The Global Goals: Implications for Investors

Global Goals: More than meets the Eye

What a week this just was, but what does it mean for investors, investing and financial systems?  

Pope Francis returns to the Vatican likely as you read this, on the back of a stunning week that saw him deliver inspirational, uplifting speeches and through which his many millions of followers were encouraged to read his Encyclical on Climate Change and Inequality by the US Conference of Catholic Bishops.

 The US & China issued a joint statement on Climate Change including the upcoming launch of the largest ever cap and trade system on carbon emissions in China.

And now we have the Global Goals, 17 specific goals in fact to be achieved over the next 15 years, in effect by 2030.  On the back of the Millennium Development Goals of the year 2000, these new set of goals, provides another 15 years of targets, in this case fairly specific ones, which can be summed up as:  end extreme poverty, fight inequality and injustice and fix climate change throughout the world.

A rousing, free concert in Central Park last night for 60,000 in person and a national audience on MSNBC, saw concerts from the likes of Pearl Jam, Beyonce, Coldplay among others combined with speeches from Bill and Melinda Gates, corporate leaders, UN Secretary General Ban Ki-Moon, Michelle Obama, Joe Biden, Malala, Prime Ministers from Sweden and Norway and well beyond.

Rather than doing a fundraiser, the event sought to simply raise awareness and called on the audience to demand answers to these global challenges from leaders.  

These 17 Goals are as follows:

1) No Poverty,  2) Zero Hunger, 3)  Good Health and Well-Being, 4) Quality Education, 5) Gender Equality, 6)  Clean Water and Sanitation, 7)  Affordable and Clean Energy, 8)  Decent Work and Economic Growth, 9)  Industry, Innovation and Infrastructure, 10)  Reduced Inequalities, 11)  Sustainable Cities and Communities, 12)  Responsible Consumption and Production,  13)  Climate Action, 14)  Life Below Water, 15)  Life on Land, 16)  Peace and Justice Strong Institutions, 17)  Partnerships for the Goals.

These might sound on first glance like very generic topics, but if you click on the links above for each Goal, you will see in many more specific statements with significant investment implications, some of which include, for the Zero Hunger goal for example, "Increase investment, including through enhanced international cooperation, in rural infrastructure, agricultural research and extension services, technology development and plant and livestock gene banks in order to enhance agricultural productive capacity in developing countries, in particular least developed countries."

Infrastructure is also a specific theme within the Goals above on Water, and perhaps especially Industry, Innovation and Infrastructure as well as Affordable and Clean Energy, which has as one of its specific goals, "by 2030, expand infrastructure and upgrade technology for supplying modern and sustainable energy services for all in developing countries, in particular least developed countries, small island developing States, and land-locked developing countries, in accordance with their respective programs of support."

Reducing Inequalities is the clear, majority purpose of Impact Investing, and which per this recent analysis, is primarily devoted to providing access to medicine, education and financial services to those most in need.

Responsible Consumption and Production is a key aim of companies such as Unilever whose Sustainable Living Plan called for doubling growth and halving the company's environmental footprint by 2020.  We see this as one more piece of evidence for our form of sustainable investing, where investment winners will be solutions providers who demonstrate value from specifically implemented sustainability strategies.  Such companies have already been outperformers since 2010 and adds to our suggestion that Sustainable Investing is now the only way forward for many other reasons as well as we discussed recently here.

Investors can now see where companies are differentiated along the following categories:

1. Risk: - Company-specific risks - External costs

2. Performance: - Process innovation - Product innovation

3. Reputation: - Human capital - Consumers

The recent Volkswagen scandal shows quickly how shareholder value can be very quickly affected, and as was seen before with BP and the Deepwater Horizon incident.

Infrastructure investing is now fully expected to become a major future investment trend, with competition growing in Asia from the likes of the new AIIB led by China last year.  

The nature of the deployment of Trillions of dollars in new infrastructure and related fixed income investment will go a long way towards determining the success of the Global Goals.

These goals and lenses may turn out to be one of the most important sets of drivers of future business success going forward.  If investors seek to match their dollars to Pope Francis's words and inspiration, through Sustainable Investing, then we truly would have a financial system that aligns shareholder value and the needs of global society.  It isn't clear how we can otherwise achieve both of these essential goals over the longer term.