Governance, Society, and the Environment
1. Our Common Agenda – Peace for Progress – The recently published United Nations (UN) report on Our Common Agenda presents the UN Secretary-General’s vision on “the future of global cooperation through an inclusive, networked, and effective multilateralism.” Our hope is that the nations of the world agree in 2022 to cease all military conflicts for a period of at least two years in order to focus global attention of driving progress and delivering on this Common Agenda and the Sustainable Development Goals.
2. New Institutions – We hope that investigations begin on how to structure, resource, empower, operate, and govern new international agencies. These will be required to anticipate and drive co-ordinated action, regulation, and responses in areas such as global horizon scanning and risk identification, crypto assets, AI governance, and human enhancement.
3. Countries – A New Rescue Recipe – The continuing social and financial ravages and aftershocks of each pandemic wave will push some already fragile nations beyond the brink and into bankruptcy, debt defaults, deep recessions, economic freefall, and savage impacts on individuals and society. In line with the UN Common Agenda, a search will begin for new models and experiments around economic rescue plans. These will need to focus on long term sustainability through foresight, education and skills, the environment, health and wellbeing, governance capacity development, infrastructure delivery, industry support, new venture creation, robust financial systems, and economic governance.
4. Trust as Social Capital – Globally, we could see a tipping point around declining trust in governmental, societal, and business institutions. Some leaders, governments, and businesses will fall or fail because of insurmountable trust failures. Building trust will increasingly be seen as route to creating and growing social capital. Citizenry will reward those taking genuine trust enhancing steps and punish those engaging in “trustwashing.”
5. Net Zero is Not Zero – Countries, cities, and organizations will increasingly be challenged to provide full transparency on their net zero emissions plans and claims. We will see a growing use of blockchain technology to provide full visibility of emissions across value chains. Evidence will be required to demonstrate that carbon offsets are genuinely tied to the claimed level of emissions reduction and absorption. Pressure will increase to switch from purchasing carbon credits to delivering actual emissions reductions.
6. Planetary Boundaries – Our environmental awareness will expand beyond climate, energy, and waste to encompass other critical areas where planetary boundaries are being breached or tested. These include access to clean water, atmospheric aerosol loading, air quality, biodiversity, diversification of food crops, sustainable land use, biospheric integrity, stratospheric ozone depletion, and oceanic acidification.
Economy and Finance
7. Inflation and Interest Rates – Inflation could run rampant in some economies – driven predominantly by supply chain issues rather than massive surges in market demand. Some could see their currencies being devalued by 10% or more while others accelerate into a deflationary spiral. Fiscal and economic uncertainty and a slowdown in business investment and housing markets could see countries like the US and UK set central bank base rates at 0.1% or lower in the first half of the year, with a maximum of 0.5% by year end.
8. Stock Markets – After strong volatility driven by the pandemic and global economic uncertainty, equity markets in the US and UK in particular will reach all-time highs in the second half of 2022. This will be driven by heavy corporate headcount reduction, reduced office space requirements, cost cutting, and faster innovation through accelerated adoption of productivity technologies such as robotic process automation (RPA) and artificial intelligence (AI).
9. Growth Stocks and Sectors – Apple’s market cap could exceed US$4 trillion during the course of the year, while Microsoft, Alphabet (Google), and Amazon could all power past US$3 trillion. China will see its first trillion dollar listed corporation. The fastest growing sectors will include artificial intelligence (AI), biopharma, green technologies, and metaverses – driven by the creation of – or presence in – metaverses by Meta (Facebook) and many other technology corporations and global consumer brands.
10. Sector Disruption – Travel, hospitality, and retail will remain among the worst hit sectors. Over 10% of global airlines will seek government bailouts and / or bankruptcy protection due to passenger hesitancy resulting from pandemic travel restrictions and reductions in corporate travel.
11. Cryptoeconomy Participation – Market growth will be driven by greater investment by financial institutions, corporate crypto acceptance, increasing balance sheet holdings, and easier access through payments providers such as Mastercard, Visa, and PayPal. By the end of 2022, user numbers will rise from over 300 million to 600-900 million globally and from 3.3 million to over 5 million in the UK.
12. Cryptocurrency Market – The crypto economy market capitalisation will rise from a peak of around US$3 trillion in 2021, to over US$7.5 trillion during 2022. Ethereum’s market cap will temporarily overtake Bitcoin during 2022. Bitcoin’s price will hit US$150,000 and Ethereum’s US25,000 at different points during the course of 2022. Bitcoin’s market cap will at some point overtake all listed equities except Apple.
13. Crypto Takeovers – We will see the first takeovers of real world business and sporting teams funded through crypto assets and Non Fungible Tokens (NFTs). Many more businesses will use NFTs as mechanisms to generate new revenue streams.
