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Inequality, Climate Change, Aging: Three Key Challenges for China’s New Era

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Asian Development Bank (ADB) President Takehiko Nakao addressed the China Development Forum (CDF), which opened today in Beijing. Mr. Nakao will meet Premier Li Keqiang along with other participants of the CDF. He also participated in a roundtable with Vice Premier Liu He.

During his visit to Beijing, Mr. Nakao met the new Finance Minister and ADB Governor Liu Kun to exchange views on the status of the global and PRC economies, the PRC’s reforms including in the fiscal area, and the strong development partnership between ADB and the PRC. Minister Liu and Mr. Nakao agreed to promote regional cooperation through the Belt and Road Initiative, the Central Asia Regional Economic Cooperation Program, and the Greater Mekong Subregion Economic Cooperation Program.

In his remarks to the CDF, Mr. Nakao praised the PRC for its remarkable development over the past 40 years. The PRC has grown from one of the poorest countries in the world to the second largest economy globally, and it is on the verge of reaching upper-income status. “The China Development Forum is especially memorable this year as it marks the 40th anniversary of China’s start of reforms and opening up,” said Mr. Nakao.

Mr. Nakao highlighted three policy challenges for the PRC as it transitions to high-quality growth in a new era: (i) inclusiveness, (ii) climate change and the environment, and (iii) an aging society. He emphasized, in particular, the need for inclusive development. Mr. Nakao remarked “China is already a very dynamic and innovative country with momentum for continued growth. Making society more inclusive and equal is a greater challenge for China than achieving further technological development and industrial transformation.”

In his speech, Mr. Nakao stressed that macroeconomic stability and efficient markets are prerequisites for tackling the three challenges and, more generally, promoting sustainable and inclusive growth.

ADB operations are supporting the PRC in meeting the three challenges.

To support inclusiveness, ADB is providing the country with technical assistance to reform the tax system. Making the taxation more progressive and broadening the coverage of personal income taxes will improve equity and help augment government revenue to fund the delivery of social services. ADB is also focusing on education and skills development, including technical and vocational education and training, especially in lagging areas such as Guangxi and with a focus on gender. In addition, ADB is supporting small and medium-sized enterprises through microfinance and capacity building.

Mr. Nakao commended the PRC’s efforts in promoting a better environment, building a green economy, and mitigating climate change under the COP21 Paris Agreement. Since 2015, ADB has been working with the government to improve air quality in the Greater Beijing–Tianjin–Hebei region through a series of reform programs and projects. ADB is also planning to provide $2 billion during the 13th Five-Year Plan period of 2016–2020 to help the PRC address water pollution control and water resources management in the upper and middle reaches of the Yangtze River.

ADB is supporting the PRC’s development needs in an aging society, where the number of people aged 65 years and older reached a record 158 million in 2017. For example, ADB has been supporting efforts to reform the rural social security system, strengthen health and pension administration, and build age-friendly cities.

The CDF is a high-level event organized by the Development Research Center of the PRC’s State Council. Founded in 2000, the annual event offers a platform for global business leaders, representatives of international organizations, and international experts including Nobel Laureates to have direct dialogue with the PRC’s top decision makers and economic planners. Mr. Nakao has attended the CDF since 2014 as one of the first foreign speakers.

The PRC became an ADB member in 1986. Between 1986 and 2017, ADB provided close to $38 billion in loan assistance to the PRC, comprising $34 billion for the public sector and $4 billion for the private sector. ADB has also been supporting the PRC through knowledge work, with $334 million in technical assistance grants approved since 1986.

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Finance

Corporate Boards are Critical Starting Points for Implementing Stakeholder Capitalism

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COVID-19 has led to global and systemic economic, social and environmental disruption, and an increasing number of companies are recognizing the need for pragmatic approaches to implement the principles of stakeholder capitalism.

A new white paper, The Future of the Corporation: Moving from Balance Sheet to Value Sheet, provides analysis about the important role boardrooms and corporate governance play in addressing the environmental, social and governance (ESG) challenges their companies face. Focusing on practical tools for corporate leaders, the white paper, produced in collaboration with Baker McKenzie, provides a set of actions and stakeholder governance considerations boardrooms can take to reshape their company’s purpose and practices.

