Last year, the editorial team at Visual Capitalist scoured through 200+ reports, articles, podcasts, and more, to create our 2021 Prediction Consensus—a big picture and aggregated look at the key trends that experts predict for the year ahead.
If 2021 taught us anything, it’s that things can change at the drop of the hat. Amidst all this uncertainty, how many of the highlighted predictions came to fruition, and which ones didn’t pan out exactly as expected?
Before we start, it’s worth revisiting the prediction bingo board for 2021:
Below, we’ve evaluated a handful of the predictions for 2021 to determine whether or not they actually materialized.
The Easy-to-Quantify Predictions for 2021
Some of the predictions were easy to quantify—like the price of Bitcoin, or GDP targets.
Bitcoin hits the $50,000 mark
Did it happen? Yes
As many of the experts forecasted, Bitcoin, and the crypto space in general, had another explosive year in 2021.
Bitcoin’s price rose 72%—from $29,000 at the start of 2021 to roughly $50,000 today (after reaching an all-time high of $69,000 in November).
The price increase wasn’t without its fair share of volatility, with Bitcoin suffering three different pullbacks of at least 30%, the greatest being a 50% correction in May.
Bitcoin’s ascent is impressive considering the amount of attention and capital that poured into other cryptocurrencies and sectors in the space. Layer one blockchains like Ethereum (+483% in 2021) and Solana (+12,500% in 2021) greatly outpaced bitcoin’s price growth, and NFTs emerged as one of the hottest markets this year.
Global GDP grows 5-6%
Did it happen? Yes
By the end of 2021, Euromonitor International expects global real GDP to increase by 5.7%, which aligns perfectly with expert predictions from last year.
However, despite the global economy’s overall growth, this year hasn’t come without its challenges.
Supply chain issues have triggered a rise in global commodity prices. And since supply constraints are likely to continue into 2022 or beyond, global inflation is expected to keep rising, which could create a drag on real GDP growth.
Positive growth for small cap stocks
Did it happen? Yes
The S&P Small Cap 600 Index generated a return of 24.6% from December 31, 2020, to December 7, 2021. This mimics the performance of the S&P 500 Index, which grew by 24.8% over the same time period.
Many analysts expect U.S. small caps to continue their momentum into 2022. Historically, the asset class enjoys significant gains during times of robust economic growth.
For context, the International Monetary Fund (IMF) expects U.S. GDP to grow by 5.2% in 2022, outpacing many other developed economies.
The Harder-to-Quantify Predictions
Many of the predictions were more subjective than GDP or stock-market growth, and therefore, were harder to measure. So, for these predictions, we polled nine members of our editorial team to gauge whether or not they panned out as expected.
We also sifted through hundreds of individual predictions from last year to see which experts got it right, and we’ll be highlighting some of them below.
Let’s dive in.
ESG reaches a tipping point in 2021
ESG continued its upward trajectory in 2021.
In Q3 2021 alone, the number of sustainable funds jumped 51% to roughly 7,500 worldwide, and assets under management hit a record $3.9 trillion. In the U.S., sustainable fund assets surpassed the $300B mark.
As sustainable investing continues to become a top priority among investors, companies are starting to be held accountable for their sustainability efforts. And those that don’t get on board could see it negatively affect their bottom line.
Who saw this coming? DWS Asset Management Group said, “ESG will continue to play an increasingly important role in investing.” Fidelity Investments, an American financial services company also got it right, claiming “ESG and climate funds have outperformed conventional funds throughout 2020 and are likely to continue to do so in 2021.”
Work from home is here to stay
Even as lockdown restrictions eased, and the world took small steps towards normalcy, workers across the globe continued to work from home.
By the end of the year, Gartner predicts that 51% of knowledge workers worldwide will be working remotely, up from 27% in 2019.
Luckily, remote work hasn’t seemed to have a negative impact on employee engagement. In fact, a recent Gallup survey found that 36% of American respondents felt engaged at work, a near all-time high.
