SUSTAINABLE INVESTMENT, Demographic Change by Raiffeisen Capital Management

April 2021

SUSTAINABLE

INVESTMENT

DEMOGRAPHIC CHANGE

PAGE 04 DISCUSSION: “EDUCATION IS THE KEY”

PAGE 10 CORPORATE VOICES ON THE TOPIC OF DEMOGRAPHIC CHANGE

PAGE 18 A marketing communication of Raiffeisen Kapitalanlage GmbH

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EDITORIAL

LEAD ARTICLE

DEMOGRAPHIC CHANGE

RESEARCH

DISCUSSION: “EDUCATION IST THE KEY”

INFO BOX: SDG 1

CORPORATE VOICES ON THE TOPIC OF DEMOGRAPHIC CHANGE

COMPANY SPOTLIGHT

INSIDE

UPDATE: BECOMING A CO2-NEUTRAL INVESTMENT FIRM

LET’S TALK ABOUT MONEY

CONTENTS

General orientation: Information on the topics of investment funds, securities, capital markets, and investment; additional information pursuant to the Austrian Media Act can be found in the publication information at www.rcm.at. Project coordination: Irene Fragner, Sabine Macha Authors: Klaus Glaser, Sabine Macha, Pia Oberhauser, Andreas Perauer, Wolfgang Pinner Photos: iStockphoto (p. 04 – p. 09, p. 12, p. 16, p. 20, p. 22), Miguel Ferraz, iiasa, Pia Morpurgo, UNESCO (p. 10, p. 12), Raiffeisen KAG (p. 03, p. 05, p. 10, p. 18, p. 23, p. 25) Graphic design: [WORX] Multimedia Consulting GmbH Editorial deadline: 15 March 2021 This is a marketing communication of Raiffeisen Kapitalanlage GmbH. Raiffeisen Capital Management ist the umbrella brand of the following companies: Raiffeisen Kapitalanlage GmbH Raiffeisen Immobilien Kapitalanlage GmbH Raiffeisen Salzburg Invest GmbH Disclaimer Investments in funds involve higher risks, up to and including loss of capital. This document was prepared and designed by Raiffeisen Kapitalanlage-Gesellschaft m. b. H., Vienna, Austria (“Raiffeisen Capital Management” or “Raiffeisen KAG”). Despite careful research, the statements contained herein are intended as non-binding information for our customers and are based on the knowledge of the staff responsible for preparing these materials as of the time of preparation and are subject to change by Raiffeisen KAG at any time without further notice. Raiffeisen KAG assumes no liability whatsoever in relation to this document, in particular with regard to its timeliness, accuracy, or completeness. Similarly, any forecasts or simulations of earlier performance presented in this document do not provide a reliable indication of future performance. This document is neither an offer nor a recommendation to buy or sell, nor an investment analysis. It is not intended for use in lieu of investment advice or other consultation. If you are interested in a specific product, we and your bank advisor will be happy to provide you with the complete prospectus or the information for investors pursuant to § 21 AIFMG prior to purchase. No specific investments should be made until after a consultation and discussion, and after having reviewed the prospectus and the information for investors pursuant to § 21 AIFMG. It is expressly noted that securities transactions can involve significant risks and that taxation of such depends on personal circumstances and is subject to change in the future. Reproduction of the information or data, in particular the use of texts, text sections, or graphic material from this document, requires the prior written consent of Raiffeisen Kapitalanlage GmbH.

EDITORIAL

Dieter Aigner Managing Director of Raiffeisen KAG, responsible for fund management and sustainabilty

Dear Readers,

Modernisation, urbanisation, and im-

population growth in the emerging and

You may be asking yourself at this point

proved access to education and health

developing countries is causing a host

what all of this has to do with investment

care have massively changed our de-

of other social problems such as supply

funds. How can investors promote gov-

mographic structures over the past 100

bottlenecks and a lack of jobs and pros-

ernment education measures, for exam-

to 150 years. While advancements in

pects, just to mention a few. This puts

ple? As fund managers, we must make

medicine and increased awareness of

young people in par ticular under pres-

decisions every day about how to invest

the impor tance of good nutrition are

sure to migrate – and results in substan-

the capital provided by investors sus-

leading to increasing life expectancies

tial global migration flows. Here and

tainably while generating a return. With

and declining bir th rates in the nor thern

there alike, sustainable development is

regard to education, we evaluate listed

hemisphere, the population is continuing

not possible without educated societies

companies but also development banks

to grow rapidly in the southern hemi-

that are able to address and overcome

and sovereigns as targets for investment.

sphere, especially in Sub-Saharan Africa.

these major challenges. UNESCO has

But to generate measurable impacts, we

Because Africa is now undergoing the

declared education to be a human right,

need more social bonds that address

so-called demographic transition. This

but this is not a reality everywhere.

this issue. In other words bonds that

is characterised by a lower death rate

Compulsory schooling is enshrined in

are issued by government i nstitutions

because of improved health care on the

law in most developed countries, but is

and that finance concrete socially rele-

one hand but a continued high bir th rate

not in a large number of poor countries

vant projects such as the construction

on the other.

around the world. This robs millions

of schools, academic curricula, and the

of children – especially girls – of their

like. Billions are invested in the capital

While state pension systems are on the

oppor tunities. COVID-19 will exacer-

markets every day. Credible instruments

verge of collapsing and health care sys-

bate this trend because many children

help to direct this capital into the right

tems are reaching their capacity limits

will likely not return to school after the

channels. A great deal could be achieved

in the developed countries, the rapid

pandemic.

here with social bonds.

EDITORIAL

DEMOGRAPHIC CHANGE You can find out more about Sustainable Development Goal 1 on pages 16–17 and at www.investment-zukunft.at/kategorie/ sustainable-development-goals/

LEAD ARTICLE

The ageing of society is giving birth to new challenges. The a verage age is rising steadily in the industrialised countries and China in particular. This is not only putting government pension systems under pressure. Requirements for individual care, care facilities, and products and technologies developed or adapted specifically for the elderly are gaining importance. Another aspect of demographic change is the unabated population growth in the Emerging Markets and the shifting purchasing patterns being seen there.

