2020 Year in Review

At the onset of the coronavirus' geographical spread in late February and early March, markets began to feel the outbreak's initial implications for global trade—affecting oil and commodities to freight and logistics and more. China's manufacturing output and consumer activity dampened dramatically before countries around the world began implementing lockdowns to contain the spread of the virus, which ultimately constricted global activity.

Throughout the entirety of 2020, the global economic downturn depleted international trade as a result of the disruption to activity and supply chains and changes in the structure of demand.

The COVID-19 pandemic created a cascading series of cataclysms, beginning in March, for oil markets. Economic shutdowns led to the sharpest plunge in global oil demand on record as the coronavirus containment measures constricted mobility. Tensions between Saudi Arabia and Russia triggered an oil price war that, combined with the lockdowns’ depletion of demand, ultimately sent the West Texas Intermediate crude oil benchmark price into negative territory for the first time in history on April 20. Following the crash, the Organization of the Petroleum Exporting Countries and their partners curbed crude oil production by 9.7 million barrels per in May and June, then by 7.7 million barrels per day for the remainder of the year.

The largest coordinated supply contraction covered by an international deal was lifted in December when the OPEC+ alliance decided to gradually increase global oil production by 50,000 barrels per day in January. The group said it will revisit that amount monthly to determine what quota changes will be made. Now, while vaccine-induced optimism has recently fueled higher oil prices, rising infection rates and new restrictions in colder months have left oil markets in a vulnerable state at year-end.

The COVID-19 pandemic revealed systemic weaknesses in the global supply chains that bring foot to markets. The crisis caused significant labor shortages, production facility closures, and changes in demand that threatened the successful functioning of such critical infrastructure.

Global farming was burdened by falling commodity prices, labor shortages, and difficulties related to planting, harvesting, and transporting crops as COVID-19 tightened its grip on the world. The global dairy industry struggled with lower demand and a steep decline in prices as the virus' spread wreaked havoc on its supply chains. Meat supply chains' food service demand plummeted in free fall and processing facilities were forced to shutter due to infected workforces.

Workplace safety and awareness of human capital have been thrust into the spotlight as key environmental, social, and governance (ESG) factors. Companies were forced to make direct decisions that impacted their employees and communities. Many institutions responded to the pandemic by offering more flexible working arrangements for their employees.

But the most notable development for ESG came at the start of the summer, when several incidents of police violence against Black Americans sparked protests across the country and world and thrust the U.S. into a reckoning. The ongoing wave of civil unrest prompted corporate leaders to prioritize social justice as a social factor. Pressed to show how their policies are contributing to a more equitable, diverse, and inclusive workplace, many chose to publicly condemn discrimination and commit to changing their internal and external practices. Increased awareness and activism among corporate stakeholders pushed transparency and accountability to unprecedented levels.

Throughout the crisis, while the price of oil plunged and equities benchmarks skyrocketed and sunk, gold emerged as a safe haven for investors. Gold's rising market price, massive secondary supply, and quarter-over-quarter successes largely cemented its shining status as uncertainty prevailed. However, by the end of the year, gold’s status began to waver as positive news regarding COVID-19 vaccines and relative calm surrounding the outcome of the U.S. elections dampened some of the enthusiasm.

The COVID-19 pandemic has disrupted health care systems operations across the globe without any precedent to respond to. While the deep wounds from the loss of revenues related to government shutdowns of non-essential and non-emergent care may be in the rearview mirror, hospitals and systems in the U.S. are likely to continue to experience an uneven financial recovery into 2021.

Notably, this crisis encouraged dramatic innovation to meet global needs. Established pharmaceutical manufacturers and new entrants raced to complete clinical trials of their experimental coronavirus vaccines in record time—and less than a year after the contagion was identified, safe and effective vaccines are already being distributed to the public.

With the economic downturn caused by the coronavirus pandemic, U.S. banks in 2020 had to prepare for the likelihood of elevated borrower defaults and more than doubled their allowances for loan losses.

