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24th CEO Survey Launch Event Transcript

Emma Crosby: [00:00:00] Hello and a very warm welcome to this exclusive online event hosted by PwC in collaboration with CNBC. Let me introduce myself. My name is Emma Crosby, and I'm delighted to be your host over the next hour. Now, today marks exactly one year since COVID 19 was declared a global pandemic. That's an entire year of navigating new ways of working and living.

And as I'm sure many of you know, each year PwC also launches its Global CEO survey to see what our community of business leaders think about the world's most pressing issues. Now this year's survey explores the views of over 5,000 CEOs worldwide on how they plan to grow their businesses and manage their teams in the year ahead.

So, the agenda for the next hour. Let me talk you through it. We're going to do three things: first Bob Moritz, who's waiting patiently as you can see, the global chairman of PwC is going to talk through the all-important results. And then we have two fantastic panels for you featuring an exciting line-up of CEOs and global leaders.

We are so excited to have them on board. The first panel will focus on getting to growth in 2021 and beyond. And the second of today's panels will look at building trust through stakeholder capitalism, something that's incredibly important right now. This is an interactive event. We really, really want to hear from you throughout this hour that we have together.

And we would love you to take part in our two polling questions. You can do so by following the instructions in the box on the side of your screen, it's very, very simple. So let's kick off our event with our first polling question. This is a question we'd love you all to have a go at answering. And the question is what percentage of CEOs are very confident in their own company's prospects for revenue growth in 2021?

So their own companies, is it 16%, 26%. 36% or even 46%? Do select the one that you think is correct, and we'll give you the results shortly. So as you can see, Bob Moritz is standing by for us. The global chairman of PwC will be coming to you, Bob, in just a few minutes, but first we really like you to have a look at this short video.

Here you go.

Voice Over: [00:02:23] Today. One year after COVID-19 was declared a global pandemic, the human and economic effects are still being felt across the world. Yet, looking ahead, CEOs are optimistic. A record 76% believe global economic growth will improve in 2021. Confidence in their own company's revenue growth is up too. As business leaders take on tomorrow, they must set a course that builds trust and deliver sustained outcomes for shareholders and society. Are CEOs ready?

Emma Crosby: [00:02:54] Good stuff. Well, it's time now to hand over to Bob, to talk about the all-important results for this year's CEO survey. And while he takes you through a few of those key findings of the survey, we would very much like to hear from you. If you have any questions for Bob, do let us know. You can put them in the chat box on the side of your screen, and I'll be putting some of those to him very shortly. So Bob, a very warm welcome and over to you.

Bob Moritz: [00:03:19] Thanks very much, Emma. Thanks very much. We're looking forward to the conversation today and looking forward to the insights from this wonderful group of panellists that we have. As you said, it's been a year since the pandemic.

So the question on the top of mind is how are the business community leaders feeling about their prospects looking forward and what are the challenges and opportunities in front of them? So a couple of key highlights first and foremost, they're tremendously optimistic. Surprisingly so perhaps, especially with everything going on. The optimism comes through in three forms, first optimism in the potential in the economy, it's at a record high up 20 percentage points compared to previous years.

And let's remember last year's survey was actually done prior to the start of the pandemic. The second thing they see is opportunity in their own organizations, particularly the ability to grow revenues over the next 12 months. And likewise, they see that same opportunity over the next three years. What's interesting is what is it that they're going to be doing differently?

And we'll talk about that in a few minutes. The other question that we asked though, is how are CEOs thinking about the risks that exist within the world that they are operating in? And here it's interesting. Clearly the number one risk is the effects of the pandemic. No surprise to anybody. But this year, consistent with some concerns that we've been talking about in previous years, the concept of cyber risk rises to number two.

And what's interesting this year is that rise is more consistent around the world. Where in past years, we saw that significance primarily out of Western Europe and of course the U S. What you see is a few other things dropping. Trade conflicts, protectionism, while still risks and concerns, it's less so on the agenda of the CEOs.

So this comes back to the topic of trust and how in fact organisations need to think about trust in their business and trust with their stakeholders, as one key element of focus. The second thing that's interesting is a topic we've talked quite a bit about, and particularly over the last year, and that is the concept of stakeholder capitalism, stakeholder requirements, ESG, and more specifically the effects of climate.

This is a topic that's been discussed worldwide. The issue of climate has risen slightly, but not prominently in the minds of the CEOs. What is surprising though, is even with that rise, about 60% of those CEOs that we surveyed and as Emma said, we have 5,000 that responded this year, a record high. 60% of them have not built in to their strategic plans, the issue of climate and what they should be doing differently, which causes a concern around the risk and the threat, versus the realities of action and outcomes that they're looking to achieve.

So the challenges are many. And with that in mind, what we see in organisations today is there is a big difference between those that are moving with speed and agility to react to the uncertainties that are out there. And yes, there definitely are both risks, but also opportunities that the CEOs are seeing.

So with that, Emma, I'll put it back to you.

Emma Crosby: [00:06:44] Bob, I've got a few questions for you. Lots of people asking questions, also questions coming in. So let me ask you a couple now. And of course, with your job as chairman of PwC, I mean, you are talking to CEOs on a daily basis, aren't you.

So are CEOs optimistic that 2021 is going to be good because 2020 was so bad or because 2021 is going to be good in its own rights.

Bob Moritz: [00:07:07] I would tell you, Emma, the anecdotal evidence, as well as the feedback from the survey is definitely better than last year. And arguably it is an opportunity looking for the opportunities that CEO's have in front of them.

