Alongside health, education is a key pillar of human capital. After all, the healthier and more educated we are, the more productive we can be. The opportunities we have to learn effectively play a big role in determining our prospect, and poor access to quality education prevents millions – if not billions – of people from breaking the vicious cycle of poverty.
Addressing inequalities like this is at the heart of the UN Sustainable Development Goals. These SDGs, which codify the world’s most pressing environmental and social issues, represent a universal call to action. To meet these ambitious goals by 2030, it has been estimated that some US$3.9 trillion a year needs to be spent. Governments alone cannot foot the bill.
Investors therefore have a crucial part to play, including in widening access to quality education. While delivery of basic education rightly remains the reserve of the state, by and large, higher education and lifelong learning are often delivered by the private sector, especially in developing economies where needs are arguably greatest.
Where companies can successfully fill the gap, and develop the skills that enable people around the world to thrive, irrespective of their background, I believe they and their investors can have a far-reaching and long-standing impact.
Removing barriers to entry
Few countries are as renowned for their vast natural resources as Brazil, but its huge human resources are often overlooked. Unequal access to high quality education means the human and economic potential of more than 200 million people could be going largely unrealised.
According to the 2019 Social Progress Index, which attempts to measure real quality of life independent of economic indicators, Latin America’s largest economy ranks 14th in the world for the quality of its universities. Yet it ranks 136th (out of 149) for how equal access is to quality education.
In short, Brazil is home to some world-class public universities, but they are dominated by an affluent elite whose privately educated children are best placed to win the fierce competition for spaces. Aiming to meet the need for affordable and effective private education is Cogna Educação.
The company, formerly called Kroton, operates across all educational segments, and has post-secondary education campuses across more than 100 cities in Brazil. It also offers web-based distance learning, opening up access to higher education for students living in rural areas. As well as removing geographical barriers to learning, Cogna reduces financial barriers by providing affordable loans and financing to poorer students.
By expanding access to higher education, I believe Cogna clearly – and intentionally – delivers positive social impact aligned with SDG 4: “ensuring inclusive and equitable quality education and promoting lifelong learning opportunities for all”.
Contributing to lasting impact
Measuring the impact of investments in human capital can be difficult, but it is vital for impact investors to overcome the challenge. Indeed, “measurability” is a key differentiator between impact and other forms of responsible investing.
By identifying key impact indicators, we can gauge a company’s progress towards realising an SDG. As well as quantitative metrics – such as, in the case of an education provider, the number of students enrolled and the proportion using loans – there are indicators of the quality of outcomes – analysis of graduate earnings and employment rates, for instance.
Where companies can effectively deliver improved skills and knowledge, and widen access to the opportunities that further learning can open up, they can empower individuals and their communities to thrive.
By playing a part in levelling the playing field, I believe investors in these companies can aspire to have a lasting positive impact on global society, while also pursuing sustainable financial returns over the long term.
The views expressed here should not be taken as a recommendation, advice or forecast.
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