This, on the back of about $115 billion of provisions in the first half of 2020, represented major progress toward absorbing the loan losses likely to result from the economic downturn.

For Nordic banks, oil-related exposures started to cause problems since the onset of the coronavirus crisis, but quarter-over-quarter financial results indicated that the region's lenders otherwise avoided the worst impact of the pandemic. Most of Europe's largest banks were able to strengthen their ability to mitigate the negative effects of the coronavirus pandemic after posting higher core capital ratios, while mid-sized and small Chinese banks set aside more cash as loan loss provisions than they earned as net profit in the first half of 2020.

The COVID-19 pandemic is one of the most severe economic and energy shocks in modern history. On top of the massive disruptions to business, mobility, and everyday life, there clearly will be longer-lasting implications for the energy transition away from fossil fuels. While the shocks from the pandemic are leading to reductions in fossil fuel consumption and emissions, they will not be enough to put the world on a path to meet 2 degree global warming target, nor bring forward peak oil demand, nor drive coal consumption to near zero.

The COVID-19 pandemic has forced almost all organizations to speed up their digital transformation priorities, which has increased systemic vulnerabilities to cyberattacks. Some corporates and financial institutions have doubled-down on information technology spending and infrastructure to ensure business continuity. New security technologies came to the forefront as the latest defenses for corporate cybersecurity.

Beginning with devastating bushfires that blazed across Australia and ending with millions of acres of the Western U.S. scorched after months of inferno, this year the global community confronted a new era of climate-driven disasters. Disastrous wildfires and rolling blackouts in August 2020 forced the Western U.S. to confront a new era of climate-driven disasters. In particular, the crisis in California and surrounding states forced communities, businesses, energy companies, and policymakers to face the immediate physical risks of climate change by

As the warming climate continues to disrupt conventional power systems, leaders are facing a critical moment to take a unified approach in order to mitigate the detrimental consequences of climate change.

President-elect Biden has announced sweeping plans for a clean energy revolution, but without a Democrat-controlled Senate, his climate agenda will likely be limited. The stakes are high for the U.S. energy and commodities sectors as the new administration is expected to bring a different approach to shaping energy, climate, and trade policy. Biden’s announcement that he will reenter the U.S. into the Paris Climate Agreement raised hopes that the move will create momentum to fight climate change and advance technological innovation. The president-elect also unveiled key nominations and appointments to his climate change team, confirming reports on his choices for major cabinet positions that will be instrumental to his plans for slashing carbon dioxide emissions nationwide.

For employees worldwide, the coronavirus crisis has caused a clash of professional and personal responsibilities, and presents an urgent question for companies that want to retain their talent: How do you create policies that allow employees to balance career and family—both during a pandemic and beyond?

As such, many institutions have responded to the pandemic by increasingly offering more flexible working arrangements for their employees. Companies also recognize that meeting employees’ needs supports their bottom lines, and offering more family-friendly benefits tends to produce higher returns. However, some companies aren’t as familiar with the issue of family caregiving for adults, and instead favor supporting parents. Fears that current conditions will become permanent and significantly set back women’s participation and advancement in the workforce have crystalized. Flexibility and support, coupled with better leave policies, can help employers find and keep female talent.

The COVID-19 pandemic has placed much of the hope of returning back to normal on the pharmaceutical industry to develop treatments and vaccines. Following the completion of several stages of clinical trials, safe and effective vaccines developed in record time by Moderna Inc. and Pfizer Inc. have left warehouses and are already being distributed to the public worldwide. The next crucial steps toward a new normal and economic recovery will be widespread availability, distribution, and administration. Healthcare executives, however, say building trust with the public is the next hurdle in combating the pandemic. Following decades of consolidation, the global vaccine market offers stable and healthy revenue growth, significant barriers to entry, and good profitability, broadly comparable with the broader pharmaceutical industry.

– (opens in a new tab)Top Industry Trends and Outlooks for 2021

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– (opens in a new tab)Diversity in the U.S. Insurance Industry

– (opens in a new tab)Geopolitical Tensions and Global Trade