Agribusiness Report: Accelerating agri trends providing opportunities for NZ

Agribusiness was the shining star for the New Zealand economy last year. Its status as an essential industry meant it was able to continue during lockdowns and provide food to an uncertain world.

But a year on, the world remains turbulent. While we can expect to see markets slowly return to a resemblance of normality as the vaccine rollout continues and lockdown restrictions are reduced, global megatrends impacting the agriculture industry will continue to shape the future of agribusiness.

Need for a cohesive national strategy on sustainability

Covid-19 brought a discussion around sustainable and safe food systems to the fore, with the boosted emphasis on climate change, carbon offsetting and ESG (environmental, social, and governance) credentials all having an impact on the behaviour of consumers.
They are looking for sustainable business models that consider all aspects of the production process — including the impact on natural resources.

Some developments on this were made last month, with the Climate Change Commission releasing its final report: Ināia tonu nei: a low emissions future for Aotearoa. It lays out a roadmap for New Zealand to meet its greenhouse gas reduction obligations by 2050, and calls for immediate action by government, local government, individuals and businesses.

For agriculture, the Commission says New Zealand needs to reduce its livestock numbers by 13.6 per cent by 2030. It predicts that while New Zealand will still produce roughly the same amount of milk and meat, it will do so with fewer animals, and expects some farms to convert from livestock agriculture to horticulture.

It says low-methane sheep will play an important role (and help cut methane 10 per cent by 2030), along with a reduction in the use of fertiliser, and new technologies will need to come on board, such as vaccines that can help reduce emissions from livestock.

Transparency into provenance and supply chains

As part of making more conscious sustainable choices, consumers in some of our major trading markets are demanding detail and transparency on provenance and supply chains of food, to make informed decisions about what they eat. In some cases, this detail is sought down to individual farms and farmers.

A discussion paper on the future of food and the primary sector by University of Auckland thinktank Koi Tū: The Centre for Informed Futures, headed by Sir Peter Gluckman, notes that this trend is one New Zealand can approach with some confidence. We have high social and environmental values, and our primary sector produces quality, safe animal protein with a low carbon footprint relative to our competitors.

But while we have a favourable global profile, Koi Tū says that in order to sustain it for our high-value agricultural exports we must develop a cohesive national strategy that is connected to quality assurance:

“Our national product branding needs to be refreshed and not just seen as a slogan. It needs to be linked to measurable progress on key indicators of value to consumers. These are likely to be origin and environmentally linked.”

The new coal?

Although it may seem extreme, the growing awareness from consumers of the environmental impact of the food they eat means that some are predicting beef to become “the new coal”.

Alternative protein has reached a tipping point where it is becoming mainstream, with plant-based options such as Beyond Meat and the Impossible Burger increasingly common on restaurant menus and in supermarkets. Last year around 13 million metric tonnes of alternative proteins were consumed globally — including those from plant-based ingredients, cultured meat products, and alternative sources such as insects. This represents around 2 per cent of the animal protein market.

Boston Consulting Group (BCG) believes by 2035 — when alternative proteins reach full parity in taste, texture, and price with conventional animal proteins — 11 per cent of all the meat, seafood, eggs, and dairy eaten around the globe is very likely to be alternative.

This could save as much carbon dioxide equivalent as Japan emits in a year, conserve enough water to supply London for 40 years, and promote biodiversity and food security.

In late 2020, Singapore gave the world’s first regulatory approval for meat that doesn’t come from slaughtered animals. Eat Just’s chicken meat is grown from animal muscle cells in a lab, and the company says this “breakthrough for the global food industry” is one it expects other countries to follow.

New Zealand innovators are working to meet this growing demand for alternative protein. Auckland-based Sunfed Meats recently launched its Bull Free Beef product made from vegetables and cocoa butter, alongside its range of other plant protein “meat analogues” including Chicken Free Chicken and Boar Free Bacon.

FoodHQ, which represents NZ’s food innovation organisations, said in a recent report that emerging proteins are a diversification opportunity that could complement New Zealand’s traditional animal-based protein sectors.

“While our dairy products, meat, wine, apples and kiwifruit will underpin NZ’s food exports for many years to come, we must explore the opportunities to continue adding diversity to our food product offering in order to meet global demand,” says FoodHQ chief executive Abby Thompson.

Tech to boost productivity and reduce emissions

Sensors, robotics, big data and artificial intelligence are other technologies shaping the future of food production and farming.