Demographics is a science that deals

ty has positive sustainability aspects

statistically and theoretically with the

because it counters unchecked popu-

development of populations and their

lation grow th. On the other hand, an

structures. The focus is often placed

ageing population may cause social

on the development of the population

problems stemming from the need to

pyramid in individual countries, which

f inance life in old age and the associ-

shows the statistical age distribution of

ated higher costs for the social system.

the inhabitants. Characteristic forms of

Due to the prevalence of the transfer

the population pyramid are the linear or

methodology in government pension

traditional pyramid form and the convex

insurance systems in the industrialised

form. The linear population pyramid is

countries, rising social expenses due to

based on a steady population decrease

demographic changes consume funding

per upward age group. A large number

that then may not be available for oth-

of children are born with a low life ex-

er future-relevant budget items such

pectancy. This pyramid form can still be

as education and research. From an

found today in South America and India.

environmental perspective and consid-

This structure also dominated Germa-

ering that natural resources are f inite,

ny and Austria around 1890. Today, the

the ageing of society and lower fer tility

convex form is typical for industrialised

are def initely positive due to the slow-

countries and is based on a low bir th

er grow th of the world’s population,

rate and high numbers of older people

assuming a constant or rising environ-

due to greater life expectancy.

mental footprint.

An ageing population as a result of

The number of persons requiring care

changes in life expectancy and fer tili-

increases in an ageing society. The high-

Wolfgang Pinner Head of Sustainable and Responsible Investment at Raiffeisen KAG Chart: World population from 1950 to 2100 Distribution of he world population by age and gender for the period from 1950 to 2018 and the prodjected development through to 2100 (according to the UN Population Divison). 70 mn

60 mn

50 mn

40 mn

30 mn

20 mn

10 mn

20 mn

30 mn

40 mn

50 mn

60 mn

70 mn

90 years 00

80 years

70 years

5 07

60 years

20 50 years

40 years

Average age

2100: 41.6 years 2050: 36.1 years

30 years

2018: 30.0 years

1950: 23.6 years 20 years

10 years

Men

Women

Source: United Nations — World Population Prospects 2017

LEAD ARTICLE

DEMOGRAPHIC CHANGE

er life expectancy is also due in par t to general advances in health care. This makes the pharmaceuticals and medical technology industries key beneficiaries of the demographic changes. The number of required care facilities and nursing homes increases in step with the number of people requiring care in old age. For the financial industry, the increasing overburdening of the public pension systems has a positive side effect, namely the increasing impor tance of private pension insurance and saving for the future. Different population pyramids cause distor tions in the calculation of data on value creation and prosperity that are based on the population, such as per capita GDP. The same distor tions occur to a lesser ex tent when comparing Germany and France, for example, because both countries have signif icant differences in their fer tility rates. A large number of children and young adults generally leads to lower economic output per inhabitant. The statistics typically differentiate between “economically dependent” people, i.e. people up to the age of 15 and older than 65, and the working-age population. Economically dependent people make a low contribution to value creation, especially in young years, while the working-age population contrib-

LEAD ARTICLE

SUSTAINABLE INVESTMENT | April 2021

utes to increasing the economic out-

Chart: Age dependency ratio

put through its work and savings. In

“Economically dependent persons”, as of 2017

terms of investments, pension insurance funds in the industrialised coun-

The ratio of “economically dependent” persons is based on the number of young

tries can prof it from f inancial invest-

inhabitants (younger than 15) and older inhabitants (65 and older) compared with

ments in countries with comparatively

the working-age population aged 15 to 64. The char t shows the propor tion of

“healthy” demographic structures. This

economically dependent persons as a percentage of the working-age population.

could mean a second pillar alongside the increasingly burdened government pension systems, a pillar that is diversif ied by means of funded holdings in countries with attractive demographics – and thus high potential for economic grow th.

DEMOGRAPHIC DIVIDENDS VERSUS COSTS

Countries with a growing working-age population as a share of the overall population profit in economic terms from the productive por tion of the population needing to suppor t fewer economically dependent persons. The people can consume, save, and invest more. This factor is called a “demograph-

the baby boom years from 1946 to 1965

Source: World Bank –

ic dividend”. A negative demographic

were able to invest in a variety of asset

World Development Indicators

dividend is called “demographic costs”.

classes to finance their retirement, and

No Data

High demographic costs are expected

could potentially have a negative im-

0% – 20%

especially in Europe but even more so

pact on the financial markets by selling

20% – 40%

in Japan in the coming decades due to

these assets and causing excess supply.

40% – 60%

the decrease in the size of the potential

The generally longer life expectancy for

60% – 80%

working-age population. Demographic

the world population and the growing

80% – 100%

trends influence economic growth and

number of senior citizens will cause

100% – >120%

savings habits in each country. In the

rapid growth in health care spending.

industrialised countries, people born in

The

pharmaceuticals,

– – – – – – –

biotechnology,

LEAD ARTICLE

DEMOGRAPHIC CHANGE

and health care industries should profit

stitute in Rostock, has conducted such

from this in general.

studies for the USA. The basic finding

EFFECTS ON THE CARBON FOOTPRINT

Chart: World population

of the study, which is thought to apply to all developed economies in the world, is that per capita carbon emis-

Demographics are not limited to an-

sions rise continuously from the age of

alysing the changes in the population

10 to 60 and then decline. This is linked

pyramid. Factors such as gender, lan-

to the fact that average incomes gener-

guages, living situation, and social char-

ally increase with age. Older people live

acteristics such as occupation, marital

in larger houses and drive less energy

status, and income are also par t of de-

efficient cars. Kilometers travelled by

mographic analyses. The ongoing de-

air also increase with age, which gen-

mographic change is also being shaped

erally consumes more energy. The en-

by immigration and emigration. The en-

vironmental footprint then decreases

vironmental footprint for different life

again for senior citizens. The per capita

stages is also interesting. Emilio Zaghe-

spending does not decrease, but more

ni, demographer at the Max Planck In-

of this money goes into health care

by age groups Total population and populations by age class from 1950 to 2020 and projections through to 2100, based on the average fertility scenarios of the UN. Overall projection

10 bn 8 bn 6 bn

25 – 64 projection

4 bn

Under 25 projection

2 bn

Under 15 projection

0 bn

Under 5 projection

1940 1960 1980 2000 2020 2040 2060 2080 2100 Source: United Nations, Department of Economic and Social Affairs, Population Division (2019). World Population Prospects: The 2019 Revision, DVD Edition.

