Governance to innovate and competition between North and South

Another form of intervention, some argue interference, is the promotion by law and other regulations, of the principles of diversity, equity and inclusion within companies. After years in which the DEI agenda seemed to have the wind in its sails, not least because it was backed up by studies showing that virtuous companies are also better managed, the wind has started to favour the boat of restoration. But this is not the end of initiatives to better align societal expectations and corporate behaviour in respect of human rights.

The year 2024 saw the approval of the European directive on the liability of multinationals along the entire value chain, as well as a sharp acceleration of allegations of sexual abuse and violence in the mining industry. One of the criticisms raised against all these policies is that they harm Western companies compared to those in emerging countries, which are not subject to them. Apart from the fact that the scope is global, the criticism is based on a mischaracterisation of the sources of the competitive advantage of companies in the BRICS and beyond. Which is less and less low labour costs and more and more high technology, as demonstrated by the success of the Mate 70, Huawei's first model after the restrictions imposed on trade in semi-conductors.

In a world where the North struggles with growth decimals, the South still offers better opportunities. Which it is the most dynamic companies in the South that are exploiting with South-South investments whose importance is constantly growing. The growth potential in domestic markets is certainly not exhausted, quite the contrary. Diversified conglomerates, active in seemingly heterogeneous industries but where project execution, brand credibility, access to credit and good relations with politicians are key, are taking advantage of it. This explains why Dangote produces cement and sugar, and is building one of the
biggest refineries in the world.

But business groups are not exempt from critical issues, as shown this year by Adani, who was investigated by the US courts for bribing Indian public officials, or the Saigon Commercial Bank, whose CEO was sentenced to death for embezzling USD 12 billion and bankrupting it. Governance is also about governance when dealing with the minefield of inter-generational transfer. 2024 has been a season worthy of Succession, between trials in Nevada for the Murdochs and face-to-face at the Geneva court between Margherita Agnelli and her sons. Bernard Arnault seems to be doing better, distributing the top posts among les enfants, apparently without quarrels and dirty laundry washed on the public street. But for LVMH it is only the second generation and heirs are few, when you are in the sixth there are several dozen and things get complicated. You have to innovate, as the Wallenbergs are doing in Sweden, trying to match each other's skills and ambitions to the group's portfolio, which ranges from Ericsson and ABB to EQT and Atlas Copco, plus a family office, various listed and unlisted holding companies, and foundations that finance science and the arts.