Financial markets risk major disruptions by relying on business-as-usual forecasts that underestimate the impact of climate-change policies that are expected to abruptly tighten next decade, a leading group of investors has warned.
The report by the U.N.-backed Principles of Responsible Investing (PRI), representing investors with $86 trillion of assets under management, joins a growing chorus of warnings thatforecasts and investments by oil and gas companies are out of sync with the pace needed to meet energy transition targets.
The International Energy Agency’s central outlook, which underpins many government and business projections, is not aligned with targets set out in the 2015 Paris climate agreement to limit global warming to “well below” 2 degrees Celsius by slashing greenhouse gas emissions, the PRI warned.
Scientists view a rise of more than 1.5 degrees Celsius in the Earth’s average temperature as a tipping point where climate impacts such as sea-level rise, natural disasters, forced migration, failed harvests and deadly heatwaves will rapidly start to intensify.
PRI released a new forecast which it said “aims to fundamentally reset investors’ forward-looking risk management, strategic asset allocation and company engagement.”
The study, branded the Inevitable Policy Response (IPR), predicts “an abrupt and disruptive” government policy response to climate change by 2025, which it expects to be a “tipping point.”
Under the IPR scenario:
“We foresee an inevitable policy response by 2025 that will be forceful, abrupt and disorderly because of the delay,” Fiona Reynolds, chief executive of the PRI, said in a statement. “This will create considerably greater disruption than many investors and businesses are prepared for today.”
The Inevitable Policy Response forecast responds “to concerns that financial markets are overly reliant on business-as-usual outlooks – such as the International Energy Agency’s New Policy Scenario (NPS) – that assume limited policy response to climate change,” according to the PRI.
The IEA’s forecast, PRI said, “assumes the world will glide towards” a 2.7 degree Celsius – 3.5 degree Celsius warming above pre-industrial levels by 2100 “without any further climate policy action beyond what has already been announced.”
This scenario was highly unlikely given “the human suffering this would result in.”
The world’s top oil and gas companies have come under heavy pressure from investors to adapt to the energy transition by lowering their carbon emissions and investing more in renewables.
Chairman Helge Lund told Reuters in June that the London-based company would rather see a rapid, orderly phasing out of fossil fuels than a delayed and disorganised transition.
PRI represents 2,600 signatories including most of the world’s biggest investors such as BlackRock, Wellington, CalSTRS, Allianz, Aviva, Amundi.
Our responsible business ambitions bring Centrica’s purpose to life. Of course, we’re in business to satisfy the changing needs of our customers through energy and services, and thereby to create long-term shareholder value through returns and growth. But we’re also in business to be a trusted corporate citizen, an employer of choice and a 21st century energy and services company.
Our ambitions are designed around four pillars, namely our customers, climate change, colleagues and the communities in which we operate. Together they give meaning to the goal of helping you run your world in ever more sustainable ways. We’ve been active in each of these areas for many years but wanted to bring them all together and set specific targets for 2030. Like other businesses, we have used the UN Sustainable Development Goals as a guide, mapping the challenges facing society against our capabilities, to better understand how we can make the greatest contribution.
In the matter of climate change, we’ve laid out clear goals to 2030 in the three areas where we can make a real difference as a responsible energy and services company. The first is to help our customers reduce their emissions. The second is to enable a decarbonised energy system through flexible, distributed and low-carbon technologies. And the third area, of course, is to address our own emissions, where we have delivered an 80 per cent reduction in the last decade. We are now working towards reducing our internal carbon footprint by 35 per cent in the ten years to 2025, to demonstrate by 2030 that we are on track with the Paris Accord, and to develop a path to net zero by 2050.
Through these ambitions, we can play a part in helping the communities in which we operate to manage their energy more efficiently and contributing through volunteering and skills development. With our employees, we are creating the right environment for people to succeed, and we’re promoting STEM skills and improving diversity and inclusion. For our customers, we are bringing new energy technology which will make a real difference to how they run their lives. As a company involved in energy, our climate change goals are of fundamental importance and are built around our customers, the energy system and our own emissions.
Our ambitions are not going to be easy, but setting challenging goals is the right thing for our company. They will also help us deliver better long-term sustainable value for all our stakeholders.
We hear all the time that digital technologies are changing the way we live and work. It seems an obvious thing to say. But you only have to look back ten years to see how remarkable the change has been.
