What COVID-19 means for ESG and the future of sustainable finance

Intelligent ESG investing as a response to COVID-19 and a roadmap towards recovery

Published on: Jun 3, 2020 | Written by: Luis Neves

On 27 May, the European Commission unveiled its €750 billion proposal to revive the EU economy, aimed at ensuring a sustainable and equitable plan that will allow Member States to “repair and prepare for the next generation [1].”

The revamped budget proposal is being presented as a key policy response to COVID-19 as the EU strives to recover from the socio-economic damage sustained from the pandemic and to reinforce protections for public health emergencies, natural disasters, and economic crises [2].

Over the years, we have seen how responsible investing—which integrates environmental, social and governance (ESG) factors into decision-making—is steadily being accepted as “part of fiduciary duty” [3] with its worth now estimated at $30 trillion [4].

In a recent article on Forbes, Chairman of global asset management firm Arabesque Georg Kell identifies key questions to consider as countries enter into the next phase of the pandemic; Kell reflects on issues such as a possible increase in protectionist policies as more entities strive for resilient markets and the long-term changes in social norms and consumer preferences following COVID-19.

Despite these questions, Kell affirms that organisations and companies are more likely to ramp up, rather than slow down, their sustainability efforts [5]—be it through engagement in responsible investment initiatives such as the UN Principles for Responsible Investment (PRI) or through expanded corporate social responsibility (CSR) programmes. Ultimately, Kell foresees intelligent ESG investing will soon be the new normal, arguing that corporations that are adaptable and open to transformative change will thrive in a new, evolving world.

Read more of Georg Kell’s article here.

[1] https://ec.europa.eu/info/strategy/eu-budget/eu-long-term-budget/2021-2027_en

[2] https://ec.europa.eu/info/sites/info/files/factsheet_1_en.pdf

[3] https://www.forbes.com/sites/georgkell/2018/07/11/the-remarkable-rise-of-esg/#3de97ea71695

[4] [5] https://www.forbes.com/sites/georgkell/2020/05/19/covid-19-is-accelerating-esg-investing-and-corporate-sustainability-practices/#4a494a8126bb