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Thomas A Singlehurst

Nithin Pejaver

Cameron Hedrick

Peter Fox

Leah Belsky

Corey Thomix

Greg Siegel

Mike Howells

Jeff Tarr

Mark Orisk

David Somers

The skills gap topic and how it is addressed is of critical importance. This is especially true in the current environment, where tightness in the labor market, coupled with the ever-present threats posed by automation, are having real world impacts on lives around the world. Although a lot of stakeholders are impacted by this phenomenon, the focus of this report is on the role played by enterprises — i.e., large companies — in identifying the skills of the future and equipping their employees with the tools they need to survive and thrive in a world beset by change. Our survey work shows that companies are ambitious and optimistic about the impact enterprise learning & development (L&D) programs can have not only on their businesses but also on employee welfare. It also shows these companies are “putting their money where their mouth is” and backing this ambition with significant budget increases (18%+ annual growth over the next 2 years). In the report Citi’s Chief Learning Officer, Cameron Hedrick, and Head of Enterprise Learning & Talent Technology, Peter Fox, outline their vision of what the future of L&D looks like and what the benefits will be for those companies that take proactive steps to embrace the future. We also include a number of interviews with subject matter experts, including strategy consultants and best-in-class providers of content, technology, and services from across the professional learning landscape. Each has their own area of focus, but all are in agreement on the significant opportunity for growth in this large but fragmented market. What, then, are the implications? As always, it is a question of concentric circles. At the center is a significant opportunity for those companies focused on closing the skills gap, both in terms of better direct financial performance (better productivity; lower costs) as well as higher employee satisfaction. There is also an opportunity for the professional learning companies that enable this. The more interesting impact, though, is perhaps in the outer rings of the circle: the employees who move onto more remunerative and fulfilling jobs without the threat from automation/risk of redundancy; the minorities no longer deprived of access to education with long-term effects on their health, wealth, and happiness; and the benefit for economies from increased productivity and a more flexible workforce. Authors: Thomas A Singlehurst, CFA,Nithin Pejaver, CFA,Cameron Hedrick,Peter Fox,Leah Belsky,Corey Thomix,Greg Siegel,Mike Howells,Jeff Tarr,Mark Orisk,David Somers,

The skills gap topic and how it is addressed is of critical importance. This is especially true in the current environment, where tightness in the labor market, coupled with the ever-present threats posed by automation, are having real world impacts on lives around the world.
Although a lot of stakeholders are impacted by this phenomenon, the focus of this report is on the role played by enterprises &mdash; i.e., large companies &mdash; in identifying the skills of the future and equipping their employees with the tools they need to survive and thrive in a world beset by change.
Our survey work shows that companies are ambitious and optimistic about the impact enterprise learning &amp; development (L&amp;D) programs can have not only on their businesses but also on employee welfare. It also shows these companies are &ldquo;putting their money where their mouth is&rdquo; and backing this ambition with significant budget increases (18%+ annual growth over the next 2 years).
In the report Citi&rsquo;s Chief Learning Officer, Cameron Hedrick, and Head of Enterprise Learning &amp; Talent Technology, Peter Fox, outline their vision of what the future of L&amp;D looks like and what the benefits will be for those companies that take proactive steps to embrace the future.&nbsp;We also include a number of interviews with subject matter experts, including strategy consultants and best-in-class providers of content, technology, and services from across the professional learning landscape. Each has their own area of focus, but all are in agreement on the significant opportunity for growth in this large but fragmented market.
What, then, are the implications? As always, it is a question of concentric circles. At the center is a significant opportunity for those companies focused on closing the skills gap, both in terms of better direct financial performance (better productivity; lower costs) as well as higher employee satisfaction. There is also an opportunity for the professional learning companies that enable this.
The more interesting impact, though, is perhaps in the outer rings of the circle: the employees who move onto more remunerative and fulfilling jobs without the threat from automation/risk of redundancy; the minorities no longer deprived of access to education with long-term effects on their health, wealth, and happiness; and the benefit for economies from increased productivity and a more flexible workforce.
 Authors: Thomas A Singlehurst, CFA,Nithin Pejaver, CFA,Cameron Hedrick,Peter Fox,Leah Belsky,Corey Thomix,Greg Siegel,Mike Howells,Jeff Tarr,Mark Orisk,David Somers,

The Next Frontier for Global Education According to our September 2021 survey of 300 corporates, learning and development (L&D) is increasingly being viewed as a strategic investment, but low employee engagement is a key pain point for management. From our respondents:

According to our September 2021 survey of 300 corporates, learning and development (L&D) is increasingly being viewed as a strategic investment, but low employee engagement is a key pain point for management. From our respondents:

The Next Frontier for Global Education

The Skills Gap is a Significant and Growing Problem Almost 80% of survey respondents agree there is a lack of supply of talent for certain roles. Two in three organizations are looking to plug the skills gap through internal upskill and reskill training initiatives.



Almost 80% of survey respondents agree there is a lack of supply of talent for certain roles. Two in three organizations are looking to plug the skills gap through internal upskill and reskill training initiatives.



The Skills Gap is a Significant and Growing Problem

The Citi View on Enterprise Skills Optimization In order to create the conditions necessary to maximize the effectiveness of an organization, we believe there are three main areas of progress: skills, adaptive learning, and collaboration. Each area holds the possibility of improving human potential. Taken together, the possibilities are even more intriguing.

In order to create the conditions necessary to maximize the effectiveness of an organization, we believe there are three main areas of progress: skills, adaptive learning, and collaboration. Each area holds the possibility of improving human potential. Taken together, the possibilities are even more intriguing.

The Citi View on Enterprise Skills Optimization

Increased Focus on L&D Provides a Significant Market Opportunity for Private Capital Against the $360 billion professional learning market, the eLearning portion is about $28 billion and about one third of that — $9 billion — is outsourced. Based on our survey, we estimate the outsourced spend on professional eLearning will grow 18% per year to $12.5 billion by 2023.

Against the $360 billion professional learning market, the eLearning portion is about $28 billion and about one third of that — $9 billion — is outsourced. Based on our survey, we estimate the outsourced spend on professional eLearning will grow 18% per year to $12.5 billion by 2023.

Increased Focus on L&D Provides a Significant Market Opportunity for Private Capital

The skills gap topic and how it is addressed is of critical importance. This is especially true in the current environment, where tightness in the labor market, coupled with the ever-present threats posed by automation, are having real world impacts on lives around the world. Although a lot of stakeholders are impacted by this phenomenon, the focus of this report is on the role played by enterprises — i.e., large companies — in identifying the skills of the future and equipping their employees with the tools they need to survive and thrive in a world beset by change. Our survey work shows that companies are ambitious and optimistic about the impact enterprise learning & development (L&D) programs can have not only on their businesses but also on employee welfare. It also shows these companies are “putting their money where their mouth is” and backing this ambition with significant budget increases (18%+ annual growth over the next 2 years). In the report Citi’s Chief Learning Officer, Cameron Hedrick, and Head of Enterprise Learning & Talent Technology, Peter Fox, outline their vision of what the future of L&D looks like and what the benefits will be for those companies that take proactive steps to embrace the future. We also include a number of interviews with subject matter experts, including strategy consultants and best-in-class providers of content, technology, and services from across the professional learning landscape. Each has their own area of focus, but all are in agreement on the significant opportunity for growth in this large but fragmented market. What, then, are the implications? As always, it is a question of concentric circles. At the center is a significant opportunity for those companies focused on closing the skills gap, both in terms of better direct financial performance (better productivity; lower costs) as well as higher employee satisfaction. There is also an opportunity for the professional learning companies that enable this. The more interesting impact, though, is perhaps in the outer rings of the circle: the employees who move onto more remunerative and fulfilling jobs without the threat from automation/risk of redundancy; the minorities no longer deprived of access to education with long-term effects on their health, wealth, and happiness; and the benefit for economies from increased productivity and a more flexible workforce. Authors: Thomas A Singlehurst, CFA,Nithin Pejaver, CFA,Cameron Hedrick,Peter Fox,Leah Belsky,Corey Thomix,Greg Siegel,Mike Howells,Jeff Tarr,Mark Orisk,David Somers, The Next Frontier for Global Education According to our September 2021 survey of 300 corporates, learning and development (L&D) is increasingly being viewed as a strategic investment, but low employee engagement is a key pain point for management. From our respondents: The Skills Gap is a Significant and Growing Problem Almost 80% of survey respondents agree there is a lack of supply of talent for certain roles. Two in three organizations are looking to plug the skills gap through internal upskill and reskill training initiatives.

 The Citi View on Enterprise Skills Optimization In order to create the conditions necessary to maximize the effectiveness of an organization, we believe there are three main areas of progress: skills, adaptive learning, and collaboration. Each area holds the possibility of improving human potential. Taken together, the possibilities are even more intriguing. Increased Focus on L&D Provides a Significant Market Opportunity for Private Capital Against the $360 billion professional learning market, the eLearning portion is about $28 billion and about one third of that — $9 billion — is outsourced. Based on our survey, we estimate the outsourced spend on professional eLearning will grow 18% per year to $12.5 billion by 2023.

Companies recognize Enterprise L&D as an important tool to fill the current skills gap. We see this as driving an 18% per year growth in eLearning over the next couple of years.

Education: Learning for Life - CitiGPS

Why Enterprise L&D Is The Next Frontier In Global Education

It is difficult to scroll through your timeline, open a newspaper, listen to the radio, or turn on the TV without hearing someone extolling the virtues of education and how, broadly speaking, there should be more of it to address the ever-widening “skills gap.” In this context, the role played by alternative providers of vocational and professional learning — i.e., community colleges and the “further education” sector more broadly, online learning sites and employers providing in-job training and/or support for more formal education — is often overlooked. Somehow it feels less urgent than discussions around primary/secondary education for kids and at the same time less glamorous than talking about the Ivy League in the U.S. or Oxbridge in the U.K.

Education: Learning for Life

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Social mobility is the idea of the American Dream: that opportunity should be afforded to each of us in accordance not with our background but with our ability. In other words, our chances to succeed should be determined not by the circumstances of our birth but by our own efforts. While many aim for this, in most countries, mobility remains a challenge, and where you come from does significantly impact your lifetime outcomes. Improving social and economic mobility is not just the right thing to do socially, it also makes economic sense: According to the World Economic Forum, a 10-point increase in each country’s Global Social Mobility Index score could lead to a $514 billion increase in global GDP. In the U.S. and Europe mobility rates are low and there is a risk they could fall even lower given the effects of the pandemic on education together with the rising share of lifetime income made up of intergenerational wealth transfers. No single lever is enough to solve the social mobility challenge. Education, which is often tasked with improving social mobility, is crucial but is certainly not able to take on the task alone We believe that there is now sufficient evidence of the economic importance for the topic of social mobility to move up the global political agenda. Yet, cultivating the conditions for mobility is not a task only for policymakers: Employers can play a significant role in ensuring fair access to the labor market. We find that employers are largely focused on early career access to the labor market for young people, reflecting a wider ecosystem interest in intergenerational mobility. Employers are delivering a wide range of interventions, which broadly fall into three categories: Philanthropic programs that are largely unconnected to the recruitment process. Organized schemes for applicants from lower socioeconomic backgrounds. System change, including culture change, to facilitate interaction with an organization regardless of socioeconomic background. Employers face multiple challenges to improving social mobility, but two appear particularly common: data challenges and attitudinal difficulties in convincing management and staff that social mobility is a worthy issue. However, even if employers are not convinced of the benefits of trying to recruit and retain a more socioeconomically diverse workforce, an approach to diversity that is grounded in social mobility can better support existing race and gender goals.

Social mobility is the idea of the American Dream: that opportunity should be afforded to each of us in accordance not with our background but with our ability. In other words, our chances to succeed should be determined not by the circumstances of our birth but by our own efforts. While many aim for this, in most countries, mobility remains a challenge, and where you come from does significantly impact your lifetime outcomes.
Improving social and economic mobility is not just the right thing to do socially, it also makes economic sense: According to the World Economic Forum, a 10-point increase in each country&rsquo;s Global Social Mobility Index score could lead to a $514 billion increase in global GDP. In the U.S. and Europe mobility rates are low and there is a risk they could fall even lower given the effects of the pandemic on education together with the rising share of lifetime income made up of intergenerational wealth transfers.
<img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/6494c51052e5920404cadde5.png" alt="Gaps" />
No single lever is enough to solve the social mobility challenge. Education, which is often tasked with improving social mobility, is crucial but is certainly not able to take on the task alone We believe that there is now sufficient evidence of the economic importance for the topic of social mobility to move up the global political agenda. Yet, cultivating the conditions for mobility is not a task only for policymakers: Employers can play a significant role in ensuring fair access to the labor market.
&nbsp;
We find that employers are largely focused on early career access to the labor market for young people, reflecting a wider ecosystem interest in intergenerational mobility. Employers are delivering a wide range of interventions, which broadly fall into three categories:
<ul>
<li>Philanthropic programs that are largely unconnected to the recruitment process.</li>
<li>Organized schemes for applicants from lower socioeconomic backgrounds.</li>
<li>System change, including culture change, to facilitate interaction with an organization regardless of socioeconomic background.</li>
</ul>
Employers face multiple challenges to improving social mobility, but two appear particularly common: data challenges and attitudinal difficulties in convincing management and staff that social mobility is a worthy issue. However, even if employers are not convinced of the benefits of trying to recruit and retain a more socioeconomically diverse workforce, an approach to diversity that is grounded in social mobility can better support existing race and gender goals.

Intergenerational Social Mobility Intergenerational social mobility &mdash; the extent to which an individual's socioeconomic status persists over time &mdash; can be a factor of economic mobility (income and wealth), position in the occupational structure, or level of education. It can also be absolute or relative.

Intergenerational social mobility &mdash; the extent to which an individual's socioeconomic status persists over time &mdash; can be a factor of economic mobility (income and wealth), position in the occupational structure, or level of education. It can also be absolute or relative.

Intergenerational Social Mobility

Economic Potential of Improving Intergenerational Social Mobility Social mobility is a challenge across many countries. From an econmic view, the World Economic Forum found $514 billion could be added to the global economy if the countries in their study increased rankings in the Global Social Mobility Index by 10 points. In addition to the moral and business case, arguments for focusing on social mobility at both the national and global levels include that (1) poor prospects for social&nbsp; mobility weigh on economic growth, and (2) social immobility risks political unrest and undermines social cohesion.

Social mobility is a challenge across many countries. From an econmic view, the World Economic Forum found $514 billion could be added to the global economy if the countries in their study increased rankings in the Global Social Mobility Index by 10 points. In addition to the moral and business case, arguments for focusing on social mobility at both the national and global levels include that (1) poor prospects for social&nbsp; mobility weigh on economic growth, and (2) social immobility risks political unrest and undermines social cohesion.

