“There comes a time When we heed a certain call When the world must come together as one”
This is following on from my earlier newsletter on how COVID has negatively impacted the UN Sustainable Development Goals (SDGs) and how, by focusing on impact investing, we can help turn the tide.
UN SDG 6 Clean Water and Sanitisation. Handwashing is one of the cheapest, easiest and most effective ways to prevent the spread of the coronavirus. In 2017, only 60 per cent of people had a basic handwashing facility with soap and water at home. In less developed counties,the share was 28 per cent.
Given the lack of credible COVID reporting and limited testing in many of the poorer countries it is likely the impact of the virus has been greater than is reported. The lack of access to clean water can only have severely hindered the spread of the virus.
UN SDG 7 Affordable and Clean energy.
UN SDG 13 Climate Action.
UN SDG 14 Life Below Water.
UN SDG 15 Life on Land. I’ve grouped the preceding four goals as 'environmental'. To meet the Paris Accord emission targets, emissions need to fall by 7.6 % each year from 2020. The virus meant that this target was likely met in 2020.
Perhaps the biggest development in this space is President Biden's decision for the US to re-join the Paris Agreement and appoint John Kerry as a special climate envoy.
“Countries must phase out coal five times more quickly than the current rate, increase tree cover five times more quickly, accelerate renewable energy deployment six times more quickly and transition to electric vehicles 22 times more quickly”, Kerry said on 21 January 2021.
Kerry called on the private sector to aid governments in achieving more rapid decarbonization.
"In this decade through 2030, the world will need more than $1 trillion in annual investment in clean power systems to speed the energy transition".
Agtech, aquatech and clean climate technologies all form part of the impact investing universe.
UN SDG 8 Decent work and economic growth. COVID-19 threw goal 8 off track, but GDP growth is expected to recover in 2021. Despite this, the global unemployment rates in advanced economies are forecast to take four years to return to pre COVID-19 levels.
Real GDP Growth
Source IMF World Economic Outlook October 2020
The uneven nature of the COVID impact means certain industries have been devastated and are struggling to recover, notably in the arts and travel sectors.
SDG 10 Reduced Inequalities within and among countries. COVID-19 has made inequality worse within countries and given the uneven distribution of the vaccines, it has increased inequality between countries. Even before COVID the Gini index in the US has risen from .43 in 1990 to .48 in 2019 (lower means less inequality). Data measurement is an issue, with the IMF reporting a significant increase in inequality in China over the past 30 years but a significant decline in poverty.
SDG 11 Sustainable cities and communities. Over 90 per cent of COVID-19 cases are occurring in urban areas. The pandemic is hitting the most vulnerable the hardest, including the 1 billion residents of the world’s densely populated informal settlements and slums.
CBDs in the industrial world have turned into ghost towns and many of the SMEs that rely on that CBD population may not survive.
COVID-19's impact on cities however is not all negative, working from home has increased productivity and eliminated commute time. Urbanisation has been on the rise from the 1990s as cities have expanded faster than population growth, but there are some signs/belief that this process may have peaked.
In an Australian study in 2019, Sydney and Melbourne are forecast to grow to populations of 10 million each by 2056 and commute times are forecast to grow by 60%.
Yet, between 2011 and 2016 more millennials left Sydney and Melbourne for regional Australia than the other way around.
UN SDG 12 Responsible Consumption and Production. The global material footprint grew by 17.4% between 2010 and 2017. From 2010 to 2019, e-waste generated globally grew from 5.3 to 7.3 kilograms per capita annually. Fossil fuel subsidies globally rose to over $400 billion in 2018, approaching 2014 levels, but fell by around 27 per cent in 2019, mostly due to a decline in fuel prices. Subsidies for oil, gas and fossil-fuelled electricity will likely further decrease in 2020 due to weak demand.
Since 2017, the overall quality of sustainability reports has improved around the world. The share of reporting in the environmental, social, and institutional and governance dimensions aligned with the minimum requirements outlined in SDG indicator 12.6.1 ̶ the number of companies publishing sustainability reports ̶ has almost doubled.
Electric Vehicle sales continue to grow and are forecast to increase 10-fold in the next decade.
UN SDG 9 Industry Innovation and Infrastructure. China spends more annually on infrastructure than the US and Western Europe combined. This despite the Congressional Budget Office estimating in 2015 that every dollar spent on infrastructure brought an economic benefit of up to $2.20 — more than double the returns. The US Council of Economic Advisers calculated that $1 billion of transportation infrastructure investment alone would support 13,000 jobs for a year.
Perhaps, more importantly, the US Government Accountability Office finds that nearly one in four bridges are deficient, with 10% categorized as structurally deficient and 14% categorized as functionally obsolete.
Unfortunately, ever-expanding sovereign debt levels constrain infrastructure spending despite the needs. Funding innovation will be required to fill the infrastructure deficit.
Innovation is the key ingredient in solving all these issues.
Beckon Capital is itself an innovation.
At Beckon we believe that impact is a key factor in generating sustainable financial returns. Measuring impact is not always front of mind for SMEs, but at Beckon we help firms recognise and measure their impact which leads to making better business decisions. We then align these impacts with the SDGs.
These decisions help the firms grow, improve investor returns and make the world a better place.
“There's a choice we're making We're saving our own lives It's true we'll make a better day, just you and me”
“We are the World” https://www.youtube.com/watch?v=9AjkUyX0rVw
"We Are the World" is a charity single originally recorded in 1985 and raising over $63 million for humanitarian aid in Africa and the US. It was rerecorded by new artists in 2010 to raise money for Haiti. https://youtu.be/Glny4jSciVI
How many of the artists can you name in either film clip?
Beckon Capital Pty Limited (ABN 49 628 013 678), authorised representative No. 001280538 of Fundhost Limited (ABN 69 092 517 087, AFSL No. 233045) (“Beckon”)