INVESTING TOWARDS REDUCED INEQUALITIES



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, Kanopé analyzes investment alternatives which contribute to the 10th SDG, aiming to reduce inequalities within and among countries, whether they are based on income, sex, age, disability, sexual orientation, race, class, ethnicity, religion .



Despite some progress towards reducing inequality in some dimensions such as relative income inequality, it is still an issue everywhere in the world. The COVID-19 pandemic has intensified pre-existing inequalities, hitting the poorest and most vulnerable communities the hardest. The increase in global unemployment has dramatically slashed workers' incomes and put a spotlight on weak social safety nets.


Inequalities based on income, sex, age, disability, sexual orientation, race, class, ethnicity, religion and opportunity continue to persist across the world, within and among countries. Even if they do not directly affect you, inequalities threaten overall social wellbeing and economic development, and harm efforts toward poverty reduction. Furthermore, exclusion from opportunities and services of certain groups hinder sustainable development.


Income inequality continues to rise, especially within countries. It is crucial to empower and promote inclusive social and economic growth to ensure equal opportunities and reduce income inequality. This comes principally by the elimination of discriminatory laws, policies, and practices. Developing countries should also be better represented in decision making on global issues so that solutions can be more adapted, effective and accountable.

KEY FIGURES

In 1980, the top one percent owned 16% of global income while the bottom 50 percent had 8%. In 2018, the top one percent had 22% of global income while the bottom half only increased its share to 10% of global income. This is largely due to unequal ownership of capital and the massive transfers from public to private wealth which have occurred in nearly all countries since 1980. In 2016, the top one percent owned 33% of global wealth.

Inequality based on sex is one of the most prevalent; refer to our article on the matter for further details. Women spend, on average, twice as much time on unpaid domestic as men. Despite not being remunerated, this work has a huge impact on the economy. Women only have equal access to financial services as men in only 60% of countries, and to land ownership in just 42% of the countries assessed. Up to 30% of income inequality is due to inequality within households. Additionally, rural women are three times more likely to die while giving birth than women living in cities because they face more difficulties in access basic services and face more discrimination.


Children are also victims of inequality, those in the poorest 20% of the population are three times more likely to die before turning 5 than children in the richest 20% of the global population. Person with disabilities face discrimination in many aspects of their lives and are 5 times more likely than average to incur unaffordable health expenditures.


Inequality and exclusion can breed crime, diseases, and environmental degradation. Income inequality continues to rise in many parts of the world, yet it is important to note that between 2010 and 2016, in 60 out of 94 countries with data, the incomes of the poorest 40 per cent of the population grew faster than those of the entire population. There is hope for a fairer and more equal world, which SDG 10 aims to achieve.

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:

  • Equality

  • Refugees

  • Social justice

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 Kanopé Impact. 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.

Equality


According to the Nobel prize in economics Joseph Stiglitz, widely unequal societies do not function efficiently, and their economies are neither stable nor sustainable in the long term. This is because concentration of wealth leads to concentration of power, yet the rich do not exist in a vacuum and also benefit from a well-functioning society. Inequality undermines growth and leads to civil conflicts, high levels of criminality and lack of social cohesion.


Bridges Social Outcomes Fund II plays a role in tackling this issue by investing in charities and social enterprises which have specific programmes designed to improve social outcomes in sectors like employment, housing, education, and care for vulnerable people. The fund consists of £35 million, mainly invested through Social Outcomes Contracts, structured so that Bridges Funds only make a financial return if valuable outcomes are delivered to the targeted communities.

Refugees

Refugees are people forced to leave their home country due to violation of human rights, including persecution due to political, religious, or racial reasons. The global population of refugees has been steadily increasing and now represents 3.4 persons for every 1000. Providing solutions to problems faced by refugees can improve their life conditions and decrease the cost burden for host countries.


Kiva is a non-profit organization promoting financial inclusion to empower underserved populations. The Kiva Refugee Investment Fund was launched in 2017 and works with existing partners to expand their lending activities to refugees, impacted host communities and internally displaced persons. It is a 5-year closed end fund consisting of $30 million, $20m in debt and $10m in equity with a targeted return of 5.5-6.5%.


Social justice


It is important to invest in companies driving social change for disenfranchised communities to promote equal rights and opportunities.

CNote offers fixed income and cash solutions which contribute to growing small businesses, building affordable housing and helping underserved communities to thrive. Its Flagship Fund generates a 2.75% return.


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.


#ImpactInvesting #FinanceDurable #ODD #FamilyOffice #BroccoliVirus#ClimateChange

*Toniic - 2020

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