Cash & Liquidity ManagementInvestment & FundingEurasia MD: We’re living in a G0 world

Eurasia MD: We're living in a G0 world

Absence of global leadership in midst of pandemic will lead to a fractured recovery, according to Rohitesh Dhawan, managing director at Eurasia Group

The lack of global leadership and cooperation in the fight against the coronavirus pandemic could lead to a patchwork, regional recovery where nations emerge out of the pandemic at different speeds, Dhawan said, speaking at the Virtual CFO Agenda yesterday.

“In 2008 we were in a G20 world. Today we are in a G0 world. No one is working with each other. There’s no global leadership. And there’s very little coordination to make sure that the response from the crisis is measured, it’s in-step and it’s coordinated in some fashion,” he said.

Dhawan stopped short of saying the lack of coordination would cause a deeper recession as the pandemic had largely achieved that by itself. However, the rate of recovery could dramatically differ between countries.

The comments come the same day that former UK Prime Minister Gordon Brown slammed the G20 for an “abdication of responsibility” in their response to the coronavirus crisis. Writing in The Guardian, he said they had gone “awol – absent without lending”. This approach would harm economic recoveries worldwide and lead to more deaths, particularly in poorer nations.

Comparing the Global Financial Crisis to the current pandemic, Dhawan was similarly aggrieved by the G20’s response.

“After the financial crisis, the US created the G20, finance ministers came together and coordinated a response. China helped deliver the strategy that was led by the US to bring the economy out of the hole. Compare that to today, you’ve got the US threatening to pull out of the World Health Organisation, taking up a bigger fight with China in the middle of a pandemic, and Trump calling it the China virus,” he said.

Pandemic encouraging green industries

The other panellists at the Virtual CFO Agenda agreed that green initiatives were likely to accelerate in uptake as a result of the pandemic.

Tim Hammonds, GBS finance director at Groupe PSA, highlighted the likely increase in government intervention schemes that will encourage consumers to buy electric cars. While Martin Sanders, chief audit executive at Honda Europe said “the technology is there now” for electric vehicles and a move away from fossil fuels, but the question is whether consumers are ready for it.

Dhawan said environmental, social and governance (ESG) funds had fared better during the pandemic – so much so that they could now be thought of as more than just a luxury.

“ESG funds have outperformed the traditional asset classes whichever way you look at it. In the past, people might have said that ESG investing is a luxury in a bull market, but what we’re seeing is that ESG is a sound strategy in a bear market as well, which is going to accelerate the amount of money that is dedicated to ESG,” he said.

For Markus Kobler, group CFO at Allianz, a shift in mindset is taking place around sustainability, but that ultimately, the question was whether it was now becoming genuine.

“With ESG at the moment, is it a label or is it really something game-changing in the way investments are done?

“A lot of managers in investment companies say they use ESG and have always been doing it, with a lot of nice presentations around that. But I see now that climate change is a topic with a shift into reading, you mean what you preach,” he said.

 

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