In 2009, Spotify arrived, Twitter had gone mainstream and GPS navigation was added to the iPhone OS. All of which are technological developments we now take for granted every day.
Looking further back, technologies that would have seemed like something out of science fiction in 1999, such as drones, autonomous vehicles, 5G, social media, machine learning and AI, are now a reality and key to the UK’s digital economy and society.
Looking ahead to 2030 and beyond is therefore a bit tricky – what will the future hold? What digital technologies will be part of our lives by 2030? And will this article come back to haunt me?
One prediction, I think it’s safe to make is that the technology industry is by no means slowing down. It’s size and economic impact flourishes so much that it is an industry that is creating more jobs that it can fill.
To understand what these new technologies may mean to the UK and how we position it for success, techUK has launched a new area of work to explore and showcase what key emerging and transformative technologies will mean to the UK’s digital future.
We are running campaigns to explore the UK’s quantum future and showcase how drone technology is key to the UK’s fourth industrial revolution, and what needs to happen to realise the positive benefits of these advanced autonomous technologies.
Already this work has identified key areas where these emerging technologies could offer huge economic and social potential for the UK, if we are brave and grasp the opportunities now. For example:
It is, however, also safe to predict that there will be challenges ahead in our advanced digital future that will need to be overcome if the UK is to release the full potential and benefits of emerging technologies, such as:
While many questions need to be answered and there are opportunities yet to be uncovered, what does seem clear is that our digital lives in 2030 will be shaped and influenced by the convergence and interplay between these and other key technologies; some that are with us today, such as 5G, AI and IoT, and others that will appear in the future.
Ensuring that every part of the UK economy and society has what they need to make the most of this exciting future will be a key issue discussed at techUK’s upcoming Supercharging the Digital Economy event being held in Manchester on 6 November. Industry leaders and policy makers will be exploring whether we have the capability and capacity we need to succeed, and how to ensure we supercharge the digital transformation of every industry and sector across the UK.
Nicky David, Service Delivery Director and Rachael Beer, Account Sales Director, Capita IT and Networks
Today, many public sector and enterprise organisations are reliant on Critical National Infrastructure, with world-class digital connectivity becoming essential for organisations wishing to compete, grow and serve their customers well. Not only is connectivity essential between organisations and customers, but also across local, national and global locations; in offices, data centres, applications and clouds. To meet the most basic commercial goals and commitments, it is vital that organisations can store, access, manage and transfer business data securely, and quickly.
A key provider of critical national infrastructure, Capita designs, builds, operates and optimises every form of network service. Trusted to connect thousands of sites across the UK, from hospitals to schools, to airports, Capita’s infrastructure is everywhere, from the Scottish highlands to aircraft carriers and submarines.
Alastair Greener interviews Nicky David, Service Delivery Director at Capita, and Rachael Beer, Account Sales Director at Capita, to discuss the biggest challenges of developing secure and reliable infrastructure, and how businesses can ensure that they connect with certainty.
Perhaps one of the biggest challenges lies around security.Rachael Beer provides insight into a recent Capita survey of over 200 IT decision makers in which 69% voted security at the top of their agenda for the immediate future. Ensuring prevention methods and monitoring systems are in place is vital to guaranteeing that infrastructure is protected at all times.
Rachael comments, “When all network requirements are met, all network users, both off-site and on-site, should be able to access the same data, with the same level of service, same speed and across multiple different devices, all knowing with confidence that the network is managed and supported 24/7, 365 days a year. That’s what it should look like.”
In addition, Nicky David shares vision of Capita’s role in providing such infrastructure to public sector and enterprise organisations, citing Capita’s transparency and dedicated teams as key differentiators. Safeguards on offer to customers include 24/7 network monitoring by expert engineers, enabling a constant and reliable service.
Find out how Capita can support your business, click here.
The London Metal Exchange (LME) will postpone plans to ban metal tainted by human rights abuses until 2025, giving producers three more years to comply with guidelines and the exchange time to rethink its approach, industry sources said.
Under the initial plan announced in April, the exchange had set 2022 as the deadline to bar metal from the LME’s lists of approved brands whose extraction involved abuses such as child labour or which was tainted by corruption.
The initiative to ensure responsible sourcing followed an outcry about cobalt mined by children in Africa.
Two industry sources directly involved with the process said the deadline had been pushed back to 2025 in part because some major producers would not go along with the LME’s original plan.
