Why saving the planet is more than just reducing carbon emissions
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Improving social, racial, gender, disability and income equality is a universal responsibility. But inequality has been on the rise across the globe for several decades. While some countries have reduced the numbers of people living in extreme poverty, economic gaps have continued to grow as the very richest amass unprecedented levels of wealth. According to the UN, despite progress since the global financial crisis, the pandemic is likely to reverse much of the good that had been done in reducing income inequality.
“A nation will not survive morally or economically when so few have so much and so many have so little.” — Bernie Sanders, US Senator
SDG #10 is all about reducing inequality within and among countries. By 2030, its aim is to empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status. It also aims to ensure equal opportunities, reduce inequalities of outcome and progressively achieve and sustain income growth of the bottom 40% of the population at a rate higher than the national average.
A large focus of reducing inequalities centres on migrants: to facilitate orderly, safe, regular and responsible migration and mobility of people.
By the end of 2020, 26.4 million* people had fled their countries and become refugees due to war, conflict, persecution and human rights violations, the highest level ever recorded. Nearly half were women and girls. The intersecting vulnerabilities of migrant, refugee and internally displaced women and girls have intensified in the wake of the pandemic. And this is likely to be higher given the recent invasion of Ukraine.
Income inequality is also on the rise globally. The richest 10% have up to 40% of global income, whereas the poorest 10% earn only between 2-7%**. If we take into account population growth inequality in developing countries, inequality has increased by 11%**. These widening disparities require global solutions.
Investors can pay a major role in advocating for improved politics and practices at companies, building on the progress achieved in the arena of gender equality by the likes of the 30% Club. The 30% Club initiative looks to have more diverse boards. We covered more about the initiative and how it has been implemented on our recent women’s day podcast.
Another way investors can focus on reducing income and wealth inequality is by focusing on raising wages or the lowest paid and making sure other benefits are available to employees – this could include a cap on the ratio of executive pay to worker’s pay. Both of these areas are where fund managers can directly engage and influence boards of companies to make a significant change.
The Responsible Investment team at BMO GAM is one of the largest in the industry. The BMO Global Smaller Companies trust is active in company engagement and individual investments are aligned with the UN Sustainable Development Goals when relevant.
FSSA as a company believes that “sustainability is not just a label, but a set of values by which we operate”. Its approach places an emphasis on stewardship and the belief that quality managers and good governance should ensure that environmental and social concerns are rightfully addressed. FSSA All China, FSSA Global Emerging Markets Focus, FSSA Greater China Growth and FSSA Japan Focus all have strong elements of sustainability integrated into their process.
Socially conscious investments have become even more prevalent in recent years. The pandemic brought about an extraordinary set of circumstances with significant social implications, in terms of health (SDG 3), poverty (SDG 1), decent work (SDG 8) and even resilient infrastructures (SDG 9). Companies will have to navigate these social issues astutely and ethically, and as investors we will need to be acutely aware of them.
*Source: UN Sustainable Development Goals, 2021 Report
**Source: UNDP, Goal 10 Reduced Inequalities