The COVID-19 pandemic has amplified the investment materiality of environmental, social and governance (ESG) factors. In this publication, we outline why we believe companies managing ESG risks and opportunities are built on firmer foundations to brace and survive downturns.
The focus today is on the corporate social response to the crisis—the ‘S’ in ESG. Effectively addressing the needs of employees, customers and suppliers can help companies build trust, bolster their brands and, one study suggests, may even lead to lower borrowing costs, higher credit ratings and lower stock price volatility.
Investors are starting to focus even more intently on good governance. How companies allocate capital and the policy choices governments make will help determine how well they respond to future economic shocks.
The focus on climate change may decline in the near term as companies address financial challenges. But we think that will be a small bump in the road toward a decarbonized world. Once the pandemic is under control, green fiscal policies and private sector decisions could smoothen—or even shorten—the path to climate change commitments
Sheila Patel | GSAM Chairman, with oversight of ESG and impact investment initiatives
Hugh Lawson | Head of Institutional Client Strategy and ESG & Impact Strategy; Co-Chair, GSAM Sustainability Council
Kathryn Koch | Co-Head of Fundamental Equity; Co-Chair, GSAM Sustainability Council
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