This includes leadership-level actions, such as aligning company purpose and incentives with transparent goals and KPIs, increasing board diversity and adopting the common stakeholder capitalism metrics to measure and manage global risks and opportunities related to business, society and the planet.

“Business leaders are increasingly implementing business models that create value based on stakeholder needs,” said Klaus Schwab, Founder and Executive Chairman, World Economic Forum. “While there’s increasing momentum towards stakeholder capitalism, many businesses are also looking for practical solutions to help them fully understand and address the concerns of all their stakeholders. The Forum is committed to providing measurement and governance tools that will help these leaders succeed, thereby advancing stakeholder capitalism globally.”

Effectively aligning a company’s practices with its purpose is another key role boardrooms must play when integrating stakeholder interests into their business models. Setting clear metrics for management, which align with company purpose is an important step for boards.

Ørsted, a company who successfully transformed its business from fossil fuels to renewable energy, is a clear example of how effective governance is critical to company-wide transformation For example, in its transition to being a sustainable business, Ørsted made it a board-level priority to ensure its transformation was transparent, the journey was measured with concrete metrics and it was communicated to all relevant stakeholders.

“The pandemic, climate and inequality challenges of the last year were and continue to be unprecedented. Against this backdrop, how can companies drive long-term value creation and sustainable growth? A good stakeholder governance framework will help companies mitigate risk, build resilience and enjoy sustainable value creation and long-term success; at the heart of good stakeholder governance is clearly understanding who key stakeholders are, engaging with them and bringing their voice into decision-making,” said Beatriz Araujo, Head of Corporate Governance, Baker McKenzie. She added: “There is no ‘one-size-fits-all’ approach; each company must embark on its own stakeholder governance journey and we have suggested some of the steps companies should consider taking on such a journey.”

In addition to the examples above, the white paper provides a stakeholder governance framework centred around four key areas of four key areas of leadership focus. These are:

1) Purpose

Purpose is returning centre stage as an enabler for long-term sustainable value creation for corporate success.

Boards should ensure their companies have a clear and well understood purpose, informed by their key stakeholders’ expectations, and regularly use this purpose as a guide in their strategic decision-making.

2) Strategy

Corporate leaders should ensure their company’s strategy is robust and designed to deliver the company’s purpose.

This strategy needs to be flexible to take account of changing stakeholder considerations. Periodic ESG risk and opportunity assessments are a tool that leaders can use to ensure they are pursuing an appropriate strategy in light of changing externalities and stakeholder feedback.

3) Culture/Values

A company’s culture and values are important in ensuring decisions and daily business practices appropriately reflect their stated purpose.

4) Governance

Effective governance, which regularly addresses stakeholder input, is critical for running a sustainable, resilient business.

Board composition, diversity and inclusion are important factors in ensuring boardrooms are equipped with the skills needed adequately understand and consider the needs of their stakeholders.

Along with input from the Forum’s Community of Chairpersons, the whitepaper is based on interviews with senior leaders at bp, the Cambridge University Institute for Sustainability Leadership, Fidelity International and Ørsted.

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Health & Wellness

Guterres warns against self-defeating ‘vaccinationalism’

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With more than two million lives now lost worlwide to COVID-19, the UN Secretary-General appealed on Friday for countries to work together and help each other to end the pandemic and save lives. In a video statement, Secretary-General António Guterres noted that the absence of a global coordinated effort has worsened the pandemic’s deadly impact.

“Behind this staggering number are names and faces: the smile now only a memory, the seat forever empty at the dinner table, the room that echoes with the silence of a loved one”, Mr. Guterres said.

Solidarity, to save more souls

 “In the memory of those two million souls, the world must act with far greater solidarity,” he added.

Since its discovery at the end of December 2019, COVID-19 has now spread to all corners of the world, with cases in 191 countries and regions. Deaths due to the disease reached the grim milestone of one million only in September.

 In addition, the socio-economic impact of the pandemic has been massive, with countless jobs and livelihoods lost globally, and millions pushed into poverty and hunger.

