A D P

A T

Five urgent global issues

and implications

March 2022
Introduction

The five Megatrends we identified ten years ago continue to be pervasive and impact society at all levels.

In 2016 we defined a system of thinking that described the immediate manifestations of these trends. The goal was to provide
business, governments and institutions with a framework to think about their strategy and navigate into an uncertain future. We
called this the ADAPT framework. ADAPT covers the five urgent global issues facing the world today and their implications at all
levels of society.

A D A P T
Asymmetry Disruption Age Polarisation Trust
Increasing wealth Impact of Population Breakdown in Declining
disparity and the technology, climate shifts and global consensus confidence in the
erosion of the change and demographic and a fracturing institutions that
middle class significant events pressure world, with growing underpin society
nationalism
and populism

Originally created through in-depth data analysis and many conversations with a diverse set of stakeholders from around the
world, we have continued to review and dynamically adjust ADAPT to ensure it keeps describing the most relevant and pervasive
issues of our time. Many of the implications identified in the ADAPT framework overlap; this is to be expected because the five
issues form a mutually-reinforcing system. We are talking about intersections, collisions and magnifiers.

While you could interrogate ADAPT and emerge feeling overwhelmed, we see huge opportunities in these challenges. Not least,
the opportunity to reframe the way you see the world and take action to drive towards a positive outcome for yourself, your
organisation and the society of which you are a part.

We hope you are similarly inspired by the potential, and that you will join us in acting upon it.

The Global Strategy and Leadership Team, PwC

2 | ADAPT – Five urgent global issues and implications | PwC

Asymmetry

Increasing wealth disparity and the Implications:

erosion of the middle class • Disparities in opportunity will grow, with a likely
Global wealth disparity has reached such a significant level decline in social mobility.
that, as of 2020, 46% of the world’s wealth was held by just • Regional disadvantage is at risk of getting larger
1.1% of the population, including over 215,000 individuals with (within and between countries).
a net worth over USD 50 million.1 According to UBS/PwC, the
• Traditional sources of money will decline.
number of billionaires in the world exceeded 2,100 individuals
in 2020 and total billionaire wealth globally climbed to USD • The number and relative importance of private
10.2 trillion in July 2020, surpassing the previous peak of USD businesses will increase.
8.9 trillion reached at the end of 2017.2 • Combined with disruption, capital markets will decline
in importance.
At the same time, there is a continued erosion of the middle
class in both developed and developing economies, driven • Technological capability will create greater disparity.
predominantly by two trends: technology replacing jobs and a • The tax base will shrink and there will be increased
lack of investment in innovation to create jobs. demands on welfare.
Inequality is present at two levels: within countries and • Society and governments will increase scrutiny on
between countries. While global income inequalities between compensation practices.
countries have declined, inequalities have increased • Governments are likely to invest in job-creating
significantly within countries, over the past two decades. The industries and position State Owned Enterprises for
gap between the average incomes of the top 10% and the job growth.
bottom 50% of individuals within countries has almost
• Consumption will bifurcate between luxury and low-end.
doubled, from 8.5x to 15x. This sharp rise in within-country
inequalities has meant that despite economic catch-up and • Risk of social unrest is increasing.
strong growth in the emerging countries, the world remains
particularly unequal today.3

Wealth growth rates by wealth group The global wealth pyramid

2020
The poorest half of the world population only captured 56 m
2.3% of overall wealth growth since 1995. The top 1% (1.1%)
captured 38% of total wealth growth.
> USD USD 191.6 trn
1 million (45.8%)
Average annual wealth growth rate, 1995—2021
(per adult, net of inflation)
USD 100,000 to 583 m USD 163.9 trn (39.1%)
9%
Richest 1/100 million 1 million (11.1%)
(Top 50)
8%

7% Top 1/10 million USD 10,000 USD 57.3 trn

(Top 500) 1,715m
to 100,000 (32.8%) (13.7%)
6%

Rise of middle Top 0.001%

5% class in the
emerging world
< USD USD 5.5 trn
Squeezed lower
4% and middle 10,000 (1.3%)
groups in rich 2,879 m
(55.0%)
3%