And the reason I say that is. It very much depends not by the country you're in or the sector you're in. But the organizations that have adapted most quickly, those that have adapted more quickly, they've changed supply chain. They've enhanced their trust with their stakeholder group. They've watched carefully the consumer behaviours and expectations and adjusted their portfolio to that mix.

Those are the ones that are attacking the market and being successful. So they see that opportunity. So the need for speed, fast learning, adjustment, and quick decision-making is clearly the secret to success as we look ahead.

Emma Crosby: [00:07:56] And, Bob when you're talking to CEOs on a daily basis, what is something noteworthy that you're hearing that resonates with the findings of your survey this year?

Or maybe even is it the tension which is kind of going against what you're finding?

Bob Moritz: [00:08:11] Yeah, the, the point I would go to Emma is the point around the tension while there's a tremendous amount of confidence, there's an underlying debris of uncertainty or fragility that's in the system that all of the CEOs are worried about.

It only takes one or two major themes to happen that actually causes perhaps the cards and the optimism to, to move away. So that fragility is real. You look to the price valuations that people are seeing in the marketplace and how sustainable are they truly, you see the question marks around, can I actually do M and A activity?

And this is a deal driven agenda going forward, or you see the issues of risks. And some of the challenges that if we have a big cyber attack and something goes wrong, that's going to be a problem for people. And as a result, the confidence lessens, the uncertainty increases, the speed for change, and decision-making actually slows down quite a bit.

And that's where the concerns are for the CEO. So it's a cautious optimism with a lot of fragility in the ecosystem that they're operating in.

Emma Crosby: [00:09:12] Yeah, of course we can talk about cyber crime and the threat to cybersecurity later on aren't we in, in our panel. So lots of priorities for CEOs in the year ahead.

What mission critical priority do you think would be the easiest for CEOs to overlook as they set their agenda for the year ahead, Bob?

Bob Moritz: [00:09:31] Yeah, I would point to two things. Emma, first and foremost is they've got to remain vigilant on the engagement with stakeholders, the communications with them and trying to meet and match those expectations, at least reconcile those expectations. That's a challenge. The reason I say that is because brands take decades to build up, but only seconds to lose. The second point is the need for key talent. In our survey, the key talent question is still on the table, but it is predicated and actually replaced by a few other issues.

You've got to have the right talent with the right skills and we do see itopens up as people get more comfortable, you probably will start to see an increase in turnover of key talent and organizations will be eager to get the right talent that can make those decisions and drive the agendas going forward and achieve the strategic objectives.

They have a plan in place.

Emma Crosby: [00:10:25] Good answer. Okay. Bob it's au revoir it's not goodbye, because I'm going to invite you back onto the panel in the second panel of this hour. So do stay where you are, but thank you very much for showing those findings for us, because they are really interesting aren't they, this year more than ever.

So we really do appreciate that. Thank you very much, right? Okay. We have got the results from our first poll that we asked you at the beginning of our hour together. I'll just remind you what the question was: What percentage of CEOs are very confident in their own company’s prospects for revenue growth in 2021, let's have a look at the results.

Now 36% is the right answer.  One of those four answers and 35% of you are right. So congratulations on that. And actually really interesting that so many CEOs are very optimistic about their own growth prospects, which is very heartening to see isn't it. Let's move straight on to our second poll.

Here's our question for you? Where do CEOs see themselves increasing their investments the most over the next three years, as a result of the pandemic. There are four options. Is it on supply chain, restructuring R&D and new product innovation? Or maybe it's on digital transformation or even cost efficiency initiatives? Do make your selection in the box and the answer I'll reveal it to you shortly.

I bet I've got a good idea that you're going to get this one correct. Now it is time to delve into our first topic of our hour together that is getting to growth in 2021 and beyond. With our first panellists. Now throughout this discussion, we're going to look at how businesses can deliver sustained outcomes in the context of the pandemic, through digital disruption and changing nature of society and the environment.

And here are our fantastic panellists, all lined up, ready to go. It's my absolute pleasure to introduce them to you that this moment  we're joined by Regina Dugan CEO of Wellcome Leap. Regina. Welcome very much to the programme. We're also joined by Jim Hagemann Snabe, chair of Siemens and chair of Moller Maersk.

Jim, welcome very much to you too. We're joined as well by Alison Rose CEO of Natwest Group. Alison, hi there and welcome. And we're joined lastly by Ngaire Woods, founding Dean of the Blavatnik School of Government at Oxford University. Ngaire it’s a pleasure to have you on board. Thank you all for your time. I know how busy you are.

So we are very grateful to have this amount of time with you today. Now as we come out of that pandemic, I want to start by asking what it'll take for businesses to be successful in 2021. And really interesting how Bob was telling us that 76% of CEOs are optimistic about growth improving this year.

I'd love to find out whether you think that they're right. And Jim, let's go to you first. If success is the order of the day this year, what do you see as the keys to success over the coming year or two?

Jim Hagemann Snabe: [00:13:19] Well, thank you very much, Emma. And before answering that, let me just say I'm humbled and delighted to be in the panel with such thought leaders and good friends.

So thanks for the opportunity. My mantra for the post COVID phase is “renew, don't return.” Some call it “build back better.” And for me it's all about how do we from a leadership point of view, convert this terrible pandemic into an opportunity? Where we try and accelerate the future rather than try and return afterwards.

So the first question I asked myself, to answer your question is what do we need to accelerate? And for me, it's  two things, really, it's climate action and it's responsible digitisation. The second question is of course, how? And first of all, we need investments. Now the good news is there's trillions of dollars in recovery funds committed by governments all over the world.

