FINANCE
Five ways to balance profit with purpose
By Noel Quinn (pictured), Chief Executive, HSBC Global Commercial Banking
Influencers of many kinds gathered in Davos recently to discuss the problems our world faces. More than ever, they looked to business to come up with solutions. Several world leaders dropped
out of 2019’s World Economic Forum, but this wasn’t the only reason attention shifted to CEOs. New Edelman research shows
three quarters of people trust their employer but less than half have faith in their government. What’s more, 73% think a company can “increase profits while improving the economic and social conditions in the communities where it operates” – that’s up nine percentage points from a year ago. I find this both inspiring and a
little daunting too. With rising stakeholder
expectations, no business can afford to fall behind. Today’s leaders must think about future- proofing their business and must also demonstrate a positive contribution to humanity. Here are five suggestions to
help you and your business balance profit with purpose.
1. INVEST IN PEOPLE The OECD estimates 65% of today’s children will go into jobs which don’t yet exist. Advances in robotics and artificial intelligence are already creating opportunities for those with the right expertise and aptitude to seize them, but others fear being left behind. Alongside governments, businesses have a responsibility to equip employees with the skills they need to stay ahead of technological change.
2.KEEP PACE WITH
TECHNOLOGY Technology is transforming where and how consumers buy goods and services, how they interact
with brands and with each other, and how businesses produce and sell products. Keeping up with the latest innovations, thinking about future trends and creating a structure and culture agile enough to capitalise on change is critical for businesses to survive the digital transition.
3.LOOK TO ASIA By 2050, billions of consumers will join the middle classes, particularly in Asia. The region is already home to 28.5% of the world's 2,754 billionaires – more than North America. The rebalancing of global wealth towards Asia is opening up new markets.
4.DE-CARBONISE YOUR
OPERATIONS No matter their size, companies can reduce their environmental footprint and play an active part in mitigating the risks associated with climate change. Companies that can demonstrate high sustainability credentials can attract consumers who want to buy ‘green’.
5.UNDERSTAND YOUR
PURPOSE Purpose means more than delivering the right products and services to customers, it’s also about doing right by the community. Public and shareholder expectations have never been higher, so companies must demonstrate a positive impact on economic and social conditions.
In a fast-changing environment,
leaders who can demonstrate agility and responsibility will be best placed to secure long-term success. This may seem easier for large companies but future- proofing your business is always important, whatever your size.
Why risk-averse savers need advice By Carole Waghorne, Owner at Boolers, Pensions and Investments
The majority of adults in the UK (56%) describe their attitude to investment risk as either low or zero, according to research from Aegon. Minimal losses and modest gains were considered
preferable, with cash savings favoured over equities. But, there is a real danger in doing so, especially in the long-term. Aegon Investment Director Nick Dixon has gone on record as saying: “Regardless of the current turbulent political and investment landscape, failing to take measured risk is not prudent.”
IS CASH REALLY KING? What is the risk in taking no investment risk? Quite simply, the erosion of your money’s buying power over time. Dixon continued: “Over the long term, reckless caution is the biggest risk of all. Our research shows the majority of UK consumers are exposing their money to stagnation and putting assets at risk of falling well below the rate of inflation.” The Bank of England base rate has remained low
since the financial crisis in 2008. Interest rates are, therefore, equally low. This might be good news for mortgage borrowing, but cash saving rates simply do not exceed the current rate of inflation, which is around two per cent.
EMBRACING VOLATILITY Since 2008, we have seen a ten-year bull market; growth has been relatively steady. However, towards the end of 2018 we experienced increased volatility, widely attributed to political and economic uncertainty. Volatility is inevitable but, as history has shown,
markets do bounce back. When markets go down and your portfolio loses value, you still own the same number of investment units. Units are simply cheaper. Investing at this time offers better value for money; more units at a reduced price. During volatility might be the best time to top up your pension or utilise your ISA allowance.
THE VALUE OF ADVICE A financial planner can help make sense of your finances and help secure your financial future. In fact, 14% of surveyed savers said they would be open to taking a greater investment risk with the knowledge that higher returns required more risk. One of the primary tasks when creating a
bespoke financial plan is to determine your attitude towards investment risk. Whether you are cautious or adventurous, an appropriate investment portfolio can then be aligned to your risk tolerance.
business network March 2019 77
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