EY Argentina: Argentina's Promotional Tax System for Knowledge-based Companies is Gaining Ground in the Local Market

After more than two years of the enactment of the “knowledge-based” Law, time has come to ask whether this new promotional system have truly improved the capacity of the knowledge-based industries to generate employment, federal economic development, and foreign exchange reserves.

As a way to recap, Law No. 27,506 had been published in the Official Bulletin on June 10, 2019. Such law had established the promotional regime for the knowledge-based economy. The system created a legal framework that removed those types of industries of the uncertainty in which they were.

However, the regime was suspended by the Government in January 2020 with the intention of introducing certain changes. Later, in February 2020 a bill was submitted to the Chamber of Deputies to amend certain items of Law No. 27,506. Finally, on 26 October 2020, the Congress enacted Law No. 27,570, which is currently in force.

The last amendment divided the benefits according to the size of each local company and the level of maturity of each production sector, among other, while continuing to promote and accompany the development of large companies, which are essential for the growth of the country. In addition, new requirements to qualify for the regime and modifying certain benefits were introduced. The regime will be in force until 31 December 2029.

Few industries have grown as much in the world since the beginning of the pandemic as those one linked to the knowledge-based economy. On this path, the new and progressive local tax promotion embraces the generation of quality employment, technological development, and exports of high-added value.

The great universe of activities included within the promotional tax regimen should not be overlooked. Those activities are the following: (i) software and IT and digital services, including several ways of implementing and developing these tools; (ii) audiovisual production and postproduction, including digital formats; (iii) biotechnology, bioeconomy, biology, biochemistry, microbiology, bioinformatics, molecular biology, neurotechnology and genetic engineering, geoengineering, and their trials and analyses; (iv) geological and prospective studies, and services related to electronics and communications; (v) professional services, only insofar as they constitute export services; (vi) nanotechnology and nanoscience; (vii) aerospace and satellite industry, space technologies; (viii) engineering for the nuclear industry; (ix) manufacturing, fine-tuning, maintenance and introduction of goods and services aimed at production automation solutions, including feedback cycles from physical to digital processes and vice versa, characterised at all times exclusively by the use of industry 4.0 technologies, such as artificial intelligence, robotics and industrial internet, internet of things, sensors, additive manufacturing, augmented and virtual reality.

It also comprises engineering, exact, and natural sciences, agricultural sciences and medical science activities related to research and experimental development tasks.

Moreover, professional services qualifying as exports include legal, accounting, management, public relations, audit, tax and legal advisory, translation and interpretation services, human resources, advertising, design, engineering, and architectural services are also included.

Tax Benefits

In general terms, companies that achieve the inclusion within the knowledge-based regime will receive the following benefits:

Tax stability for the taxpayers.

A 60% reduction in the income tax rate for micro and small enterprises, a 40% reduction for medium-sized enterprises and a 20% reduction for big enterprises, applicable on the income originated in the promoted activities (which, considering the current general rate of 30%, would result in effective income tax rates of 12%, 18% and 24%, respectively).

A tax credit bond that equals 70% of the amount payable as Social Security contributions on employees working in the promoted activities (80% if those employees are female employees, professionals graduated in engineering and/or exact or natural sciences, people with disabilities and other specific groups) and applies to up to 3,745 employees (and to new hires for promoted activities that increase the total headcount).

Status of Applications for the Tax Promotional System in Argentina

During the last twelve months, local companies have made progress on certain pre-feasibility analysis to internally validate whether they are in good shape to access to the promotional system.

It is worth noting that a large amount of documentation and information must be gathered and analysed when applying to the knowledge-based regime. This is not extremely difficult, but it does require companies to spend some time to be prepared for the submission.

On the other hand, the forecast and previous estimations on the tax and social security savings and the fees of regime’s inclusion are extremely useful to give companies a picture of the actual benefits that will enjoy once the registration is approved. The assistance of skilled tax advisors at this point can generate added value for the fiscal strategic planning.

It could be said that as of December 2021, several enterprises have already performed the submission of the documentation and information required by the local enforcement authority to be categorised as “knowledge-based company”.

On the other hand, there are companies that have already obtained the resolution of the enforcement authority approving the application and the registration in the "National registry of beneficiaries of the promotional regime for knowledge-based economy".

It is worth reminding that companies intending to enjoy the tax benefits shall be required to prove that 70% of their total billing in the last year arises from promoted activities. The professional services must meet this requirement to the extent of their export.

The law also sets forth that those interested in applying for the promotion shall meet two out of three requirements in relation to the promoted activity: (i) provide evidence of continued improvements in the quality of their services, products or processes, or through a well-known quality standard; or (ii) prove the disbursements made in (a) training a percentage of their payroll employees, or (b) research and development as a percentage of total billing; or (iii) prove the export of goods or services arising from promoted activities or their development and intensive application as a percentage of total billing.

The market shows that companies and their stakeholders are truthfully interested in obtaining the certification needed to access to the tax benefits. Enterprises doing business in Argentina are now relying on this regime to develop a growing strategy if knowledge and technology are key drivers of their business models.

About the Authors

[caption id="attachment_15880" align="aligncenter" width="269"] Author: Sergio Caveggia[/caption]

Sergio Caveggia is a tax partner currently in charge of Transaction Tax area in Argentina. He joined EY Argentina in 1994 and has developed expertise over 24 years in international taxation and merger and acquisition matters. Sergio is also focus on servicing clients in the Private Client Services (PCS) area. He is highly experienced in inbound and outbound investments, buy side, sell side and restructuring services within the Transaction Tax area.

Sergio has served in a variety of industries and has also been involved in many due diligence procedures performed in the past 20 years. He has given lectures in national universities and is a frequent speaker in tax seminars. He has also written several articles dealing with Argentina tax issues.

He is a Certified Public Accountant who graduated from University of Belgrano in Argentina. He obtained his Tax Specialist’s Degree at the University of Belgrano and has a postgraduate certificate in Business and Management from Universidad Catolica Argentina (UCA). He is also member of the Professional Council of Economic Sciences of Buenos Aires and the Argentina Fiscal Association.

[caption id="attachment_15881" align="aligncenter" width="268"] Author: Jimena Rocío García[/caption]

Jimena Garcia is a Manager currently working in the International Tax and Transaction Services (ITTS) and Private Client Services (PCS) areas in Argentina. She joined the firm in 2014.

She has extensive experience in social security & labor law buy-side and sell-side due diligence services in numerous companies in different industries. She also participated in the coordination of many cross-border engagements, dealing with foreign labor and social security legislation matters on each transaction. Jimena participates in numerous seminars related to payroll taxes and labor law matters.

Jimena is a Lawyer graduated in 2010 from UNLAM (Universidad de La Matanza). She is enrolled in the Bar Association of the City of Buenos Aires.


Former Student Protest Leader Claims Presidency in Chile

[caption id="attachment_21407" align="alignright" width="300"] President-elect Gabriel Boric. Photo: Paulo Slachevsky / eldiariodelaeducacion.com[/caption]

A land of geographical and political extremes, Chile seems to have rejected moderation and elevated a former student protest leader to the presidency. However, the electorate did so reluctantly as it faced an almost impossible choice between a right-wing apologist for authoritarian rule and a left-wing radical.

Leading the ‘Approve Dignity’ coalition-of-coalitions that includes a colourful array of fringe movements ranging from libertarians and humanists to communists and greens, the 35-year-old Gabriel Boric secured almost 56% of the vote in Sunday’s runoff election.

Mr Boric owes his triumph to his often-blustering opponent José Antonio Kast (55) whose populist message included a promise to dig a trench along the country’s northern border with Peru and Bolivia in a ‘last-ditch’ attempt to stop illegal immigration. Promising a ‘return’ to law and order and a safeguarding of Chile’s free market policies, Mr Kast also appealed to social conservatives with his opposition to abortion, same-sex marriage, and ‘feminism’ in general. More importantly, Mr Kast’s effusive praise of late-dictator Augusto Pinochet, who kept the country in his iron grip between 1973 and 1990, turned away many voters otherwise sympathetic to the candidate’s business-friendly policy proposals.

President-elect Boric did tone down some of his more radical proposals to ensnare the social democrat constituency which lost its home after the demise of the ‘Concertación’, the centre-left coalition of democratic parties which governed the country successfully for twenty years after the reestablishment of democratic rule.

Mood Swings

Plagued throughout much of its contemporary history by wild political mood swings that touched both ideological extremes, Chile became a beacon of stability in the region until a small hike in subway fares sparked widespread protests in early October 2019 – at one point rallying an estimated 1.2 million people in downtown Santiago. It was the proverbial straw that broke the camel’s back: the $0.04 increase of the ticket price unleashed years of discontent brewing just below the surface.

Billionaire president Sebastián Piñera initially stoked the fires with fierce law and order rhetoric, threatening to invoke National Security Law with 10-year prison sentences for those found guilty of causing public disturbances. Apparently tone deaf and grossly underestimating the deep-seated anger at poor public services and growing inequality, President Piñera proved singularly inept at containing the social outburst as it quickly spread to provincial capitals and churches, government buildings, and shops were looted and torched.

Assorted pundits argue that the election of a more leftist president will calm the waters and move Chile closer to the ideal of a modern social democratic welfare state. Investors are not so sure and have withdrawn close to $50bn from the country over the past few months. Mr Boric’s most controversial – and also potentially most harmful – proposal concerns the scrapping of the country’s private pension funds and their replacement with a government-backed scheme.

Opponents accuse the president-elect of preying on the estimated $140bn stashed away in the privately held and managed funds which provide ample liquidity to Chilean capital markets. The thorough reform of the pension system in late 1980 is credited with signalling the start of Chile’s remarkable economic growth trajectory – just short of a ‘miracle’ – which propelled the country from a troubled backwater to the top spot in Latin America.

