Thursday5 March 2020 ★ FINANCIAL TIMES 9

Opinion

I

f Donald Trump loses the White

House toJoe Biden n November,i

one thought is liable to disturb his

sleep ever after. No one has gone to

such extreme and impeachable

lengths to dig out the former vice-presi-

dent’s ethical liabilities. And yet no one

has done more to make them appear so

banal.HadtheUSpresidentnotcontrib-

uted so lavishly to the debasement of

public life, Mr Biden’s fabulist tenden-

cies might disturb more voters than

they seem to. So might the vexed ques-

tion of his son Hunter. As it is, neither

kind of baggage is weighing downhis

surgeintheDemocraticprimaries.

Mr Biden’s success hows us mores

than the higher bar for scandal since

1988, when a part-plagiarised speech

and some puffed-up anecdotes were

enough toend his presidential bid.

It also tells us to question the much-

billeddeathofthepoliticalcentre.

Looking back, these have been an

underrated few years for what we used

to know as “the third way”. It was with

a non-ideological campaign that Demo-

cratswon the House of Representatives

in 2018. The breakthrough star of the

primaries has been the former South

BendmayorPeteButtigieg,adifference-

splitterinpolicywithanemollienttone.

If the centre has had a problem, it was

not the lack of an audience so much as

its fragmentation among a superfluity

of candidates. The narcissism of small

differences being what it is, politicians

haverunonbehalfofthecentre-left(Mr

Buttigieg), the left-centre (Amy Klobu-

char),thedeadcentre(MichaelBennet)

and, in Beto O’Rourke, a hard-to-place

personal following. As some of these

hopefuls stand down and support Mr

Biden, the non-radical vote is congeal-

ing. Its awesome size is becoming

unmistakable.

And so too is its breadth. Now that

black and rural voters have helped to

save Mr Biden’s hide, I hope we can

dispense with the idea that moderation

isanarrowlyelitetaste,attributabletoa

vested interest in minimal social

change.

Populists of left and right often pre-

tend to a unique connection with the

masses.Thiscantipintoacertainnostal-

gie de la boue,inwhichthelessprivileged

are patronisingly credited with special

virtue. As a reminder, though, the

globalist New Democrats won Kentucky

and West Virginia in 1996. Barack

Obama took Indiana in 2008 and Iowa

in 2012. And over the past week, Mr

Biden, whose network of contacts reads

like theBilderberg invitee list, has won

Arkansas, Oklahoma andevery county

inSouthCarolina.

There is no automatic tension

between tepid, managerialist views and

membership of “the people”. If any-

thing, voters whose livelihoods are on a

knife-edge have the most to lose from

dramatic change. It is the coastal higher

orders who have viewed Mr Biden’s can-

didacy as a frightful bore since its decla-

rationalmostayearago.

Being creatures of narrative, my pro-

fession inferred from the shocks of 2016

— Mr Trump’s victory and the vote for

Brexit — a lasting crisis for the global

centre. Contrary events, such as the

election of President Emmanuel

Macron in France, or the US midterm

elections, did not dissuade us. Perhaps

the only thing that ever would is the ele-

vationofapre-2016retread,alionofthe

Senate Foreign Relations Committee in

the globalised heyday, to the world’s

grandestoffice.

For that to happen, Mr Biden still has

to see off his Democratic rival Bernie

Sanders, then Mr Trump, and along the

way his own demons: the meandering

verbosity, the vote for the Iraq war, the

signs of age that — not to be macabre

about it — put a large premium on his

choice of running mate. To keep the left

from splintering, or sitting on their

hands in November, he must also

persuade them that theirs is not a revo-

lution denied so much as one deferred.

He can try warranted flattery: Mr Sand-

ers has moved the centre to the left,

evenifhehasnotbeatenit.

Mr Biden might yet flunk one or all of

these challenges. But something about

him makes more sense in 2020 than in

1988 or 2008. True, it is futile to gauge

“the”moodofanationwhenthatnation

is more than 300m-strong, mosaical in

its heterogeneity and peppered across a

continent. But one feeling does seem to

recur: exhaustion. It is unclear that

Americans want an equal and opposite

reaction to Mr Trump, at least for the

time being. The latent demand is rather

forafewyearsofquiet.

In 1988, Mr Biden expounded his

theory that the presidency oscillates

between radicals and those who “let

America catch its breath”. Thirty-two

years later, in those five words, he has a

potential campaign theme that is unim-

aginative, uninspiring and, perhaps,

unbeatable.