So we kind of have the money. We need to make sure that they are used to accelerate climate action and responsible digitisation. Secondly, you know, we come to a stage now where we need more action and less talk. And again, I think the good news coming out, if anything from COVID-19 is that COVID-19 has demonstrated an incredible ability to drive change and human capacity for change. We've done things in weeks, which normally would take months. And so we need to keep that speed in the post COVID world. And finally, and that's my last point. We need leadership. Leadership that is geared towards unleashing human creativity.

There is such a need for strong leadership. We've had a year of lockdown. It's time to be human again. And frankly, in my mind, the old leadership model is outdated. We try and make machines deliver on predetermined plans like they were robots or machines and leave very little room for creativity. And I think we need a new leadership approach.

I call it dreams and details, dreams that inspire people to do much for things and focus on the few details that matter, and then have less plans and leave more room to unleash human creativity to find a better way to come to a more sustainable future. So those are some of the keys to unlock the potential in my mind.

Thank you.

Emma Crosby: [00:15:52] Jim. Jim, thank you. I'll come back to you in a moment. We've seen a huge amount of innovation haven't we this year, look at the vaccine rollout, in a space of a one year we're having people having vaccines for COVID-19, which is an incredible feat when it comes to healthcare. Regina let's come to you now because you've been at the forefront of innovation, your entire career.

So what are the broader business lessons would you say when we're looking at innovation and of course, innovation and growth, what should businesses be learning?

Regina E. Dugan: [00:16:25] Well, thanks, Emma. My thoughts on this topic, echo many of Jim's. So I think there are two broad lessons that we have from the events of last year.

The first is that creating and preventing disruption is our leadership challenge for the future. 2020 was our reminder of that. What do I mean the events of the last year, remind us that disruption is a way of life and an aspiration and COVID-19 gave us illustrations of both? So my sense is that the global pandemic is our generation's Sputnik moment.

The disruption was felt very personally in the loss of family and friends. In the damage felt by businesses and economies, and it certainly laid bare how much work we have to do in health, across policy, equity, speed and scale. But as you mentioned, the pandemic also revealed what a difference a single breakthrough can make.

So let's level set. The normal time to develop a vaccine for a novel pathogen is 3 to 10 years. Morderna's MR&A vaccine went from virus sequence to first dosing in humans in 63 days BioNTech's timeline was similar. So let's just take that in for a moment. 63 days not years. We have a vaccine because of an innovation, a breakthrough, and one that was considered quite disruptive in its earliest days.

Frankly, it's stunning. So, how did that happen? I think there's a lesson for every organisation and every leader in it. It happened at the hands of small creative teams with a mission and a mandate to challenge conventional wisdom. So every CEO should consider it their job to form a small team focused on creating or preventing the Sputniks in your business.

Because what we can be sure of is that it's not optional. The Sputniks will come. They'll either come at your hand or someone else's. So that's the first. The second is we must learn to do this for the global challenges that define lines on a map, the ones that don't honour borders. And global health is an example of that, but so is climate change and cyber is the third.

We simply must do better at solving these global challenges across the lines of countries, organisations, and so on.

Emma Crosby: [00:18:55] Regina, thank you very, very well said. I'd like to talk a little bit about the great acceleration that we've seen because of COVID-19 that being the acceleration into digitalisation and, and interesting the PwC survey this year showing that CEOs are going to plan significant investments into this space. So Alison, let me come to you now. Of course, you're CEO of one of the biggest banks in the UK. Tell us how you are thinking then about your digital strategy now compared to pre COVID times.

Alison Rose: [00:19:29] Thank you and lovely to be on the panel as well.

So, thank you for having me. What I would say is that the COVID-19 situation has accelerated some of the underlying trends that were already happening. And I will always look at it through the rapid change in customer behaviour and expectations, but what we saw was those trends, which were, you know, continuing at a reasonably fast pace have absolutely jumped forward and demand has changed really, really significantly.

For me, it's then, as I'm thinking about it, is investing for the future and making sure that we continue to support the changes in customer behaviour and, and they're extreme. And just, just to sort of bring those to life. January last year, I would be holding maybe a hundred meetings a week on video banking as an interface for my customers.

That's now closer to 15,000 a week as I sit here today. Our use of our AI chat bots has increased by over 60% and those are conversations that are happening in a very different way. And now almost 60% of my customers in the bank interact with us only through digital. So that is their preferred choice.

So the change is really, really significant. I mean, I would echo the point though using digital in a responsible way. So I think that's a really critical path because as we transition rapidly, we need to make sure that we're not just inventing and delivering digital were also helping customers to transition and get the benefit out of doing this and making sure that we don't leave people behind.

So from my perspective, the digital transformation has accelerated. We're investing over 3 billion over the next three years in our technology and digital, but most importantly, we're thinking about it from the customer behaviour perspective and  building relationships through digital and face-to-face in a way that supports customers. It's become a huge part of the way people will interact, but we need to make sure we invest, follow customer behaviour, but also do it in a really responsible way as well.

Emma Crosby: [00:21:44] Indeed well said. Alison, thank you very much. And Ngaire let's come to you. You've been waiting patiently. We'll be talking about extraordinary trends throughout the pandemic.

I'll tell you what's also been extraordinary is the amount of fiscal and monetary stimulus that's been helping us all through the pandemic and you of course are an expert in governance. So how do you see, there’s a big question to answer in just two minutes, but how do you see that unwinding as economic growth starts to return?