Consensus and Pragmatism

However, talk of Chile backsliding and joining the ranks of quasi-failed states such as Venezuela and Nicaragua ignore the country’s sophistication in law, institutions, and politics. Only hours after the polls closed, Mr Kast conceded victory, and President Piñera congratulated the winner. Mr Boric immediately promised to seek consensus and work with the opposition to implement a ‘modern’ agenda. President-elect Boric is widely expected to follow the example set by fellow leftists in the region such as Brazil’s Luiz Inácio da Silva (‘Lula’) and Peru’s Ollanta Humala who turned to pragmatism and realism upon gaining power, losing the sharper edges of their ideological discourse in the process.

On the other side are the less fortunate examples of more committed ideologues such as Nicolás Maduro of Venezuela and Cristina Fernández de Kirchner of Argentina who both presided over prolonged recessions and, essentially, bankrupted their countries. As he tries to balance administrative competence, radicalism, and pragmatism, Mr Boric enjoys some wiggle room. His promise to raise taxes on corporates and the well-off are not altogether unreasonable considering the state’s moderate tax take (19.3% of GDP) and the lopsided social stratification which grants 1% of the population control 26.5% of the country’s wealth whilst the bottom half of the social pyramid has access to just 2.1%.

Within the OECD, Chile’s poor Gini coefficient is only exceeded by South Africa and Brazil, a telling testament, in the eyes of Mr Boric, to the bankruptcy of the neo-liberal model which, he claims, has consistently failed to deliver social inclusion.

Continuity

After a meeting with outgoing president Piñera at the Moneda Palace on Monday afternoon, Mr Boric emphasised the importance of policy continuity and promised to fill his cabinet with independents. He also scaled back planned tax hikes for corporates and wealthy individuals.

His incoming administration will need to deal with the unwinding of Chile’s substantial pandemic emergency support programs – and any of the resulting withdrawal symptoms. The budget proposal currently winding its way through Congress seeks to reduce the deficit from 4.2% to 2.8% of GDP. In real terms, government spending is set to be slashed by 22.5% as pandemic measures end. Cash transfers to businesses and families, estimated at $34bn (11.1% of GDP) for the current fiscal year, are being scrapped altogether.

Chile’s covid-19 response was by far the most robust in Latin America as the government spent more than 14% of GDP on emergency measures, compared to 8.7% in Brazil and a paltry 0.6% in Mexico.

Though government debt has ballooned to 37.3% of GDP, Chile had no trouble raising funds thanks to the country’s solidly investment-grade sovereign bond rating (A- outlook stable). Mr Boric will inherit a booming economy expected to grow more than 11% this year as Chileans splurge their pandemic windfall – including the $49bn in early withdrawals from pension funds allowed under emergency legislation – on consumer goods.

Less eye-catching, perhaps, than the presidential election, on January 4 delegates to the Constitutional Convention are set to elect a new (rotating) president. The assembly is currently headed by Elisa Loncón, an academic and indigenous activist under whose polarising leadership the body has become mired in discussions on identity and diversity with radical factions apparently firmly in charge of writing the country new constitution.

As is (depressingly) common throughout Latin America, the Chilean draft constitution is turning into a vast depository of desires and aspirations – all painstakingly described – as opposed to a collection of generic national principles. A welfare state is not legislated into being. However, president-elect Boric has promised to support and collaborate with the convention and promised to implement its decisions.

Meanwhile, markets are mostly keeping their cool with the peso initially retreating 4% against the dollar and Santiago’s IGPA index dropping 6.2% on Monday before advancing to pre-election heights towards the end of the week after soothing noises from the Boric camp. Investors took heart from the fact that the incoming administration will have to show considerable restraint if its proposals are to clear the senate where its supporting coalition controls only 5 of 50 seats.

On second thought, Mr Boric’s landslide victory may amount to little more than ‘a small earthquake in Chile’.


Meet the Orange Capital Partners Team

Orange Capital Partners founder and CEO Victor van Bommel is responsible for day-to-day management, strategic direction, and capital-raising.

[gallery columns="2" size="medium" link="file" ids="21413,21411,21412,21410"]

He chairs investment committees and leverages relationships to source investment transactions. He has been instrumental in raising the Orange Capital Partners investment vehicles and joint venture programmes totalling €2.5bn in equity commitments, and serving prominent institutional investors across North America, Asia, and Europe.

Under his leadership, the company has grown to employ 55 people and drive into new territories. Prior to launching OCP, Van Bommel worked at Goldman Sachs in various capacities, including the global distribution of real estate products. He serves on the board of EPT Global and is an advisor to the OCP Charity Foundation.

Victor van Bommel holds an MA in Economics and Finance from the University of Amsterdam. His colleagues describe him as a strategic and passionate business leader with relentless drive and energy.

Hedde Reitsma is the chief investment officer, and a managing partner at the firm. Reitsma joined OCP in 2014 and has been responsible for all real estate transactions — totalling €7bn. In his day-to-day role, he is responsible for the management of the Investment arm, strategic direction, and investor contacts.

He also engages in refinancing trajectories, investment structuring, and the acquisition of entities with significant balance sheet tax assets. Prior to joining OCP, Reitsma was part of the European Special Situations Group at Goldman Sachs, where he had a specific focus on real estate and NPL portfolios.

As a board member of OCP, Hedde Reitsma also sits on the investment committee, chairs the remuneration committee, and is an advisor to The OCP Charity foundation. He studied Financial Economics at the Erasmus University in Rotterdam, and did internships in Shanghai, Jerusalem and Amsterdam.

He is known for his quantitative mindset, rational decision-making, and intricate knowledge of his field.

Partner Casper Vernooij is responsible for asset management. He was appointed to the OCP board in 2020 when the retail and residential teams merged. Vernooij joined OCP in 2016 at the launch of its convenience retail fund, and under his oversight OCP grew the fund to more than €600m.

Vernooij is a member of the investment committee with focus on technology, innovation, and the digitalisation of property management processes. Prior to joining OCP, he was heading the retail investments arm at Multi Blackstone and overseeing UK and German operations.

He has been involved in more than €12.0 bn of real estate investments across Europe. His colleagues describe him as an energetic and pragmatic real estate professional with genuine real estate expertise.

Joris Voorhoeve is a partner of OCP, responsible for business development. He was appointed to the board in 2020, responsible for international expansion. Under his leadership, OCP raised €1bn for its Nordics operations. Voorhoeve set-up the Copenhagen office, and prior to his appointment worked for 20 years at ABN AMRO and Kempen in various investment banking roles: deal origination, execution, and capital raising.

In his most recent role, he headed the Kempen corporate finance Benelux team where he acted as a trusted board room advisor.

Joris Voorhoeve studied International Relations at the University of Leiden and he is a motivating business leader, people manager, and an experienced deal maker.


Right Place, Right Time, Right Attitude: Dutch Firm, Orange Capital Partners Plays Its Cards with Skill

Since its first acquisition in 2014, Amsterdam-based Orange Capital Partners (OCP) has been on a roll.

Set up by two former Goldman Sachs executives, Victor van Bommel (founder and CEO) and Hedde Reitsma (CIO) the company employs 55 people at its offices in Amsterdam, Dublin, and Copenhagen.

Orange Capital Partners main investment strategies are European residential and Dutch convenience retail. Residential accounts for 75 percent of its €4bn portfolio, with the remainder invested in two retail mandates.

[gallery size="medium" link="file" ids="21417,21418,21419,21420,21421,21422"]

The company is better known for its drive in the residential sector, but its left-field move into convenience retail in 2016 proved timely.

Its first residential venture in 2014 was backed by a US state pension fund. The strategy focused on the Amsterdam market, which was lagging behind most European capitals recovering from the Global Financial Crisis. Within three years, OCP had grown to dominance.

“The first few years were good fun,” says Van Bommel. “We were new kids on the block in a market dominated by local families, traders, and housing corporations. The market was completely shut down by a lack of liquidity. We were the first company to invest institutional capital.

“When the dust settled, we owned a substantial portfolio in Amsterdam. We were in the right place at the right time.”

The founders realised that building a best-in-class team was crucial for success. “We didn’t want to be a one-trick pony, so we invested in our team and our culture. We hired people from all walks of life: former athletes, bankers, creatives, real estate people. We laid the foundations of what we are today.”

With a focused and dedicated team, the company quickly became known as a diversity outlier in an industry historically perceived as homogenous. “We employ 14 nationalities, and a third of our employees are female. The diversity brings us creativity, and fresh perspectives.”

[caption id="attachment_21423" align="aligncenter" width="586"] AuM Development. Numbers in EUR (millions).[/caption]

Out-the-box thinking and that contrarian view paid-off when OCP acquired a €300m convenience portfolio in 2016. Casper Vernooy, former multi-CIO and partner at OCP, said it had been a rare marketplace opportunity. “Due to the paradigm-shift to online spending, the entire retail sector was under pressure,” he says. “After a thorough analysis, we took the view that convenience retail represented exceptional value. When the right opportunity arose, we took our chances and invested in the sector. We stabilised the portfolios, repositioned assets — and today we’re selling in a very strong market.”

Following the recovery of the Amsterdam housing market, OCP was forced to sell its residential portfolio to CBRE Investment Management in a €400m deal in 2017. “Due to our success, our partner wanted to take their chips off the table. Unfortunately, we had to start all over again.”

A New Vision

This interlude changed OCP’s way of thinking about partnership structures, and the wider residential opportunities in Europe. A fragmented residential market, a shortage of housing, and underinvestment in the sector created a perfect opportunity to take a fresh approach.

“Our vision was to create a pan-European housing company,” says Van Bommel, “a credible brand, supported by strong governance, that will still be around in 30 years.” That vision only could be achieved with the right partners, who shared OCP’s longer-term view of the residential sector. In 2017, it closed a new partnership backed by a sovereign wealth fund.