They all contribute to what is known as precision agriculture, which was already becoming mainstream before the pandemic, but has in the past year demonstrated its importance in creating resilient farming systems.

A local example that integrates several of the above-mentioned technologies is Halter — a company developing a smart collar for fence-free animal management. Last month, Halter secured $32 million in a Series B round led by Australian VC firm Blackbird Ventures (supported by current shareholders including Rocket Lab’s Peter Beck).

The collars, loaded with Bluetooth, GPS and solar panels, allows farmers to virtually herd their stock from anywhere by using an app on their smartphone. Sound and vibration help direct cows, and the collar can also monitor the wellbeing of the animals by detecting unusual movement which might indicate if it is lame or on heat.

The technology works well with NZ’s farming system, as well as other regions that put an emphasis on free-range, pasture-based farming such as Europe and South America.

As new technologies like Halter emerge and farms become better connected to digital infrastructure, the use of precision agriculture and other technologies in agriculture will dramatically accelerate.

These technologies will play a critical role in helping the industry operate with more resilience, increase food security, boost productivity and reduce emissions in farming systems. All of these are integral aspects of the megatrends shaping a sector that is so important to New Zealand’s economy now and into the future.

Agribusiness Report: Why care is a consideration, according to NZTE

New Zealand has relied on tourism as a way of keeping us alive in the hearts and minds of global consumers.

Research released by New Zealand Trade and Enterprise (NZTE) in April revealed that the five major challenges New Zealand exporters are grappling with are: building brand awareness, finding the right partners and channels, dealing with strong overseas competition, understanding how destination markets differed from New Zealand markets and each other, and determining the right export pricing strategy and product-related costs to remain competitive and profitable.

All these challenges have been heightened during the Covid-19 pandemic, particularly brand awareness and developing the right business connections, given there is no international travel.

NZTE’s “Made with Care” campaign aims to help lessen these barriers. Launched in October 2020, the campaign has been designed to grow awareness, preference and demand for New Zealand food and beverage products in key markets offshore, and share New Zealand’s commitment to being a trusted, sustainable global food source. It provides New Zealand food and beverage exporters access to a suite of free, ready-made marketing assets to use in their own sales and marketing efforts.

The campaign is part of a wider “Messages from NZ” country brand campaign — a New Zealand Inc effort to raise our international profile in key markets across trade, education and tourism with international consumers, buyers, and investors to help rebuild our economy.

To establish the Made with Care campaign, NZTE joined forces with Tourism New Zealand, Ministry for Primary Industries, Education New Zealand, and New Zealand Story, building on the positive sentiment felt toward New Zealand and raising the international profile of the New Zealand brand across priority markets.

NZTE’s lead for food and beverage, Craig Armstrong, says the openness of all organisations to work differently has been the key to the campaign’s success.

“We have borrowed a lot of tourism people for the last 15 months to make this work — it’s been fantastic,” he says. “It really became a partnership to say: ‘Well, how can we promote New Zealand products, as opposed to promoting New Zealand as a destination?'”.

Armstrong says businesses were telling NZTE the biggest issue for them was not being able to be in market to talk to buyers and consumers.

“What we realised was that we could use this budget to talk to shoppers and buyers at a time when New Zealand businesses could not get there and do it themselves.”

The Made with Care campaign includes paid media, social campaigns, and a suite of creative assets including templates, logos, stories, videos, and vignettes that businesses can use as part of their own marketing.

Since its launch, over 340 companies have been involved in the Made with Care campaign — by using the free marketing assets made available, or by participating in promotions managed by NZTE in Australia, China, East Asia, the United Arab Emirates, the UK and North America.

NZTE says because of the campaign, preference and appeal measures for New Zealand food and beverage are trending slightly upwards. As an example, after a short burst of promotional activity in the UK, spontaneous awareness of New Zealand as a country that produces premium quality food and beverage increased 5 per cent, with 57 per cent of research respondents stating they have either bought or are considering buying food and drink from New Zealand because of seeing the campaign.

In North America, awareness of New Zealand food and beverage increased by 10-14.5 per cent across seafood, wine, meat, and honey.

Armstrong says he has been surprised by the results and the cut through the campaign has had with consumers internationally.

“When you reflect back on it, we managed to get what can be at times a very competitive industry to work together and agree on something.”

