Sustainability challenge and related SDGs:
Innovation has shaped much of today’s world. Looking back, we can identify several life-changing, world-altering #InnovationForGood coming from private companies. A market-based economy is considered to foster innovation. It certainly has its fair share in solving problems and thereby raising wealth and life quality in many parts of the world over the last 50 to 100 years.
Nevertheless, innovation does not automatically lead to a positive impact on society and/or nature. Commonly it had, and still often has, many unintended side effects. For example, the invention of the combustion engine not only brought a huge increase in mobility, worldwide logistics, and many positive side effects for society, but it is also one of the main causes of the climate crisis.
Fossil fuel exploitation not only brought us warm homes but also huge CO2 emissions and often a loss of nature. The invention of the internet brought us closer together and democratized knowledge all over the world, but also had many negative side effects e.g., increased spread of fake news and conspiracy theories or cyberbullying.
Nontheless, innovation must play a fundamental role in solving today’s major challenges. We need innovation to solve the climate crisis, reverse nature loss, spark inclusive economic development and fight major diseases, inequalities, and hunger. SDG 9 “Industry, Innovation and Infrastructure” targets such positive innovation for a better and more sustainable world.
Possible solutions and their contribution to achieving the SDGs
Innovation can do good and have a positive impact on society and the environment. But we need to carefully assess these innovations and the companies behind them. At radicant, we assess companies not simply in terms of their innovative power, but if they show the potential to deliver #InnovationForGood and hence are aligned to SDG 9 and its targets.
We
use environmental and social factors as a proxy for the innovation potential “for good”. By assessing the most relevant environmental and social operational metrics per industry, we identify which companies are leading their industries in indices such as having the lowest carbon intensity or the lowest water intensity. Thereby, we make sure to look beyond R&D spending, or patent numbers and include sustainability factors from the beginning. Additionally, we combine this innovation proxy factor with an SDG solution factor.
More concretely, companies that lead their industry in environmental and social intensities and are “impact solution providers” via their products and services will be awarded the raditag #InnovationForGood.
Primarily related SDG Targets: 9.1, 9.2, 9.4, 9.5
Investment Rationale and Growth Potential
Innovation is a highly relevant performance driver of companies. The investment rationale to invest in innovative companies is clear. We are convinced that investing in companies that are not only innovative but have the potential to deliver #InnovationForGood for society and/or nature adds to this investment case. The pressure to solve today’s global challenges is rising daily as the consequences of climate change and other global issues are increasingly felt. Companies that innovate and contribute to solving these challenges will have a comparative advantage and should perform better in the mid to long run.