The bottom 50% The top 1%

2% captured 38%
captured 2% of
global walth of global
wealth growth
1%
Wealth Number of adults Total wealth
0 10 20 30 40 50 60 70 80 90 99.9 99.99 99.999
range (percent of world adults) (% of world)
1% poorest Global walth group 0.001% richest

Source: Chancel, L., Piketty, T., Saez, E., Zucman, G. et al., World Inequality Source: James Davies, Rodrigo Lluberas and Anthony Shorrocks, Credit Suisse
Report 2022, World Inequality Lab Global Wealth Databook 2021

1
Credit Suisse, Global Wealth Databook 2021
2
UBS/PwC, Billionaires Report 2020
3
World Inequality Lab, World Inequality Report 2022

PwC | ADAPT – Five urgent global issues and implications | 3

Disruption—
Technology
Impact of technology, climate change and Implications:
significant events
• Market dynamics are changing and business models
The proliferation and impact of breakthrough technologies – will need to adapt or fail.
ranging from artificial intelligence and robotics to augmented • Digital transformation and speed of execution will be a
reality and blockchain – are occurring, and at a faster rate than survival requirement for most organisations.
ever anticipated. Moreover, these new technologies are leading to • Organisations will fail as they are disrupted by others.
the creation of new business models, especially for
start-ups unencumbered by the infrastructure of the previous • Massive loss of work and transformation of work
century. Once new business models are developed, they are will lead to regional shifts as industry sectors
often applied across industries, leading to the blurring of are disrupted.
traditional boundaries (e.g. Amazon, Tencent). • Huge technology spend required to compete in the
digital world and network effects drive
As new, technology-driven models transform industries, capital concentration of power and threaten the survival of
replaces people and we estimate 30% of UK jobs, 38% of US small businesses.
jobs, 35% of German jobs and 21% of Japanese jobs could be at • At the same time, job loss from automation will drive
high risk of automation by the early 2030s.1 the development of local businesses.
The social and political implications of this transformation are as • There will be a continuous change in the relationship
vast as the business implications for industry incumbents: between people and technology.
economies literally will not be able to afford themselves as tax • Technology capital will increasingly be a differentiator.
bases erode and the jobless can no longer consume goods • Institutions will struggle to evolve and be at risk
without some form of income. of failing.

Growth in average wages and labour productivity in Potential job automation rates by education level
developed economies across waves
(index: 1999=100) (median values for 29 countries)

124

122
Wave 1
120 (to early 2020s)

118

116

114

112 Wave 2
(to late 2020s)
110

108

106

104
Wave 3
102 (to mid-2030s)

100
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

Labour poductivity index Real wage index 0% 10% 20% 30% 40% 50%

% of existing jobs at potential risk of automation

Low education Medium education High education

Source: International Labour Organization (ILO), Global Wage Report Source: PwC estimates based on analysis of OECD PIAAC data
2020–2021, ILO estimate

