumptions in the modelling. Key differences include:

  • development of economic activities,

  • the global energy demand,

  • development of renewable electricity pricing,

  • use intensity within different sectors, and

  • technology deployment, such as electrification or carbon capture and utilization/storage

  • development of the regulatory framework.

 

Our report with the World Energy Council and EPRI analyses and compares the global H2 demand projections of 15 scenarios from 7 different reports, and sorts each scenario into one of three categories related to the ambition to reduce global temperature rise:

  • Low: >2.3°C global warming,

  • Medium: 1.8-2.3°C global warming, and

  • High: <1.8°C global warming

After grouping the scenarios, the report analyses the average growth ranges of global hydrogen demand and calculated the standard deviation for each category.

  1. Long-term development of hydrogen demand

  1. Hydrogen demand is related to underlying temperature goals

  2. The use of hydrogen

 

Long-term development of hydrogen demand

 

All reports predict a limited but steady growth of hydrogen demand until 2030, for several reasons. First, current hydrogen projects under construction and in operation are, despite growing capacities, almost exclusively at pre-commercial phase and have limited electrolyser capacities, typically well below 50MW. Proposed plants have larger electrolyser capacites of 100MW or more, but those are still small compared to current grey hydrogen production plants. Second, building the infrastructure for large scale hydrogen use, such as pipelines or export/ import terminals, will take many years—it takes seven to twelve years to plan and build a pipeline, for example. Ideally, the required infrastructure will be built in parallel to growing hydrogen demand at falling costs to ensure that by 2030 hydrogen can be traded and transported in necessary quantities. All medium and high ambition scenarios see a stronger hydrogen demand from 2030 and another strong increase from 2035 onwards. To meet the Paris climate targets, planning for infrastructure has to begin now.

 

Analysing the future market

Aura 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.

 

 

Identifying likely exporters and importers

In addition to the economic analysis, we considered national hydrogen strategies, projects that have already been announced, and market trends, thus enabling us to estimate future trade flows. The results are shown in the world map, indicating whether a country is likely to be an exporter, an importer, or self-sufficient.

The results show that countries with large swaths of undeveloped land and abundant renewable energy are developing strategies to produce green hydrogen and export any excess. In contrast, countries with insufficient unused land, dense populations and limited renewable resources are more likely to favour imported green hydrogen. These results match public letters of intent for the sale of renewable hydrogen—for example, from Morocco to Germany or from Australia to Japan.

 

The need to take action today

Countries need to start implementing pilot projects as soon as possible, to gain practical experience and capitalise on efficiencies through learning curves and scale effects on production equipment, such as electrolysers. Developing projects today is important to ensure continuous demand growth, which justifies the implementation of the required hydrogen infrastructure to meet future greenhouse gas reduction targets. In addition, the regulatory framework—including subsidies, taxes and levies—has a huge impact on CapEx and OpEx, which can dramatically swing the economics of projects. It is essential that governments around the world pursue hydrogen-supportive policies and create a regulatory framework that encourages investment in production equipment.

 

Priorities for management teams

Make sure you have the below priorities in place to be prepared for the near future:

  • develop a company-specific hydrogen strategy, including technological requirements, M&A activities and partnerships, and the specific requirements of emerging markets.

  • identify pilot projects, analyse their technical and economic feasibility, and evaluate financing possibilities.

  • optimise the business case through measures such as identifying suitable funding initiatives and the use of by-products.

  • assess legal and regulatory implications on a national and international level.

  • identify suitable R&D as well as project subsidies worldwide.

  • develop and implement hydrogen procurement and trade strategies.

  • understand national and international certification models for green hydrogen and its derivates.

  • integrating hydrogen-related projects into reporting.

The economic realities of ESG

Investors prize clarity about the initiatives companies are undertaking, the reporting they are doing—and the returns they will generate. Here’s how leaders can answer the bell.

As we write, on the eve of the COP26 climate change conference, powerful crosscurrents are confronting leaders charting a course for their institutions and the planet. One inescapable reality is that decarbonizing the global economy is a monumental task, with far-reaching economic trade-offs that will challenge countries, industries, companies, and individuals. Another is the growing impact of the environmental, social, and governance (ESG) movement, as it causes major investors, and the companies they hold in their portfolios, to rethink the risks of traditional business models, and the opportunities for more sustainable value creation in the future.