Underpinning the Made with Care sentiment, and what distinguishes New Zealand food and beverage products from others, is the principle of Taiao — the interconnectedness of our people and the natural world.

The values of Kaitiakitanga (guardians, caring for people, place and planet, now and for future generations), Manaakitanga (caring for others and showing hospitality, kindness, generosity, support and respect) and Ingenuity (challenging the status quo with original and bold solutions) are also woven throughout the campaign messaging.

This interconnectedness of people and the natural world, and the desire for sustainable, safe and innovative products are all aspects of the megatrends that are currently shaping the industry, and Armstrong says the desire for these attributes have all been accelerated due to the pandemic.

“What Covid has done is really bring forward consumers’ changing preferences by years — whether that is five years, six years, 10 years… I’m not quite sure,” he says. “But what we are seeing now is a need or a preference from consumers that is playing into New Zealand’s hands. We are a very ethical producer of food, treat our people well, treat our animals well, and generally treat our land well.

“We have got to be able to tell that story and be able to capitalise on what most advanced and developing economies now care about.”

He says telling that story is critical, and that most of the growth from exporters is not hampered because we are not in the right markets or don’t have the right product, but rather because people don’t spend any money on marketing and telling their story.

“Look at the results we are getting through the Made with Care campaign,” he says. “Those kinds of numbers should give you an indication that if you invest in marketing and look at it as an investment, rather than a cost, you will get a return out of it.”

Insights into key purchase drivers from 14,000 international shoppers

NZTE partnered with global research and insights company Kantar to identify key purchase drivers, supported by insights into behavioural and emotive needs of the primary household shoppers in Australia, China, Singapore, Japan, United States of America and the United Kingdom.

With Kantar, NZTE conducted an online survey with household shoppers in January/February 2021 to examine what’s driving purchases within eight different F&B categories and 29 sub-categories, including meat, fruit and vegetables, dairy, seafood, alcoholic beverages, non-alcoholic beverages, sweet snacks and vitamins, minerals and supplements/mānuka honey.

“We learned that eight attributes drive consumer purchases: tasty, affordable, trusted brand, safe product, healthy, fresh, ethical and on-trend,” says NZTE’s Craig Armstrong.

“Those may sound obvious, but we must understand our consumers rather than base what we do off assumptions. Plus, there is a huge amount of depth and data behind these insights.”

Armstrong says the research found five key paths that companies could take to capture a premium: ethical, on-trend, health, safe product and trusted brand. However, he says these vary depending on the market and category, so how businesses construct and communicate their offer needs to be tailored.

“For example, China is influenced by health and safety; Japan by health, taste and freshness; Singapore contains a broader spread of drivers; while Western markets are more driven by affordability, taste and trusted brand.

“However, affordability and taste do not pull in a premium whereas there is real potential for ethical and on-trend purchases to do so, particularly in the US.”

Locking in brand sustainability

David Babich, chief executive of Babich Wines says they have seen a 4 per cent lift in website traffic over the time Made with Care has been running.

“While not double-digit growth, it is off good base traffic and in an environment where the investment (hence competitiveness) in this area has been intense due to the global constraint on face-to-face.

“As an exporter you have to make an investment in travel and visiting customers. While people understand the reasons why we can’t visit, the time that you can get away with not doing that is fundamentally finite.

“We are going to hit two years without visiting our customers, and meanwhile other competitors are either domiciled in the market or have face-to-face market access because of their own infrastructure — especially the large players.

“We have four people in the US, three in China, one in the UK, so we are not without representation in our key markets, but we don’t have an enormous team to continue to push our message relentlessly. A lot of other NZ companies are in that situation.

“Since we can’t put a billboard in Times Square, social media has worked particularly well for us to market to the world and get our brand messaging out.

“What has resonated for us in the Made with Care Campaign is that one of our brand platforms is sustainability.

“We lock right into that.”

Tapping into the Multinational Opportunity (Callaghan Innovation)

Originally published on Callaghan Innovation’s Healthtech Activator website

Tim McCready from BioPacific Partners spoke with healthtech multinationals about changes in the industry and why they are interested in NZ innovation

The healthtech sector is broad, and big corporations in pharma, consumer health and medtech all have slightly different attitudes toward accessing external innovation – but they all share an increased reliance on external innovation to supplement and bolster their pipeline.

