Daily Update: May 25, 2021

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While companies around the world have taken their own approaches to the coronavirus, certain common themes—including a renewed focus on the employee experience, new spotlight on flexibility and adaptation, and calls to action for social equity—emerged as trends likely to continue in a post-pandemic economy. Chief executive officers of many global companies showed different leadership styles in addressing these challenges.

Women CEOs exhibited more positive communication styles at the peak of the pandemic—and, throughout the crisis, often expressed empathy, adaptability, accountability, diversity, trust, and anticipation, according to new research using natural language processing and sentiment analysis by S&P Global’s Diversity Research Lab and the LARGEPA Research Laboratory in Management Sciences at Paris 2 Pantheon-Assas University. While male CEOs communicated using language more focused on metrics, transactions, and performance, women CEOs spoke more about their clients and customers. Both women and men CEOs expressed negative sentiment at the same frequency.

“Our research identified clear gender affinities for key concepts and words during the peak pandemic period across nearly 8,500 companies in 61 countries that we examined,” Daniela Brandazza, a senior director and analytical manager at S&P Global Ratings and a lead author of the research, said. “We concluded that women CEOs favored a leadership and communication style that emphasized flexibility and adaptability during a crisis period, enabling their connection with employees and other stakeholders. As our research shows, women CEOs may be leading the way in this regard even if their relative numbers remain small.”

As the pandemic prompted a surge of support for stakeholder capitalism, the research found that women CEOs’ leadership aligned with a wider range of stakeholders. 

“Our research focus on women as leaders and communicators provides invaluable insights into a corporate terrain that is increasingly concerned with becoming more diverse, equitable, and sustainable,” Dr. Gabriel Morin, an associate professor of leadership development for LARGEPA, said. “Quota policy is a way forward that we believe is more of a transitional means to achieve deeper change. The impact of women CEOs as role models seems to be far more inspiring.”

But women in the senior leadership roles are still overwhelmingly outnumbered by men. Of the companies studied, more men held CEO roles by a ratio of 19:1, with just 5% of the global companies represented in the S&P Global Broad Market Index helmed by women. Japan and Brazil ranked lowest in the number of women in executive leadership positions, at 0.8% and 0%, respectively, while Norway and Singapore led, with 14% and 12%, respectively.

“Much of the business community is warming to a stakeholder capitalism model that emphasizes a company’s creation of value in society and the economy, instead of a narrower focus on value created primarily for shareholders. Under this approach, employees are one of many stakeholders. A commitment to an increasingly diverse and inclusive workforce and leadership is part of that vision,” Ms. Brandazza and Katie Darden, a financial institutions research director at S&P Global Market Intelligence, said in the report. “To the extent that CEOs demonstrate a commitment to such ideas through their public communications, it may benefit other leaders to follow their example. As our research shows, women CEOs may be leading the way in this regard even if they remain small in number.”

Today is Tuesday, May 25, 2021, and here is today’s essential intelligence.

Uncertainty in the Global Economy

U.S. Biweekly Economic Roundup: A Break In The Action

After a burst of activity in March, recently released U.S. economic data for April was overall weaker than anticipated. Nevertheless, growth in the second quarter is running at a 10.1% annualized pace (versus S&P Global Ratings’ 11.3% forecast), according to the Atlanta Fed's GDP tracker.

—Read the full report from S&P Global Ratings

Market Dynamics

A Return to Normalcy?

The onset of the COVID-19 pandemic a year ago produced the highest-ever monthly volatility reading for the S&P 500^® in March 2020. Volatility began to decline as the market’s recovery began, but if we measure volatility on a 12-month trailing basis, we see the sustained impact of last year’s ructions. Not only is overall market volatility now close to pre-pandemic levels, the same seems to be true for all sectors of the S&P 500. One-year volatility declined significantly in every sector compared to three months earlier. While volatility in all sectors declined by at least 10%, the biggest drops came in Energy, Financials, and Utilities, which declined by approximately 20%.

—Read the full article from S&P Dow Jones Indices

The Credit Cycle

The Risk Of Credit Deterioration Is The Lowest In 14 Months

The number of potential bond downgrades (issuers rated 'AAA' to 'B-' with negative rating outlooks or ratings on CreditWatch negative) fell for the ninth consecutive month to 844 as of April 30, from 942 a month prior and far below the annual twelve-month average of 1,198.

—Read the full report from S&P Global Ratings

Take A Hike: Which Sovereigns Are Best And Worst Placed To Handle A Rise In Interest Rates

Nearly all developed sovereigns should be able to digest the first-round effects of even a 300 basis point rise in refinancing rates on public finances, though Japan and the U.S. would likely respond by further shortening the maturity of their debt profiles.

