Impact for Good: tackle problems, make the world better, deliver returns?

Hunger, poverty, climate change and resource scarcity continue to occupy the world in this second year of the coronavirus pandemic. Although the numerous shutdowns and lockdowns around the globe have had a positive short-term impact on the environment, many problems have been exacerbated. It is therefore all the more important that companies join governments and NGOs in working to create a sustainable and socially responsible economy. This also opens up attractive investment opportunities for committed investors.

Last year, the planet was able to breathe a little more easily again for the first time in a long time: it took until August 22 to reach Earth Overshoot Day – around three weeks later than in the previous year. This marks the day by which humankind had not only consumed more natural resources than can be regenerated annually, but also produced more CO₂ than the forests and oceans can absorb in a year. This shift was a direct consequence of the temporary shutdown of many production sites and the majority of long-distance transport, which led to both lower consumption of resources and a reduction in greenhouse gas emissions. Sadly, however, this effect will soon prove only short-lived: as soon as we have the pandemic somewhat under control, Earth Overshoot Day is likely to shift right back toward the middle of the year. Environmental and sustainability experts agree that this will happen as early as 2021.

Exacerbation of numerous problems

While the coronavirus pandemic has mainly had a positive impact on our environment, other problems have come to greater prominence than ever. For example, the World Food Program, which was awarded the Nobel Peace Prize in 2020, estimates that Covid-19 could push up to 132 million more people into hunger – in addition to the 680 million who already did not have enough to eat. In March 2021, the children’s charity UNICEF also drew attention to the catastrophic emergency in education: it stated that the schools for more than 168 million children globally had been completely closed for almost a full year, and that 214 million children had missed more than three-quarters of their in-person learning. This is a danger not only because of the looming education gap, but also because millions of children in low-income and developing countries rely on school meals, which are no longer being provided.

The UN’s fight for a better future

The United Nations has been working to create a more sustainable and socially just future for some time. At the heart of these efforts are the 17 UN Sustainable Development Goals (SDGs), which have a deadline of 2030. The challenges that the UN wants to address with the greatest urgency include:

• – Eradicating hunger
• – Ending poverty in all its forms
• – Increasing educational opportunities
• – Advancing gender equality
• – Improving water supply and sanitation
• – Combating climate change
• – Protecting the environment

Opportunities and challenges for companies

If all these goals are to be achieved on time, the global community needs to make significantly greater efforts: in most areas, the players around the globe are (almost) hopelessly behind – and there are only nine years to go until 2030. This is precisely what makes it so vital that companies tackle the UN goals alongside governments and NGOs. By doing this, they are not merely living up to their responsibility toward society and the environment, but they may also benefit financially: numerous studies have shown that gearing business practices to environmental and social considerations can produce better long-term financial results. In other words, managing a company in line with environmental, social and corporate governance criteria has long since become a success factor, with ethical investments also becoming increasingly important for investors.

Vontobel launched a certificate on the “Impact for Good” theme in December 2018. This allows investors to invest in companies that achieve a positive environmental and social impact in the areas of health, education, poverty eradication and the environment. The aim is to promote an environmentally sustainable and socially responsible economy which can overcome the challenges facing us (climate change, resource scarcity, demographic change). The companies covered by the certificate predominantly provide products and services that make consumers’ lives more sustainable, protect the environment and support the establishment of innovative start-ups.

Since it was issued in December 2018, the certificate has significantly outperformed its benchmark, the MSCI ACWI Index. However, past performance is no guide to future returns.

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