Comment

Despite persistent and difficult challenges, Dawn McLaughlin is bullish on the north-west’s prospects for 2022 and beyond. This time of year is often a natural time to reflect and contemplate what has happened over the past 12 months. 2021, for all its challenges and difficulties, has been a greater whirlwind than the preceding year in many ways. While still profoundly challenging, businesses have got to grips with issues like the pandemic and the Northern Ireland Protocol, adapting to the challenges before them and seeking new ways of working to meet their customer needs and obligations. I have witnessed the hardship and listened to stories of decimation and uncertainty. But I have also been heartened by how businesses reacted to the crisis, putting their people before themselves. As we look towards 2022 and consider all that it may bring, it is important to look at the challenges we have faced, what we have achieved, how we have progressed, and what still needs to be done. For the north-west, it has been a year of optimism and positivity as well as change and progression. February saw the heads of terms signed off on the £250 million Derry and Strabane City Deal, an investment package that will see 7,000 jobs created over the next decade and an extra £210 million in GVA (gross value added) generated in our regional economy annually. It is difficult to overstate the transformative potential this deal could have for our region – a part of the island that has historically been underfunded, underdeveloped, and under-prioritised. If we get this right, there is an opportunity to carve out the north-west as a leading location in Western Europe for technology, health and life sciences, diagnostics, artificial intelligence, and other emerging industries that will become increasingly important to the global economy over the next decade. It has been a joy to finally see future doctors and consultants training in the city, with the opening of Derry’s new School of Medicine in September. The further expansion of Ulster University’s Magee campus is something that City partners are committed to making a reality, and we will continue to work collaboratively towards this goal. We have welcomed new Executive ministers this year, new MLAs in Foyle, and new party leaders. Ahead of the next Assembly election in Spring 2022, we have been working hard to get our message out there and tell our local candidates precisely what they must support to see our region flourish and prosper. We hope that issues like our regional connectivity and infrastructure, the expansion of our local university, job creation, attracting new investment, and skills development will be front and centre for our elected representatives in May. Specific issues still linger as we look ahead to 2022. Continuing disagreement over the Northern Ireland Protocol does no one any favours, especially businesses. Companies crave certainty, and they thrive when things are stable. While the Protocol is by no means perfect and difficulties are still to be ironed out, these are not insurmountable. Both sides can come to a positive conclusion through committed dialogue, and Northern Ireland can begin to take serious advantage of access to both the UK and EU markets. With growing inflation, a squeezed labour market, and rising costs of materials, services, and utilities, businesses face persisting challenges as we go into the New Year. However, I have spoken regularly about my optimism for the north-west throughout the past 12 months. This optimism has not abated, and I still believe 2022 will be a year of opportunity and prosperity for our region. Dawn McLaughlin FCA is Founder of Dawn McLaughlin & Co. Chartered Accountants  and President of Londonderry Chamber of Commerce.

Dr Brian Keegan explains why less is often more when it comes to the written word, despite the innate tendency to elaborate rather than edit. The first draft standard from the International Sustainability Standards Board (ISSB) was published last month. Dealing with climate, it runs to a mere 39 pages. But then you have to add on the appendices, which run to well over 500 pages. Even though it is still in draft, that’s a lot of material for people to get their heads around. There will be changes before it is finalised, and I wouldn’t bet that those changes will make it shorter. James Joyce rarely cut sentences when he edited his own work; he just added more words. Many of us subscribe to the Joycean approach. The business and regulatory environment has undoubtedly become more complex. That has a bearing on the volume of information we need to process, but it is not the only reason. Annual reports are growing in length; witness the growth in the size of the published accounts the Leinster Society considers and awards each year. Senior figures in the profession are now predicting the emergence of a more narrative form of assurance on corporate results. More reporting reflects business complexity and stakeholder expectations, of which the new ISSB draft standard is a paradigm example. Much of what we write shows a desire to be seen to have written rather than showing that we want to be read. We may literally be the authors of our own misfortune. Copy and paste functions aid and abet the blossoming of word counts. In this age of email and social media, it is trivial to point out that it is easier to send than to receive; it is certainly quicker. By tolerating this growth, we all do ourselves a disservice. One distinguished senior member and non-executive director put it succinctly to me earlier in the year, as he glumly surveyed yet another multi-volume set of board materials. The bigger the pile of papers, the more it suggested to him that the board didn’t trust management, that management didn’t trust the board, and that everyone assumed that everyone else had too much time on their hands. Even if none of that was true, it would be hard to disprove given the evidence. The tide may be turning, at least in some quarters. Many websites and journals now advertise the length of time it will take to read an article. This tactic is not without its risks either, as it insults fast readers and panics slow ones. Yet, we communicate best when the reader is minded to hear what we have to say. An assurance that the communication won’t take up too much of their time is a good way of getting an audience onside. The French philosopher, Blaise Pascal, is credited with first making the excuse for something he wrote being too long – because he had no time to make it shorter. Time cutting the verbiage is time well spent; the reader is much more likely to hear the message, but it’s not easy. We need to stop hiding behind executive summaries and elevator pitches and instead manage better what we write in the first place. I propose to lead by example. This column is supposed to be 600 words long, but it will be a little shorter this month. I hope the editor is okay with that. I hope you are too. Dr Brian Keegan is Director of Advocacy and Voice at Chartered Accountants Ireland.