LEAD ARTICLE

SUSTAINABLE INVESTMENT | April 2021

DEMOGR APHIC CHANGE IN THE CONTEXT OF THE THREE SUSTAINABILITY ASPECTS: ESG

footprint of the population could fur-

G (Governance):

ther exacerbate the problem. The

From a governance perspective, the pri-

effects on agriculture and the food

mary question is who must ultimately

industry must also not be underesti-

bear the costs of the ageing of the pop-

mated from a resource perspective

ulation. Here, privately and publicly fi-

given the increasing number of people

nanced models must be discussed along

E (Environment):

who must be fed.

with the sustainability of financing the

The population growth projected for

social system from the running govern-

the coming decades will especially

S (Social):

have a quantitative impact from the in-

The demographic trend towards an

creasing sale of products and services,

increasingly older population gives rise

Summary:

and may have problematic quantita-

to new challenges in financing the so-

Demographic change is a key future top-

tive consequences from an environ-

cial security systems. Higher social ex-

ic for Raiffeisen Capital Management.

mental perspective. In addition to the

penditures may lead to reduced ben-

The health care sector and medical

purely quantitative analysis, continued

efits if the financing structures remain

technology in particular are structurally

growth in the average e nvironmental

the same.

overweighted in Raiffeisen’s investments.

than into energy-intensive consump-

be caused by the population growth

tion such as the purchase of clothing

will lead to potentially expanding mar-

and travel.

kets for consumer goods and increased

ment budgets.

material use, which will boost demand Current projections point to global

for commodities. Another trend that

population growth continuing, with a

is driven in par t by demographic fac-

reversal not expected until 2064 ac-

tors and in par t by the high econom-

cording to a study by a group of sci-

ic growth per tains to the expansion

entists headed by Professor Stein Emil

of the middle class, especially in the

Vollset and published in the medical

Emerging Markets. Here as well, the

journal The Lancet. Researchers expect

projected increase in demand should

a declining bir th rate after this point.

boost sales for the manufacturers of

Until then, the rise in demand that will

durable goods.

Quellen: Ellen MacArthur Foundation, A new textiles economy: Redesigning fashion’s future, (2017, http://www.ellenmacarthurfoundation.org/publications) The World Bank: Consumption (per November 2020)

LEAD ARTICLE

Under the moderation of Dieter Aigner, Managing Director of Raiffeisen KAG

Virtual round-table discussion about the need to ensure education globally.

Professor Wolfgang Lutz Head of the Department of Demography at the University of Vienna

Patrizia Jankovic General Secretary of the Austrian UNESCO Commission

Gloria Boateng Education activist, moderator, and book author, recipient of the Order of Merit of the Federal Republic of Germany

Thomas Motsch Fund Manager Sustainable Investments, Raiffeisen KAG

ROUND-TABLE DISCUSSION

Professor Lutz, what is the current global

caused death rates to decline rapidly.

population trend, and what are and were

But bir th rates remained high, as having

the most important drivers of this?

a large number of children was an es-

Wolfgang Lutz: The human population

tablished cultural norm. It took decades

has gone through very many changes

for the bir th rates to also decrease.

over the past 100 to 120 years. The

Modernisation, economic growth, ur-

most impor tant development in funda-

banisation, and of course women work-

mental terms is what we call the demo-

ing outside of the home played a large

graphic transition. In Europe, this began

role in this process. But the key factor

at the end of the 19th century as death

was the increasing education of wom-

rates began declining. Until then, society

en. This displaced the fatalistic view that

was plagued by recurring famines and

they could make no independent deci-

wars. Life expectancy was much low-

sions, and allowed them to take control

er. There were no controls whatsoever

of their own reproductive systems. The

on mor tality or bir th rates. Only mar-

bir th rate also began declining from that

riage served as a check that limited the

point on.

number of pregnancies, though a great many children were born. There was

You mentioned Africa. Is the continent on

usually no self-determined bir th con-

the cusp of this demographic transition

trol. We see something similar today in

today?

less-developed countries in Africa such

Wolfgang Lutz: The population is grow-

as Mali and Niger, where 70 – 80% of

ing extremely rapidly in places where

women are illiterate and never had the

the death rate is already low but the

oppor tunity to attend a school. These

bir th rate is still high. Right now, this

countries are experiencing more or less

is mainly the case in West Africa and

uncontrolled growth in demographic

East Africa. Every African woman there

terms, they are where Europe was in

has an average of five to six children.

the 19th century.

And this leads to other challenges, as was also the case in Europe: poor eco-

What triggered the transition process in

nomic conditions, an insufficient supply

Europe?

of jobs, etc. This causes migration pres-

Wolfgang Lutz: It was primarily better

sure. We had all of this here in Europe

nutrition, but also improved knowledge

in the 19th century, when the people

of health and hygiene. Early forms of vac-

emigrated across the ocean. Africa is

cinations against smallpox and cholera

seeing this today. This means that we

SUSTAINABLE INVESTMENT | April 2021

„EDU CATION IS THE KEY“ must provide women with access to

out. The UN’s latest Global Education

the child can attain in future. Because

education so that they can lead self-de-

Monitoring Repor t, which is published

this not only depends on the parents.

termined lives. This is the key to sus-

every year and documents effor ts in the

What’s much worse is that it is these

tainable development.

field, clearly shows that identity, origin,

children who are also discriminated

and ability still determine access to edu-

against by our school system.

