The June 2024 issue of ThinkTWENTY20 includes an interview with Bob Tapscott discussing his book on integrating AI, Blockchain, and IoT, titled "Trivergence." Additionally, the issue launches a new AI-focused series by Eric Cohen aimed at financial professionals and introduces a book that guides companies on evolving from sustainability reporting to actionable strategies in corporate responsibility.

Access the newsletter on ThinkTwenty20’s website.

In her speech at the conference, she discussed the substantial ramifications of large geopolitical shocks on monetary policy, emphasizing the need for global economic systems to adapt to a more shock-prone environment. She highlighted how the ongoing geopolitical conflicts have accelerated the fragmentation of the global economy and increased defence spending, influencing national and economic security strategies across nations.

She argues that these changes, while necessary for current geopolitical realities, could lead to a global economy that is more susceptible to shocks, characterized by heightened inflationary pressures and constrained economic growth. The speech delves into the broader economic impacts, particularly the inflationary spikes driven by disruptions in energy and food supplies, and how these have reshaped economic growth, trade relationships, and public finances.

To address these challenges, she emphasizes several adjustments to monetary and fiscal policies to bolster economic resilience against large shocks. These include adopting more flexible monetary policy approaches, allowing central banks to respond dynamically to inflation and stabilize employment. She advocates for strategically using foreign exchange interventions to manage exchange rate volatility. She stresses the importance of aligning fiscal policies with monetary efforts to control demand pressures without inflating prices further. Enhancing financial regulations is crucial, as is implementing structural reforms to improve labour market flexibility and economic diversification. She calls for an integrated policy framework that combines monetary, fiscal, and structural strategies, ensuring a cohesive and robust response to financial shocks. Additionally, adopting a risk management approach in policy settings to prepare for potential worst-case scenarios is vital for maintaining economic stability.

Access the speech on the IMF’s website.

In his speech, Deputy Superintendent Ben Gully focused on the evolving role of boards in risk governance amid a rapidly changing risk environment. He highlighted that despite improvements in financial risk oversight post-Global Financial Crisis (GFC), recent challenges like the Archegos collapse and other financial failures underscore the need for boards to manage economic and non-financial risks actively.

Gully emphasized the importance of boards as the last line of defence against complacency in risk management, advocating for a shift in focus from traditional risk limits to broader resilience strategies, including scenario analysis and contingency planning. He also discussed the critical role of culture and accountability in effective risk governance, suggesting that boards must integrate risk management into the organization’s operations and ethos. Overall, Gully called for a proactive, vigilant approach to board governance to effectively navigate the uncertainties of today’s risk landscape.

Access the speech on the OSFI’s website.

The blog post discusses integrating GPT-4 with XBRL data to enhance narrative disclosure analysis, particularly in areas like sustainability disclosures and accounting policies. It highlights how machine learning and generative AI can simplify the interpretation of complex narrative data without requiring extensive coding knowledge.

The author provides examples of how GPT-4 can detect changes in accounting policies and calculate TF-IDF scores (Term Frequency-Inverse Document Frequency, a measure of importance of a word to a document) for thematic analysis in going concern disclosures. This capability allows analysts to derive insights more efficiently and with greater depth, making it easier to compare, spot patterns, and potentially uncover issues such as greenwashing in corporate reports.

Access the blog on the XBRL’s website.

In her address, the Managing Director emphasized the crucial role of international regulatory and supervisory communities in maintaining economic stability and growth. She underscores the dynamic pace of change driven by technological advancements like blockchain, crypto, and AI, which challenge traditional financial systems and bring opportunities and risks.

The Managing Director highlighted AI's transformative potential in enhancing productivity and economic progress and pointed to significant risks, such as cybersecurity threats and the potential for systemic instabilities. She advocates for a vigilant approach to managing these emerging risks through improved diagnostics, strengthened regulation, and robust crisis management, stressing the importance of international cooperation in navigating the future financial landscape.

Access the speech on the IMF’s website.

