ESG: the impact of COVID-19 on the sustainability agenda

On 15 December 2020, The Economist held its latest webinar as part of its Sustainability Week Insight Hour series. Titled ‘ESG investing: a spotlight on the “S”’, the insightful webinar supported discussions to examine the impact of COVID-19 on the sustainability agenda.

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The online event heard the perspectives from business leaders, policymakers and industry experts on the increased focus around the social factor to ESG (environmental, social and governance) investing.

The key take-aways from attending this digital conversation include:

  • A significant increase in investor interest in ‘S’ is more evident now than compared to pre-COVID times, which is bringing ‘S’ to equal weight with ‘E’ and ‘G’ factors.

  • Thanks to COVID-19, there is a noticeable global convergence on sustainability reporting in 2020. 
    • There has been a flowering of interest to create globally consistent ‘S’ standards.
    • The EU Commission is reforming a non-financial reporting directive and is exploring the potential for detailed regulatory standards in this area.
    • ShareAction is running a Workforce Disclosure Initiative to help broaden out the detail for ‘S’ reporting.
    • Big data and AI are accelerating social media coverage of ESG exposure.
  • There is growing investor interest in driving impact through stewardship strategies. This is considered to be a fast route to generate widespread positive impact. 
    • For example, investing in social housing, access to finance and education as well as affordable healthcare.
  • ShareAction is working on collaborative engagements with other investors to look at human capital management and the future of these structures. For example, working from home in the longer term.

  • Asset managers are looking internally to align with social movements such as #MeToo and BLM to appeal to investor interest and making sure they are ‘walking the talk’.
    • Diversity and net zero climate pledges are becoming more common.
    • Gender, race and LGBTQ+ diversity and representation are gaining prominence.
  • Measuring inclusion was discussed to be a ‘top-down’ approach through policies and how they are lived out in a daily process.
    • This is much more than a simple DNI index. Investors are looking for a full picture of the inside of the company and would like that to be disclosed.
  • It is expected that ‘S’ will maintain this new significance in the longer term as Gen Z are ethically orientated and tend to align behaviours and employment with social values.

The Luminous view
At Luminous we partner with a number of businesses to bring their ESG messaging to life in their annual report and digital presence. In light of COVID-19 and the impact this has had on the corporate world, we have also witnessed a growth in social focus within corporate ESG reporting, in particular full disclosures on company responses to the pandemic and how they are supporting their workers.

If you would like to discuss how we can help you with your ESG messaging and reporting, please get in touch.

Read our ESG edition of Reporting Matters.