Sustainable development: A good investment strategy

“If you have certain convictions in your personal life, you also apply them to your professional life.”—Ivan Pictet

Ivan Pictet Senior Managing Partner, Pictet & Cie

Sustainable development is no longer just an idea or a marketing ploy. For many, it’s a viable way to invest their money. For Ivan Pictet, it’s the way.

In a recent article written for The Guardian, Klaus Schwab wrote: “There is a real danger that the financial and economic crisis will develop into a social crisis. Difficult times lie ahead. If we want to keep society together, a sense of community and solidarity are more important now than ever before.”
As readers of Swiss Style know, Schwab is the founder and executive chairman of the World Economic Forum. But this isn’t the only thing he’s known for. About 40 years ago, Schwab developed the “stakeholder” theory for businesses. Ring a bell?
According to his theory, the management of a business ought to act on behalf and in the interests of all stakeholders and not just the company’s shareholders. According to Schwab, the theory is based on the idea that each individual is embedded in societal communities in which the common good (and the success of a business, for that matter) can only be promoted through the interaction of all participants. In his article, Schwab attributes part of the economic recession to what he calls an erosion of the communitarian spirit. “Instead of a communitarian sense of duty,” he writes, “there is a rise of individualistic profit-seeking behaviour in which society plays only a secondary role.”
In line with the theme of this year’s World Economic Forum Annual Meeting – “Rethink, Redesign and Rebuild” – Schwab’s article is a call for a fundamental shift in how we develop our morals, our ethical norms and the regulatory mechanisms that underpin the economy, politics and global interconnectedness.

Answering the call

One man answering Schwab’s call is Ivan Pictet, senior managing partner at Pictet & Cie, one of Switzerland’s largest private banks. Pictet is also, among other things, a member of the Foundation Board of the World Economic Forum and the vice-chairman of the Global Humanitarian Forum. He also chairs the Geneva Financial Center Foundation.

Like Schwab, Pictet is wary of implementing policies that focus on the short-term in the hope of maximizing profits and shareholder value.
“As long-term stewards of our clients’ capital,” he says, “we cannot afford to take short-term views or to ignore the eventual consequences of our actions, whether financial or personal.”

In view of this, Pictet Asset Management began looking at broadly diversified sustainable investment in 1997. In 1999, they launched a Swiss Sustainable Equities fund and, shortly afterwards, a European Sustainable Equities fund. In late 2005, they partnered with Ethos, a Swiss socially responsible investments (SRI) foundation that promotes SRI investment and corporate governance services, to manage socially responsible investment for institutional investors. Today, Pictet Asset Management manages over EUR 1.7 billion in global SRI assets, on top of some EUR 7 billion in environmental-related theme funds. This is less than 3% of the total assets managed by the Group.

“So far, everything that relates to the environment or to sustainable development has been looked at as a constraint which reduces the return on investment,” Pictet says. “I think that the short-sightedness of business, which has been flagrant in this recent crisis, is going to move more and more toward management being more sensitive to the long-term advantages of sustainable development.”

The sustainability approach

Pictet & Cie define sustainability as economic activity that meets the needs of the present generation without compromising the ability of future generations to meet their own. Their SRI portfolios are aimed at meeting their client’s financial needs, as well as their concerns about social, environmental and governance issues.

Pictet & Cie’s approach to managing SRI portfolios is a “best-in-class” one. Rather than make global exclusions or apply negative screenings, they prefer to do positive screenings by selecting companies with high sustainability ratings.
“Among the public institutions, apart from the Dutch and some of the Scandinavian pension funds, very few apply a sustainability approach,” Pictet says.
“At Pictet, we offer our clients the possibility to have a degree of sustainability in their portfolio. In his tailor-made portfolio, the client chooses himself the exact level of SRI constraints he is willing to accept.”

Pictet & Cie says they do not claim that investing in sustainable development leads to better performance. What they do say is that they are, through SRI, able to create portfolios that achieve a high sustainability rating by providing their clients with portfolios that incorporate the maximum sustainability for a given level of risk relative to the client’s benchmark.

Having said this, Pictet believes private banking is more sensitive to the issue of sustainability than institutional investors because their clients are often more willing to sacrifice some of their profit for the long term and for the greater good. But, Pictet stresses, at the end of the day, it’s still the client’s decision to invest in sustainability or not. “I think the critical issue is that you cannot force a vision,” he says. “You can just try to make people more sensitive to it.”

Supporting the cause

Pictet & Cie, together with The Financial Times, developed and sponsors Prix Pictet, an annual photography competition that focuses on social and environmental issues. “The competition not only gives photography expression,” Pictet says, “but more importantly, through pictures you can make people much more sensitive to the issues.” In 2008, Benoit Aquin, a Canadian, was awarded the first Prix Pictet; the 2009 prize winner was Nadav Kander, an Israeli photographer.
In addition to the competition, each year one of the shortlisted nominees is offered the Prix Pictet Commission to photograph a sustainability project supported by Pictet & Cie.

In 2008, the competition’s inaugural year, Pictet supported the Chittagong Hill Tracts Water Project in Bangladesh, which is managed by UK-based charity, WaterAid. The project seeks to provide water, sanitation and hygiene education to communities in the area.

In 2009, the bank supported eco-charity, Azafady, and their work in Madagascar. The charity works with communities in the country to improve their living standards and quality of life while at the same time raising awareness of and respect for the fragile local environment.
As a further example of the bank’s commitment to sustainability, their head office in Geneva has been designed to optimize environmental, social and working conditions. The CO2 emission per employee does not exceed 1.8 t/year and if, after an annual audit, Pictet’s total CO2 emissions are higher than their target, they compensate by purchasing CO2 certificates. In addition, financial incentives exist to encourage employees to use public transport rather than their own cars whenever possible. At Pictet & Cie, it appears, everyone walks the talk. Literally.

For Ivan Pictet, it doesn’t make sense to focus on the short-term as it could have disastrous consequences for the global economy (which, of course, it has!). Rather, like Schwab, he believes the focus should be on the long-term and that sustainable development – by promoting a more stable and sustainable overall economy for companies, investors and societies alike – not only makes sense on a normative level, but it’s a good investment strategy.

Article by Alinka Brutsch

SWISS STYLE honours TNT Express CEO Peter Bakker and employees for their CSR linking hunger and climate change solutions

SWISS STYLE honours TNT Expres CEO Peter Bakker

The ancient Greek historian Herodotus reminded us: “No man is free until all men are free.” American statesman Adlai Stevenson observed, “A hungry man is not a free man.” Sit down with Peter Bakker and you will not leave without knowing that a child dies every five seconds from hunger, and you can do something about it. Like climate change, if you are part of the problem, you are part of the solution.

At Davos 2010, we honour TNT CEO Peter Bakker and TNT’s 152,000 employees in 200 countries who were inspired to make a difference on both global hunger and climate change solutions. This is CSR (Corporate Social Responsibility) that embraces and takes responsibility for fixing the broken chain in the circle of life.