Who predicted this? Forrester did: “Hybrid work models will become the norm for information workers.” Blue Frontier also predicted this, “Most companies will employ a hybrid work model, with fewer people in the office and more full-time remote employees.”
SPACs will fall out of favor
Special Purpose Acquisition Companies (SPACs) waned in 2021—despite a strong start to the year. The market for “blank check” companies peaked in March of 2021, when a record 109 SPACs were issued.
The SEC cracked down on accounting practices, and Rep. Maxine Waters, chair of the House Financial Services Committee remarked she had “deep concerns about the lack of transparency and accountability that is a hallmark of the SPAC process”.
However, blank check firms haven’t disappeared completely. Singaporean startup, Grab launched on the Nasdaq in late 2021, reaching a roughly $40 billion valuation—a record according to data from Dealogic. As well, issuance is creeping back upward, a sign that the SPAC market could be staging a comeback.
Who saw this coming? John Battelle, co-founder of Wired Magazine, wrote “In 2021, SPACs will lose their luster.”
China will have a strong 2021
China had an impressive first half of the year, but growth slowed down by Q3.
Interestingly, it wasn’t so much COVID-19 that ended up hurting the Chinese economy. Rather, the country struggled with supply chain issues, along with a drastic regulation crackdown by the CCP that ended up hamstringing domestic industries.
Investors were so spooked by the Chinese government’s crackdown, that from Oct 2020 to Oct 2021, investors sold more than $1 trillion in Chinese equities.
Who got this right? James McGregor, China chair of public affairs firm APCO Worldwide, said that “China is going to be ahead of everyone economically, however, its global reputation is not going to improve.”
Big Tech backlash will continue
From congressional hearings to massive fines, the tech backlash continued into 2021.
While Big Tech in general faced plenty of criticism, it was Facebook (now Meta) that bore the brunt of the scorn. This was especially the case after former Facebook employee Frances Haugen leaked thousands of internal documents to the Wall Street Journal, which Haugen claimed shows that the company prioritizes profits over the wellbeing of its users. The pressure is on for U.S. lawmakers to enact new regulations that hold social media companies more accountable, but decisions on what these new regulations would look like haven’t been made.
In contrast, European regulators have managed to get a plan in motion. The EU plans on enacting the Digital Services Act by 2022, which would require tech companies to immediately remove hate speech and other illegal content from their platforms, or pay significant fines.
Two powerful counterpoints to the bluster directed at tech companies are that stock prices are largely up and users still continue to use these services. Even Facebook, which is arguably the most heavily-criticized brand has never seen a drop in users, quarter-on-quarter.
Who predicted this? John Battelle saw this one coming, too: “Nothing will get done on tech regulation in the US.”
Millennials answer the call of the suburbs
Millennials did move away from the city, but not so much to the suburbs. Rather, small towns and rural areas saw the most growth as people streamed away from large, expensive cities.
As people migrated from cities, businesses followed suit. According to data from the National Association of Realtors, urban centers in America experienced a net migration loss (meaning more businesses left the area than moved in) while small towns and rural areas in the U.S. experienced a net migration gain.
Who saw this coming? Joe Tyrrell, president, ICE Mortgage Technology “People are shifting away from metropolitan areas to more rural ones. We expect this migration trend to continue as people redefine what home means for them.”
What’s in Store for 2022?
We publish our annual Predictions Consensus to give readers a big-picture understanding of what experts predict for the coming year.
With supply chain issues, climate woes, and geopolitical tensions continuing to simmer, 2022 is set to be just as uncertain as 2021 was. To help prep you for another turbulent year, keep an eye out for our 2022 Predictions Consensus, which will be published in early January.
Want extra insight into 2022?
Sign up for VC+ to gain access to our 2022 Global Forecast series
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ESG Data: The Four Motivations Driving Usage
ESG controversies can damage a company’s value, but ESG data may be able to help manage this risk. What are other reasons for using ESG data?
