By Dr Sally Uren, Chief Executive of Forum for the Future, an independent non-profit that works globally with business, government and civil society to solve complex sustainability challenges
Accenture estimates that $30 trillion could be passed down from one generation to the next in the coming decades, while the Boston College Centre on Wealth and Philanthropy estimates the windfall at $59 trillion.
That’s quite a lot of money. In fact, it could easily fund the UN’s Sustainable Development Goals, the bill for which which is estimated at $3 trillion a year.
I imagine that most of the conversations taking place between the Next Gen inheritors and their financial advisers are centred around the financial instruments needed to secure the future sustainability of their wealth. I wonder how many of these conversations include ways in which this vast wealth could help drive the delivery of a form of sustainability? One which delivers a thriving, prosperous world that works for everyone. In other words – the Sustainable Development Goals – a universally adopted set of goals that could deliver such a sustainable future.
Just tuning into the news briefly tells us that there is urgent need for such goals. The current systems which we rely upon, from the food system to our economic system, are broken. In the last few days the United Nations has warned that millions are set to starve in Africa and the Middle East, caused by a double whammy of drought and conflict. There is no doubt that millions of dollars of humanitarian aid will help alleviate some of the worst impacts of this lethal combination. But very little of that money will actually address the causes of this latest humanitarian crisis: climate change and inequality.
This is where the next generation of high net worth individuals could make a big difference. The private wealth that is currently changing hands has two main features that permit its recipients to achieve uniquely significant results. First, it is free from the shackles of our casino economy which drive publicly traded businesses to focus on short-term profit maximisation, which in turn make it difficult to deliver longer term strategies that work for broader society and business. Second, it can be shaped by the passion of individuals (in this case the families), whose values can be stamped on the legacy created by the wealth.
This all means that Next Gens could inherit more than money; they could also inherit the ability to create a sustainable future, with these trillions of dollars shaping a new economic system built on sustainable development that benefits everyone.
The reasons why we have struggled to act quickly enough, and decisively enough, on grand challenges such as climate change is that it’s taken a long time to make the economics work. With the markets now rewarding renewable technology, and investors understanding value at risk from climate change, we are nearly there. Even with decisive action now, however, we are possibly too late to avoid some consequences, which are beginning to make themselves felt.
At the same time, we are in the midst of a drastic transition in politics and power dynamics. We are living through a period of intense disruption, but also of incredible innovation. Technologies such as blockchain are revolutionising how supply chains work, whilst a novel sharing economy is emerging, where goods and services are transacted on peer to peer platforms, often with no actual financial transaction.
Against this backdrop of innovation and transition in governance, there is an unparalleled opportunity to use private wealth as a powerful lever to deliver the Sustainable Development Goals.
Instead of funnelling newly inherited private wealth into standard financial instruments, it could be used to invest in a new breed of impact investment that strives to deliver both economic and social returns. It could be used to scale new technologies that rely on the sun and the sea for their power, not carbon emitting fossil fuels. Critically, it could be used to create the structures we need for a sustainable world through new forms of charitable foundations, ones that don’t spend millions on palliating the symptoms of our unsustainable world, but rather address the causes. Finally, it could be used to develop new market mechanisms that reflect the true costs of our goods and services, and that are designed to deliver positive environmental and social impacts amongst the economic ones.
“I would rather have it said, ‘He lived usefully’ than ‘He died rich’ ” Benjamin Franklin.
As a vehicle for change, private wealth is under the radar. Only in January this year Oxfam made headlines with the fact that eight men own the same wealth as the world’s poorest 3.6 billion. What better time then to change the narrative? To one in which Next Gens can inherit not just money, but the means and desire to create something money can’t buy: prosperity and happiness for the many, not just for the few.
Forum for the Future was voted one of the world’s leading sustainable development NGOs in the 2016 Globescan/SustainAbility Sustainability Leaders Survey. The organisation works in partnership with companies such as Unilever, PepsiCo and Telefonica O2 to raise awareness of sustainability. Like Horizons, they believe it is critical to reinvent the key systems we rely upon to shape a brighter future and innovate for long-term success.