Game Changer

It was another game-changer. Following a string of acquisitions in the Netherlands, Ireland and Denmark, OCP’s residential portfolio grew to include 8,000 apartments by 2021. Offices were opened in Dublin and Copenhagen. OCP managing partner Hedde Reitsma says people always say real estate is a local business, but “we strongly believe that scale benefits are much more important for residential companies”.

Technology and innovation are key differentiating factors, he says. “Do you really think that in 10 years’ time, we will still use external property managers and leasing agents? The entire process will be digitalised, and the living experience for our customers will be revolutionised.”

OCP has ambitious targets to grow its portfolio to €10bn by 2025, with the Nordics, Germany and Poland on the list. “Scale allows us to in-source processes and invest significant sums in innovation and technology,” says Reitsma. “It will create tenant platforms, and all services that come with it. Besides this, we have set firm targets to make all our assets energy-neutral.”

Challenges

One central challenge of a competitive market is to source the correct product. OCP focuses on quantitative modelling by evaluating data for investment decisions.
From a macro perspective, OCP invests only in markets that are supported by favourable demographics, a healthy supply- demand balance, and good affordability compared to ownership. On a micro level, location, apartment types and regulatory environment play crucial roles.

OCP partner Joris Voorhoeve says that by combining entrepreneurial and analytical skills, the company has built a solid track record for closing deals. “Even in the uncertain Covid times, we stood firm at our bids. Reputation does make the difference in sourcing deals. We have built a very strong network in the market, based on trust and respect.”

Success

The innovative housing company is rapidly moving forward. Next year, Orange Capital Partners will launch a housing brand, further in-source operations, and digitalise operational processes. “We are blessed with an incredible energetic and focused team of professionals. It’s undoubtedly the biggest asset we have,” says Victor van Bommel. “One of our key focus points will be to sustain our corporate culture while pursuing our growth ambitions.”

“We push ourselves every day to be the best in what we do — but we need to do it together.”


Sunny Misser: A Visionary in the New Business Environment

[caption id="attachment_21427" align="alignright" width="300"] CEO: Sunny Misser[/caption]

When Sunil (Sunny) Misser joined AccountAbility to become its CEO, it was with the aim of filling a gap in the market that he had identified – the “one-stop shop for all things Sustainability”.

His background working all over the world had made him the ideal person to fill that gap.

Originally from Mumbai (which he still refers to as Bombay), Misser obtained his master’s from Lehigh University followed by another at MIT Sloan School of Management (Massachusetts Institute of Technology) and then forged a formidable career for himself at PwC (PricewaterhouseCoopers) where he rose to become the Global Head of Firmwide Strategy and subsequently Global Managing Partner of its Sustainable Advisory Business.

His roles involved working with large global clients, developing and implementing solutions in the areas of strategy, structure, process, and people.

During his time at PwC, Misser not only improved the efficiency and effectiveness of organisations but also oversaw many complex business transformations. He served as a strategic business advisor to CEOs, Boards, and senior executives at Fortune 500 companies and multi-lateral organisations (MLOs).

He was a pioneer in the field of “mainstreaming” ESG (Environmental, Social and Governance) back when sustainability was a developing academic platform and just a vague notion that a few companies paid lip service to.

AccountAbility was founded in 1995 with the aim of enabling organisations to incorporate those principles into their working DNA.

Misser is very direct when it comes to defining today’s AccountAbility and its purpose. “We are not an advocacy platform or an activist forum – we are an expert ESG advisory firm that provides objective counsel to CEO’s and Boards on how to improve their business performance”.

“As a global consulting and standards firm, we focus on delivering practical, effective, and enduring results that enable our clients to succeed”, he states.

AccountAbility’s purpose is to innovate and advance the global Sustainability / ESG agenda by improving the practices, performance, and impact of organisations.
Misser is a big believer in ‘good’ governance. Good governance, as he puts it, comprises three basic elements – managing risk, enabling engagement and improving performance.”

He went on to explain, “Good governance creates better performance. Builds great companies. Increases stock values. You buy stock. You create jobs. Businesses grow. They pay more taxes - Improved overall performance. Period”.

He has simplified the narrative, identified and focused on the key factors that drive ESG and has shown many companies how this can add value and improve their overall performance.

He attributes his success to four fundamental elements:

Mental and Emotional Resiliency

Mastering your Craft

Building and Nurturing Meaningful Relationships

Effectively Managing Luck - Good or Bad.

The mental and emotional resiliency are qualities that have given him the confidence to lead but he rightly points out that mastering the craft, or being on top of whatever endeavour one chooses, is fundamental to obtaining the best outcomes. Misser sees resilience (in all its forms) as a combination of inner strength, flexibility and persistence.

You only have to speak to Misser to understand how open and engaging he is and how his integrity, warm personality and his affability enable him to establish strong, enduring relationships that stand the test of time. People do business with those they trust and like and the ability to create strong rapports with one’s clients and peers is a vital component. Misser’s Advisory Board comprises of top Regulators, former Chairmen and CEO’s of some of the world largest companies – all clients that he personally served and has known for decades.

The fourth attribute is fascinating. Luck is an interesting concept that many leaders refuse to acknowledge. He not only recognises it but realises that whatever life might throw at us, it’s how we deal with those vicissitudes that single us out. “Being deeply learned, working extremely hard and using well spoken words – that’s my definition of good luck.“, he commented.

Misser is a self-confessed workaholic and voracious reader who loves interacting (and learning) from professions completely different to his own – he has befriended athletes, religious preachers, surgeons, chefs, painters and, yes, homeless individuals.

He has also imparted his ideas in a book which he co-wrote Corporate Responsibility – Strategy, Management, and Value. He is a member of the Council on Foreign Relations and is often quoted in media such as Fortune, Financial Times, The Economist, New York Times, New York Stock Exchange Quarterly, Forbes, Dow Jones Interactive, Global Finance, and Internal Auditor’s Magazine.

His plain-spoken honesty, clarity of thought and relentless focus have led to the best possible practical outcomes and that is what sets him apart.

It is undoubtedly appropriate to sum up by letting Misser put it in his own words:

“In my 30 years in the consulting business, the awareness of Sustainability / ESG matters (risks and returns) in the C-Suite has never been higher. Stakeholders are no longer satisfied with output measures – instead, they are very much focused on impact.

The CEO role itself is expanding far beyond the day-to-day running of the business. The ‘Tone at the Top’, therefore, needs to be genuine, informed and balanced in its response and consider the organisation’s long term viability”.

Enough said.


Industry’s Most Exciting Space: Untold Billions Showered on Battery and Electric Vehicle Technology and Production

Earlier this week, the first lithium-ion battery cell rolled off the assembly line of Europe’s newest so-called gigafactory – a novel phenomenon usually defined as a manufacturing plant capable of churning out at least 15 gigawatt hours of cumulative battery storage.

The facility, owned by the Volkswagen-backed startup Northvolt and located in Skellefteå, Sweden, is Europe’s third gigafactory and the only EU owned one. Samsung and LG, both South Korean companies, operate large battery factories in Hungary and Poland respectively.

Northvolt management expects the Skellefteå plant to churn out at least 60GWh worth of batteries annually – enough to equip up to a million vehicles. By 2030, the continent is expected to host at least 25 gigafactories according to London-based battery data compiler Benchmark Mineral Intelligence (BMI). Globally, 247 battery plants are in the works with a combined output in excess of 4,600 GWh.

On Tuesday, Northvolt CEO Peter Carlsson (50) hailed the start of battery production in Skellefteå as a “great milestone”. It is also a lucrative one. Six months before production began, investors already valued the company at €10 billion. That valuation is not off the charts. Northvolt’s order book boasts €30 billion in contracts with prestigious carmakers such as Volkswagen, BMW, Volvo, and Polestar – Volvo’s electric performance car division charged with adding pizzaz to the parent company’s line-up.

Push Into EV

The electric vehicle (EV) space is, arguably, the most exciting and dynamic new industry to emerge since the advent of the IT Age. Just this year, global carmakers have earmarked an estimated €450 billion for spending on electric vehicles, investing in both production and research.

Volkswagen alone unveiled a €73 billion push into e-mobility, self-driving cars, and the development of vehicular operating systems. The number represents about half of the company’s investment budget. Volkswagen seems determined to maintain its position as the world’s largest carmaker and expects 2 out of every 3 cars sold by 2030 to be electrics or hybrids. As Volkswagen shifts into e-mobility, the company (group) is reviewing the fate of its Lamborghini, Ducati, and Bugatti premier brands.

Late last year Bugatti, part of the Porsche stable, partnered with Croatian electric performance car manufacturer Rimac Automobili to usher the classic brand into the new era. Rimac, born just over a decade ago in a Zagreb garage, gained notoriety as the builder of the world’s fastest electric car. Rimac’s 1,220 HP Concept One takes its driver from a standstill to 300 km/h in just 14 adrenaline-filled seconds, leaving even electric-sceptic Jeremy Clarkson breathless and gasping for fitting superlatives.

Exit Petrolheads

Announcing the hook-up with Porsche/Volkswagen, company founder Mate Rimac announced the development of a new generation of Bugatti’s with electric-powered models staying true to the design philosophy and engineering excellence of Ettore Bugatti whose light-weight engine blocks were hand-hewn to such precision that gaskets were not needed. Mr Rimac solemnly promised petrolheads that Bugatti will not go all-electric (for now). The company’s line-up will continue to include models powered by the much revered and rather monstruous 8.0L WR16 engine as currently found in the Veyron and Chiron models.

However, nostalgia for the roar of full-throttled petrol engines may wane as old-era top performers are left in the proverbial dust of even a (comparatively) modestly priced Tesla Model S Plaid which is propelled from 0 to 100 km/h in just 2.1 seconds as opposed to 2.6 seconds for the Bugatti Veyron. The latter vehicle does carry a sticker price of about €1.7 million, or about 12 times the amount Tesla asks for its zappiest offering.

