Finance at a Crossroads: A Moment of Opportunity in a Sea of Uncertainty

In today’s fast-paced world, the only constant is change. From global markets to local communities, uncertainty?seems ever-present. With the array of challenges coming from almost every?area (from supply chain insecurity, deglobalisation, inclusive growth?to demographic shifts),?the financial world has been placed at a crossroads. How it responds to the mounting pressures and changes will shape our financial systems and broader society. We need to use?this as an opportunity to reach a more stable, prosperous future.?

Though financial markets are inherently prone to fluctuations, recent years have exposed them?to a combination?of factors that have amplified?this instability. ?

We have seen inflation surge globally?(6.8% in 2023 and 5.8% in 2024?(IMF 2024)), reducing purchasing?power and causing central banks to raise interest rates, bringing up?borrowing costs and slowing?growth. The possibility of recession is coming ever closer?in several major economies, exacerbating?debt levels as governments, businesses, and households rely on loans to stay afloat and spiked by the COVID?pandemic (global debt has reached a new record height of $313 trillion?(IIF 2024)). Emerging markets are particularly challenged, as they face both tighter financial conditions and capital flight, whilst trying to manage their own economic recovery.?

Regional conflicts, trade wars, and rivalries are becoming ever louder, causing the rapid reshaping of financial landscapes, markets?and supply chains. With this, the trust in globalisation,?and its promise of growth,?has been shaken, bringing with it a new trend of nationalisation – “friendly-shoring”.??

Governments are struggling to keep pace with the rapid evolution of finance and technology?and even when they do, approaches are diverging. Fragmented regulation and policy complicate?international business operations, trade?and investments?alike. At the same time, ageing populations (WHO 2023) and widening economic inequality (Oxfam 2024) present long-term structural challenges, slowing economic growth and stoking social unrest. ?

Climate-related risks are mounting, from infrastructure damage to real estate losses?caused by?extreme weather events. These result?in the growing complexity of insurance and risk models. Evolving ESG regulations seek?to hold businesses accountable?through the?needed?transition to a greener economy. However, the metrics used to measure impact are still being developed, and the risks of greenwashing are real?and arguably growing.?

So, we stand at a crucial turning point. Change is inevitable,?but?the direction it goes in is not. By learning from past mistakes?and?understanding the present dynamics, we can begin shaping a future grounded in adaptability and resilience, pushing past the current challenges. ?

One area showing promise is China and the ASEAN region, which continue to push forward. Emerging markets are on track to grow?(ADB 2024), fuelled by strong domestic demand and expanding middle classes.?Such success can be learnt from;?tailored policies and innovative solutions have the potential to spur similar changes in other regions. ?

Moreover, major disturbances, turbulence and uncertainty are not new.?History?shows that?the financial industry can?innovate?in such times. Whether it’s?developing new financial products, creating sustainable investment frameworks, or leveraging?technology for better risk management, the sector’s ability to adapt will be tested and proven once again. Moving forward, we have both the successes and the failures of the past to guide our actions. ?

Advances in sustainable technology offer promising, practical?solutions?to the tension between economic development and climate responsibility. From renewable energy to green finance, innovation is key to making the transition feasible. The financial industry’s role in funding and scaling these solutions is crucial.?

So, this uncertainty is a?moment of opportunity?to steer finance toward a more sustainable, equitable, and resilient future. Achieving this will require?foresight, innovation?and collaboration. ?

At our 2024 Ethical Finance Global Summit: Progress or Procrastination,?we will delve deeper into this topic during our Navigating Uncertainty?Session. Come and hear prominent voices like Leon Kamhi Kamhi, Federated Hermes Limited ’s own Head of Responsibility and EOS and John Pang , Senior Fellow at The Belt and Road Initiative Caucus for Asia Pacific.

But be quick, with over 290 registrations, tickets are selling out fast! Buy your tickets now at https://www.eventbrite.com/e/ethical-finance-global-2024-tickets-718453903967?aff=oddtdtcreator, or to find out more, visit https://www.globalethicalfinance.org/our-work/ethical-finance-summit/ethical-finance-global-2024/.?

Written by Global Ethical Finance Initiative (GEFI) 's Nina Oldham . ?