Credit Suisse has updated its long-term investment trends drawing the connection to the United Nations’ Sustainable Development Goals (SDGs). This will help investors prioritize their investments according to their purpose be it climate action (SDG 13), reduced inequalities (SDG 10), decent work and economic growth (SDG 8) or good health and well-being (SDG 3) among others.
Credit Suisse launched the Supertrends four years ago to support investors to focus on multi-year societal trends believed to lead to fast-growing business opportunities. Each of the investment trends identifies opportunities expected to outperform as a result of these societal shifts. The COVID-19 pandemic has proven to be a great disruptor, accelerating progress in some fields such as technology, but reversing hard-fought gains in other areas including poverty, health, quality education, and gender equality. It has also heightened the importance of the 17 UN SDGs to serve as the guiding principles for economic activity and development, as well as government cooperation and international relations.
“Governments, businesses, and citizens are now looking at how to “build back better” in the post-COVID world. While the pandemic will eventually pass once vaccinations have been rolled out, the world will keep this goal firmly in mind to address the challenges that lie ahead for our shared future. Investors can play an important role by directing their capital toward investment solutions that participate in this effort. In other words, investing with purpose. As part of the Credit Suisse House View, our Supertrends thematic long-term equity framework provides investors with an avenue to do just that”, explains Michael Strobaek, Global Chief Investment Officer, Credit Suisse.
The long-term investment trends, first introduced in 2017, are outlined below:
- Climate change – Decarbonizing the economy (aligned with 6 SDGs): The Climate change Supertrend focuses on the decarbonization of economic activity to achieve ambitious greenhouse gas (GHG) emission targets, impacting life on land and below water and contributing to healthy communities.
Ones to watch: Firms leading in renewables (wind, solar, water, etc.) and other CO2-free power generation and electricity-storage technology providers. Energy companies that can square the circle by cutting GHG emissions while maintaining dividend yields. Carbon-capture technology companies and firms involved in blue and green hydrogen capacity enhancements. Transport companies with a strong commitment to CO2 reduction. Low GHG emission meat processors and plant-based food product providers.
- Infrastructure (aligned with 7 SDGs): Infrastructure spending is an important part of the fiscal stimulus packages that governments around the world are putting in place to revive their economies following the COVID-19 recession. As for infrastructure projects, government focus has shifted to providing more support for sustainable infrastructure investments, as countries attempt to build a greener economy, and placing a greater focus on building climate-resilient infrastructure to protect the investment against the impact of climate change.
Ones to watch: efforts are underway to invest in sustainable infrastructure for transport, power and telecom systems in developed and emerging countries. US infrastructure stimulus spending for the construction of transport systems, 5G networks and energy efficient & smart buildings should support construction and infrastructure operator companies.
- The Anxious societies Supertrend (aligned with 8 SDGs) addresses the inequality of opportunities, with a focus on the affordability of essential human needs such as housing, education, healthcare and personal security, and the issue of decent employment amid changing labor markets. The COVID-19 pandemic proved an additional economic challenge and changes with job security, the rising cost of education, increasing healthcare expenses, as well as personal and public safety among the top priorities for many individuals around the globe. The private sector, including investors, can provide effective solutions that do not necessarily entail more government spending but require the right incentives and partnerships.
Ones to watch: Companies providing solutions to lower the costs of basic needs, such as healthcare, housing, education and nutritious food. Companies providing reskilling/upskilling or education as skill requirements radically change. Companies helping to improve the safety and security of citizens – including COVID prevention.
- Technology Supertrend (aligned with 6 SDGs) is at the heart of many advances toward the UN SDGs. The next frontier will be the “touchless economy” as the removal of physical interaction in human communication, life and work has accelerated dramatically during the COVID-19 pandemic suggesting digital cash will be king in the future.
Ones to watch: Software, IT services and platform companies that serve the “touchless industry” and are enablers of digital payments, artificial intelligence (AI), virtual reality (VR), augmented reality (AR) and industry automation processes. Providers of AI solutions and services for use in areas as diverse as healthcare and education, among others.
- Central to the Silver economy Supertrend (aligned with 5 SDGs) lies the projection that the world’s senior population will double to more than two billion by 2050. This shift will create demand, but also unearth challenges that call for innovative solutions – in healthcare, insurance and consumer and property markets. The advances in vaccine development made amid the pandemic are likely to accelerate other research efforts centered around some of the most challenging health conditions, like oncology or neural diseases.
Ones to watch: Biopharmaceutical, medical technology and life sciences companies that address conditions affecting the elderly through innovative products such as immunotherapies or antibody-drug conjugates. Providers and operators of senior housing, managed care organizations and telemedicine operators that can direct patients to the most efficient care setting. Health and life insurance companies, private wealth advisors and asset managers with strong pricing capabilities.
- We expect digitalization to dominate change in ever more sectors going forward. Moreover, sustainability and responsible consumption should continue to thrive thanks to the influence of the younger generation. This is why attention is shifting to include regenerative agriculture and biodiversity within the Millennials Supertrend (aligned with 6 SDGs).
Ones to watch: Companies that are synchronized with the green attitude of Millennials in fields such as protecting biodiversity and the climate, healthy sustainable food, responsible consumption and production and clean energy. Digital platforms around the world that are disrupting shopping, advertising, media and now the finance industry. Companies that are in tune with Millennials’ values of fun, health and leisure, and are geared toward emerging markets, both global and Chinese (domestic) brands.
The new Supertrends report is available at: https://www.credit-suisse.com/microsites/private-banking/supertrends/en.html