In her speech at the AI for Good Global Summit, Gita balanced AI's benefits, such as potential boosts to productivity, with its significant risks. She suggested several preventive policy actions, including reconsidering tax systems that favour automation, enhancing investments in education and training to protect workers, and adopting measures to lower financial and supply-chain risks related to AI. She called for a shift in the international focus towards AI-proofing the economy, urging policymakers to closely monitor AI's development and prepare for its potential economic impact. Despite outlining these risks, Gopinath emphasized that they are not predictions and stressed the importance of proactive measures to harness AI's potential for good.

Access the speech on the IMF’s website.

Davies, a Canadian law firm, published an analysis of the implications of Bill S-285, the 21st-Century Business Act. This legislative proposal, introduced by Senator Julie Miville-Dechêne, seeks significant amendments to the Canada Business Corporations Act (CBCA), focusing on redefining corporate responsibilities toward societal and environmental considerations.

The following is a high-level summary of this analysis:

The bill seeks to align the fiduciary duties of directors and officers with a broader corporate purpose, which includes benefiting society and minimizing environmental harm in proportion to a corporation's size and nature of operations.

Bill S-285 shifts the focus from treating stakeholder interests as incidental to making them central to a corporation’s purpose, legally enshrined and protected through enhanced directors' and officers' duties. The bill also mandates that CBCA corporations publish annual impact reports and expands the scope of derivative actions to include failures in adhering to these new corporate purposes.

This proposal marks a significant shift towards integrating the "double materiality" principle into federal corporate law, emphasizing the impact on and of corporations concerning social and environmental issues. If passed, this could lead to complex decision-making and legal adjustments for corporations and might prompt changes in provincial and territorial corporate laws, potentially affecting where businesses choose to incorporate.

Access more details on the bill on Parliament of Canada’s website.

Superintendent Routledge discussed the expanded mandate of OSFI in his keynote speech, which requires OSFI to ensure financial institutions have policies to protect against threats to their integrity or security, including foreign interference.

He highlighted that the global financial crisis necessitated focusing on non-financial risks, which are now considered prudential and economic risks. He argued for a more comprehensive risk management approach encompassing financial and non-financial risks.

In his words, “Integrity and Security brings together many critical non-financial risk guidelines into a comprehensive, overarching guideline. In doing so, OSFI has elevated Integrity and Security stewardship to the board level. We expect boards to comprehensively examine their oversight of non-financial risks and synthesize them into an enterprise-wide approach to protecting their institutions from threats to their Integrity and Security. While the visibility and scrutiny of these activities will intensify, we do not think we are asking boards to do anything new or that they are not already tasked by their shareholders to do."

Superintendent Routledge concluded by emphasizing the importance of principles-based regulation and viewing the addition of Integrity and Security to OSFI's mandate as a step towards maturing Canada's financial system.

Access the speech on OSFI’s website.

The publication starts with an editorial, followed by an exploration of the book "Trivergence: Accelerating Innovation with AI, Blockchain, and the Internet of Things," which delves into the transformative potential of technology in our future. It also discusses how traditional accounting systems can improve sustainability reporting. This section emphasizes the importance of transparency and progress in achieving sustainability goals.

The publication then explains the recent OSFI Guidelines B-10 and B-13 updates. These guidelines are designed to help financial institutions deal with new risks emerging in the industry.

Finally, the publication explores the world of Generative Artificial Intelligence (Generative AI), especially its role in advancing software development. This section points out the potential of Generative AI to boost efficiency and spark innovation.

Access the publication on ThinkTWENTY20’s website.

Part 2 of Bill C-69 enacts the Global Minimum Tax Act (GMTA), a regime based on the rules of the Organisation for Economic Co-operation and Development (OECD). The global minimum tax regime will subject large multinational corporations to a minimum effective tax rate of 15% on their profits wherever they do business. It sets out rules for the purposes of establishing liability for the tax and also sets out applicable reporting and filing requirements.

Review Bill C-69 on the Parliament of Canada’s Web site.