Ngaire Woods: [00:22:11] Well, you know, it's so interesting because the world seen from the CEO perspective, as Bob Moritz shared with us, you know, is a world with a tremendous amount of confidence and some challenges they had, it looks so different from government for so many governments across the world, because what they've come through, is something much more like fighting a war, which has taken huge resources.

And so many governments and economies came into this crisis already indebted. So they've now had to put public resources at huge scale into sustaining, you know, society and the economy and in fighting the war against the pandemic. And now the challenge ahead is that governments are going to have to now put even more public resources into, as Jim said, building back better.

Now that's hard because governments come to this with an austerity playbook. It's one they've used several times through financial crises. It says we're already in debt. The minute this stopped, we've got to get back to fiscal austerity to a tighter monetary policy,and start repaying debt. That if we take most of the economists in the world, particularly those in the OECD, in the IMF and other places would be a huge mistake.

And so there's a mindset change that has to be made where instead of picking up your austerity playbook, they have to pick up an investment playbook. And that means investing in a way that they haven't done really since the second world war. Now last point would be that they're going to need new kinds of partnerships with the private sector to do this, not the lobbying partnerships that are evolved, not the outsourcing partnerships, some of which have done disastrously during the crisis, but the kind of intelligent mixing of private sector expertise, knowhow, what Bob Moritz talked about, the speed that fast learning the adjustment of the private sector, with the public trust equity of the public sector. And we did see this, as you said, in the vaccine program in Britain, when you saw people from private equity from the bank from the pharma sector, come together with their know-how, but with government very much in the driving seat.

And that meant that public trust in vaccines in Britain has steadily risen week on week on week, because they've had the sense to put resources into locally trusted public sector and religious and other communities that are trusted. So I think there's a huge opportunity to get this right, to build back better.

But I think thinking about the mindset that government will have to make and the relationship change they've got to make with how they relate to the private sector will be key.

Emma Crosby: [00:24:49] Ngaire I thank you very much. Alison. I want to come back to you because obviously we've all been focusing on building back better obviously, a term that we've all been using during this panel, but of course the other existential threat that's facing us all is climate change.

So as the CEO, again, of a very big organization in the UK, how are you thinking then about the challenge of balancing these two threats?

Alison Rose: [00:25:15] Now, I think that climate challenge is one of the biggest challenges we're going to face in our lifetime and that threat has not gone away. And then obviously as we've been focused on dealing with the pandemic that that issue has from, from our perspective remained very much at the forefront.

And I think the demands and urgency  to address the risks, but also the opportunity that comes from that as we build back better  is critical. We've made climate a core part of our strategic focus and set out some really ambitious targets in terms of how we transition to a low carbon economy.

And I was quite surprised from the results  of the low number of CEOs who haven't yet factored that in to their risk plans. We certainly, when we looked at it, see it as a really significant global challenge and also a huge opportunity. Financing that transition to a low carbon economy for me  is a critical part of what we need to do.

And it requires absolute collaboration across public and private sectors and globally, so that we can fund any technology that needs to come in, to even up the balance between those countries who are further ahead than others and also provide consistent measurements and tools to do that. So for us, it's right at the heart of our strategy. We've committed across a number of elements, firstly, getting our own house in order so we achieved net zero at the end of last year. So that's a critical part for our commitments. And then secondly, how we help our customers. So we committed to halve the impact of financing on our balance sheet by 2030, but most importantly, to work with customers to transition. And that means putting financing in place and funded 12 billion of financing and funding in green energy and renewables last year. We're planning to get to a 20 billion target this year and rolling out tools and partnerships to really support particularly small and medium sized businesses and consumers.--understand the impact of their footprint and give them tools to transition. And I think that's a really critical element for the large global organizations. They can address this challenge. So you’re making different choices for smaller businesses, for different communities.

They need help and support to do that. And it really is going to require collaboration so very firmly at the part of our strategy. And I do think as we use the phrase, “build back better”, there is an opportunity to make proactive choices around it, building back a greener and fairer economy by financing that transition, supporting the transition and making sure we collaborate very firmly on that.

And I think with COP 26, coming up later this year, it's a really opportune moment to come together and think about how we are going to make those changes. Because there is an urgency on this debate, which I think we should absolutely address. And every business model needs to face into the risk it poses.

Emma Crosby: [00:28:18] Indeed. Jim let's let's come back to you now, build back better.

Let's talk about that in a bit more detail. Of course, you're the chair to big multinational companies and from where you sit you must have a great vantage point on initiatives that you're seeing that are really working. So can we give an example of one that is building back better, which other businesses, and indeed other governments could maybe seek inspiration from?

Jim Hagemann Snabe: [00:28:41] Yeah, thank you very much. And I'm trying to be brief and concrete. Climate action that's really the most important area we do need business and governments to come together and also do that across countries to come solve climate centrally, locally and both Siemens and Maersk have ambitious plans.

We are now looking at how can we accelerate now? One inspiring example that I participated in, in relation to build back better was an initiative that looked at a study conducted at Oxford University, we can talk more about it. You know, identified various scenarios to use recovery funds for and flooded those scenarios on two axes.

One was, what is the impact on the climate agenda? And the other one was what is the impact on recovery in terms of creating growth and job opportunities? And I thought it was a very smart way, and it identified a number of initiatives. And you could see that there were very concrete initiatives that would actually cover both. Create opportunities in jobs  and accelerate the green agenda wind energy as an example. Lots of jobs involved in that. Europe has a leading role in electric vehicle infrastructure to reinvent transportation, and there's a lot of new jobs being created. Or even circular value chains. We're recycling materials in more ways. So if we could come up with such initiatives it’s not political anymore, it's just a good thing to do. You bring together governments for defining carbon prices so it’s more economically viable to invest in businesses that come together and solve these problems. And then find ways to take care of people whose jobs are being moved into new areas. I think those are good examples of that and I think that's my biggest fear is that after a year of lockdown every country is on its own plan. This is the moment to collaborate, in the private sector, public sector and globally. We need to rebuild global collaboration technology; it is there that we can create this better future but we need to come together now.