Economic Potential of Improving Intergenerational Social Mobility

Complex Motivations for Employers to Act on Social Mobility In interviews with UK corproate HR leaders and in-business champions for social mobility, a "moral" motivation to improve social mobility dominated. However, when asked, all employers saw a business benefit to increasing social mobliity. The reasons employers cited for acting on social mobliity fell into two groups: direct economic factors and ecosystem development.

In interviews with UK corproate HR leaders and in-business champions for social mobility, a "moral" motivation to improve social mobility dominated. However, when asked, all employers saw a business benefit to increasing social mobliity. The reasons employers cited for acting on social mobliity fell into two groups: direct economic factors and ecosystem development.

Complex Motivations for Employers to Act on Social Mobility

Catalyzing Social Mobility Through Employers Although education is often tasked with improving social mobility, employers play a significant role in solving the social mobility challenge. Employers are delivering a wide range of interventions &mdash; philanthropic programs, organized schemes for applicants from lower socioeconomic backgrounds, and system change to facilitate interaction with an organization regardless of socioeconomic background. Employers can further mitigate the impact of a lack of economic, social, and cultural capital.&nbsp;

Although education is often tasked with improving social mobility, employers play a significant role in solving the social mobility challenge. Employers are delivering a wide range of interventions &mdash; philanthropic programs, organized schemes for applicants from lower socioeconomic backgrounds, and system change to facilitate interaction with an organization regardless of socioeconomic background. Employers can further mitigate the impact of a lack of economic, social, and cultural capital.&nbsp;

Catalyzing Social Mobility Through Employers

Social mobility is the idea of the American Dream: that opportunity should be afforded to each of us in accordance not with our background but with our ability. In other words, our chances to succeed should be determined not by the circumstances of our birth but by our own efforts. While many aim for this, in most countries, mobility remains a challenge, and where you come from does significantly impact your lifetime outcomes. Improving social and economic mobility is not just the right thing to do socially, it also makes economic sense: According to the World Economic Forum, a 10-point increase in each country’s Global Social Mobility Index score could lead to a $514 billion increase in global GDP. In the U.S. and Europe mobility rates are low and there is a risk they could fall even lower given the effects of the pandemic on education together with the rising share of lifetime income made up of intergenerational wealth transfers. No single lever is enough to solve the social mobility challenge. Education, which is often tasked with improving social mobility, is crucial but is certainly not able to take on the task alone We believe that there is now sufficient evidence of the economic importance for the topic of social mobility to move up the global political agenda. Yet, cultivating the conditions for mobility is not a task only for policymakers: Employers can play a significant role in ensuring fair access to the labor market. We find that employers are largely focused on early career access to the labor market for young people, reflecting a wider ecosystem interest in intergenerational mobility. Employers are delivering a wide range of interventions, which broadly fall into three categories: Philanthropic programs that are largely unconnected to the recruitment process. Organized schemes for applicants from lower socioeconomic backgrounds. System change, including culture change, to facilitate interaction with an organization regardless of socioeconomic background. Employers face multiple challenges to improving social mobility, but two appear particularly common: data challenges and attitudinal difficulties in convincing management and staff that social mobility is a worthy issue. However, even if employers are not convinced of the benefits of trying to recruit and retain a more socioeconomically diverse workforce, an approach to diversity that is grounded in social mobility can better support existing race and gender goals. Intergenerational Social Mobility Intergenerational social mobility &mdash; the extent to which an individual's socioeconomic status persists over time &mdash; can be a factor of economic mobility (income and wealth), position in the occupational structure, or level of education. It can also be absolute or relative. Economic Potential of Improving Intergenerational Social Mobility Social mobility is a challenge across many countries. From an econmic view, the World Economic Forum found $514 billion could be added to the global economy if the countries in their study increased rankings in the Global Social Mobility Index by 10 points. In addition to the moral and business case, arguments for focusing on social mobility at both the national and global levels include that (1) poor prospects for social&nbsp; mobility weigh on economic growth, and (2) social immobility risks political unrest and undermines social cohesion. Complex Motivations for Employers to Act on Social Mobility In interviews with UK corproate HR leaders and in-business champions for social mobility, a "moral" motivation to improve social mobility dominated. However, when asked, all employers saw a business benefit to increasing social mobliity. The reasons employers cited for acting on social mobliity fell into two groups: direct economic factors and ecosystem development. Catalyzing Social Mobility Through Employers Although education is often tasked with improving social mobility, employers play a significant role in solving the social mobility challenge. Employers are delivering a wide range of interventions &mdash; philanthropic programs, organized schemes for applicants from lower socioeconomic backgrounds, and system change to facilitate interaction with an organization regardless of socioeconomic background. Employers can further mitigate the impact of a lack of economic, social, and cultural capital.&nbsp;

The Role of Business in Improving Outcomes

Although socioeconomic diversity lags race and gender on corporate diversity agenda, employers are playing a significant role in improving economic and social mobility. Yet, there is still more to do and, with a more supportive ecosystem, employers could go further faster. 

Economic and Social Mobility

There is currently a $1.7 trillion investment gap in climate mitigation that needs to be closed to limit the negative impact of climate change on both people and the plant. As the public sector does not have the fiscal capacity to reach this investment figure alone, 70% of all climate finance needed must come from the private sector. For these reasons, we must deploy all available financial tools, while at the same time develop new, innovative financial tools that can be scaled up rapidly. Remember, we are in a race against time; we need to reduce emissions by 45% from 1990 levels by 2030 to have any chance of limiting temperature increase to a 1.5ºC rise. 2030 is only seven years away and we are currently not close to these targets. The voluntary carbon market (VCM), although nascent, has managed to provide financing for many sustainable projects in developing and emerging countries. Traditionally, these countries have a hard time attracting private investment due to factors including the perception of risk, lack of bankable projects, foreign exchange, and high debt levels. The VCM is currently valued at approximately $2 billion, but many project it will scale up significantly over the next decade as more companies invest in voluntary carbon credits to reduce their residual emissions. The VCM has come under scrutiny by the media, causing many buyers to question this market due to reputation worries. However, this market is needed. It is very difficult for companies, especially those in hard-to-abate sectors to reach net zero without investing in carbon credits. Collectively, these sectors (steel, cement, aviation, shipping, and road freight) account for 25% of today’s global carbon emissions but have the potential to rise by 50% through 2050 given growth expectations. (See Citi GPS, Hard to Abate Sectors and Emissions; The Toughest Nuts to Crack for a Net Zero Future.) Hard-to-abate sectors typically have long-lived capital assets, such as industrial plants, which are expensive and difficult to change. They also require new fuels and technologies that are currently not available on a large commercial scale and are not yet economically feasible. Hard-to-abate sectors are not the only ones requiring carbon credits. In the limited time available, it is inherently difficult to reach net zero across many sectors, especially regarding scope 3 emissions. Companies still need to reduce their emissions and invest in low-carbon solutions — both investors and the general public demand that this occurs and many companies are working hard to achieve this. It is also inherently difficult to raise the capital needed in emerging and developing economies for them to move to a sustainable economy. We cannot deny the market currently has some problems. These include transparency in the pricing of credits, confusion among buyers as to how the market works, and confusion on ensuring that what they are investing in actually reduces, avoids, or removes carbon emissions In this report, we provide a guide for companies to help navigate the VCM. We discuss how the market works, describe what initiatives are being done to improve it, and identify six steps that companies can use to help them use it effectively. These include (1) developing a strategy for the use of carbon credits across their business, (2) finding a trusted seller, (3) asking the right questions, (4) ensuring the use of verified carbon credits, (5) diversifying portfolios, and (6) using rating agencies if needed.

There is currently a $1.7 trillion investment gap in climate mitigation that needs to be closed to limit the negative impact of climate change on both people and the plant. As the public sector does not have the fiscal capacity to reach this investment figure alone, 70% of all climate finance needed must come from the private sector. For these reasons, we must deploy all available financial tools, while at the same time develop new, innovative financial tools that can be scaled up rapidly. Remember, we are in a race against time; we need to reduce emissions by 45% from 1990 levels by 2030 to have any chance of limiting temperature increase to a 1.5&ordm;C rise. 2030 is only seven years away and we are currently not close to these targets.
The voluntary carbon market (VCM), although nascent, has managed to provide financing for many sustainable projects in developing and emerging countries. Traditionally, these countries have a hard time attracting private investment due to factors including the perception of risk, lack of bankable projects, foreign exchange, and high debt levels. The VCM is currently valued at approximately $2 billion, but many project it will scale up significantly over the next decade as more companies invest in voluntary carbon credits to reduce their residual emissions.
The VCM has come under scrutiny by the media, causing many buyers to question this market due to reputation worries. However, this market is needed. It is very difficult for companies, especially those in hard-to-abate sectors to reach net zero without investing in carbon credits. Collectively, these sectors (steel, cement, aviation, shipping, and road freight) account for 25% of today&rsquo;s global carbon emissions but have the potential to rise by 50% through 2050 given growth expectations. (See Citi GPS, <a href="https://www.citigroup.com/global/insights/citigps/hard-to-abate-sectors-and-emissions" data-link-source="tiny">Hard to Abate Sectors and Emissions; The Toughest Nuts to Crack for a Net Zero Future</a>.)&nbsp;Hard-to-abate sectors typically have long-lived capital assets, such as industrial plants, which are expensive and difficult to change. They also require new fuels and technologies that are currently not available on a large commercial scale and are not yet economically feasible.
Hard-to-abate sectors are not the only ones requiring carbon credits. In the limited time available, it is inherently difficult to reach net zero across many sectors, especially regarding scope 3 emissions. Companies still need to reduce their emissions and invest in low-carbon solutions &mdash; both investors and the general public demand that this occurs and many companies are working hard to achieve this. It is also inherently difficult to raise the capital needed in emerging and developing economies for them to move to a sustainable economy.
We cannot deny the market currently has some problems. These include transparency in the pricing of credits, confusion among buyers as to how the market works, and confusion on ensuring that what they are investing in actually reduces, avoids, or removes carbon emissions
In this report, we provide a guide for companies to help navigate the VCM. We discuss how the market works, describe what initiatives are being done to improve it, and identify six steps that companies can use to help them use it effectively. These include (1) developing a strategy for the use of carbon credits across their business, (2) finding a trusted seller, (3) asking the right questions, (4) ensuring the use of verified carbon credits, (5) diversifying portfolios, and (6) using rating agencies if needed.
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<div id="ftn1">
<a title="" href="#_ftnref1" target="_blank" rel="noopener" name="_ftn1" data-link-source="tiny"></a>
</div>
</div>

Carbon Credits 101

Why Carbon Credits?

OTC Carbon Credit Prices

The Voluntary Carbon Market

How Should Buyers Navigate the VCM

There is currently a $1.7 trillion investment gap in climate mitigation that needs to be closed to limit the negative impact of climate change on both people and the plant. As the public sector does not have the fiscal capacity to reach this investment figure alone, 70% of all climate finance needed must come from the private sector. For these reasons, we must deploy all available financial tools, while at the same time develop new, innovative financial tools that can be scaled up rapidly. Remember, we are in a race against time; we need to reduce emissions by 45% from 1990 levels by 2030 to have any chance of limiting temperature increase to a 1.5ºC rise. 2030 is only seven years away and we are currently not close to these targets. The voluntary carbon market (VCM), although nascent, has managed to provide financing for many sustainable projects in developing and emerging countries. Traditionally, these countries have a hard time attracting private investment due to factors including the perception of risk, lack of bankable projects, foreign exchange, and high debt levels. The VCM is currently valued at approximately $2 billion, but many project it will scale up significantly over the next decade as more companies invest in voluntary carbon credits to reduce their residual emissions. The VCM has come under scrutiny by the media, causing many buyers to question this market due to reputation worries. However, this market is needed. It is very difficult for companies, especially those in hard-to-abate sectors to reach net zero without investing in carbon credits. Collectively, these sectors (steel, cement, aviation, shipping, and road freight) account for 25% of today’s global carbon emissions but have the potential to rise by 50% through 2050 given growth expectations. (See Citi GPS, Hard to Abate Sectors and Emissions; The Toughest Nuts to Crack for a Net Zero Future.) Hard-to-abate sectors typically have long-lived capital assets, such as industrial plants, which are expensive and difficult to change. They also require new fuels and technologies that are currently not available on a large commercial scale and are not yet economically feasible. Hard-to-abate sectors are not the only ones requiring carbon credits. In the limited time available, it is inherently difficult to reach net zero across many sectors, especially regarding scope 3 emissions. Companies still need to reduce their emissions and invest in low-carbon solutions — both investors and the general public demand that this occurs and many companies are working hard to achieve this. It is also inherently difficult to raise the capital needed in emerging and developing economies for them to move to a sustainable economy. We cannot deny the market currently has some problems. These include transparency in the pricing of credits, confusion among buyers as to how the market works, and confusion on ensuring that what they are investing in actually reduces, avoids, or removes carbon emissions In this report, we provide a guide for companies to help navigate the VCM. We discuss how the market works, describe what initiatives are being done to improve it, and identify six steps that companies can use to help them use it effectively. These include (1) developing a strategy for the use of carbon credits across their business, (2) finding a trusted seller, (3) asking the right questions, (4) ensuring the use of verified carbon credits, (5) diversifying portfolios, and (6) using rating agencies if needed. Carbon Credits 101   Why Carbon Credits?   OTC Carbon Credit Prices   The Voluntary Carbon Market   How Should Buyers Navigate the VCM  

The voluntary carbon market (VCM), although nascent, has managed to provide financing for many sustainable projects in developing and emerging countries. This report provides a guide for companies to help navigate the VCM. We discuss how the market works, describe what initiatives are being done to improve it, and identify six steps that companies can use to help them use it effectively.

A Critical Piece of the Net Zero Puzzle

Voluntary Carbon Market

Technology advances seem to be dominating the headlines. There are new ways to search the web using artificial intelligence and machine learning, alternate payment systems using blockchain and digital currency, and innovative ways to socialize gaming, and shop using the metaverse. In most cases, the advances have been facilitated by increasing computing speeds that enable faster calculations as well as better connectivity, but all are based on existing computing technology. But that is all about to change. The next phase of computing — quantum computing — is getting closer to becoming practically useful as we are quickly coming to a point where quantum computers will be able to perform valuable tasks faster, more efficiently, or cheaper than classical computers. Quantum computing breaks away from traditional classical computing using quantum mechanics as a base. If you made it through physics class in high school or college, you might remember that quantum mechanics as a daunting concept associated with geniuses like Albert Einstein, Niels Bohr, and Max Planck. But you don’t have to be a rocket scientist to start thinking about how quantum computing can revolutionize industry and society. And given the speed that quantum computing is progressing, we believe now is the time to for nation-states, corporates, and market participants to start getting ready for its arrival. In the report that follows, we look at what quantum computing is and what its advantages are compared with classical computing in terms of optimization, machine learning, simulation, and cryptography. We then apply those advantages to specific industries to highlight areas where quantum computing can materially advance processes from logistics and drug discovery to portfolio optimization and cybersecurity. Most importantly, we set out steps that nation-states and corporates can begin implementing in preparation for the arrival of quantum computing. Setting up appropriate funding to encourage research and development is important on a national scale, as is ensuring education and training to avoid a talent skills gap. Corporates should improve their awareness of how quantum computing will affect their industry, create impact assessments, and contextualize opportunities.