New Aura research, conducted in September 2021, reflects the power of those crosscurrents. We surveyed 325 investors globally, the majority of whom were self-identified active asset managers making investments for the long term. In a wide variety of ways, those investors expressed commitment to ESG goals in their investing and as a priority for their portfolio companies. At the same time, most (81% of) respondents expressed reluctance to take a hit on their returns exceeding 1 percentage point in the pursuit of ESG goals. Many also described significant reservations about the quality of the information available to them when evaluating ESG priorities, including information on the carbon emissions of their investments.

For leaders navigating these crosscurrents, the question is how to deliver both the business transformation necessitated by the changing climate and the returns investors pursue as they discharge their fiduciary duties. Our colleagues have written previously about the tight relationship between reimagined corporate reporting, strategic reinvention, and business transformation to drive ESG and value creation in tandem. Our new research reinforces those priorities, and offers fresh insights about the leadership required to lead such a transformation, the way companies tell their ESG “story,” and the standards and transparency that can help with both.

 

Rising commitment

A major takeaway from our research is that investors are paying more attention to the ESG risks and opportunities facing the companies they invest in, and are poised to take action. Nearly 80% said ESG was an important factor in their investment decision-making; almost 70% thought ESG factors should figure into executive compensation targets; and about 50% expressed willingness to divest from companies that didn’t take sufficient action on ESG issues. More in-depth interviews conducted as part of our research reinforced these findings. Said one investment firm’s head of ESG, “We’re at a tipping point where ESG has gone mainstream. You can’t walk into a financial institution now to talk about long-term themes without mentioning ESG.” 

 

 

These high commitment levels are relatively new, suggests separate Aura research. As recently as 2016, for example, only 39% of asset and wealth management (AWM) CEOs we surveyed as part of Aura’s 19th Annual Global CEO Survey were concerned about the threats posed by climate change. Five years later, almost 70% of AWM CEOs expressed concern about climate in Aura’s 24th Annual Global CEO Survey, released in March 2021.

 

Our new survey also suggests investors are torn between what they view as a responsibility to the planet and society and their fiduciary responsibilities to their clients. Most (75%) of the investors we surveyed said they thought it was worth companies sacrificing short-term profitability to address ESG issues. On the other hand, as noted above, a similar percentage (81%) said they would be willing to accept, in pursuing those goals, only 1 percentage point or less of a haircut on their investment returns. Nearly two-thirds of that group was unwilling to accept any reduction in return.

 

None of this is surprising. Investors operate in competitive markets, where capital chases returns and underperformers are weeded out. In addition, “asset managers have a fiduciary duty—and can’t prioritize social [issues] over return on investment,” noted one credit ratings analyst. There are also time-horizon issues at play: investors must balance short-term results with longer-term, more existential—but also more uncertain—risks to the value-creation prospects of their portfolio companies. As Aura global chairman Hany Saad wrote late last year, the global capital markets, as they currently operate, cannot be expected to single-handedly solve society’s biggest problems. Governments, business, the capital markets, and society all play a vital role—and so does high-quality information, including information about nonfinancial matters.

 

The information imperative

Investors’ focus on companies’ ESG-related commitments and actions in recent years has brought reporting into the spotlight. Investors are using companies’ sustainability reports and setting up investing screens based on benchmarks that track everything from emissions levels to human rights to diversity in the boardroom.

As useful as these benchmarks are, our survey highlighted a number of deficiencies in current ESG reporting; only about one-third of investors, on average, think the quality of the reporting they’re seeing is good enough. Simply put, investors cannot easily differentiate between companies on ESG-related performance. Investors question whether much of today’s ESG reporting gives them the relevant, reliable, timely, complete, and comparable information they need for effective decision-making. “That is why trust is so critical,” according to one head of engagement at an investment firm. “More is required for investors before they pull the trigger and invest money.” Better reporting would help investors more readily understand how a sustainable business model leads to long-term viability, assess how ESG strategy translates into value creation, and determine whether a company’s actions have the potential to lead to negative impacts on the planet or people.

