As a global business, the issues that we define as material are shaped by global economic, social, and environmental trends, as well as stakeholder expectations. We look for the opportunities in these changes while mitigating risk to the business.
In 2015, we continued to respond to a range of factors that have had a profound impact on our business. These included continued high volatility in capital markets, an interest rate environment which remained at a historic low, and a challenging regulatory environment in the financial sector. Additionally, we faced increasing competition, especially from “fintechs” and rapidly changing client behaviors. As the world continues to become ever-more digital, greater opportunities are emerging to offer a more seamless customer experience and new “on-the-go” financial products. However, this also presents risks to customer privacy and cyber security. See also Annual Report: Executive summary; see also Annual Report on Form 20F: Competitive environment
Aside from that, more than eight years after the chain of events which saw the collapse of credit bubbles in the USA and Europe, trust in the financial sector remains low. According to the 2015 Edelman TRUST Barometer, an internationally respected survey on consumer confidence, only 25% of German consumers trust financial services, while the UK is only slightly higher at 36%. The loss of trust is down to a number of factors, including the perceived loss of integrity within the financial system, the complexity of financial products and the perception (real or otherwise) of miss-selling, and the perceived excessive remuneration at senior levels.
More optimistically, 2015 was a milestone year in terms of social and environmental sustainability. During the United Nations’ (UN) General Assembly in September 2015, world leaders adopted the post-2015 development agenda. “Transforming Our World: the 2030 Agenda for Sustainable Development” is a universal action plan for people, planet, and prosperity, consisting of 17 Sustainable Development Goals (SDGs). The finance needed to achieve the SDGs is estimated to amount to several trillion US dollars a year. Private sector participation is recognized to be at the heart of achieving the SDG agenda.
A changing global climate poses risks to people and the world’s economy, affecting the productivity of nation states, the availability of resources, the price of energy, and the value of businesses. At COP 21 in December 2015, the UN achieved a universal agreement on climate, with the aim of keeping global warming below 2°C and accelerating the transformational changes needed to meet the challenge. This will require public and private sectors working together to achieve a common goal. The financial sector has a critical role to play in creating the infrastructure needed to facilitate the transition to a low-carbon economy.
The European refugee crisis of 2015 is perhaps the greatest humanitarian issue of the early 21st century. The war in Syria alone has triggered a mass exodus of around 11.5 million Syrians, four million of whom have fled to other countries. While there are obvious significant social challenges in terms of housing and integrating such large numbers of refugees, the influx also offers an opportunity to rejuvenate Germany’s workforce and stimulate economic growth.
The world of business and communications is getting smaller. Multinational organizations are on the increase, serving a global population predicted to rise by more than a quarter by 2050. By this time, 66% of the world’s population will live in cities. A more populous, urbanized world presents business opportunities, but it also reminds us of the need to conduct business responsibly across national borders.