Multinational corporations can bring with them strong investment, a powerful workforce, and access to global markets for local New Zealand (NZ) innovators. But regardless of whether a partnership or investment happens or not, there are always insights to be gained from them. Even a 15-minute conversation can reveal insights that might help reshape a product to be more suitable or better accepted by the market, or perhaps adapt a business model to one that had not previously been considered.

Most of these multinationals are not embedded within the Australasian region. They might have sales and marketing teams here, but there are few business development personnel. While it can be a challenge identifying and reaching relevant decision-makers within the confusing hierarchies of multinationals, there are many reasons why it can be a worthwhile activity.

Strong desire to access good innovation

“Innovation does not have a boundary. There is no border limit, wherever there is good science, we go for it,” I was told by a business development executive at a healthtech multinational. It helps that generally these companies are positive about NZ innovation – thanks to our well-regarded education and science, robust regulatory environment, and diverse population.

“If something is making headway there, there’s a whole lot of hurdles it has overcome and it makes me think I can pick it up and run with it elsewhere,” they said.

For the pharmaceutical industry, the cost of research and development for new drugs, the high risk of failure, and the significant exposure many have due to the expiry of blockbuster drug patents means they increasingly look to external innovations for their product pipelines. If the technology fits a gap in the company’s pipeline they will be interested – and are largely ambivalent about the stage of development.

But for medical technologies this is slightly different. For traditional medical devices, multinationals will often prefer to wait until a technology has regulatory approval and can demonstrate strong sales. This is because some of the most challenging aspects of bringing a device to market are the registration of the device, and the considerable work required to convince physicians and surgeons that an innovation is worth considering (and often retraining for) over existing alternatives. Multinationals prefer to see a technology that is proven to mitigate these risks.

Digital innovation

There has been a rapid shift in digital innovation in healthtech, and the development of technologies for a consumer market, including mobile phone sensors, smartwatches, fitness trackers, apps and the use of big data for diagnostics and treatment. This is causing huge concern in the medtech and consumer health industries about where future revenues will come from.

I was told by a business development executive in a medtech multinational: “I joke that I’m glad I am closer to the end of my career than the beginning because I’m not wired to think this way. My gut feel used to be pretty good, but I don’t have that for the future… I think it is incredibly naïve to think that technology and digital won’t fundamentally change the sector.”

The onset of digital giants entering the healthtech space has made traditional medtech multinationals nervous. They are hesitant to enter the consumer market since the big players – the likes of Amazon, Samsung, Apple, Google and Huawei – could quickly wipe out the market share of new technologies that begin to gain traction.

A business development director joked with me that “One day I will need a new hip. I’ll go onto Amazon, where there will be a base one, and then ones with extra features… I’ll select my hip, pick my doctor, choose a hospital – after checking their reviews – and take my basket to the checkout. Somebody is going to figure that out.”

Making the connection

Before the pandemic, these big players were reluctant to travel the 12 to 24 hours required to visit NZ and saw the significant time zone difference as a barrier.  This meant that costly visits to the big conferences – the likes of the BIO Convention or The MedTech Conference – were the only places to sit down for 15 minutes with the relevant people in these companies.

But over the past year these interactions have moved online, and with it so has a growing acceptance from large corporations that new technologies can be discovered using digital platforms – no matter where in the world they might come from.

Capital Markets report: Megatrends shaping the markets

Living through a global pandemic has seen existing trends in capital markets accelerated.
When considering the global megatrends in capital markets over the past year, few new trends have emerged.

Many of the key trends that were gaining traction prior to or during the pandemic have dramatically accelerated into 2021.

Here is a look at some of the most interesting ones:

A green and ethical recovery

One of the big trends remains the push towards socially responsible investing.

This gained momentum during the pandemic as Covid-19 highlighted how connected humans and society are to each other and to the world around them. Many leading investment firms now consider ESG (environmental, social and governance) performance important to consider alongside traditional financial metrics as a fundamental way of creating value and mitigating risk.

Last year, a study from Morgan Stanley’s Institute for Sustainable Investing showed that US sustainable investment funds focused on ESG factors outperformed traditional funds and reduced investment risk during the pandemic.

Morningstar data shows global sustainable fund assets grew 18 per cent in the first quarter of 2021 compared to the previous quarter to almost $2 trillion, supported by strong inflows from Europe.