UNESCO is promoting education on be-

cational oppor tunities. And in all coun-

half of the United Nations. What is hap-

tries except those with high income

Could you explain that?

pening here?

levels in Europe and Nor th America,

Gloria Boateng: Educational pover ty

Patrizia Jankovic: UNESCO views edu-

we see that for every 100 of the rich-

masks talent. If a child grows up with a

cation as a human right. But in reality,

est children, only 18 of the poorest

poor level of education, this child not

not nearly everyone has this right. It has

complete secondary school. These are

only has a lack of knowledge in cer tain

never been as impor tant as it is now to

shocking numbers.

subjects, but also lacks a network that it

ensure that all people have equal access

can call upon later. It is missing a key par t

to education and the same educational

These numbers also have concrete names

of the social code, it is missing par tic-

oppor tunities. The world is facing enor-

in your work, Ms. Boateng. You support

ipation oppor tunities, recognition, and

mous challenges: disruptive technology,

and motivate children from socially disad-

the resulting self-confidence and self-es-

climate change, migration, intolerance,

vantaged groups in Hamburg in making use

teem. I could add a great deal to the list.

and hate. These challenges are exac-

of their educational opportunities. What

If we want to promote education, we

erbating the inequality even fur ther.

insights have you gained from your work?

must consider many levels of education.

COVID-19 also revealed serious weak-

Gloria Boateng: In my experience,

Because of this, I think it is impor tant

nesses in education. Our society bears

when we think about education and

for the academic and extracurricular

more collective responsibility than ever

educational oppor tunities, we often

players to work together. Because ide-

to suppor t disadvantaged people and to

think of the school system. But school

ally, we want to provide all children with

ensure that they are not left behind.

is only the institutionalised framework

access to institutionalised education, but

for education. Education is so much

also want to help them to understand

But how many children are in fact left

more than “ just” school. In Germany,

themselves and the fabric of our society,

behind?

the potential for educational success

and to understand the dependencies

Patrizia Jankovic: According to UNES-

correlates more significantly with the

that this creates. And it is also impor tant

CO statistics, over 90% of pupils and

origin and educational background of

that we help them recognise and seize

students are affected by school closures

the parents than in nearly any other in-

the oppor tunities that they have.

due to COVID-19. Some 258 million

dustrialised country, and we have made

children and adolescents around the

little headway in breaking this link. And

How does education change people’s lives

world are not going to school. Especial-

this also means that by the time a child

and decisions?

ly the socially disadvantaged are at high

enters school, it may already be decid-

Gloria Boateng: Education is the key

risk of missed schooling and dropping

ed what level of educational success

that unlocks all doors, that enables a

ROUND-TABLE DISCUSSION

„

person to make self-determined deci-

situation is much worse in Africa. The

sions. Everything depends on it: a per-

school closures in Africa are the most

son’s nutritional choices, what occupa-

adverse long-term impact of COVID-19

tions they are qualified for, how healthy

in my eyes. All schools have been closed

they are, how much economic capital

for a year now in some African coun-

they can build up, and much more. Plus

tries. And we know for cer tain that

how many children they have. Simply

school is the only way for young girls

everything. True freedom of choice in

there to emancipate themselves and lat-

life is rooted in education. Without ed-

er lead a self-determined life. Getting

ucation, a person is limited in their abil-

back into school will be very difficult

ity to act and is controlled by external

for these girls, and likely impossible for

influences.

many. I fear that we will see more un-

The school closures in Africa are the most adverse long-term impact of COVID-19.

“EDUCATION IS THE KEY”

Dieter Aigner conferencing with Professor Wolfgang Lutz, Patrizia Jankovic, Gloria Boateng and Thomas Motsch

wanted pregnancies, and thus a slower decrease in the bir th rates. Patrizia Jankovic: I can unfor tunately confirm that this is true. A person’s gender still determines their oppor tu-

Do digitalisation, which has surged around

nities, and we see that hardly any poor

the world in the wake of COVID-19, and

young women from rural areas gradu-

the Internet offer the potential to improve

ate from secondary school in at least

education in rural areas in Africa?

20 countries in Sub-Saharan Africa.

Wolfgang Lutz: It theoretically has

And this trend will only become more

this potential. But in practice, there

pronounced in the wake of COVID-19.

is a great deal of evidence to suggest

Experiences with diseases such as Ebola

that the increasing digitalisation is ex-

have shown that the health care system

acerbating the polarisation of society.

leaves many people behind, especially

Even in this country, we see that it is a

large numbers of poor women from

problem for the socially disadvantaged

less-developed areas. The children who

when they cannot go to school, and that

went to school before the pandemic

COVID-19 is widening this gap. But the

will likely not return to school after the

SUSTAINABLE INVESTMENT | April 2021

pandemic. The numbers are alarming.

impor tant step. But only around 18% of

It is estimated that this will impact 11

children receive ter tiary education at a

million girls.

university or comparable post-secondary school. The same statistic in Ger-

You were born in Ghana and probably

many was over 54% in 2020. So it is 18%

have a good network in Africa. What is

in Ghana, considerably more than when

your take on this?

I grew up there. Many university grad-

Gloria Boateng: I have to agree with Mr.

uates cannot find suitable jobs or are

Lutz that advancing digitalisation brings

unable to afford post-graduate studies

greater polarisation in society and that it

in their country, and thus leave to study

will cause many people to fall even far-

(again) abroad, often in Europe, as do

ther behind than they already are. And

many other young adults from Camer-

it is also still true that especially girls are

oon and other countries. And most do

at a serious disadvantage above all in

not return. In this way, the African coun-

terms of education promotion in many

tries lose par t of their best graduates.

African countries. Ghana is a model for many African people and countries

Why does this happen?

in terms of effor ts to offer institution-

Gloria Boateng: One reason in my opin-

al education throughout the country.

ion is that many African countries are

It was a great step forward when the

living in a post-colonial age where they

primary and junior secondary schools

are still very constrained. The countries

became essentially free. I say essentially

have substantial debt, at high interest

because school materials and uniforms

rates. They collect high taxes so they

still had to be financed, and many fam-

can at least pay the interest and show

ilies could not even afford that. Thus,

their creditors “hey, we can do it, we

more children went to school until 6th

will make it”. But high interest cripples

or 7th grade, but some were still not

economies and innovation potential,

able to go. Especially children who were

and only small-scale investments can

needed as workers by their families,

be made. Because of this, there are not

mainly girls. Senior secondary school

enough jobs, and this causes people to

has also been free since 2016. Another

emigrate and seek education elsewhere.

