As active investors we are responding to the pandemic, asking new questions of companies in light of the fundamental changes it has brought to lives, businesses, governments and healthcare systems.
We have undertaken this detailed research to assess the interconnectedness of global factors such as population growth, unsustainable production and consumption, resource scarcity and climate change with the emergence of communicable diseases.
The findings of this research have highlighted a number of areas for consideration by investors, including:
- Support for employee health and wellbeing. How are companies supporting their workforces and providing the resources to transition into the ’new normal‘ that the pandemic has brought about? Companies that have invested in platforms to support the health and wellbeing of their employees are reaping the benefits today.
- Support for suppliers. How are companies supporting suppliers that may be vulnerable to additional risks or challenges as a consequence of the pandemic? Acting responsibly to support exposed businesses may be an indicator of long-term resilience.
- Durability of supply chains. How resilient is a company’s supply chain to pandemic (and other) risk, and can a company evidence tracking, traceability and identification of risk hotspots? What is the likelihood of a supply chain shock, and are all risks fully mapped?
- Oversight and ownership of pandemic-related risks. Can a company demonstrate it has clear, broad, oversight and ownership of the risks (and opportunities) caused by extreme events such as a pandemic? How well-prepared are they?
- Ability to adapt, mitigate and innovate. Crucially, how is a company responding to this environment, seeking solutions that can future-proof its business? Similar to responses to climate change, how can a company demonstrate innovative adaptation to this pandemic.
These and other questions are fundamental to our approach to integrating environmental, social and governance (ESG) factors into our investment decisions.
We believe that deeper understanding of the human and environmental influences on the planet allows us to make better informed investment decisions, including identifying solutions to the challenges faced by society.
This research highlights a number of interlinked sustainability challenges, and how these relate to our investment processes.
The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested.