What issues were on the agenda at the World Economic Forum this year and did the leasing industry have a say in the discussion?
The global chief executives who gathered at the Swiss mountain resort of Davos at the end of January for the 50th gathering of the WEF had plenty to chew over during their various forums and informal chats.
This year’s theme of ‘sustainability’ asked its nearly 3,000 members to consider, among other issues: how to mobilise business to respond to the risks of climate change?
Where once climate change pressure was exclusively directed at the extraction industries, today it’s also banks that fund the fossil fuel sector that are coming in for criticism.
This pressure is coming not just from civil society groups, but increasingly from regulators, chief executives and shareholders (with politicians, perhaps not surprisingly, arriving late to the debate).
But if some say the penny has finally dropped for the global finance community, believing it is now beginning to alter its behaviour to accommodate climate change concerns, others believe the opposite is true. On the last day of Davos 2020, the two rival camps were no closer together.
The push back against climate activists came largely from Wall Street, with bank and insurance bosses (Citibank, Goldman Sachs and AIG) telling World Economic Forum (WEF) delegates it is not the job of financiers to ensure companies were adopting environment-friendly policies.
Mike Corbat, the chief executive of Citibank, said: “We don’t want to find ourselves being the person that dictates winners and losers. A bank’s job is to support the communities in which it operates. It is not to dictate outcomes,” the FT reported from Davos.
The World Bank chief, David Malpass, voted with his feet and refused to attend the WEF, despite being in Europe, reports in the press suggested.
On the Greta Thunberg side of the argument, there were clear demands at Davos to halt all investment in fossil fuel exploration and extraction by companies, banks, institutions and governments, for an immediate end to all fossil fuel subsidies, and for an immediate exit from fossil fuel investments. The suggestion being that finance providers clearly can, and must, nail their colours to the mast.
Leasing at Davos?
But what representation might there have been at Davos 2020 by leasing providers from Europe?
The list of WEF corporate members is a tightly held secret, so evidence of leasing representatives is hard to come by. But at Leasing Life, we decided to compare two separate lists to arrive at a fair guess.
The first list is of Europe’s top banks (by assets) the second is of Europe’s top asset finance providers. By establishing which companies these lists have in common, it’s possible to create a list of top-tier asset finance providers with banking parents. On the automotive financing side, it’s also possible to isolate ‘captive’ finance companies that are wholly-owned by Europe’s top car manufacturers.
The Asset Finance Policy publishes a periodic ranking of Europe’s top 50 asset finance providers. The Asset Finance Europe 50 (AFE50) estimates Europe’s total market was £351bn for 2019 (based on total business equipment and vehicle lease receivables).
By cross-referencing the AFE50 list with S&P Global’s ‘Europe’s 50 largest banks by assets’ (published in April 2019), it is possible to offer a ‘guestimate’ of which leasing companies are likely to be represented at the WEF.
Europe’s top banks that register on the asset finance top 50 are:
HSBC (UK), BNP Paribas (France), Credit Agricole (France), Societe Generale (France), Barclays (UK), Lloyds (UK), ING (Netherlands), UniCredit (Italy), Credit Mutuel (France), Intesa Sanpaolo (Italy), RBS (UK), Rabobank (Netherlands), Nordea Bank (Finland), DZ Bank (Germany), Commerzbank (Germany), ABN Amro (Netherlands), KBC Group (Belgium), DNB Group (Norway), Banco de Sabadell (Spain), and Swedbank (Sweden).
For the auto sector, the AFE50 lists its largest ‘auto captives’ as BMW, Daimler and Volkswagen, while other ‘captives’ include (Volvo and IBM) and the big independents are (Siemens and LeasePlan).
So, it is fair to propose that these 20 banks, along with the seven listed captives and independents, might easily include those with a seat at the WEF table.
At what cost?
Corporate membership of the WEF starts at a base rate of 27,000 Swiss francs (£20,900) and rises to between 60,000 to 600,000 Swiss francs (£47,000 to £470,000), which comes with the right to be called a ‘strategic partner’, the BBC reported.
But ultimately, which corporations may or may not be card-carrying members of the WEF is an educated guess on our behalf, but what should be clear is that finance leasing – perhaps indirectly via its bank or auto parent companies – was not unrepresented at Davos 2020.
The Netherlands-based company LeasePlan Corporation N.V. stands out from this list of notables as the most lease-oriented representative of the pack.
Mike Lightfoot, the company’s chief corporate affairs officer, was clear on LeasePlan’s Davos strategy: “climate action is a very important subject to us” he said on YouTube, adding that because 20% of global emissions come from the automotive sector, “we think that EVs can play a really important part in bringing this number down.”
On LeasePlan’s agenda at Davos was its hosting of a dinner event about its ‘circular car’ initiative along with its partners, the Geneva-based World Business Council for Sustainable Development and the We Mean Business Coalition.
Underscoring LeasePlan’s car-as-a-service growth plan is a green agenda, says LeasePlan. “Throughout Europe, we see more and more drivers opting for zero-emissions EVs, and we continue to increase the reach of our full package EV solution. By 2030, we aim to have zero emissions from our total fleet,” Lightfoot said.
LeasePlan he added, was also at Davos to bring pressure to bear on policymakers to get the proper incentives and infrastructure in place to improve EV take-up, but when we asked LeasePlan to specifically address what improvements Sajid Javid, the UK chancellor, could introduce when he hands down his budget on 11 March, Lightfoot was more circumspect.
He said: “To make EVs the common sense choice for all drivers, governments across Europe need to step up and commit to long-term green incentives and charging infrastructure projects, including in the UK.”
LeasePlan scored eighth on the AFE50 list with receivables of £9.61bn. LeasePlan UK is a UK-registered company and subsidiary of its Dutch parent. In its latest filing with Company’s House, the company describes itself as “one of the Group’s largest operating countries across over 30 markets” and posted solid profits of £57.6m for year-end 2018.
Davos loomed large on the international news agenda, and often for the wrong reasons. As the WEF faithful descended on Switzerland, the local airport in Zurich seemed the best place to park one’s jet plane on-route to Davos.
The irony was not lost in some news reports that sought to highlight how the choice of transport for some did not square with the sustainability that many professed to believe in.
The WEF attributed more than 600 plane journeys to the four-day Davos 2019 event, but that figure does not “take into account public figures such as presidents and prime ministers,” a Davos spokesperson told a reporter from the Business Insider.
Reports that Davos was host to an excessive number of guests flying in on private jets was much commented on.
Many business jets used the Swiss Air Force base in Duebendorf, Switzerland, making it hard to gain accurate numbers, reports said, but depending on whose reports you read the number of private jets destined for Davos can number anything between 309 (Business Insider) and 1,500 (the Guardian), both reporting figures for 2019.
It should be added that these figures are disputed by the WEF who said some jets may have been recorded twice.
LeasePlan, we’re glad to report, played no part in the extravagance of flying in a private jet to Davos to preach climate action to the world, rather the team said it had: “travelled to Davos via regular scheduled commercial flights. LeasePlan’s C-suite does not use a private jet, as a rule.”
Alejandro Gonzalez is the editor of Leasing Life