ROUND-TABLE DISCUSSION

ROUNDTABLE DISCUSSION

The topic is so complex that we cannot

and what specif ic measures are taken

discuss it here. But it is time for debt

in this area. These are key factors in

relief for these countries. Time for fair

our overall assessment. The corporate

global trade on equal footing. It is time

and government bonds in which we in-

for the industrialised countries to get

vest must of course also be f inancially

off their high horse.

attractive.

What contribution can the f inancial in-

Can you have an impact with an invest-

dustry make here? How can investors pro-

ment, and how can you measure this?

mote educational measures?

Thomas Motsch: We have placed a con-

Thomas Motsch: The direct options

crete focus on impact measurement in

to invest, for example through so-

recent years, and this is becoming in-

cial bonds, are ver y limited for us or

creasingly relevant in sustainable invest-

non-existent at present. Because there

ment. The goal here is to measure the

are not nearly enough of these instru-

effects that my investment has. And the

ments in the education segment. This

UN’s Sustainable Development Goals

makes it hard for us to f ind an effective

are a good framework that investors

lever. Thus, we concentrate our sus-

can orient towards to see where com-

tainable investments on companies and

panies can generate a positive effect

governments that promote education

with their products.

and training measures and that take ac-

Goal 4 is defined as “Ensure inclusive

tive steps to create education oppor-

and equitable quality education and

tunities. When selecting companies,

promote lifelong learning oppor tunities

we also determine whether talented

for all”. We can measures companies

persons in the company are suppor ted

and governments based on this goal.

and trained. Because this usually also

“EDUCATION IS THE KEY”

means offering the employees pros-

There is a great deal of money on the

pects and oppor tunities. When select-

market, but there is a lack of suitable f i-

ing sovereign issuers, we analyse the

nancing instruments to direct this capital

government’s position on education,

into the desired channels. The topic of so-

the impor tance assigned to education,

cial bonds already came up…

SUSTAINABLE INVESTMENT | April 2021

„

Thomas Motsch: As a fund manager, I

in Austria, we are worried about over-

different universities are working to

must make decisions every day about

aging, that there are not enough young

move in this direction on a very frag-

which topics, companies, and govern-

people in the population. At the same

mented basis, but much more needs to

ments to invest in. How can I invest

time, we waste these human resources

be done.

the capital provided by investors sus-

by investing in the wrong measures in

tainably while generating a return. With

education. More than one f ifth of our

Gloria Boateng: After an election, have

regard to education, we evaluate listed

students do not have adequate tex t

you ever heard or read about fights

companies but also development banks

comprehension. How are these peo-

over who will get the education ministry

and sovereigns. But what I would really

ple supposed to f ind a job in a knowl-

or agency when the cabinet posts are

like to see as an investor is more social

edge-based society? This will bring

being assigned? I haven’t. Education is

bond issues. In other words bonds that

greater problems for us down the road.

given the shor t shrift as an inconvenient

finance concrete social projects, such

The most impor tant investments in the

necessity in social policy in Germany

as education initiatives. There is cer-

future, including in Austria, are not only

and many other countries around the

tainly a good deal of demand for such

in advanced research and cutting-edge

world. That is a disaster. And that is why

bonds. We and others would invest in

technology, but also in the broad edu-

we are hardly making progress here.

these bonds and generate a targeted

cation of the entire population. Because

We manage, but we do not actively

positive impact.

other wise, we will have what some call

shape, and we do not even come close

the education proletariat. And this will

to being innovative and future oriented.

come back to bite our society in every

Because of this, we find ourselves woe-

sense.

fully unprepared when crisis strikes, like

Education policy is the social policy of the 21st century.

While we are making wishes, what is at the top of your list?

Wolfgang Lutz: Education policy is the social policy of the 21st century. Here

now during the coronavirus pandemic. Patrizia Jankovic: I can only agree: Ed-

So my wish is that we wake up! Rec-

ucation is the key to everything. If the

ognise that education must come first

United Nations reaches its goal, every-

because all other areas depend upon it.

one will have equal access to education

Recognise that an entire society must

by 2030. This education goal for sus-

have the best possible education and

tainable development has been inte-

not just a few, because a society is de-

grated into the curricula in Austria, but

pendent upon the potential of all of its

this is far from being enough. Austria

members. I would love to see heated

needs an effective overall implementa-

debates among politicians all vying for

tion strategy. New primary schools and

the ministry of education.

Editing: Pia Oberhauser

ROUND-TABLE DISCUSSION

SUSTAINABLE DEVELOPMENT GOAL 1 (SDG 1): Ending poverty in all forms and everywhere

SDG 1

Nachhaltig SUSTAINABLE Investieren | Dezember INVESTMENT 2019| April | Ausg. 2021 26

Poverty is more than just a lack of the income and resources

The COVID-19 pandemic is pushing many people back into ex-

needed to ensure a sustainable existence. It includes hunger and

treme poverty, wiping out years of progress. While the pande-

malnutrition, limited access to education and other basic neces-

mic has made the need to bolster social protection systems and

sities, social discrimination and exclusion, and a lack of participa-

emergency preparedness and treatment very clear, these measu-

tion in decision-making processes.

res will not be enough to protect the poor and vulnerable who need them the most.

Around 9 per cent of the employed persons and their families around the world lived on less than USD 1.90 per person and

Economic growth must be integrative to create sustainable jobs

day in 2017. Most people who live below the poverty line are

and promote equality. Social protection systems must be set

located in two regions: South Asia and Sub-Saharan Africa. After

up to ease suffering in the vulnerable countries and to provide

declining by 15.7 per cent in 2010, the elimination of extreme

support to counter major economic risks. These systems will

poverty has slowed further. According to recent estimates, the

contribute to improving the response of affected populations to

global level will be between 8.4 and 8.8 per cent in 2020, about

unexpected economic losses in the event of disasters and will

the same level as in 2017. It is now expected that the goal of

ultimately help to eliminate extreme poverty in the least-de-

eliminating poverty around the world by 2030 will not be met.

veloped areas.

