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From megatrends to the sixth green wave of growth according to Allianz GI

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Russian economist Nikolai Kondratieff thinks the world has witnessed five long waves of growth, from the invention of the steam engine to information technology. These supercycles have greatly affected all areas of the economy and our lives. Now, the trend towards greater sustainability is transforming our economies and marks the beginning of the sixth wave.

All the key criteria for a new wave are met: the usefulness of previous “basic innovations” is depleted and productivity is declining. Investors are desperately looking for returns and there is excess capital available to fund new key innovations and develop them further. Controversies over digitization and environmental policies are highlighting changes in society.

In this context, a key factor is emerging: climate change it is becoming the one that, according to Kondratieff, will facilitate the development of new basic innovations and unleash the transformation process. The Russian economist believes that innovation alone is not enough for fundamental change if it does not satisfy a certain need. Climate change is the latest wake-up call for us to manage the transition from parasitic to symbiotic growth. Growth and innovation are essential to stop global warming and fight hunger and poverty.

Sustainability is only possible if we rely on innovation, since self-control will not be enough. If roughly 1 billion people in Europe and North America emit less carbon dioxide because they give up consumption, the remaining 6.5 billion people in Africa, Asia and South America still could not live a more comfortable life. And the world’s population continues to grow. UN estimates suggest that by 2100 it will reach 11 billion people.

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The environment itself has become a scarce resource. According to calculations by the Global Footprint Network, at the moment, we are consuming 1.7 times the available biocapacity, and the trend continues to point to the upside.

The Paris Agreement has not had a major impact on carbon emissions and the Intergovernmental Panel on Climate Change predicts that global average temperatures will rise by 3–5 ° C by 2100. To prevent this from happening, the transition to greater sustainability will cost money. The United Nations estimates that the global investments required if the 17 SDGs are to be achieved by 2030 would be $ 5-7 trillion per year.

This total (a staggering amount of money) includes both public and private investment. Still, it doesn’t seem completely out of reach. We must remember that the 3,038 signatories of the initiative Principles of Responsible Investment (“PRI”) they manage a total of 103 billion dollars. These asset managers are committed to making their investment decisions based on sustainability criteria.

The preconditions for a new wave of “green growth” are fulfilled and according to Allianz GI, we must Invest to combat climate change and support sustainability.

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