Further bolstering this trend is the increased attention combatting climate change is being given by governments around the world. Take for instance the United States, where last month President Joe Biden pledged to cut US greenhouse gas emissions in half by 2030 — more than double the commitment made under the 2015 Paris Climate Agreement by the Obama Administration. He has also begun rolling back some of President Trump’s initiatives that side-lined ESG investment.

This shift is bringing with it dramatic change in many areas that will continue to shape investment activity — with many attractive opportunities in energy, transport, agriculture, and infrastructure.

Earlier this month, Bill Gates-led fund Breakthrough Energy Ventures invested in Ecocem Materials, an Ireland-based firm developing low-carbon cement — a material that currently contributes some 8 per cent of global carbon pollution.

Investors are expecting to see the number of attractive opportunities to become more and more frequent.

The events of last year have also heightened the awareness of inequality — women, minority populations and those on lower wages were most impacted by the pandemic.

There is a growing demand to understand how businesses operate, treat employees and customers, and whether they are engaged ethically with their global supply chains.

Boards and management will be increasingly required to address questions from investors and customers about social purpose, inequality, diversity, pay ratios and executive remuneration.

Technology adoption set to continue

One of the most omnipresent trends over the past year has been the leap forward in the digitisation of the economy. The lockdowns, social distancing, and the inability to travel and shop in traditional ways have acted as catalysts for the digital adoption by businesses and customers.

Capital markets are no exception. The same broad trends are accelerating a push towards digital as well as a new wave of innovation at a pace that was previously only seen in consumer-facing financial services.

While most trading technology architectures remain cumbersome, a recent report by the World Economic Forum suggests distributed ledger technology (DLT) — of which blockchain is the most well-known example — is reaching an inflection point. They say it has the potential to reshape capital markets by simplifying operations for leading players and expanding access to markets for small businesses and retail investors.

The use of DLT is growing in acceptability, due to growing institutional and regulatory comfort with the technology, the potential for central bank digital currencies in several jurisdictions, and commercial dynamics including cost pressures and client service expectations.

As an example, the UK Chancellor Rishi Sunak last month set out proposals to enhance the UK’s competitive advantage in fintech — from regulatory support and reforms to help firms grow, to the establishment of a Central Bank Digital Currency (CBDC) taskforce to coordinate the exploration of a potential UK CBDC.

“If we can capture the extraordinary potential of technology, we’ll cement the UK’s position as the world’s pre-eminent financial centre,” he said.

In more practical ways, technology adoption across the industry saw acceptability in the industry for remote and flexible working.

Regulators have had to support this and adapt to ensure money laundering, anti-fraud, data privacy and conduct regulations continue to be equivalent whether working from the office or working from home.

But there are still concerns around market abuse and cybersecurity that come with remote working, and whether this trend will persevere long-term following the relaxation of lockdowns around the world remains to be seen.

New Zealand demonstrated that the lack of personal contact after so long working remotely, along with Zoom fatigue, saw most working in capital markets return to the office.

However, the inability to entirely wind back the new remote working culture has made flexible working a likely requirement for capital markets of the future.

Rise of unpredictable retail investors

The past year saw a surge in amateur investors engaged with the stock market. During the level four lockdown, for the first time ever, amateur investors were more active than professional investors in New Zealand.

Services like Sharesies and Hatch have created accessible platforms for retail investors to engage in share trading without needing to go through traditional fund managers. Their rapid growth in interest has been attributed to the pandemic keeping people idle at home, low interest rates limiting savings returns and many people being shut out of the property market.

But recent months have seen another factor come into play — the rise of social media-driven traders. The most well-known example is video game retailer GameStop Corp, where amateur investors worked together to drive its stock price up 1500 per cent over two weeks to take on Wall Street investors who had betted against it. This wasn’t a one-off, with other stocks including BlackBerry and Nokia targeted.

These investors are unpredictable and bullish and have rattled sophisticated professional investors. As a result, the chair of the US Securities and Exchange Commission, Gary Gensler, is considering new rules for apps that “gamify” trading and use visual graphics to reward an investor’s decision to trade.

“The SEC must remain attuned to rapidly-changing technologies with an eye to freshening up our rules,” says Gensler. “If we don’t address this now, the investing public, those saving for retirement, and education, may shoulder the burden later.”