Seven years ago, Bakker wanted to address global hunger. TNT partnered with the World Food Program (WFP) to help transform emergency food distribution. TNT employees volunteer time, use corporate in-kind resources and raise funds to improve food distribution globally. Bakker set up the Hunger Tent at Davos in an act of civil disobedience to galvanize solutions. The Tent has become the WFP Hunger Tent established by the World Economic Forum as the exclusive site for food security sessions, gathering the best brains, leaders and experts to the issue.

In similar fashion, Bakker launched TNT’s global programme Planet Me, to address climate change. His reasoning: TNT contributes to the problem so it must be part of the solution. The 3-part programme to cut carbon emissions that includes electric truck fleets, driver training and competitions, and even innovations such as the creation of biofuel collective farms in Malawi for Jatropha plants, is an effort to stabilize the circle of life between farming, food, economics and social well-being.

TNT went further in the CSR circle and cycle of life, ranking number one on the Dow Jones Sustainability Index and creating corporate accounting methods that allow neither individual nor institution to slip away from tighter metrics for social responsibility and efficiency.
We salute Peter Bakker and TNT employees for unflinching vision and verve, for connecting the logical circle between hunger and environment, and for unceasing insistence that we be the solutions we wish to see in the world.

John François Béguin
Chairman, Swiss Style

Ariane de Rothschild has an undeniable passion

When children ask their parents for an expensive toy, the answer worldwide is often: “Do I look like a Rothschild to you?” With the exception maybe of the Rockefellers, no other family has become such a synonym for wealth in our collective memory. Yet the Rothschilds are not merely a family; they are an institution that has been at the forefront of banking and philanthropy since the mid-18th century.

Baroness Benjamin de Rothschild - “Why did we come to this crisis? This is an important question. If we can answer this, we will also have better answers for tomorrow.”

This rich and long family history can be quite intimidating, yet it stands in stark contrast to the casual and accessible attitude with which the Baroness de Rothschild received Swiss Style in a recent informal conversation in the French Alps. In jeans and a black blazer, Ariane de Rothschild seems relaxed. She smiles radiantly and puts one at ease instantly. As she talks to us about the undercurrents guiding economic activities in today’s world, Ariane’s passion is undeniable.

She is keen to discuss the lessons she learned from the Rothschild’s family history as well as the strengths of the Edmond de Rothschild Group. “Business models have been shattered,” she says. “To rebuild the models, we are looking into what made our family successful in the past.”

The advantage of diversity

Ariane de Rothschild is highly involved in the activities of the Edmond de Rothschild Group, run by her husband, Baron Benjamin de Rothschild, son of the late Edmond de Rothschild. She serves as vice-chairman of the family holding company. She is also in charge of several foundations as well as numerous other endeavours. In addition, Ariane de Rothschild is a trained banker who is well acquainted with the world of finance. She is a member of the Board of the private banks Compagnie Financière Edmond de Rothschild in France and Banque Privée Edmond de Rothschild in Switzerland. “One of our biggest strengths is our diversity,” the Baroness explains. “Our activities range from making Brie cheese to advising governments on financial issues.”

This diversity has helped the family stay rooted during the crisis. “People stopped valuing money and everyone started talking in billions of dollars, without realizing how much a billion is actually worth. My father-in-law, Edmond de Rothschild, used to say: ‘After a certain number of zeros, people don’t know what it represents anymore. They cannot conceive how much it actually is.’ We have other businesses beyond banking. When you run a farm or a foundation, one million dollars is a lot of money. This diversity has helped us stay rooted and is an important aspect of who we are.”

The true meaning of managing risk

In finding solutions for tomorrow, Ariane de Rothschild places emphasis on learning from the past. “Why did we come to this crisis? This is an important question. If we can answer this, we will also have better answers for tomorrow,” she opines.
Leading up to the current crisis, the basic assumption of risk-return had not been respected. “One of the biggest problems was the rate of return expected by investors. You had thousands of people playing the market and they expected unreasonably high returns regardless of market conditions,” she adds. Capital growth became people’s sole concern. “Instead of thinking in terms of capital preservation, everyone was exclusively concerned with aggressively increasing their earnings. We talk to our client in terms of risk management, instead of concentrating solely on returns,” the Baroness explains. One of the most dangerous factors leading up to the crisis was the ‘too-big-to-fail’ notion. This, to me, is unacceptable and kills the benefits of capitalism, such as entrepreneurship,” says Ariane de Rothschild.

As apparently infallible giants collapsed, some are asking whether capitalism is still a viable system. Not Ariane de Rothschild. “Capitalism creates ownership and as such, you are responsible.”
Although Ariane de Rothschild did not lose her faith in capitalism, she does not believe that it’s business as usual. “In my opinion, most business models are shattered. The stock market might be picking up, but I question this take-off. Like many people, my husband and I are worried about how long it will last and whether this recovery is sustainable. To build for the future, we are not only looking to new economic models but also to what made our family successful, businesswise.”

Concordia, Integritas, Industria

A study of the Rothschild history highlights the strengths of the family. “We are a family business, and, as such, we have a long timeline. We are not interested in next year’s profits; moreover, we think in terms of what we will be able to give to our children. This does not mean that we completely disregard the short term,” she elaborates. ”We are also responsible to our employees; yet, above all, the thirty-to-forty-year plan is what really matters. Not many companies think that far.”

The motto of the family – “Concordia, Integritas, Industria” – is the guiding light of the Rothschilds. “When looking into what made our family successful, we kept coming back to this sentence. It is the essence of what we stand for,” Ariane de Rothschild proudly states. “Although it is two hundred and fifty years old, it is nonetheless modern“.

At a first glance, this sentence might seem quite straightforward, yet this is not the case. A very powerful message is linked to the specific connotation of each word. “ ‘Concordia’ is not merely unity. It is unity within difference. The question is: ‘How do you preserve local differences, but create global unity?’”
In the late 18th century, Mayer Amschel Rothschild involved his five sons in the family business as partners. One son stayed in Frankfurt, while his brothers set up establishments in London, Paris, Vienna and Naples. Thus, since the beginning, “Concordia” has always had a special connotation that places emphasis on unity within difference.

“Because of the crisis, we have seen a surge in the concept of ethics,” the Baroness states. “Beforehand, only few people mentioned ethics and now it is on everybody’s mind. Yet ethics is all a matter of balance and this is how we conceive ‘Integritas’,” she explains. You have to be ethical towards human beings, the earth you live on, and ethical towards other cultures. However, one cannot be dogmatic about this. When you live in different countries, you realize the importance of adapting and finding a balance.”

Industria, the third element of the motto, also goes beyond the standard definition. “Industria is not only work, but work and creativity. You have to reinvent yourself to stay on top of the game,” she says. “Our tradition is anchored in innovation and this has been the case for over two centuries and several generations.”

Duty from within

Some would say being a banker and being a philanthropist is a contradiction. Yet Ariane de Rothschild would beg to differ. “We are fortunate to have inherited a unique philanthropic tradition which rests on an absolute commitment to solidarity, social responsibility and the advancement of knowledge. It is our turn and our duty to preserve this legacy.”