Emma Crosby: [00:31:07] Collaboration certainly seems to be the word of the day, doesn't it, Jim. Thank you. Ngaire let's come back to you now. We talk a lot about ESG don't we these days, especially for investors and it’s very important for CEOs. The focus seems to be a lot though on the “E” -- the environment.

But what about the social and the government issues because a lot of them have been magnified by the pandemic and they need more attention. So in your opinion, and from where you sit, what do you think CEOs should do to better address the “S” and the “G” of ESG?

Ngaire Woods: [00:31:41] Look, I think there's a lot of work to be done, a really wonderful opportunity as companies invest in  consumers and employees, all focus on the “S” and “G”, but we need to know when we set targets for S and G that those targets really are going to have the beneficial effects on communities in which we work, that we hope.

So, it’s a wonderful opportunity to work collaboratively. We've got so much data on the communities in which we work, uh, you know, across every one of our countries. But there's, I think until now there's been very little effect, effort to say, okay, if we do set this as a social target, then do we track for five years, not be positive or not effect on the community that we're hoping to have an effect on is.

And I think there's a there's a lot of scope. I also think what Jim said about collaboration is totally crucial. We cannot cooperate on controlling this pandemic on preventing a global financial crisis, which is in the wings or on making any of our climate change policies work, unless we do it collaboratively.

And that means the difficult cooperative relationship, whether it's Britain in Europe or whether it's China and the United States. Whether it's China and Britain, a whole lot more work has to be put into that. And I think everyone that can play a role in making that work is going to need to play a role in making that work.

Emma Crosby: [00:33:03] Well said, Ngaire, thank you

Regina you'll be waiting so patiently. Let's come to you now because I would so like to talk to you about the future. I think you do this all the time. Don't you look at the future when it comes to technology. S could you give us a taste of the next big transformative technology wave that business leaders in particular should be aware of or should be looking out for?

Regina E. Dugan: [00:33:27] Well, look, there's much talk about artificial intelligence, but we should be clear.

AI is not a product. AI is a tool. It means nothing without data and a problem to be worked on. And because it's a new tool, AI is transforming every industry and we can be sure that no one's industry or business will be exempt. So one needs to get on the playing field. If you aren't already, you're behind, you need to plan to hire a team.

Initially have that team work on a limited number of problems, like for example, better demand forecasting and reduction of inventory and build from there. And eventually that central group should be disbanded so that AI capacity is embedded in your business. And indeed this kind of agility is what you'll need to take on most new transformative technologies.

But I'm also reminded of what Steve Jobs said in 2011. And that is that the biggest innovations of the 21st century will be at the intersection of biology and technology. Just like the intersection that caused the digital wave that he experienced. And this intersection between biology and technology will impact climate change. It impacts global health. And at Wellcome Leap we fundamentally believe that that intersection between the life sciences and engineering is rich with potential. I want to be clear though, these are broad areas of opportunity, potential sources of disruption, and that can be good or bad, but those broad areas of opportunity aren't the feature itself.

Indeed, what I'm most often asked is what the future will look like in 10 years and embedded in that question is the sense that the future is an inevitability and that we are somehow passive observers watching it unfold. But I don't believe that. I believe we are active architects of the future. And in this respect, the future will be what we choose to build.

And we choose to build what we believe in, in that order. We choose to believe in something and then we built it and that becomes our future. 

Emma Crosby: [00:35:39] Very well said, Regina, thank you so much. And that is a good opportunity for me to bring our panel to a close. I wish we had more time. I could speak to you all afternoon, but I know that time is tight, certainly for your diaries.

So thank you so much Regina, Ngaire Alison and Jim, it's been an absolute pleasure. Thank you very much for joining us. Bye-bye.

So before we move on to our second panel, let's take a look at the result from our second poll. Just a reminder, the question was: Where do CEOs see themselves increasing their investments most over the next three years, as a result of the pandemic? Is it on supply chain, restructuring or R and D and new product innovation, or maybe it's digital transformation or cost efficiency initiatives?

Alison actually talks about this an awful lot, so I'm sure you've all got the answer, right. And the answer being digital transformation. And this time 77% of you got it, right. I'm sure it's very much on your wish list of things to do as well for the year ahead. So thank you very much for taking part in that poll.  And thank you again to our esteemed panellists for our first panel.

It is time now to move on to our second panel, which is going to focus on building trust through stakeholder capitalism, a subject we are all talking about these days. Now this topic is going to look at how businesses can reconcile the need to deliver sustained growth with of course, the need really to deliver for society at large.

Now I am delighted to say we welcome onto the programme now, well certainly onto to the panel -- Nikesh Arora CEO of Palo Alto Networks.  Afsaneh Beschloss, CEO of RockCreek. We're also joined, re-joined I should say by Bob Moritz, PwC’s global chairman, and we're joined by Klaus Schwab, founder and executive chairman of the World Economic Forum.

It's a pleasure to have you all on the program. Thank you so much for joining us and Bob, welcome back. I know you've been watching intently in the wings. Let’s start with you, Bob. What an incredible conversation we've had already. What struck you the most as the most compelling aspects so far, if you could choose something?