China Business Summit 2021: event MC conference close (video)

China Business Summit 2021: Mark Tanner with Tim McCready (video)

China Business Summit 2021: event MC conference opening (video)

 

Opinion: Covid-19 provides impetus for fundamental change (NZ Herald)

 

Opinion: Covid-19 provides impetus for fundamental change (NZ Herald)

It has been three years since Prime Minister Jacinda Ardern called climate change “my generation’s nuclear-free moment”.

While the previous Government was unable to declare a climate emergency in the last term — believed to be because Labour’s coalition partner New Zealand First blocked it — she has now made it a priority with a declaration of a climate emergency.

Since Covid swept the world, it has done a lot to emphasise the social and economic inequalities that exist globally. The harsh reality of the lockdown exposed that, even in New Zealand, women and low wage workers were most impacted by job losses and reduced work hours.

Similarly, the relationship between climate change and inequality will see those who are disadvantaged suffer disproportionately from the adverse effects of global warming. The need for action to achieve New Zealand’s vision of a thriving, climate-resilient, low emissions future is widely understood.

The same areas that New Zealand used to successfully respond to the Covid-19 outbreak are needed to address global warming: listening to scientists, public policy and international co-operation.

When US President-elect Joe Biden spoke with Ardern for the first time since the US election last month, he spoke positively about her handling of the pandemic and said he looks forward to working closely with her on common challenges, including tackling climate change. Biden has named ex-US Secretary of State John Kerry — one of the leading architects of the Paris climate agreement — as his climate envoy.

“America will soon have a government that treats the climate crisis as the urgent national security threat it is,” said Kerry.

This break from the Trump administration’s climate policy will put our Government to the test, and necessitate that our ambition reflects our action.

Speaking recently at the Institute of Financial Professionals in New Zealand (Infinz) conference, Climate Change Commission chair Dr Rod Carr said the commission’s current programme of work is to produce the first emissions budget out to 2035 — and to the extent that we are not on track to achieve our domestic targets and global obligations, advise on a reduction plan that will reduce those emissions having regard to a wide range of impacts.

“It is important to understand that climate action is now mainstream conversation, and understand what is to be done, by who, and by when,” he said.

New Zealand emits about 80 million tonnes of carbon dioxide-equivalent greenhouse gases every year, and under the international accounting rules sequesters about 10 million tonnes, largely through forestry. Nearly half of those emissions come from agriculture.

The challenge for New Zealand, says Carr, will be that although our form of pastoral agriculture may be one of the most efficient ways of producing meat and milk protein in pastoral agriculture, there may now and in the future be ways of producing meat and milk proteins with an even smaller greenhouse gas footprint.

Of the remainder of our greenhouse gas emissions, transport makes up about 40 per cent. It is a growing contributor, with household transport emissions increasing by 15 per cent between 2011 and 2017.

Carr says this will be one of the major challenges that will go to the heart of both the allocation of capital by private vehicle owners, fleet operators and government infrastructure providers.

“Converting ground transportation to low or no emissions is a 100 plus billion-dollar investment challenge over the next 30 years,” he says. “Known technologies exist. They largely require electrification, and that electrification needs to be provided from renewable energy sources, unless it is to continue to contribute to greenhouse gas emissions.”

Navigating our economic recovery from Covid-19, while finding solutions for our climate change challenges will require a substantial and coordinated response. This will mean making sure capital is deployed to support the new age, new technologies, and new and necessary ways in which we conduct business.

Covid-19 exposed major weaknesses in our society. But it has also given us the impetus to make fundamental changes that will address inequality and fuel an economic recovery that is long-lasting and sustainable. Without a handbrake on the Government — and with a renewed impetus from international leadership to deliver — now is the time to make sure New Zealand isn’t left behind.

Mood of the boardroom: Resurgence pops plans for transtasman bubble (NZ Herald)

Support for transtasman travel but only when safe, reports  Tim McCready

The transtasman bubble proposal should be progressed once the Covid-19 flareup in Australia is under control. That is the message from New Zealand’s top CEOs in the Herald’s Mood of the Boardroom survey.

The result was overwhelming — 94 per cent of respondents are in favour, 5 per cent are unsure. Just 1 per cent of respondents say we shouldn’t continue to progress the initiative.

CEOs placed myriad caveats — “only when safe”, “define ‘under control’”, “risk must be minimal before relaxing”.

“It’s something we should keep a watching brief on,” says a tech entrepreneur. “Nothing in Australia gives me confidence in their capabilities to contain.”

Deloitte CEO Thomas Pippos asks: “The question is what does under control mean? At one stage Victoria was considered under control.”