According to the Baroness, duty has almost become an old-fashioned word over the last 20 years. It is almost perceived as being an obligation from without. “However, I believe the opposite to be true and I educate my children to be duty bound. You cannot have privileges without giving anything back. Duty goes beyond merely writing cheques; it is about being involved and helping to find new solutions. We like to compare our return on equity in our banking activities to the return on involvement in our philanthropic endeavours. The people we invest in, the projects we support, best represent our belief in the human potential, our commitment to the value of sharing and our search of excellence.”

Article by David Sidler. Photos by Olivier Seignette

Klaus Kleinfeld on why sustainability is encoded in Alcoa’s DNA

Klaus Kleinfeld CEO, Alcoa

It is common knowledge that being at the right place at the right time is half the battle. Yet often this right time and place is cloaked by a thick veil and can only be recognized as such by those who are truly on the lookout.

In May 2008, Klaus Kleinfeld was appointed CEO of Alcoa, the world leader in the production and management of aluminium. He was thus thrown into the driver’s seat of a huge company that employs over 60,000 people worldwide, just months before the outbreak of the worst crisis since the Great Depression.

Some would say he was at the wrong place at the wrong time. Yet Klaus Kleinfeld would beg to differ, as he explained when he sat down with Swiss Style to discuss the major trends facing CEOs across the globe as well as Alcoa’s leadership position in sustainability issues.

Sustainability comes naturally

“Sustainability is in our DNA and has been guiding us since before the word even existed,” Kleinfeld proudly proclaims. This might sound like an empty catch phrase, but in the case of Alcoa, it couldn’t be closer to the truth. Since 2005, the aluminium producer has always made it to the top of the World Economic Forum’s list of the most sustainable corporations. In addition, Alcoa has been a member of the Dow Jones Sustainability Index for 8 consecutive years. “Given our constant efforts and in light of our achievements, we have been recognized as sustainability leaders even beyond our own industry,” he adds.

When it comes to sustainability Alcoa has a natural advantage. Aluminium is both strong and lightweight, the ideal metal for reducing fuel consumption in cars, buses, trains and planes. And it is infinitely recyclable. “Seventy-three percent of all aluminium ever produced is still in use today,” Kleinfeld says. Yet the company’s positive sustainability record is linked to more than a mere natural advantage and is mainly the result of hard work. “We have reduced greenhouse gas emissions by thirty-six percent since the 1990s. At the same time, production has been doubled. Technological innovations as well as better process control have allowed us to improve yields. At Alcoa, efficiency and sustainability are highly linked.”
Combining the notions of efficiency and sustainability is easier said than done and is causing many experts to scratch their heads. What lessons can Alcoa teach us about integrating sustainable solutions into efficient business models?

“The past does not equal the future”

When contemplating trends that will define sustainability consideration in the future, Kleinfeld places emphasis on two fundamental concerns. “We have to be mindful of two major trends that will shape the discourse on sustainability in the years to come: population growth and increasing urbanization. The population is going to grow to over nine billion by 2050. This demographic boom is also linked to a rise in average life expectancy. New York Mayor Michael Bloomberg recently declared that a child born in New York today has an average life expectancy of 104.” Population growth will be accompanied by changing settlement patterns. “More and more people are moving to an urban environment. Experts have forecasted that two thirds of humanity will live in cities by 2050.”

These two trends will shape the world in ways still unknown, yet it is already clear that the impact on consumption will be massive. As Kleinfeld puts it, “They will drive demand for certain goods and services exponentially. Construction, consumer goods and energy consumption will reach unrivalled levels. This is why I believe that the past does not equal the future.”

As awareness of the difficulties ahead grows, attitudes are starting to change. “Especially among consumers, the demand for sustainable products and solutions is on the rise,” he adds. Yet on the supply side work still needs to be done. “One of the fundamental challenges to sustainable development is the current attitude towards investment. We have to move away from the dominant logic that looks at the pure investment cost to one that looks at the entire life cycle of an investment. Business leaders have to ask themselves: ‘How will this work in 50 years’ time?’ Only then will sustainability have an impact on how we invest.”

Sustainability is on everybody’s minds, yet when it comes to finding solutions, the determining bodies are regional ones. “Emphasis has to be placed on treating this as a global problem,” he says. And he is well aware of the fact that this is an uphill battle, but believes that the coordination of policies worldwide is possible. “The world is capable of coming together.” Kleinfeld cites the legislations and actions in response to ozone layer depletion as an example. “I am impressed with what was achieved. This is an example from recent history that is proof of the feasibility of international coordination and that we are capable of turning things around.”

Advantages of thinking green

An important factor aggravating global policy-making on climate issues is that companies often treat sustaina- »»» biity as an add-on that robs them of precious capital they could be investing otherwise, without realizing the potential that it offers. Apart from helping make the world greener, Alcoa’s sustainability efforts have a number of positive side effects. “It has helped our image and also is great at attracting new customers. In essence, it’s good for our reputation.”

“Aluminium itself has inherent sustainable characteristics. Our production process, as well as our product, is thus sustainable”

In September 2009, Alcoa launched a new mine in Juruti on the Amazon riverbank in Brazil. Its sustainable mining methods were a major factor influencing the Brazilian government to offer them the required licences. Alcoa is using the foundations of its world-recognized experience in land rehabilitation in Western Australia and in other parts of Brazil, but is also going beyond and creating a model that is evolving into a benchmark for the industry. “Alcoa will mine bauxite in Juruti and return the area to the same, if not better, condition than when we initially arrived.”

As part of its numerous initiatives in this project, Alcoa has committed to help provide the Juruti region with necessary infrastructures by promising US$ 18 million in investments. Beyond what is planned as part of that commitment, Alcoa will invest voluntarily an additional US$ 30 million to cover projects such as building schools and hospitals.

Being a recognized sustainability leader not only helps Alcoa receive mining contracts. “Our environmental efforts also attract a lot of young talent,” Kleinfeld says. “Often during recruitment interviews, candidates are aware of our sustainability efforts and mention this as a reason for wanting to join our company.”

At the cutting edge

Alcoa is well suited to position itself at the forefront of the sustainability debate. “Aluminium itself has inherent sustainable characteristics. Our production process, as well as our product, is thus sustainable,” Kleinfeld says in conclusion. It seems as if aluminium is naturally unbeatable. It would appear that this is also the case for Alcoa.

Article by Michael Afenzar

How today’s companies can gain a competitive edge

Christian-André Weinberger Corporate Senior Vice President & Global Chief Marketing Officer, Laundry & Home Care, Henkel

In the wake of a major global recession, the days when a successful company’s only priority is to maxi-mize profits are long gone. As Indra Nooyi, the chairman of PepsiCo, said in a recent CNBC interview, “Companies today can no longer perform and toss the costs back to society.

The new future is public-private partnerships where companies feel responsible for society at large. The key now is to build a company that is not only financially sustainable, but sustainable in the sense of being a great citizen who gives back to society.”

Business leaders like Nooyi who espouse the “performance with a purpose” mantra reflect the radical shift in corporate values that has occurred over the past few decades.

Today, corporate responsibility is a major buzzword in the air as more and more of the world’s major corporations adopt new standards of production that are more conducive to social progress and environmental sustainability.

From the beginning

For the leaders of the Henkel Corporation, however, sustainability has been ingrained in their DNA from the very beginning. One of the world’s leading producers of laundry detergent and other home cleaning solutions for more than 130 years, Henkel has had a remarkable track record of developing sustainable and highly performing products long before the word “sustainability” became a major paradigm.

While other corporate leaders have grudgingly accepted sustainability as a necessary evil in today’s business environment, the leaders of Henkel discovered long ago that sustainability, far from being a detriment to product quality and performance, could actually be one of its key innovative drivers.

Henkel Corporate Senior Vice President and Global CMO Christian-André Weinberger, who serves also on the company’s Sustainability Council for Laundry & Home Care, recently sat down with Swiss Style to discuss his company’s century-long commitment to sustainable development and the need to rethink the common misperception today that sustainability standards necessarily hinder a company’s performance and competitiveness.

The new quality standard

The history of the Henkel Corporation, founded in 1876 and based in Düsseldorf, Germany, is filled with important milestones in sustainable development. In 1965, Henkel launched the first detergent with biodegradable components. In 1986, the company produced the first phosphate-free Persil brand laundry detergent by replacing phosphate with Sasil®, a patented substitute that acts as a water softener without causing over-fertilization.

In 1994, Henkel released its Persil Megaperls® brand, the first super-concentrated detergent that allows the user to remove stains at much lower dosages, thus minimizing raw material and packaging waste. In 2007, Henkel developed low-temperature products and refined this concept further by releasing the new energy-efficient Persil ActicPower detergent in 2009 that removes stains effectively in small dosages and at temperatures as low as 15 degrees Celsius.
“Here at Henkel, we dedicate 100% of our product turnover to sustainability in some form,” says Weinberger. “Every innovative new product we put on the market delivers to one of the five major focal areas of sustainability – energy and climate, materials and waste management, water and wastewater management, health and safety, and social progress.”

In addition to developing detergents that minimize energy, water and material waste, Henkel has also invested in designing safer packaging for consumers and has sponsored large-scale volunteer projects, such as the “Henkel Smile”, to support local communities.
According to Weinberger, the company’s dedication to sustainability has played an indispensable role in driving innovation and enhancing product quality and performance over the years. “Performance based on sustainability is the new quality standard,” asserts Weinberger. “Take our energy-saving low-temperature detergent brands, for example. It is much more difficult to develop stain removal enzymes that work just as effectively at 15 degrees as at 90 degrees. Thus, our drive for top quality and responsibility in our quest to save energy forces us to innovate and to invest in research and development, which has ended up producing more powerful, high-quality detergents that remove stains more effectively, and that also happen to save energy.

“Sustainability drives innovation, which drives performance,” Weinberger elaborates. “People used to look at products only from one angle. They assumed that there was necessarily a trade-off between performance and sustainability. Previously, a car with more horsepower must emit more carbon dioxide, and vice versa. However, Henkel strives to combine product performance and quality to enable sustainable development, so that our products exhibit both high performance and at the same time contribute to sustainable development.

“Performance based on sustainability will be the key driver of innovation in the years to come with the magnitude comparable to that of the Industrial Revolution. I am confident that sustainability-based performance will establish a new quality standard on a worldwide level and an achievement currency for innovative sustainable consumption.”

“Sustainability is a competitive edge”

Henkel’s commitment to producing innovative, high-performance products based on sustainability is a cornerstone of the company’s global competitiveness. “Our products have a double appeal to consumers,” Weinberger explains. “On the one hand, they enjoy top-grade performance with smaller dosages, shorter programs and lower temperatures. On the other, they have also come to associate our brands with corporate responsibility and sustainable development, a reputation that we treasure especially in these times.

“Besides, Henkel will be offering consumers information on the sustainable use of its laundry and home care products by scanning Quick Response codes on the product packs with their cellphones. Through this service, we aim to provide not only comprehensive information on the subject of sustainability but also a CO2 calculator.”
In addition to raising consumer satisfaction, the company’s efforts to develop sustainable products have also increased its shareholder value. “Our stance on sustainability speaks out not only to consumers, but to the financial markets as well,” says Weinberger. “In the sector of the non-durable consumer goods industry within the Dow Jones Sustainability Indexes we are the leader for the third consecutive year. This is a good sign that we are moving in the right direction with our continued dedication to sustainability initiatives.”

However, Weinberger also expresses his belief that companies such as his own that already have an established track record in sustainable development are far ahead of the game than are those that simply jumped on the sustainability bandwagon in response to recent regulations. “Sustainability is a competitive edge, and those who realized this early on have an advantage,” says Weinberger. “Henkel has always been an innovative leader and agenda setter when it comes to sustainable development. Today, larger companies in the industry like Alcoa are beginning to follow Henkel’s lead.

“The better we are at creating value added for the consumer – be it functional or emotional – the better we are at generating incentives for consumers to adapt their lifestyles, the more rewarding it will be for us in business and in marketing especially,” Weinberger continues. “It is not to simply sit back and do the minimum necessary to meet regulations. We focus on meeting consumer needs, and at the same time setting the agenda for sectoral standards.”

Setting global trends

In recent years, Henkel has continued to set global trends in sustainable development. The company was the first to sign the A.I.S.E. Charter for Sustainable Cleaning in March 2005, an agreement between the world’s major detergent and soap producers to improve the industry’s sustainability profile. Under the Book & Claim system, Henkel became the first company in the world to purchase certificates for sustainable palm kernel oil for the products of its Terra Activ brand. The ingredients of the cleaning products range are based up to 85% on renewable raw materials.

“Being a leader in sustainable development is so vital to our company’s competitiveness,” says Weinberger. “In today’s environment, you either drive the market through innovative sustainable consumption with the focus on the entire value chain, or the market will abandon your products.”
Adds Weinberger, “This year’s World Economic Forum Meeting in Davos is all about ‘Rethink, Redesign and Rebuild’ – but what really happened was a ‘Reset’ in business values a long time ago. At Henkel, our ambition is that each new product should not only offer customers excellent performance but must also make a contribution to sustainable development at the same time – this we call ‘Quality & Responsibility’.”

Article by Karin Sun

An optimistic perspective on the wind energy market and the Copenhagen Climate Change Conference

Peter Brun Senior Vice-President Government Relations, Vestas Wind Systems

From a modest blacksmith shop set up in Lem, Denmark by H. S. Hansen in 1898, Vestijysk Stalteknit has matured through many growing pains to become the largest Aeolian – windmill – manufacture in the world.

Vestas Wind Systems A/S, as the company is now known, has over 20,000 employees worldwide and boasts sales of over US$ 8.5 billion. Its sales growth in 2008 was 18% and its income of over 720 million dollars represented a 68.2% increase over the preceding period. Vestas has over 30,000 installations throughout Europe, the United States, Australia and China, among many other locations.

