The forces driving globalisation have not gone away. They are just in abeyance as populist politicians have used nationalism to seek election success, whipping up the frustrations of voters who felt partly disenfranchised by the impact of cross-border decision-taking.
But the world is a small place, continuing to shrink, and there are two issues driving home the need for globalisation: climate change and the pandemic. Neither can be addressed solely by individual nations and the public increasingly recognises this.
As we approach COP26, even the most nationalist of governments and their supporters understand there is no way out but to cooperate in order to head off catastrophic temperature change. It is no good the UK setting CO2 reduction targets, for example, if China has approved the opening of 24 new coal fired stations in the first half of 2021 alone. Cross-border diplomacy to implement global restrictions on emissions is essential to bring to a halt, let alone reverse, heat damage to the planet.
And such cooperation applies equally to individual companies and investment managers who invest in them as they wrestle with Environmental, Social and Governance (ESG) policies. Under pressure to minimise and then eradicate their carbon footprint, it is far more than just a brand issue for executives. Businesses have to demonstrate responsible investment decision-taking and, to avoid accusations of greenwashing, show they are making a real difference. In particular, investors allocating capital must exert influence by pooling resources globally to force companies and even governments, via exposure to sovereign debt, to change their ways. (Incidentally, forming alliances needn’t undermine competition in the asset management sector. There is a myriad of ways to undertake proprietary research and construct portfolios to deliver a spread of investment returns despite evidently overlapping exposures).
Robert Armstrong in the Financial Times makes some good points in his recent article for the publication, stating his belief that financial markets do not have a meaningful part to play in solving ESG related problems until citizens and governments act first and decisively. But fundamentally, business is as much a part of society as the institutions that have a formal constitutional role in governing us. They should set an example in tandem with governments and citizens on climate change, let alone on diversity, and use global cooperation where relevant to make a difference. Government regulation alone is not enough, certainly from the perspective of creating a consensus on the need to act.
Second, the pandemic. This is no one country’s problem and not in the gift of any one country to provide a solution. Mask wearing globally has spread faster than the brand of coca cola as mankind grapples with the devastating impact of Covid-19. The solution lies in globalisation; a globally based approach to vaccine creation and delivery, travel restrictions, regulation of laboratories playing with viruses and broader healthcare initiatives.
Which takes us neatly to the final point. How do we ensure the net benefits of globalisation are understood and accepted by voters, investors, and the media alike? It is by shrewd communications, explaining how each aspect of cooperation between nations, each global solution, impacts individuals for the better in their everyday lives; how each country cannot shield itself on its own from malign forces so easily able to spread from one border to the next. Globalisation should be presented as a force of liberation supported by practical examples, not a way to stifle accountability.
When the xenophobia of nationalist politicians no longer wins elections, globalisation will be back in vogue. A pandemic and climate change are providing a powerful helping hand.
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