World leaders gather in Davos

Davos World economic Forum

The 2017 gathering at the World Economic Forum in Davos takes place this week against an almost unprecedented backdrop of global political and economic uncertainty.

The ramifications of the UK’s vote last June to leave the European Union are extensive. Re-setting the trading and political relationship will be a multi-year process that will result in positives and negatives for the UK economy.

Later this week, across the Atlantic, Donald Trump will be inaugurated as the 45th President of the United States. Trump is possibly the most unlikely victor of all time, and social media has gone into meltdown over his many Twitter pronouncements and what they might or might not presage.

It is fair to say that Trump will be a different kind of US President than we are used to. However, we should judge him not on what he says – but on what he does. The US constitution confers extraordinary powers on a President, but it also provides very many checks and balances.

Indeed, some of the forward-looking confidence data suggests that a large contingent of corporate America expects good things from Trumponomics. The key pillars of Trump’s economic policies include tax and regulatory reform, tax cuts and infrastructure spending – accompanied by the odd dose of ‘America first’ protectionism.

Brexit, and Trump’s election victory, are unarguably seismic political developments. A primary driver of both events was the feeling among millions of ordinary voters that they were not benefiting from the economic growth generated through globalisation.

Davos is regarded by some as merely a talking shop. It isn’t. And it’s encouraging that the agenda this year is focused on ‘responsive and responsible leadership’. This requires a recognition that large segments of society feel left behind and ignored by the establishment (many of whom will be at Davos).

Innovations from automation to artificial intelligence are changing the way that many sectors work.

Many UK and US voters feel nervous about the future – anxious about whether they will lose their jobs as a result of technological advances. This is an understandable concern. Innovations from automation to artificial intelligence are changing the way that many sectors work.

The change from using horses to machinery made the farming industry more efficient and able to produce vastly more, literally feeding economic growth.

The current debate focuses on people’s fear of change – rather than the possibilities that change can bring. Leaders in Davos – and beyond – need to help people understand that this particular form of change can be positive.

Responsible leadership therefore entails a deeper commitment to development that takes everyone with it and equitable growth, both nationally and globally. This issue is now top of the political agenda in the UK, and was recently articulated by Prime Minister Theresa May in her commitment to building a ‘sharing society’.

In business, individual leaders need to consider it a core responsibility to make sure our companies promote and reward ability equally and give opportunities to all who are able.

The UK asset management industry alone has £5.7 trillion in assets under management. This means my own sector can take action to help close the divisions that exist.

Fundamentally, we are in the business of looking after other people’s hard-earned money – a responsibility that we take very seriously. We need to manage that money shrewdly and treat our customers fairly.

Much of what we manage is invested in bonds and shares issued by companies. We owe it to the people whose money we manage to ensure that those companies behave in a decent and fair way. Not just to us as shareholders but also to their customers, employees, suppliers and others who their work affects. If the company boardrooms don’t act responsibly, we need to let them know that we won’t stand for it.

The article above by Martin Gilbert, CEO, Aberdeen Asset Management, originally appeared on the Aberdeen Assest Management ‘Thinking Aloud’ blog on 16th January 2017