Bob Moritz: [00:37:43] Emma, thanks for this. And it was a wonderful discussion. I want to connect two dots. First, Jim, as well as Regina talked about the concept of responsible digital transformation and the connection back to purpose. The number one and number two survey response in terms of where CEOs are spending their time, is yes, going after that digital transformation.

Let's remind ourselves over the past year, everyone got forced to go digital for surviving, not necessarily thriving. And it was an unbelievable cascading of events that caused everybody to speed up, as Alison said, all of the trends that we're already seeing. What CEOs now are focused on is the fact that I've got to get the benefits out of that transformation.

And those benefits go to not just short-term financial results, but longer-term societal results that the stakeholders expect. And that comes back to this concept of purpose and trust, which we'll talk about in a second. The second point I do want to acknowledge is Ngaire's point: from a government and a societal perspective, this is a different world. Let's remind ourselves how many people are still unemployed either because those small or micro businesses have actually been shut down or not able to compete, or because the furloughing or the layoffs happened because of that productivity that was gained. That societal unrest is still a huge challenge and governments are in a war to say, how do I deal with the health crisis, the labour force and the like, and this is where the opportunity is big for the business community to step up and actually play its role. And that's why the point around public-private partnerships to solve these big problems are going to be the step forward for the future.

Emma Crosby: [00:39:22] Well, a point well made Bob, thank you very much. And professor Klaus Schwab, let's come to you first. You're an incredibly well-known gentlemen. Many of us have been to Davos and  certainly enjoyed the discussions that we've seen there and of course, you've written plenty of books your last one called Stakeholder Capitalism.

It's a topic that you've been talking about since the 1970s. Isn't it? So I'm keen to get your opinion on the opportunities for stakeholder capitalism going forward as hopefully the world enters a post pandemic era.

Klaus Schwab: [00:39:52] Thank you so much Emma and thank you Bob for taking this initiative. It's very important to re-establish confidence into our future.

And we have seen the opportunities and we see the threats. But let me just say, those companies who do not embrace stakeholder capitalism will be on the wrong side of history in a post Corona era. And there are 3 compelling reasons for saying so, the first one is as the COVID pandemic has illustrated, corporations are not just economic production units, they are very important, social organisms. And therefore companies will have to respond, not just to the expectations of shareholders, but to the expectations of all those who depend on and who contribute to the prosperity and the progress of a corporation.

The second reason is that to succeed a company has not only to make optimal use of financial capital, but also of natural capital, human capital and social capital. So the company must care in the best way of all those different forms of capital, because only in such a way, it's in the self-interest of the company, since only by caring  for the stakeholders the company will be able to attract the best talents to keep loyal customers and with impact funds and so on, to have increasingly also access to more favourable forms of finance. The third point Covid has shown us how much we have to invest in remaining resilient. And for corporations, resilience means investing into the long term health and prosperity of the company. So it's to a certain extent short-term versus long-term, but let me summarise. Stakeholder capitalism is the best way to create the most important capital of a company.

It was mentioned several times, trust, trust, and it's the best way to enhance simultaneously long-term wealth creation for shareholders while also caring for people, planet and society.

Emma Crosby: [00:42:40] Klaus. Thank you very much. Nikesh let’s come to you now. I saw you nodding throughout Klaus's comments there.

And you're very well placed to talk to us on the issue of cyber crime because that cyber threat has certainly grown, gone up the list, hasn't it terms of what CEOs are most concerned of this year. Of course you are a leader in cybersecurity, so on the issue of trust, which is what Klaus was just talking about.

How do we create an environment there where technology builds trust instead of eroding it?

Nikesh Arora: [00:43:13] First of all Thank you. I'm nodding because I'm a huge fan of that with Klaus and many others talked about stakeholder capitalism. Yes. And, in the context is, you know, Jim talked about this, Bob talked about this. The pandemic has shown this tremendous sort of human resilience that we've all talked about.

And how have you all been able to adapt during these times. And Bob mentioned, it has also shown that technology has come to the rescue and it's gotten us to survive. And then today we wouldn't be able to do this. You know, we're all relying on technology in everything we do, and the pandemic has kind of made it so visibly apparent to every one of us as leaders or as individuals, that our lives would come to a standstill without the existence of technologies.

And because of that, many of the CEOs when they looked at the risk matrix, then suddenly the bricks and mortar risks are gone. You know, the fact that you can have a shutdown in a country - it's happening, all the stores are shut. Yet. We all somehow have been able to keep our businesses running. And the businesses have been kept running by technology.

I think there's tremendous amounts of trust in technology today. You know, we jumped into cars, we used to into planes, trains, automobiles, all the product technology as in the prior panel that talked about trust in technology and the trust in the vaccines, which wouldn't happen without the gene sequencing technologies we've been working on.

So I think there's tremendous trust in technology. There is a heightened risk people fear that in case of a cyber attack, are they going to be able to get back up again and, and perform because their entire business relies on technology? And I think the way to mitigate that risk is actually to understand the risk, to understand the parameters of that risk, to understand do you have an integrated, comprehensive ability to resist any cyber attack at your end.

And if you have that understanding, that comfort, you feel a lot more comfortable. So I think the way to get over this risk for CEOs and for leaders is to understand your exposure, understand the risk, go ahead, come up with the mediation plans. And I use a new word it's called “cyber resilience”. I think we're all going to be attacked one day or the other as we've evidenced in the last two weeks. We've had 125,000 organizations out there who are potentially impacted. There's the last act that happened on the weekend. So we're all going to get attacked. The question is, have you made sure that when you are attacked, you can get back up and get back running as quickly as you can.