—Read the full report from S&P Global Ratings

Banking Sector Under Pressure

Japan's Megabanks Facing Rising Domestic Credit Risk, Cautious Margin Outlook

Japanese megabanks are facing weakening credit quality of domestic borrowers, in addition to lingering default risk of their overseas operations, after reporting the highest nonperforming loan ratios in more than three years for the March-end quarter.

—Read the full article from S&P Global Market Intelligence

ESG in the Time of COVID-19

Listen: Beyond The Buzz – The Leaders Climate Change Summit

Corinne Bendersky and Mike Ferguson return to discuss highlights from April’s Leaders Summit on Climate, hosted by the U.S. Several large economies reiterated their commitments to reducing emissions and other climate pledges—one of the most newsworthy being the U.S.’s goal to reduce emissions 50%-52% by 2030. But who will actually implement all of these lofty goals?

—Listen and subscribe to Beyond the Buzz, a podcast from S&P Global Ratings

Amid Calls For More Water Storage In Arid West, Large Dam Projects Stall

As extreme drought continues across a large swath of the western U.S., water district managers and Republican members of Congress are calling for more and expanded water storage facilities they say will help hydroelectric plants and food growers prepare for the next inevitable dry spell.

—Read the full article from S&P Global Market Intelligence

Lithium Americas Poised To Meet Growing Demand, CEO Says

S&P Global Market Intelligence spoke with Lithium Americas President and CEO Jon Evans on May 21 to learn how the Canadian company plans to respond to skyrocketing demand for battery-quality lithium.  Investment from automakers and utilities gives the U.S. government leverage to advance its decarbonization agenda, Lithium Americas CEO and President Jon Evans said. But lengthy environmental review processes in the U.S. can sometimes deter investors from backing the mineral industry's resource development ambitions early on, Evans said. Evans remains confident in the federal government's final decision on a proposed lithium project in Nevada, even as the decision faces a court challenge.

—Read the full article from S&P Global Market Intelligence

Ammonia A Boon For Renewables But Green Hydrogen Switch Still Costly

Ammonia plays an essential role in the agriculture industry as a key plant food, as well as being used in manufacturing and for other purposes. It is produced by combining nitrogen and hydrogen — mostly "gray" hydrogen derived from natural gas — and is responsible for around 2% of all fossil fuel use globally. But given the European Commission's ambitious strategy to produce "green" hydrogen, made with renewable power using electrolysis, the resulting green ammonia could become a major offtake market for utilities and renewables developers.

—Read the full article from S&P Global Market Intelligence

The S&P Europe 350 ESG Index – The European Benchmark for ESG-Focused Investors

The S&P ESG Index Series is aimed toward those who are looking to incorporate environmental, social, and governance (ESG) considerations into their investment products. These indices seek to provide benchmark-like returns by having the same broad industry group exposure as the underlying index while simultaneously offering an enhanced ESG profile.

—Read the full article from S&P Dow Jones Indices

Next in Tech Episode 16: Datacenters, Regulations and ESG

Datacenters receive a lot of attention for their environmental impact and regulations are changing, shifting the economics. Dan Thompson, principal research analyst, joins host Eric Hanselman to discuss some of the issues that datacenter operators face as they look for more green energy from electric grids that may not be able to provide it.

—Read the full article from S&P Global Market Intelligence

The Future of Energy & Commodities

Global Oil Demand Rebound Seen Eclipsing India, Iran Uncertainty

The global oil market remains set to tighten in the coming months as a demand-driven rebound from the pandemic dwarfs the ongoing crisis in India and outstrips the potential for a quick return of Iran's oil, according to market watchers.

—Read the full article from S&P Global Platts

Iran Says IAEA May Get One-Month Extension As Nuclear Talks Progress

The International Atomic Energy Agency could get a one-month extension of its monitoring and verification deal in Iran as talks to end US sanctions are making progress, state news agency IRNA reported May 23, citing a source at Iran's Supreme National Security Council secretariat.

—Read the full article from S&P Global Platts

Dakota Access Pipeline Gains Win-Win With Court Ruling And Biden Inaction

The future of the 570,000 b/d Dakota Access Pipeline is still at risk, but the primary crude artery out of the Bakken Shale is in a much stronger position after a federal court ruling kept the oil flowing and the Biden administration opted against intervening on an existing pipeline system.

—Read the full article from S&P Global Platts

After Dust-Up Between FERC Commissioners, Glick Ponders Rules For Open Meetings

Following an unusually combative Federal Energy Regulatory Commission agenda meeting, Chairman Richard Glick May 21 said he was mulling whether written rules were needed governing FERC's open meeting procedures, as well as questioning whether his colleague's surprise actions had damaged the trust needed among commissioners.

—Read the full article from S&P Global Platts

Written and compiled by Molly Mintz.