Jens Peers, CIO for Sustainable Equities and Fixed Income at the sustainable investing firm Mirova, says this massive demographic trend has multiple implications when solving for a sustainable world.
"As the middle class in emerging markets becomes wealthier and increasingly educated, there is more awareness of – and demand for – medical care they can now afford," said Peers. He points out that companies like the ophthalmic lens and optical equipment producer Essilor are working to address these demographic trends.
"They are investing in mobile ophthalmic labs which makes it easier for people in emerging countries to access the eye care they need," says Peers. He adds that Essilor is aiming to increase the number of people who receive eye care treatment in regions with a high incidence of untreated sight problems, while developing new business models to make affordable visual diagnostics and treatments available to these populations.
Emerging demand for consumer goods and healthcare services
While the global boom in low-cost manufacturing has had negative consequences for wages and employment in the US and Europe, the NIC suggests middle classes in emerging economies like China and India should experience significant income growth in the coming decades.2 Consequently, a growing global middle class is likely to have major implications for markets, as demand for consumer goods, healthcare, energy, and technology extends to new regions of the world. The potential market effects of a growing consumer class are likely to be magnified by the possibility that world populations could also be enjoying longer life spans.
The NIC estimates that by 2030, the world's population could be one that is "longer lived than previously thought possible." In a report titled GLOBAL TRENDS 2030, it submits "the greatest gains in healthy longevity [are] likely to occur in those developing countries that will experience a huge growth in the size of their middle class populations."3 An increasingly older population has the potential to translate into greater business demand for companies providing products and services designed to help maintain and encourage good health and well-being.
Peers believes that an active approach to sustainable investing incorporates both an attentive consideration of a company’s current fundamentals and careful scrutiny of how it is working to both adapt to and solve for major demographic and environmental trends. What’s more, he says, conviction-driven sustainable investing is applicable to more than the energy and natural resource sectors alone. The influence of economic and demographic trends is likely to be felt across a range of business sectors, from healthcare and consumer goods to the service and software industries. "As improving economic well-being coalesces with increasing lifespans worldwide, there may be more opportunities for investors to seek sustainable long-term growth in companies working to deliver viable, impactful solutions for their clients."
2 GLOBAL TRENDS: PARADOX OF PROGRESS. United States. National Intelligence Council. January 2017. Web.
3 GLOBAL TRENDS 2030, p. 21.
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