&nbsp;
Technology advances seem to be dominating the headlines. There are new ways to search the web using artificial intelligence and machine learning, alternate payment systems using blockchain and digital currency, and innovative ways to socialize gaming, and shop using the metaverse. In most cases, the advances have been facilitated by increasing computing speeds that enable faster calculations as well as better connectivity, but all are based on existing computing technology.&nbsp;
But that is all about to change. The next phase of computing &mdash; quantum computing &mdash; is getting closer to becoming practically useful as we are quickly coming to a point where quantum computers will be able to perform valuable tasks faster, more efficiently, or cheaper than classical computers. Quantum computing breaks away from traditional classical computing using quantum mechanics as a base. If you made it through physics class in high school or college, you might remember that quantum mechanics as a daunting concept associated with geniuses like Albert Einstein, Niels Bohr, and Max Planck. But you don&rsquo;t have to be a rocket scientist to start thinking about how quantum computing can revolutionize industry and society. And given the speed that quantum computing is progressing, we believe now is the time to for nation-states, corporates, and market participants to start getting ready for its arrival.
In the report that follows, we look at what quantum computing is and what its advantages are compared with classical computing in terms of optimization, machine learning, simulation, and cryptography. We then apply those advantages to specific industries to highlight areas where quantum computing can materially advance processes from logistics and drug discovery to portfolio optimization and cybersecurity.
Most importantly, we set out steps that nation-states and corporates can begin implementing in preparation for the arrival of quantum computing. Setting up appropriate funding to encourage research and development is important on a national scale, as is ensuring education and training to avoid a talent skills gap. Corporates should improve their awareness of how quantum computing will affect their industry, create impact assessments, and contextualize opportunities.

Why Quantum Computing Is a Big Deal Computing is at an inflection point. After five decades of increasing computational power by Moore's Law (i.e., doubling the number of transistors per chip every 2 years), the growth rate of classical computing is reaching its physical limit. At the same time, the capabilities of quantum computers (QCs) are advancing at a "doubly exponential" rate &mdash; in line with Neven's Law &mdash; and are close to generating commercial value.

Computing is at an inflection point. After five decades of increasing computational power by Moore's Law (i.e., doubling the number of transistors per chip every 2 years), the growth rate of classical computing is reaching its physical limit. At the same time, the capabilities of quantum computers (QCs) are advancing at a "doubly exponential" rate &mdash; in line with Neven's Law &mdash; and are close to generating commercial value.

Why Quantum Computing Is a Big Deal

How Big Could Quantum Computing Become? Total addressable market (TAM) estimates for quantum computing vary widely &mdash; ranging in 2027 from $700 million to $8.6 billion. Venture capital investment in the QC space has been strong but still pales in comparison to investment in artificial intelligence (AI).

Total addressable market (TAM) estimates for quantum computing vary widely &mdash; ranging in 2027 from $700 million to $8.6 billion. Venture capital investment in the QC space has been strong but still pales in comparison to investment in artificial intelligence (AI).

How Big Could Quantum Computing Become?

How Will Quantum Computing Disrupt Industry? Quantum computing will likely solve practical problems faster, cheaper, or more effectively than classical computers in four broad areas &mdash; optimization, machine learning, simulations, and cryptography. Three of these attributes offer significant upside for numerous industries, including Manufacturing &amp; Logistics, Artificial Intelligence, Healthcare, Energy &amp; Climate, and Finance. However, with cryptography, QCs post a potential threat to the cryptographic standards that underpin computer systems and cryptocurrencies.

Quantum computing will likely solve practical problems faster, cheaper, or more effectively than classical computers in four broad areas &mdash; optimization, machine learning, simulations, and cryptography. Three of these attributes offer significant upside for numerous industries, including Manufacturing &amp; Logistics, Artificial Intelligence, Healthcare, Energy &amp; Climate, and Finance. However, with cryptography, QCs post a potential threat to the cryptographic standards that underpin computer systems and cryptocurrencies.

How Will Quantum Computing Disrupt Industry?

Preparing for Quantum Due to the exponential scaling power of quantum computers, by the time they offer a practical advantage to business, the gap between early adopters and those using only classical computing will widen at an increasingly accelerated pace. Now it the time to prepare for the transition to capitalize on opportunities and safeguard against risk. To take advantage of the opportunity we suggest government and corporates should prepare in the following ways:

Due to the exponential scaling power of quantum computers, by the time they offer a practical advantage to business, the gap between early adopters and those using only classical computing will widen at an increasingly accelerated pace. Now it the time to prepare for the transition to capitalize on opportunities and safeguard against risk. To take advantage of the opportunity we suggest government and corporates should prepare in the following ways:

Preparing for Quantum

Technology advances seem to be dominating the headlines. There are new ways to search the web using artificial intelligence and machine learning, alternate payment systems using blockchain and digital currency, and innovative ways to socialize gaming, and shop using the metaverse. In most cases, the advances have been facilitated by increasing computing speeds that enable faster calculations as well as better connectivity, but all are based on existing computing technology. But that is all about to change. The next phase of computing — quantum computing — is getting closer to becoming practically useful as we are quickly coming to a point where quantum computers will be able to perform valuable tasks faster, more efficiently, or cheaper than classical computers. Quantum computing breaks away from traditional classical computing using quantum mechanics as a base. If you made it through physics class in high school or college, you might remember that quantum mechanics as a daunting concept associated with geniuses like Albert Einstein, Niels Bohr, and Max Planck. But you don’t have to be a rocket scientist to start thinking about how quantum computing can revolutionize industry and society. And given the speed that quantum computing is progressing, we believe now is the time to for nation-states, corporates, and market participants to start getting ready for its arrival. In the report that follows, we look at what quantum computing is and what its advantages are compared with classical computing in terms of optimization, machine learning, simulation, and cryptography. We then apply those advantages to specific industries to highlight areas where quantum computing can materially advance processes from logistics and drug discovery to portfolio optimization and cybersecurity. Most importantly, we set out steps that nation-states and corporates can begin implementing in preparation for the arrival of quantum computing. Setting up appropriate funding to encourage research and development is important on a national scale, as is ensuring education and training to avoid a talent skills gap. Corporates should improve their awareness of how quantum computing will affect their industry, create impact assessments, and contextualize opportunities. Why Quantum Computing Is a Big Deal Computing is at an inflection point. After five decades of increasing computational power by Moore's Law (i.e., doubling the number of transistors per chip every 2 years), the growth rate of classical computing is reaching its physical limit. At the same time, the capabilities of quantum computers (QCs) are advancing at a "doubly exponential" rate &mdash; in line with Neven's Law &mdash; and are close to generating commercial value. How Big Could Quantum Computing Become? Total addressable market (TAM) estimates for quantum computing vary widely &mdash; ranging in 2027 from $700 million to $8.6 billion. Venture capital investment in the QC space has been strong but still pales in comparison to investment in artificial intelligence (AI). How Will Quantum Computing Disrupt Industry? Quantum computing will likely solve practical problems faster, cheaper, or more effectively than classical computers in four broad areas &mdash; optimization, machine learning, simulations, and cryptography. Three of these attributes offer significant upside for numerous industries, including Manufacturing &amp; Logistics, Artificial Intelligence, Healthcare, Energy &amp; Climate, and Finance. However, with cryptography, QCs post a potential threat to the cryptographic standards that underpin computer systems and cryptocurrencies. Preparing for Quantum Due to the exponential scaling power of quantum computers, by the time they offer a practical advantage to business, the gap between early adopters and those using only classical computing will widen at an increasingly accelerated pace. Now it the time to prepare for the transition to capitalize on opportunities and safeguard against risk. To take advantage of the opportunity we suggest government and corporates should prepare in the following ways:

The newness and complexity of quantum computing is a challenge for stakeholders, but fostering awareness of what these machines can achieve could help with preparation and execution. The debate around the arrival of quantum advantage will continue, and it will appear at different times for different use cases. When it does, despite the upskilling and technology integration that will be necessary, quantum computing is likely to scale exponentially.


Moving Quickly From Theory to Reality

The newness and complexity of quantum computing is a challenge for stakeholders, but fostering awareness of what these machines can achieve could help with preparation and execution. The debate around the arrival of quantum advantage will continue, and it will appear at different times for different use cases. When it does, despite the upskilling and technology integration that will be necessary, quantum computing is likely to scale exponentially.

Quantum Computing 

Generative AI has burst onto the scene following the launch of ChatGPT in 2022. As a concept, artificial intelligence (AI) is not new, and Generative AI represents the latest inflection point in the evolution of AI. However, what is distinctive about Generative AI is the tremendous potential it holds to transform work across industries and boost overall productivity. Taking a more holistic view, Generative AI might not only bring the power of AI itself to the masses but in fact accelerate the wider democratization of innovation. We believe it is a game changer. Although it feels like Generative AI has come out of nowhere, the rise of AI starting in the 1950s and through its significant growth over the past decade. This growth has brought with it a host of potential opportunities and challenges. The first wave of potential opportunities for Generative AI is centered on the technology value stack. Historically, the Silicon layer has been the de facto foundation of almost all technological shifts in the technology value stack, and Generative AI is expected to drive significant growth for compute (i.e., processing power), networking, and memory chips. However, we see opportunities in each layer. In the Infrastructure & Platforms layer, we see the hyperscalers/cloud providers racing today to build the underlying infrastructure that enables Generative AI applications and services, but over time we expect to see higher or more differentiation. When it comes to Models and Machine Learning Operations (MLOps), the open-source community is likely to be a key driver of innovation. Moving further up the stack, we believe nearly all software companies will be impacted in some form by Generative AI, and company-specific execution will be critical. Lastly, we believe Generative AI represents a step forward from ongoing AI/automation initiatives at the Services layer. Opportunities are not just limited to the technology value stack —they are also spilling into sectors outside of technology. To capture the full picture, we extended our analysis to look at the impact of Generative AI across six supersectors. We do this through a two-stage framework to assess risk/reward and apply that broadly across companies and sectors. Our analysis finds the Financials & FinTech supersector to be the most likely to be impacted overall, followed by the Consumer sector. At the other end of the spectrum, Natural Resources & ClimateTech at this stage look the least likely ones to be impacted. Key challenges include those centered around bias, inequality, authenticity, infringements as well as the more debated one underpinned by existential concerns. The emergence of Generative AI has unsurprisingly seen AI as a broader topic become a firm focus for policy makers around the world. However, the regulatory path taken so far has varied. Given the stakes involved, we believe policy and governance evolution will play a defining role. What does the future look like for Generative AI? We investigate the global trends and growth is from the perspective of investment in technological innovation. We do this by analyzing the number of AI-related patent applications over time and across countries. Research papers are also telling, with the total cumulative AI research output increasing 1,300% between 2003 and 2021. Given the importance of AI as a foundational technology, the race is on between countries for scientific and technological dominance.

Generative AI has burst onto the scene following the launch of ChatGPT in 2022. As a concept, artificial intelligence (AI) is not new, and Generative AI represents the latest inflection point in the evolution of AI. However, what is distinctive about Generative AI is the tremendous potential it holds to transform work across industries and boost overall productivity. Taking a more holistic view, Generative AI might not only bring the power of AI itself to the masses but in fact accelerate the wider democratization of innovation. We believe it is a game changer.
Although it feels like Generative AI has come out of nowhere, the rise of AI starting in the 1950s and through its significant growth over the past decade. This growth has brought with it a host of potential opportunities and challenges. The first wave of potential opportunities for Generative AI is centered on the technology value stack. Historically, the Silicon layer has been the de facto foundation of almost all technological shifts in the technology value stack, and Generative AI is expected to drive significant growth for compute (i.e., processing power), networking, and memory chips.
However, we see opportunities in each layer. In the Infrastructure &amp; Platforms layer, we see the hyperscalers/cloud providers racing today to build the underlying infrastructure that enables Generative AI applications and services, but over time we expect to see higher or more differentiation. When it comes to Models and Machine Learning Operations (MLOps), the open-source community is likely to be a key driver of innovation. Moving further up the stack, we believe nearly all software companies will be impacted in some form by Generative AI, and company-specific execution will be critical. Lastly, we believe Generative AI represents a step forward from ongoing AI/automation initiatives at the Services layer.
<img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/64f7dc62b7581721266e09ae.png" alt="Tech" />
Opportunities are not just limited to the technology value stack &mdash;they are also spilling into sectors outside of technology. To capture the full picture, we extended our analysis to look at the impact of Generative AI across six supersectors. We do this through a two-stage framework to assess risk/reward and apply that broadly across companies and sectors. Our analysis finds the Financials &amp; FinTech supersector to be the most likely to be impacted overall, followed by the Consumer sector. At the other end of the spectrum, Natural Resources &amp; ClimateTech at this stage look the least likely ones to be impacted.
<img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/64f7dc83c1acef4c8ae226e1.png" alt="Supersectors.JPG/" />
Key challenges include those centered around bias, inequality, authenticity, infringements as well as the more debated one underpinned by existential concerns. The emergence of Generative AI has unsurprisingly seen AI as a broader topic become a firm focus for policy makers around the world. However, the regulatory path taken so far has varied. Given the stakes involved, we believe policy and governance evolution will play a defining role.
What does the future look like for Generative AI? We investigate the global trends and growth is from the perspective of investment in technological innovation. We do this by analyzing the number of AI-related patent applications over time and across countries. Research papers are also telling, with the total cumulative AI research output increasing 1,300% between 2003 and 2021. Given the importance of AI as a foundational technology, the race is on between countries for scientific and technological dominance.

What does the future look like for Generative AI? One way to investigate the global trends and growth is from the perspective of investment in technological innovation. We do this by analyzing the number of AI-related patent applications over time and across countries. Research papers are also telling, with the total cumulative AI research output increasing 1,300% between 2003 and 2021. Given the importance of AI as a foundational technology, the race is on between countries for scientific and technological dominance.

The AI Arms Race

Generative AI represents the latest inflection point in the evolution of artificial intelligence (AI). Although AI is not new, what is distinctive about Generative AI is the tremendous potential it holds to transform work across industries and boost overall productivity. We look at the opportunities for AI not only in the technology sector but across six supersectors. Given the race to dominate in the AI space, we also analyzing research papers and patents by country.

Unleashing AI

Although, broadly speaking, Africa rode out the pandemic-related economic crisis relatively well, with growth slowing much less than most economists forecast, the crisis has brought to a head many issues that were already emerging. Notably, following COVID-19, and then the rise in international interest rates, the widening fiscal deficits have proved hard to fund and led to defaults in Zambia and Ghana. But COVID-19 also highlighted the ongoing resilience of the growth story in Africa, which seems to have firmly put a floor on growth in many countries. The pandemic also underscored the importance of the informal sector as a safety net for many individuals and households across the continent. Not only has growth held up remarkably well, but there has been no wider spreading of defaults either. Yet the challenge facing the continent’s policymakers in the short term is clear: the need to narrow fiscal deficits. At present, this is set to be achieved under a new wave of International Monetary Fund (IMF) programs, which we have broadly dubbed the “New Age of Fiscal Austerity.” Unlike in the late 1980s and early 1990s, the new wave of IMF programs is not based on cutting spending; in fact, spending on health and education will be preserved. Instead, fiscal consolidation is largely driven by raising revenue. A key element of this will be taxing the informal sector. Coupled with this is the challenge to formulate new exchange rate policies in an era of higher global interest rates. It is also worth highlighting that after the last wave of defaults across Africa in the mid-1990s, better fiscal discipline and more flexible exchange rate regimes ushered in a strong pickup in growth, eventually encapsulated in the “Africa Rising” story. We think that at the time the hype around this story was overplayed, but that does not mean that there were not many real elements to it that still have important implications about how Africa will grow and develop going forward, or which we think will be the key elements of a “New Growth Model” for Africa. For a “New Growth Model” to emerge, however, African governments, and the private sector are going to have to work together to take advantage of the continent’s favorable demographics, technological developments, and a changing world economy. At the same time, it is critical to avoid getting caught up in a new hype and forgetting the importance of developing foundational infrastructure. There is an argument that politics could yet undermine such a “New Growth Model” playing out. While we accept that politics can be a constraint on development, we suspect that if the story is to play out as we hope, more African governments will simply have to get serious about economic growth and development as their central political and policy concerns. Finally, it is important to bear in mind that development does require clear politics and policy, but also has an element of luck. Moreover, it is perhaps a much more gradual process than is often popularly perceived. Africa has changed vastly in the last 50 years and will continue to change. The challenge for policymakers, facing young and demanding populations, is to try and speed up the process.

Although, broadly speaking, Africa rode out the pandemic-related economic crisis relatively well, with growth slowing much less than most economists forecast, the crisis has brought to a head many issues that were already emerging. Notably, following COVID-19, and then the rise in international interest rates, the widening fiscal deficits have proved hard to fund and led to defaults in Zambia and Ghana.
But COVID-19 also highlighted the ongoing resilience of the growth story in Africa, which seems to have firmly put a floor on growth in many countries. The pandemic also underscored the importance of the informal sector as a safety net for many individuals and households across the continent. Not only has growth held up remarkably well, but there has been no wider spreading of defaults either. Yet the challenge facing the continent&rsquo;s policymakers in the short term is clear: the need to narrow fiscal deficits. At present, this is set to be achieved under a new wave of International Monetary Fund (IMF) programs, which we have broadly dubbed the &ldquo;New Age of Fiscal Austerity.&rdquo;
Unlike in the late 1980s and early 1990s, the new wave of IMF programs is not based on cutting spending; in fact, spending on health and education will be preserved. Instead, fiscal consolidation is largely driven by raising revenue. A key element of this will be taxing the informal sector. Coupled with this is the challenge to formulate new exchange rate policies in an era of higher global interest rates.
It is also worth highlighting that after the last wave of defaults across Africa in the mid-1990s, better fiscal discipline and more flexible exchange rate regimes ushered in a strong pickup in growth, eventually encapsulated in the &ldquo;Africa Rising&rdquo; story. We think that at the time the hype around this story was overplayed, but that does not mean that there were not many real elements to it that still have important implications about how Africa will grow and develop going forward, or which we think will be the key elements of a &ldquo;New Growth Model&rdquo; for Africa.
For a &ldquo;New Growth Model&rdquo; to emerge, however, African governments, and the private sector are going to have to work together to take advantage of the continent&rsquo;s favorable demographics, technological developments, and a changing world economy. At the same time, it is critical to avoid getting caught up in a new hype and forgetting the importance of developing foundational infrastructure.
There is an argument that politics could yet undermine such a &ldquo;New Growth Model&rdquo; playing out. While we accept that politics can be a constraint on development, we suspect that if the story is to play out as we hope, more African governments will simply have to get serious about economic growth and development as their central political and policy concerns.
Finally, it is important to bear in mind that development does require clear politics and policy, but also has an element of luck. Moreover, it is perhaps a much more gradual process than is often popularly perceived. Africa has changed vastly in the last 50 years and will continue to change. The challenge for policymakers, facing young and demanding populations, is to try and speed up the process.

African Economies Have Unique Strengths… African economies have shown comparative resilience in the face of shocks such as the Global Financial Crisis and COVID-19 pandemic. This suggests their dependence on the informal and agricultural sectors is not always a negative. In our view, it implies a clear growth floor for most of the continent.

African economies have shown comparative resilience in the face of shocks such as the Global Financial Crisis and COVID-19 pandemic. This suggests their dependence on the informal and agricultural sectors is not always a negative. In our view, it implies a clear growth floor for most of the continent.

African Economies Have Unique Strengths…

…and Vulnerabilities The fiscal positions of many African countries were deteriorating before 2020, but low interest rates incentivized further excessive borrowing. Africa&rsquo;s key policy battles in the coming years look set to center on improving fiscal discipline while also making exchange rate policy more flexible.

The fiscal positions of many African countries were deteriorating before 2020, but low interest rates incentivized further excessive borrowing. Africa&rsquo;s key policy battles in the coming years look set to center on improving fiscal discipline while also making exchange rate policy more flexible.

…and Vulnerabilities

Can Growth by Trumped by Demographic Challenges? It is uncertain whether Africa will be able to create the jobs necessary to absorb the inevitable rise in its labor force due to its rapidly growing population. On the other hand, aging populations elsewhere may create an historically unprecedented opportunity for the continent to become a global supplier of labor.

It is uncertain whether Africa will be able to create the jobs necessary to absorb the inevitable rise in its labor force due to its rapidly growing population. On the other hand, aging populations elsewhere may create an historically unprecedented opportunity for the continent to become a global supplier of labor.

Can Growth by Trumped by Demographic Challenges?

A New Growth Model We identify the following strategies &mdash; all, of course, easier said than done &mdash;for African economies to maintain stable growth and improve their fiscal positioning:

We identify the following strategies &mdash; all, of course, easier said than done &mdash;for African economies to maintain stable growth and improve their fiscal positioning:

A New Growth Model

Although, broadly speaking, Africa rode out the pandemic-related economic crisis relatively well, with growth slowing much less than most economists forecast, the crisis has brought to a head many issues that were already emerging. Notably, following COVID-19, and then the rise in international interest rates, the widening fiscal deficits have proved hard to fund and led to defaults in Zambia and Ghana. But COVID-19 also highlighted the ongoing resilience of the growth story in Africa, which seems to have firmly put a floor on growth in many countries. The pandemic also underscored the importance of the informal sector as a safety net for many individuals and households across the continent. Not only has growth held up remarkably well, but there has been no wider spreading of defaults either. Yet the challenge facing the continent’s policymakers in the short term is clear: the need to narrow fiscal deficits. At present, this is set to be achieved under a new wave of International Monetary Fund (IMF) programs, which we have broadly dubbed the “New Age of Fiscal Austerity.” Unlike in the late 1980s and early 1990s, the new wave of IMF programs is not based on cutting spending; in fact, spending on health and education will be preserved. Instead, fiscal consolidation is largely driven by raising revenue. A key element of this will be taxing the informal sector. Coupled with this is the challenge to formulate new exchange rate policies in an era of higher global interest rates. It is also worth highlighting that after the last wave of defaults across Africa in the mid-1990s, better fiscal discipline and more flexible exchange rate regimes ushered in a strong pickup in growth, eventually encapsulated in the “Africa Rising” story. We think that at the time the hype around this story was overplayed, but that does not mean that there were not many real elements to it that still have important implications about how Africa will grow and develop going forward, or which we think will be the key elements of a “New Growth Model” for Africa. For a “New Growth Model” to emerge, however, African governments, and the private sector are going to have to work together to take advantage of the continent’s favorable demographics, technological developments, and a changing world economy. At the same time, it is critical to avoid getting caught up in a new hype and forgetting the importance of developing foundational infrastructure. There is an argument that politics could yet undermine such a “New Growth Model” playing out. While we accept that politics can be a constraint on development, we suspect that if the story is to play out as we hope, more African governments will simply have to get serious about economic growth and development as their central political and policy concerns. Finally, it is important to bear in mind that development does require clear politics and policy, but also has an element of luck. Moreover, it is perhaps a much more gradual process than is often popularly perceived. Africa has changed vastly in the last 50 years and will continue to change. The challenge for policymakers, facing young and demanding populations, is to try and speed up the process. African Economies Have Unique Strengths… African economies have shown comparative resilience in the face of shocks such as the Global Financial Crisis and COVID-19 pandemic. This suggests their dependence on the informal and agricultural sectors is not always a negative. In our view, it implies a clear growth floor for most of the continent. …and Vulnerabilities The fiscal positions of many African countries were deteriorating before 2020, but low interest rates incentivized further excessive borrowing. Africa&rsquo;s key policy battles in the coming years look set to center on improving fiscal discipline while also making exchange rate policy more flexible. Can Growth by Trumped by Demographic Challenges? It is uncertain whether Africa will be able to create the jobs necessary to absorb the inevitable rise in its labor force due to its rapidly growing population. On the other hand, aging populations elsewhere may create an historically unprecedented opportunity for the continent to become a global supplier of labor. A New Growth Model We identify the following strategies &mdash; all, of course, easier said than done &mdash;for African economies to maintain stable growth and improve their fiscal positioning:

When we wrote about Africa in 2015, the story was "Africa Rising." But with a sharp pull back in commodity prices since then and rising fiscal deficits, then COVID-19, the trajectory of growth and debt deteriorated. What is the new growth model for Africa? We look at the medium and longer-term growth prospects for Africa, including its population conundrum and whether agriculture and services can drive a new African growth model as well as the infrastructure and power challenge as well as the developments in financing.

Africa

The consequences of the COVID-19 pandemic have been far reaching. The potential for remote work means that cash-strapped families are now able to escape the metropolis, where the cost of living crises has become particularly severe. But this trend might be short-lived. For one thing, if a job can be done remotely, it can also be offshored, meaning that regional convergence in advanced economies might be short lived. To what extent this will happen, remains an open empirical question. On the positive side, recent improvements in remote technology have made it much easier for scientists and innovators to collaborate at distance. Against this backdrop, we argue that a revival of breakthrough science seems likely and could reverse the productivity stagnation of recent decades. Trying to predict future trends and identify new technologies that will truly be disruptive can be both challenging and rewarding. It can also be incredibly humbling. Getting the trend right is only half the battle. The “you don’t know what you don’t know” is where things can get a little upside down. Our very first Technology at Work Citi GPS report was based on a seminal report from Carl Benedikt Frey and Michael Osbourne that predicted 47% of U.S. jobs were susceptible to automation over the coming decades. The rationale was that non-routine manual tasks were increasingly able to be automated, and for the first time, low-skill and low-income jobs were at risk of automation. Lower automation risk was attributed to jobs that were intensive in social and creative skills. We did also note that a growing share of office and administration support jobs would soon be subject to automation as advances in big data continued. We still think automation will continue to affect U.S. jobs and may impact even more sectors as recent developments in artificial intelligence take shape. But here is where our predictions missed something and “we didn’t know what we didn’t know”: The COVID-19 pandemic brought with it a rush of new technology that enabled workers to work from home while offices were closed. And while these advances were crucial to workers maintaining productivity from remote locations, it led to a realization: If a job could be done remotely, it could be done anywhere. Corporates in industries like technology, which were historically clustered in large cities, can now move out of high-priced city centers to lower-cost secondary hubs. Initially, this should lead to a decline in economic disparities between regions. As skilled professionals follow their companies to lower-cost areas, service jobs are created in their new locations, and unskilled workers who have been battling the high cost of urban housing can follow. But this shift may be short-lived. If a job can be done in a lower-cost region of the country, it can also be sent offshore. Similar to what happened in manufacturing decades ago, instead of moving a job to a secondary hub, corporates may decide to take advantage of the global wage arbitrage in professional jobs and move jobs outside the country. What can be done to avoid the loss of jobs? Policymakers in advanced economies should focus on supporting science and education. Remote technology boosts collaboration at a distance, which is leading to increased innovation and breakthrough science. This, in turn, can lead to new job creation. As we absorb this new information, we will keep trying to predict the future and identify the next disruptive innovation. As we keep learning from experience, hopefully we will get hit with fewer “don’t knows.”

<h3>The consequences of the COVID-19 pandemic have been far reaching. The potential for remote work means that cash-strapped families are now able to escape the metropolis, where the cost of living crises has become particularly severe. But this trend might be short-lived. For one thing, if a job can be done remotely, it can also be offshored, meaning that regional convergence in advanced economies might be short lived. To what extent this will happen, remains an open empirical question. On the positive side, recent improvements in remote technology have made it much easier for scientists and innovators to collaborate at distance. Against this backdrop, we argue that a revival of breakthrough science seems likely and could reverse the productivity stagnation of recent decades.</h3>
Trying to predict future trends and identify new technologies that will truly be disruptive can be both challenging and rewarding. It can also be incredibly humbling. Getting the trend right is only half the battle. The &ldquo;you don&rsquo;t know what you don&rsquo;t know&rdquo; is where things can get a little upside down.
Our very first <a href="https://www.citigroup.com/global/insights/citigps/technology-work" target="_blank" rel="noopener" data-link-source="tiny">Technology at Work</a> Citi GPS report was based on a seminal report from Carl Benedikt Frey and Michael Osbourne that predicted 47% of U.S. jobs were susceptible to automation over the coming decades. The rationale was that non-routine manual tasks were increasingly able to be automated, and for the first time, low-skill and low-income jobs were at risk of automation. Lower automation risk was attributed to jobs that were intensive in social and creative skills. We did also note that a growing share of office and administration support jobs would soon be subject to automation as advances in big data continued.
We still think automation will continue to affect U.S. jobs and may impact even more sectors as recent developments in artificial intelligence take shape. But here is where our predictions missed something and &ldquo;we didn&rsquo;t know what we didn&rsquo;t know&rdquo;: The COVID-19 pandemic brought with it a rush of new technology that enabled workers to work from home while offices were closed. And while these advances were crucial to workers maintaining productivity from remote locations, it led to a realization: If a job could be done remotely, it could be done anywhere.
Corporates in industries like technology, which were historically clustered in large cities, can now move out of high-priced city centers to lower-cost secondary hubs. Initially, this should lead to a decline in economic disparities between regions. As skilled professionals follow their companies to lower-cost areas, service jobs are created in their new locations, and unskilled workers who have been battling the high cost of urban housing can follow.
But this shift may be short-lived. If a job can be done in a lower-cost region of the country, it can also be sent offshore. Similar to what happened in manufacturing decades ago, instead of moving a job to a secondary hub, corporates may decide to take advantage of the global wage arbitrage in professional jobs and move jobs outside the country.
What can be done to avoid the loss of jobs? Policymakers in advanced economies should focus on supporting science and education. Remote technology boosts collaboration at a distance, which is leading to increased innovation and breakthrough science. This, in turn, can lead to new job creation.
As we absorb this new information, we will keep trying to predict the future and identify the next disruptive innovation. As we keep learning from experience, hopefully we will get hit with fewer &ldquo;don&rsquo;t knows.&rdquo;

Charting the Rise of Remote Work Globally To analyze the remote work revolution, we collected data on global job postings from LinkUp for 70 of the world&rsquo;s largest cities, spanning six continents, since the onset of the pandemic. The increase in remote work is broad-based across a range of professions. There was a robust relationship between the increase in remote work and cities with a lower cost of living.

To analyze the remote work revolution, we collected data on global job postings from LinkUp for 70 of the world&rsquo;s largest cities, spanning six continents, since the onset of the pandemic. The increase in remote work is broad-based across a range of professions. There was a robust relationship between the increase in remote work and cities with a lower cost of living.

Charting the Rise of Remote Work Globally

The Global Wage Arbitrage Over the course of the 20th century, manufacturing jobs gradually diffused from developed to emerging markets where labor was cheaper. A similar process is now playing out in technology and services. Going forward, competition for talent around the world will likely intensify with a global wage arbitrage developing for skilled workers as remote work increasingly becomes an option. If a job can be done remotely, it could also be done offshore.

Over the course of the 20th century, manufacturing jobs gradually diffused from developed to emerging markets where labor was cheaper. A similar process is now playing out in technology and services. Going forward, competition for talent around the world will likely intensify with a global wage arbitrage developing for skilled workers as remote work increasingly becomes an option. If a job can be done remotely, it could also be done offshore.

The Global Wage Arbitrage

Technology and Remote Collaboration As the proliferation of the internet drove an increase in remote collaboration scientists became more focused on incremental improvements rather than the kind of breakthrough technologies that open up new avenues for progress. However, new collaboration technology introduced in the 2010s created a turning point where remote teams became more likely to produce breakthrough discoveries relative to their onsite counterparts. The promise of remote collaboration is that connecting different local knowledge networks increases &nbsp;the innovating potential of the &ldquo;collective brain.&rdquo;

As the proliferation of the internet drove an increase in remote collaboration scientists became more focused on incremental improvements rather than the kind of breakthrough technologies that open up new avenues for progress. However, new collaboration technology introduced in the 2010s created a turning point where remote teams became more likely to produce breakthrough discoveries relative to their onsite counterparts. The promise of remote collaboration is that connecting different local knowledge networks increases &nbsp;the innovating potential of the &ldquo;collective brain.&rdquo;

Technology and Remote Collaboration

Implications of Remote Work Job creation since the computer revolution of the 1980s has been highly concentrated to a few superstar cities. The result has been a marked increase in regional inequality. However, a surge in collaborative technology during the pandemic is facilitating remote work as jobs shift to secondary hubs and locations where housing and labor is cheaper. The implications of this new geography of work include:

Job creation since the computer revolution of the 1980s has been highly concentrated to a few superstar cities. The result has been a marked increase in regional inequality. However, a surge in collaborative technology during the pandemic is facilitating remote work as jobs shift to secondary hubs and locations where housing and labor is cheaper. The implications of this new geography of work include:

Implications of Remote Work

The consequences of the COVID-19 pandemic have been far reaching. The potential for remote work means that cash-strapped families are now able to escape the metropolis, where the cost of living crises has become particularly severe. But this trend might be short-lived. For one thing, if a job can be done remotely, it can also be offshored, meaning that regional convergence in advanced economies might be short lived. To what extent this will happen, remains an open empirical question. On the positive side, recent improvements in remote technology have made it much easier for scientists and innovators to collaborate at distance. Against this backdrop, we argue that a revival of breakthrough science seems likely and could reverse the productivity stagnation of recent decades. Trying to predict future trends and identify new technologies that will truly be disruptive can be both challenging and rewarding. It can also be incredibly humbling. Getting the trend right is only half the battle. The “you don’t know what you don’t know” is where things can get a little upside down. Our very first Technology at Work Citi GPS report was based on a seminal report from Carl Benedikt Frey and Michael Osbourne that predicted 47% of U.S. jobs were susceptible to automation over the coming decades. The rationale was that non-routine manual tasks were increasingly able to be automated, and for the first time, low-skill and low-income jobs were at risk of automation. Lower automation risk was attributed to jobs that were intensive in social and creative skills. We did also note that a growing share of office and administration support jobs would soon be subject to automation as advances in big data continued. We still think automation will continue to affect U.S. jobs and may impact even more sectors as recent developments in artificial intelligence take shape. But here is where our predictions missed something and “we didn’t know what we didn’t know”: The COVID-19 pandemic brought with it a rush of new technology that enabled workers to work from home while offices were closed. And while these advances were crucial to workers maintaining productivity from remote locations, it led to a realization: If a job could be done remotely, it could be done anywhere. Corporates in industries like technology, which were historically clustered in large cities, can now move out of high-priced city centers to lower-cost secondary hubs. Initially, this should lead to a decline in economic disparities between regions. As skilled professionals follow their companies to lower-cost areas, service jobs are created in their new locations, and unskilled workers who have been battling the high cost of urban housing can follow. But this shift may be short-lived. If a job can be done in a lower-cost region of the country, it can also be sent offshore. Similar to what happened in manufacturing decades ago, instead of moving a job to a secondary hub, corporates may decide to take advantage of the global wage arbitrage in professional jobs and move jobs outside the country. What can be done to avoid the loss of jobs? Policymakers in advanced economies should focus on supporting science and education. Remote technology boosts collaboration at a distance, which is leading to increased innovation and breakthrough science. This, in turn, can lead to new job creation. As we absorb this new information, we will keep trying to predict the future and identify the next disruptive innovation. As we keep learning from experience, hopefully we will get hit with fewer “don’t knows.” Charting the Rise of Remote Work Globally To analyze the remote work revolution, we collected data on global job postings from LinkUp for 70 of the world&rsquo;s largest cities, spanning six continents, since the onset of the pandemic. The increase in remote work is broad-based across a range of professions. There was a robust relationship between the increase in remote work and cities with a lower cost of living. The Global Wage Arbitrage Over the course of the 20th century, manufacturing jobs gradually diffused from developed to emerging markets where labor was cheaper. A similar process is now playing out in technology and services. Going forward, competition for talent around the world will likely intensify with a global wage arbitrage developing for skilled workers as remote work increasingly becomes an option. If a job can be done remotely, it could also be done offshore. Technology and Remote Collaboration As the proliferation of the internet drove an increase in remote collaboration scientists became more focused on incremental improvements rather than the kind of breakthrough technologies that open up new avenues for progress. However, new collaboration technology introduced in the 2010s created a turning point where remote teams became more likely to produce breakthrough discoveries relative to their onsite counterparts. The promise of remote collaboration is that connecting different local knowledge networks increases &nbsp;the innovating potential of the &ldquo;collective brain.&rdquo; Implications of Remote Work Job creation since the computer revolution of the 1980s has been highly concentrated to a few superstar cities. The result has been a marked increase in regional inequality. However, a surge in collaborative technology during the pandemic is facilitating remote work as jobs shift to secondary hubs and locations where housing and labor is cheaper. The implications of this new geography of work include:

The consequences of the COVID-19 pandemic have been far reaching. The potential for remote work means that cash-strapped families are now able to escape the metropolis, where the cost of living crises has become particularly severe. But this trend might be short-lived. For one thing, if a job can be done remotely, it can also be offshored, meaning that regional convergence in advanced economies might be short lived. To what extent this will happen, remains an open empirical question. On the positive side, recent improvements in remote technology have made it much easier for scientists and innovators to collaborate at distance. Against this backdrop, we argue that a revival of breakthrough science seems likely and could reverse the productivity stagnation of recent decades.


The Third Phase of Globalization

The consequences of the COVID-19 pandemic have been far reaching. The potential for remote work means that cash-strapped families are now able to escape the metropolis, where the cost of living crises has become particularly severe. 

Technology at Work v7.0

Following pandemic-related disruptions, supply chains are in a state of transition. To avoid future backlogs and disruptions, many solutions are being explored including a switch from just-in-time inventory to just-in-case, as well as near-shoring and on-shoring. Technology can play a significant role in securing global supply chains via automation, software, and connectivity. New technology developments can be utilized from production to storage, delivery, and recycling. One of the more interesting observations about the COVID-19 pandemic era was the way in which it expanded words and phrases used in general conversation. Prior to the pandemic, it was unlikely that people routinely talked about the effectiveness of mRNA vaccines or how long a virus could stay viable on a shopping bag. And conversations about the daily trip to the supermarket suddenly incorporated phrases like “supply chain disruptions.” We started writing about supply chains back in December 2021 in our report Global Supply Chains: The Complicated Road Back to Normal. At the time, global markets were unbalanced. There was strong demand for goods, as many who were sitting home due to lockdowns or remote work were clicking on “Add to Cart.” On the supply side, border closings and lockdowns kept production sites shuttered. At the time, we noted that because there was more than one cause or event that had gotten us into that situation, one single solution would not relieve the stress. Then came the armed conflict between Russia and Ukraine, which added a new layer of supply chain pressure and new challenges for the global economy. Together with the issues from the pandemic, the supply chain management practices that prevailed in the years before the pandemic were questioned, especially whether global supply chain structures were robust, cost-effective, and reliable, and whether the demand for goods was relatively smooth and predictable. With vulnerabilities in supply chains exposed, we noted that many firms would feel the need to take the lessons from supply chain disruptions on board and adjust their operations. One of our suggestions was to embrace digitalization and technology more broadly throughout the supply chain. Although technology had been slowly added over the year into the production and distribution areas of the economy, we believe the recent supply chain disruptions are proving to be a catalyst for technology adoption. From robotics in manufacturing and automated guided vehicles in warehouses, new technologies in the production area of the economy can help to automate processes, increase productivity, and lower costs. In the delivery sector, technology can help decrease delivery times and novel transportation solutions can lower delivery costs. New technology such as artificial intelligence and machine learning can help companies bring products to market faster and more efficiently. Finally, digitization and documentation can help keep supply chains running smoothly. In our full report, we look at 20 different areas of supply chain technology that could help companies enhance their supply chain management practices. Some are technologies that are already used in practice, while others are more conceptual. All are likely to help lead to a more stable global supply chain. Hopefully supply chain technology can ensure that future conversations about the trip to the market will center around what’s for dinner instead of what’s missing on the shelves.

<h3>Following pandemic-related disruptions, supply chains are in a state of transition. To avoid future backlogs and disruptions, many solutions are being explored including a switch from just-in-time inventory to just-in-case, as well as near-shoring and on-shoring. Technology can play a significant role in securing global supply chains via automation, software, and connectivity. New technology developments can be utilized from production to storage, delivery, and recycling.</h3>
One of the more interesting observations about the COVID-19 pandemic era was the way in which it expanded words and phrases used in general conversation. Prior to the pandemic, it was unlikely that people routinely talked about the effectiveness of mRNA vaccines or how long a virus could stay viable on a shopping bag. And conversations about the daily trip to the supermarket suddenly incorporated phrases like &ldquo;supply chain disruptions.&rdquo;
We started writing about supply chains back in December 2021 in our report <a href="https://www.citigroup.com/global/insights/citigps/citi-gps-global-supply-chains" target="_blank" rel="noopener" data-link-source="tiny">Global Supply Chains: The Complicated Road Back to Normal</a>. At the time, global markets were unbalanced. There was strong demand for goods, as many who were sitting home due to lockdowns or remote work were clicking on &ldquo;Add to Cart.&rdquo; On the supply side, border closings and lockdowns kept production sites shuttered. At the time, we noted that because there was more than one cause or event that had gotten us into that situation, one single solution would not relieve the stress.&nbsp;
Then came the armed conflict between Russia and Ukraine, which added a new layer of supply chain pressure and new challenges for the global economy. Together with the issues from the pandemic, the supply chain management practices that prevailed in the years before the pandemic were questioned, especially whether global supply chain structures were robust, cost-effective, and reliable, and whether the demand for goods was relatively smooth and predictable.
With vulnerabilities in supply chains exposed, we noted that many firms would feel the need to take the lessons from supply chain disruptions on board and adjust their operations. One of our suggestions was to embrace digitalization and technology more broadly throughout the supply chain.
Although technology had been slowly added over the year into the production and distribution areas of the economy, we believe the recent supply chain disruptions are proving to be a catalyst for technology adoption.
From robotics in manufacturing and automated guided vehicles in warehouses, new technologies in the production area of the economy can help to automate processes, increase productivity, and lower costs. In the delivery sector, technology can help decrease delivery times and novel transportation solutions can lower delivery costs. New technology such as artificial intelligence and machine learning can help companies bring products to market faster and more efficiently. Finally, digitization and documentation can help keep supply chains running smoothly.
In our full report, we look at 20 different areas of supply chain technology that could help companies enhance their supply chain management practices. Some are technologies that are already used in practice, while others are more conceptual. All are likely to help lead to a more stable global supply chain.
Hopefully supply chain technology can ensure that future conversations about the trip to the market will center around what&rsquo;s for dinner instead of what&rsquo;s missing on the shelves.

Production and Storage While humans still perform 72% of manufacturing tasks, the use of robots is on the rise, including Automated Mobile Robots (AMRs) and Automated Guided Vehicles (AGVs). Lower costs and higher speeds can be achieved through technologies such as Robots-as-a-Service (RaaS) subscriptions and 3D printing. While warehouses are still largely manual, the use of Automation Storage and Retrieval Systems (AS/RS) is growing.