In late October, the US carmaker’s market cap broke through the $1 trillion barrier and has kept moving north since. Apparently untroubled by the global chip scarcity, Tesla exceeded market expectations and managed to deliver 308,600 vehicles in Q4 2021. At current production rates, the company is on track to produce more than 1.5 million vehicles this year, excluding output from two new assembly plants – Giga Austin in Texas, and Giga Berlin in Germany – slated to start production within weeks rather than months.

Lounge on Wheels

As Tesla barrels ahead, Sony announced the formation of its own EV offshoot, Sony Mobility as it unveiled the company’s second concept vehicle, the Vision-S 02. Speaking at the Consumers Electronics Show (CES) in Las Vegas, Sony CEO Kenichiro Yoshida said that his company aims to leverage its imaging and sensing expertise, and its prominence in cloud, 5G, and entertainment technologies, to “redefine mobility”.

According to recent reports, deep-pocketed Apple, long rumoured to mull entry into the automotive market, still plans to launch a self-driving vehicle by 2025. Project Titan, set up in 2014 and subsisting mostly below the radar, suffered several setbacks such as when its chief technology officer defected to Ford last September. The design brief for Apple’s “loft on wheels” excludes a steering wheel and pedals but includes a U-shaped seating arrangement. Earlier this week, Bloomberg reported breakthroughs in the development of the chip Apple intends to use in its car.

Bubble Alert

The unabashed excitement and buzz prevalent throughout the electric vehicle industry may, however, lead to localised bubbles with startups such as Rivian, backed by Jeff Bezos of Amazon fame, accumulating a market cap ($87bn) similar to that of BMW, the Bavarian carmaker that sold 2.3 million vehicles last year. Though Mr Bezos drove to the launch site of his New Shepard spacecraft in a Rivian prototype SUV, the company has yet to generate revenue and profit.

Lucid Motors, another well-backed EV startup, hopes to manufacture and sell a trifling 20,000 luxury sedans this year after its new assembly plant in Casa Grande, Arizona, becomes operational. Even so, the company already enjoys a market cap of around $61 billion – significantly more than the $58 billion valuation of Stellantis, the French-Italian-American conglomerate that boasts a stable of 15 brands, a global workforce of some 300,000, and manufacturing facilities on six continents with a combined annual output in excess of 6 million vehicles.

Investors seeking alpha in 2022 may want to think twice before hopping on the EV bandwagon. Legacy manufacturers may find it tough to beat Tesla at the game it invented. Chip shortages and other supply line issues may well undermine the best-laid plans, whilst questions remain over the ability of battery manufacturers to keep up with demand. Consumer scepticism is, however, on the wane as EV technology improves at an impressive clip. Whilst there has so far been no great single breakthrough in battery technology, incremental progress has considerably lessened range anxiety – the industry’s bugbear – as battery storage capacity gradually improves and the charging infrastructure becomes more robust. A mixed bag has rarely been so electrifying.


No Gloating on First Anniversary of DC Riots: Misguided Republican Anger at a Beneficial Electoral System

She called it a “beautiful sight to behold” when student protesters stormed the building that houses the Hong Kong Legislative Council. Now Speaker of the House of Representatives Nancy Pelosi is at a loss to explain why the spectacle of a mob assaulting the Capitol did not meet her approval.

On this day last year, the world looked on in disbelief as a multitude of angry flag-waving people forced its way into, and ransacked, a proud symbol of American democracy. Illiberal and authoritarian regimes from China to Zimbabwe were quick to diagnose a terminal illness and rub some salt in the wounds of a slightly stricken adversary. The events in Washington of 6 January were said to have uncovered “blatant double standards” and “stripped the United States of its “moral high-ground.”

Schadenfreude kicked into overdrive often accompanied by liberal doses of irony and added touches of facetiousness such as when none other than President Recep Tayyip of Turkey called the events a “disgrace for democracy” whilst his Iranian counterpart Hassan Rouhani promptly noted the “weakness” of Western democracy. President Emmerson Mnangawga of Zimbabwe surmised that the US “no longer has the moral right to punish other nations under the guise of upholding democracy.” Displaying a bit more tact, and perhaps understanding, Russian president Vladimir Putin kept mum.

America’s friends and allies were much less eager to comment. UK Prime Minister Boris Johnson drew on his undisputed mastery of the English language to utter kind and elegant, yet meaningless, phrases to express his dismay without offending his best friends. Most other Western leaders just pretended to ignore the events and kept quiet.

No Passarán

What most Chinese pundits and other commentators not particularly well-disposed towards America choose to overlook was the built-in resilience of US democracy which can withstand and absorb shocks without capitulating to authoritarian forces in a modern rendition of ‘no passarán’. Also, and more than just a footnote, the Washington mob was out to overturn a free and fair election – as determined by the courts. These protesters were not so much inspired by lofty democratic ideals as they were motivated by rage at an inconvenient election outcome.

In an opinion piece published in the New York Times, former president Jimmy Carter points to a study by the Survey Center on American Life, part of the American Enterprise Institute think tank, which found that 36% of Americans – roughly 100 million people – agree with the statement that “the traditional way of life is disappearing so fast that we may have to use force to save it.” The Washington Post meanwhile reported that about 40% of Republicans believe that violence against government is “sometimes” justified – a mere replay of the Second Amendment and, as such, nothing to freak out over.

Mr Carter worries about the erosion of democratic values. He notes that though politicians, and citizens, may disagree on a great many issues, until recently very few questioned the fundamental constitutional principles that underpin US democracy. When even court findings on reported election irregularities and contested outcomes are being dismissed as partisan, a problem does indeed exist.

Republican anger is all the more remarkable because the US electoral system actually does seem tilted, however slightly, towards the GOP. Since 1988, only one Republican presidential candidate (George W Bush in 2004) has managed to win the popular vote.

In 2016, Donald Trump was bested by Hillary Clinton who received almost 3 million votes more than her Republican opponent yet lost in the Electoral College. The same fate fell to Al Gore in 2000. Such anomalies had been absent from American politics for well over a century.

In the 1876 election, Rutherford Hayes landed in the White House on the back of the Electoral College as did Benjamin Harrison twelve years later. Both gentlemen were Republican candidates. However, the first one to benefit from the idiosyncratic system was John Quincy Adams in 1824 – candidate for the Democratic-Republican Party (aka Jeffersonian Republican Party), the forerunner of the present GOP.

The Longest Shot

Only five times in US history did the Electoral College diverge from the popular vote. This usually only happens when the popular vote is close with Hillary Clinton being the only exception of note. It was always a long shot for President Trump to try and swing the Electoral College, given that he lost the popular vote by well over seven million ballots.

However, it is rather unfair – and also historically incorrect – to depict Mr Trump as the only president ever to challenge the electoral system. That honour must go to James Madison, one of the Founding Fathers and the fourth president of the United States, who freely (and proudly) admitted that the constitution he helped write achieved “the total exclusion of the people in their collective capacity.” Mr Madison’s repeatedly expressed his condescension of ‘the people’: “Had every Athenian citizen been a Socrates, every Athenian assembly would still have been a mob.”

Explaining his views in The Federalist Papers, a collection of 85 essays written to explain and promote the ratification of the US Constitution, Mr Madison argued against an “interested and overbearing majority” and warned of the “mischiefs of faction” leading him to endorse a system that combined the tenets of representative democracy with those of federalism.

A Brush with Rupture

Notwithstanding its vast array of checks and balances, the United States on 6 January 2020 came perilously close to the unimaginable: a rupture of the constitutional order. The system creaked and groaned – but ultimately held. Rather than a sign of weakness, the storming of the Capitol showed that American democracy can – and does – survive even the greatest challenges and upheaval.

Opportunistic criticism from leaders who deny their people a voice and say is not just gratuitous but downright malicious, bordering on the ridiculous. Imperfect and assailed as it may be, US democracy survived the events of early last year largely intact and with the preservation of the constitutional order and the rule of law. However, that brush with disaster should not lead to complacency.

Some may severely dislike Donald Trump, and fear his return to the White House, whilst others may hope and pray for that day, a narrow strip of common ground must be found to harbour a collective belief in the timeless values and institutions that ensure the supremacy of the will of the people. If the ‘people’ want to propel Mr Trump back into the White House then, however much others disagree, that will must be respected. Likewise, a second Trump Administration must in turn respect the confines of US democracy as imposed and maintained by the courts.

However, polarisation now runs amok in US politics and demagoguery seems at an all-time high with public discourse becoming ever more acerbic and fact-free. Today’s disconcerting political ambiance shows a chilling resemblance to the dystopian world depicted in Sinclair Lewis’ 1935 political novel It Can’t Happen Here which describes the rise and fall of a demagogue elected president of the United States on a patriotic platform. Although written at a time when fascist forces in Italy and Germany were on the ascendancy, the novel’s warnings seem equally applicable to present times.

Temptation

Whilst most readers would succumb to the temptation to see former president Donald Trump in the character of the power-hungry Buzz Windrip, that would also miss the point. Politics may be lively, with the frequent brinkmanship-like courting of disaster, a few good men is still all it takes to prevent a calamity. Though the Republican Party may presently be enthralled to its former president, that party is by no means monolithic and still contains plenty of honest politicians for whom the rule of law and the preservation of the constitutional order remain sacrosanct – and principles elevated well above mere party politics.

In fact, nearly every dystopian novel with a social slant may be misinterpreted and deployed as a dire warning of today’s supposed slide into political barbarism. A Canticle for Leibowitz, Walter M Miller’s 1959 science fiction masterpiece, describes a faintly recognizable world in which knowledge and culture become despised in a process dubbed ‘simplification’ whereby anyone with a modicum of learning is being hunted down and killed – by ‘simpletons’ – until illiteracy prevails.

The progressive dumbing-down of the public debate – with the routine dismissal of expert opinion, the absence of fact-based arguments and the prevalence of alt-truths or ‘wokeism’ – is arguably a bigger threat to democracy than any single candidate. In today’s world, knowledge is no longer considered a key to power – and that is as disconcerting as the rule of partisan dogma.

