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Dispatch from Davos: Retooling Globalization

By better embedding sustainability considerations into markets and business and investing, globalization could become a more stable, sustainable and inclusive process.

Discussions and debates at this year’s World Economic Forum took a soul-searching turn with Davos organizers and delegates agonizing over the future of globalization in a world marked by nationalism, protectionism and social tensions based on economic imbalances.

In many respects, this year’s absence of both President Donald Trump and President Xi Jinping – and their trade war brinkmanship – gave Davos attendees the intellectual space to seriously ponder “Globalization 4.0,” the overarching conference theme.

Some key observations and takeaways from this year’s forum:

  • There is now widespread acceptance that the pure-play globalization process (call them versions 1.0, 2.0, 3.0) long advocated at Davos has produced positive results, especially in relation to overall economic growth and general poverty reduction, but also malign outcomes – most notably in relation to issues of economic inequality and damage to the planet. Related, Edelman’s Trust Barometer registered a significant trust gap between the “haves” and “have nots” of the world – arguably one of the main drivers of populist backlash.
  • Nationalistic rejection of multilateralism and the norms of the long-standing liberal economic order (including rules-based open trade) poses threats to international stability and general prosperity, many attendees stated. A more assertive defense and recommitment to these norms – and their parent institutions – is therefore required, in the view of many.
  • The ESG (environmental, social, governance) and sustainability agenda – including the UN Sustainable Development Goals – was seen as a partial antidote to many. By better embedding sustainability considerations into markets and business and investing, globalization could become a more stable, sustainable and inclusive process – while also addressing the threat of runaway climate change.
  • At a session co-hosted by PIMCO and the UN Global Compact, private sector leaders and policymakers discussed how to develop new pathways and strategies to unlock commercial opportunities while achieving the SDGs.
  • Scott Mather, PIMCO CIO for U.S. core strategies, said new market innovations such as SDG bonds could create significant investment opportunities while also advancing new-era impact investing – that is, striving for both financial return and positive social and environmental outcomes. Mather called on more companies and governments to consider issuing such instruments to finance their sustainability objectives.
  • Also at the special PIMCO session, Lise Kingo, CEO of the UN Global Compact, announced a global Call-to-Action – urging companies and investors everywhere to adopt the SDGs and direct investment and finance toward their achievement.

These, then, are some of our major takeaways from Davos. It will be essential to follow – and indeed shape – Globalization 4.0 in the hope that a retooled approach will spread wealth, prosperity and well-being more widely.

Learn why the bond market may be uniquely suited to both benefit from and provide finance for ESG-related efforts.

READ HERE

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Gavin Power

Chief of Sustainable Development and International Affairs

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London
PIMCO Europe Ltd
11 Baker Street
London W1U 3AH, England
+44 (0) 20 3640 1000

Dublin
PIMCO Europe GmbH Irish Branch,
PIMCO Global Advisors (Ireland)
Limited
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PIMCO Europe GmbH - Italy
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PIMCO Europe Ltd (Company No. 2604517) is authorised and regulated by the Financial Conduct Authority (12 Endeavour Square, London E20 1JN) in the UK. The services provided by PIMCO Europe Ltd are not available to retail investors, who should not rely on this communication but contact their financial adviser. PIMCO Europe GmbH (Company No. 192083, Seidlstr. 24-24a, 80335 Munich, Germany), PIMCO Europe GmbH Italian Branch (Company No. 10005170963), PIMCO Europe GmbH Irish Branch (Company No. 909462), PIMCO Europe GmbH UK Branch (Company No. BR022803) and PIMCO Europe GmbH Spanish Branch (N.I.F. W2765338E) are authorised and regulated by the German Federal Financial Supervisory Authority (BaFin) (Marie- Curie-Str. 24-28, 60439 Frankfurt am Main) in Germany in accordance with Section 32 of the German Banking Act (KWG). The Italian Branch, Irish Branch, UK Branch and Spanish Branch are additionally supervised by: (1) Italian Branch: the Commissione Nazionale per le Società e la Borsa (CONSOB) in accordance with Article 27 of the Italian Consolidated Financial Act; (2) Irish Branch: the Central Bank of Ireland in accordance with Regulation 43 of the European Union (Markets in Financial Instruments) Regulations 2017, as amended; (3) UK Branch: the Financial Conduct Authority; and (4) Spanish Branch: the Comisión Nacional del Mercado de Valores (CNMV) in accordance with obligations stipulated in articles 168 and 203 to 224, as well as obligations contained in Tile V, Section I of the Law on the Securities Market (LSM) and in articles 111, 114 and 117 of Royal Decree 217/2008, respectively. The services provided by PIMCO Europe GmbH are available only to professional clients as defined in Section 67 para. 2 German Securities Trading Act (WpHG). They are not available to individual investors, who should not rely on this communication.| PIMCO (Schweiz) GmbH (registered in Switzerland, Company No. CH-020.4.038.582-2) . The services provided by PIMCO (Schweiz) GmbH are not available to retail investors, who should not rely on this communication but contact their financial adviser.

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