While humans still perform 72% of manufacturing tasks, the use of robots is on the rise, including Automated Mobile Robots (AMRs) and Automated Guided Vehicles (AGVs). Lower costs and higher speeds can be achieved through technologies such as Robots-as-a-Service (RaaS) subscriptions and 3D printing. While warehouses are still largely manual, the use of Automation Storage and Retrieval Systems (AS/RS) is growing.

Production and Storage

Delivery and Recycling Globally, automation at container terminals remains low despite evidence it increases throughput and reliability while reducing costs. Other technologies such as autonomous trucks, hyperloop transport, automated parcel sorting, and automated last-mile delivery technologies can produce further efficiencies in logistics.

Globally, automation at container terminals remains low despite evidence it increases throughput and reliability while reducing costs. Other technologies such as autonomous trucks, hyperloop transport, automated parcel sorting, and automated last-mile delivery technologies can produce further efficiencies in logistics.

Delivery and Recycling

Decision Making The Internet of Things (IoT) is providing greater visibility over supply chains and enables better decision making through artificial intelligence (AI) tools. Greater connectivity from 5G enhances these capabilities, with quantum computing expected to further optimize supply chains. As sensor costs fall, the number of IoT-connected devices is expected to rise significantly.

The Internet of Things (IoT) is providing greater visibility over supply chains and enables better decision making through artificial intelligence (AI) tools. Greater connectivity from 5G enhances these capabilities, with quantum computing expected to further optimize supply chains. As sensor costs fall, the number of IoT-connected devices is expected to rise significantly.

Decision Making

Digitization and Documentation Less than 10% of trade documents are fully digitized, but this is changing with the Digital Documentation Initiative (dDOC). Interoperable Digital ID systems and digital payments (including blockchain and tokenization) in the supply chain may bring further change, helping to improve supply chain resilience and increasing transparency to stakeholders.

Less than 10% of trade documents are fully digitized, but this is changing with the Digital Documentation Initiative (dDOC). Interoperable Digital ID systems and digital payments (including blockchain and tokenization) in the supply chain may bring further change, helping to improve supply chain resilience and increasing transparency to stakeholders.

Digitization and Documentation

Following pandemic-related disruptions, supply chains are in a state of transition. To avoid future backlogs and disruptions, many solutions are being explored including a switch from just-in-time inventory to just-in-case, as well as near-shoring and on-shoring. Technology can play a significant role in securing global supply chains via automation, software, and connectivity. New technology developments can be utilized from production to storage, delivery, and recycling. One of the more interesting observations about the COVID-19 pandemic era was the way in which it expanded words and phrases used in general conversation. Prior to the pandemic, it was unlikely that people routinely talked about the effectiveness of mRNA vaccines or how long a virus could stay viable on a shopping bag. And conversations about the daily trip to the supermarket suddenly incorporated phrases like “supply chain disruptions.” We started writing about supply chains back in December 2021 in our report Global Supply Chains: The Complicated Road Back to Normal. At the time, global markets were unbalanced. There was strong demand for goods, as many who were sitting home due to lockdowns or remote work were clicking on “Add to Cart.” On the supply side, border closings and lockdowns kept production sites shuttered. At the time, we noted that because there was more than one cause or event that had gotten us into that situation, one single solution would not relieve the stress. Then came the armed conflict between Russia and Ukraine, which added a new layer of supply chain pressure and new challenges for the global economy. Together with the issues from the pandemic, the supply chain management practices that prevailed in the years before the pandemic were questioned, especially whether global supply chain structures were robust, cost-effective, and reliable, and whether the demand for goods was relatively smooth and predictable. With vulnerabilities in supply chains exposed, we noted that many firms would feel the need to take the lessons from supply chain disruptions on board and adjust their operations. One of our suggestions was to embrace digitalization and technology more broadly throughout the supply chain. Although technology had been slowly added over the year into the production and distribution areas of the economy, we believe the recent supply chain disruptions are proving to be a catalyst for technology adoption. From robotics in manufacturing and automated guided vehicles in warehouses, new technologies in the production area of the economy can help to automate processes, increase productivity, and lower costs. In the delivery sector, technology can help decrease delivery times and novel transportation solutions can lower delivery costs. New technology such as artificial intelligence and machine learning can help companies bring products to market faster and more efficiently. Finally, digitization and documentation can help keep supply chains running smoothly. In our full report, we look at 20 different areas of supply chain technology that could help companies enhance their supply chain management practices. Some are technologies that are already used in practice, while others are more conceptual. All are likely to help lead to a more stable global supply chain. Hopefully supply chain technology can ensure that future conversations about the trip to the market will center around what’s for dinner instead of what’s missing on the shelves. Production and Storage While humans still perform 72% of manufacturing tasks, the use of robots is on the rise, including Automated Mobile Robots (AMRs) and Automated Guided Vehicles (AGVs). Lower costs and higher speeds can be achieved through technologies such as Robots-as-a-Service (RaaS) subscriptions and 3D printing. While warehouses are still largely manual, the use of Automation Storage and Retrieval Systems (AS/RS) is growing. Delivery and Recycling Globally, automation at container terminals remains low despite evidence it increases throughput and reliability while reducing costs. Other technologies such as autonomous trucks, hyperloop transport, automated parcel sorting, and automated last-mile delivery technologies can produce further efficiencies in logistics. Decision Making The Internet of Things (IoT) is providing greater visibility over supply chains and enables better decision making through artificial intelligence (AI) tools. Greater connectivity from 5G enhances these capabilities, with quantum computing expected to further optimize supply chains. As sensor costs fall, the number of IoT-connected devices is expected to rise significantly. Digitization and Documentation Less than 10% of trade documents are fully digitized, but this is changing with the Digital Documentation Initiative (dDOC). Interoperable Digital ID systems and digital payments (including blockchain and tokenization) in the supply chain may bring further change, helping to improve supply chain resilience and increasing transparency to stakeholders.

Following pandemic-related disruptions, supply chains are in a state of transition. To avoid future backlogs and disruptions, many solutions are being explored including a switch from just-in-time inventory to just-in-case, as well as near-shoring and on-shoring. Technology can play a significant role in securing global supply chains via automation, software, and connectivity. New technology developments can be utilized from production to storage, delivery, and recycling.

Improving Efficiency, Resilience, and Transparency

Following pandemic-related disruptions, supply chains are in a state of transition. To avoid future backlogs and disruptions, many solutions are being explored including a switch from just-in-time inventory to just-in-case, as well as near-shoring and on-shoring. 

Supply Chain Technology

Philanthropy makes an extraordinary but underappreciated contribution to the global economy each year. Despite economic headwinds, 2022 was no exception. Aggregated at the global level, charitable sentiment is blossoming. Behaviors like donating and volunteering have boomed in the last three years, and evidence is starting to suggest that this is not a temporary response to the pandemic, but a shift towards a new “normal.” The story of the total stock of philanthropy in the global economy is both less positive and less uniform. 2022 brought a mixed global picture: The U.S. saw total charitable dollars decline after a pandemic-related boom, while giving rebounded in the UK, driven largely by donors’ response to the crisis in Ukraine. If there is any uniform feature of the total stock of philanthropy in recent years, it is volatility — total charitable receipts have bounced between growth and decline in recent years, albeit at different times in different countries. Two key themes emerge from our review of the latest data on global giving and conversations with a series of experts and nonprofit leaders. After exploring data at the global level, we first zoom in on the U.S. to examine trends in the composition of the donor base. We argue that philanthropy is becoming more affluent and more institutional, with consequences for both society and individual nonprofits. Second, we explore the future of cross-border giving. Data suggests that there is growth in the number of donors outside traditionally “philanthropic” countries — like the U.S. and Western Europe — which intersects with an increasing appetite to give to locally-led organizations, both at home and abroad. As a result, the geography of philanthropy is shifting before us, disrupting the paradigm of a linear flow of funds from Global North to Global South as it does so. As so often happens in philanthropy, these shifts are gradual and not seismic. There is scope for nonprofits and philanthropists alike to prepare for these trends — and perhaps even to alter their evolution. We conclude each chapter of this report with recommendations on how to respond to these trends. For nonprofits, these include building trust with and communicating impact to those who offer smaller donations, as well as financially preparing for a more geographically complex, interlinked web of transactions as donations and spending both shift closer to the communities that nonprofits serve. For philanthropists, recommendations include leveraging networks to connect nonprofits and corporate entities in mutually beneficial partnerships and providing funding with fewer restrictions to allow nonprofits to experiment with technology and innovate in the years ahead. This Citi GPS report is the third in our Philanthropy and the Global Economy series. It builds upon two previous reports: Opportunities in a World of Transition and Reinventing Giving in Challenging Times. This year’s report is again produced in partnership with Citi Private Bank’s Philanthropic Advisory team and our core group of expert partners. We are also delighted to partner this year with Citi Commercial Bank, colleagues from the Citi Foundation, and an expanded group of experts. We are grateful to the panel of nonprofit leaders who participated in interviews as we conducted the research for this report. We hope that this Citi GPS series continues to highlight the contribution that philanthropy makes to our world and that it can play some small part in driving fruitful partnerships between public, private, and philanthropic sectors.

Philanthropy makes an extraordinary but underappreciated contribution to the global economy each year. Despite economic headwinds, 2022 was no exception.
Aggregated at the global level, charitable sentiment is blossoming. Behaviors like donating and volunteering have boomed in the last three years, and evidence is starting to suggest that this is not a temporary response to the pandemic, but a shift towards a new &ldquo;normal.&rdquo; The story of the total stock of philanthropy in the global economy is both less positive and less uniform. 2022 brought a mixed global picture: The U.S. saw total charitable dollars decline after a pandemic-related boom, while giving rebounded in the UK, driven largely by donors&rsquo; response to the crisis in Ukraine. If there is any uniform feature of the total stock of philanthropy in recent years, it is volatility &mdash; total charitable receipts have bounced between growth and decline in recent years, albeit at different times in different countries.
Two key themes emerge from our review of the latest data on global giving and conversations with a series of experts and nonprofit leaders. After exploring data at the global level, we first zoom in on the U.S. to examine trends in the composition of the donor base. We argue that philanthropy is becoming more affluent and more institutional, with consequences for both society and individual nonprofits. Second, we explore the future of cross-border giving. Data suggests that there is growth in the number of donors outside traditionally &ldquo;philanthropic&rdquo; countries &mdash; like the U.S. and Western Europe &mdash; which intersects with an increasing appetite to give to locally-led organizations, both at home and abroad. As a result, the geography of philanthropy is shifting before us, disrupting the paradigm of a linear flow of funds from Global North to Global South as it does so.
As so often happens in philanthropy, these shifts are gradual and not seismic. There is scope for nonprofits and philanthropists alike to prepare for these trends &mdash; and perhaps even to alter their evolution. We conclude each chapter of this report with recommendations on how to respond to these trends. For nonprofits, these include building trust with and communicating impact to those who offer smaller donations, as well as financially preparing for a more geographically complex, interlinked web of transactions as donations and spending both shift closer to the communities that nonprofits serve. For philanthropists, recommendations include leveraging networks to connect nonprofits and corporate entities in mutually beneficial partnerships and providing funding with fewer restrictions to allow nonprofits to experiment with technology and innovate in the years ahead.
This Citi GPS report is the third in our Philanthropy and the Global Economy series. It builds upon two previous reports: <a href="https://www.citigroup.com/global/insights/citigps/philanthropy" target="_blank" rel="noopener" data-link-source="tiny">Opportunities in a World of Transition</a> and <a href="https://www.citigroup.com/global/insights/citigps/philanthropy-and-the-global-economy-v2" target="_blank" rel="noopener" data-link-source="tiny">Reinventing Giving in Challenging Times</a>. This year&rsquo;s report is again produced in partnership with Citi Private Bank&rsquo;s Philanthropic Advisory team and our core group of expert partners. We are also delighted to partner this year with Citi Commercial Bank, colleagues from the Citi Foundation, and an expanded group of experts. We are grateful to the panel of nonprofit leaders who participated in interviews as we conducted the research for this report. We hope that this Citi GPS series continues to highlight the contribution that philanthropy makes to our world and that it can play some small part in driving fruitful partnerships between public, private, and philanthropic sectors.

Charitable Sentiment Remains High Despite a slight decline in 2022 compared with 2021, pro-social behaviors (e.g., donating, volunteering, and helping a stranger) globally remained significantly above their pre-pandemic averages in 2017-19.

Despite a slight decline in 2022 compared with 2021, pro-social behaviors (e.g., donating, volunteering, and helping a stranger) globally remained significantly above their pre-pandemic averages in 2017-19.

Charitable Sentiment Remains High

U.S.: An Increasingly Affluent and Institutional Donor Base the U.S. donor base increasingly skews affluent, with higher-income groups more likely to give and less likely to stop donating before and during the pandemic. The U.S. donor base is also becoming more institutional as chariable giving shifts away from individuals toward corporations and, more substantially, foundations.

the U.S. donor base increasingly skews affluent, with higher-income groups more likely to give and less likely to stop donating before and during the pandemic. The U.S. donor base is also becoming more institutional as chariable giving shifts away from individuals toward corporations and, more substantially, foundations.

U.S.: An Increasingly Affluent and Institutional Donor Base

Stronger Connections Through Technology Technology could play a role in replenishing the donor base as it becomes narrower and more institutionalized. Digitally mature nonprofits reported stronger relationships with their stakeholders in a recent survey.

Technology could play a role in replenishing the donor base as it becomes narrower and more institutionalized. Digitally mature nonprofits reported stronger relationships with their stakeholders in a recent survey.