This is impressive navigating for a company that had to declare bankruptcy at the end of 1986 because of fickle legislation in the US that completely cut out subsidies and tax benefits of renewably generated electricity.

New management repositioned Vestas as a wind turbine specialist. It is hard to imagine that this world leader had to cut the company payroll to only 60 employees.

Peter Brun, Senior Vice-President Government Relations for Vestas Wind Systems and the Vestas representative at the recent United Nations 15th Conference on Climate Change held in Copenhagen, discussed his perspective on the industry and the meeting of 192 countries with Swiss Style.

A practical approach

“Renewable energy, and wind specifically, is very much a practical approach, a good return on investment,” Brun says. “It is about a government’s future energy mix and strategy and taking the right path. They receive a sustainable and reliable energy source for the next twenty years. This industry will generate green jobs and is a contribution to its total energy supplies and security. Renewable energy is not just a one-off, it’s a win-win-win situation.”

With regard to the Copenhagen Conference, he comments that, “We had hoped for a stronger outcome in Copenhagen. On the other hand, we were very realistic before coming to Copenhagen and that the prospect for a conclusive agreement coming out of that particular meeting looked pretty bad.”
Brun goes on to note, however, that what they had expected at the “international” level from this meeting was confirmation that the positive development of what Vestas was experiencing at the national level, such as in places like the United States, Europe, China, Australia and other markets throughout the world, would be continued “despite the fact that we do not have a multinational agreement.”

An optimistic view

He adds that, “I see a shift of emphasis, as a matter of fact, maybe a little away from the global level to the national or regional level in the next stage to come. I would expect governments and politicians throughout the world would be very keen to let their populations know that they were doing the right things, putting in place the right mechanisms, investments and technologies. That is the reason why I take a rather optimistic view in the developments that we will be seeing in the wind power industry over the next year or so. I’m also hoping we’ll be seeing strong multilateral agreements in the longer term; next year or maybe in one and a half year’s time.”

When asked why he thought it was so difficult for the world to come to general agreement about such a basic issue as clean energy, Brun responds, “I think the world is basically in a pretty difficult situation on many accounts caused by the global financial crisis and recession in some parts of the world. One approach would have been to enact new stimulus into the world economy with a green stimulus on national level with strong peer guidance from the international level. But of course there is always a discussion of who pays the bill, discussion between the North and the South and the UN system. I think this meeting was a replay of those classic issues again but with an interesting East-West dimension between China and the United States, which played into the negotiations in a way one would not have hoped. There is a need to come back to the negotiation table to find the right solutions because these global challenges on climate change cannot only be found on a unilateral national level but need international agreement.”

In Brun’s opinion, “Of course from our perspective it should not be that difficult to do the right thing about climate change because we believe we do have available clean technologies and the challenge is simply a question of securing a fast and stable scaling of those modern energy solutions. However, we realize that we are now talking big politics and therefore I think we try to stay pretty realistic with the challenges that we are facing today. Of course it is a complex political issue but one should not overestimate the complexity. If we do, we will not see the forest for the trees.”
According to the website Answer.com, “Despite a downturn in the global wind turbine market and a generalized economic slowdown, Vestas’ long-standing expertise and market-leading position enabled it to solidify its international standing.”

“Today, wind accounts for 1.5% of global electricity consumption, a minor share of the overall picture. However, if wind power generation grows at the most conservative estimates of 14–16% per year, then our industry will account for 10% of global electricity production by 2020.”

Asked how Vestas is positioned as a global energy producer, specifically as concerns wind power generation, Brun comfortably answered with firm facts and figures: “Today, wind accounts for 1.5% of global electricity consumption, a minor share of the overall picture. However, if wind power generation grows at the most conservative estimates of 14–16% per year, then our industry will account for 10% of global electricity production by 2020,” he comments.
“China is coming on very rapidly. They have a growth rate of over 100% every year in terms of installed wind capacity and have taken a very strong consistent regulatory approach toward growing the clean energy industry. The United States and Canada have barely started their consistent regulatory approach but the new US Administration is trying hard to improve the situation. There is huge potential in Latin America, Africa and other parts of Asia as well. Wind for green power generation is mostly developed in the European Union, especially in three countries: Denmark, Germany and Spain. All the rest is basically unexploited and is waiting for being captured,” Brun states.

The potential is there

And how does Brun see the potential? “The potential is huge. I could cite many numbers in terms of the percentage of global electricity consumption but these are theoretical academic numbers. Wind power fully exploited could deliver the world’s power needs many times. There is, however, general agreement about the potential of wind power, especially in North America, Latin America, parts of Africa and Asia, regions where wind has only started growing and there is great potential. Partly why the Chinese are driving this industry so strategically forward these days is because they can see, apart from solving their own energy problems, the possibility of a lot of export to the rest of the world in the coming years. The latest figure is that there are over 70 competitors coming out of China and the number is growing every year,” he says.
However, he adds confidently, “But we are used to strong competition.”

Article by T. R. Priest

Tiger Tyagarajan Chief Operating Officer, Genpact

Too often, companies do not run, think and measure processes. They run as separate functions and departments with individual goals and deliverables. They do not apply a standard framework or science to processes and they have very few benchmarks and targets for the metrics to run these processes. The repercussions include ineffective processes that drain available cash but more importantly, impact customer satisfaction – a key measure of success, more so now in today’s turbulent economic climate.

A clear example of where this ‘siloed’ behaviour creates extensive damage is the Order-to-Cash (OTC) process – the sequential steps from acquisition of a customer’s order up to the customer’s money reaching the supplier’s bank account. The OTC process is at the core of any business and yet it is the most difficult to track as a process. Even the smallest error can make the process ineffective, quickly draining available cash.

For instance, the aggression that sales people have is great in terms of getting and growing business. However, aggression and speed can lead to several accuracy issues which might not surface immediately but create even bigger problems at a later stage in the lifecycle of the customer relationship. In the leasing business, for instance, you book an order, push a lease deal out and everything is hunky dory. However, the problem emerges a couple of years later when you realize that the asset details captured were wrong to begin with.

Another example of an ineffective OTC process is when customers do not pay the full amount when billed for a number of reasons; unbudgeted discounts, discrepancies on prices, shortage of order, damaged goods, etc. While some of it can be avoided, some of it can’t. The avoidable percent is 6–12 % and 50% of these can be reduced by reengineering the OTC process. This could translate to business impact of US$ 50–70 million for a typical CPG company of $5 billion!

Fixing these errors and ensuring that they do not repeat is always critical, and more so in today’s scenario with little to no revenue growth in sight. CFOs are turning toward their accounts receivable area to help improve cash flow and a well-oiled OTC process ensures that orders get delivered on time and payments are collected quickly.

However, to be a best-in-class process, the entire OTC cycle for an organization needs to be studied in its granularity and involves far more than tweaking a process here or there. It requires an end-to-end view of the entire process and deep insights that can only come after years of experience in handling this for various organizations, industries and situations.