A third source said delaying the deadline would give producers which bought from artisanal miners more time to ensure they met responsible sourcing guidelines set by the Organisation for Economic Co-operation and Development (OECD).
A senior metal trader said the LME now had time to review its plan. “It’s being kicked into the long grass, it looks like they (LME) want to rethink some aspects,” he said. “The LME is a price setting forum, not a policeman.”
The LME declined to comment.
Industry sources said some metal producers including Chile’s Codelco, the world’s largest copper producer, and Antofagasta considered their own rules more rigorous in ensuring responsible sourcing than those drawn up by the OECD.
“The LME’s proposal doesn’t mean a better end result. They are trying to impose a standard not followed by the whole industry,” said a source with direct knowledge of the sourcing issue.
Codelco would let the LME delist its brands if the costs in time and money of implementing the LME guidelines “are unreasonable”, the source added.
Codelco told Reuters in a statement it “is participating and analysing in detail the process that the LME is carrying out and will adopt a decision regarding its implementation when there is greater clarity regarding its content.”
“Codelco expects that if the LME definitively establishes a standard related to responsible supply, this will be made effective through an efficient, expeditious and easily managed mechanism by the companies, so as not to affect the fluid performance of the market,” the company said.
Antofagasta declined to comment.
The implementation of the responsible sourcing initiative will depend on support from metal producers with LME-approved brands, including firms from China, the world’s largest consumer of industrial metals such as copper and aluminium.
Sun Lihui, director of the development department at the China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters (CCCMC), said his organisation would provide “technical support to Chinese companies” over the policy and CCCMC had discussed the issue at two meetings with the LME.
“We hope this will encourage more companies to meet international standards and requirements,” he said, saying the policy “poses a great challenge” for Chinese firms.
Other industry sources said a lack of Chinese legislation and experience in sourcing conflict-free minerals was hindering Chinese engagement in the process, compared to other areas of the world which were actively addressing the issue.
“The U.S. have Dodd-Frank and the EU is legislating on conflict minerals. The experience and knowledge is there,” a source at a copper producer said.
Dodd-Frank legislation requires companies operating in conflict areas such as Democratic Republic of Congo to conduct due diligence to establish minerals are conflict-free. The minerals involved are tin, tantalum, tungsten and gold.
The European Union in May 2017 passed a regulation to stop mine workers being abused and conflict minerals being exported to the EU. The EU requirement to ensure mineral imports are responsibly sourced will become effective on Jan. 1, 2021.
Source: Pratima Desai and Zandi Shabalala, Reuters
Unlike most other people, the question I have been asked the most in job interviews is not “why do you want this job?” Rather, the interviewer, having cast an eye over my qualifications, would enquire why I decided to study classics alongside physics, chemistry and maths at A-level.
I used to like this question, it was as if my choice, made aged 16 so as not be placed completely into the “science” camp, made me somehow special. Now that I am older, I realise that I’m probably not.
There is a lot of pressure to choose what we want to study, and by extension, what we want to be “when we grow up” from a pretty early age. But human interests are generally broader than our education system accommodates for. This is demonstrated pretty well if you talk to a smallish child. Take my second cousin. At the age of seven he wanted to be a saxophone-playing detective… and a dinosaur.
As adults, we know there are various practical issues, biology being the most problematic, against making this a viable career option. But, dinosaurs aside, what would you recommend my cousin study? It is unlikely that he would be able to be both a professional musician and a police officer, but under the current education system he would be forced to choose a path to one job or the other before he is old enough to vote. Yet this expansive set of interests, aspirations and skills that children and, I believe, adults too, possess, is the very thing this country needs to embrace now, and will need more of in the future.
A job for life is becoming a thing of the past. It’s a change driven by increased migration between towns, cities and countries and a generational change in attitudes to work. Certainly my generation are happier to move jobs regularly, seeking new challenges, better salaries and improved work-life balance or promotion prospects. And certainly, technology plays a part in this shifting of the job market too.
