Liontrust Sustainable Investment Annual Review 2021 - International - Report - Page 36
2020 investment outlook
Looking to a new decade
(and celebrating the last one)
PETER MICHAELIS
My original outlook piece, written in January, held positive
predictions of how our societies would develop over the coming
years. It explained that the sustainable trends making our
environment cleaner, our quality of life better and our societies
more resilient would continue, and that companies linked to these
positive currents within our economy would prosper.
Updating my outlook in early April in the midst of the Coronavirus
crisis, with its dreadful human cost and unprecedented economic
impact, this optimism about the future might seem misplaced.
Within the past few weeks, country after country has gone from
business as usual to full lockdown. Governments and central banks
have had to intervene to support their economies and people,
trashing any notion of ‘small government’. Hard ethical choices have
had to be made: from doctors deciding who gets intensive care
and who does not, to world leaders trading off economic damage
against lives saved. Deserted streets, closing businesses, mass
unemployment and a rising death toll are a very harsh counter to any
positive view of 2020 and beyond.
This crisis has revealed both the interconnected nature of our world
and also how vulnerable humanity and our way of life is to an
external shock. One small strand of replicating protein has brought
the activities of the most
successful species on
the planet to a near
standstill. It has also
revealed just how
dependent we are on
the things we often
take for granted: first
and foremost, an
effective healthcare
system with doctors,
nurses, and scientists
protecting us from
disease. After that
come the benefits
of a well-
36 - Liontrust Sustainable Investment: Annual Review 2019
functioning economy, providing the employment, products and
services we need; freedom of movement to congregate with family,
friends and colleagues for leisure and work; global trade. The list
goes on.
And yet on reflection I still believe we should be optimistic about the
future. The crisis is terrible but the response shows just how we can
overcome this challenge through co-operation, applying ingenuity
to positive ends and investing in businesses to deliver a positive
impact. There are stark parallels with how we have to deal with the
challenges of the climate emergency, loss of biodiversity on land and
sea, and sharing prosperity more widely and more fairly. I believe
that, after we have suppressed this pandemic, we will intensify our
response to these challenges, underpinning the sustainable trends in
which our strategies invest.
For this reason, we include here my original outlook article, in spite of
it not mentioning Coronavirus, because it is, to our minds, still valid.
Before our thoughts turn to what the 2020s will hold, we should
pause and celebrate the 2010s: in many ways, they were the best
decade humanity has ever had. Judged by improvements in levels of
poverty, disease, war, education and democracy across the world,
there has never been a decade like it; we found ways to dramatically
improve quality of life, increase resilience and do much more with
fewer resources.
These macro trends are positive, powerful and predictable. While
they often get lost in daily news that seems to need the drama of
disaster, destruction and doom to get readers and listeners, the real
stories of the past few decades are much more positive. And it is
these macro trends that have enabled us to deliver superior returns
by investing in sustainable companies.
First, the air we breathe. In UK cities, the air is cleaner than it has
been since the beginning of the industrial revolution. If we look
at PM10 pollution levels in London – with long exposure leading
directly to lung cancer and pulmonary disease – back in 1992, it
was at moderate or high levels for 1,500 hours a year. Now, it is
20 times lower, which is still not perfect but much improved. Progress
also continues with the move to hybrid and pure electric vehicles.