At Genpact, we leverage thousands of associates working in different parts of the OTC process for numerous clients across at least 10 different industries globally to develop insights and prioritize cash-flow improvement opportunities for our clients.
Over the last 12 years, Genpact has created a science called Smart Enterprise ProcessesSM (SEPSM) that delivers substantially improved financial performance by breaking down organizational silos and making business processes truly effective. Compared with traditional efforts focused on efficiency within individual processes or business units, SEPSM end-to-end methodology can deliver two to five times the impact on improved cash flow, margins, revenue growth or other targeted financial and operating metrics.

SEPSM applies a framework of analytics, technology and reengineering to the key processes that a company uses to manage its business. Through experimentation, testing and rigorous analysis of data from over 200 million transactions across more than 3,000 managed processes, Genpact has determined the benchmarks that best-in-class companies achieve at each level in a process. It has identified the key drivers of improved business results for each process, and developed best practices for addressing those drivers.

Some examples of insights in the OTC process we have developed include:

• A 20% DSO improvement can be realized by designing collection strategies based on a customer’s previous payment habits. Additionally, you can eliminate “self-cure” customers (customers who pay on time with out reminders) from the workload freeing up focus on riskier customers.
• Offering your customers a self-serve (invoice receipt & payment) option will save US$ 5–7 per invoice transaction and US$ 25+ per disputed invoice while improving DSO and customer satisfaction.
• 13% of an average company’s invoices are disputed due to errors such as pricing, quantity, logistics, etc. Time to resolve these disputes and to collect monies owed ranges from 7 to 145 days.
• In the Service Industries, establishing integrated workflow between the sales and billing teams can reduce service to invoice time by 50–75% leading to US$ 50–60MM of cash flow.

But more than the specific insights, the real a-ha! moment that we have found in our experience of drilling through the OTC process and making it effective is that not only does it result in improving cash, but it also drives much higher levels of customer satisfaction that enables growing existing relationships and getting new business.

Smart Enterprise Proceses: Applying Science to Managing Busines Proceses

Smart Enterprise Processes (SEPSM) is a groundbreaking, rigorously scientific methodology for managing business processes. SEPSM delivers substantially improved financial performance by breaking down organizational silos and making business processes truly effective. Compared with traditional efforts focused on efficiency within individual processes or business units, SEPSM’s end-to-end methodology can deliver two to five times the impact on improved cash flow, margins, revenue growth or other targeted financial and operating metrics.

Founded in 1997 as a unit of General Electric Co. and spun off as an independent company at the beginning of 2005, Genpact was one of the first companies focused on the global management of business processes. With SEPSM, Genpact elevates the management of business processes to a strategic tool that can significantly improve a company’s bottom line performance.

Genpact is fully focused on process, with the entire organization of over 37,000 employees engaged in improving its clients’ processes to drive measurable impact. It has the reputation of being a pioneer in the field of business process management and has introduced many of the concepts and capabilities that have driven the industry. Genpact’s culture is uniquely ingrained in Lean Six Sigma, the capability having been driven through the entire organization and leveraged in all it does in a highly visible manner. Its mindset is 100% client-centric, demonstrated daily through its commitment to “destroying” its own revenue to deliver greater client value, the 100% empowerment of its employees to do what is needed for the client and the fact that it will not let a contract get in the way of client success.

With almost 12 years of focused effort in the field of managing business processes, Genpact has amassed the IP necessary to deliver the insights and best practices behind the SEPSM methodology. It has the strength in the core capabilities of analytics, reengineering and IT, all uniquely driven by its deep knowledge of process. Genpact has built the SEPSM-specific tools, trained its teams and continues to innovate to make SEPSM a success for its clients.

SEPSM is a strategic direction for Genpact and it is uniquely positioned to deliver the value of SEPSM and apply science to the management of business processes.

Article by Tiger Tyagarajan, COO, Genpact

Pop goes the bubble

The lives of millions have been caught up in economic bubbles that seem beyond anyone’s power to control. Boom followed by bust – can anything be done to stop this vicious cycle? Perhaps not – and perhaps we shouldn’t even try.
In that magical world known only to a few economists, where resources are allocated efficiently and investors and consumers behave rationally, bubbles would always be unambiguously negative. They cause all sorts of distortions and silly, self-defeating behaviour. Exactly what triggers a speculative bubble remains mysterious, as do the mechanisms that inflate and ultimately burst it.

But to put it simply: bubbles start when dissatisfied people try to shake things up by taking risks with their money, their careers and even their lives. Since human beings are both imitative and inventive, other people find ways to jump on the bandwagon, which starts rolling faster and faster – until it crashes.

A physicist in the world of finance

Professor Didier Sornette, a physicist cum economist and chair of entrepreneurial risks at the Swiss Federal Institute of Technology in Zurich, as well as author of Why Stock Markets Crash (2004), is essentially trying to gain a better understanding of the dynamics of bubbles. He is alone – or one of very few – in three leading concurrent fields in the analysis of complex systems: pure physics, applied economics and econometrics, and market practitioners. Being a physicist in the world of finance automatically makes Professor Sornette an outsider. But then again, being alone versus being part of the herd is also a large part of Professor Sornette’s research.

Financial markets, unlike earthquakes or other natural phenomena, express what Professor Sornette refers to as reflexivity – or the expectations of others’ behaviour. Analysing price behaviour, which is a mere human perception of fundamental value, is something else entirely. But markets are endemically heterogeneous, according to Professor Sornette. And that makes them more predictable than “purer” homogeneous systems.
“What we are trying to do is examine evidence of precursory stress in the build-up to a crash. While it’s impossible to determine the crash itself, most complex systems show signs of stress as they become dislocated,” says Professor Sornette in an interview with the Financial Times. He gives the counter-example of a quartz crystal. A single pure quartz crystal does not show any foreshock as force is applied to it, it simply breaks when it can no longer withstand the pressure.

Didier Sornette’s method of fitting a dizzyingly broad array of phenomena into unifying mathematical frameworks has raised controversy. Yet two aspects of his thesis – that bubbles enable the risk-taking behaviour necessary for building future infrastructure and are an intrinsic feature of society – are worth pursuing.

The light and dark side of the bubble

In his 2007 book Pop! Why Bubbles are Great for the Economy, journalist Daniel Gross argues that in bubbles, investors’ money is used to build

“It is only during the reckless abandon of bubbles that individuals and companies take the foolhardy risks needed..."

infrastructure that can’t possibly repay its upfront costs, but ends up being beneficial for companies and consumers in the long run – particularly after more-efficient companies have picked up the pieces for pennies. To take a recent case, most investors in “dotcoms” lost their investment but their money built the software and infrastructure that runs today’s Internet. There are plenty of other historical precedents. For example, a bubble in the 1840s rendered shareholders in train companies penniless but left Britain equipped with the world’s best railway network.

The social economist Carlota Perez believes that bubbles inevitably precede each of the “techno-economic paradigm shifts” by which society advances. In a paper in the Journal of Economic Interaction and Coordination, Didier Sornette argues that it is only during the reckless abandon of bubbles that individuals and companies take the foolhardy risks needed to develop technologies with large social impacts but low financial returns.

