18th MAP International CEO Web Conference 2020

Global issues and

impacts on business
Blair Sheppard
PwC Global leader for strategy and leadership
 A D A P T
Asymmetry Disruption Age Polarisation Trust
Increasing wealth The pervasive Demographic Breakdown in global Declining
disparity and the nature of technology pressure on consensus and a confidence in the
erosion of the and its impact on business, social fracturing world, with institutions that
middle class individuals, society institutions and growing nationalism underpin society
and our climate economies and populism

PwC
This highlighted four global crises

1 2 3 4
Crisis Crisis Crisis Crisis
of prosperity of technology of institutional of leadership
legitimacy

PwC
The crisis of prosperity
Young and falling behind Retiring broke

The squeezed middle Age the accelerator

Philippines Household Debt

Source: WWW.CEICDATA.COM
PwC
The crisis of technology
Massive job loss needs to be mitigated
Job Displacement by 2020 (ASEAN-6)

AI challenges and potential harms

AI Policy Challenges

Robots rights Artificial stupidity

At what about point should machines How we avoid critical errors
or robots acquire legal rights (if ever)? that can cause harm?

Arms race Bias

Should we allow autonomous weapons How do we prevent
and strong AI to get into the wrong hands? biased AI?
Sources: CISCO; Oxford Analytics; The ASEAN Post.
AI policy
Inequality questions Control
Unintended harms How do we ensure that the benefits
of AI are shared by all?
How do we control self-learning
systems to ensure the right
outcomes?
Incidence of Major Depressive Episode (MDE) in Last 12 Months;
Percent of Adolescents and Adults by Age Category, 2005-2017 Security
14 Employment How do we prevent hacking and
13 12-17
Everything that can be automated malicious repurposing?
12 will be – what next?
18-25
11
26-49
10
50+
9
8
7
6
5
4
2009 2010 2011 2013 2014 2015 2016 2017

Source: American Psychological Association, Journal for Abnormal Psychology, 2019, Vol 128, Number 3. Source: Webber Wentzel
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The crisis of
institutional legitimacy
Institutions are dysfunctional… …and under challenge
Percentage of population who feel the system is working for them

48%
How true is this for you?
(Percent who agree)

Sense of injustice 74%

Desire for change 73% 34%
Lack of confidence 66%
Lack of hope 26%

18%

-2 -2 +3
The system is… Working for me Not Sure Failing me
Source: 2019 Edelman Trust Barometer

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The crisis of leadership
Climate solutions
Emissions headed in the wrong direction
Top 20 actions we can take to reduce our carbon footprint*

Gigatons CO2 Equivalent

Rank Solution Sector Reduced / Sequestered
(2020-50)

1 Offshore Wind Turbines Electricity 147.72

2 Utility-Scale Solar Photovoltaics Electricity 119.13

3 Reduced Food Waste Food, Agriculture, & Land Use / Land Sinks 94.56

4 Plant-Rich Diets Food, Agriculture, & Land Use / Land Sinks 91.72

5 Health and Education Health and Education 85.42

6 Tropical Forest Restoration Buildings 85.14

7 Improved Clean Cookstoves Industry / Buildings 72.65

8 Distributed Solar Photovoltaics Industry / Buildings 69.64

9 Refrigerant Management Land Sinks 57.75

10 Alternative Refrigerants Food, Agriculture, & Land Use / Land Sinks 50.53
Lack of climate leadership 11 Silvopasture Land Sinks 42.31

Peatland Protection and Land Sinks 41.93

12
Rewetting

Tree Plantations (on Degraded Land Sinks 35.94

13
Land)

14 Perennial Staple Crops Land Sinks 31.26

15 Temperate Forest Restoration Land Sinks 27.85

16 Managed Grazing Land Sinks 26.01

17 Tree Intercropping Land Sinks 24.40

18 Concentrated Solar Power Land Sinks 23.96

19 Public Transit Transportation 23.36

20 Regeneration Annual Cropping Food, Agriculture, & Land Use / Land Sinks 22.27
Source: ©2020 Project Drawdown. www.drawdown.org
PwC
* Under Project Drawdown Scenario 2, which stops climate change close to 1.5°C of global warming.
Then COVID-19 occurred

Society Business

Much greater debt Much weaker balance sheets

Real risk of sovereign failure Highly unpredictable political context

Negative GDP Small businesses severely damaged

Significant unemployment Indebted to government

Failure of entire industries without support Shut down

And the world had a shared experience.

PwC
COVID acted mostly as an accelerator for ADAPT
• The poor (people, regions, countries) will get hit the hardest
• Unemployment at the bottom of the wealth pyramid, which will also grow
A Asymmetry •
•
Massive failure of small business
Sovereign debt and GDP growth issues

• Strength and influence of big technology platform companies will grow faster
• In the short-term, climate worries are forgotten as the world deals with the crisis,
D Disruption but in the medium/long-term people are likely to become more socially conscious

• Increased pressure on young countries as there are fewer workforce opportunities

• Increased pressure on pensions and social welfare systems in older countries
A Age •
•
Challenges stimulating job creation in developing markets compound the issue
Intergenerational debate

• Increased localisation of economies due to supply chain issues

• Heightened nationalism as nation states look to blame “others” and protect themselves
P Polarisation • The potential for humanity to come together after the crisis to solve important problems

• Distrust in institutions and their ability to respond fairly will grow

• Some institutions and leaders will come out of the crisis with stronger reputation
T Trust

PwC
We need to
engage in a more Acceleration of A D A P T
sustainable way to
create the future
Economic conditions worsen Greater need for
information and scrutiny
Shared global experience

Restart Repair Rethink

Ensure viability/strength Envision the future in
Shutdown/bankruptcy order to manage today Report
Comply with
expanded
audit requirements

Reconfigure
Dramatic redesign

PwC
What does rethink look like?

A Asymmetry
Climate: transformation to Technology: platform-based
net zero and managing economy and constantly
D Disruption water/drought/weather changing technology
Climate Major
Technology transition
Significant event
driven by:
A fractured world: polarisation, populism and nationalism

A Age
Workforce transformation caused by the above
and accentuated by demography and disparity
P Polarisation

Increased
Broader reporting, managing restructuring and
T Trust scrutiny
stakeholder pressure
requiring:

PwC
And it is accelerating the need for
society to transition
The 20th
Strategy
century approach Globalization, technology and
single measures are good

Leadership
Economically
Structure
sophisticated
Institutions built to Culture
globalists
sustain globalization Market-based,
and technology technology-focused

PwC
And it is accelerating the need for
society to transition

The 21st
Strategy
century way Globalization only works with thriving
local economies; technology only
works if humanized; measures must be
expanded to ensure social progress

Leadership
Balancing
Structure
paradoxes
Repair institutions Culture
with strategy in mind Technological innovation
as a social good

PwC
An obligation and an opportunity

What kind of organization does a society

need in these times?

How often in life do you get a chance to wake up in the

morning and make a decent living while making the world a
better place for your clients, your country and your children?

We each have that opportunity.

And, even more important, we all have that obligation.

PwC
Thank you