 A ‘vaccine vacuum’

 Mr. Guterres went on to note that though safe and effective COVID-19 vaccines are being rolled out, disparity continue between nations.

 “Vaccines are reaching high income countries quickly, while the world’s poorest have none at all,” he said, adding that “some countries are pursuing side deals, even procuring beyond need.”

 The UN chief went on to note that while governments have a responsibility to protect their populations, “‘vaccinationalism’ is self-defeating and will delay a global recovery.”

 “COVID-19 cannot be beaten one country at a time,” he stressed. Mr. Guterres called on countries to commit now to sharing any excess doses of vaccines, to help urgently vaccinate health workers around the world and prevent health systems from collapsing.

He also reiterated the need to ensure full funding for the Access to COVID-19 Tools Accelerator (ACT Accelerator) and its COVAX facility, to make vaccines available and affordable to all.

Proven steps

At the same time, people must remember and practice “simple and proven” steps to keep each other safe: wearing masks, physically distancing, avoiding crowds, and hand hygiene.

 “Our world can only get ahead of this virus one way – together. Global solidarity will save lives, protect people and help defeat this vicious virus”, added Mr. Guterres.

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Human Rights

Pandemic curbs trend towards ever-increasing migration

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photo © UNHCR/Hazim Elhag

Travel restrictions and other curbs to movement put in place in the light of the COVID-19 pandemic, have put a significant dent in migration figures, but the overall trend shows 100 million more people living outside their countries of origin in 2020, compared to the year 2000, a new UN report revealed on Friday.

‘Migration is part of today’s world’

International Migration 2020 Highlights, published by the UN Department of Economic and Social Affairs (DESA), shows that the pandemic may have slowed migration flows by around two million people last year, cutting the annual growth expected since mid-2019 by around 27 per cent.

Since the year 2000, however, there has been a major increase in migration. That year some 173 million people lived outside of their countries of origin. Twenty years later, that figure had risen to 281 million.

In a statement, Liu Zhenmin, UN Under-Secretary-General for Economic and Social Affairs, said “The report affirms that migration is a part of today’s globalized world and shows how the COVID-19 pandemic has impacted the livelihoods of millions of migrants and their families, and undermined progress in achieving the Sustainable Development Goals.”

Less money sent home

The economic crisis that following in the wake of the pandemic has had a major impact on remittances, the money migrants send home to their countries of origin. The World Bank projects that remittances sent back to low- and middle-income countries may see a $78 billion dip, around 14 per cent of the total amount.

This will negatively affect the livelihoods of millions of migrants and their families, especially in those countries with a big diaspora. India, for example, has the largest diaspora in the world: 18 million people born in India live outside the country. Other nations with significant diasporas include Mexico, the Russian Federation (11 million each), China (10 million) and Syria (eight million).

US and Germany top destinations

Unsurprisingly, high income countries are the most coveted destinations for migrants. The US takes the top spot with 51 million migrants hosted in 2020.

Germany hosted the second largest number of migrants worldwide, at around 16 million, followed by Saudi Arabia (13 million), the Russian Federation (12 million) and the United Kingdom (nine million).

Many migrants do not travel far, however. Nearly half of them remain in the region from which they originated. For example, in Europe 70 per cent of migrants come from another European country. Similarly, some 63 per cent of migrants in sub-Saharan Africa come from a country in the same region.

Most refugees in lower income countries

Contrary to some perceptions, the vast majority of refugees, around 80 per cent, are hosted in low- and middle-income countries, and constitute some 12 per cent of all international migrants.

The number of refugees is rising faster than voluntary migration: the number of people forced to leave home due to conflict, crises, persecution, violence or human rights violations has doubled from 17 to 34 million since the beginning of the 21st Century.

In recognition of the need to better manage migration, the General Assembly has adopted several landmark agreements, including the 2030 Agenda for Sustainable Development, the New York Declaration for Refugees and Migrants and the Global Compact for Safe, Orderly and Regular Migration. DESA says that around 60 countries have begun to adopt measures to ensure safe, orderly and regular migration.

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