By zoning in on the possible displacement of jobs, the scheme doesn’t address the fact that new skills will be needed and, indeed are needed now, if we are to take advantage of the economic gains to be had by becoming a world leader in AI and automation
The worry of automation “taking” jobs is not new – in manufacturing, industrial automation has been around since the late 1960s. Industrial automation has over this time increased operational productivity, safety and profitability – today, less “dull, dangerous and dirty”, manufacturing is one of the best sectors to work in. Nevertheless, it would be disingenuous for me to suggest that this has all been a positive change to the workforce in the sector. In the mid 20th century, manufacturing was the largest sector by employment numbers, now it’s the fourth largest. So I can understand the concern from some quarters on the impact of automation as a whole on employment, especially given this period of rapid digital transformation – not just in manufacturing, but across almost every sector. No one knows how long this cycle of fast-paced technological change will last, but what is certain is that technology, and with it, cities, industries and jobs, will within a decade be very different.
This is why multifarious interest and abilities, and the emphasis on life-long learning, will be essential.
In July, then Education Secretary Damian Hinds announced a National Retraining Scheme. The aim of this scheme is to help those whose jobs are at risk of being displaced by AI and automation retrain and find new careers.
This is a step in the right direction, but it is unlikely that any job will not be touched in some way by new digital technologies. By zoning in on the possible displacement of jobs, the scheme doesn’t address the fact that new skills will be needed and, indeed are needed now, if we are to take advantage of the economic gains to be had by becoming a world leader in AI and automation. Even today there is a chronic shortage of automation engineers in this country. Programmes that encourage children to become engineers are all well and good, but we need to retrain adults too.
People in their 30s or 40s going back to college or starting university shouldn’t be regarded as exceptional, and it’s crucial we let children know that they don’t have to be “science” or “arts”, or choose at 16 what they want to be for the rest of their lives. With some investment, and a collective change of mindset, within a decade the UK will have a workforce best placed to cope with whatever future technologies come our way.
For more information, visit www.gambica.org.uk.
by Victoria Montag, Sector Head, Industrial Automation, GAMBICA
SMEs can bring about significant growth and innovation to their local economies.
Small businesses opening in the UK are on a constant rise; at the beginning of 2018, we saw the number of SMEs hit 5.8 million. As part of the economy what we would like to understand is do we as individuals know of the benefits that SMEs bring to the local economy?
Two of the most important benefits SMEs bring to our economy are growth and innovation. Unlike larger companies, SMEs are more likely to provide a niche service with a personalised customer experience targeted at a specific audience. SMEs provide the main source of employment in the UK, which on average accounts for about 70% of jobs. In emerging economies, the OEDC states that SMEs contribute up to 45% of total employment. The importance of multiple SMEs in your local economy is job creation for local people, thus lowering unemployment. In turn, there is the benefit of employees’ income being spent locally, which brings about a positive multiplier effect, leading to a greater increase in real GDP.
The Business Show’s mission and passion has always been to help entrepreneurs and SMEs to grow and develop, so we can increase and expand on these proven benefits that truly help our local economies to flourish. The Business Show provides all the tools to reach your business goals, from inspiring keynote talks to interactive master classes and filling your black book with names and numbers from everyone you will ever need in the business world via our famous speed networking sessions – what more could you need? The Business Show will really help you every step of the way towards your success.
This November will see the 42nd edition of The Business Show at ExCeL London. To receive your free tickets and discover exactly what we have in store for you just click here.
Image provided by The Business Show
by Becky Johnston, Marketing Executive, The Business Show
Steven Spielberg once said that technology can be both “our best friend and the biggest party pooper”. So which will it be in the coming year?
BIMA’s think tanks were established to aid industry leaders, offering insight and clarity in areas of the digital and tech sector often shrouded in mystery and clouded by clutter. They are there to act as guides, teachers and “fuellers of the future”. So who better to turn their predictive power on 2019 than the chairs of our three think tanks: Immersive Tech, AI and Blockchain?
Lawrence Weber, Immersive Tech
From a corporate point of view, we predict the continuing maturation of the market, as commercial use-cases of virtual reality (VR) slowly gain traction. There will be much less use of immersive tech – especially VR – just for the sake of it and more consideration of how it fits into either a marketing or operational strategy.
The real growth will come from enterprise use-cases, especially those around training. It’s much safer to have a new employee learn to use expensive and potentially dangerous equipment in the virtual world than in the real one and, happily for business, it’s cheaper too. The new wave of portable and affordable hardware such as the Oculus Go or Magic Leap One make commercial use-cases more realistic too.
The consumer side of the market is facing a little bit of a make-or-break year, particularly for VR. The prevailing wisdom has been that mass adoption of VR has been held back because the hardware that will truly drive it hasn’t arrived. The low end of the market – Cardboard and Gear VR – is too limited to really excite, and the high-end such as the Oculus Rift is too expensive and cumbersome, requiring you to be tied to a high-end PC like a virtual prisoner.