Dawn McLaughlin explains how the north-west’s reputation as a prime location for foreign direct investment has been sixty years in the making. Sixty years ago, the US industrial fibre giant, DuPont, established a base on the outskirts of Derry/Londonderry. At the time, few international corporations were based in Northern Ireland, and very few would have considered this part of the world when choosing where to invest. DuPont’s decision was not only courageous but helped kick-start and sustain economic growth and development for nearly half a century. The company remained in the region throughout the dark days of the Troubles, sustaining jobs and keeping families in work at a time when our economy was underdeveloped and primitive in many respects. For 30 years, the company put the city at the cutting edge of innovation and technology by producing Kevlar, one of the world’s most important materials, at the site. As important as the jobs were to thousands of local working-class families, DuPont’s presence was almost more important for its role in attracting other global companies to the region. DuPont became an ambassador for the north-west and strengthened its status as a region well-equipped for foreign direct investment (FDI), with its low-cost structure, strong talent pool and high standard of living. Other American and European companies were encouraged by DuPont’s positive experience in the north-west and saw Northern Ireland as a viable and strategic place to invest. FDI has been a significant driver of the North-West City Region’s economic growth over the past three or four decades. The late John Hume’s role in bringing Seagate to the city is well-known, and it has gone on to be an integral part of the local economy. By the company’s 20th anniversary in the city in 2013, it had invested over £720 million in the region, contributed nearly £50 million in annual wages, and boomed to become the city’s largest employer with a workforce of almost 1,400. To this day, Seagate remains one of the region’s most important organisations. US tech giant and insurance company, Allstate, was one of the first foreign companies to invest in Northern Ireland after the signing of the Good Friday Agreement. Starting with an initial staff of just 20 in Derry, the firm has blossomed into one of the north-west’s most recognisable employers and has spread further into the region with its Strabane office. Taking a leap of faith like Allstate’s is a brave one for a business, but one that has generated great gains for both the company and the community. With more and more companies choosing to invest in the north-west, the economy has diversified and matured. We now have a cluster of cutting-edge and exciting tech, fintech, health and life-sciences, artificial intelligence, and diagnostics firms. The Derry and Strabane City Deal is a once-in-a-lifetime capital investment package, which will help attract even more companies and nurture this ecosystem of innovation, research and development, and technology. Inward investment and FDI have played a key role in our local economy over the past sixty years and will continue to do so. As we emerge from the pandemic, partners within the city will be working hard to attract more investment, jobs, start-ups, and business. Thanks largely to the courageous decisions of companies like DuPont to come to the north-west all those years ago, this region now has a diverse and innovative economy and is an ideal location for FDI. Dawn McLaughlin FCA is Founder of Dawn McLaughlin & Co. Chartered Accountants and President of Londonderry Chamber of Commerce.

You don’t have to listen very carefully to hear the rattle of bandwagons being boarded as governments, quangos and interest groups issue their calls to action on behalf of Planet Earth, writes Dr Brian Keegan. It is over 20 years since the Kyoto Protocol was signed. With hindsight, the aspirations back then were relatively modest, amounting to little more than a commitment by governments to reduce carbon output. That hasn’t got us very far, as highlighted by the report over the summer from the Intergovernmental Panel on Climate Change (IPCC). There is no one to blame except us when it comes to increases in planetary temperature. The political difficulty with the climate crisis is akin to the political difficulty facing many countries in relation to pensions. Everybody knows there is a problem, but the crisis is happening too slowly for urgent remedies to be acceptable. It is painful to increase the retirement age (an approach currently under examination in Ireland and the UK) or add to the tax burden. Both or either option would correct the ratio of pension beneficiaries to pension funders. Yet, there will be no immediate political benefit. The political dilemma is the same when it comes to decisions over climate policy. We have fixed climate problems before. Forty years ago, the big environmental concern was the hole in the ozone layer. Changes in industrial policy resulted in the virtual banning of chlorofluorocarbons in refrigeration and other industries to help repair it. But where is the political dividend for those who took these actions? This is the nub of the problem for both the Kyoto Protocol and, more recently, the 2016 Paris Accord. Both initiatives depended primarily on government action, but government action on its own isn’t sufficient. A similar fate awaits the Irish Government’s Climate Action Act and the British Government’s Climate Action Act of 2019. It is all very well setting legally binding emissions targets – net-zero by 2050 in both cases – but people still have to travel, work, eat, and stay warm. Even when governments mandated the curtailment of normal life, as was the case with successive lockdowns in the past 18 months across the world, the impact on global carbon emissions fell short of the 7% reduction per annum promoted as necessary by the UN. Preparations for the next international gathering on climate change, known as COP26, are being finalised for November 2021 in Glasgow. However, while all this activity and wordsmithery is happening, the real progress on climate change may be taking place elsewhere. There is evidence that private sector financing for non-sustainable business activity could dry up. Speaking to a TASC think-tank event recently, the chief executive of AIB, Colin Hunt, put the matter succinctly: “Companies that don’t take this seriously won’t be around to talk about it in ten years’ time”. He is echoing a sentiment that seems increasingly prevalent in the investment community and is supported by academic research. Of course, all this comment could be mere virtue signalling and a form of greenwashing in itself. Nevertheless, it does seem that environmental investment considerations are genuinely more prevalent. It follows that environmental, social and governance (ESG) reporting will come more to the fore, even without government prompting. The chief executive of the International Accounting Standards Board has suggested that if ESG reporting for investors is correct, by addressing investor concerns, we will also address broader societal concerns. Government carbon targets might indeed be met, but by private investment strategies rather than climate legislation. Dr Brian Keegan is Director of Advocacy & Voice at Chartered Accountants Ireland.