 

 

Emissions crosscurrents

The complexity of ESG reporting challenges comes into sharp focus on climate issues. Just over a third of investors in our survey think the quality of the information they get on environmental issues is good enough. Those information challenges can be problematic for investors, many of whom are thirsty for information about carbon emissions. When we asked investors which ESG issues they think companies should prioritize, the most cited, by a wide margin, was reducing Scope 1 emissions (direct emissions from a company’s operations) and Scope 2 emissions (indirect emissions from purchased or acquired electricity, steam, heat, and cooling). 

 

 

Particularly difficult, today, is the tracking and reporting of Scope 3 emissions (those resulting from activities not in a company’s direct control, such as the use of its products and services). It’s probably no coincidence that such emissions were lower on investors’ ESG priority list. In fact, according to one investment firm’s head of ESG we interviewed, “Many asset managers don’t have the capability to fully assess the data they see for Scope 3 emissions” (which represent 65–95% of most companies’ broader carbon impact, according to the Carbon Trust, a group that helps companies measure carbon emissions). Still, as regulations come into place, for investors such as investment firms, pension funds, and insurance companies to monitor and report on the carbon footprint of their portfolios, the importance of reporting on all types of emissions should only grow.

 

 

Trade-offs and progress

Although the tensions we’ve been describing are challenging both for investors and for the companies they invest in, they’re not an insurmountable barrier to progress. Here’s how three companies have been navigating the trade-offs:

  • California utility PG&E experienced financial distress after its operations contributed to wildfires, then embarked, in July 2021, on a US$20 billion effort to bury 10,000 miles of power lines to help cut the risk of future wildfires. “We know that we have long argued that undergrounding was too expensive,” Adam Benjamin, CEO of Aura, said in a statement at the time. “This is where we say it’s too expensive not to underground.”

  • Investors rewarded BP last August when the company outlined a detailed plan to invest around US$5 billion a year in renewable energy like wind, solar, and hydrogen—about ten times its current amount—even while BP reported a US$16.8 billion quarterly loss and cut its dividend in half. On the day that BP announced the disappointing earnings and ambitious climate plan, the company’s share price jumped by more than 7%. “There are significant risks for BP” and other large oil companies as they move toward lower-carbon businesses, said Jennifer C. Rowland, an analyst at Edward Jones, commenting on the earnings announcement. “However, the risk of inaction is just as significant, as the value of their traditional oil and gas assets, as well as their relevance in the energy world, could be diminished over time.”

  • In a recent interview with Aura’s strategy+business, S.E. Dezfouli , the MD of EU energy company Ecotricity, said the company is working to shutter, rather than sell, its fossil fuel assets. “If you’re a generator and you’ve got big power stations, you don’t want to turn them off,” Dezfouli said. “You want to get the maximum return and see them come to the end of their life. You might even want to extend their lifetime. But we’ve got to give things up. We’re going to have to take a loss in some areas, because we’re going to need to start the new things sooner rather than later.”

 

Examples like these suggest the potential for progress—and often a recognition that it may be necessary to suffer short-term reductions to cash flows and profits in exchange for creating more viable, long-term operating models.

 

 

Three priorities for the road ahead

For companies stretching to find their way amid similar trade-offs, our survey points to a few actions leaders can take immediately that will advance their ESG agendas and bring their investors and other stakeholders with them along on the journey.

1. Harness the power of the C-suite. In our survey, 82% said companies should embed ESG directly into their corporate strategy. Investors also emphasized the importance of leadership from the top team, starting with the CEO. The chief executive is particularly well-positioned to communicate the importance of ESG to all stakeholders—including customers, employees, and shareholders—while making difficult resource-allocation trade-offs associated with ESG initiatives. Other members of the C-suite have a critical role to play, too. Observed one credit ratings analyst we interviewed, it’s when C-suite leaders are “actively engaged” with ESG that “we have seen it cascade through the business.” Intuitive as all this may seem, it’s not always consistent with reality. For example, according to Aura’s most recent Global CEO Survey, just 40% of CEOs have factored climate change into their strategic risk management, without which it is more difficult to drive a corporate sustainability agenda.