THE UN HAS SET THE FOLLOWING GOALS FOR ENDING POVERTY BY 2030, WHICH HAVE ALSO BEEN INCORPORATED INTO THE AUSTRIAN FEDERAL GOVERNMENT’S 2030 AGENDA FOR SUSTAINABLE DEVELOPMENT (SLIGHTLY ABRIDGED):

ü Eradicate extreme poverty for all people everywhere, currently measured as people living on less than USD 1.25 a day.

ü Reduce at least by half the proportion of men,

women, and children of all ages living in poverty in all its dimensions according to national definitions.

ü Implement nationally appropriate social protection

systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable.

ü Ensure that all men and women, in particular the

poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property, inheritance, natural resources, a ppropriate new technology, and financial services, including microfinance.

* No time frame has been defined for these objectives. References: usdgs.un.org/goals/goal1 bundeskanzleramt.gv.at/themen/nachhaltige-entwicklung-agenda-2030

ü Build the resilience of the poor and those in

vulnerable situations and reduce their exposure and vulnerability to climate-related extreme events and other economic, social, and environmental shocks and disasters.

ü Ensure significant mobilization of resources from a variety of sources, including through enhanced development cooperation, in order to provide adequate and predictable means for developing countries, in particular least developed countries, to implement programmes and policies to end poverty in all its dimensions.*

ü Create sound policy frameworks at the national,

regional and international levels, based on pro-poor and gender-sensitive development strategies, to support accelerated investment in poverty eradication actions.*

SDG 1

Andreas Perauer Member of the Sustainability Team at Raiffeisen KAG

CORPORATE ON THE TOPIC OF Population ageing is creating major chal-

1 Philips, a Dutch provider of health

lenges for the public and private sec-

care technology and household appli-

tors. Solutions must especially be found

ances, sees the growing and ageing po-

for providing medical treatment and

pulation, the increasing prevalence of

care to older persons. This means that

chronic illnesses, and growing spending

the health care sector is seeing some of

in developing markets as key influences

the greatest impacts from demographic

on the company. The goal is to have a

change, but that it is also profiting sig-

positive impact on the health and well-

nificantly.

being of 2 billion people by 2025, 300 million of them in underserved communities in places like Africa. The Ameri-

The shareholder engagement activities of Raiffeisen Capital Management’s SRI team with regard to the topic of demographic change include discussions with some of the biggest listed companies in the medical technology industry. The following questions were asked in this process: 1 How does demographic change impact your company? To what degree are you profiting from this, and what positive impacts can you generate? 2 Do you see significant geographical differences that you must account for? 3 Demographic change has an influence on the required employee qualifications. How are you addressing this risk for current and future staff?

can Stryker group, one of the world’s largest manufacturers of or thopaedic implants such as ankle joints, also sees demographic change as a material input factor for its products and services. The company’s customer-oriented research and development approach, decentralised operating processes, and various specialist teams are all focused on the creation of targeted clinical solutions that meet the individual needs of the patients and health care personnel. This also includes a focus on the demographic changes among patients. The British company Smith & Nephew, another leader in or thopaedics, sees a strong oppor tunity in the positive expectations that people place in the health care industry. People want to lead acti-

RESEARCH

The responses to these questions can

ve, high quality lives regardless of their

be summarised into the following state-

age. Smith & Nephew strives to facili-

ments and results:

tate this and redefine what is possible

SUSTAINABLE INVESTMENT | April 2021

VOICES DEMOGRAPHIC CHA GE with newly engineered technologies.

that the products can be used safely and

capital, and inclusion and diversity in its

Coloplast, a specialist in ostomy and

effectively. Smith & Nephew especially

staff. Solid talent is to be recruited and

continence products and services, al-

contributes to improving the efficiency

retained in the company and the capa-

ready helps millions of people but is se-

and effectiveness of health care systems

bilities of the existing employees are

eing a steady increase in demand. From

in developed markets so that operations

to be improved, thus ensuring that the

a sustainability perspective, the Danish

can be conducted in a streamlined and

company can adapt to constantly chan-

company sees this as a significant chal-

integrated environment. In developing

ging circumstances. In terms of diversi-

lenge because serving more people also

markets, the group offers its solutions

ty, Coloplast focuses on three material

means producing more products and

at adapted, competitive prices and also

characteristics: gender, origin, and ge-

thus potentially increasing its adverse

conducts an active product donation

neration. Especially the latter criterion

environmental impact. Coloplast is ad-

programme. This is intended to provide

contributes to a diverse team comprising

dressing this challenge head-on and is

people with access to health care tech-

all age groups. Zimmer Biomet follows

pursuing strict sustainability goals, in

nology that would otherwise be unavai-

a similar approach. While existing em-

par t to contribute to limiting the glo-

lable. It is also a challenge for Coloplast

ployees are given learning and develop-

bal temperature increase to 1.5 degrees

to adapt to the local differences in the

ment oppor tunities at and outside of

and in this way to suppor t the UN Sus-

nearly 100 countries where it operates.

the workplace, the company recently

tainable Development Goals and the

This makes it all the more impor tant to

introduced a guideline for vir tual work-

goals of the Paris Agreement on climate

apply global principles and guidelines

places that is intended to allow it to tap

change.

that provide a solid framework for bu-

new, previously unused talent pools.

siness regardless of the par ticulars of a

This will ensure that the company can

given country.

move forward into a secure future. As

2 The health care system and the needs of patients can vary considerably from

a multinational company, Philips recruits

region to region, both in terms of the

3 Demographic change is a source of

talent from around the world and cur-

provision of care and the applicable re-

oppor tunities and challenges for com-

rently has over 81,000 employees from

gulations. This requires companies to

panies and must be managed appropria-

120 countries. To increase awareness of

continuously adapt their approach to

tely. People are living and working longer

the various oppor tunities at Philips, the

remain competitive. Zimmer Biomet,

while employee fluctuation is higher than

company integrates what it calls experi-

another major provider of or thopaedic

in the past, especially among younger ge-

ence maps that describe the experience

implants that is based in the USA, offers

nerations. Coloplast’s strategy for over-

that employees develop in strategic roles

the same products at the same quali-

coming these challenges targets three

or that they can build in order to prepare

ty level in all regions, but also ensures

key aspects: a healthy balance between

for such roles. This opens up cross-fun-

that the necessary training is offered to

new and existing employees, ensuring

ctional, traditional, and unconventional

surgeons in less-developed countries so

the development of the existing human

career oppor tunities.