Wheels of History

What was witnessed on 6 January in Washington may, ultimately, have been nothing more than the turning and churning of the wheels of history – also identified and described by Mr Miller: “All societies go through three phases. First there is the struggle to integrate in a hostile environment. Then, after integration, comes an explosive expansion of the culture-conquest, then a withering of the mother culture, and the rebellious rise of young cultures.”

With his summary, Mr Miller closely followed historians and philosophers such as Oswald Spengler (The Decline of the West: Outlines of a Morphology of World History) and Will Durant (The Story of Civilization) who saw the decline of civilization as the product of strife between religion (dogma) and secular intellectualism with convention and morality as fatalities of that clash.

One need only look at the outrageously outfitted QAnon Shaman strolling the hallowed corridors and halls of congressional power looking for ‘Satan-worshipping paedophiles’ to conclude that a revaluation of experience, expertise, education, and rationality is urgently needed.


Women's Brain Project - Shattering the Status Quo: Investing in Women in STEM

Representation matters. The now classic TV show The X-Files starring David Duchovny and Gillian Anderson inspired more women to pursue careers in a science, technology, engineering, and math (STEM) field. So much so, that this was referred to as “the Scully effect” named after the main female character. More recently, the movie Black Panther featured Shuri, a young black girl, at the head of Wakanda’s tech innovation efforts. With 2022 named the International Year of Glass by the United Nations, highlighting it among other things as an opportunity to promote the participation of women and girls in STEM, we can hope that such representation will slowly but surely become mainstream and contribute to a post-pandemic “new normal” that is better than how things used to be.

Glass, as it turns out, is very on-point with the times. The term “the glass ceiling”, referring to the socio-cultural barrier limiting women’s career advancement, is almost 45 years old and yet it is still relevant today. Studies have shown time and again that women and diversity are good for business, but COVID-19 has set gender parity back by a generation.

In many ways, the pandemic has shattered our society. One way in which the pandemic has already enabled us to rethink our systems is that it shone a light on the differences between men and women from a health perspective, paving the way for precision medicine. It also brought mental health and gender-based violence to the forefront, alongside the importance of caregivers, reminding us that silent epidemics are as deadly as ones that make the headlines.

Differences between men and women exist in many situations, and none are more apparent - yet hidden from the mainstream - as differences in men and women’s brains.

With the World Economic Forum Annual Meeting in Davos focusing this year on “Working Together, Restoring Trust”, why not take the opportunity to push for gender equality and brain health? This would be in sync with our times, and yet still visionary, as the Organisation for Economic Co-operation and Development (OECD) has been developing the concept of “brain capital” and France has committed to prioritizing brain research when it takes on the European Union Presidency - to name but two examples.

And, unlike the challenge of finding champions for niche issues such as ALS - which was put on the map by the “Ice Bucket Challenge” that went viral when a pro-golfer shared it on social media - brain health is everyone’s business: we not only all have a love grandparent or parent suffering from Alzheimer’s or a friend suffering from depression, but we all have brains which comes with a vested interest in brain health.

While sex and gender differences in brain and mental health is a global issue, a pioneer in this space is headquartered in Switzerland, not far from Davos. The Women’s Brain Project - always open to new partnerships - is an international non-profit working across disciplines on the implementation of sex and gender within precision medicine, from basic science to novel technologies.

Their co-founder and CEO, Dr Antonella Santuccione Chadha, is leading by example and an inspiration to many. She was nominated Woman of the Year by Women in Business Switzerland in 2019, and won the World Sustainability Award in 2020. A book based on her life experience “The Headless Baby Girl” was published in Italian in 2021, and the Swiss production company Suisse Vague SA, who acquired the rights for a TV show, are scouting for the right investors to bring the project to fruition.

“The time is right to integrate sex and gender differences into mental and brain health, and to shine the spotlight on mental health as a whole. We need more women in clinical trials, doing research, on boards, and advocating for themselves - and if I can inspire just one more person to go into STEM, or one person in STEM to practice self care to avoid burnout, it’s already a victory,” said Dr Santuccione Chadha

With a growing number of initiatives - including one by the Obama administration and the BBC, and the movies such as “Hidden Figures” - focused on recognising women who played lead roles in historical STEM innovation and discoveries, but were overlooked during their time, I hope we can learn from our past and celebrate women like Dr. Santuccione Chadha while she is still in her prime.

In Japan, they have an art called Kintsugi whereby broken pottery (not glass, but for this purpose I hope you won’t mind putting them in the same proverbial basket) is repaired by mending the cracks with material mixed with gold, silver or platinum. This treats breakage and repair as part of the history of any given object, and integrates the repair as an integral feature that makes the object more beautiful. This is starkly different to the tendency we have in the West to consider broken things as having lost value.

When it comes to rebuilding in a “post-COVID-19” world, can we learn to accept that things will never go back to how they were before, and that this is an opportunity to improve our ways rather than a blemish on our history? If we do, I hope we will continue to celebrate inspiring women in STEM during their lifetimes, and that we’ll invest in brain research and health, integrating gender and diversity as key elements to ensure that findings reflect the richness of our societies.

About the Author

[caption id="attachment_14038" align="aligncenter" width="275"] Author: Shahnaz Radjy[/caption]

Shahnaz Radjy is a member of the Women’s Brain Project Communications Working Group.


Taiwan’s Chunghwa Telecom Takes Private 5G Tech to the Next Level

[caption id="attachment_21442" align="alignright" width="300"] Chunghwa Chairman and CEO: Chi-Mau Sheih[/caption]

The pandemic has negatively affected enterprises in many ways — but it has also accelerated digital transformation in Taiwan’s activity in the cloud, Internet of Things, and edge technology spheres.

Chunghwa Telecom provides business opportunities for Taiwan’s private 5G enterprise networks and helps customers with digital transition. Private 5G enterprise networks help companies to introduce innovative tech and develop applications in vertical fields. The construction, operation and management of a telecommunications company requires professional assistance — which Chunghwa provides.

Demand for smart applications and remote operations have soared, and Chunghwa Telecom gains insights into the market needs of enterprises and assists customers in facing the challenges of digital transformation with reliable services, large bandwidth, low latency, and information security.

Chunghwa Telecom’s R&D team strengthens system integration capabilities for corporate customers, which is key to the introduction of private networks. The organisation has the largest number of users in China, with the largest spectrum in the 3.5GHz and 28GHz frequency bands. It has a leading edge in spectrum resources and can create an Infra field with high bandwidth, low latency, and large connections for 5G private networks.

Chunghwa continues to invest in broad alliances with domestic and foreign NetCom factories and product vendors. It has core technology advantages, such as mobile edge computing, information security, IDC, AI, and blockchain. Chunghwa’s independent R&D, planning and design capabilities combine with round-the-clock after-sales service.

A leading brand, Zhonghua Telecom, provides customers with ICT solutions, information and communication integration advantages, and jointly creates momentum for Taiwan's industry.

Digital Transformation and 5G

Chunghwa Telecom is international in its approach; it has deep involvement with Vietnam’s Viettel-CHT company to assist local enterprises with public cloud application services.

Chunghwa Telecom established Viettel-CHT as a joint venture with Vietnam Viettel. It operates IDC business in Vietnam and is central to Taiwan’s entry into South East Asia. “CHT and Viettel jointly promote public cloud services in Vietnam,” says Chunghwa chairman Sheih Chi-Mau. “I hope we become the best assisting partner for digital transformation of Vietnamese enterprises.”

The co-operative effort promotes public cloud services in Vietnam via technical energy, service, and public cloud ecosystem partners. The Viettel-CHT public cloud services ecosystem is diversified and a leading infrastructure provider. “Chunghwa Telecom and Viettel Group will continue in the spirit of joint venture and growth, introducing the latest global technology for Viettel-CHT, leading the Vietnamese public cloud market, and injecting new service energy for Vietnamese companies,” says Chi-Mau.

In 2021, Chunghwa Telecom joined forces with Thai National Telecom, The WhiteSpace (WSP), and TEDA to build a private 5G network. The parties signed a letter of intent to jointly support the Thailand 4.0 manufacturing plan Assist Thailand in accelerating 5G applications, remote collaboration, and smart medical care. This four-party multinational effort focuses on solving any “pain points” in the post-epidemic era. The Thai government has created an innovative application service ecosystem, making the country a leader in the industrial and technological innovation of the five North ASEAN countries — Thailand, Cambodia, Myanmar, and Laos.

Chunghwa Telecom co-operated with NT and The WSP for TEDA Telecom's first plant in Bangpu Industrial Zone, Thailand, to introduce AR remote collaboration and apply it to assembly training, operation assistance, and visual equipment control. “In the future, the joint planning will be extended to local government, manufacturing, tourism, medical or financial industries in Thailand,” says Chi-Mau.

Chunghwa Telecom will provide its own MEC Intelligent A+ and design and planning experience, NT will provide the local 5G core network, while the WSP will provide local marketing and operation experience for TEDA's smart factory.

Chunghwa Power has been cultivating the “new south direction” for a long time. It has joined forces with Thailand’s National Telecom, Vietnam’s Viettel Group, Singapore’s Singtel and other companies. “We are convinced that through this co-operation, Taiwan will reach a new milestone in the expansion of the ASEAN market,” Chi-Mau says.

ESG Leads the World

To implement a friendly workplace environment and enable colleagues to take care of their families and work comfortably, Chunghwa Telecom holds a group wedding ceremony every year, in addition to handling the marriage of 550 couples of employees in 11 years, and actively encouraging childbirth. Since 1995, with regard to the implementation of the two-year parental leave welfare measure, in addition to the 80 percent of the labour insurance salary guaranteed by the law in the first half of the period, the greater party will issue a childcare allowance of 50 percent of the labour insurance salary for the subsequent period.

