Updated: Jun 14, 2021
As a response to the climate emergency and social crises, the United Nations has established a set of Sustainable Development Goals, to be achieved by 2030. These are organized in 17 concrete objectives to tackle global issues in order to reach a sustainable and peaceful future for everyone, everywhere. The SDGs aim to bring together all countries, private companies, and individuals to promote a prosperous future while protecting the planet. The achievement of a particular goal is often interlinked with the others, as will be seen in our series of articles.
In this article, KIMPA analyzes investment alternatives which contribute to the 8th SDG, aiming to promote inclusive and sustainable economic growth, employment and decent work for all.
Sustained and inclusive economic growth can drive progress, create decent jobs for all and improve living standards. This year, the COVID-19 pandemic has created an unprecedented human crisis and caused a historic recession with record levels of unemployment, affecting the poorest hardest. Indeed, the International Labor Organization expects the global recession to be as bad or worse than in 2009 and estimates that almost half of the global workforce is at risk of losing their livelihoods. It is therefore urgent to scale-up efforts in building resilient economic systems and ensuring universal access to essential services and social protection.
Sustainable economic growth can drive progress and improve living standards for all. This SDG seeks to achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value by 2030. Decent work implies a productive activity rewarded by a fair income, security in the workplace and social protection for families, and opportunities to develop personally and integrate in society.
In order to achieve this, it is crucial to provide youth with the best quality training and skills so they have the opportunity to get a decent job and match labor market demands. Women are currently underrepresented in the workforce and often underpaid, yet their participation in the economy can bring enormous benefits to society as a whole.
The objective is to build dynamic, sustainable, innovative and people-centred economies, promoting youth employment and women’s economic empowerment, in particular, and decent work for all.
The real Gross Domestic Product (GDP) per capita and labor productivity have increased globally in the past decade. Global unemployment has gone down from 6.4% in 2000 to 5.6% in 2017, yet some 731 million workers lived in extreme or moderate poverty in 2018, with less than US$3.20 per day. This shows us that employment is not a synonym of decent working and living conditions.
Worldwide, 61% of the workforce was engaged in informal employment in 2016, accounting for 2 billion workers. This has many consequences, including the lack of social protection and fair wages, and the heightened risk of abuse from employers.
Because of the growing population and expanding labor force, it is estimated that 30 million new jobs need to be created each year between 2016 and 2030 to supply new entrants to the labor market.
In 2018, women’s participation in the labor force stood at 63% while for men it stood at 94%. The global gender pay gap stands at 23% globally, meaning women earn 23% less than men for equivalent work. Women continue to do 2.6x more unpaid care and domestic work than men, despite increasing presence in the labor force.
The targets of SDG 8 include achieving higher levels of economic productivity while decoupling it from environmental degradation, higher levels of technology and innovation, and the promotion of development-oriented policies, decent job creation, entrepreneurship, and formalization of micro-, small- and medium-sized enterprises, for example through better access to financial services.
WHAT INVESTMENT SOLUTIONS EXIST TO CONTRIBUTE TO THIS SDG?
It is nowadays possible to demand more than a financial return adapted to a risk level from your investments. Impact investing is placing a third dimension at the core of your investment strategy: to have a positive impact on the world.
Regarding industry, innovation and infrastructure, the investment themes* are the following:
Developed world jobs
Developing world jobs
Fair trade and ethical supply
Before moving forward with the presentation of investment solutions we have identified, we’d like to remind you that the ensuing presentation does not constitute a buy, sell, subscription or advice in financial investments offer from KIMPA. This presentation analyzes data and numbers without accompanying them with comments or value judgements regarding their worth for the reader. This article seeks to illustrate how an investor’s capital can contribution to solving global issues. The performance or numbers mentioned are estimates from asset managers communicated over a given time period and are therefore in no way a guarantee of the value of said investment in the future. If you wish to invest financially, please contact your financial advisor who will be able to guide you towards your objectives given your civil, fiscal, and asset situation while ensuring an adequate investment.
Developed world jobs
The creation and maintenance of existing jobs is essential for sustained economic growth, even in developed countries. The Parnassus Endeavor Fund invests in US large cap companies with outstanding workplaces and attractive valuations. The idea is that companies with favorable workplace environments lead to positive and therefore more productive employees, as well as more retention. The fund is publicly traded and has achieved a 5.61% over the past year (as of June 24 2020).
Regarding private equity, the fund VamosVentures seeks to deliver social impact through economic security, community empowerment and racial equity. For this, it provides seed capital for startups founded by Hispanics and with diverse teams. Hispanics are the fastest growing ethnic group in the US and the average age is 27, compared to 42 for white Americans. This is a huge opportunity for the creation of sustainable, innovative and inclusive communities.
Developing world jobs
Creating decent jobs in the world’s poorest regions will allow for global development and more prosperity for all. The first step to economic growth is food security, yet millions still die each year from hunger (see our article about SDG 2). Warc helps West African farmers to adopt regenerative agriculture and increase their income up to 5-fold by providing access to the best available machinery, agricultural practices, and technical advice. Furthermore, it assists subsistence farmers to spend less time on low-value activities, so they can focus on the activities which yield the highest revenues.
There is no doubt that financial inclusion is a key component of economic growth, as it implies access to basic financial services to the underserved, allowing them for better planning and contribution in the formal economy. Microvest fund invests in Responsible Financial Institutions through private-debt capital. These institutions act as the first provider of formal credit to micro entrepreneurs and small businesses in developing countries, thus fuelling entrepreneurship and economic growth.
Fair trade and ethical supply
It is also important that the jobs created provide decent working conditions and fair compensation without having harmful impacts on the environment. Stony Creek Colors is a company currently raising capital in series B, which produces clean and safe bio-based dyes. The plant-derived dyes replace petroleum-derived synthetic ones and supplies the textile industry to make it more sustainable.
AND NOW? If you want to become an impact investor, contact your financial advisors specialized in impact investing. They will be able to support you in measuring and connecting the three dimensions that are risk, return and impact, according to your property status and investor profile.