July 9, 2018

The Unintended Consequences of This Century and How Impact Investing Will Change the Next Century

A century ago, it would have been nearly impossible to envision the world as it is today. Who could have imagined our communication and transportation technologies, from supersonic jets to cell phones? Consider the impact of the internet and automation, robots and artificial intelligence. But perhaps most unimaginable of all are the drastic changes to the planet and the massive growth in population over just the last half-century. Who could have foreseen the issues we face trying to provide access to clean water and air, the damage done to our oceans and rivers, the depletion of the topsoil? And most would not have been able to conceive of 7 ½ billion people sharing the globe.

If all of that was unimaginable a century ago, think about what things could look like a century from now. It’s up to us to set the stage for the future we want. This may seem like a daunting task, but it’s also an exciting opportunity. Never has the world more needed investment in innovative, breakthrough solutions and human ingenuity. Technological advances are opening doors in resource efficiency, healthcare, water access and distribution, and food supply that will change the next century, and we have the opportunity to be a part of it.

The United Nations has laid out 17 Sustainable Development Goals as a universal call to action to end poverty, protect the planet, and ensure prosperity for all. The target for meeting all of the goals is 2030, but experts and policymakers estimate that there is a $2.5 trillion funding gap that needs to be filled by private capital. Fortunately, the tailwinds are favorable, as active public support and regulation are incentivizing private capital, consumers are supportive of efforts, and investors are beginning to see the possibilities.

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Unintended Consequences: Statistics from The Lancet Commission on pollution and health, October 2017

  • 90% of the population living in cities worldwide is breathing air that fails to meet World Health Organization (WHO) air quality guidelines limits.
  • At least 12.6 million people die each year because of preventable environmental causes (almost a quarter of all annual deaths globally).
  • Pollution is the largest environmental cause of disease and premature death in the world today. Diseases caused by pollution were responsible for an estimated 9 million premature deaths in 2015 – 16% of all deaths worldwide – three times more deaths than from AIDS, tuberculosis, and malaria combined and 15 times more than from all wars and other forms of violence.
  • Pollution-related diseases are responsible for 1-7% of annual health spending in high income countries.
  • It’s estimated that, in 2015, 1-8 million deaths were attributable to water pollution, including unsafe water sources, unsafe sanitation, and inadequate handwashing.

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We may be faced with unintended consequences of the past century, but the time is ripe for us to intend something different for the next one. Arnerich Massena has been focusing research on thematic impact investments in the areas of water, resource efficiency, agriculture, and healthcare – all of which we categorize as “what we need,” which we believe are going to become ever more central as the future unfolds.

Ask us about the current opportunities we are investigating, and look for upcoming blog posts diving into each of these themes – water, resource efficiency, agriculture, and healthcare – and the potential they present for investors.