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Now that the non-radical

vote is congealing,

its awesome size is

becoming unmistakable

Biden surge is proof of the resilience of the centre

people at the bottom of their org charts

havewoninvestors’backing.

So what companies should do is clear.

What they choose to do will determine

whichonesemergestrongest.

Even with support from longer-term

ESG investors, CEOs face intense pres-

sure to put shorter-term shareholders’

demandsfirst.Iftheyyieldtoitbyslash-

ing jobs, short-changing suppliers or

backingawayfromenvironmentalcom-

mitments, their actions risk being seen

not as inevitable responses to hard

times but as corporate hypocrisy, shat-

teringthepublic’salreadyshakytrustin

business.

In 1963, the Stanford Research Insti-

tute defined “stakeholders” as “groups

without whom the organisation would

cease to exist”. It took decades for exec-

utives to come around to the idea that

constituents other than their investors

play such an existential role. Now they

must show the substance behind their

professedconversion.

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working, “everybody in New York

thinks they’ll sit at home and get

takeout, but nobody who delivers

takeout or Amazon parcels gets paid

sick leave,” points out Alison Taylor,

executive director of NYU Stern's Ethi-

cal Systems centre. An ethical business

shouldextend such benefits o contractt

and gig economy workers, she argues:

“Do I think there’s a hope in hell they’ll

dothat?Noway.”

The case for companies staying

focused on multiple stakeholders’ long-

term interests — even in a crisis — is get-

ting stronger. Deloitteestimates hatt

half of all actively managed funds will

have ESG mandates by 2025, and a

growing body ofresearch uggests thats

companies which manage to longer

horizons outperform regardless of the

economiccycle.

“The numbers show that acting in a

long-term fashion can shield a company

from the lasting effects of a market

downturn,” says FCLTGlobal CEO Sarah

Williamson. Companies such asPayPal

which haveimproved benefits orf

astheyhaveinrecentweeks.Raisingthe

prices when in-demand products are in

short supply is rational in normal times;

in a crisis it looks like gouging.Amazon

this weekdeleted housands of productt

listings that flouted its fair pricing pol-

icy, and a New York state senatorpro-

posed enalties for retailersp increasing

thepriceoffacemasks.

Similarly, disparities in the benefits

companies offer different workers pose

unexpected reputational risks. It is one

thing to tell office dwellers they can stay

home with their laptops, but minimum-

wage staff atWalmart nda McDonald’s

and thegig economy workerson which

DoorDash nda Uber epend do not haved

thatchoice.

As infection concerns boost remote

This heavily marketed support for a

new way of doing business has raised

expectations among staff and custom-

erstoapointthatmanyofthebelt-tight-

ening moves that executives have

deployed in past crises could do lasting

brand damage. A sustained downturn

would also leave them with tougher

choicesthaninpreviousreversals.

Harsher conditions always prompt

CEOstocutthenice-to-have:61percent

of executives would cut discretionary

spending to avoid missing their profit

forecast, according to a survey byFCLT-

Global, a group formed to encourage

corporatelongtermism.

When choosing between addressing a

long-term environmental crisis and

more imminent supply chain upheav-

als, many companies will shelve the less

pressing demand. But doing so now will

expose executives who have embraced

the environmental, social and govern-

ance demands of a growing universe of

“ESG”fundstouncomfortablescrutiny.

“We always get that question: in a

downturn, does ESG keep going?” says

Martin Whittaker, the CEO of Just Capi-

tal, which ranks companies by how they

treat stakeholders. “In a riskier world,

some people are... not going to think

long-term,” he warns, predicting a

shake-out that will expose “those that

are in it for the marketing”.WeWork’s

claim o be dedicated to “the energy oft

we”, for example, has rung hollow since

it outsourced ,000cleaners’jobs. 1

Even business as usual can look cal-

lous when conditions change as sharply

H

ow stakeholder-friendly

will companies feel in a

falling market? The corpo-

rate consensushas shifted

remarkably quickly to the

idea that executives must manage for

the long-term benefit of employees,

consumers, suppliers and the planet —

ratherthanfocusonlyonmeetinginves-

torexpectationsforthenextquarter.

Yet this rebuke to the old doctrine

of shareholder-primacy as come dur-h

ing a long bull market. Record profits

have made it easier for chief executives

to think magnanimously about constit-

uentswhohavenopowertooustthemif

theymissforecasts.

