Six Key Megatrends That Will Shape How We Live

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The world is changing, and so are the opportunities and challenges that everyone must now face. Increasing life expectancy, mass-scale technological advances and shifting demographics have profound implications for how we will live.

How do we build a sustainable world for generations to come? How can we ensure that our burgeoning cities remain fit for purpose? How do we build stronger economies that can provide equal opportunities for all? How we address such fundamental questions today will come to define the societies we live in tomorrow.

In this series of video interviews, Simon Smiles, Chief Investment Officer for Ultra High Net Worth at UBS Wealth Management, identifies six megatrends in sustainable development driven by broad underlying economic, social, technological and environmental shifts.

1) Gender inequality

Significant progress has been made when it comes to gender parity in education and health, but women continue to lag behind men in economic equality. Globally, only about half of working-age women are employed, and they earn about three-quarters as much as men with the same level of education, even in the same occupation. The pay gap is further exacerbated by women being overrepresented in lower-paying and temporary jobs, with limited opportunities for advancement.

In September 2015, 193 U.N. member states unanimously adopted a bold new agenda to end poverty by 2030, with women and girls at the center of 17 sustainable development goals, including Goal 5: “Achieve gender equality and empower all women and girls.”

The social benefits of achieving gender equality are matched by financial benefits, too. If women were to participate in the economy in equal measure as men, they could add as much as $28 trillion, or 26 percent, to the world’s annual global GDP in 2025, according to projections by the McKinsey Global Institute.

2) Energy sustainability

Change is coming to the energy landscape, driven by the increasing use of sustainable electricity resources, primarily solar, wind, hydro and biomass. Meanwhile, ongoing developments in the automotive sector—away from the combustion engine and reliance on fossil fuels—could significantly reduce the world’s carbon emissions.

One change in the energy sector that could bring its own challenges is the prospect of the U.S. achieving energy independence. This elusive goal has excited American leaders for the past four decades, with the promise of significant benefits, including lowering the cost of energy and reducing the threat of supply disruptions.

However, a shift towards U.S. energy independence is set to bring its own challenges, including a reduction in the amount of dollars circulating in the global economy and possible cut backs on its defense budget, which UBS's 2015 World Economic Forum white paper on The New Global Context equated to 19 percent of the US federal budget and 3.8 percent of GDP.

Read the UBS report on energy efficiency

3) The rise of the machines

The global economy is on the cusp of disruption that will be comparable in magnitude to the advent of the first Industrial Revolution, the development of assembly line production or the invention of the microchip, according to the UBS white paper for this year’s World Economic Forum Annual Meeting in Davos, Switzerland.

The Fourth Industrial Revolution is characterized by two key traits: increased automation and increased connectivity. Technological advances are introducing ever-greater levels of automation. Meanwhile, the near-universal ownership of smart devices in many parts of the world is leading to a degree of interconnectedness that was previously unimaginable.

Read the UBS whitepaper on the Fourth Industrial Revolution

Find out more about Automation and Robotics in the UBS CIO Longer Term Investments themes

4) How does technology lead to income inequality?

Many of the drivers of transformation affecting global industries are expected to have a significant impact on jobs. New roles and requirements are being created on a regular basis by governments and companies alike.

In many industries, the most in-demand occupations or specialties did not exist 10 or even five years ago, and the pace of change is set to accelerate. In such a rapidly evolving employment landscape, the ability to anticipate and prepare for future skills requirements will be increasingly critical for businesses, governments and individuals in order to fully seize the opportunities—and to mitigate undesirable outcomes.

The reskilling and upskilling of today’s workers will be critical. But it need not become a race between humans and machines, but rather an opportunity for work to truly enable people to recognize their full potential.

5) Urbanization

Growing populations also mean growing waste, and the management of our domestic waste must become a major priority. Efficiently managed recycling can dramatically decrease the volume of waste sent to landfills and incinerators. Rather than being disposed of, most waste materials can be turned into something more useful, and bring environmental and economic benefits.

Policy makers will have to introduce new measures and systems governance without wrecking structures developed over the years. Getting cities right is more than a local and national question—it’s one that will increasingly concern us all in the years ahead.

6) Impact investing and medical advances

There has been a dramatic increase in average life expectancy throughout the 20th century, and this trend has continued into the 21st century. The majority of babies born in 1900 did not live past the age of 50, whereas babies born today are expected to live well into their 90s.

Such previously unthinkable longevity is a sure sign of progress as lifestyles improve, but it is having a significant impact on societies around the world. One of the most notable areas currently being transformed is healthcare.

A shakeup of the world’s healthcare systems is being helped by funding from social-impact investors. One area that has received significant investment in the last year has been oncology, where early-stage research continues to uncover exciting new avenues of investigation.

Read the UBS report on Sustainable Investing, Doing well by doing good