Investments with a sustainable focus better able to weather Covid-19 storm
ESG equity funds have suffered large losses of value this year but have held up better than conventional funds
Environmental, social and governance (ESG) funds favour companies with better ESG credentials that can be expected to manage their environmental impacts, treat their stakeholders well and govern themselves in an ethical way. Indeed, it appears that such businesses have been more resilient during the Covid-19 crisis and are showing themselves to be the new “quality companies” of the 21st century.
In a strange way, the Covid-19 crisis has provided a good litmus test for the quality management argument around ESG investing and further supports the idea that ESG integration is not just a nice to have but it is also a good to have. We have long maintained that analysis of ESG issues can, and does, drive long-run investment performance. We see sustainability as a macro thematic trend that is fundamentally reshaping the competitive landscape across all sectors. Companies that respond to this trend early enjoy stronger social licence to operate, lower staff turnover, better resource ...
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