Future-proofing: Smart solutions for a changing world

In a world where production and environmental conditions are constantly evolving, adapting to new realities is essential to safeguard progress and accelerate the achievement of the SDGs. Here’s a quick look at how the team behind LuxAid private sector engagement funds supports enterprises built to thrive in the future.

The world’s population is over three times larger than it was in the mid-twentieth century, and over 1 billion people are estimated to live in acute multidimensional poverty1. Productive capacities are crucial to ensure that we can drive forward progress on the SDGs. These productive capacities are shaped by global megatrends that are increasing exponentially in speed and depth. To understand trajectories better, the LuxAid private sector engagement funds include a future proofing /megatrends approach in the analysis of the submitted projects. There are many megatrends2 but the team in charge of the funds decided to focus on the following:

  1. Climate change and land degradation;
  2. Shifting productive capacities;
  3. Digital disruption and 4th industrial revolution.

Climate change and land degradation

The loss of biodiversity in soils and the accompanying land degradation are a threat to the livelihoods and security of over 3 billion people3. Half of the world’s GDP depends on terrestrial ecosystems staying healthy and productive4. Yet, at least one in five hectares of land around the world is no longer productive5. By 2050, global crop yields are estimated to decrease by 10% due to climate change, with some regions suffering up to a 50% reduction6. Severe climate change impact is already affecting society with droughts up by 29%7. 2,4 billion people live under “water-stressed” conditions – when demand outstrips supply during certain periods – with 1.8 billion people likely experiencing absolute water scarcity in just a few years8. Safeguarding food systems remains critical. Innovations supported by the LuxAid private sector engagement funds must therefore be as climate and land proof as possible. This is assessed during a due diligence process for all submitted solutions.

Shifting productive capacities

The rise of the middle classes in many developing countries, although at a slower rate since Covid, as well as the rise of megacities and shifting consumer demands are impacting global consumption patterns. Lowest income and low-income market segment in developing countries account for USD 2.3 trillion in the food and beverage industry – a clear market access opportunity. Private sector engagement funds’ project team focuses on building productive capacities that generate above-average positive externalities/returns, ensuring that proposed solutions are tapping into opportunities from megatrends.

Digital disruption and the 4th industrial revolution

Digitalisation and connectivity are dramatically transforming the way we consume, produce or engage in society. In the selection process for the private sector engagement funds, priority is given to high-impact disruptive digital innovations and technologies that drive progress towards the SDGs. Proposals in low-skilled, low-revenue sectors could only be supported provided they propose a truly innovative approach with clear upward mobility potential for the target population.

Are you interested to use this approach in your work? The LuxDev dedicated team is ready to share its experience – don’t hesitate to reach out!

Footnotes:

  1. UNDP (2023), Global multidimensional poverty index https://hdr.undp.org/system/files/documents/hdp-document/2023mpireportenpdf.pdf ↩︎
  2. WEF GRR (2023) and McKinsey megatrends analysis ↩︎
  3. IPBES (2018), Assessment report on land degradation and restoration https://www.ipbes.net/assessment-reports/ldr ↩︎
  4. UNCCD (2018), https://www.unccd.int/news-stories/stories/poor-land-use-costs-countries-9-percent-equivalent-their-gdp ↩︎
  5. UNCCD (2022), GLO 2 ↩︎
  6. IPBES (2018), Summary for Policymakers, https://www.ipbes.net/news/media-release-worsening-worldwide-land-degradation-now-‘critical’-undermining-well-being-32 ↩︎
  7. UNEP (2024), As shortages mount, countries hunt for novel sources of water ↩︎
  8. https://news.un.org/en/story/2019/06/1040561 ↩︎