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Three months into the novel coronavirus crisis, it has become clear that ESG (Environmental, Social, Governance) investing is not about to be placed on the backburner during the pandemic. In the first quarter of 2020, a net US$40.5 billion went into funds scoring high on ESG criteria while traditional mutual and exchange-traded funds saw net outflows. Indeed, 94% of sustainable indices outperformed their parent benchmarks in the first quarter 2020, according to a BlackRock study.
Public activity as measured in hard numbers by ActivistInsight, is down significantly in Q1 2020. However, it is a tenuous metric, especially during times of severe dislocation. The market turmoil caused by COVID-19 creates an abundance of opportunities for activists: valuations have plummeted almost across the board and stark differences between companies´ ability to cope with the crisis are becoming increasingly apparent. Moreover, the pandemic will lead to a reassessment of corporate vulnerabilities, and open new doors for activists. ESG is likely to become one of those new doors, with social (‘S’) aspects gaining importance during the pandemic.
When we do finally emerge from the COVID-19 crisis, the world will employ a magnifying glass to assess how businesses responded to the crisis – and the steps taken to recover and rebuild. Leaders are already recognizing that rebuilding a “new normal” affords businesses an opportunity to recover in a more responsible, sustainable and, ultimately, better way. As BlackRock Chairman and CEO Larry Fink highlighted in his recent Chairman’s Letter to Shareholders: “The world will be different. Investors’ psychology will change. Business will change. Consumption will change. And we will be more deeply reliant on our families and each other to stay safe.”
This week the UK government set out its three-phased approach for gradually lifting the current lockdown restrictions and returning the nation back to what previously might have been described as “normal.” But while policymakers are hopeful that a COVID-19 vaccine will be successfully developed, the Prime Minister and his scientific advisers acknowledged that there is no real assurance that we will not be living with COVID-19 for a long time to come.
One question we are getting a lot right now from clients is this: is there any appetite at all for non-COVID-19 stories in the news media? The pandemic is the focus for almost every company and organisation on the planet. However, by the same token, there are still many interesting initiatives going on inside those institutions that at any other time would be highly newsworthy.
The people of Wuhan, China suffered a second and unexpected indignity after enduring the outbreak of COVID-19. Several residents of the original epicenter of the virus found their names, addresses, daily movements and other personal data leaked online. It was an apparent attempt by vigilantes to protect the rest of the population from those presumed to carry the virus.