Peter Michaelis

The world in 2041: accessing innovations for the next 20 years

Peter Michaelis

Over the 20 years since the Sustainable Future funds launched, we have experienced huge transformation across so many facets of life, and Covid-19 has shown this change will likely accelerate as we move past the pandemic and address many of the other challenges to a cleaner, healthier and safer future.

There have been welcome improvements in poverty reduction and health outcomes in the past two decades, although far more is needed on both and areas such as biodiversity, carbon emissions and inequality have deteriorated. This means we need to continue to invest in companies driving improvements. With this in mind, the Liontrust Sustainable Investment team have cast their minds forward another 20 years to forecast what changes they expect across a range of areas, from the cities we inhabit, through our healthcare systems, to how we communicate, pay for things, travel and heat our homes and offices.

Looking at our Building better cities theme first, increasing urbanisation looks set to continue, with more than two-thirds of the global population likely to be city dwellers by the early 2040s. Current cities emit 50% to 60% of greenhouse gases and will therefore have to invest in retrofitting to mitigate environmental impacts. Cities at their best enable a high quality of life with low impacts but this requires infrastructure investment, community planning, water management and efficient mass transport, with thermally efficient buildings essential.

Healthcare is a huge part of a more sustainable future, as people need to be around to enjoy a better world. Looking beyond the pandemic, our view is that we will see significant advances across areas such as gene editing and DNA sequencing, and these are revolutionising how we think about treatment. The traditional model has a large element of trial and error, with people seeking help when they feel ill and hoping whatever drug or procedure prescribed is effective but this intervention often proves too late. We are moving towards a more personalised system where we can understand how someone’s genetic make-up leaves them vulnerable to diseases and potentially correct this, paving the way for early diagnostics and pre-emptive treatment.

Carbon emissions remain the key ‘sustainable’ goal over the coming years, with a range of net zero targets in place. By 2041, our hope is that the electricity we consume will primarily come from renewable sources and be delivered through a hugely upgraded and more intelligent grid that includes demand-side management. Many things that currently consume fossil fuels will have switched, such as electric vehicles and heat pumps to heat and cool buildings.

Electric cars should be 2041’s dominant form of passenger vehicles, and the combustion engine is likely to be an antique as quiet, clean cities become the norm. Cars will be charged from solar panels connected to houses and battery technology so developed that refuelling is a thing of the past. We anticipate autonomous vehicles as the norm for deliveries of food and parcels; while driving your own car is unlikely to be fully autonomous, safety systems should take control of braking and moving lanes/turning.

In terms of other lifestyle changes, the digital economy is increasingly central to a properly functioning global economy and this will continue. Digital technologies enhance the productivity and reliability of a range of sectors and improve quality of life through positive impacts in areas including health and education. We predict ongoing shifts in the future of networking, systems, applications and services. While the internet will continue to play a vital role in how we communicate, artificial intelligence could personalise our experiences within platforms and quantum technologies and computing make networks faster and more available.

As for finances, despite the current furor around Bitcoin, we would expect most governments to have their own cryptocurrency by 2041 and these will be assimilated into everyday transactions. Commoditisation of mainstream banks will continue with technology-first businesses eating into their profits, and physical cash will be a thing of the past. Everyone, regardless of socioeconomic status or geography, should have access to affordable financial services, with a cashless payment and savings system fostering greater financial inclusion.

Finally, events of the last year have highlighted the importance of physical and mental health and we expect these to become integral parts of everyday life, supported by employers and governments. We hope to see gyms and exercise studios on most high streets, part of our offices and homes, and 50% of the UK population either a member of one of these or an online fitness community.

As for diets, a stark fact is that if cattle were a country (with this ‘Republic of Cattle’ a combination of the beef and dairy industries), it would be the third largest global CO2 emitter. We therefore believe alternative and plant-based proteins will account for over half of protein sold, taking market share due to the taste, texture, health and environmental benefits.

Looking to the next 20 years, we see a pressing need to be just as challenging and radical in our thinking as we were in 2001 and expect this to involve investing in many of the innovations highlighted in this article to make the world of 2041 cleaner, healthier and safer, as well as fairer.

For a comprehensive list of common financial words and terms, see our glossary here.


Key Risks

Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from them can fall as well as rise and is not guaranteed, therefore, you may not get back the amount originally invested and potentially risk total loss of capital. The majority of the Liontrust Sustainable Future Funds have holdings which are denominated in currencies other than Sterling and may be affected by movements in exchange rates. Some of these funds invest in emerging markets which may involve a higher element of risk due to less well-regulated markets and political and economic instability. Consequently the value of an investment may rise or fall in line with the exchange rates. Liontrust UK Ethical Fund, Liontrust SF European Growth Fund and Liontrust SF UK Growth Fund invest geographically in a narrow range and has a concentrated portfolio of securities, there is an increased risk of volatility which may result in frequent rises and falls in the Fund’s share price. Liontrust SF Managed Fund, Liontrust SF Corporate Bond Fund, Liontrust SF Cautious Managed Fund, Liontrust SF Defensive Managed Fund and Liontrust Monthly Income Bond Fund invest in bonds and other fixed-interest securities - fluctuations in interest rates are likely to affect the value of these financial instruments. If long-term interest rates rise, the value of your shares is likely to fall. If you need to access your money quickly it is possible that, in difficult market conditions, it could be hard to sell holdings in corporate bond funds. This is because there is low trading activity in the markets for many of the bonds held by these funds. Mentioned above five funds can also invest in derivatives. Derivatives are used to protect against currencies, credit and interests rates move or for investment purposes. There is a risk that losses could be made on derivative positions or that the counterparties could fail to complete on transactions.

Disclaimer

The information and opinions provided should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Always research your own investments and (if you are not a professional or a financial adviser) consult suitability with a regulated financial adviser before investing.

Monday, June 21, 2021, 10:42 AM