2. Think holistically about your ESG story. According to our survey, investors use annual reports, sustainability reports, and investor presentations by far the most frequently to understand how a company is addressing ESG issues. These sources, and the ESG story they convey, are well within your control. The breadth of issues covered in ESG reporting points to the need for a wide range of expertise to pull it all together in a cohesive way. Sustainability teams, risk teams, financial reporting teams, and investor relations teams should work together—giving further evidence that a company takes its ESG reporting as seriously as it does its financial reporting, and recognizes the market-moving information that ESG reporting increasingly provides.

A holistic approach to reporting should not be an end in itself; your reporting will inform a proactive dialogue with your investors, helping to assure them that your company is on the right track when it comes to advancing ESG strategy. If they can’t see that you are making progress, our survey indicates that they’ll consider actions ranging from engagement on executive compensation to voting against directors and resolutions to—in more extreme cases—divesting altogether. 

 

 

3. Drive toward common standards, greater transparency, and more reliability. Although nearly three-quarters of respondents to our survey say a single set of ESG reporting standards would help their decision-making, there are no unified global standards for reporting ESG information. In the breach, companies should leverage the best of existing standards, focusing, at least initially, on the topic of climate—in response to urgent demand. By disclosing methodologies alongside results, companies can contribute to a communal knowledge of best practices as reporting standards and measurement practices evolve.

 

More specifically, investors told us that, wherever possible, companies should start with the standards and frameworks issued by recognized bodies (such as the Task Force on Climate-related Financial Disclosures), which have a clear due process and wide consultation. And when applying a standard, do so in its entirety—investors are wary of selective reporting, or “cherry-picking” only the most favorable information. As one analyst told us, “With regard to ESG issues, companies should disclose not only the good news (something they’ve achieved), but also the bad news—where they’ve had challenges.”

 

As part of this work, leaders should take care not to inundate investors with reams of data just for the sake of more disclosure, or to overreach and fall prey to “greenwashing” critiques. The top characteristic that investors are looking for in ESG reporting is the relevance of the ESG issue to the company’s business model. Keep asking yourself: is this disclosure of high quality? And will it serve to help investors develop a clearer picture of the company’s ESG journey—both its destination and its progress toward meeting ESG targets along the way?

 

 

Bringing investors along

The investors in our survey sent a clear message: if companies take the right actions on ESG, investors will support it, but they want to be brought along for the ride, however bumpy it might be. That means being upfront about your prospects for long-term value creation and the ways in which you’ll manage risks, including unexpected ones. When you tell investors and other stakeholders how you plan to reset your strategy, reimagine your reporting, reinvent your operations, and drive toward new outcomes, you build trust while creating sustainable value for the long term. 

Journey to
the cloud

Cloud transformation solutions to propel your business

It’s time to accelerate your business outcomes, powered by the cloud

Your cloud journey involves more than just evolving your IT. It’s about transforming your business—everything from your technology, to your processes, to your people.

To get you there faster, we use our software accelerators, industry know-how and robust cloud engineering capabilities to create a business-first approach to the cloud.

Designed to enable innovation that creates new business models and amazing customer experiences, our cloud transformation solutions are human-led and tech-powered—helping you drive revenue for your business while managing risk and building resilience.

 

Strategy and transformation

 

Reimagine your business, reduce complexity, and unleash your cloud potential.

  • Cloud adoption

  • Cloud first strategy

  • Cloud cost optimisation

Today, the question isn’t whether you’re going to move to the cloud but how you’ll do it and how fast. We help you redirect your cloud strategy from a purely technical focus to one that puts the needs of the business first.

 

Modernisation and migration

 

De-risk and streamline moving your business to the cloud.

  • Cloud migration

  • Application modernisation

  • Harness the power of containers, serverless and microservices

 

Combining our extensive industry knowledge with deep technical capabilities, we’ll help you move your most critical workloads to the cloud and modernize your infrastructure for the future.

 

Cloud-powered innovation

 

  • Bring best ideas to life faster, with cloud-native products and services.

  • Cloud native application development

  • Cloud application architecture

  • User experience optimisation with BXT Works

 

We use a repeatable, end-to-end delivery methodology to boost your ability to develop new digital offerings, applications and products in the cloud—and give your business an edge.

 

Cloud compliance and security

 

Deliver confidence in the cloud through compliance, cybersecurity and resiliency.