The Oculus Go will be cheap enough to make an impact on the mass market and good enough to give people a ‘proper’ VR experience. If the general public still don’t get it after that, then it may be that having a potentially isolating headset on is something people just don’t like after all.
Pete Trainor, AI
2018 was a big year for the AI industry. We saw media pump it to peak-hype, while AI companies which learned from the lessons of the past kept cool heads and ignored the overblown projections made some huge advances in deep learning and natural language processing.
2019 will continue those trends, and we predict three major gear-shifts in AI:
1. The year of open-source AI. Microsoft bought GitHub for a reason, and it’s because companies will begin to open up their internal AI projects and stacks. It massively increases innovation, enables faster time-to-market and lowers costs. It’s going to be a huge opportunity, and a huge hindrance, as non-data-science-driven businesses muscle in on the action.
2. We’ll see further acceptance that AI is about human and machine interaction, not full machine autonomy. Businesses will see AI as an extension of their workforces, contributing to the bottom line and widening reach. This human-in-the-loop mentality will move us further from the idea of general artificial intelligence, and to more realistic expectations from the technology.
3. 2019 will see deeper development of the AI assistant, showing us just how powerful and useful these tools could be. Our phones and homes will become increasingly intertwined with voice and predictive assistance. We’ll see the first car companies including AI assistants in their vehicles.
We may also expect the arrival of our first in-ear assistant (like Samantha from the movie Her). Apple’s second-generation AirPods might be the catalyst for an in-ear race with Google and Amazon.
Many have struggled to stay afloat, having managed their treasuries poorly during the decline in market valuation throughout the year, the similarities to the dotcom boom and bust of 2000 continue unabated
David Lockie and Rob Belgrave, Blockchain
2018 has been a turbulent year for the Blockchain world, due to its intrinsic link with the valuation of the various cryptocurrencies built atop the technology.
As prices have tumbled, many of the start-ups that raised significant funds during the hype of 2017 have found the reality of building a business more difficult than they expected. Many have struggled to stay afloat, having managed their treasuries poorly during the decline in market valuation throughout the year, the similarities to the dotcom boom and bust of 2000 continue unabated.
However, there are projects that have been quietly beavering away and making impressive progress despite the conditions, such as , which promises to disrupt payments in a number of contexts and already has some remarkable demonstrations being shared, including transfer of value within a VR environment.
More optimistically, many of the projects that raised money in 2017 via ICOs (initial coin offerings, similar to an IPO) will release platforms, products and protocols in 2019. That should lead to more successful case studies emerging from enterprise, and more case law and regulation that will underpin more confidence from institutions. Gartner’s hype-cycle model describes this phase as the “trough of disillusionment”, which is shortly followed by the “plateau of productivity”.
We remain confident that 2019 will be the year people come to realise that the future of value transfer and the future of money won’t look like the past. That won’t matter to the organisations and individuals who will use it successfully to disrupt and bypass incumbents who cling to the past, though, and although internet money will suffer the same challenges as internet anything – cyber-threats, fake news and censorship – it will also offer and in some cases supercharge similar advantages: disruption, new economic models and removing the barriers to entry that more traditional models are gated by.
Themes of 2019
If there are common threads running through the predictions this year, they are maturation, the potential to get beyond the headline hype, and traction.
For consumer VR (as opposed to commercial VR, where momentum continues to build), customers will decide whether the improving tech and lower prices are sufficient compensation for the inconveniences of the headgear. For AI, keeping humans in the loop in 2019 should lead to fewer “robots taking over the world” articles, and enable more realistic expectations of AI to gain traction. And as blockchain begins to deliver on its promise, we’ll start to see what the “new future of economics” really looks like. It’s going to be an exciting year.
Greg Austin, GEA Slicing and Packaging Equipment, Robert Unsworth, GEA Refrigeration and Heating Solutions and Chris Clarke, GEA Environmental Application
Video 2: Robert Unsworth, GEA Refrigeration and Heating Solutions
A global leader in supplying technology for the food industry, GEA has been tackling the issues from multiple angles. The company’s portfolio includes food processing and packaging machinery, refrigeration solutions, waste management and service to support both global and local customers. GEA’s technology is an integral part of the food industry, and supports food manufacturers with practical solutions for product handling, cooling, heating and management or even elimination of waste.
