Octo Opinion: How lockdown is bringing ESG to the fore

Octo Members
2 June 2020

A short read. 

With cleaner cities, skies and seas, and employee rights and corporate decision making now centre stage in the battle to maintain capitalism in a time of crisis, ESG has never been more relevant to investors. 

Environmental, Social and Governance investing was a huge talking point across Octo before the crisis and should be again as we begin our slow recovery.

With both professionals and their clients given time to reflect on their true place in the global economy, and indeed nature, portfolios too must evolve to reflect new realities.

Fast-paced change

Encouragingly, particularly for providers, there’s evidence to suggest this is happening at a faster rate than you might expect. New research from Schroders, released this week, finds that advisers recognise the increasing importance of conversations around ESG.

In its survey of 63 advisers, conducted online between 15 and 21 April – at the height of the pandemic – it found that 34% of advisers polled believe that coronavirus will impact client attitudes towards sustainable investing.

Two-thirds of those polled said that the crisis will increase the attention they pay to ESG risks associated with investments.

From a governance perspective, a vast majority of advisers (88%) agree that the crisis reinforces the importance of stewardship and using asset managers who actively engage with company management.

Of course, one poll does not tell us the whole story of the UK adviser population, but the message of ESG and sustainable investing – admittedly pushed mostly by asset managers with a vested interest – seems to be sinking in.

Of course, with any hot topic comes the risk of the bandwagon jumpers, with the subject of ‘greenwashing’ a real concern among our members.

Dodging responsibilities

However, I do believe this could be more of a temporary problem as ESG factors become more mainstream and are incorporated across investment processes.

Indeed, with bodies such as the Investment Association getting in on the act with new frameworks, it will become harder for stock pickers and company management to dodge their responsibilities.

Really interested to get members’ views on this topic so we can investigate more.

Has ESG become more important to you and your clients, or has it somewhat been left to wayside as you look to protect on the downside? Which kinds of companies will be the winners in recovering economies?


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