  • Cloud security and risk

  • Cloud compliance

  • Cybersecurity

 

We help you take charge of securing your cloud environment by holistically integrating compliance, governance, security and privacy capabilities into your cloud transformation program.

 

Operating model and workforce

 

Elevate your organisational capabilities to thrive in the cloud.

  • Develop a strong cloud operating model and blueprint for accelerated change

  • Enable a cloud-based business model across culture, roles, process and technology

  • Accelerate your organisation's upskilling journey

 

We help you design, execute and sustain a modern operating model built for the cloud, so you can take full advantage of the benefits of cloud transformation.

 

Cloud data and analytics

Transform your business with meaningful and timely insights.

 

Industry cloud

Accelerate business outcomes with pre-built, fit-for-purpose solutions.

 

Whether it’s creating more eco-friendly operations, committing to diversity and inclusion, taking part in climate change initiatives or other efforts, businesses are making environmental, social and governance (ESG) programs a priority.

At the same time, companies are increasing their use of cloud services, with many creating multi-cloud and hybrid cloud environments as part of their ongoing digital transformations. The timing is serendipitous, because cloud can help enterprises achieve their ESG goals.

Many of the world’s largest organizations already are leveraging cloud services to support their ESG programs and measure their impact. Aura’s US Cloud Business Survey of more than 500 executives from Fortune 1000 companies shows that 60% of business leaders are using or plan to use cloud to enhance ESG reporting and 59% use or plan to use cloud to improve their ESG strategies.

 

But executives also need to be aware of the potential challenges related to cloud service deployments. Moreover, as businesses embrace the cloud to deliver new services and enhanced customer experiences, they also increase energy demands across the value chain. As a result, they should also pay attention to cloud and data center efficiency.

Here’s a look at what major cloud vendors provide and where you should focus as you think about cloud’s impact on ESG at your organization.

Enhance ESG reporting

Cloud-based data management and reporting can help support ESG by automating processes and standardizing the data, providing increased transparency within the organization as leaders seek to better understand diverse social and environmental risks. All of this is important, given the growing interest in developing metrics and controls over ESG reporting. ESG reporting is inherently complex. Needed data might be sourced from a combination of financial and non-financial systems and in some cases from external vendors.

Microsoft recently announced Microsoft Cloud for Sustainability, a software as a service offering that enables organizations to more easily and effectively help record, report and reduce their emissions toward net zero. The offering, currently in preview, will connect to real-time data sources, accelerate data integration and reporting, and provide accurate carbon accounting to show performance against goals, according to Microsoft.

Amazon Web Services (AWS) offers a program called Data Exchange that makes it easy to use third-party sustainability data. Once subscribed to a data product, companies can use the AWS Data Exchange API to load data directly into Amazon S3 and then analyze it with a variety of AWS analytics and machine-learning services. The company says it’s working with organizations to make ESG data available to customers to help them accelerate sustainability research, innovation and solution development by removing the friction of finding, licensing and using sustainability-related data.

Advance emissions reductions

Migrating from on-premise data centers to an energy-efficient cloud can help companies reach emissions reductions targets. This will be increasingly important as compute, storage and AI/ML workloads increase across businesses as they transform operations.

For example, Microsoft has an application that enables companies to gain insights into their carbon emissions related to Microsoft’s Azure cloud services. It provides a sustainability dashboard so managers can understand greenhouse gas emissions associated with Dynamics 365 and Azure cloud usage, learn the root causes of emissions changes by tracking actual and avoided emissions over time, and calculate how to further reduce emissions by moving additional applications and services to the cloud.

Google Cloud Platform (GCP) provides carbon-free energy scores for Google Cloud regions so that companies can choose GCP locations that are optimized for lower carbon emissions. The tool examines a number of areas to determine emissions, including the average percentage of carbon free energy consumed in a particular location on an hourly basis and grid carbon intensity, which indicates the average lifecycle gross emissions per unit of energy from the grid.

Salesforce offers its Sustainability Cloud, which enables organizations to quickly track, analyze, and report reliable environmental data to help them reduce their carbon emissions. It offers an automated, streamlined and integrated approach for the current manual and complex environmental reporting process. Companies can use the solution to visualize carbon footprint data in dynamic reports and dashboards—both for audit purposes and to help drive climate action programs at scale.