Invest in UN SDG Goal 4: Quality Education with ESG ETFs

The United Nations Sustainable Development Goals (SDGs) are 17 goals that all UN Member nations have agreed to achieve by 2030. They set out an ambitious mission to end all forms of poverty, hunger and disease. Education has a central place in UN's agenda for a better tomorrow through its SDG #4 entitled “Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all”, and underpinned by 10 ambitious targets. In this article we highlight how you can contribute to UN SDG Goal 4: Quality Education with ESG Exchange-Traded Funds (ETFs).

17 SDGs for a better future

The Sustainable Development Goals (SDGs) are 17 goals with 169 targets set by the United Nations in 2015 as a global initiative to tackle issues that affect humans and the environment we live in, with the hope of achieving tremendous progress by 2030.

The 17 sustainable development goals (SDGs) to transform our world:

1. No Poverty
2. Zero Hunger
3. Good Health and Well-being
4. Quality Education
5. Gender Equality
6. Clean Water and Sanitation
7. Affordable and Clean Energy
8. Decent Work and Economic Growth
9. Industry, Innovation and Infrastructure
10. Reduced Inequality
11. Sustainable Cities and Communities
12. Responsible Consumption and Production
13. Climate Action
14. Life Below Water
15. Life on Land
16. Peace and Justice Strong Institutions
17. Partnerships to achieve the Goal

Each goal has several targets and is measured quantitatively by indicators provided by private and public entities. The creativity, knowhow, technology, and financial resources from all stakeholders are necessary to achieve the SDGs in every context. The beauty of these goals is their interrelation, meaning that action in one area will affect outcomes in others. The development of those goals must balance social, economic and environmental sustainability.

UN SDG GOAL #4: Quality Education

Malcolm X once said: "Education is the passport to the future, for tomorrow belongs to those who prepare for it today". Unfortunately, more than 250 million children are deprived of that "passport", unable to get into school or access good quality education. And more than 50% of all children and adolescents worldwide are not meeting minimum proficiency standards in reading and mathematics.

Things got worse during the 2020 pandemic, when most schools were closed as result of worldwide shutdowns, impacting more than 90% of students around the globe. By April 2020, close to 1.6 billion children and youth were out of school. And nearly 350 million children who rely on school meals needed to look to other sources for daily nutrition.

As an immediate COVID-19 response, the UNESCO launched in March 2020 the Global Education Coalition, an initiative that brings UN family, civil society organizations, media and IT partners together to deploy innovative solutions and save the education sector from falling apart. Together they helped countries tackle content and connectivity gaps and facilitated learning opportunities for children and youth during unprecedented times.

As we gradually put the pandemic in the rearview mirror, nations are re-shifting their focus on the long-term education objectives, highlighted in the United Nations 4th Sustainable Development Goal "Quality Education" and include 10 associated targets that aim by 2030 to:

1. Provide free and good quality primary and secondary education for girls and boys.
2. Ensure all girls and boys have access to early childhood care and education.
3. Ensure equal access for all women and men to affordable and quality education.
4. Increase the number of youth and adults with relevant skills, decent jobs and entrepreneurship opportunities.
5. Eliminate any gender, racial or other disparities and ensure equal access to education and training.
6. Achieve a high number of literacy and numeracy among youth and adults
7. Promote education, knowledge and skills that align with sustainable development and lifestyles.
8. Build and upgrade education facilities to accommodate for children and people with disabilities.
9. Expand the number of scholarships, especially in least developed countries.
10. Increase the supply of qualified teachers and training, especially in least developed nations.

The United nations along with other stakeholders have put together hundreds of actions to achieve these targets and have define 11 statistical indicators by which the world aims to track whether these targets are achieved.

Investors can support Quality Education with ESG ETFs

The world of investing has always been about making money, but things are changing. Investors are becoming more socially and environmentally conscious, and their investment goals have split between expanding their wealth and making a positive impact on the world around them.

Today, impact investing has become the norm, with billions of dollars flooding the market in adequately screened investments, focusing on entities that align their operations with SDG and ESG initiatives (Environmental, Social, Governance). Corporate Social Responsibility departments (CSR) went from being a cost burden to an existential necessity that represent employees and consumers values.

The change in investors' mindsets has given birth to mutual funds and ETFs that provide exposure to securities that work towards achieving ESG or SDG goals. It allows them to invest in opportunities that can provide wealth accumulation while making an impact.

SDG ETFs promoting quality education

Trackinsight analyses the fact sheets and other publicly available information of all ETFs in the ESG universe. The information is screened for statements that show an explicit tilt towards specific Sustainable Development Goals.

In relation to "Quality Education" goal, Trackinsight identifies 1 ETF:

• Rize Education Tech and Digital Learning UCITS ETF (LERN)

LERN is a $16 million ETF invested in 49 companies involved in digital and lifelong learning technologies such as personalization and adaptive learning, video content, gamification and immersion technology that are changing the way people learn.  

According to the latest fact sheet (September 2021), LERN provides exposure to companies focused on K-12 education (kindergarten to 12th grade, 32%), higher education (32%), workforce learning (18%), publishing (13%) and pre-K (Pre-Kindergarten, 5%). The United States has the lion's share in terms of country exposure with 54%, followed by China (28%), United Kingdom (5.4%) and Norway (3.6%).

LERN's top holdings include:

• Gaotu Techedu Inc. (6.8%): Gaotu Techedu Inc., a technology-driven education company, provides online K-12 after-school tutoring services, language and other professional courses in China.
• Duolingo (6.6%): American language-learning website and mobile app, as well as a digital language proficiency assessment exam
• New Oriental Education & Technology (6.18%): Chinese provider of private educational services including K-12 AST, test preparation, online education and other segments.
• Bright Horizons Family Solutions (5.47%): U.S-based child-care provider, it is the largest provider of employer-sponsored childcare. It also provides back-up childcare and eldercare, tuition program management, education advising, and student loan repayment programs.
• Tal Education Group (4.45%): Chinese holding company that offers after-school education for students in primary and secondary school.
• 2U (4.37%): American educational technology company that contracts with non-profit colleges and universities to offer online degree programs.
• Coursera (4.26%): American open online course provider that works with universities and other organizations to offer online courses, certifications, and degrees in a variety of subjects.
• Chegg (3.64%): American education technology providing digital and physical textbook rentals, textbook solutions, online tutoring, and other student services.
• Grand Canyon Education (3.49%): America educational service company that provides an array of support services in the post-secondary education sector.
• John Wiley & Sons (3.34%): American multinational publishing company founded in 1807 that focuses on academic publishing and instructional materials.

Since inception on August 27, 2020, the fund generated a cumulative loss of -38%, as results of the Chinese crackdown on technology and education shares. However, LERN has been trending higher in the last 30 days, gaining more than 4.5%.

LERN trades on various European exchanges including Borsa Italiana, Deutsche Börse Xetra, Euronext Amsterdam, SIX Swiss Exchange and the London Stock Exchange. The fund accumulates the dividends and charges 0.45% in annual fees.

To fully understand the composition and risk/return profile of Rize Education Tech and Digital Learning UCITS ETF, it is essential to perform thorough due diligence before engaging in any investment activities.

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