1
PwC UK Economic Outlook March 2017

4 | ADAPT – Five urgent global issues and implications | PwC

Disruption—
Climate change
Impact of technology, climate change and Implications:
significant events • Rising sea levels will displace thousands of people, destroy
Scientists are observing changes in the Earth’s climate in every millions of acres of land and cause potentially trillions of
region and across the whole climate system. Many of the changes dollars in losses.
are unprecedented in thousands of years, and some of the • A propensity towards drought in Central America,
changes already set in motion – such as continued sea level Northwest South America, Central and South Asia, and
rise – are irreversible over hundreds to thousands of years. almost all of Africa will likely influence agricultural exports
Unless there are immediate, rapid and large-scale reductions in and global food security, calling for innovation or massive
greenhouse gas emissions, limiting warming to 1.5°C or even 2°C changes in how people live their everyday lives.
will be beyond reach.1 Climate-related risks to health, livelihoods, • Countries most impacted by climate change will have an
food security, water supply, human security and economic growth
increasingly precarious financial situation; they will almost
are projected to increase with global warming of 1.5°C.2
certainly need to invest heavily to protect themselves.
Pressure on resources will increase dramatically. The global Governments and the public sector will have to address
population is expected to demand 35% more food by 2030. The the tension between green regulations and growth for
types of food in demand – vegetable oils, dairy, meat, fish and industries and the economy.
sugar – have a high impact on energy and water. Plant disease is • A transition to renewable energy will be demanded but will
predicted to have a drastic effect on crop growth and cultivation, require more time and funding than is available.
posing a threat to global food security.3 • Healthcare systems may struggle with an increased risk of
Interconnectivity between climate change and resource scarcity pandemics, perhaps from previously unknown diseases.
amplify the impact: climate change could reduce agricultural • Investment in climate tech will experience strong growth,
productivity by a third across Africa over the next 60 years. leading to an increasing number of jobs in green industries.
Globally, demand for water will increase by 40% and for energy
by 50%. The world’s economic model is pushing beyond the
limits of the planet’s ability to cope.4

Disruptive forces from technology and climate change are closely

connected: while climate change and environmental damage are
largely caused by the ubiquitous industrial technology system,
technology advancements will need to play a major role in fighting
the crisis.

Basic water stress Global surface temperature change

(ratio of withdrawals to supply)
Annual CO2 emissions Expected global surface
(Gt CO2/yr, 5 illustrative scenarios) temperature increase
(2081–2100 vs. 1850–1900)
140

SSP5-8.5 +4.4°C
120

100

80 SSP3-7.0
+3.6°C

60

40

20

High (40–80%)
SSP2-4.5 +2.7°C
Extremely High (>80%) 0
SSP1-2.6 +1.8°C
-20
SSP1-1.9 +1.4°C
Source: WRI Aqueduct, www.wri.org 2019 2050 2100

IPCC, 2021, Climate Change 2021: The Physical Science Basis

1
Parallel assumptions for other key non-CO2 drivers taken into account too
IPCC, 2018: Global Warming of 1.5°C
2
Source: IPCC, 2021, Climate Change 2021: The Physical Science Basis
National Intelligence Council: Global Trends 2030: Alternative Worlds
3

ibid.
4

PwC | ADAPT – Five urgent global issues and implications | 5

Disruption—
Significant events
Impact of technology, climate change and Implications:
significant events
• The pandemic lays bare pre-existing fragility of
COVID-19 has shown the world that major one-time events can economies and societies.
have just as large an impact as the disruption coming from • It is hitting poor people, and poor countries hardest.
technology and climate change. • Public debt is rising dramatically, increasing pressure
The COVID-19 pandemic has wrought enormous personal, on pensions and social welfare systems.
economic and social damage. It has upended countless lives, • Small businesses are failing on a massive scale.
and exacerbated the many disruptions afoot, laying bare the • The power of big tech platform companies is further
unviability of many business models and the fragility of our increasing.
economic and political systems and our global supply chains. • The acceptance of e-everything (including e-health,
Beyond that, it has provided a new set of acute shocks to e-government, e-education, e-commerce) has grown
seemingly sturdy businesses and principles that have guided our significantly
thinking for decades. Having resulted in more than 435 million
known infections and more than 5 million known deaths as of • Cyber risk has grown.
March 2022,1 the new coronavirus is unpredictable and lethal. The • Supply chain disruptions affect all regions and
pandemic has caused a supply shock and a demand shock. It is products and drive record levels of inflation.
causing economic turbulence of indeterminate length and • Economies are becoming more localized owing to the
severity, leading governments to grow public debt to unknown reconfiguration of supply chains.
levels. It is stoking competition among countries to secure • Polarisation is increasing over COVID containment
supplies and vaccines, while also serving as an occasion for and vaccine mandates.
greater national solidarity and regional cooperation. The
• Distrust in institutions’ ability to respond fairly and
pandemic is primarily a public healthcare problem, but one with
effectively is growing.
immense immediate implications for business, and for economic,
fiscal, and monetary policy. This virus is both accelerating • Remote working / flexible working is becoming the
powerful existing trends (such as automation and inequality) and norm in many regions of the world.
slamming the brakes on trends that had, until recently, possessed • COVID is a major factor driving the great resignation.
tremendous momentum (such as globalisation). • Mental health issues have exploded.
COVID-19 is one such example of a significant, disruptive event. • School closures have accentuated unequal
Armed conflicts, natural disasters or other incidents could have educational opportunities.
equally large effects.