Food glorious food
Historically the primary purpose of food packaging has been to protect its contents, and to ensure the food is safe to eat. Now, the aim is also to reduce the amount of packaging – and plastic in particular – while still maintaining the integrity of the pack and quality of the food. GEA has a head start with an unrivalled portfolio of packaging solutions that minimise waste but maximise protection and quality.
Products such as the newly launched GEA PowerPak and SmartPacker deliver on promises including thinner films, better inspection processes and compatibility with sustainable packaging materials. Ultrasonic sealing reduces the amount of plastic required while still guaranteeing a high integrity seal. In addition, OxyCheck is an in-line quality control system that checks the oxygen (O2) content and seal integrity of every single Modified Atmosphere Package (MAP) in a non-invasive manner that ensures only selective rejection, thus minimal waste.
Blowing hot and cold
The refrigeration sector is a massive energy consumer: an estimated 30 per cent of power generated in the UK drives the refrigeration process. Up to 90 per cent of energy use in a food storage environment is for refrigeration. And much of the heat produced as a by-product of cooling would have previously been wasted.
GEA is now helping the food industry to maximise its environmental credentials – reducing CO2 emissions – and minimise energy use, not only by reverting to natural refrigerants such as ammonia, but also through the use of heat pump technology. A heat pump is a far more eco-friendly and profitable solution than traditional heating alternatives. Industry, local authorities and homeowners have been using them for heating applications for many years – and food factories are now starting to see the significant financial and environmental benefits of using heat pumps in production processes, especially those that require the application of heat during preparation and subsequent chilling.
GEA has installed heat pumps for many giants in the food industry, helping companies to reduce their running costs and CO2 emissions from day one – and ultimately to reach their sustainability targets.
Waste not, want not
Annually we see a rise in the tonnage of food waste coming from UK households and industry. Dealing with food waste usually means sending it to landfill where it could have been avoided. Storage and handling costs with this process could be reduced, greenhouse gas emissions contained, the nutrients extracted and potentially re-used as fertiliser on land. How?
Separation by a centrifuge process makes it possible to manage the solid and liquid fractions individually. Primary separation of the raw food waste reduces storage space and transport costs while increasing the value of the potential product for renewable resource such as animal feed or anaerobic digestion. The concentrated solids and in turn the nutrients are easier to handle and can go to further processing, for instance, in anaerobic digestion (AD) where the gas yield per tonne sees a huge increase. The low solids liquid fraction is treated on site for discharge or reuse.
The AD process has many benefits, but post primary separation the waste generated is in the form of digestate. This is still over 90% liquid due to break down of solids and other mixed in liquors and handling again can be a problem. Further separating by use of a highly efficient centrifuge gives control of the nutrient value in the solid or liquid fractions. With phosphorus (P) mainly bound to the solids, and Nitrogen (N) mainly soluble, the flexibility of the machine allows nutrient division to be controlled. This means a concentration of nutrients in solid form which can be stored easily or transport to nutrient deficient areas further away.
The liquid fraction, if compliant, can be spread to farm land as an organic fertiliser in higher volumes while meeting consent of local legislations for Nitrogen and Phosphorus, reducing the environmental impact. Storage in tanks or lagoon also becomes easier due to no settleable solids.
This all gives farmers more leeway in their spreading schedule to apply the necessary nutrients at the time when crops need them the most.
Get in touch with the GEA UK team.
Widespread use of AI is inevitable, but businesses will only unlock its true potential by focusing on integration and education across the organisation.
We are currently living through a new industrial revolution. One in which artificial intelligence (AI) and machine learning (ML) permeates all industries and sectors of our economy, enhancing the impact and value of businesses worldwide. The UK has acknowledged this, and consequently is heavily investing in these technologies.
But despite numerous successes, there have also been many failed AI projects that simply did not provide the expected return on investment. In many cases, the reason behind these failures are mismatched expectations and the overselling of the capabilities of AI.
Businesses must be better informed and trained to understand the limitations and expectations of what can be achieved when harnessing AI to solve their problems. So there needs to be a shift in mindset in the business world when it comes to AI, and widespread education of how and when to integrate tech solutions. Identify a problem first, then find the right tech to solve it.
