Readers of this newsletter know that the global economic system is at a crossroads. The two great trends of the last half century – globalization and digitization – have created unprecedented prosperity and lifted billions of people out of poverty, but also have created a backlash. Inequality within nations is on the rise, and dissatisfaction with a system that too often showers its riches on a privileged few is growing. Populism and protectionism are rearing their heads around the world, and trust in business – as well as other institutions – has plummeted.
What can business leaders do to restore trust and create a system that spreads its benefits more broadly? That’s the question we hope to explore at the Fortune/Time Global Forum being held in Rome and at the Vatican on December 2 and 3. The unprecedented gathering will bring together 100 Fortune Global 500 CEOs, plus other private sector leaders, to begin a serious discussion around Forging a New Social Compact. The two-day event – which will include deliberative sessions on topics such as technology and jobs, food and water, commitment to communities, energy and the environment, and financial inclusion – will culminate in a meeting with Pope Francis.
The host committee for the event includes the CEOs of Dow Chemical, IBM, Johnson & Johnson, Pepsi, Siemens, WPP, Virgin Group, Monsanto, McKinsey, Novartis, BCG, Deloitte, Eni, Blackrock, TIAA-CREF, Alcoa, Dow, Wells Fargo, Walgreens, Allstate, Campbell Soup, and others. (You can read the full host committee list here.) We will be recruiting others in the weeks ahead.
At Fortune, we see this discussion as critical to the future of business. Those of you who have thoughts on the subject, please send them my way.
• G20 Ends With Little to Show
The G20 meeting in Hangzhou concluded without any concrete commitements on any of the key issues facing it, be it Chinese steel dumping, militarization of the South China Sea, the war in Syria or containing the fall-out from Brexit. The final communiqué contained the usual platitudes foreswearing protectionism and competitive devluations, but anecdotal reports suggest that China and developed economies talked past each other on the issue, with China unwilling to listen to complaints about a lack of access to its market, and still offended by its partners’ ‘paranoia’ on accepting Chinese investment (as evidenced by Australia’s refusal to sell its electricity grid and the U.K.’s putting the brakes on a new nuclear power station). Fortune
• Bayer Closes in on Monsanto
Bayer appears to have broken down Monsanto’s resistance. The German company said late Monday it’s in advanced talks to buy Monsanto after raising its offer from $125 to $127.50 a share, valuing the company at $56 billion. Monsanto confirmed the discussions but said it’s still assessing “proposals from other parties and other strategic alternatives.” The deal, if completed, would create the world’s biggest agrochemicals company. But, like others in the sector, it faces rigorous antitrust scrutiny. The current wave of consolidation is on track to concentrate over 60% of the global seeds and chemicals markets into just three companies—good for their margins, less so for farmers’. The German company’s stock opened lower in Frankfurt Tuesday amid concerns that it is overpaying. Reuters
• Oil Spikes on Saudi-Russian ‘Deal’
Crude oil prices rose 2% after Saudi Arabia and Russia, the world’s two largest producers, said they may cap output in the future to support prices. U.S. futures had initially spiked over 5% to $46.50 as the producers spun what they touted as a ‘historic’ agreement, but which turned out to contain nothing more concrete, in the short term at least, than a new joint working group on market stabilization (the eagle-eyed noticed that this was exactly what they had done a year ago, too). Analysts suggested that the deal was best seen as an indication of a lack of their willingness, or even ability, to increase output further—an acknowledgement of the limitations to the ‘price war’ strategy that they have engaged in for the last two years. Saudi Minister Khalid al-Falih in particular has been backing away from such talk for some weeks, conscious of the need to keep prices at a decent level as the Kingdom prepares the first partial privatization of Saudi Aramco. Fortune
• GE Splashes out on 3D Printing
General Electric announced plans on Tuesday to buy two European 3D printing groups — Sweden’s Arcam and Germany’s SLM Solutions — for a total of $1.4 billion to tap into manufacturers’ growing demand for digital technologies. Both companies serve the aerospace and healthcare industries, while SLM also makes laser machines for metal-based 3D printing for the automotive and energy sectors. The breadth of GE’s own activities presents some rich opportunities for the two companies to grow the application of their products. GE said it expects $1 billion in annual revenue from 3D printing by 2020 with an “attractive” return. The deal raises questions of whether GE’s competitors such as Rolls-Royce and United Technologies will feel the need to follow suit. Fortune
Around the Water Cooler
• GM Settles Bellwether Ignition Cases
General Motors settled the last two so-called bellwether cases stemming from a faulty ignition switch linked to 124 deaths and 275 injuries. The settlement came on the eve of what would have been the fourth in a series of test trials intended to help GM and the plaintiffs define settlement options in 234 injury and death lawsuits consolidated in Manhattan federal court. It appears to hasten the end of a two-year scandal that has cost the company some $2 billion so far, but which has burnished the reputation of CEO Mary Barra, who has overcome stiff internal resistance in her efforts to resolve the issue as quickly and thoroughly as possible. Barra has fired 15 key executives in the process. Even so, GM still has to face another round of bellwether trials next year regarding vehicles with different ignition switches, and it also still faces driver claims relating to alleged loss of resale value. Fortune
• Navistar’s Cleaner Future With…VW
Volkswagen’s search for a life in the U.S. after the emissions scandal took an intriguing turn: according to Reuters’ sources, it is close to taking a stake of just under 20% in truckmaker Navistar in return for a deal to supply next-generation engines. The deal is relatively small in absolute terms—worth around $225 million at current market prices, but is an interesting signal of intent, given speculation that the sprawling German concern would sell off its truck division to strengthen its balance sheet in the wake of the emissions scandal. Navistar has been looking for a partner on engines since 2010 when it failed to get approval from the Environmental Protection Agency for its own heavy-duty diesel engines. Investing in cleaner energy was one of the conditions of VW’s settlement with federal authorities earlier this year. Reuters
• Computer Problems Hit British Airways
After Southwest and Delta, now it’s British Airways’ turn to suffer from a computer outage. The airline suffered major delays overnight, notably on red-eye flights from North America to the U.K.. According to the Financial Times, the airline said the problem wasn’t global, but customers’ complaints suggested otherwise, with many flights out of the U.K. suffering big delays due to the need for manual check-ins. The problem was compounded by a protest at London’s City Airport, a few miles east of the Canary Wharf financial district, after a handful of activists from the local “Black Lives Matter” movement forced their way on to the runway in protest at the phenomenon of air pollution, which they said disproportionately affects the black community. Fortune
• Duterte Pivots to Penitence
Philippines president Rodrigo Duterte expressed regret, but didn’t apologize, to President Barack Obama after the incident that led Obama to cancel their scheduled meeting. Duterte had said that if Obama challenged him on reports of extrajudicial killings (which are growing by the day), he would say “Son of a whore, I will swear at you.” He said in a statement Tuesday that “we regret it came across as a personal attack on the U.S. president.” Doubtless it lost something in translation, but the POTUS, whose dignity had already taken something of a battering from Chinese snubs at the G20, appears to have thought it would be best to give the self-styled “Punisher” of south-east Asia some time to reflect on how he intends to stop the encroachments of the Chinese navy—sorry, fishing fleet–on his own. Fortune