Cumulative COVID-19 death rate Hours worked per person in the working-age population
(per 100,000), by March 11, 2022 (aged 15 to 64) worldwide

29.0

28.5 2020–Quarterly

28.0

27.5

27.0

26.5

26.0

25.5

25.0

24.5

24.0

23.5

23.0

22.5

22.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 *2019 Q1 Q2 Q3 Q4

Source: WHO COVID-19 Dashboard. Geneva: World Health Source: ILO Monitor: COVID-19 and the world of work (Seventh edition),
Organization, 2020 International Labour Organization, 2021

1
WHO (https://covid19.who.int/)

6 | ADAPT – Five urgent global issues and implications | PwC

Age

Population shifts and Implications:

demographic pressure • Needs and consumption patterns will
The global population is on track to reach 8.5 billion before 2030, shift significantly.
and the average age is increasing.1 There will be stark • There will be a capacity mismatch across countries
contrasts in the challenges faced by older versus younger (infrastructure, investment, organisational capability
nations: in 2030, the median age in Japan will be 52, while in and people).
Nigeria it will be 19.2 • Dramatic job creation will be needed in countries with
younger populations.
In the aging economies, older workers will need to work longer
and learn new skills to remain relevant. Moreover, governments • People will not be able to afford to retire and will be a
may seek to supplement the workforce with migrant significant drain on the system.
populations and, in some cases, higher participation by • Managing new welfare programmes in conjunction
women. At the same time, the numbers of the very old will with an erosion of the tax base will put increasing
increase too, putting a strain on healthcare, pensions, pressure on governments.
entitlement programmes and public debt. • Consumption-based sectors will experience a
slowdown in countries with older populations.
In younger economies, governments will be faced with
chronically high youth unemployment – no matter what level of
education has been achieved by these individuals – and, if
unsuccessful in addressing these issues, they may face
increasing social unrest.

Young children and older people as percentage Unemployment among youth

of global population 2021
1950–2050
World

13.8%

Children
Eastern Europe
Northern,
Northern Central and
Southern and 14.2%
America Western Asia
Western Europe
17.7%
9.4% 15.1%
13% 10% 7% Eastern Asia

Arab states 10.2%

ME and
Souther Asia
Northern Africa 22.9%

Latin America 29.6%

19.8%
South-Eastern Asia
and the and the Pacific
Caribbean Sub-Saharan
Africa 11.0%
18.1%
8.7%
16%
Older people 7%
5%

1950 2000 2050

Note: Young children are those aged 0–4; older people are those aged 65 Note: Youth is defined as the world’s labor force aged 15–24
and over. Source: ILO, Global Employment Trends for Youth 2020, ILO modelled estimates,
Source: United Nations, World Population Prospects 2019 November 2019

1
 nited Nations, Department of Economic and Social Affairs, Population Division
U
(2019). World Population Prospects 2019
2
ibid.