Primarily, businesses and their leaders need to understand the difference between the outstanding breakthroughs – many coming from the UK – in the academic community, and the (sometimes even more complicated) process of integrating those models and ideas into real production systems. This will allow us to build better AI strategies and products and explore alternative solutions that will, in return, provide a greater value.
One of the key elements to consider when investing in, and implementing, AI solutions is the internal requirement of an incredibly skilled and specialised workforce. As more and more businesses integrate AI into their systems, the demand for data scientists, data engineers, and AI-knowledgeable product managers, is soaring. And this is a trend that is not likely to slow down any time soon. Unfortunately, we have historically failed to train as many highly skilled workers as we need in the UK. And given the current political climate, it is likely that attracting foreign talent will become even more complicated, at least in the short term.
On a more positive note, many companies are already exploring how best to circumvent this issue, some by having a remote workforce. Other businesses are opening offices around the world to have access to Europe and beyond, and the wider talent pool it supplies. Each of these approaches has its benefits and drawbacks. One or the other, or a solution found somewhere between the two, will suit the businesses forced to adapt to survive. But one fact is certain: AI is one of the critical areas of innovation that will allow UK businesses to be leaders in their respective industries. However, it will only be possible with access to the right skill-sets to implement these tech solutions and reap the benefits in full.
Another way to ensure future success is to build the necessary bridges now, between the business world and academia. The UK has some of the best universities and researchers in the world, and in order to remain competitive, we need to form and strengthen partnerships between those conducting groundbreaking research and those integrating the fruits of academic labour into their production systems. Several governmental programmes, such as Knowledge Transfer Partnerships (KTP), have been designed to address this challenge. I strongly believe in any initiative that allows this cross-pollination of knowledge and know-how, and that facilitates the application of current research and cutting-edge principles within organisations to provide tangible value. At Signal AI we have undertaken multiple KTP projects ourselves and are active in the academic community, drawing talent and inspiration to inform our product strategy and offering.
Ultimately, AI and technological solutions that truly augment our work, businesses, and lives, are inevitable. To be a leader in 2020, let alone 2030, we have to embrace these and nurture this mutually beneficial, symbiotic relationship between businesses, highly skilled talent, tech providers and academia, enabling you to unlock the true potential of AI and maximise the impact it has on your organisation.
by Miguel Martinez, Co-founder and Chief Data Scientist, Signal A
Explore the ways in which challenger businesses are rapidly growing and inspiring change in our whitepape, Rise of the Challenger Brands: How Challenger Brands are Winning Against Incumbents.
Miguel Martinez, Co-founder and Chief Data Scientist, Signal AI
From the pinnacle of the City of London’s largest skyscraper, Stuart Lipton is wagering a $1.2 billion bet that the British capital remains a master of the international financial universe no matter what happens with Brexit.
The 76-year-old property developer is not alone. Bankrolled by a host of global investors, including France’s Axa, his big-ticket gamble in London’s financial district is – so far – on the money.
The cataclysmic warnings during the 2016 referendum that London would lose its financial throne if it voted to leave the European Union (EU) have, so far, been proven wrong. London is still the world’s banker, only bigger by some measures.
“London is extraordinarily resilient and its future as a finance centre is secure because what we have here is unique,” Lipton told Reuters on the 61st floor of 22 Bishopsgate, set to become western Europe’s second tallest skyscraper when it opens next year.
In the year to June, London has attracted more cross border commercial real estate investment than any other city. It has overtaken New York as destination for fintech investment and it has increased its dominance of the world’s $6.6 trillion daily foreign exchange market.
Since the vote to leave the EU, Britain has leapfrogged the United States to become the largest centre for trading interest rate swaps, despite calls by ex-French President Francois Hollande to end London’s dominance in clearing euro-denominated derivatives.
That London has expanded its influence as an international finance centre is one of the biggest riddles of the United Kingdom’s tortuous three year Brexit crisis.
The city’s standing ensures the United Kingdom keeps one of its last big chips at the top table of world politics just as it splits from the EU.
It also means EU companies will still come to London to raise finance outside the bloc after Brexit, a fact not lost on Wall Street heavyweights such as Goldman Sachs and JP Morgan.
Just a mile away from 22 Bishopsgate, Goldman opened its new 1 million square foot European headquarters – complete with mothers’ rooms and wildflowers on the roof – in July, three years on from the 2016 referendum.