If there is a need for parenting for children under the age of three, colleagues can apply for a one-hour reduction of working hours each day. Salaries will be paid without affecting full attendance and performance appraisal. It is estimated that more than 1,200 employees have benefited.

Each employee with children aged up to six can receive a monthly subsidy up to 72 times before reaching the age threshold. The corporate rebate fund will be distributed and paid to employees who provide public and private institution childcare certificates in the current year.

There are plans to set up 10 Workplace Mutual Aid Education and Insurance Service Centres in Taipei, Yangmei, and Liudu. Fifteen classes collect 458 children from two to six to provide education and care. The service allows employees to deliver to collection points, reduces the financial and time burden of colleagues, and demonstrates the company's support for parenting families.

Organisational Transformation

Chunghwa Telecom launched a three-year strategic transformation plan in 2019 for core and emerging business, cost optimisation and capability upgrades. Financial performance continues to grow.

Chunghwa Telecom has won the trust of consumers with industry-leading technology and service. Some 12,000 5G base stations have been built — and reached the standard ahead of schedule. Chunghwa has the widest coverage, and the most base stations.

Year
2020
2019
2018
2017
2016

Consolidated operating income
207,608,998
207,520,061
215,483,158
227,514,183
229,991,428

Consolidated operating profit
42,361,726
40,645,854
43,643,659
46,702,977
48,105,278

Consolidated net profit attributable to owners of parent company
33,406,130
32,788,546
35,501,622
38,873,905
40,067,010

Basic EPS
4.31
4.23
4.58
5.01
5.16

Table 1: Financial performance in the last five years. Note: Prepared in accordance with Taiwan IFRSs; except that earnings per share are denominated in NT dollars, all others are denominated in NT$ thousand. 2014 is the amount after retrospective adjustment.

Chunghwa Telecom passed TCFD and BS8001 audits to shoulder corporate social responsibility and pursue sustainable development. It implements sustainable operations and promotes climate-change solutions. It is the first in the sector to adopt centralised wireless access network" (C-RAN) architecture to build mobile 5G computer rooms. The structure is stable, with energy-saving benefits. Chunghwa Telecom upholds the spirit of “always being at the forefront” to achieve a sustainable future.

Chunghwa Telecom has proposed energy-saving and carbon-reduction programmes, and assisted the value chain in carbon-reduction. It joined the CDP supply chain project, driving suppliers to carry-out carbon management and reduction. For customers, Chunghwa has developed low-carbon technology products and solutions, such as iEN smart energy-saving services.

It has put forward a communication network adaptation action plan for climate change adaptation in the next 20 years, implementing key improvements and an adaptation plan for high-risk climate equipment to enhance the company's climate resilience.

In the circular economy part, Chunghwa Telecom introduced the BS 8001 circular economy model with MOD film and television services as the target. Chunghwa Telecom co-operates with suppliers to minimise the volume and power of the MOD set-top box, and reduces the use of raw materials and electricity. On the consumer side, Chunghwa adopts the MOD set-top box to guarantee service quality. It avoids the waste of resources and works to reduce pollution.

Chunghwa Telecom has a long-term goal of net zero emissions by 2050. It plans to have 100 percent net-zero emissions at office sites, and full use of IDC computer rooms by 2030. “The medium-term goal of renewable energy, climate-change solutions and circular economy business models aim for the establishment of a sustainable and beautiful society,” says Chi-Mau.


Jenny Just: The Deck Should Be Stacked — with Tech

[caption id="attachment_21467" align="alignright" width="300"] US Entrepreneur and Fintech Disruptor: Jenny Just[/caption]

US entrepreneur and fintech disruptor Jenny Just believes that girls should be taught to play poker. It’s a game that demonstrates strategy and risk-taking — two elements vital for business success.

Growing up as a middle child surrounded by four brothers, Just quickly learned to stand up for herself. “I was always the odd one out,” she says. “I had to figure things out for myself.”

She left the University of Michigan in her early 20s with a business degree and plunged straight into the old-school trading pits of the Chicago Options Exchange. There were so few women on the floor that there wasn’t even a female bathroom.

“I literally didn’t know what my job was on my first day,” she says. “I put on my jacket and walked on to the floor. There’s nothing like learning in that type of environment. You’d have to watch old movies to see what it was like then. It was people screaming and yelling. The movies get it right. It was like a crazy sporting event.”

Today, according to Forbes’ estimate, Just is worth a cool $1.5bn. She is recognised as a pioneer in finance and options trading, and as a champion of business-changing technology. In a career spanning more than 20 years she and husband Matt Hulsizer — who she met in that frenetic Chicago trading environment — have launched and acquired several organisations.

They have built industry-leading companies, including PEAK6 Capital Management, Apex Fintech Solutions, and OptionsHouse. They have acquired and transformed a raft of other financial businesses, building a reputation for open collaboration, creating environments where ideas are shared and pressure-tested, and fostering a culture which believes new possibilities are always right in front of you.

Jenny Just learned her craft in finance with the options traders O’Connor & Associates, but her entrepreneurial instincts drew her to explore other opportunities. She and Hulsizer developed a vision. They would embrace technology and use it to simplify processes and improve performance.

They took risks and made some mistakes in the early days. “We failed quickly and failed small,” she admits. “We were a little too big for our shoes.” But she quickly earned a reputation for identifying problems which others had overlooked… and for finding solutions. It was in large part thanks to using available technology in smarter ways.

Just realised that the future lay in bringing together those who understood the fundamentals of business and those who understood the tech. Today’s technologies are accessible, she says, and can support faster growth than was historically possible.

Business advantage comes from understanding the tech, she believes, and those who “learn the code” will lose the fear traditionally associated with it. “It’s about being able to talk the language of tech,” she says. “There’s a lot of low-hanging fruit. Business school kids must be given the opportunity to understand all the tech that goes along with it.”

The financial sector, she says, needs to work harder to keep up. Customers’ expectations are high, and businesses that lag behind the tech curve may not survive.

Jenny Just champions women in the traditionally male-dominated finance world. Her businesses are helping to pave the way for female talent in the sector, creating internships where women can learn to trade and sharpen their programming skills.

And pick up a poker skill, of course: it doesn’t matter what hand you’re dealt — it’s how you play it.


Thai Lee: Avoiding All the Spotlights

[caption id="attachment_21473" align="alignright" width="300"] Thai-born Korean American Businesswoman: Thai Lee[/caption]

You may not have heard of Thai Lee, but Google her name and it becomes clear that news of her — in business circles, at least — swirls high and settles in calm, lofty locations: Forbes, Bloomberg, CRN, Leaders’ League. This Thai-born Korean American entrepreneur is more hurricane than whirlwind, albeit one that approaches with a gentle and self-effacing manner.

Armed with an MBA from Harvard and an all-comers determination to prove her company’s worth through the tech it provides, Lee co-founded SHI (with Leo KoGuan) in 1989. Lee and her (now ex-) husband bought a software reseller — the SHI predecessor — for less than $1m. The company born of that corporate union and headquartered in Somerset, New Jersey, now has customers in the non-profit, private, and public sectors. And it’s worth $11.1 bn in sales alone.

Lee may not be a household name, but those in financial and business circles will certainly be aware of her. SHI has around 20,000 customers — including AT&T, Johnson & Johnson, and Boeing. And yet Lee herself remains almost invisible to all but the most inquisitive eye.

She drives herself to work, one Forbes article remarked, and parks “in the middle of the lot, even when there are spaces open up front… There's no executive assistant at the door keeping interruptions away; she doesn't have one. Lee keeps her own calendar, books her own travel and does her own filing…”

Thai Lee has stormed through the financial and business ranks to find her name, and her company, in several of those “Top 10 / 20 / 50” rankings, and a rich list or two. She famously (and modestly) attributes her business success to management tactics; she believes in a tenet that Chinese whitegoods giant Haier also cleaves to: empowered employees with the autonomy to deal with customers.

It seems to have worked — for SHI and Haier — and Lee’s employees and clients have served her well in return: retention in both areas is high.

Now 62, Lee was born in Bangkok, grew up in South Korea, and moved to the US at high school age. After Harvard, she worked at Procter & Gamble and American Express before co-founding SHI. In 2018, she joined the board of PureTech Health, a bio-pharma company and affiliate of Sonde Health, which develops voice-based diagnostic technology.

Lee was recently ranked the eighth-richest self-made woman in the US (Forbes, again) with an estimated worth of some $4bn. She is known to donate time and money to educational charities and cancer research societies.


‘ESG Principles Inform Everything We Do,’ says Founder of AUM Asset Management Ltd. Jean-François de Clermont-Tonnerre

[caption id="attachment_21476" align="alignright" width="300"] Founder of AUM Asset Management Ltd.: Jean-François de Clermont-Tonnerre[/caption]

As a results-driven investment manager that seeks consistent growth of clients' wealth over time, AUM Asset Management Ltd. (“AUM”) defies the traditional profile of high-performing firms with its commitment to positively impacting the planet and society, while also delivering strong returns to its investors. When AUM’s founder, Jean-François de Clermont-Tonnerre, established the firm in 2015, he integrated environmental, sustainability and governance (“ESG”) factors into its investment analysis and has worked daily since that time, alongside his highly experienced investment team, to thoughtfully build portfolios that employ an ESG-centric investment approach and promote sustainable development.

With offices in Malta and London, AUM provides bespoke asset management, MANCO and advisory services to top institutional investor and family office clients around the world, offering traditional, alternative and real-asset investment solutions through the firm's expansive international network in Europe and North America.

AUM’s diversified investment approach provides investors access to a variety of investment strategies, markets, geographies and asset classes in a flexible and nimble investment framework, with the goal of delivering absolute returns and wealth creation over the long term, while integrating ESG factors into all investment decisions.