RESEARCH

SONOVA HOLDING AG

Sonova is a leading provider of innovative hearing solutions. The company offers a wide range of products including hearing aids, cochlear implants, wireless communication solutions, digital tools, and professional audiological care. Sonova serves the market in over 100 countries with its core brands Phonak, Unitron, Hansaton, Advanced Bionics, and AudioNova and has more than 14,000 employees. The company is based in Stäfa, Switzerland.

ACCESS TO TECHNOLOGICALLY ADVANCED HEARING SOLUTIONS

The importance of good hearing and the consequences of hearing loss are largely underestimated despite the fact that the World Health Organisation (WHO) estimates that around 20 per cent of the world population suffers from hearing problems or hearing loss. Sonova’s goal is to provide people around the world with access to technologically advanced hearing solutions and services. It strives to offer as wide a range of services and prices as possible to meet the individual needs of its customers and the situations in different markets around the world. It attaches special importance to covering

RESEARCH

SUSTAINABLE INVESTMENT | April 2021

COMPANY SUSTAINABILITY SPO TLIGHT RESPONSIBLE BUSINESS PRACTICES

underserved markets. Presence here is to

changed markets underscore the impor-

be increased through a wide range of ser-

tance of a proactive personnel strategy

vice and price levels and the use of digital

for Sonova. The company believes that

technologies, and also by improving re-

developing talent to ensure internal man-

sessing the sustainability of companies.

mote access and expanding the global dis-

agement succession is a key to sustain-

A broad focus is placed on this espe-

tribution network. The efforts to improve

able success. Filling key positions with

cially in the health care sector. Sonova

access to hearing care also extend to in-

existing employees while also promoting

sees maintaining its good reputation

vestments in partnerships and non-profit

the loyalty and providing for the advance-

for ethical behavior and integrity as a

organisations such as the Hear the World

ment of qualified employees is intended

top priority given that this is a core as-

Foundation established by Sonova in

to help retain the expertise and intellec-

pect of the company’s goal of ensuring

2006. The foundation is dedicated to en-

tual property of Sonova within the com-

sustainable grow th and value creation.

suring equal opportunities and increased

pany and to help the company maintain

Three fundamental values ref lect the

quality of life around the world for people

and expand its competitive advantages.

corporate culture and unite the com-

Ethical behaviour is a key factor in as-

pany across all brands and regions: in-

suffering from hearing loss. It especially promotes projects to help children suf-

Sonova has subsidiaries in over 30 coun-

novation, engagement, and responsi-

fering from hearing loss to allow them to

tries and has more than 14,000 employ-

bility. The basis for this is compliance

develop in step with their peers. Some

ees with widely varied experience and

with the laws of ever y countr y in which

34 million children around the world are

backgrounds. The company strives to

Sonova is active and with the internal

affected by moderate to severe hearing

create an environment in which every-

regulations and the aforementioned

loss. Around 80 per cent of these chil-

one can make a contribution and realise

code of conduct. Thus, an approach

dren live in countries with low to medium

their full potential regardless of their

is employed where the internal rules

income levels, and often have no access

gender, language, age, origin, religion,

and principles are oriented towards

to hearing health care. The foundation

sexual orientation, or state of health.

internationally recognised standards

is tackling these challenges and provides

Diversity is seen as a key success fac-

of the United Nations (UN), Interna-

funding and hearing aids along with the

tor because it promotes innovation and

tional Labour Organization (ILO), and

time and expertise of its employees.

helps the company to understand its

Organisation for Economic Co-oper-

various customer groups around the

ation and Development (OECD). The

world. Its key impor tance is also reflect-

group compliance programme is to

EMPLOYEES AS THE KEY TO SUCCESS

ed in an internal code of conduct that is

be improved, human rights respected,

Global trends such as demographic

binding for all employees of the Sonova

responsibility promoted in the supply

change, a limited supply of skilled work-

group, its subsidiaries, and all contrac-

chain, and adherence to tax regulations

ers, and the need to adapt rapidly to

tors and suppliers.

ensured.

RESEARCH

UPDATE: Raiffeisen Capital Management (Raiffeisen Kapitalanlage GmbH) has steadily reduced its carbon footprint, in other words its direct and indirect greenhouse gas emissions, in recent years. This is part of the strategy of avoiding, reducing, and ultimately compensating as outlined in the previous issue. We would like to provide insights into the concrete steps here.

STRIVING FOR CARBON NEUTRALITY The

operational

ecology

policy

R aiffeisen Kapitalanlage-Gesellschaft is aligned with the group strategy of Raiffeisenbank International (RBI), which publishes a comprehensive sustainability repor t every year.

