A new social contract - sustainable investing during the Covid-19 crisis - Schroders

The coronavirus crisis has seen some high profile companies step up to offer their support. Schroders consider what this means for sustainable investing, and the possibility of a new social contract.

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Sustainable investing has grown exponentially in recent years. Even so, there has long been a nervousness about how the space would behave in a downturn.

In terms of performance, Schroders have long argued that sustainable companies should have lower declines due to lower incidence of controversies and occupational mishaps; greater loyalty from customers, employees and even shareholders; and often more conservative balance sheets.

There’s also a question of whether asset owners will continue to demand sustainable/ESG (environmental, social, governance) funds in a downturn, or whether ethical investing was a luxury that could only be afforded in a bull market.

The current crisis provides an unfortunate opportunity to test these hypotheses.

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