Stronger Connections Through Technology

Trends in International Giving An increase in the share of giving to international causes, particularly to Ukraine, pushed up overall headline figures for chritable giving in Sweden and the UK in 2022.&nbsp; More importantly, nonprofit leaderes we interviewed report a shift is underway to fund more locally-led organizations.&nbsp;

An increase in the share of giving to international causes, particularly to Ukraine, pushed up overall headline figures for chritable giving in Sweden and the UK in 2022.&nbsp; More importantly, nonprofit leaderes we interviewed report a shift is underway to fund more locally-led organizations.&nbsp;

Trends in International Giving

Philanthropy makes an extraordinary but underappreciated contribution to the global economy each year. Despite economic headwinds, 2022 was no exception. Aggregated at the global level, charitable sentiment is blossoming. Behaviors like donating and volunteering have boomed in the last three years, and evidence is starting to suggest that this is not a temporary response to the pandemic, but a shift towards a new “normal.” The story of the total stock of philanthropy in the global economy is both less positive and less uniform. 2022 brought a mixed global picture: The U.S. saw total charitable dollars decline after a pandemic-related boom, while giving rebounded in the UK, driven largely by donors’ response to the crisis in Ukraine. If there is any uniform feature of the total stock of philanthropy in recent years, it is volatility — total charitable receipts have bounced between growth and decline in recent years, albeit at different times in different countries. Two key themes emerge from our review of the latest data on global giving and conversations with a series of experts and nonprofit leaders. After exploring data at the global level, we first zoom in on the U.S. to examine trends in the composition of the donor base. We argue that philanthropy is becoming more affluent and more institutional, with consequences for both society and individual nonprofits. Second, we explore the future of cross-border giving. Data suggests that there is growth in the number of donors outside traditionally “philanthropic” countries — like the U.S. and Western Europe — which intersects with an increasing appetite to give to locally-led organizations, both at home and abroad. As a result, the geography of philanthropy is shifting before us, disrupting the paradigm of a linear flow of funds from Global North to Global South as it does so. As so often happens in philanthropy, these shifts are gradual and not seismic. There is scope for nonprofits and philanthropists alike to prepare for these trends — and perhaps even to alter their evolution. We conclude each chapter of this report with recommendations on how to respond to these trends. For nonprofits, these include building trust with and communicating impact to those who offer smaller donations, as well as financially preparing for a more geographically complex, interlinked web of transactions as donations and spending both shift closer to the communities that nonprofits serve. For philanthropists, recommendations include leveraging networks to connect nonprofits and corporate entities in mutually beneficial partnerships and providing funding with fewer restrictions to allow nonprofits to experiment with technology and innovate in the years ahead. This Citi GPS report is the third in our Philanthropy and the Global Economy series. It builds upon two previous reports: Opportunities in a World of Transition and Reinventing Giving in Challenging Times. This year’s report is again produced in partnership with Citi Private Bank’s Philanthropic Advisory team and our core group of expert partners. We are also delighted to partner this year with Citi Commercial Bank, colleagues from the Citi Foundation, and an expanded group of experts. We are grateful to the panel of nonprofit leaders who participated in interviews as we conducted the research for this report. We hope that this Citi GPS series continues to highlight the contribution that philanthropy makes to our world and that it can play some small part in driving fruitful partnerships between public, private, and philanthropic sectors. Charitable Sentiment Remains High Despite a slight decline in 2022 compared with 2021, pro-social behaviors (e.g., donating, volunteering, and helping a stranger) globally remained significantly above their pre-pandemic averages in 2017-19. U.S.: An Increasingly Affluent and Institutional Donor Base the U.S. donor base increasingly skews affluent, with higher-income groups more likely to give and less likely to stop donating before and during the pandemic. The U.S. donor base is also becoming more institutional as chariable giving shifts away from individuals toward corporations and, more substantially, foundations. Stronger Connections Through Technology Technology could play a role in replenishing the donor base as it becomes narrower and more institutionalized. Digitally mature nonprofits reported stronger relationships with their stakeholders in a recent survey. Trends in International Giving An increase in the share of giving to international causes, particularly to Ukraine, pushed up overall headline figures for chritable giving in Sweden and the UK in 2022.&nbsp; More importantly, nonprofit leaderes we interviewed report a shift is underway to fund more locally-led organizations.&nbsp;

Prosocial attitudes continue to thrive globally, but giving trends changed in 2022 compared to 2021. Some countries saw an uptick in charitable giving following the invasion of Ukraine, while others saw headline figures fall below pandemic-related highs. In the U.S., giving is becoming more institutional, with the nonprofit and for-profit sectors moving closer together in mission purpose, business models, and partnerships. International giving is also becoming more "local' to beneficiaries.

Perspectives on the Future of Giving

Prosocial attitudes continue to thrive globally, but giving trends changed in 2022 compared to 2021. Some countries saw an uptick in charitable giving following the invasion of Ukraine, while others saw headline figures fall below pandemic-related highs. 

Philanthropy and the Global Economy v3.0

Anxiety over AI’s impact on jobs is high. It seems clear that upskilling, reskilling and lifelong learning will be the key to successfully surfing the AI wave. Talent Intelligence Platforms (TIPs) can help futureproof the workforce with insights into talent trends, skill gaps and employee engagement. Rob Garlick and Wenyan Fei from Citi Global Insights, talk about the size of the challenge that AI presents to human capital management and how TIPS can be part of the solution. 

AI Meets Human Capital: TIPs For Talent Management 

Top-performing treasuries efficiently fund working capital, deploy liquidity, and identify and mitigate risks. They put in place the fundamental building blocks to perform well in each of these areas, and transition from people-dependency to well-defined processes. They apply technology to automate repeatable processes that would otherwise occupy significant day-to-day time. They also develop data strategies and invest to ensure access to timely, complete, and accurate data. Other companies can learn from this. The analysis and insights presented throughout this study lay a path to achieving high-performance in treasury. Doing so creates value by contributing to a company’s profitability and growth. Corporate treasurers are reinventing their roles to support business growth while maintaining focus on efficiency, managing risk, and optimizing the use of capital across the entire cash lifecycle. Meanwhile, the emergence of new technologies is changing business models. Digital business models are accelerating the pace of interaction across company supply chains, increasing the velocity of cash, and creating new challenges for treasury management. Technology enables treasury to move from manual processes led by people to full automation. Technology increasingly powers data-led insights. That said, many companies still struggle to set a foundation of strong treasury fundamentals — good cash forecasting, centralized cash and banking, optimized working capital, and effective mitigation of financial risks. This is not without good reason. Many companies face a technology debt. They are plagued with manual processes, poor data, and underinvestment in technology and talent. In the face of rising expectations and demands from executive leadership, treasurers are seeking guidance to shape their investment roadmap. How do they demonstrate that leadership in treasury matters for the firm? What are the attributes of a leading treasury? What are the steps that treasurers need to take? This study measures what differentiates top performing treasuries from the rest. Companies that nurture treasury teams to be leaders tend to enjoy better financial performance. Put another way, underperformance in treasury risks diminishing value. We show how high-performing treasuries ensure efficient funding of working capital, proactively identify and mitigate financial risks, and deploy liquidity to fund company growth. We argue that companies can use the learnings from this study to leapfrog a historically lengthy process of their treasury reaching the top tier. And by doing so, they can accelerate their ability to better support company returns.

Top-performing treasuries efficiently fund working capital, deploy liquidity, and identify and mitigate risks. They put in place the fundamental building blocks to perform well in each of these areas, and transition from people-dependency to well-defined processes. They apply technology to automate repeatable processes that would otherwise occupy significant day-to-day time. They also develop data strategies and invest to ensure access to timely, complete, and accurate data. Other companies can learn from this. The analysis and insights presented throughout this study lay a path to achieving high-performance in treasury. Doing so creates value by contributing to a company&rsquo;s profitability and growth.
Corporate treasurers are reinventing their roles to support business growth while maintaining focus on efficiency, managing risk, and optimizing the use of capital across the entire cash lifecycle. Meanwhile, the emergence of new technologies is changing business models. Digital business models are accelerating the pace of interaction across company supply chains, increasing the velocity of cash, and creating new challenges for treasury management. Technology enables treasury to move from manual processes led by people to full automation. Technology increasingly powers data-led insights. That said, many companies still struggle to set a foundation of strong treasury fundamentals &mdash; good cash forecasting, centralized cash and banking, optimized working capital, and effective mitigation of financial risks. This is not without good reason. Many companies face a technology debt. They are plagued with manual processes, poor data, and underinvestment in technology and talent.
In the face of rising expectations and demands from executive leadership, treasurers are seeking guidance to shape their investment roadmap. How do they demonstrate that leadership in treasury matters for the firm? What are the attributes of a leading treasury? What are the steps that treasurers need to take?
This study measures what differentiates top performing treasuries from the rest. Companies that nurture treasury teams to be leaders tend to enjoy better financial performance. Put another way, underperformance in treasury risks diminishing value.
We show how high-performing treasuries ensure efficient funding of working capital, proactively identify and mitigate financial risks, and deploy liquidity to fund company growth. We argue that companies can use the learnings from this study to leapfrog a historically lengthy process of their treasury reaching the top tier. And by doing so, they can accelerate their ability to better support company returns.

Our ambition is to be the number one trusted advisor for our clients, offering innovative solutions and practical insights throughout their growth journey. Our Services business remains at the heart of that, and the globality of our network uniquely positions us to deliver. I’m excited for Citi to continue supporting clients with their vision and strategy for treasury, accelerating their transformation programs, and driving growth. 
Jane Fraser, CEO, Citi

The ability we have to serve our clients across the globe is underpinned by our Services business, which enables us to meet our client’s needs as they grow and develop. As a CFO, I have seen first-hand the benefits that come from investing in treasury, in managing risks, and supporting business growth and I’m always excited by how Citi partners with clients to support their everchanging treasury needs.  Mark Mason, CFO, Citi

Top-performing treasuries efficiently fund working capital, deploy liquidity, and identify and mitigate risks. They put in place the fundamental building blocks to perform well in each of these areas, and transition from people-dependency to well-defined processes. They apply technology to automate repeatable processes that would otherwise occupy significant day-to-day time. They also develop data strategies and invest to ensure access to timely, complete, and accurate data. Other companies can learn from this. The analysis and insights presented throughout this study lay a path to achieving high-performance in treasury. Doing so creates value by contributing to a company’s profitability and growth. Corporate treasurers are reinventing their roles to support business growth while maintaining focus on efficiency, managing risk, and optimizing the use of capital across the entire cash lifecycle. Meanwhile, the emergence of new technologies is changing business models. Digital business models are accelerating the pace of interaction across company supply chains, increasing the velocity of cash, and creating new challenges for treasury management. Technology enables treasury to move from manual processes led by people to full automation. Technology increasingly powers data-led insights. That said, many companies still struggle to set a foundation of strong treasury fundamentals — good cash forecasting, centralized cash and banking, optimized working capital, and effective mitigation of financial risks. This is not without good reason. Many companies face a technology debt. They are plagued with manual processes, poor data, and underinvestment in technology and talent. In the face of rising expectations and demands from executive leadership, treasurers are seeking guidance to shape their investment roadmap. How do they demonstrate that leadership in treasury matters for the firm? What are the attributes of a leading treasury? What are the steps that treasurers need to take? This study measures what differentiates top performing treasuries from the rest. Companies that nurture treasury teams to be leaders tend to enjoy better financial performance. Put another way, underperformance in treasury risks diminishing value. We show how high-performing treasuries ensure efficient funding of working capital, proactively identify and mitigate financial risks, and deploy liquidity to fund company growth. We argue that companies can use the learnings from this study to leapfrog a historically lengthy process of their treasury reaching the top tier. And by doing so, they can accelerate their ability to better support company returns. Our ambition is to be the number one trusted advisor for our clients, offering innovative solutions and practical insights throughout their growth journey. Our Services business remains at the heart of that, and the globality of our network uniquely positions us to deliver. I’m excited for Citi to continue supporting clients with their vision and strategy for treasury, accelerating their transformation programs, and driving growth. 
Jane Fraser, CEO, Citi The ability we have to serve our clients across the globe is underpinned by our Services business, which enables us to meet our client’s needs as they grow and develop. As a CFO, I have seen first-hand the benefits that come from investing in treasury, in managing risks, and supporting business growth and I’m always excited by how Citi partners with clients to support their everchanging treasury needs.  Mark Mason, CFO, Citi

"Top-performing treasuries efficiently fund working capital, deploy liquidity, and identify and mitigate risks. They put in place the fundamental building blocks to perform well in each of these areas, and transition from people-dependency to well-defined processes. They apply technology to automate repeatable processes that would otherwise occupy significant day-to-day time. They also develop data strategies and invest to ensure access to timely, complete, and accurate data. n	Other companies can learn from this. The analysis and insights presented throughout this study lay a path to achieving high-performance in treasury. Doing so creates value by contributing to a company’s profitability and growth."


Does It Matter?

Top-performing treasuries efficiently fund working capital, deploy liquidity, and identify and mitigate risks. They put in place the fundamental building blocks to perform well in each of these areas, and transition from people-dependency to well-defined processes.

Treasury Leadership

We take things for granted every day. In the morning it’s easy to take the coffee cart on the sidewalk outside the office for granted, despite it allowing us to start day with a warm cup of caffeine and a buttered roll. At 7a.m. there are likely few thoughts around the logistics necessary for the cart to be fully stocked and in the right location each morning, let alone the details around where the flour and coffee beans were grown. Being able to easily get breakfast is all the matters. In the Citi GPS Sustainability series, we have written extensively about climate change. Specifically, in Food and Climate Change: Creating Sustainable Food Systems for a Net Zero Future, we discussed the impact of food production on greenhouse gas emissions, and in Food Security: Tackling the Current Crisis and Building Future Resilience, we explored how climate change can heighten the ever-present global threat of food insecurity. But the big issue we may be overlooking is the relationship between food, water, and climate change. What happens if changes in climate affect the availability of water resources? And with water already stressed in many regions, could climate change lead to pressures on food production? In our new report, we investigate the connections between water, food, and climate change — known as the water, food, and climate nexus — with particular attention given to the impacts that too much or too little water could have on food production. Staple crops — rice, wheat, maize (corn), and soybeans — make up around two-thirds of the world’s food calories, making them critically important to consumers worldwide. Global production of these staple crops is highly concentrated in regions known as “breadbaskets,” and at least 72% of the global production of each of these crops is found in just five regions. Any changes to the growing conditions in these regions would have huge global consequences. In our analysis, we looked at the water stress levels in these five regions and found that in a “business-as-usual” climate change scenario, many countries have an extremely high risk of water stress in 2050. India is of particular concern, with over 70% of rice and 78% of wheat currently produced in areas that could have high-to-significant water stress in 2050. We then looked at the materiality of staple food production in each country, including whether the country is a large producer or exporter of these staple crops and the size of the country’s population. We found that a failure, or even a reduction, in crop yields in any of these countries would have a material impact on global food security, with cereal prices rising by 1% to 28% and an additional 1 million to 180 million people potentially going hungry. Moreover, nearly $3 trillion of business revenues of publicly listed companies could be affected. The good news is there are plenty of technological solutions that can help us avoid this dismal scenario, but good governance will also be important. We explore these opportunities in the report. The food, water, climate change nexus is critical and should not be taken for granted.

