Can we build a better economic future?

August 4, 2020

Can we build a better economic future?
 

Whether it be companies working with bad actors across supply chains, poor crisis and contingency preparedness, workforce layoffs, or even brand reputation management, the Covid-19 coronavirus pandemic has indeed dragged the tide out, exposing businesses and sectors where the ESG emperor is wearing no clothes. The good news: as the global economy starts to emerge from this worldwide crisis, opportunities will abound for companies across all sectors to recommit to rigorous environmental and social programs and sustainable practices.

What we are witnessing is no mere economic recession. At its heart, the pandemic is a societal and health emergency that will leave deep scars that linger for a generation or more. During the current crisis, investors, as well as our broader society, need to be vigilant against the potential outcome that would see existing, entrenched interests reinforced, rather than reversed, which would run counter to the hopes of society. We are currently seeing the best of many individuals and companies in the battle against the disease, but with trillions of dollars flooding the global system, the potential for misappropriation of recovery dollars by vested self-interests runs high.

Now is the time for companies to rebalance expectations away from maximizing short-term returns – the use of excessive debt and extended supply chains to reduce labor costs – towards the quality of those returns. In short, we have an opportunity to re-examine notions of efficiency in favor of resiliency.

Our Covid-19 moment presents us with the opportunity to retire the ESG label in favor of recognizing that what we’re really talking about is ‘finance 101’: the management of issues that are self-evident and influence good long-term corporate financial outcomes. Companies with poor ESG records may ultimately deflate shareholder value – and are likely to be held accountable if their behavior falls short as the trauma engulfing the economy unfolds. I won’t be the last to say that our present time has been challenging, unprecedented and even surreal. If corporations and investors alike remain vigilant, when the coronavirus tide finally recedes, it just might unearth a better, more purposeful world.

Andrew Parry, head of sustainable investment at Newton Investment Management

Download Infographic

Charts are provided for illustrative purposes and are not indicative of the past or future performance of any BNY Mellon Investment Management product.

All investments involve risk, including the possible loss of principal. Certain investments involve greater or unique risks that should be considered along with the objectives, fees, and expenses before investing.

"Newton" and/or the "Newton Investment Management" brand refers to Newton Investment Management Limited. Newton is incorporated in the United Kingdom (Registered in England no. 1371973) and is authorized and regulated by the Financial Conduct Authority in the conduct of investment business. Newton is a subsidiary of The Bank of New York Mellon Corporation. Newton is registered with the SEC in the United States of America as an investment adviser under the Investment Advisers Act of 1940. Newton's investment business is described in Form ADV, Part 1 and 2, which can be obtained from the SEC.gov website or obtained upon request.

BNY Mellon Investment Management is one of the world’s leading investment management organizations and one of the top U.S. wealth managers, encompassing BNY Mellon’s affiliated investment management firms, wealth management organization and global distribution companies. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and may also be used as a generic term to reference the corporation as a whole or its various subsidiaries generally.

This material has been distributed for informational purposes only. It is educational in nature.

Views expressed are those of the author stated and do not reflect views of the other authors or the firm overall. Views are current as of the date of this publication and subject to change. This information contains projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. There is no assurance that such events or expectations will be achieved, and actual results may be significantly different from that shown here. The information is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. Forecasts, estimates and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Certain information contained herein has been obtained from sources believed to be reliable, but not guaranteed. Please consult a legal, tax or financial professional in order to determine whether an investment product or service is appropriate for a particular situation. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. BNY Mellon Investment Advisor, Inc., Newton and BNY Mellon Securities Corporation are subsidiaries of BNY Mellon.

Not FDIC-Insured | No Bank Guarantee | May Lose Value

MARK-133229-2020-07-31