World leaders in business and politics have gathered in Davos to discuss the Fourth Industrial Revolution and the pressing challenges of our times. This year’s theme of the World Economic Forum (WEF): Stakeholders for a Cohesive and Sustainable World. It’s more important than ever for state heads and the economy to join forces on a global scale and make sustainability the center of their joint efforts. The good news is: it works.
A recently published article by Time magazine gives 20 concrete examples of how the world has in fact gotten better in 2019 — none of them made huge headlines or were depicted in public perception. We take a look at some of the achievements, their relation to exponential technologies, explore reasons for the apocalyptic collective perception and suggest a radical shift towards constructive collective action: innovation investing.
The given first: There is no doubt that climate change is happening, radical transformation processes are needed and we can’t just wait and watch the earth become an uninhabitable place. However, there’s a catalyst of scandalization that drowns out voices of reason: mass communication has turned into communication of the masses. As a result, hysteria and perception mix with facts and common sense. Here in Davos, the term “apocalypse” has found center stage. And it was climate activist Luisa Neubauer who used her stage as a surprise guest during the reception of ZEIT to make a sound point: “Calling the climate crisis ‘apocalypse’ is irrational. We simply have to all agree that it’s the biggest threat we are facing.” She sees activists as a “counterforce” to demand the promised actions from company leaders.
It is old wisdom that applies to the climate crisis as well: Impactful actions should speak louder than panic-fuelled and clickbaiting words. When thinking about sustainability and impact, innovation is the place to be: not just to invest, but also to create returns, and mostly to improve lives in the long run. Especially in troubled and turbulent times, facts and figures can and should be the compass guiding through the jungle of (mis)information, pointing towards what’s closest to reality and leading the way towards better decisions — and the stats speak for themselves. So let’s take a closer look.
The virtuous cycle of joint global efforts
One of the most striking findings of Time’s Elijah Wolfson is that almost 90 percent of the world has access to electricity. 15 years ago, 24 percent of the world population lived without power. Interestingly, at the same time the share of juice generated from renewable sources reached an all-time high at approximately 11 percent. 2001, this figure was only around 7 percent. This is obviously more than improvable but also unveils the vast opportunities. Wolfson states the positive changes are “due largely to renewable energy becoming more and more price-competitive with fossil fuels; it’s getting to the point that many of the oil and gas majors are themselves investing in green energy.” In 2019, such companies sealed 70 clean-energy deals, a Bloomberg report shows.
A sector we see as one on the rise when it comes to exponential technologies is health care — but not how you might think. Most exponential technologies are more often expected to show up in smaller tech companies and innovation hubs, but it’s in fact established companies like Johnson & Johnson that stand out as innovation leaders transforming business models for an innovative future. The company has positioned itself as a leader in material design for healthcare equipment and joint replacement components all the way to meniscus tissue design. 3D Printing joint replacement components can not only impact J&J’s bottom line but also improve the quality of lives for an increasingly aging population across the globe.
The pace of progress in the health care sector we witness today has been unmatched since the 1950s. Today, we benefit from our forefathers’ studies in this field: “According to the United Nations Population Division, a person born in 2017, on average across the world, could be expected to live to be 72.4 years old, the highest number in nearly six full decades of record-keeping.” Infant and maternal mortality rates are at an all-time low (except for the US who have repeatedly failed to improve their comparatively alarming rates).
Other numbers show a significant increase of the literacy rate. More than 86 percent of the population from 15 and older can read and write. In the 1970s, it was only about 65 percent. Wolfson concludes: “Access to health care, safe drinking water, reliable electricity, and financial capital all have a huge impact on one thing the majority of parents everywhere care about most: that their children can get a good education, and therefore, opportunities that they themselves didn’t have. So it’s no surprise as these other metrics continue to rise, so do the rates of global literacy — a fairly good indicator of overall education.” In addition, the GDP per person is at an all time high (37’738 US Dollar) and so is access to safe water with about 93 percent of the world’s population.
It almost seems like the contrary of a vicious cycle: a virtuous cycle. The equation is simple: with innovation comes change comes access to fundamental resources comes literacy comes a “weapon” against poverty and with that gender equality and potentially social equality in the long-run — if intentions to become more sustainable increasingly comprise the will to not only stop exploiting e.g. resources, but also stop exploiting people.
Sensation sells — innovation works
As opposed to the one-way street news used to move in when means of mass communication entered the living rooms (radio and later TV), today, headlines travel at the speed of a witness’s eye. Sometimes news appears on Twitter first before making it to the broadcasting studios and news desks — some of which have become fast-paced copy’n’pasters instead of acting as investigators. Above all, business models for media outlets have changed. Clicks, visits and engagement are the hottest currency on the market. Sensational headlines sell better than those seeking solutions — so they naturally fuel and purposely mislead public perception in addition.
What we see today is a revolution and the democratization of debate and information. However, the lack of quality control and fact checks as well as the unfiltered nature of contribution and language together with the low barriers for people to engage, sometimes anonymously, amalgamates in a toxic cocktail of perceptions, sentiments, actual facts, rumors and lies. Mostly, what we can identify is a lot more talking and a lot less acting. This brings us to investing as a way to walk the talk.
Fire brigade vs. long-term impact — donation vs. innovation investing
A culture ranging between a “fire distinguisher”/actionistic mentality and a mentality of denial or paralyzation won’t lead to much needed sound immediate actions with a long-term effect. Or to put it in the words of our Board Member and Co-Founder Tobias Reichmuth from an interview he recently gave to Blocks 99:
“I think it’s the biggest investment opportunity in the 21st century. And the thing is, it’s not only an opportunity, it’s a duty. We have to invest a lot in energy transition infrastructure in order not to be killed. Climate change is happening. The problem is that it’s not the new normal, it’s just the beginning. So we have to turn our whole economy into a CO2 neutral society. And this will be possible only if you invest a lot of money. The good news is that there are interesting investment opportunities and you can make attractive returns with it. So it’s not that we have to donate only, we first of all have to invest.”
How effective his appeal is, becomes most obvious when we look at fossil fuels vs. renewable energies. According to Time, the total assets of institutions that are divesting from fossil fuels is 11.5 trillions dollar — in 2012, this number was at 5 billion dollar. This means within 7 years, the money streamlined towards more sustainable business models has risen more than 2’000 times or by 22’900 percent. Investors are starting to rapidly divest from fossil fuels: 2012, only 50 (yes, 50) investors stated they would divest from fossil fuels. In 2019, we speak of 1’156 investors.
As we believe in exponentials, these signs indicate just the beginning of a global movement and investing revolution channeling assets towards exponential technologies, transformation and business models that have the potential to avert the inescapable. We have dedicated this year to assessing the actual impact of such investments and will soon present our research. What we can already say is: There is a clear correlation between a company’s integration of exponential technologies and getting closer to its Environmental, Social, and Governance (ESG) goals. In other words: The economic landscape gets greener and dirty industries cleaner, if investors and stakeholders set the course for innovation to solve the problems.
By Katharina Boehringer, The Singularity Group