Marine Dubrac

Marine Dubrac

Thematics Asset Management

Pierre-Alexis Francois

Pierre-Alexis Francois

Thematics Asset Management

The post-pandemic world has ushered in a new era where all of us are communicating, working, and consuming more online, and investors want exposure to both the real economy and the more digital world we now live in. At the same time, resource scarcity, innovation and demographics are increasingly long-term considerations.

Before the pandemic, trends such as cloud computing, artificial intelligence, clean technology, new ways of consuming, and evolving work habits were already reshaping conversations in boardrooms.

Driven on the one hand by an ageing population and on the other by a new generation of the environmentally and socially conscious, these changes have jolted industries as diverse as healthcare, telecommunications, car manufacturing, electricity generation, real estate and infrastructure.

But this new generation of investors is not just worried about the health of the planet. They are also fully subscribed to everything digital and seeking experiences that benefit their own long-term health and wellbeing.

‘Gen Z’, which refers to individuals born between 1996 and 2016, is a cohort of digital natives – an ‘app’ and social media savvy set that spends more time online than any other generation1. Indeed, they have never known a world without the internet and are therefore more likely to be connected for much of the time.

As Gen Z is digital by nature, it’s perhaps unsurprising that there has been a constant and steady increase in the number of industries and companies that use subscriptions to monetise their products and services. After all, a part of the online entertainment industry related to e-sports, gaming, music, and video streaming has a big Gen Z audience.

Most Gen Zers glancing over their credit card statement will notice monthly or perhaps even annual subscriptions to a range of services that they use regularly, and some of those will likely be for a video or music streaming service. Yet subscribing to a service means not actually owning the product.

What this new generation values more is the experience. So, while Gen Zers enjoy the experience of watching the movie, for example, they have no need to buy the DVD if they can simply consume it on a video streaming service.

Indeed, 70% of all adults say2 that the maintenance and costs associated with ownership of material possessions is burdensome and that they would rather subscribe to a service instead. It would follow then, that subscriptions are a wider trend that most generations are embracing.
Consumption habits are changing more broadly too, in favour of products and services that are more local, more natural, and more beneficial for our health, as well as for the planet’s health. Certainly, meat is increasingly off Gen Z’s menu3.

Equally, tech innovation has facilitated the development of apps and wearables to track and monitor our health, but also improve products such as glasses and hearing aids. These advancements allow us to monitor our own health on a daily basis to anticipate and detect any health concerns quickly in order to limit their consequences as much as possible.

Pre-pandemic, the world had already begun to witness health-conscious individuals actively seeking to make healthier choices regarding exercise, diet, self-care, and mental health.

As the world continues to reset, it has never been clearer that such a focus is among the most effective ways to prevent chronic diseases – evidence shows that 30 minutes of activity, five days a week, reduces the risk of getting ill and dying from an infectious disease by 37%4.

Gen Z minds need to adjust too. Nearly two years after the pandemic began, this is the cohort that is reporting higher rates of anxiety, depression, and distress than any other age group5.

Indeed, while Gen Z has been less vulnerable to the physical impacts of Covid, it bears unique burdens due to its life stage, including emotional stress and grief from the pandemic, high rates of job loss and unemployment, and educational challenges from remote or interrupted learning. Some of these issues have still not been fully resolved in 2022, even as we learn to live with coronavirus.

It’s just one of the reasons why wellness is a daily concern – whether that’s through more regular physical activity or a more active social life, the increased consumption of vitamins – even the practice of yoga.
Clearly, enlightened, connected individuals are investing more in their long-term health through gym memberships, fitness equipment and healthier dining experiences.

Companies, meanwhile, are investing more into mental health and well-being than ever before: four in five HR leaders globally report that mental health and well-being is a top priority for their organization6. In fact, it is estimated that 9 in 10 organisations around the world now offer some form of wellness program7.

As we continue to live with Covid, companies are increasingly required to adapt to meet the needs of Gen Z as customers. At the same time, Gen Z investors – and others who are alive to the opportunities – are looking to have exposure to both the real economy and the more digital world that we now live in.

The investors that will benefit the most are those who have positioned their portfolios towards the companies that contribute to – and are aligned with – our changing world.

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1 Source: « Generation Influence: Reaching Gen Z in the New Digital Paradigm », Center for Generational Kinetics (CGK), commandé par WP Engine
2 Source: Zuora, novembre 2018
3 Source: Enquête thématique BofA n=14,592, réalisée en août 2020, « What are your meat eating habits? »
4 Source: Glasgow Caledonian University Research, avril 2021
5 Source: McKinsey &Co, « Addressing the unprecedented behavioural-health challenges facing Generation Z », janvier 2022
6 Source: McKinsey Health Institute Employee Mental Health and Wellbeing Survey, 2022 : n (employés) = 14 509 ; n (responsables RH) = 1 389.
7 Source: Charlotte Lieberman, « What wellness programs don’t do for workers », Harvard Business Review, 14 août 2019.