PwC | ADAPT – Five urgent global issues and implications | 7

Polarisation

Breakdown in global consensus and a Implications:

fracturing world, with growing nationalism • International organisations will find it harder to be
and populism effective as consensus is more difficult to build.
Economic growth has become disconnected from social • People’s local concerns will become more acute and
progress leading many people to re-examine long-standing crowd out other issues.
assumptions relating to their country’s role in the world. • Political decisions will become increasingly parochial.
• Societal polarisation will become more extreme.
As people have become disillusioned, the impacts of
globalisation, automation and economic shifts have led to a • Countries will compete for capital and talent.
rise in populism. This has typically manifested itself as an • There will be an increase in international conflict,
opposition of a self-defined “common people” against the insecurity and immigration.
elites they believe are in control of national and international • Global businesses will need to be deeply embedded
governance and commerce. in key countries.
In this environment, a new nationalism is taking hold, with
many countries prioritising their own interests. One
manifestation is in corporate tax reduction, with countries
increasingly competing to lure back corporations. At the
same time, changes in bilateral trade agreements – including
the imposition of protectionist tariffs – will cause companies
to re-think their manufacturing practices. Many governments
are restricting immigration and access to work visas and
increasing data-localisation requirements. Overall, there is a
growing tension in cross-border business.

Protectionism by the G20 Net migration by region

Number of discriminatory interventions imposed 1980–2020 (millions of people)
Nov 2008–Oct 2021

United States 40

7,376
30
Mexico China
243 5,891 20
South Korea 33
Saudi Arabia 356
10
South Africa 362
Germany
Indonesia 530 2,566
0

Australia 539 Number of discriminatory

interventions imposed -10
Nov 2008 – Oct 2021 1,443 Italy
Turkey 586
-20
Japan 756 1,252 France
-30
885
Argentina 1,231
United Kingdom
-40 1980–1990 1990–2000 2000–2010 2010–2020
985 1,223
996 1,029
Brazil India North America Europe Oceania
Russia
Canada Latin America and Caribbean Africa Asia

Source: The 28th Global Trade Alert Report, St.Gallen Endowment Source: United Nations, World Population Prospects 2019

8 | ADAPT – Five urgent global issues and implications | PwC

Trust

Declining confidence in the institutions that Implications:

underpin society • Institutions will continue to be devalued and suffer the
The erosion of trust in institutions began years ago as corrosive effects of corruption.
organisations and governments grew larger and became • Concerns about personal and digital security will
increasingly detached from the societies they represent. This increase.
trend accelerated with the financial crisis and the increasing • The rise of tribalism and distrust of those outside own
politicisation of institutions. identity group will continue.
The general population’s trust in institutions remained at a low • Rising scepticism will make it harder to drive
level in 2021, based on a survey of 28 countries. Almost two- meaningful change.
thirds of people are now inclined to distrust organisations. • The growing debate over truth, alongside a lack of
understanding of the real impact of social media on
At first, technology appeared to offer a way to build trust: large, societal trust, will cause increased opportunities for
impersonal institutions could offer something close to a misinformation.
personalised service or a way to interact through peer-to-peer
• Governments will increase regulations to keep data in
platforms. However, as we learn more about the implications of
territory.
technology, trust is increasingly eroding. Data security
breaches, the manipulation of social media and the spread of • New, technology-based institutions will be created,
fake news are all leading individuals to question the many based on a peer-to-peer model.
organisations responsible.

If governments, business and institutions can’t find a way to

rebuild trust, they will struggle to drive the level of change
needed in such a dynamic world.

Trust index: average trust in institutions Percentage of population who feel the system
(government, business, NGO and media) is working for them

2021 General Population 2022 General Population

How true is this for you?
Trust (60–100) 56 Global 27 56 Global 27 (percent who agree) 48
77 India 83 China
72 China 76 UAE
Sense of injustice 74
72 Indonesia 75 Indonesia
Desire for change 73
Neutral (50–59) 69 Saudi Arabia 74 India
Lack of confidence 66 34
68 Singapore 72 Saudi Arabia