“Our clients are—more than ever—seeking investments that weigh the good they do in the world with doing well for themselves and these two goals, which previously seemed mutually exclusive years ago, we now know are self-reinforcing, whereby applying ESG screens in our investment process allows our clients also to do well,” said Mr. de Clermont-Tonnerre.

Investments included in AUM's portfolios are determined by their potential return profile and specific ESG factors. The firm then applies global macro, quantitative, fundamental and technical analyses to its investment theses to provide another layer of informed decision making prior to allocating to its portfolios. ESG principles inform every investment action that the firm takes and serves as a core approach, rather than an ancillary afterthought.

For the past 25 years, Mr. de Clermont-Tonnerre has been committed to the environment and sustainability through various business and personal philanthropic projects. In 2009, he formed his personal foundation based in Brussels to serve and support four key focus areas: the environment, science, youth education and culture. Since that time, he has personally supported key initiatives focused on the environment and biodiversity, including the establishment of the Collége de France’s Annual Biodiversity and Ecosystems Chair, which aims to promote research and teaching by leading French and foreign specialists in the subjects of biodiversity and ecosystems who, through their work and action, highlight the environmental challenges the world currently faces. This Chair position ensures that these issues are widely communicated to the academic world, decision-makers and the general public to find the best solutions to address the issues of today.

Mr. de Clermont-Tonnerre is also currently working alongside Lone Tree Properties Ltd. in British Columbia to support the sustainable protection and conservation of 1,800 acres of land that was previously cut down and logged in order to stop the logging and protect the remaining land for the local community to enjoy, which includes a 900-acre, permanently-protected public park.

“Caring for the environment and making sustainable choices is our collective responsibility and making investment decisions that take the environment, bio-diversity and conservation of land into account creates a virtuous cycle that benefits everyone in the end. That is why AUM will continue to apply ESG principles for the benefit of our clients and our broader communities,” said Mr. de Clermont-Tonnerre.


Market Volatility as Push (Slowly) Comes to Shove: Grappling with a Multitude of Crises in an Increasingly Dangerous World

Central bankers seem caught between their natural inclination to get a grip on inflation and a fear of abruptly deflating asset prices. In other words: the temptation to avoid engineering a bust after the post-lockdown boom reigns supreme.

Thus, the US Federal Reserve is likely to limit its three or four rate hikes this year to a modest 25 or 50 basis points each. The European Central Bank (ECB) is likely to follow at an even slower pace, fearful to punch holes into an already fragile economy. Although the Eurozone is forecast to barrel ahead this year, adding 4.3% to its GDP, much of that growth is the result of previously repressed consumer demand caused both by lockdowns and disrupted supply chains.

The present inflationary spurt, whilst disconcerting, is much less a consequence of quantitative easing in its many iterations than of a surge in demand across most sectors of the economy. The imminent ending of the ECB’s €1.85 trillion Pandemic Emergency Purchase Programme, set to be wrapped up by March, may not tame the price index quite as much as expected. However, time will. Rising to an annualised rate of 5% in December, Eurozone inflation significantly erodes the spending power of both households and business, depressing demand in a natural, albeit painful, way.

Don’t Panic!

Adding higher interest rates to the mix equates to playing with fire. Prior to the current upswing, inflation remained largely confined to capital markets benefitting nearly all asset classes and trickling down to a limited number of top-tier households. Bursting the asset bubble may seem an attractive way to ‘level down’ and fight inequality, it also entails great risks such as undermining consumer confidence, restricting credit flows, and upsetting a delicate economic balance. If anything, the present seems to require passive brinkmanship, or as Lance Corporal Jones from Dad’s Army would exclaim: Don’t Panic!

Luckily, and notwithstanding increasingly frantic calls from jumpy economists and market analysts, central bankers display a healthy awareness of their predicament – and a resolve to refrain from major interventions. Taking the long view, they may also remember the decidedly lacklustre recovery that followed the 2009 banking crisis. A cynic could argue, not altogether unconvincingly, that all the world’s major economies have been on life support continuously for the past decade in one form or another. Quantitative easing in the west and shadow banking in China.

This addiction to easy money will prove hard to kick and especially so in times of rising geopolitical tensions – and a lingering pandemic. Any major conflagration is likely to cause already jittery investors to run (but where to hide?), upsetting the apple cart. Safe haven assets such as treasury bonds and precious metals are already seeing an uptick in demand.

The yield on Germany’s benchmark 10-year bund briefly wandered into to positive territory for the first time since 2019 whilst 2-year US T-bills last week experienced their biggest yield gain in six years. Admittedly, both movements were sparked by selloffs aimed at containing a rally in treasuries. Bond prices move in opposite direction to yields. In times of uncertainty or trouble, prices rise with a corresponding drop in yields.

Platinum, palladium, and silver have embarked on a bull run with gold not trailing far behind. Conversely, bitcoin touched a 5-month low at $35K as investors began to dump riskier assets in a herd-like move towards the proverbial hills. Looking at the wider bear market, some analysts such a Euro Pacific Capital Chief Economist Peter Schiff fear that bitcoin still has a long way to go (down). Mr Schiff warns that once the $30K support floor is breached the crypto currency may crash as low as $10K.

Keep Cool

Though markets shrugged off Russia’s 2014 annexation of the Crimean Peninsula, a prolonged full-on ground war in Europe is unlikely to be ignored. Typical conflict responses such as a wholesale move into safe haven assets are a given with a spike in energy prices thrown in as a wildcard. Again, experience may provide guidance. Data on political and economic crisis moments in the six decades leading up to the 2011 9/11 attacks shows that in 19 out 28 cases (events), stock markets recovered within six months.

The biggest fear of a growing number of market analysts and assorted pundits is that any ‘military-technical’ attitude by Russia may prompt other nations to follow suit, adding to the turmoil – and possibly stopping the global post-covid recovery in its tracks as energy prices jump even higher. Oil at $150 a barrel would reduce global GDP growth to just 0.9% whilst adding to inflation.

The US Federal Reserve’s Open Market Committee is due to meet on Tuesday and Wednesday to discuss its next moves. In anticipation of a rate hike, markets retreated across the board with the Pan-European Stoxx 600 shedding 1.4% by mid-morning on Monday – moving in tandem with most Asia-Pacific markets. Hope is now pinned on Fed Chairman Jerome Powell who may well stop short of a 50 bp rate hike and an aggressive tapering of asset purchases. This is, after all, not the moment to start correcting the central bankers’ earlier peccadilloes – or, indeed, to cede to the temptation of declaring war on inflation. May cool heads prevail.


IFC: After Glasgow, Four Steps to Keep Us On Track

[caption id="attachment_21489" align="alignright" width="300"] Author: Emmanuel B Nyirinkindi[/caption]

The UN Climate Conference in Glasgow saw a flurry of commitments and proposals to limit temperature rises to 1.5°C. While there was concrete headway on several fronts, COP26 also underscored the enormity of the task still ahead. Four clear signposts can continue the momentum and accelerate the critical transition to net zero.

First, Access to Energy is a Must

Decarbonisation will only be effective if it addresses development needs. Around the world, an estimated 800 million people still live in the dark without access to electricity. While much of the focus is on decarbonising larger middle-income countries, the private sector can provide affordable electricity to energy in-poor countries. This can be done through a combination of grid-based and off-grid renewables. However, many technologies – including solar – still require government subsidies to become viable. One of the solutions is to combine more public and private capital to achieve scale – and make a difference for families and communities, women and youth. This is something the new Global Energy Alliance for People and Planet (GEAPP),which was announced at COP26, will aim to do. We are very happy to be part of this Alliance.

Second, the Transition From Coal Needs to Be Fair

Many countries pledged in Glasgow to phase out coal. This is critical, and it’s becoming progressively cheaper to replace coal-fired power plants with utility-scale renewable projects. However, jobs and livelihoods will inevitably be lost in the process. The good news is that the transition to renewables will bring about millions of new jobs. It is vital the public and private sectors, together with communities, join forces to ensure workers transfer their skills to low-carbon businesses. As development finance institutions, we need to maximise private sector participation in renewable energy, invest in transmission and distribution, and mobilise private capital for the significant capital expenditures and efficiency improvements needed in that sector.

Third, We Need All the Private Capital We Can Mobilise

At COP26, 450 insurers, banks, and pension funds representing 40 percent of the world’s financial assets pledged to align their financing with netzero. How do we make sure such finance can be directed to climate projects in the developing world? Building on its recent experience with mobilisation platforms, IFC announced two major initiatives during COP26. One is a $2 billion fund with Amundi – Europe’s largest asset manager – to build the bond market and promote a green recovery in developing countries. The other is a $3 billion portfolio of Paris-aligned loans created with Allianz and the Hong Kong Monetary Authority to scale up climate-responsible financing for private companies in emerging markets. Platforms likes these help minimise risks for investors, and build capacity in local markets to make green, sustainable investments.

Fourth, Carbon Markets are Crucial

Another key area that’s expected to unlock significant financing for climate mitigation and adaptation is carbon pricing. At COP26, nearly 200 countries finally agreed on the Article 6 rules of the Paris Agreement for international cooperation through carbon markets. Policymakers can play an important role in designing carbon pricing systems that send the right signals to the market and raise money for initiatives like reforestation or research and development. On the other hand, businesses can establish voluntary carbon prices to anticipate new carbon regulations. We need to look at increasing investment opportunities in carbon projects, monetising carbon credits, and establishing and managing carbon facilities for private companies.

The Bottom Line

Climate change is a threat. But it also presents an opportunity to change course, and is one of the greatest commercial opportunities we may see in our lifetime. Under the World Bank Group’s new Climate Change Action Plan for the next four years, IFC is committed to aligning its operations with the objectives of the Paris Agreement, and taking climate into account in every decision and transaction that it makes. Such actions help countries and private sector clients maximise the impact of climate finance, aiming for measurable improvements in adaptation and resilience, and measurable reductions in greenhouse-gas emissions. This is how IFC will continue creating opportunities for economic growth and transformation in developing countries that will advance a green future.

