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The Top Global Risks in 2019

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The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

The suits are pressed and the jets are gassed up, as global political and business leaders prepare to converge in Davos for the World Economic Forum.

To prep the wide variety of world leaders attending the summit, the organization has just published its most recent edition of the Global Risks Report. The highly anticipated annual presentation puts the world’s most pressing issues into focus, giving a sense of what is top-of-mind for global decision-makers.

Below are the top five risks highlighted in this year’s report.

Visualizing the Top Global Risks in 2019

The World’s Evolving Risk Landscape

The report looks at two specific ways of evaluating global risks:

  1. The likelihood of an event occurring
  2. The impact or severity of an event, should it occur

And over recent years, it’s clear that the composition of these top threats has evolved.

top global risks over time

In 2009, the world was still reeling from the global financial crisis, so economic concerns were naturally at the forefront of discussions.

Today, the most likely scenarios to play out in the near future involve extreme weather events and natural disasters. Also trending upward are cyber-security threats and concerns over the security of personal data.

Risk Perception

Each year, the Global Risks Perception Survey looks at which risks are viewed by global decision-makers as increasing in the coming year.

global risks survey 2019

Some clear themes emerge from the responses:

A Breakdown in Geopolitical Cooperation
From trade wars to the dissolution of weapons treaties, cooperation between countries is on the decline. Leaders are concerned that this divergent geopolitical climate may continue to inhibit collective progress on important global challenges.

Technological Instabilities
As the influence of technology creeps into more aspects of everyday life, cyber-attacks and lax cybersecurity protocols are becoming more of a concern. In one dramatic example information theft, multiple breaches of India’s government ID database reportedly left the information of over 1 billion registered citizens exposed. Technology is influencing society in other ways too, such as the pervasive issue of “fake news”.

Polarization of Government and Society
One of the major themes of this year’s forum will be addressing increasing polarization in many countries.

Where opposing political groups previously expressed frustration with each other, they now express fear and anger.

– Global Risks Report 2019

Gauging the National Sentiment

The report also looks at questions related to human happiness too.

One might ask, “Is the world becoming a better or worse place?” That, of course, is a complicated question, and one that is influenced by geography and socioeconomic standing.

tale of two countries

Survey data also shows that when people are asked to compare their lives to their parents’ generation, the answers vary greatly from country to country.

The prevailing opinion in China is that things are improving, whereas nearly 60% of French respondents had a pessimistic view of the realities facing their generation. While France has a uniquely gloomy outlook on the future, this uncertainty is reflected in the opinion of citizens in many other developed democracies as well.

In Davos, global leaders will be pondering a similar question: How do we move towards a brighter future for the next generation when the collective will for tackling global problems appears to be weakening?

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Investor Education

Fact Check: The Truth Behind Five ESG Myths

ESG investing continues to break fund inflow records. In this infographic, we unpack five common ESG myths.

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ESG Myths

Fact Check: The Truth Behind 5 ESG Myths

In 2021, investors continue to embrace environmental, social, and governance (ESG) investments at record levels.

In the first quarter of 2021, global ESG fund inflows outpaced the last four consecutive quarters, reaching $2 trillion. But while ESG gains rapid momentum, the CFA Institute shows that 33% of professional investors surveyed feel they have insufficient knowledge for considering ESG issues.

To help investors understand this growing trend, this infographic from MSCI helps provide a fact check on five common ESG myths.

1. “ESG Comes at the Expense of Investment Performance”

Fact Check: Not necessarily

Worldwide, ESG-focused companies have not only seen higher returns, but stronger earnings growth and dividends.

Returns by ESG RatingsEarnings Growth*Active Return**Dividends and Buybacks
Top tier2.89%1.31%0.28%
Middle tier1.35%0.12%-0.02%
Bottom tier-9.22%-1.25%-0.05%

Source: MSCI ESG Research LLC (Dec, 2020)
*Contribution of earnings growth and dividends/buybacks to active return
**Active return is the additional gain or loss compared to it respective benchmark

In fact, a separate study from the CFA Institute shows that 35% of investment professionals invest in ESG to improve their financial returns.

2. “Investors Talk About ESG But Don’t Invest In It”

Fact Check: False

Global ESG assets under management (AUM) in ETFs have grown from $6 billion in 2015 to $150 billion in 2020. In just five years, ESG AUM have accelerated 25 times.

Today, money managers are focusing on the following top five issues:

Top ESG IssuesAssets AffectedGrowth in Assets Affected (2018-2020)
Climate change / carbon emissions $4.18T39%
Anti-corruption$2.44T10%
Board issues$2.39T66%
Sustainable natural resources / agriculture$2.38T81%
Executive pay$2.22T122%

Source: US SIF Foundation (Nov, 2020)

Meanwhile, over 1,500 shareholder resolutions focused on ESG-related matters were filed between 2018-2020. Not only are investors turning to ESG assets, but they are placing higher demands on corporate responsibility.

3. “ESG Investment Strategies Eliminate Entire Sectors”

Fact Check: Not necessarily

First, not all ESG investment approaches are exclusionary.

For instance, in North America roughly 51% of ESG ETFs used an ESG integration approach as of Dec. 31, 2020. In an ESG integration approach, ESG risks and opportunities are analyzed with the goal to support long-term returns.

