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Coronavirus and ESG – some early (personal) reflections

March 27th, 2020

This has undoubtedly been a memorable (and pretty miserable) week, month and indeed quarter.

My first thoughts, when the horrible seriousness of Coronovirus started to become clear, may however have been a little different from some in that they were not entirely negative…

Aside from the fears about relatives – my mother-in-law is recently bereaved, indeed we had to mostly ‘un-organise’ the funeral a fortnight ago – and ten days ago my father was mid way through downsizing, moving just around the corner from us – but was not anywhere near ‘moved in’ (with his new home missing eg fridge, washing machine, phone line).

And then there was the worry about how the our offspring would deal with their respective exams being cancelled.  They were  meant to be doing A levels and GCSE’s this summer… and had been working surprisingly hard.  (For the record they are both thoroughly enjoying the bonus free time … although our ‘going easy on them because of the shock’ may end pretty soon.  And after a frankly barmy couple of days my father is now installed in his fully equipped new home – and enjoying not having to drive to family to be fed!  And in further good news our dogs, Evie and Daphne – are having an absolute ball , with a full house 24/7. Never better – evidently.)

So aside from the many and various personal challenges that we are all dealing with at the moment and the constant flow of heart breaking news – my thoughts, as ever, turned to what the coronavirus might mean for sustainable investment and the battle against climate change.

The following are at the top of my current, if early, list:

  • We are (belatedly) learning to recognise that we are vulnerable – and not in fact ‘masters of the universe’.  This news may surprise people who see ‘sustainability’ as somehow optional.  But who knows, it might shift mindsets and put an end to climate complacency and endless procrastination… perhaps even encouraging those who have recently learned to ‘talk the talk’ to start ‘walking the walk’  (which is much needed given the insanity of our current carbon emissions and planetary destruction trajectories).
  • The coronavirus has put the ‘S’ in ‘ESG’ firmly front and centre for the first time in a long while (ever?).  Evidently (thank goodness) we do appear to  believe we should care for others – even, on occasions, if we don’t know them!  And companies that are scarily light on scruples are rightly being  publicly chastised.  Again the parallel with climate is clear.  To date we have been mopping up after climate change.  I doubt the people who have had their homes destroyed by floods and fires feel that that is good enough.  It is time to protect the vulnerable (today and tomorrow) and get to net zero as fast as we can.
  • Today’s turmoil points to the importance of (albeit evolving) providers of  ‘basic necessities of life‘ –  which in their many different ways (themes, screens etc)  are at the heart of so many ethical, ESG and sustainable investment funds – and always have been.  Food, water, shelter, health, safety – and newer on the block ‘being connected’ are genuinely important to us.  We know many people prefer to invest in things they see as beneficial and useful – intermediaries should keep this front of mind.
  • And a message of hope. We are seeing that it is in fact possible to effect massive change very rapidly.  Our response to the virus – both individually and collectively – may be imperfect on many levels (I thought stock piling loo roll was nonsense until we nearly came very unstuck!)  but we can all see the speed with which change has occurred.  Evidently we can reduce flights, work from home and consume less… I’m not wishing to imply things are great right now (other than for our pets).  A middle ground would of course be immensely preferable,  but we should take heart from knowing that rapid change is possible –  reflecting on the fact that crises are best averted – and making the necessary adjustments sooner rather than later.

There are of course many other push and pull factors that will shape how we respond to the climate crisis once we are ‘on the other side’.  Growing government debt and rapidly increasing unemployment do not bode well.   Expressions of delight about cleaner air and waterways do. (Who would have guessed people might actually prefer to live with lower pollution levels!?).

Once we put this mess behind us I’d like to see the finance community reflecting more seriously on what can really be done to halt the climate crisis.  The COP26 team are calling for the finance community to play its part in addressing climate change.  The coronavirus crisis might just be the catalyst we need to recognise what we are capable of.

We all know we ‘shouldn’t waste a crisis’, so whatever happens in the markets let’s try to make the most of our not always exactly splendid isolation and work through what we can do to help prevent the next one…

 

See ESG Fund Manager coronavirus (early) responses here. 

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