dinsdag 4 december 2018

Briefings from GOLDMAN

December 03, 2018
2019 European Economic Outlook: A Decelerating Recovery
Europe's economic growth is expected to slow next year as the benefits from past tailwinds fade, according to Goldman Sachs Research. While underlying momentum has slowed, recent data -- such as a sharp, but temporary, drop in the auto sector due to a change in environmental rules -- has exaggerated the slowdown. Financial pressures in Italy, the continuation of global trade tensions and Brexit will challenge the regional outlook with our economists projecting that the acceleration in Euro-area growth is behind us.
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What Happens When...a Goldman Sachs Analyst Tries "Precision Farming"
Above: Jerry Revich of Goldman Sachs and Zac Spence of Trimble, an industry technology solutions company
The world's food supply needs to increase 70% over the next 30 years to keep pace with population growth -- a task made only more complicated by the limits of natural resources. "Because we're out of arable land, all of that production growth has to come out of the existing footprint," says Goldman Sachs Research's Jerry Revich, who despite the scale of the problem sees the challenge as surmountable. In his view, the next leg of food supply growth will be fueled by technologies that can help farmers get more from the land, while increasing sustainability -- a solution known as "precision farming." This includes self-driving tractors paired with precision planters that are optimized to plant more seeds in the most fertile patches of land -- a technology Revich recently had the chance to experience firsthand. "What we saw today was the first building block in what we need to see to feed a growing population," Revich reflected as we followed him through his day in the field.
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Talks at GS: Joanna Coles and Storytelling in the 21st Century
Above (L to R): David Solomon of Goldman Sachs and Joanna Coles
When Joanna Coles became editor-in-chief of women's magazine Marie Claire, she aimed to transform the pages for a new generation of readers. "I thought, well, women are interested in mascara and the Middle East, why can't we have both in one place?" Coles said last week during an episode of Talks at GS moderated by Goldman Sachs CEO David Solomon. "We referred to it as 'feminism by stealth.' This was back in 2006 before the reawakening of feminism really began to start feeding stories. And we started covering a lot of stories about women in Afghanistan or in the Middle East who weren't getting any coverage at all." Today, Coles -- who serves as a creative advisor to CBS This Morning and sits on the board of directors of Snap Inc. -- is heartened that many of the people whose stories are left out of mainstream media are taking to social media to make their voices heard. But her enthusiasm for the "extraordinary vehicle" of social media remains tempered by the fact that "there are no real checks and balances on it at the moment" to prevent the dissemination of false news.
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Briefly...on the Board of Directors' Perspectives on ESG
Above (L to R): Heather Kennedy Miner of Goldman Sachs and Ellen Kullman
As companies address the growing importance of environmental, social and governance issues, their boards of directors are increasingly weighing in. At the Goldman Sachs Sustainable Finance Innovation Forum in November, Ellen Kullman, former CEO of DuPont who also serves on the boards of companies including Amgen, Dell Technologies, Goldman Sachs and United Technologies, shared her thoughts with Goldman Sachs Head of Investor Relations Heather Kennedy Miner.
Heather Kennedy Miner: Ellen, given your experience as a board member across various industries, can you share your perspective on how boards are approaching their discussions around environmental and social issues? What's driving that shift?
Ellen Kullman: Over the past decade, boards have adopted a broader, more inclusive definition of governance. Part of this stems from the rise of passive investments, which are managed by institutional investors who -- rather than focus solely on short-term metrics, such as quarterly earnings -- are increasingly active in pushing companies to focus on long-term performance. Shareholders are relying on the board to make sure the company is going in the right direction, which includes a higher set of expectations than before.
There are many different ways that corporate boards today engage on ESG. As directors, we discuss ESG and related reputational issues in our risk or audit committees. We consider ESG in our compensation committees when we're evaluating whether the company has the kind of culture that attracts the next generation of people who want to come work for you. Then there are environmental and other important issues that the public policy committees are typically responsible for.
I sit on boards across various industries and importantly, ESG means different things to different companies. At DuPont, which manufactures a variety of industrial products, ESG was discussed in terms of the company's environmental footprint. Pharmaceutical and medical device companies, on the other hand, may look at ESG issues through the lens of drug pricing or safety requirements. And service companies, such as Goldman Sachs, typically face a different set of ESG issues, such as how they can effectively manage reputational risk or harness capital to have an environmental or social impact. While every company has a different set of issues they consider, at the end of the day, leading management teams are thinking about how to make the world a better place through their core business activities and risk management processes. And I think many shareholders today are asking management teams about those important issues.
HKM: So, how are boards responding to that increased focus from investors?
EK: The key question from investors is whether the company has the right processes and procedures for dealing with the myriad of ESG issues that come up. At the board level, whether it is the risk, audit, compensation or public responsibility committee, investors will look at the respective charters, what they cover and how each committee is measuring itself against its goals. And so as a Board, we need to be clear about our oversight responsibilities in this area.
HKM: That raises a question that investors often have which is on the benchmarking process. When you were CEO of DuPont -- where you defined sustainability as a strategic imperative for the company -- how did you evaluate success across your business?
EK: At DuPont, we decided that when we released our Environmental Sustainability Report, we would be as transparent as we could and then continued toward greater transparency over time. And it served us well when we had issues or delays that we had to work through with our stakeholders. I think the kind of relationships that we built by being open really helped us in tough situations throughout the process.
HKM: Ellen, you're also co-chair of Paradigm for Parity, which is a critical initiative that focuses on gender equality within the C-suite. How are boards focused on issues of diversity?
EK: Boards are very concerned about diversity because diversity is not just a social issue -- it's an economic issue. In my experience, I've found that diverse teams make better decisions. And diverse teams are more holistic in how they look at a problem. So from the board's perspective, we want to know if the company has the type of culture that is accepting of people who look different than the majority of people at the firm. And do these people want to work for your company? Because if you have an inclusive work environment, you are going to get people who will be comfortable really looking at tough issues and making sure that the decisions come out in the right place.
Goldman Sachs Media Highlights
The Glass Hammer - December 3
Voice of Experience: Katie Koch, Partner, Goldman Sachs
CNBC - November 28
Recession Unlikely in 2020, Says Goldman Sachs Strategist (2:38)
Bloomberg - November 28
FOMC Will Stay the Course, Goldman's Wilson Says (3:12)
CNBC - November 26
Goldman's Commodities Chief on Oil's Price Plunge (6:20)
Bloomberg - November 25
Goldman Models Impact of Rate-Shock Scenarios on Markets