Largely abandoned by the British government during Brexit talks, ten senior industry officials told Reuters London’s financial services sector has grown since 2016 because there is no realistic competitor in its time zone.
And high-rolling bankers are too attached to its Anglo-Saxon, work-hard, play-hard culture.
The chief executive of the British division of one of Europe’s largest banks said although some business will move to the EU, most senior bankers will be reluctant to leave London. He would consider taking a 20% pay cut to remain in the city.
“If you are an Italian banker, who moved out to London 20 years ago, and your kids go to private school around the corner then you are not going to move to Frankfurt,” he said.
Master of the Universe
A global hub for trading, lending and investing, London is the largest net exporter of financial services in the world, with the EU accounting for a quarter of the business.
The 2016 referendum shocked many of the masters of London’s financial universe, triggering the biggest one-day fall of the pound since the era of free-floating exchange rates was introduced in the early 1970s.
But so far, most major financial institutions have opted against moving large numbers of people and activities until the loss of access to the EU’s lucrative single market is confirmed.
Banks, insurers and asset managers have shifted over a trillion euros of assets such as derivatives and bonds from London to the continent and opened new EU hubs as a hedge against London suddenly being cut off from the bloc if Britain exits the EU without a formal agreement.
The Bank of England estimates around 4,000 people may have moved by the time Britain has exited the EU. But the key decisions are still taken in London.
Reuters contacted JP Morgan and Goldman, and rivals Citi, Bank of America, Morgan Stanley, Credit Suisse and Deutsche Bank, to seek details on how a ‘no deal Brexit’ might accelerate the transfer of resources and activities from London.
All banks said they were prepared for a no-deal Brexit, and had been since the first quarter.
Earlier this year, Morgan Stanley’s chief executive, James Gorman, said that he scarcely worried about Brexit. “That’s not in my top 200 issues,” he said.
British data shows the total number of people employed in the City between 2016 and 2018 overall rose by 31,000, though the total number of people employed specifically in banking and insurance is down 3,000 over the period.
It is not clear how much of that drop is due to Brexit and how much is due to new regulations or structural changes, such as higher numbers of tech specialists at lenders while traditional banking jobs shrink.
Initial estimates of potential job losses ranged from about 30,000 roles within a year of Britain leaving the EU, estimated by the Brussels-based Bruegel research group, to up to 75,000 by 2025 by Oliver Wyman.
Oliver Wyman said they stand by their predictions because it is important to distinguish between job losses on the first day of Brexit and over the longer term. The final number will depend upon the level of market access, which is not clear yet.
Bruegel did not respond to a request for comment.
Financial capitals such as London have remarkable longevity and their rise and fall typically happens at a glacial pace, said Youssef Cassis, a professor of economic history who specialises in financial centres.
“There is no precedent for decoupling between a major economic power- in this case the European Union- and its financial centre, London,” he said.
Some key activities have moved out of London ahead of Brexit. Euro zone government bond and repurchase agreements trading worth around 230 billion euros a day, along with clearing, switched to Amsterdam, Milan and Paris earlier this year.
London-based CBOE Europe, the EU’s largest share trading venue, began trading euro shares at its new Amsterdam hub at the start of October.
Nicolas Mackel, who heads a body promoting Luxembourg’s financial centre, said it would be a shift in activities and not jobs that will affect London most.
“It’s not between now and Christmas you have to look, but on a five, 10, 15 and 20 year framework. It’s a false comfort that you are providing by only focusing on jobs,” Mackel said.
After Brexit the $15.9 trillion EU 27 economy will still be reliant on a financial capital outside its borders, which could be politically hard for Brussels to stomach indefinitely.
One European Commission official, speaking on condition of anonymity, told Reuters that the EU had no intention of smothering Britain’s financial sector to accelerate its own plans for an EU capital markets union.
But there is scepticism in the market about the longevity of such pledges.
“Why should one expect the EU to give an economic answer to what is a political challenge?” said Xavier Rolet, former head of London Stock Exchange and CEO of investment manager CQS.
“I would expect them to respond politically, even if those answers are not necessarily in the best economic interests of EU-based investors, corporates and banks.”
Rolet, who said in the aftermath of the referendum that half of all finance jobs in London may disappear if derivatives clearing left the capital, said it was too early to assess the implications of Brexit.
“I do stand by my statement,” he said of the potential job losses.
Source: Guy Faulconbridge and Carmel Crimmins, Thomson Reuters