“The latest outbreaks seem to show this is less likely and riskier than first envisaged,” says Chapman Tripp chief executive partner Nick Wells.

Some CEOs say we shouldn’t be progressing until there is no community transmission on both sides of the Tasman.

“We need zero community transmission in each country and rapid tracing technology that crosses borders to even be considered,” says a dairy industry boss.  “Rapid testing may have a role to play when and if it becomes available.”

But others are amenable to travel with cases present in the community — so long as steps are taken to ensure the risk remains low.

“Progress on pandemic management and the use of technology can both be used to provide a quarantine-free system for travel with selected countries,” says Beca CEO Greg Lowe. “We just need to get on with solving the technical challenges so we can implement when the health settings are right.  No one wants to be unsafe, but we do need to have a plan.”

Australian Prime Minister Scott Morrison has said Australia is working on a “hotspot” model that would not necessarily require zero transmission.  He said this could also extend to Covid-free parts of New Zealand.

Morrison said all states and territories except for Western Australia had agreed to an update of the roadmap to recovery, with the goal to reopen their borders by Christmas. It will focus on testing regimes, data sharing and interstate borders — rather than issues like hospitality venue capacity.

Jacinda Ardern has said that — so far — Australia’s hotspot model will not be reciprocated holus-bolus. “Ultimately, for the hotspot arrangement, it doesn’t change the work that we’re doing on the bubble which is focused on putting New Zealand and Australia in the position to have quarantine-free on both sides of the Tasman. Right now though, neither country is in a position to offer that in its entirety because it’s just not safe.  “If a New Zealander chooses to go to Australia because there is no quarantine, they will know that they’ll be covering the cost of their quarantine on return to New Zealand.”

Back in May when a travel bubble with Australia looked promising, the Trans-Tasman Safe Border Group was established, co-ordinated by the Australia New Zealand Leadership Forum.

The group — made up of 11 government agencies, six airports, two airlines, health experts and airline, airport and border agency representatives from both Australia and New Zealand — submitted a blueprint for transtasman travel to both governments with the objective of removing the need for quarantine.

Auckland Airport CEO Adrian Littlewood was part of the effort, and said at the time “New Zealand and Australia have a great opportunity to really set some potential standards for travel restarting around the world.”

Its original aim was to have the bubble operational and flying by the July school holidays.

Prior to the Covid crisis, New Zealand was the most popular outbound travel destination for Australians, with 1.5 million visitors arriving from Australia in 2019, accounting for 40 per cent of all foreign visitors to New Zealand. Australia was the most popular outbound travel destination for Kiwis. New Zealand is Australia’s second largest source market for visitors, with 1.4 million visitors in 2019, accounting for 15 per cent of total visitors to Australia.

Unsurprisingly, a travel industry CEO is supportive: “It absolutely should be progressed — our economies and social structures are too intertwined.”

Chairman of the New Zealand Initiative Roger Partridge says the open border will be significant: “We all have an interest in Australia succeeding and expanding our ‘domestic’ marketplace for tourism by an extra 20 million people.”

Precinct Properties chair Craig Stobo reckons the industry should be innovative in its thinking. “We had 1.5 million Aussies come last year … tourism will have to go for a high-margin value proposition — not a low value volume growth strategy as we have done in the past,” he says.

Most CEOs agree quarantine-free travel across the Tasman is unlikely to happen soon.

“With the rate of community transmission and the time it will take to get this under control, we should not expect or depend on this opening up in the next three months,” says marketing boss Anne Walsh.

Capital Markets: Lessons and trends from the pandemic (NZ Herald)

We’ll be feeling the impact of Covid-19 for  a long time to come, in many different ways

Covid-19 has shaken capital markets globally, and the long-term impact will not be known for a long time.

Disruptive events tend to accelerate trends that are already in place, and Covid-19 will bring wide-ranging implications and deliver lessons into the future for organisations and individuals within the capital markets sector. Here’s some to chew on:

Digitisation, automation and cybersecurity

The most visible trend accelerated by Covid-19 is the leap forward in the digitisation of the economy. Westpac chief economist Dominick Stephens says there will be no going back: “that may be the last straw for some firms and a huge opportunity for others, but digitisation is a positive for the economy overall.”