Thecoronavirus outbreak ffers ao

stark reminder that such benign condi-

tions will not last. As stock prices whip-

saw and global supply chainsseize up,

capitalism’s recent conversion faces its

biggest test. Central banks havemoved

quickly o cushion the economic impactt

of the outbreak, and most CEOs still

hope that their profits will rebound.

But the coming weeks will be fraught

with unfamiliar risks for companies

that have come to define themselves by

theirsociallyresponsiblecredentials.

Stakeholder

capitalism’s

first big test

You can tell office dwellers

to work from home but

ig economy employeesg

do not have that option

W

e should be beyond

debating whether hav-

ing women on boards

is a good thing. The

arguments for this are

already well known: gender diversity

helps companies avoid groupthink, pro-

vides diversity of ideas, better reflects

your customer base... and, of course,

itistherightthingtodo.

But knowing that is not the same as

making it happen, particularly in Hong

Kong. We must take a different

approachhereifwearetohaveanyhope

of catching up with our international

peers. Among the 50 Hang Seng index

constituent companies, women occupy

just 13.6 per cent f board positions ando

11 HSI companies have all-male boards.

By contrast, women make up33.5 per

cent of FTSE 100 board members nda

28.6 per cent f S & P100 boards in theo

US. The figure stands at 25.3 per cent in

Malaysia and 18.4 per cent in Singapore.

In India it is mandatory to have at least

one woman on a board, and nearly 16

percentofdirectors herearewomen.t

Research continues to support the

value of board diversity. Most recently,

Cass Business School in London sur-

veyed 16,763 public mergers and acqui-

sitions globally over 20 years and con-

cluded that boards with female repre-

sentation of 30 per cent or moreoutper-

form all-male boards ver both theo

short and long term. Large institutional

investors includingState Street nda

BlackRock upport board diversity ands

have promised to vote against slates of

allmaledirectors.

In Hong Kong, we have hosted count-

lesseventstoraiseawarenessoftheben-

efits of gender diversity on boards and

to train board-ready women. We

thought peer pressure, nudging, calling

out all all-male HSI boards and their

company secretaries and even making a

hold-no-punches, funny video ouldw

spuraction.Itdidnot.

In January last year, the Hong Kong

Stock Exchange upgraded the need for

every listed company toinclude a diver-

sity policy n its corporate governancei

report from a “comply or explain”

requirement to a Listing Rule. A few

monthslateritalsoissuedguidancethat

effectively calls out all-male boards

among applicants for initial public

offerings. But with more than 2,

listed companies, it would take 2,

years to achieve 30 per cent female rep-

resentation if we relied on new listings

toredressthebalance.

This is a governance issue. In 2020, no

one can seriously believe that there are

not enough qualified women or that

they are all already sitting on boards.

Nor is it acceptable to think that one

woman per board is enough.Research

has shown hat three is the magict

number for women to be effective on

boards. Seven years ago at an Asia busi-

ness summit, I opposed gender quotas. I

hopedthat,overtime,HongKong-listed

companies would bring about their own

change. Yet soft targets have not been

met and I do not see significant change

happening any time soon. All I can fore-

see is that Hong Kong falls further and

further behind on a measure that is

increasingly a critical component of

governance.

It is time to impose quotas for gender

diversity on boards, as Norway did in

2008 and more and more countries are

doing now. I now believe this is the only

way to go for Hong Kong. We should

make it compulsory that every listed

company in the territory have a board

thatis40percentfemaleby2026.

A six-year transition period would

allowcompaniestoplanandbuildinter-

nal pipelines. A 40 per cent standard

would allow us to stand proud among

our international peers and move us

towardtheultimategoaloffullparity.

In today’s world, where uncertainty,

volatility and disruption are normal, we

need all the talent we can find. That

means tapping all of our people not just

half.Ahardtargetof40percentwomen

by2026wouldmakearealdifference.

The writer, a former chair of the HongKong

Stock Exchange’s Listing Committee, is

China chairman of Freshfields Bruckhaus

Deringer

Hong Kong

needs quotas for

gender diversity

on boards

We thought peer pressure,

nudging and calling out

all-male boards would

spur action. It did not

S

ince the beginning of its inter-

vention in Syria in September

2015, Russia has not only

sought to keep in place its

mostfaithfulArabally,Syrian

president Bashar al-Assad. It has also

wanted to regain the regional and global

influence that it lost since the fall of the

SovietUnion.