By comparison, values and screens approaches, which accounted for over 22% of ESG ETFs in North America may screen out specific business activities, such as alcohol or tobacco, or sectors such as oil & gas.

Percentage of ESG TypeIntegrationValues & ScreensThematicImpact
North America50.9%22.5%20.7%5.9%
Asia57.8%34.6%3.8%3.8%
Europe30.8%60.6%8.6%0.0%
Australia28.6%71.4%0.0%0.0%

Source: Refinitiv/Lipper and MSCI ESG Research LLC as of Dec 31, 2020 (MSCI Feb, 2021)

Second, companies are assessed on a sector-specific basis where ESG leaders and laggards are identified within each sector in comparison to peers. In other words, ESG doesn’t mean eliminating exposure to entire sectors. Instead, investors can choose from a range of companies based on their ESG ratings quality.

4. “ESG Investing Is Only For Millennials”

Fact Check: False

Although ESG is popular among millennials, ESG investing is being driven by the entire investor population. In 2019, one study finds that 85% of the general population expressed interest in ESG investing.

Interest in Sustainable InvestingGeneral PopulationMillennials
201985%95%
201571%84%

Source: US SIF Foundation (Nov, 2020)

Sustainable investing goes far beyond millennials—ESG disclosures are quickly becoming requirements for key industry participants, such as institutional investors and listed companies.

5. “ESG Investing is Here to Stay”

Fact Check: True

Climbing 28% in 2020 alone, over 3,000 signatories have committed to the UN Principles of Responsible Investment. As of the first quarter of 2021, 313 global organizations and 33 asset owners have been newly added.

Growth of UN PRINumber of Signatories*AUM Represented
20203,038$103.4T
20192,370$86.3T

Source: UN PRI
*As of Mar, 2020

Central to ESG’s growth is the availability of ESG investments. ESG investing has become more widely accessible—which wasn’t always the case. Over the last decade, the global number of ESG ETFs has grown from 46 to 497.

Why the Facts Matter

As ESG investments continue to play an even greater role in investor portfolios, it’s important to focus on data rather than prevailing ESG myths that are not backed by fact.

Given the recent momentum in investment returns and ESG adoption, data-driven evidence empowers investors to build more sustainable portfolios that better align with their investment objectives.

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Misc

Visualizing the Depth of the Great Lakes

The five Great Lakes account for 21% of the world’s total freshwater. This bathymetric visualization dives into just how deep they are.

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Visualized: The Depth of The Great Lakes

Click here to view the interactive version of the visualization on Tableau.

As the seasons change, it’s natural to want to enjoy the outdoors to the fullest. The Great Lakes, a distinct geographical region sandwiched between the U.S. and Canada, provides immense opportunity for millions of tourists to do just that every year.

But did you know that altogether the Great Lakes contain 21% of the world’s surface freshwater by volume—or 84% of the surface freshwater in North America?

This bathymetric visualization, created by Alex Varlamov, helps put the sheer size and depth of all five of the Great Lakes into perspective.

What is Bathymetry?

Bathymetry is the study of the underwater depth of ocean or lake floors, a geographical science that falls under the wider umbrella of hydrography.

In essence, it is the underwater equivalent of topography. Contour lines help to represent and study the physical features of bodies of water, from oceans to lakes.

Most bathymetric studies are conducted via sonar systems, transmitting pulses that ‘ping’ off the ocean and lake floor, uncovering what lies below.

The Depth of the Great Lakes, Compared

High on the list of the world’s largest lakes, the five Great Lakes altogether account for over 244,700 km² (94,250 mi²) in total surface area. That’s bigger than the entire United Kingdom.

Lake Superior emerges, well, superior in terms of total surface area, water volume, and both average and maximum depth.

 Surface areaWater volumeAverage depthMaximum depth
Lake Ontario19,000 km²
(7,340 mi²)
1,640 km³
(393 mi³)
86 m
(283 ft)
245 m
(804 ft)
Lake Erie25,700 km²
(9,910 mi²)
480 km³
(116 mi³)
19 m
(62 ft)
64 m
(210 ft)
Lake Michigan58,000 km²
(22,300 mi²)
4,900 km³
(1,180 mi³)
85 m
(279 ft)
282 m
(925 ft)
Lake Huron60,000 km²
(23,000 mi²)
3,500 km³
(850 mi³)
59 m
(195 ft)
228 m
(748 ft)
Lake Superior82,000 km²
(31,700 mi²)
12,000 km³
(2,900 mi³)
147 m
(483 ft)
406 m
(1,333 ft)

Lake Erie is by far the shallowest of the lakes, with an average depth of just 19 meters (62 ft). That means on average, Lake Superior is about eight times deeper.

With that in mind, one drawback of the visualization is that it doesn’t provide an accurate view of how deep these lakes are in relation to one another.

For that, check out this additional visualization also created by Alex Varlamov, which is scaled to the same 20 meter step—in this view, Lake Erie practically disappears.

More than Meets the Eye

The Great Lakes are not only notable for their form, but also their function—they’re a crucial waterway contributing to the economy of the area, supporting over 50 million jobs and contributing $6 trillion to gross domestic product (GDP).

Together, the five Great Lakes feed into the Atlantic Ocean—and when we expand the scope to compare these lakes to vast oceans, trenches, and drill holes, the depth of the Great Lakes barely scratches the surface.

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