14. The DAO Dance – We will see a rapid increase in use of, and experimentation with, the concept of a Decentralised Autonomous Organisations (DAO) in the crypto economy, physical world businesses, communities, and even local and national governance and decision making. The most common current use of DAOs is for fully automated software applications where the rules are encoded in ‘smart contracts’ running on a blockchain. This means they “answer only to their own code.” They have no board of directors, management, or staff. They are governed by the community of token holders or their nominated representatives. The community proposes and votes on key decisions and rule changes.
The DAO concept could also have broader applications beyond software in areas such as community governance and political decision making. They are considered important as they are a way for the initial developers to prove and maintain the application’s integrity in the unregulated crypto market – which can see scams such as “pump and dumps” and “rug pulls.” A DAO allows for sound governance and total transparency – which are critical in an era where trust has become a prime asset for business.
15. Digital Transformation and Corporation Zero – A growing number of businesses will become increasingly frustrated with their business transformation initiatives due to cost, a slow pace of delivery, and limited impact on performance and innovation. Emphasis will start to shift toward ‘Corporation Zero’ approaches where they start in parallel to redesign the entity. This means starting with a clean sheet of paper and designing the essential outputs, data flows, and applications. Only when the digital model works well in simulated form will the organization then determine the physical elements required – such as people, plants, and buildings. These physical factors are often the source of the complexities, structural barriers, and cultural challenges that hamper current transformation programmes.
16. Artificial Intelligence (AI) – Economic volatility, market uncertainty, and competitive pressures will drive an accelerated adoption of increasingly sophisticated AI and robotics solutions. These will be seen in sectors ranging from financial services and retail through travel and manufacturing. Leading AI players such as OpenAI, DeepMind / Alphabet, IBM, Microsoft, and early stage innovators will continue to drive the frontiers of AI’s capabilities – taking us ever closer to the goal of artificial general intelligence (AGI). These factors will increase the pressure on governments and firms to accelerate their journey of developing AI literacy and increasing experimentation and adoption.
17. Robotic Process Automation (RPA) – In 2022, we could see a growth in RPA adoption of over 50% for administrative process intensive sectors. Medium to large enterprises will look to RPA to speed up digital transformation efforts and allow end users far greater input into how day to day processes can be streamlined and automated.
18. Blockchain – We can expect to see a rapid uptake in the use of blockchain solutions in most sectors. Businesses and government departments will begin to see the value in terms of security, immutability, and transparency that come from such applications.
19. Metaverses – This could become one of the biggest trends and technology challenges for corporate IT and digital functions in 2022. The catalyst has been Facebook’s rebranding to Meta with a focus on taking its three billion customers into its own metaverse. We can expect to see all of the major tech players creating a mix of consumer and business facing metaverses – Microsoft’s Mesh already serves the corporate market. A range of global consumer brands will look to establish a presence for marketing, sales, and customer experiences. Skills in developing a metaverse presence will be in high demand.
20. Retail to Rental – Globally, the potential to use existing retail space differently is becoming apparent and there will be a major increase in activity in 2022. For example, UK retailer John Lewis has announced plans to build up to 10,000 homes above or in place of existing retail outlets and in the car parks for properties that it owns. With Blackstone the largest owner of housing in the US and UK banks like Lloyds and Nationwide also entering the build to rent space, the trend could accelerate. Many owners of retail space could look to add rental properties to existing developments such as shopping centres or replace underperforming stores with residential rental properties in attractive high street locations.
21. Retail Embracing Crypto – A growing number of retailers will start accepting a range of crypto assets as payment. The evidence is growing that customers increasingly want to pay with crypto – in the UK more people aged under 25 own crypto than have pensions or savings accounts. Vendors such as Burger King, Pizza Hut, Etsy, and several hotels already accept crypto payments, and players like Mastercard, Visa, and PayPal are making it easy for merchants to accept crypto.
22. Retailing into the Metaverse – Retail forays into metaverses will accelerate following Facebook’s Meta announcement. Opportunities include marketing and customer engagement spaces, retailing of products for physical world, and sale of exclusive in world virtual items, such as Gucci’s virtual sneakers. Metaverse entrants already range from upscale brands like D&G and Balenciaga through to mass market providers such as Disney and Adidas. The commercial opportunities will also become increasingly clear. For example, Ariana Grande’s August 2021 concert in the Fortnite metaverse Rift Tour attracted around 78 million viewers. Increasing numbers of individuals will work in – and want to spend in – metaverses. These jobs will range from designing ‘skins’ (outfits and visual personas), properties, and experiences, through to building entire towns, cities, countries, and continents for other participants in these virtual worlds.
Reference: Rohit Talwar