How a Global Pandemic Could Accelerate the ESG Imperative

The coronavirus crisis will change the world in many ways. Tony DeSpirito discusses its potential impact on ESG investing and how it may hasten an important trend for active investors.

The COVID-19 pandemic has been extraordinary in countless ways. Beyond the deeply felt strains on health and humanity, it is an economic and social issue with generational consequences. We believe it could also be a defining moment for environmental, social and governance (ESG) issues.

From a social perspective, we expect companies will be remembered and rewarded on their actions during this crisis. The societal role of corporations has been illuminated like never before, and we expect business will go to those companies deemed to have done the right thing by their employees, customers and communities in this most trying of times.

From an environmental perspective, we could see this crisis bringing even greater attention to the impacts of climate change. Coronavirus has made it clear that when it comes to human vs. nature, the upper hand goes to nature. Many may begin to take environmental issues more seriously.

Both of these spur important considerations for investors.

Get Tony’s points on preparing for opportunity ahead.

Active investing with an ESG lens

ESG issues are not new considerations in our fundamental investment process. But they are increasingly important ones. Society, voters, regulators and investors are all placing greater focus on ESG. The portion of active equity assets directed to ESG mandates is on the rise and, not surprisingly, mentions of “ESG” in broker reports have spiked, as shown below.

ESG interest in the U.S. is in early innings and gaining momentum, we believe. We see this offering opportunity for active stock investors for three key reasons: