Recent drought-induced water shortages and ravaging wildfires certainly bring into focus the need for advancements in environmental conservation and renewable energy. However, there are many other trending global challenges under way that sustainable investing looks to solve – such as better eyesight for an expanding and aging middle class. Many companies are working to support and sustain public health in new ways by contributing to the wellness and vitality of both a growing global middle class and a world population that is living longer than previous generations. In fact, according to the US National Intelligence Council (NIC), middle classes in the developing world are poised to expand substantially over the next 15 to 20 years.1 The NIC estimates that increasing middle class populations in China and India could result in a global middle class of 3 billion people by 2030.

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.

Viva Everybody
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.

Future focused
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."
1 GLOBAL TRENDS 2030: Alternative Worlds. "Executive Summary." National Intelligence Council. December 2012. Web.

2 GLOBAL TRENDS: PARADOX OF PROGRESS. United States. National Intelligence Council. January 2017. Web.

3 GLOBAL TRENDS 2030, p. 21.

Alternative investments involve unique risks that may be different from those associated with traditional investments, including illiquidity and the potential for amplified losses or gains. Investors should fully understand the risks associated with any investment prior to investing. Sustainable investing focuses on investments in companies that relate to certain sustainable development themes and adherence to environmental, social and governance (ESG) practices, therefore the Fund’s universe of investments may be reduced. It may sell a security when it could be disadvantageous to do so or forgo opportunities in certain companies, industries, sectors or countries. This could have a negative impact on performance depending on whether such investments are in or out of favor. ESG investing focuses on investments in companies that demonstrate adherence to environmental, social and governance (ESG) practices, therefore the universe of investments may be reduced. An ESG strategy may sell a security when it could be disadvantageous to do so or forgo opportunities in certain companies, industries, sectors or countries. This could have a negative impact on performance depending on whether such investments are in or out of favor. Volatility management techniques may result in periods of loss and underperformance, may limit the Fund's ability to participate in rising markets and may increase transaction costs.

Diversification does not guarantee a profit or protect against a loss.

All investing involves risk, including the risk of loss.

Reference to specific securities are not considered investment advice, and are provided for informational purposes only. There can be no assurance that security will meet its investment expectations.

This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions expressed above may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted.

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