We take things for granted every day. In the morning it&rsquo;s easy to take the coffee cart on the sidewalk outside the office for granted, despite it allowing us to start day with a warm cup of caffeine and a buttered roll. At 7a.m. there are likely few thoughts around the logistics necessary for the cart to be fully stocked and in the right location each morning, let alone the details around where the flour and coffee beans were grown. Being able to easily get breakfast is all the matters.
In the Citi GPS Sustainability series, we have written extensively about climate change. Specifically, in <a href="https://www.citigroup.com/global/insights/GPS/food-and-climate_20220719" target="_blank" rel="noopener" data-link-source="tiny">Food and Climate Change: Creating Sustainable Food Systems for a Net Zero Future</a>, we discussed the impact of food production on greenhouse gas emissions, and in <a href="https://www.citigroup.com/global/insights/GPS/food-security" target="_blank" rel="noopener" data-link-source="tiny">Food Security: Tackling the Current Crisis and Building Future Resilience</a>, we explored how climate change can heighten the ever-present global threat of food insecurity.
But the big issue we may be overlooking is the relationship between food, water, and climate change. What happens if changes in climate affect the availability of water resources? And with water already stressed in many regions, could climate change lead to pressures on food production? In our new report, we investigate the connections between water, food, and climate change &mdash; known as the water, food, and climate nexus &mdash; with particular attention given to the impacts that too much or too little water could have on food production.
Staple crops &mdash; rice, wheat, maize (corn), and soybeans &mdash; make up around two-thirds of the world&rsquo;s food calories, making them critically important to consumers worldwide. Global production of these staple crops is highly concentrated in regions known as &ldquo;breadbaskets,&rdquo; and at least 72% of the global production of each of these crops is found in just five regions. Any changes to the growing conditions in these regions would have huge global consequences.
<img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/656780675cb9b8276cef0fb4.png" alt="Food_Water_Climate" />
In our analysis, we looked at the water stress levels in these five regions and found that in a &ldquo;business-as-usual&rdquo; climate change scenario, many countries have an extremely high risk of water stress in 2050. India is of particular concern, with over 70% of rice and 78% of wheat currently produced in areas that could have high-to-significant water stress in 2050. We then looked at the materiality of staple food production in each country, including whether the country is a large producer or exporter of these staple crops and the size of the country&rsquo;s population.
We found that a failure, or even a reduction, in crop yields in any of these countries would have a material impact on global food security, with cereal prices rising by 1% to 28% and an additional 1 million to 180 million people potentially going hungry. Moreover, nearly $3 trillion of business revenues of publicly listed companies could be affected.
The good news is there are plenty of technological solutions that can help us avoid this dismal scenario, but good governance will also be important. We explore these opportunities in the report.
The food, water, climate change nexus is critical and should not be taken for granted.
<img style="display: block; margin-left: auto; margin-right: auto;" src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/6567809d9cc09145f2fd4f06.png" alt="Food_Water_Climate" />
&nbsp;

Food Insecurity, Water, and Climate Change Agricultural production is highly susceptible to changes in climate. It is also reliant on the availability of water resources, which are already stressed in many regions important for food production. These water pressure will increase with climate chnage.&nbsp;

Agricultural production is highly susceptible to changes in climate. It is also reliant on the availability of water resources, which are already stressed in many regions important for food production. These water pressure will increase with climate chnage.&nbsp;

Food Insecurity, Water, and Climate Change

Food Production At Risk We analyzed crop-producing regions in key "breadbaskets" and found that large portions of food production occur in areas forecast to face varying levels of water stress risk due to climate change. Including all levels of water stress, we also assign a "materiality" rating to assess the impact of global food security from a decline in a region's food production. This rating is based on crop production levels, export levels, population size, and other water indicators such as drought.

We analyzed crop-producing regions in key "breadbaskets" and found that large portions of food production occur in areas forecast to face varying levels of water stress risk due to climate change. Including all levels of water stress, we also assign a "materiality" rating to assess the impact of global food security from a decline in a region's food production. This rating is based on crop production levels, export levels, population size, and other water indicators such as drought.

Food Production At Risk

Potential Impacts of No Action Doing nothing to prevent a potential water and food crisis will not only impact people's health and nutrition, but could also cause economic damage and political instability.&nbsp;

Doing nothing to prevent a potential water and food crisis will not only impact people's health and nutrition, but could also cause economic damage and political instability.&nbsp;

Potential Impacts of No Action

Solutions To help reduce and adapt to the impact of climate change on water resources and food production, we highlight both innovation-based solutions and improvements to water governance.

To help reduce and adapt to the impact of climate change on water resources and food production, we highlight both innovation-based solutions and improvements to water governance.

Solutions

We take things for granted every day. In the morning it’s easy to take the coffee cart on the sidewalk outside the office for granted, despite it allowing us to start day with a warm cup of caffeine and a buttered roll. At 7a.m. there are likely few thoughts around the logistics necessary for the cart to be fully stocked and in the right location each morning, let alone the details around where the flour and coffee beans were grown. Being able to easily get breakfast is all the matters. In the Citi GPS Sustainability series, we have written extensively about climate change. Specifically, in Food and Climate Change: Creating Sustainable Food Systems for a Net Zero Future, we discussed the impact of food production on greenhouse gas emissions, and in Food Security: Tackling the Current Crisis and Building Future Resilience, we explored how climate change can heighten the ever-present global threat of food insecurity. But the big issue we may be overlooking is the relationship between food, water, and climate change. What happens if changes in climate affect the availability of water resources? And with water already stressed in many regions, could climate change lead to pressures on food production? In our new report, we investigate the connections between water, food, and climate change — known as the water, food, and climate nexus — with particular attention given to the impacts that too much or too little water could have on food production. Staple crops — rice, wheat, maize (corn), and soybeans — make up around two-thirds of the world’s food calories, making them critically important to consumers worldwide. Global production of these staple crops is highly concentrated in regions known as “breadbaskets,” and at least 72% of the global production of each of these crops is found in just five regions. Any changes to the growing conditions in these regions would have huge global consequences. In our analysis, we looked at the water stress levels in these five regions and found that in a “business-as-usual” climate change scenario, many countries have an extremely high risk of water stress in 2050. India is of particular concern, with over 70% of rice and 78% of wheat currently produced in areas that could have high-to-significant water stress in 2050. We then looked at the materiality of staple food production in each country, including whether the country is a large producer or exporter of these staple crops and the size of the country’s population. We found that a failure, or even a reduction, in crop yields in any of these countries would have a material impact on global food security, with cereal prices rising by 1% to 28% and an additional 1 million to 180 million people potentially going hungry. Moreover, nearly $3 trillion of business revenues of publicly listed companies could be affected. The good news is there are plenty of technological solutions that can help us avoid this dismal scenario, but good governance will also be important. We explore these opportunities in the report. The food, water, climate change nexus is critical and should not be taken for granted. Food Insecurity, Water, and Climate Change Agricultural production is highly susceptible to changes in climate. It is also reliant on the availability of water resources, which are already stressed in many regions important for food production. These water pressure will increase with climate chnage.&nbsp; Food Production At Risk We analyzed crop-producing regions in key "breadbaskets" and found that large portions of food production occur in areas forecast to face varying levels of water stress risk due to climate change. Including all levels of water stress, we also assign a "materiality" rating to assess the impact of global food security from a decline in a region's food production. This rating is based on crop production levels, export levels, population size, and other water indicators such as drought. Potential Impacts of No Action Doing nothing to prevent a potential water and food crisis will not only impact people's health and nutrition, but could also cause economic damage and political instability.&nbsp; Solutions To help reduce and adapt to the impact of climate change on water resources and food production, we highlight both innovation-based solutions and improvements to water governance.

Climate change would have a devastating impact on water resources, which would in turn affect food production. Many of the regions that are important for the production and exportation of staple crops have a medium-to-extremely-high risk of water stress under our "business-as-usual" climate change scenario. Technologies and innovation can help but we need to act soon and elevate water in our sustainable agendas and discussions. 


Solutions for Tackling this Critical Nexus

Climate change would have a devastating impact on water resources, which would in turn affect food production. Many of the regions that are important for the production and exportation of staple crops have a medium-to-extremely-high risk of water stress under our "business-as-usual" climate change scenario. 

Food, Water, and Climate Change

Over the past decade, amazing progress has been made toward addressing climate change. In 2015, 196 parties adopted the breakthrough Paris Agreement at the COP15 meeting, creating a legally binding international treaty focused on keeping the rise in the mean global temperature below 2°C above pre-industrial levels. At the COP26 meeting in 2021, world leaders assembled again to lay out a global agenda for a path to net-zero emissions, and they established an actionable framework around the promises made in the Paris Agreement. Once the plan was put together, the next challenge was figuring out how to pay for global action on climate change. Between 2016 and 2020, climate-related projects mobilized between $600 billion and $900 billion on average annually. However, to reach the IEA Net Zero by 2050 Scenario, an estimated $125 trillion is required over the next 30 years. Despite global finance flows more than doubling in 2022 to $1.4 trillion from 2020, the estimated annual climate finance gap between 2030 and 2050 is nearly 7x 2022 flows. Investment progress in the energy transition is being made — in developed markets via private capital financing, and in emerging markets primarily from public sector capital and supranational organizations. To achieve already-established global climate goals, much of the climate finance in the coming decades will be in emerging markets. The challenge is to mobilize private capital with lower risk profiles to invest in higher-risk emerging markets that need funding for climate projects. In this report, we lay out a framework for the development of “bankable projects” that relies on stakeholders to building an understanding of the challenges facing each party by creating an enabling environment, looking at projects through an investment prism, developing a project lifecycle, and delivering successful outcomes. What this means in practice is each stakeholder doing their part to bring very much needed climate finance to emerging and developing markets. For public sector this means developing a stable and predictable political and economic backdrop while also intentionally setting a climate agenda. Government officials should work with multilateral development banks (MDBs) development finance institutions (DFIs), and importantly the private sector, to prepare complete feasibility studies that further their climate agendas. MDBs and DFIs know that they are a major contributor to the mitigation of risk and their ability to reform their frameworks for capital deployment, among other calls will be key to the success of scaling in new markets or technologies. Private sector corporates and financial institutions also play a role; their ability to understand risks, markets, and the immense opportunities ahead is imperative. The hard part of the energy transition is mostly done — there is a will to invest in projects, and there is capital to fund those projects. Bridging the gap and releasing the flow of capital is the next step.

Over the past decade, amazing progress has been made toward addressing climate change. In 2015, 196 parties adopted the breakthrough Paris Agreement at the COP15 meeting, creating a legally binding international treaty focused on keeping the rise in the mean global temperature below 2&deg;C above pre-industrial levels.
At the COP26 meeting in 2021, world leaders assembled again to lay out a global agenda for a path to net-zero emissions, and they established an actionable framework around the promises made in the Paris Agreement. Once the plan was put together, the next challenge was figuring out how to pay for global action on climate change. Between 2016 and 2020, climate-related projects mobilized between $600 billion and $900 billion on average annually. However, to reach the IEA Net Zero by 2050 Scenario, an estimated $125 trillion is required over the next 30 years. Despite global finance flows more than doubling in 2022 to $1.4 trillion from 2020, the estimated annual climate finance gap between 2030 and 2050 is nearly 7x 2022 flows.
Investment progress in the energy transition is being made &mdash; in developed markets via private capital financing, and in emerging markets primarily from public sector capital and supranational organizations. To achieve already-established global climate goals, much of the climate finance in the coming decades will be in emerging markets. The challenge is to mobilize private capital with lower risk profiles to invest in higher-risk emerging markets that need funding for climate projects.
In this report, we lay out a framework for the development of &ldquo;bankable projects&rdquo; that relies on stakeholders to building an understanding of the challenges facing each party by creating an enabling environment, looking at projects through an investment prism, developing a project lifecycle, and delivering successful outcomes.
<img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/656a05755cb9b8276cef16df.png" alt="Bankable" />
What this means in practice is each stakeholder doing their part to bring very much needed climate finance to emerging and developing markets. For public sector this means developing a stable and predictable political and economic backdrop while also intentionally setting a climate agenda. Government officials should work with multilateral development banks (MDBs) development finance institutions (DFIs), and importantly the private sector, to prepare complete feasibility studies that further their climate agendas. MDBs and DFIs know that they are a major contributor to the mitigation of risk and their ability to reform their frameworks for capital deployment, among other calls will be key to the success of scaling in new markets or technologies. Private sector corporates and financial institutions also play a role; their ability to understand risks, markets, and the immense opportunities ahead is imperative.
The hard part of the energy transition is mostly done &mdash; there is a will to invest in projects, and there is capital to fund those projects. Bridging the gap and releasing the flow of capital is the next step.

In climate finance, there has historically been a mismatch between the risk appetite of capital and the risk profile of projects. At the heart of the issue is creating bankable projects. The best way to deal with this challenge is to build capacity, education, understanding and will while at the same time creating an enabling environment where each player understands what the others need. If this is achieved, it will go some way to creating a framework which will allow capital to flow.


Creating Bankable Projects

In climate finance, there has historically been a mismatch between the risk appetite of capital and the risk profile of projects. At the heart of the issue is creating bankable projects. The best way to deal with this challenge is to build capacity, education, understanding.

Unlocking Climate and Development Finance

Planting for tomorrow: Weaving sustainability into the path toward food security

Rising global food insecurity has come under the spotlight following a series of geopolitical shocks, including the COVID-19 pandemic and Russia’s invasion of Ukraine. Food security concerns have also been compounded by the effects of a shifting climate and increasing evidence of damage caused by accelerating biodiversity loss and water scarcity. Amid concerns about immediate and long-term food security, agriculture policies are caught in the crossfire between short-term food security and sustainability.

Sustainable Investing Spotlight

The 54th Annual Meeting of the World Economic Forum will primarily focus on exploring the opportunities enabled by the new technologies and their implications on decision-making and global partnership.
&nbsp;
As in previous years, the upcoming Annual Meeting will be the foremost platform to drive public-private cooperation at the highest level, convening over 100 governments, all major international organizations, the 1000 most important global companies, relevant civil society and academic institutions, as well as the global media.
&nbsp;
Read <a href="https://www.weforum.org/agenda/2024/01/a-new-era-of-diversification-trade-supply-chains/" data-link-source="tiny">Jane Fraser&rsquo;s latest WEF blog post</a>
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For more information, please <a href="https://www.weforum.org/events/world-economic-forum-annual-meeting-2024/" data-link-source="tiny">click here</a>
&nbsp;

World Economic Forum

Unlocking Climate and Development Finance

2024 Public Sector Perspectives

Food, Water, and Climate Change

Sustainable Investing Spotlight

Supply Chain Technology

Voluntary Carbon Market

Technology at Work v7.0

Treasury Leadership

Unleashing AI

Quantum Computing

AI Meets Human Capital: TIPs For Talent Management

Good Things Happen E8: How AI is Reshaping Finance

FemTech and the Gender Health Gap

Economic and Social Mobility

Philanthropy and the Global Economy v3.0

Education: Learning for Life

Africa

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