ESG Data: The Four Motivations Driving Usage
Data is key to the environmental, social, and governance (ESG) revolution. Access to granular ESG data can help boost transparency for market participants. Unfortunately, 63% of U.S. and European asset managers say a lack of quantitative data inhibits their ESG implementation.
Being clear on the potential application of this data is equally important.
- Investors and banks can use ESG data for risk assessment, to spot opportunities, and to push companies for change.
- Companies can publish their own ESG data, quantify progress on their ESG goals, and use data to inform decisions.
- Policymakers can use ESG data to inform regulatory frameworks and measure policy effectiveness.
This graphic from ICE, the second in a three part series on the ESG toolkit, explores four primary motivations of ESG data users.
1. Right Thing
The objective: Having a positive social or environmental impact.
For investors, this can involve screening out companies that conflict with their values and selecting companies that align with their ESG objectives.
As another example, it can involve comparing the social impact of municipal bonds. One way investors can measure social impact is through scores that quantify the potential socioeconomic need of an area, using metrics like poverty and education levels. Here are the social impact scores for three actual municipal bonds issued in Florida.
|State||Bond Issuer||Social Impact Score
(Higher = larger potential impact)
Issuer #1’s bond is projected to have a community impact that is nearly twice as high/positive as Issuer #3’s bond.
For companies, doing the right thing can include assessing their progress on ESG goals and benchmarking themselves to peers. For example, gender and racial representation is a growing area of focus.
The objective: Managing ESG risks, such as climate and reputational risks.
For investors, this can involve back-testing or analysis around specific risk events before they materialize. Here are the risk profiles of two actual municipal bonds in California. The shown bonds are practically identical in many ways, except their wildlife score.
|Issuer #1||Issuer #2|
|Current Coupon Rate||5.0%||5.0%|
|Maturity Date||Aug 01, 2048||August 01, 2048|
|Price to Date (Call Date)||Aug 01, 2027||Aug 01, 2027|
|Wildfire Score (Higher = more risk)||3.6||2.7|
Managing ESG risk can also involve analyzing a company’s policies and governance for weaknesses. This is important as an ESG controversy can have long-lasting effects on the valuation of a company.
In one study, companies with ESG controversies dropped more than 10% in value relative to the S&P 500. They hadn’t fully recovered a year after the incident.
The objective: Targeting outperformance through ESG analysis.
Selecting companies with strong ESG data can align with long-term growth trends and may help boost performance. For heavy emitting industries, research indicates that European companies with lower emissions trade at much higher valuations. The chart below shows companies’ price-to-book ratio relative to the Stoxx 600* sector median.
|Above Median Emission Intensity (Bad)||1.9||1.1||2.0|
|Below Median Emissions Intensity (Good)||2.7||1.9||2.1|
*The Stoxx 600 Index represents large, mid and small capitalization companies across 17 countries of the European region: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
Energy companies with low emissions trade at a valuation nearly two times higher than energy companies with high emissions.
The objective: Understanding and complying with relevant ESG regulation.
The International Sustainability Standards Board has announced a global reporting proposal aligned with the Task Force on Climate-related Financial Disclosures (TCFD). In addition, a growing number of jurisdictions will require organizational reporting that aligns with the TCFD.
- European Union
- Hong Kong
- New Zealand
Not only that, a European Union regulation known as Sustainable Finance Disclosure Regulation (SFDR) came into effect in 2021. It seeks greater transparency in disclosures from firms marketing investment products. Even firms located outside the EU could be impacted if they serve EU customers. In total, the market cap of these non-EU companies exposed to SFDR amounts to $3.2 trillion.
Matching ESG Data with Motivation
There will be growing demand for transparent data as ESG investing flourishes. To remain competitive, investors, policymakers, and companies need access to ESG data that meets their unique objectives.
In Part 3 of the ESG Toolkit series sponsored by ICE, we’ll look at key sustainability index types.
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