Investors opt for kind firms

SHIFT: FOCUS ON ESG FACTORS INTENSIFIES

Some fund managers are increasingly basing investment decisions in part on how considerate companies are to employees and clients during the Covid-19 pandemic. Did firms move right away to let their staff work from home? Did they continue paying contract employees who had to stop working? Are they offering flexibility for clients who can’t pay bills on time? More and more, investors such as Dai-ichi Life Insurance and AllianceBernstein Holding are asking questions like these when considering where to park their money.

It’s part of the growing global trend of environmental, social and governance investing to put money in ventures that benefit society, but these fund managers think it also just makes business sense. Being good employers and business partners may pay off with sustainable returns in the long term if, for example, it results in higher staff retention rates or helps avoid disruptions in supply chains, the investors reckon. “This pandemic is a litmus test that shows which companies have been responding to the crisis quickly and appropriately,” said Haruna Usui at AllianceBernstein Japan.

Investment in projects that benefit society is booming worldwide, with issuance of social bonds to pay for such deals hitting a record globally. In Japan alone, 328 billion yen (about R53 billion) of such securities have been sold this year.

The pandemic is intensifying investor focus on ESG factors, as it showed how a public health shock can have severe macroeconomic and credit implications. – Bloomberg