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How to sustain growth

| Posted by: Paul Donovan | Tags: Paul Donovan Weekly

  • Good decisions start with economics. This basic rule applies to sustainable investment, as much as to anything else.
  • The economics of sustainable investment is simple. More and more people are being born in the world. More and more people will want the same standard of living we have today. That means more demand. But today's living standard uses 50% more resources than is sustainable. Without change, our living standards will have to halve over the next 20 years to make growth sustainable.
  • Halving living standards within a generation makes a strong case for sustainable investing. In fact, this is a strong case for "sustainable investing" being the same as "investing" in the future. In the future, investments that are not sustainable will not be investments.
  • Today's investors are facing the realities of sustainable investment. This reality is already shaping patterns of growth and trade. China's threat to tax consumption of US soybeans, for example, does not mean that China will stop importing soybeans. China does not have sufficient water to grow its own soybeans. China will have to consume someone else's soybeans, if they do not buy from the US. Sustainability already hits growth, trade, and thus investment.