67 UAE 66 Malaysia
Lack of hope 26
Distrust (1–49) 66 Malaysia 66 Singapore
63 The Netherlands 66 Thailand
61 Thailand 60 Kenya
18
59 Australia 59 Mexico
59 Kenya 57 The Netherlands
59 Mexico 54 Canada
56 Canada 53 Australia
53 Germany 53 Italy
52 Italy 51 Brazil
51 Brazil 51 Ireland
50 Ireland 50 France The system is... Working for me Not sure Failing me
48 Colombia 48 Colombia
48 France 48 S. Africa
48 S. Africa 46 Germany Source: 2020 Edelman Trust Barometer
48 US 45 Argentina
47 Argentina 45 Spain
47 S. Korea 44 UK
45 Spain 43 US
45 UK 42 S. Korea
40 Japan 40 Japan

31 Russia 32 Russia

Source: 2022 Edelman Trust Barometer

1
2022 Edelman Trust Barometer

PwC | ADAPT – Five urgent global issues and implications | 9

Challenges facing society, business and
individuals as a result of ADAPT
As a result of ADAPT, the world is at an inflection point: inaction will lead to the dramatic acceleration of negative effects, but the
appropriate actions and right choices can produce a better future. Society at large, including its institutions and individuals, must
address four major crises.1 Business, in particular, must focus on achieving sustained outcomes and building trust to preserve
and create financial and social value in a world of increasing risk and opportunity.

Challenges for society and individuals: Challenges for business: creating sustained
managing four urgent crises outcomes and building trust

Crisis of prosperity Financial: creating and preserving the value necessary for
growth and investment
• Young people falling behind (indebtedness, unaffordable housing,
growing tax burden, inadequate preparation for work) • Preserving value by transforming to address the
• Elderly retiring broke (underfunded retirement, quality and cost ADAPT issues
of healthcare) • Uncovering new ways of creating value
• Those in the middle stuck (risk of job loss, parental care, • Creating sufficient investment capacity while capital markets are
growing tax burden) fragile and financial resources are concentrated in a few areas
Crisis of technology Fracturing world: operating in an increasingly polarised world
that lacks global consensus
• Harmful impact of 21st century industrial system on the
atmosphere and climate • Managing business complexities arising from global fracturing
• Impact of large technology platforms on society • Operating across countries and regions that are conflicting with
• Dramatic changes to the human brain and behaviour each other
• Invasion of privacy • Facing business and government pressures to localise and
increase resilience
• Job losses to automation
• Managing the mismatch between markets and resources
Crisis of institutional legitimacy
Atmosphere: adapting business models and operations to
• Inability of institutions to keep up with the pace of reduce the negative impact on climate while creating value for
technology change all stakeholders
• Governance mechanisms designed to ensure consistency and
• Reducing CO2 equivalents in the value chain
trustworthiness slowing institutions down
• Managing the physical risks of climate change
• Difficult decision making in a polarised world
• Creating value when climate is a critical factor to customers,
• Insufficient investment capacity given weakened balance sheets
investors and society
Crisis of leadership • Mitigating resource scarcity and biodiversity loss
• Current leaders not prepared to lead in this new world Social: rethinking operations to help address the negative social
• Difficulty to make decisions and reach agreement impacts of business models and decisions
• Reducing systemic inequality
• Managing issues arising from demographic trends
• Dealing with and reducing polarisation
• Reducing and managing unintended consequences of technology
Technology: creating value from technology investments via new
business models, products and services
• Dealing with massive industry disruption and leveraging
sector-specific technology
• Competing in a post-digital world
• Increasing efficiency and effectiveness via technology
• Building organisational and individual capabilities to compete in a
digital world
Trust: getting the organisation’s important stakeholders to
firmly believe in its reliability or ability to deliver the outcomes
they expect
• Building trust with a growing number of stakeholders
• Increasing breadth and depth of reporting
• Putting in place effective governance on complex transformations

1
Blair H. Sheppard et al., Ten Years to Midnight: Four urgent crises and their strategic solutions (San Francisco: Berrett-Koehler Publishers, 2020)

10 | ADAPT – Five urgent global issues and implications | PwC

www.pwc.com/adapt
© 2022 PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal
entity. Please see www.pwc.com/structure for further details.
RITM2852604