Digitisation has long been mooted as a mega trend that will disrupt the capital markets sector, but the pandemic has necessitated a swift response. The past several months have exposed the requirement for firms to make a large number of decisions with increased speed and agility. Many expect the disruption to force firms in the capital markets sector to look at new operating models that are more automated and increasingly data-driven to address revenue challenges and drive down costs. This will include leveraging artificial intelligence, the cloud, machine learning and analytics to drive efficiency, improve productivity and improve competitiveness.

Increased competition from fintech firms has been eating away the market share from traditional players. Prior to Covid-19, industry giants in the capital markets were making moves to acquire and collaborate with fintech start-ups. This is expected to continue at pace, as they acknowledge openly the need for innovation to bolster their capability and agility.

However, the rapid digital transformation and changes in the way business is conducted has also brought with it a significant increase in fraudulent activity which will ensure cybersecurity remains an important consideration for capital markets. Cybersecurity firm McAfee’s quarterly report says there has been a surge of cybercrime exploiting the pandemic through Covid-19 themed malicious apps, phishing campaigns and malware. The US Federal Bureau of Investigation said it had received as many cyber-attack reports by the second week of June as it had in all of 2019.

Impacts on people, ways of working and the gender pay gap

The pandemic changed the way employees around the world worked and engaged with their workplaces and proved that remote and flexible working is possible — even in capital markets where some firms have been reluctant to embrace the trend. While most workers in New Zealand have now returned to their workplaces, many agree there were values that became more pronounced during lockdown that we should try to hold on to. Organisations are now considering how they can be more flexible, agile and have a heightened awareness of employee wellbeing. At the same time, they want to ensure that the quality of work and productivity remains high.

A recent EY article questions whether this flexibility, reprioritisation of goals and consideration of what is important could help to close the gender pay gap. Firms in the capital markets are continuing to face requirements to become more diverse. In Europe, France is demanding a 40 per cent quota of women on boards. The UK has had more than 350 financial services firms sign up to the UK Government’s Women in Finance charter, where they set targets for gender diversity. But despite this, the World Economic Forum’s Global Gender Gap Report 2020 revealed that gender parity will not be attained for 100 years.

EY notes the “wholesale levelling of the playing field” has the potential to challenge HR, talent and recruitment and lower long-standing barriers including those for parents with children or those with other caring responsibilities.

Cashless society edges ever closer

The arrival of a cashless society has been long-anticipated, but the events of this year have no doubt accelerated its arrival. Kiwis have embraced mobility and connectivity, and Covid-19 has seen us become more comfortable with e-commerce, Auckland Transport go cashless, and many stores encouraging cashless payment for hygiene reasons — with the contactless eftpos limit temporarily raised from $80 to $200.

The Bank for International Settlements released a bulletin in April, noting that Covid-19 has fanned public health concerns around the use of cash. It said that looking ahead, developments could speed up the adoption of digital payments around the world, including central bank digital currencies.

In China, digital payment platforms are already widespread, including Alibaba’s Alipay and Tencent’s WeChat Pay — so much so that in many stores cash is not accepted. Taking this a step further, China is launching a pilot programme of its digital yuan in four major cities. The currency is backed by China’s central bank, the People’s Bank of China, and is pegged to the national currency. Commentators say the objective of the digital yuan is to increase its circulation and become a global currency like the US dollar, and that the timing of the launch — when the rest of the world is dealing with the global pandemic — provides China with an unusual opportunity to beat private competitors such as Facebook’s Libra currency.

Surge in sustainable investing

During lockdown, many appreciated the return of birdsong to inner-city neighbourhoods and the quiet that came from the severely reduced traffic. Satellites mapping air pollution revealed a significant drop in nitrogen dioxide concentrations across Europe and China, coinciding with the strict quarantine measures.

Analysts are predicting Covid-19 to be a major turning point for ESG investing, or strategies that consider environmental, social and governance performance as increasingly important alongside financial metrics. The pandemic has highlighted how connected humans and society are to nature, plainly demonstrating how a fracture in one part of the ecosystem can compromise the entire system.

A survey of 50 global institutions by J.P. Morgan, representing US$12.9 trillion in assets under management, asked how they expect Covid-19 to impact the future of ESG investing. Some 71 per cent of respondents say it was “rather likely”,   “likely”, or “very likely” that a low probability — high impact risk like Covid-19 would increase awareness and actions globally to tackle high impact — high probability risks such as those related to climate change and biodiversity losses.