As ever, this is a busy time of year when the Institute commences its CPD programme for the autumn and we unveil our programme of events and conferences. The business environment has continued to change substantially in the last year, and we have formulated this programme of events, courses and specialist qualifications with a keen eye on equipping members to leverage that change in their professional lives. We have engaged closely with our members to ensure we are addressing your needs in our new programme. I look forward to your feedback. After a lengthy period of virtual engagement necessitated by the pandemic, we surveyed our members in recent weeks to hear your preferences on engagement in the coming months. It is clear from your feedback that a shift has taken place when it comes to events. We see an appetite to attend larger conferences, awards ceremonies, and social events in person, but it is also clear that the virtual option will remain a preferred one for many when it comes to CPD courses, briefings, and other smaller-format meetings. This feedback will inform our planning in the months ahead. As we move out of the shadow of COVID-19, another crisis will dominate this coming quarter – the climate crisis. COP26, which will take place in November, will drive this focus. Accountants’ skills and expertise strongly position them to help businesses adapt to meeting the sustainability challenge. The evolution of the CFO role in recent times is proof of this, but sustainability expertise is equally becoming critical among accountants at every level. The Institute will maintain its focus on equipping members for this task. Finally, I would like to direct your attention to our recently published position paper, The Next Financial Year, which details policy measures the Institute is calling for in the months ahead. Informed by extensive engagement with members in business, practice, and the public sector, it focuses on improving government policy for businesses on the island of Ireland without demanding additional exchequer funding or support. I look forward to engaging with you all in the coming weeks and months. Barry Dempsey Chief Executive  

In an age of information overload, what websites and internet resources can someone who wants to keep up-to-date with the world of finance and financial management rely on? Here’s Cormac Lucey’s selection. For daily business news… The RTÉ website offers us the opportunity to read the daily survey of business and financial news published by the main Dublin stockbrokers. This is not just a useful survey of the previous day’s financial economic news, it also offers readers the opportunity to understand how financially literate readers view that news.   Visit www.rte.ie/news/markets/broker_reports (and check out Goodbody Stockbrokers). For detailed financial data on leading Irish corporates… I opened up an account with Davy Stockbrokers largely to get access to the company’s Weekly Book. That is a compendium of corporate data for quoted companies covering recent financial history, near-term financial forecasts and key valuation metrics. For avid financial number crunchers such as myself, it’s the equivalent of crack cocaine! Visit www.davy.ie  For an up-to-date overview of the Irish economy… The National Treasury Management Agency (NTMA) borrows money on behalf of the State. That requires regularly updating international debt investors (who may buy Irish government debt) on economic developments here. Visit www.ntma.ie (and look for ‘Investor Presentation’).  For an overview of the Northern Ireland economy… EY’s Chief Economist, Neil Gibson, provides a regular and authoritative update on what is going on up North.  Visit www.ey.com (and search for ‘EY Economic Eye: Northern Ireland’). For a global economic overview from a monetary perspective… Simon Ward, Janus Henderson’s economic adviser, uses monetary and cycle analysis to assess economic and market prospects. Visit www.moneymovesmarkets.com For general trends in financial management… Two large international consultancies offer regular publications that combine a focus on the practical problems facing financial staff in corporations with intellectual rigour.  Visit www.mckinsey.com (and search for McKinsey on Finance, which offers readers a quarterly selection of useful and stimulating articles). Visit www.bcg.com/capabilities/corporate-finance-strategy/insights, which offers regular corporate finance updates. For current developments in international markets… The Financial Times has an excellent capital markets blog (www.ft.com/alphaville), and there is an offshoot of that (www.ftalphaville.ft.com/longroom/home) on which you can (once registered) access interesting research reports from the world’s top investment banks. Another website where you can access high-level research reports from investment banks is www.savvyinvestor.net (registration required). For the technical situation of main financial markets… Steve Blumenthal, executive chair of Capital Management Group, produces a useful technical survey of the main US markets each week.  Visit www.cmgwealth.com/ri-category/on-my-radar  For financial chatter, conspiracy theories and the occasional blinding insight... It’s all available here: www.zerohedge.com  Cormac Lucey is an economic commentator and lecturer at Chartered Accountants Ireland.