I think that's, that's the call of the hour and I think that's what boards and leaders need to be prepared for.

Emma Crosby: [00:45:38] Cyber resilience, another watch word that we should certainly be noting down. Thank you very much Nikesh.  Afsaneh Let's come and chat to you. We were talking about the threat of climate change with Alison Rose, the CEO of Natwest on the previous panel. From the point of view of a CEO I'd like to talk to you on the issue of climate change from the point of view of an investor, of course, you're the boss of a global investment management firm. So how do you approach climate change there as an investor? And what do you make of the fact that it's actually fallen down the list of concerns for CEOs in this year's PwC CEO survey?

Afsaneh Beschloss: [00:46:13] Emma. It's such a great question, and I think when Bob Moritz put up the statistics from the PwC survey this year, it did actually surprise a lot of people. The important thing though, is that you also pointed out it's gone up from 24% to 30%, and let's not forget this has been a very, very problematic year. We've just talked about that. Ngaire talked about that. Alison talked about that, Nikesh just mentioned it, the need for resilience and, uh, all the things that are attacking us. So there are so many things that are attacking each CEO. And it seems to me, there may be more concern about relatively shorter term versus more longer term kinds of threats.

There's no question though that what has happened on the investor community has been the opposite. So literally in the last year, since COVID struck, whether you're an asset allocator, whether you're an investor in a big sovereign fund or at the World Bank or at RockCreek, or many of the boards I sit on, every conversation is around climate change.

Every conversation is about ESG, but specifically on climate change, the fact that the companies that are not cognizant and are not taking, really sizing of the risks of climate change are going to be getting left behind as Klaus said. So it isreally looking at what is your best long term interest as a business.

And the other thing I just want to say is we are about to launch a climate fund. The interesting thing in March, when we went to a number of investors, we thought their biggest concerns would be, you know, what's going on in the markets? What should we do with our portfolios? Guess what it was, what are you doing about climate risk and what, you know, what sorts of investment opportunities are there?

And then last but not least, if you look at the returns. In 2020 while oil and gas, obviously we know what the story was there, or stranded assets like coal, but on renewables is the one area in energy where there was growth, but a lot of projects did proceed. Well, a lot of stocks in fact did really well.

In fact, a lot of innovations in venture were booming in renewable energy. So I think the investor community is seeing the opposite trend where this is with us and the youth have signed on this, as Klaus always refers to the youth in many of the WEF conferences. And this is something that will stay as a very important concern.

Emma Crosby: [00:48:47] I'm sure it will. Klaus. Let's bring you back in, I know climate changes is a massive passion of yours and, and on this year's PwC CEO survey, 43% of CEOs in the survey say they believe their organization needs to do more to report on environmental impact. So tell us, why do you think better nonfinancial corporate reporting is key when we're talking about delivering stakeholder capitalism.

Klaus Schwab: [00:49:14] I think it's, Emma, it's very clear that capitalism or stakeholder capitalism has to mean more than lofty commitments, which we see quite often. Purpose orientated corporations have to walk the talk and we need a universal framework for ESG performance, a framework which really allows companies to report on and to measure progress and which enables also the public, the general public, to evaluate and to compare ESG performance. For these reasons, the World Economic Forum or actually its business council has taken an initiative and has with the help, thank you, thank you, Bob, with the help of the four major audit companies has developed a comprehensive system of ESG metrics, which serve as a basis, or which should serve as a basis for consistent reporting.

Now, the good news is those metrics have been in the meantime, being adopted by 70 companies. But 70 companies may be small, but they present a value of over $4.3 billion and come also from all parts of the world, so there is now a movement. We are working now together with the standard setters and regulatory agencies to ensure that a common ESG reporting system becomes a reality.

The public wants, we know,such a system which allows them to really have to create a judgement about ESG performance. But I would, I would add the “E” is certainly at the beginning. So certainly everybody is focusing on, but mentioning forwards, I think metrics on diversity and inclusion, the people aspect, if I may say so, are equally important and to enlarge it, I think we need a systemic approach.

Emma Crosby: [00:51:49] That's exactly what Ngaire was saying in our first panel. We mustn't forget the “S” and the “G” of the ESG. Afsaneh, I just want to come back to you briefly. Nikesh. I will come to you straight after if you don't mind, but Afsaneh to you first,  put us into your boots. If you like, as an investor, when you go and speak to CEOs, and you have told us already about how important ESG factors are. So to what extent do you consider ESG factors when you're thinking of making an investment and how much of it is around, say identifying the risks versus the opportunities when it comes to those factors?

Afsaneh Beschloss: [00:52:25] What is interesting is that we have really integrated ESG factors and Klaus was talking about data and the importance of data into the way we invest. So, as you said, if you are not cognizant of let's say the risks of stranded assets, your investment portfolios would have major problems. So when we do talk to CEOs of companies, when we do invest, whether it's in a company or a fund - private or public -these ESG factors are increasingly more important.

I remember years ago at the World Bank, as Ngaire was talking about, we started measuring the importance of governance the G in the ESG. And that was sort of an early part. If you're going to invest in an emerging market company, that if the governance was not right, you would have major problems.

I think what is really interesting is that E we have talked about, but the S almost includes a lot of other things. It is all that multi-stakeholder issues, but it is also things like diversity, things like inclusion, not just at the board level, but who are your five highest paid people in your company that is often we all talk about walking, the talk. It is who are the people who are getting paid most, not, you know, have certain numbers of titles. And what we do at RockCreek is what we have done in the last literally 17 years is gathered that data at the fund level and at the company level on ESG, including on health education, affordable housing, financial inclusion, diversity, and try to put it together.