You can find the S ustainability Report of Raiffeisen Bank International at www.rcm.at/sri-publications. This policy primarily covers the office infrastructure and energy and resource management. Raiffeisen Capital Management also takes additional independent initiatives. In terms of business travel, the (relatively small) company fleet has been improved over the years, and air trav-

INSIDE

BECOMING A CO2- NEUTRAL INVESTMENT FIRM el was evaluated more critically and re-

work had to be completed remotely

placed with rail travel where possible. Ad-

from home. This resulted in consider-

ditional Scope 3 components were also

able greenhouse gas savings – not only

analysed and calculated, such as employee

at the offices including employee com-

travel to the offices – which accounts for

muting, but also due to the elimination

a considerable quantity of carbon. New

of business trips and the intensive use of

issues regularly arise in environmental

telecommunication. Complete data for

management, which sometimes requires

the year are not yet available, but initial

that we correct the figures. An honest

estimates point to savings of around 500

environmental policy consists of constant

tonnes (more than 40%). A milestone of

critical assessment and learning.

sustainable operational ecology or just a

Klaus Glaser Global Portfolio Advisor and expert for corporate social responsibility at Raiffeisen KAG

one-off effect? To reach our goal of carbon neutrality, 1,186 tonnes of carbon equivalents were

Even if the exceptional conditions that

compensated for in 2019 through the

R aiffeisen Capital Management handled

BOKU climate project titled Forest Pro-

very well in 2020 will not continue at the

tection in the Colombian Rain Forest. A

same intensity, a key initial step has been

total of 1,237 tonnes were compensated

taken to a new level of telecommunica-

for in 2018, including a small corrective ad-

tion and digitalisation that is likely to re-

dition following new calculations. This rep-

sult in lasting reductions of greenhouse

resents a reduction of 11 per cent in 2019.

gas emissions. Modern office optimisa-

Thus, Raiffeisen Capital Management can

tion steps will be taken to this end. The

claim carbon-neutral office operations in-

criticism that energy consumption (and

cluding business travel since 2018.

thus carbon emissions) are simply being

2020 – MILESTONE OR JUST A ONE-OFF EFFECT?

shifted to workplaces in the home can be refuted with the fact that this effect is minor in operational ecology terms,

The year 2020 was shaped to a large de-

amounting to no more than 5 to 10

gree by the COVID-19 pandemic around

tonnes that are unavoidable and that will

the world. Starting in March, nearly all

be compensated for.

INSIDE

WOMEN AND MONEY

LET’S TALK ABOUT MON cY Do you know how your best friends invest their reserves? Or how much the colleague who sits next to you every day earns? The answer to these questions is usually “no”. Talking about money seems to be one of the last taboos in our otherwise very open society. But women especially should talk with each other about money, because this topic is relevant for us all and determines our quality of living to a large degree.

1 The basis for calculating pover ty risk is the equivalised net household income, in other words the available household income divided by the total consumer equivalents in the household. Persons whose equivalised net household income is below the risk-of-pover ty threshold of 60% of the median are considered to be at risk of pover ty. In 2019, the median of the equivalised net household income was EUR 25,729per year. Thus, the r isk-of-pover ty threshold was EUR 15,437 for a single-person household in 2019, or EUR 1,286 per month (12 times).

2 The gender pay gap refers to the difference between the average gross hourly earnings of women and men in private-sector companies with ten or more employees. According to Eurostat, this difference was 20% in Austria in 2018, 4 percentage points higher than the EU average. 3 According to Statistics Austria, the percentage of women graduating from university was 19% in 2017, 3 percentage points higher than this statistic for men.

INSIDE

We all need money for our daily lives

There is no denying that the tradition-

and to fulf il our wishes and par tici-

al division of work in relationships as

pate in social life. Money also means

is still common in German-speaking

i ndependence:

get

countries is a direct route to a financial

through a time without income due

the

ability

dead end for many women, even if this

to a job change or illness, to enjoy a

division is chosen voluntarily. The gen-

wor thy retirement, and to not be de-

der pay gap2 is a fact – despite the sub-

pendent on the f inancial suppor t of a

stantial improvem ents in the education

par tner.

of women3 . And the glass ceiling is still alive and well. So let’s talk about money

According to 2019 f igures from Sta-

and star t ensuring a suitable basis for

tistics Austria, over 13% of the pop-

our lives through a fair income.

ulation is at risk of falling below the p over ty line. 1 A par ticularly v ulnerable

Because focus cannot shift to contin-

group is pensioners living alone, 26%

uously setting aside reserves until the

of whom are at risk. In addition to pe-

basic needs are met. Many investment

riods spent not earning an income and

products are available with small regu-

the high share of women who work

lar amounts. And here again, let’s talk

par t-time (47%!), this is also caused by

about money! Let’s talk about how

structural disadvantages such as lower

we can grow our modest or larger re-

pay levels in “typical women’s occupa-

serves. Let’s talk about oppor tunities

tions”.

and risks.

Sabine Macha Head of Product Management at Raiffeisen KAG and member of Fondsfrauen

STRENGHTEN AND SUPPORT

en’s networks. The goal is to demystify

The members of Fondsfrauen in Austria

most impor tant fundamentals. Because

want to make a contribution to im-

choosing the right investment is by no

proving women’s knowledge of financial

means rocket science. But it does re-

products and capital and have created a

quire solid fundamental knowledge and

series of presentations for allied wom-

trust in your own competence.

the topic of investment and impar t the

Fondsfrauen is the professional network for women in the fund and financial industry. Raiffeisen Capital Management is a main sponsor of Fondsfrauen in Austria.

FONDSFRAUENAWARD 2020: “COMPANY OF THE YEAR”

GENDER DIVERSITY AWARD 2020

Because of concrete and very com-

Award in the category of best gender

pelling measures for the promotion

representation (50 to 100 fund man-

of women’s careers in the compa-

agers). Through this distinction, which

ny as well as for practiced diversity,

was awarded for the first time, City-

Raiffeisen Capital Management was

wire wishes to put the spotlight on as-

distinguished with the Fondsfrauen

set managers that assume a pioneering

Company of the Year Award in 2020.

role in promoting diversity. Raiffeisen

The firm came out on top as “com-

Capital M anagement was the only as-

pany of the year” among the roughly

set manager in Austria to make it onto

100 entrants. Fondsfrauen presented

Citywire’s short list – in two catego-

its awards for the second time now.

ries, in fact.

Raiffeisen Capital Management stands for Raiffeisen KAG

Citywire selected Raiffeisen Capital Management for its Gender Diversity

INSIDE

LET’S INVEST TOGETHER IN A SUSTAINABLE FUTURE. PRESERVING VALUE. CREATING VALUE.

Raiffeisen Capital Management stands for Raiffeisen Kapitalanlage GmbH. Created by Raiffeisen Kapitalanlage GmbH, Mooslackengasse 12, 1190 Vienna, Austria, as of April 2021.