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Our views 29 May 2020

ESG factors will remain important in post-coronavirus economy

5 min read

This week the UK Government announced the delay of the COP26* climate change summit to November 2021, reflecting ongoing difficulties with such summits given the current coronavirus outbreak.

Boris Johnson gave a video address following the announcement, backing the aims of the summit, notably for world leaders to “build back better” and focus on building a “fairer, greener and more resilient global economy” in the wake of the coronavirus crisis. 

In the midst of the current global pandemic, we recognise that governments and companies are taking difficult decisions and that, in the wake of this crisis, they may rethink their long-term strategies. We encourage governments and companies to weigh economic, social and environmental imperatives in their analysis. We argue that it remains crucial to avoid unnecessary environmental and social costs and to retain a focus on longer-term sustainable economic recovery.

RLAM, as stewards of our clients’ assets, remain focused on the long-term value creation of the companies that we invest in on behalf of our clients. We will continue to analyse the social and environmental impact of companies’ decisions, while recognising that, for many companies at this time, the global pandemic is their most pressing challenge. 

We will fulfil our fiduciary duties as stewards of our clients’ capital and encourage sustainable economic recovery by: 

  • Continuing to advocate that sustainable business is good business and in the long-term interests of our clients.  We will look at public policy interventions and corporate activity through this lens.
  • Integrating environmental and social factors into our investment decisions as we believe this can lead to better investment decisions and risk management in our portfolios.
  • Using our voting and engagement capabilities to support and where necessary urge company boards to be proactive in managing and leading on environmental, social and governance (ESG) opportunities and risks, including those exacerbated by the pandemic, given the potential benefits of this to companies and to the long-term returns investors expect from a more sustainable world economy.
  • Encouraging ever greater disclosure and transparency from companies on their contribution to a sustainable economic recovery given the value of this to our clients and the society as a whole.

* the 26th meeting of the Conference of the Parties

Past performance is not a reliable indicator of future results. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice. Portfolio holdings are subject to change, for information only and are not investment recommendations.