And it is difficult together with many other friends and academics to find ways to invest. And that in 2020, I have to tell you was one of the most important part of our analysis, both from a risk point, but also from an opportunity point. Risks you wanted to keep out of certain areas, for example, commercial real estate, but very interesting opportunities were in affordable housing, opportunities what Nikesh talked about earlier. And, also we had some conversations about it in the earlier panel, which was the intersection of technology, health and education. Those were some of our best investments. You know, we invested in companies run by, which happens to be women, that were involved in vaccine development.

We did that before COVID not thinking about COVID, but that health and biology, as you said earlier, really important when you put it together with technology. Education, just like, business meetings, it is the long distance learning that has become very important. So a lot of our education,investments where some of our highest return investments, frankly looking towards not just 2020, but ‘21, ‘22, ‘23, the kinds of growth patterns that we're seeing and everything that we've talked about.

And Nikesh talked about future life. It's going to be about that theme moving forward. So if you cannot integrate ESG into investments, I think you will be left behind.

Emma Crosby: [00:55:29] Really interesting to get some  trends from where you are Afsaneh so I thank you very much for that. Well Nikesh let's come to you now to help us close the panel, if you may. I'd love if you could give us one or two suggestions or examples of how you're seeing, maybe in your company or in other companies around you, how they're using technology to build trust among say employees, customers, and other stakeholders.

Of course, trust is an issue that, that we've been talking about a lot on this panel, haven't we?

Nikesh Arora: [00:55:59] Yeah. In the interest of time, I'm going to save us the benefits of technology we all experience every day. Whether it's an access to information or the modularization of services we get. I think one of the biggest gifts the pandemic has given us, and you have to think about it, is has given us a little bit of control back of our lives. And what we've done is not commuting as much, not traveling as much every day, eight o'clock in the morning to work. What we've done is we've taken that extra time and put that time back in the hands of our employees back in matters that really matter, like things like the climate, things like inclusion or diversity, things like what we've seen in this country recently around, you know, the political process and what we've done internally is we've introduced this notion of from employer choice to employee choice. And that's been enabled by technology.

Our employees can now choose where they work from, when they work, how they work. And that's all been enabled by technology. And if you told me we can all run an enterprise without ever going to one physical manifestation called the office, you know, we would have fallen off our chairs and it's like, how's that even possible?

How can have 12,000 people contribute and be twice as productive in that, that kind of environment? And this pandemic, that resilience has proven that we can do that. And employees in my mind are our biggest stakeholders, the pandemic introduced this fight or flight instinct in people. And we went ahead and created that comfort saying, look, life is going to be fine. You're going to be okay. Nobody's going to get fired and we’regoing to get through this together. All of that is going to get enabled by technology. We're going to finish with Jim's words. It says let's get out of the pandemic and renew, not return. So part of what we can all do is we can renew. We can go out and take more care of our employees, we can take more care of our planet. We can pay more attention to inclusion and diversity. Cause we've been running business with our customers forever.

Emma Crosby: [00:57:47] That is something I think we would all welcome Nikesh. Thank you very much for that. I'm afraid we have to kind of wrap up this panel again.

I could keep this going for hours and hours, but I know that you don't have the time for that because you're all very, very busy individuals, but Nikesh, Afsaneh, Klaus, thank you so much. We really appreciate your comments and I'm sure our audience do as well. You've given us lots of food for thought.

Before we wrap up, though, Bob, you've been sitting, waiting patiently, no doubt, really enjoying the conversation as much as the rest of us. I'd invite you to give us some final thoughts now on what we've been discussing during the session. Over to you.

Bob Moritz: [00:58:20] We've missed a theme here, which is we need comprehensive and more informative data. Data to make better, quicker, faster decisions that have an impact on the world.

And technology enables us to find that data, analyse that data, communicate that data, and actually point us to where it's having the most impact. Where Klaus and the rest of the conversation went, as you think about reporting, we're trying to tell a better story to our stakeholders with better informationso people can compare ourselves and demonstrate and understand the progress. We're trying to get that same information into the hands of the asset managers and to the bank so they can actually point their investment where it can have the biggest impact. And we're not going to be able to make the progress that we need to make on climate or societal challenges like wage and prosperity or inclusiveness without actually having the capital markets work as well as they need to.

And in order for it to work as well as it can, that's where data is needed and comparability  is needed for actually demonstrating the progress that we're looking to have. And this is where I think coming back to these concepts of trust, purpose, and impact become so important, which is a theme that we've clearly tried to draw across as we think about both the CEO survey itself, but also the discussions we've had today.

Emma Crosby: [00:59:37] Bob, thank you and worth waiting for, thank you very much for that. Really, really good comments and what, what an incredible hour. So, Bob, thank you very much for that. I think we're going to agree with despite such a challenging year, it is inspiring to hear what CEOs have installed for the next few years, in terms of shaping a brighter future, where growth and sustainability go hand in hand.

Thank you again to our fantastic panellists for their candour and their insight. And Bob, thank you as well to you. Now, if you'd like to learn more and read more about what CEOs think, I hope you will, because it's a really fascinating survey, then I invite you to explore the findings at ceosurvey.pwc, that's ceosurvey.pwc. Nice and easy. We’re just a tiny bit over, but we hope you have stuck with us. Thank you so much for joining me here today and sharing your thoughts. We look forward to seeing some of these ideas become reality by next year's annual PwC CEO survey. Until then,thank you very much. And it's goodbye from Bob and it's goodbye from me.

Thank you. 

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