COVID-19 Places Corporate Social Responsibility in Sharp Relief | Insights | Sidley Austin LLP

From Holly Gregory:

The COVID pandemic really reminds us that corporations are sort of central to our well-being. They get the groceries on the shelf, they manufacture the toilet paper, they deliver health care and manufacture PPE, and innovate, develop vaccines. So, they really are innovators to help solve problems, make sure we have the goods and services we need, and they’re very adept at quickly redeploying resources, and we’re seeing that in very real time. I think the pandemic also underscores the social, the S in ESG, the dimension around worker health and safety, worker support and motivation in a virtual workplace, hiring, retaining, retraining workers, and in some instances furloughing workers, and there are all kinds of social dimensions. I think also the broader corporate social responsibility that corporations show in helping out communities, whether the pandemic dies, redeploying assets to help make PPE, manufacture ventilators when they never manufactured ventilators before. For example, we’re seeing some of the auto companies shift gears, and that’s a real socially responsible act. I think also given the level of current social unrest these issues will prove to be even more important, but let’s take it back to the business. How a company responds on these social issues is inextricably linked to business continuity, resilience, if you will, and to reputation and brand values so there’s a business case. The early data indicates that ESG focused investments really outperformed when the stock market was falling in that February/March timeframe in the first quarter, and we saw that ESG funds continued to attract inflows suggesting that many viewed them as a safer haven, if you will, and this all, as I said, suggests that ESG is linked to corporate resiliency potentially through a profession that has better risk management at these firms that score high on ESG measures. I think there’s really new research, partly anecdotal, but research nonetheless that indicates that firms that receive more positive media attention regarding to how they’re responding on the human capital dimension, supply chain, and operational responses, those companies experienced a less negative impact to the stock market downturn, and I’m referring to research by State Street. So, the COVID-19 pandemic appears in my mind to be strengthening rather than weakening the case or incorporating the ESG factors into investment decisions and business decisions, and may well accelerate the trend toward ESG investing, and so in my mind the corollary is that this is not the time to reduce our corporate focus on these types of issues.

COVID-19 Places Corporate Social Responsibility in Sharp Relief | Insights | Sidley Austin LLP

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