Did you know?
- A 10% increase in mobile broadband adoption may correlate with up to 2.8% increase in GDP.1
- Each grade a child completes may raise his or her earning potential as an adult by 10%.2
- Small businesses employ 50% of workers worldwide and create seven of 10 jobs in emerging markets.3
- By some estimates, cybercrime costs an estimated US$600 billion annually, or nearly 1% of global GDP.4
In many ways, these are the modern essentials: broadband internet and mobile technology; online education and financial services; and home, workplace, and product safety. These products and services help people climb the socioeconomic ladder, become more productive and competitive, and contribute to economic growth.
Digital divide
Internet access can make getting an education or a job or accessing financial services easier by increasing users’ productivity, providing agency, lowering costs, and enabling transparency. In many countries, the digital gaps between rich and poor, and between men and women are still wide, exacerbating other inequalities. For women in particular, internet access can be a lifeline to empowerment and independence.
- Our opportunity set includes telecommunications-infrastructure providers working to expand digital penetration in rural areas across India, Africa, and Bangladesh.
- One company provides rural women with jobs selling data and digital-voice services. Another provides voice, messaging, data, and converged communication services to demographics that previously lacked access to these services.
- Fixed income issuers also include telecommunications companies financing infrastructure projects that improve access to mobile services.
Education & job training
The United Nations links educational attainment to poverty reduction, family nutrition and eating habits, child health outcomes, gender equality, and lifelong financial stability. We believe investments can narrow the inequality gap and unlock economic potential. Technological advances allow businesses and municipalities to develop and deliver smarter education services at a lower cost.
- Among equities, we continue to identify what we see as promising models for impact that can empower underserved students of all ages, and mobilize talent to better serve rapidly evolving labor markets.
- In the fixed income universe, we have identified municipal bonds issued by lower-income school districts to finance building construction and renovation projects.
Financial inclusion
Innovative companies working to expand access to financial services — and therefore, capital — for underserved populations can help drive sustainable economic development. Greater financial inclusion can increase productivity for small businesses and entrepreneurs, and providing women with access to financial services may lead to higher household incomes and better education and health outcomes for families. These gains often translate into community-level economic progress.
- We have identified new technologies in mobile payments and financing or lending platforms that help individuals and small businesses (which often struggle to get access to capital) by improving operational efficiency, lowering costs, and expediting access to cash and credit.
- We have considered opportunities in e-commerce and microfinance, which are potentially transformative for women and other traditionally underbanked populations.
Safety & security
While the systems and technologies needed to ensure cybersecurity, data privacy, and personal and product safety are increasingly sophisticated and costly, they are proving to be critical for preserving credibility and security of small businesses. Road and driver safety, as well as water, food, and drug testing, have far-reaching social benefits and the financial losses prevented by thwarting cyberattacks and data breaches are substantial.
- Impact companies help prevent cyberattacks by providing visibility into vulnerabilities, allowing a business to correct them before an attack.
- We have considered investments in companies that make advanced driver-assistance systems (ADAS) and autonomous vehicle technology.
- We also assess innovative products and services that help advance home and workplace safety, such as alarm systems or supportive “exoskeletons” that mitigate factory injuries.
Impact companies whose products and services advance human empowerment can have a lasting positive effect on society. We believe the disruptive tools and technologies that help shrink the world’s digital divide also feed through to community-level economic stability and growth. Companies under these impact themes should see secular demand growth from the trend toward sustainability and inclusivity.
We invite you to learn more about impact investing and explore our 2019 impact activity and outcomes.
1Harald Edquist, et al. “How Important are Mobile Broadband Networks for Global Economic Development?,” Imperial College Business School, May 2017.| 2“Sustainable development begins with education: How education can contribute to the proposed post-2015 goals,” UNESCO, 2015. Wellington has reviewed thisresearch and believes the findings are still valid even without the inclusion of more current data.| 3“Small and Medium Enterprises (SMES) Finance,” The World Bank, 2020. | 4“Economic Impact of Cybercrime,” Center for Strategic & International Studies, February 2018.