About the Author

Emmanuel B Nyirinkindi is IFC’s Vice President of Cross-Cutting Solutions. He is responsible for overseeing cross-cutting services globally, including public-private partnerships and corporate finance, global Upstream programs to proactively create new investible opportunities and markets, sustainability and gender solutions, climate, as well as IFC’s Western Europe and Tokyo teams to enhance client and business delivery. His leadership ensures that climate, gender, and E&S best practices are embedded throughout IFC’s operational work.


In Search of Lost Time: Mapping the Chip on Russia’s Shoulder

Before the shooting starts anew, let’s mention the war. Not the war we know, but the one that lives on in the often-indecipherable psyche of Russia, laced as it is with nostalgia and wounded pride.

Widely recognized in the West as the beginning of the end for Nazi Germany, Operation Overlord – the amphibious landings in Normandy – made but a comparatively modest contribution to the final victory in Europe. Much less well-known, Operation Bagration – unfolding at roughly the same time on the Eastern Front – pitted a million German soldiers organised into four field armies against a Red Army force some 2.5 million strong and backed by about 6,000 tanks, 33,000 field guns, and 8,000 aircraft.

By the end of the fighting, 28 of the 34 divisions of the German Army Group Centre were destroyed with 380,000 combatants killed and 160,000 captured of whom 57,000 were paraded – 20 abreast – through Moscow. Operation Bagration, virtually forgotten outside Russia, not only swept the Germans out of Belarus and large swaths of Poland, but also broke the Wehrmacht’s back. The German Army never recovered from the losses of materiel and manpower.

Reading the great classics of WW2 history and reportage – Richard Overy’s Why the Allies Won, Ian Kershaw’s Fateful Choices, Vasily Grossman’s Life and Fate, etc. – is possibly the best antidote against propaganda. Who knew that WW2 started in July 1937 with the Japanese invasion of China and not with Germany’s September 1939 assault on Poland? Who knew that Hitler borrowed the concept of Lebensraum from the British and French colonial empires and America’s Manifest Destiny? Who knew that Social Darwinism – i.e., the survival of the fittest – may well have inspired Nazi racial theory?

And, most importantly given the present geopolitical tensions; who knew that homo russicus feels ignored, humiliated, and wounded – and has long demanded, largely in vain, an acknowledgement of sacrifices made and perhaps even a measure retribution for the losses sustained?

Past Hurts

One who knows is Svetlana Alexievich, chronicler of the Russian soul and winner of the 2015 Nobel Prize in Literature for her “polyphonic writings – a monument to suffering and courage in our time.” As the ominous beat of war drums echoes along the borders of Ukraine, Ms Alexievich has a message for the armchair generals whose binary approach (us good / they bad) blissfully ignores the many past hurts and emotional subtleties that threaten to light the fuse of war.

Lest we again sleepwalk into a conflict of unforeseen scale and intensity, consider the long-suffering average Russian who, delivered from Communism, had to endure the dismemberment of his country at the hands of Mikhail Gorbachev and the rape of the rump state by assorted oligarchs under Boris Yeltsin – all the while watching how a former superpower was mercilessly brought to its knees by the West – and kept there.

When long-range Tupolev Tu-95 ‘Bear’ bombers appear over the North Sea, it is perhaps not so much to probe NATO’s air defences and response times as it is to display a remnant of Russian power – an exercise in nostalgia meant for domestic consumption. The live-fire naval exercises off the Irish coast, planned for February, are likewise an attempt to relive more glorious times when Russian warships could roam the seas without an escort of tugboats – now needed to assist with the inevitable mechanical breakdowns.

The apparently misguided Russian fear of NATO encroachment, and shrill demands to roll it back, becomes a slightly more understandable, if not reasonable, when looked at from their perspective.

Although borders between empires were fluid, Ukraine has been Russia’s forecourt for untold centuries. The part of the country east of the Dnieper River was assigned to the Russian Empire by the Eternal Peace Treaty of 1686 which formally settled the conquests and losses of the Russo-Polish War (1654-1667). Following the Partitions of Poland and the Russian defeat of the Ottoman Empire in 1774, Crimea was brought into Catherine the Great’s fold – whereby present-day Ukraine became an integral part of the Russian Empire.

Westward Drift

In Ukraine, the October Revolution of 1917 sparked a civil war followed by a Red Army reconquest in 1921. A year later, the Ukrainian Soviet Socialist Republic became one of the founding members of the Soviet Union. The country reclaimed its de jure independence on 26 December 1991 when the presidents of Ukraine, Belarus, and Russia met to formally dissolve the Soviet Union in accordance with its constitution. Earlier that same month, over 90% of Ukrainian voters had expressed their support for independence in a referendum.

However, the sudden loss of Ukraine and its westward drift as of 2005 has given rise to a Russian version of the stab-in-the-back myth (Dolchstoßlegende) whereby then-president Boris Yeltsin, a tippler of note, is usually assigned the role of traitor.

To begin to understand the many frustrations handed down over generations, and Ukraine’s deeply rooted place in the Russian psyche, Svetlana Alexievich sat down at the kitchen table with hundreds of ordinary Russians to listen to their life stories. In Secondhand Time, she documents in fine prose the laments about the broken promises of freedom, tolerance, and opportunity made by Presidents Gorbachev and Yeltsin as both laid the Soviet Union to rest. A former party official comments that in Soviet times at least nobody was building “mega yachts with champagne showers.” Another former apparatchik notes that the humanities went out the window with the arrival of thuggish capitalism: “Who cares if you had read Hegel’s complete oeuvre? If you have no money, you’re nothing.”

Lost Time

What pervades is a search for lost time, a quest borne with resignation but simmering with anger. President Vladimir Putin taps into this vast reservoir of an ill-resolved past in order for his country to regain the respect it lost after the chaotic dissolution of the Soviet Union. It perhaps helps explain his domestic popularity which continues to mystify most Western observers. Whilst he may have helped himself to some of the loot of crony capitalism, Mr Putin also reduced the might of the oligarchs and brought them to heel.

Most of all, President Putin is admired at home for his insistence that Russia be granted its “rightful” place in both European and world affairs. The Putin Doctrine aims to revisit and redraw the geopolitical settlement that ended the Cold War. As the successor state to the Soviet Union, Russia essentially demands the same level of respect as was awarded to the former superpower – and a sphere of influence to match.

In President Putin’s view, and to paraphrase George Orwell, some states are more equal than others, Russia being one of those. It explains the extraordinary demands placed on NATO to withdraw to its pre-1997 borders and the insistence that Russia be granted veto-power over the foreign policy choices of neighbouring countries – including Sweden and Finland.

In a sense, President Putin’s Russia is screaming for attention. The question now facing his Western opponents has been reduced to finding a way to accommodate Russia without giving in to its impossible demands; or punishing the country for throwing a tantrum. Just like a toddler having a fit, ignoring may not be an option. Most importantly, President Putin must be allowed to climb down without losing face. An acknowledgement of his grievances, legitimate or otherwise, will surely go a long way to ensure the peace. This is also where Western hawks clash with German doves: Berlin understands better than most the mortal danger of prodding a wounded bear.


Connection and Separation: How Social Media Shape Our World

It’s barely 25 years since SixDegrees.com launched the world’s first practical social networking site. It was named after the Six Degrees of Separation theory — the notion that everyone is only six connections away from everyone else.

Who would have predicted that this amusing distraction would one day come to dominate the planet? Today almost 40 percent of the global population has a Facebook or Instagram profile. The ability to connect with practically anyone, anywhere, is just part of daily life for billions.

Traditional gatherers and disseminators of news have seen their empires crumble before a social media tsunami. It is estimated that in the US alone, more than 50 percent of voters access their news primarily through social media.

World leaders (including Indian PM Narendra Modi, see main story) have been quick to exploit the advantages. But some have failed to recognise that this new means of communication is a two-way street —people can, and will, talk back.

"Nearly every world leader has a Twitter account or Facebook profile — including Pope Francis, and the Queen."

A paper published in 2020 by Anita Gohdes, a professor at the Hertie School of Governance in Berlin, suggests that many world leaders are trying to use social media to “divert and distract” during times of domestic crisis.

Some leaders, however, are becoming agitated by the technology: it was originally intended as a simple means to stay in touch; now it’s being used to spark revolt.

Protest groups from Chile to Catalonia, Hong Kong to France, are putting feet on the streets via social media — in minutes. Bruce Lee’s famous exhortation, “be like water”, has educated protesters who, using social media, rise quickly before trickling away, giving authorities a tough task to trace ringleaders.

Nearly every world leader has a Twitter account or Facebook profile — including Pope Francis, and the Queen. Most still have their words filtered through layers of PR, but the ease with which such filters can be bypassed is often too great a temptation.

Former US president Donald Trump is said to have tweeted 25,000 times during his time in office. Some commentators believe his election success was partly due to his use of social media. Others suggest that the revealing nature of his acerbic, unfiltered 3am tweets led to mockery — and subsequent electoral damage.

Social media often reveal the previously unseen human side of a leader. Singapore’s Lee Hsien Loong, for instance, exhibits a conversational and relaxed persona in his engagement with citizens via Facebook. South African president Cyril Ramaphosa holds Q&A sessions on Twitter, fielding questions from citizens.

And while Vladimir Putin of Russia claims to be too busy for social media, most Western politicians are happy to dabble — even if it sometimes comes back to bite them. Former UK Chancellor George Osbourne, for instance, faced derision when he posted a picture of himself eating a man-of-the-people hamburger — which was then revealed to be from a posh restaurant, costing £9.70.

Such pitfalls are common but underlying all the lampooning is a disturbing truth for world leaders. In the 1970s, American author and cultural anthropologist Margaret Mead unwittingly predicted the future when she wrote: “Never doubt that a small group of committed citizens can change the world.”

Nowadays those citizens have social media on their side.

By Tony Lennox