Vladimir Putin has sought to use the

turmoil in the Middle East to erase

international norms and advances in

international humanitarian law made

since the second world war. In fact, cre-

atingthehumanitariandisasterthathas

turned almost 6m Syrians into refugees

has not been a byproduct of the Russian

president’s strategy in Syria. It has been

oneofhiscentralgoals.

I believe Mr Assad is the most barba-

rous ruler that the world has seen since

JosephStalin.Whenhisownpeoplerose

up against him, he developed a military

strategy designed to inflict the greatest

possibleharmonhiscivilianopponents.

He deliberately targeted hospitals,

schools and kindergartens, trying to kill

or maim care givers. He has used poison

gas and chemical attacks over the

course of a conflict that has left more

than half a million dead. Mr Putin has

meanwhile provided him with the air

power without which Mr Assad couldn’t

havecarriedouthisstrategy.

InMay2019,Russiabombedfourhos-

pitals in 12 hours, as detailed by a New

YorkTimesinvestigation.Asrecentlyas

February 26 2020, according to theUN ,

10 schools were targeted in a single day

including kindergartens. Local health

officials claim that, since the Syrian

regimeanditsRussianallylaunchedthe

campaign to retake Idlib in April 2019,

at least 49 medical facilities have been

targeted. Anotherinvestigation ug-s

geststhenumbermaybeashighas60.

Russia has also targeted at least 14

camps holding internally displaced per-

sons during the conflict for Idlib. Recent

attacks on camps near the Turkish bor-

der have multiplied, pushing hundreds

of thousands of people in the direction

of the Turkish border. This has pan-

icked Ankara, prompting it to encour-

age the refugees already on its soil to

head towards Europe. That, in turn, has

triggered a refugee crisis at Turkey’s

borderwithGreece.

Syrian civil society and international

human rights groups have repeatedly

pointed out this systematic targeting

of civilians and basic civilian infrastruc-

ture.Buttonoavail.

As Russia is a permanent member

of the Security Council, it has used its

veto repeatedly — 14 times since the

beginning of the war in Syria — to block

efforts at accountability. That includes

theveto,alongsideChina,ofaresolution

supported by 65 countries and the rest

of the security council that would have

referred war crimes committed in Syria

totheInternationalCriminalCourt.

The only government that has put up

military forces to defend the civilians

trapped in Idlib by Mr Assad and its

Russian ally is Turkey. Air strikes by

Russian planes (Moscow has denied

their role) killed 34 Turkish soldiers

latelastmonth.

But Turkey did not dare attack Russia

directly because the Russian air force is

stronger than Turkey’s. Russia has

nuclear weapons and Turkey does not.

Turkey instead chose toretaliate

against the Assad forces using military

drones. That is how Putin has got away

with impunity for murder. In 2014, I

urged Europe towake upto the threat

that Russia was posing to its strategic

interests, albeit in a different context

and geography. Russia had invaded

Ukraine knowing that Europe would

seek to avoid any confrontation with

Moscow.

Yet what is happening in Idlib now is

following the same pattern: Europe is

evading a confrontation with Russia

over its Syria policy when it should be

standing up to it. By focusing on the

refugee crisis that Russia has created,

Europe is addressing the symptom and

notthecause.

A Europe that is set on limiting the

inflow of refugees must concede that

Turkey has already borne the brunt of

housing the millions of Syrians dis-

placed from their country. Turkey

already houses 3.5m Syrian refugees in

its territory. It cannot absorb the addi-

tionalmillion hat Mr Assad and Mrt

Putinarepushingtowardsitsborders.

Europe should not forget how Turkey

can also treat its own people — witness

the reckless force it has used against the

Kurds. But with respect to Syria at least,

TurkeydeservesEurope’ssupport.

Europe should therefore seek to bol-

ster Turkish president Recep Tayyip

Erdogan’s negotiating position with Mr

Putin in trying to reach a cease fire that

would preserve a “safe zone” in Idlib for

Syrian refugees. I hope that this would

also put Mr Putin’s war crimes at the

centreoftheEuropeanconversation.

The writer is chairman and founder of Soros

Fund Management and the Open Society

Foundations

The Russian president has

sought to use the turmoil

in the Middle East to erase

international norms

Europe must stand with Turkey against Putin’s war crimes

Teresa

Ko

AMERICA

Janan

Ganesh

George

Soros

BUSINESS

Andrew

Edgecliffe

Johnson

MARCH 5 2020 Section:Features Time: 3/20204/ - 18:42 User:dana.prince Page Name:COMMENT USA, Part,Page,Edition:USA , 9, 1