Contrary to the above-mentioned examples, financial bubbles do not lead to the construction of useful infrastructures. The dotcom bubble meant that fibre optic cables were laid; the housing bubble involved the construction of houses. Yet what is left once a financial bubble pops? Not much, only the illusion of a never-ending supply of money and a world that tries to fulfil its own expectations. According to Sornette, this wouldn’t be a problem if the “virtual economy did not constantly intervene in the real economy. The branch of finance has to stop pretending to be the queen and should once again become the servant of industry.”

Tulipmania again and again

“Perhaps rather than pretending that we can do something about bubbles, we should surrender the illusion of control..."

How far should we go in allowing bubbles to run their course? Policymakers tend to be terrified of speculative bubbles, and with good reason. Bubbles by their nature represent a failure of control, which looks bad, and threatens the social order.
People who can no longer afford their houses or cars probably aren’t much in the mood to listen to theoretical economic arguments about future benefits: a politician convicted in the court of public opinion of presiding over economic boom and bust might as well start drafting his memoirs.

On the other hand, attempts to prevent bubbles seem to be largely fruitless anyway.
People have been trying to stop them since “tulipmania” took hold in the Netherlands in the 1630s, to little discernible effect. At the start of 2007, banking experts were talking about the end of the boom-and-bust cycle, but it seems only to have been deferred and exacerbated by their attempts to avoid it.

Perhaps rather than pretending that we can do something about bubbles, we should surrender the illusion of control – and concentrate our efforts on trying to make the best of the bust that follows the boom.

Article by Michael Afenzar

Swiss know-how again at the forefront

When, last fall, WISeKey, the bespoke digital security solutions company, was named the sole provider of security software and services to the high-tech sailing syndicate Alinghi, as it prepares to defend its America’s Cup title against challenger BMW Oracle in 2010, Carlos Moreira, the Geneva firm’s founder and CEO, thought the timing was perfect.

Switzerland, like most of the world’s leading countries and brands, was coming out of a tough 2009. The WISeKey-Alinghi partnership, Moreira reasoned, features two of Switzerland’s most futuristic technology-driven organizations. Their renewed partnership on the global stage is as good a signal as any to the world that Switzerland will bounce back, and technology “Made in Switzerland” was determined to be a force in this new decade.

Secure sailing ahead

WISeKey has developed state-of-the-art digital security systems to protect Alinghi’s operations, brand and sailing technology during the race, a four-day 150-year-old event with a huge global following, which befits its status as one of the world’s oldest sporting events.

Carlos Moreira, Founder & CEO WISeKey, Pierre-François Unger, Geneva’s Minister of Economy, and Ernesto Bertarelli, President Alinghi

The range of services WISeKey provides Alinghi includes securing and hosting Alinghi public and confidential websites, creating and distributing biometric-protected electronic tokens to privileged fans and staff, and creating digital signature certificates to eliminate environmental waste for the sailing syndicate’s transactions and facilities during America’s Cup. WISeKey will also provide secure accreditation devices for all Alinghi facilities, including electronic identity credentials and USB data storage security tokens.

“We are proud to be named the sole provider of Alinghi’s electronic security solutions,” comments Carlos Moreira. “WISeKey and Alinghi share many values. We both deeply believe in integrity, excellence and the transforming possibilities of first-rate technology. And we are proud of inheriting the tradition of building winning organizations in Switzerland.”

WISeKey’s eKey+ combines a biometric token device with the WISeKey eSecurity Suite

The deal was a coup for 10-year-old WISeKey. It repeats a success first achieved during the last America’s Cup in 2007. The America’s Cup sailing regatta match has been around since 1857. It is the oldest active international sporting trophy, predating the modern Olympic Games by 45 years. Featuring the best sailors and resources in the world, America’s Cup is often hotly contested and very popular.

The 2007 edition in Valencia captured television global audiences of up to 200 million viewers and featured spying charges as boat syndicates grappled for an edge. The 2010 edition promises to be similarly seductive for global audiences, especially because of plans to reach the large multimedia audiences.

“We are delighted to welcome back WISeKey as a sponsor of Alinghi for the 33rd America’s Cup, says Ernesto Bertarelli, Alinghi team president. “As a team we need to share and access confidential information, such as design data, so security is paramount in our campaign to try and win the America’s Cup again. Our partnership with WISeKey will ensure that we have the optimum protection.”

And more to come

During the next America’s Cup, WISeKey will release its next generation of WISeAuthentic products, including the WISeNetBook and eKey+, a portable secure ID device for organizations and executives with sensitive data to access. A typical eKey+ user site default page can require using fingerprint or password for access and the use of SSL (Secure Sockets Layer) client authentication to establish the encrypted SSL sessions. WISeKey provides Alinghi and industries and governments with sensitive information, facilities and online and off-line events they want to improve with user-friendly and strong identity authenticating products and services.

The eKey+ is a revolutionary concept newly developed by WISeKey. It combines a biometric token device with the WISeKey eSecurity Suite to produce secure and highly trustworthy interactions with websites. In short, it’s the USB key James Bonds would use. That’s why it’s perfect for globetrotting executives and their companies.

Designed to help increase trust between users and web services providers, the security software suite offers corporations, small business owners and government agencies the ability to give their customers and colleagues access to their sensitive data to perform transactions from unsecured access points anywhere in the world.

Meeting an ever-increasing security need

The potential for fraud is a major hurdle for the evolution and growth of online commerce, according to the Organisation for Economic Co-Operation and Development (OECD). Identity theft is defined as the process of using someone else’s personal information for your own personal gain.
In 2008, identity theft worldwide increased by 22% from 2007. The Aberdeen Group has estimated that US$ 221 billion a year is lost by businesses worldwide due to identity theft.

WISeKey’s position as a leader in electronic ID management systems to facilitate electronic transactions is very timely. A combination of popular culture trends, regulatory pressures and e-commerce growth are pushing people to be upfront about who they are on the Web. Millions of users enshrouded in anonymity to engage in everything from bullying to spamming, identity theft to financial fraud are in trouble.

To help users establish their identities online and protect themselves against cybercriminals, software companies like WISeKey and websites such as Amazon.com and eBay’s PayPal require customers to enter personal information on a site-by-site basis. Yet there aren’t enough widely accepted identity standards – the online equivalents of a driver’s licence or social security number. Even Facebook is reportedly attempting to get in on WISeKey’s market.
“There isn’t anything built into the architecture of the Web that lets you verify who you are,” Moreira says. “WISeKey’s systems have been the closest thing for ten years now.”

The eKey+ Biometric USB includes a digital certificate that provides the individual user with the highest level of security, enabling identification, authentication, secure encrypted communications (e-mail, website, etc), electronic signatures and non-repudiation. The WISeKey Personal eIDs associate the identity of a person with a digital identity. On the one hand, a digital ID, or eID, can be viewed as Digital Passports that inform Internet users about their interlocutors’ identity and ensure electronic messages confidentiality. A performance improvement is achieved through offloading computer intensive cryptographic operations from the computer to the external eKey+ Biometric USB.
Bootable eKey+ Biometric USB is the latest module in WISeKey’s family of hardware e-security products, built on the company’s extensive experience in working with banks and governments, organizations which have the most stringent security requirements.

Swiss know-how at the forefront

With these innovations under its belt, the deal with Alinghi concluded a banner year for WISeKey. The World Economic Forum, the foundation renowned for its annual conference in Davos of CEOs and thinkers on ethics and globalization, last September named WISeKey a “New Champion” among “Global Growth Companies (GGCs) at the forefront of demonstrating how entrepreneurship, innovation and technology can relaunch global growth.”
Also, in 2009, WISeKey announced plans to open operations in China and Abu Dhabi. Its partnerships in Brazil launched a pioneering program to use the Web to generate popular support for carbon offsetting programs to help save the Amazon jungle.

Alinghi rejoins a cast of WISeKey clients and partners that are diverse and top of the line, including Microsoft, luxury watchmaker Hublot and IKEA. WISeKey will be joining Hublot in this partnership with Alinghi. The move combines the breakthrough technology WISeKey has developed for Hublot in the fight against counterfeiting with its work to counter corporate espionage for Alinghi.
In the process, the three Swiss firms unite in furthering Switzerland’s world-renowned position as a technology and global business powerhouse – and that’s not about to change.

Article by Jules Landon

The future movers and shakers of the business world

The Global Growth Companies (GCCs) is a relatively new branch of the World Economic Forum designed to focus on emerging multinational companies. The aim is to build up a community of fast-growing companies that the WEF believes will be important players in the world economy in 5 to 10 years. Over the past few years, Grant McKibbin, the Head of the Membership Development Centre of the GGC, has managed to compile a list of around 2,000 prospective GGC members based on financial criteria.

“Eligible GGC members are typically emerging companies with revenues of between US$ 200 million and 5 billion per annum, but also with a minimum year-to-year growth of 15%,” says McKibbin. “These are companies that are growing at a fast enough rate that we feel they will have an impact in the next five to ten years.”
Elaborating further on the characteristics that define a global growth company, McKibbin adds, “The mindset of the company’s management is very important as well. GGC members are those that not only sustain high domestic growth but that also want to expand outside their existing industries or regions.”

The following global growth companies fit McKibbin’s criteria in their commitment to growth, their innovation and their fearless efforts to expand into emerging industries and markets.

Amira Foods – Managing Director: Karan Chanana

Karan Chanana Managing Director, Amira Foods

The Chanana family founded Amira Foods in India in 1915. The company has since become the largest privately owned rice-exporting company in India, exporting more than 55,000 metric tons of basmati rice and 200,000 metric tons of long grain rice annually to the US, Europe, Africa, the Middle East and Asia.

Under the direction of Managing Director Karan Chanana, the company has made an important commitment to strategic growth. Amira has sustained a consistent 20% annual growth rate and has also expanded its product line beyond rice to include sugar, maize, edible oil, palm oil and soybeans.

The company’s international presence has also grown significantly since its founding; today, there are Amira subsidiaries in Kenya, Malaysia, Singapore, United Arab Emirates and the United States.

Today, Chanana continues to push for the company’s expansion by identifying key issues affecting the modern agricultural industry that need to be addressed, as well as refocusing investment on new parts of the world. “The biggest stumbling block to agro-business growth is the food security mechanism,” says Chanana, referring to the inability of much of the world’s population to access food due to skyrocketing prices. “In order to overcome this problem policymakers today need to devise a more transparent plan of action and a methodology of engagement with the private sector.” According to Chanana, public-private partnerships are the missing link that needs to be developed in order to combat third-world hunger and expand food production.

Chanana also believes that investing in new, resource-rich regions of the world could be key to sustained growth. He identifies Thailand, Vietnam and Cambodia as important players in the international rice trade and locations of great opportunity for agricultural sector growth in general. Amira also plans to concentrate more investment in the African continent, which could possibly “be the next food bowl.” Although long grain rice can only be produced in India and Pakistan, Amira is presently investing in lentils, beans and edible oils in Africa.

Mail.com Media Corporation – CEO: Jay Penske

Jay Penske CEO, Mail.com Media Corporation

Mail.com Media Corporation (MMC) is the digital media corporation that operates the Mail.com e-mail service and web portal, which provides customers with access to a variety of online news and entertainment sources as well as to unique portfolios of lifestyle brands that provide some of the best in original content.

Under Penske’s direction, MMC has expanded its operations to include leading entertainment sites, such as Hollywoodlife.com and award shows.

When asked how his company managed to sustain growth in a struggling fiscal year that created dips in revenue for individuals and organizations worldwide, Penske tells Swiss Style that the key is to provide free content along with premium subscriptions in order to keep market growth going while also making profits at the same time.

According to Penske, “an all-premium model is not the most effective” for digital media corporations due to the psychological dissonance involved in bringing out a credit card to access content. “Purchasing content is not the same as pulling out that credit card to purchase products online,” he added, and therefore there is a vital need to return to MMC’s bottom line of original content, providing the consumer with access to quality content that can only be found in one place.

Penske is also confident in the potential of emerging countries, such as China and India, to become major markets for digital media. MMC already has an established presence in India and will undoubtedly benefit from the increasing use of ad rates, measured by cost per thousand page impressions (CPM), to charge for digital services. “It is going to take some time for the developing world to get ad rates and CPM levels to effectively monetize online content,” Penske explains. “However, I don’t think you can ignore markets such as India or China, because in the next 10 years these two markets will become the centre of the Internet universe.”

Brightstar – CEO: Marcello Claure

Marcello Claure CEO, Brightstar

Brightstar is one of the latest companies to join the renowned GGC club. Headed by CEO Marcello Claure, this mobile telecommunications company operates in more than 50 countries across five continents. In the space of just one decade, the firm has evolved from a wholesaler to a full-fledged manufacturer and distributor of mobile phones and is on the verge of crossing a US$5 billion threshold. Brightstar also manages the supply chain of other network operators and retailers, which is an indicator of the firm’s technological edge and efficiency.

Claure attributes the overnight success of his company to the immense utility of the mobile phone combined with the trend towards privatization in previously planned economies. Brightstar, for instance, already has a strong foothold in China, based in Hong Kong. Think, for instance of the manner mobile phones have revolutionized street vendors’ jobs.

Now equipped with mobile phones, they serpent across a big city at the tip of a call to deliver a particular order, an exercise they can repeat over and over without the hassle of getting back to their headquarters to receive the next order.

Claure enthusiastically reminisces to Swiss Style of a previous World Economic Forum Meeting that he attended as a representative of Young Global Leaders. Claure describes the event as a collection of “different breeds of companies that have the opportunity to interact with one another and get the Davos experience.” Claure takes advantage of these meetings to talk shop with other rising entrepreneurs like himself, since many participants “are interested in discussing their business plans and where they see their company ten years down the road.” He adds that he believes “this dialogue is crucial to help entrepreneurs align their business with a common winning strategy.”

Article by Karin Sun