ESG in the time of COVID-19

Masja Zandbergen, head of sustainability integration at Robeco, reflects on ESG issues in context of the coronavirus ahead of Earth Day on 22nd April:

Earth day falls during an unprecedented time for the global economy. The coronavirus crisis has led to a shift in interest from investors, moving from climate change to social issues. I agree that health, safety and job security are the most important issues for people right now. However it is essential that we continue to focus on the broad spectrum of ESG issues with a continued focus on climate risk.

At Robeco we have always taken a holistic approach to sustainability; analysing and assessing companies’ management of those sustainability issues that are relevant for the business model and that is where they can have the biggest impact. And we have also always recognised that social and environmental issues are interlinked. Increasing food productivity, if done in an unsustainable way, can be detrimental to the local environment and global biodiversity.

We see currently that halting economic activity, for a moment ignoring the negative effects this had on employment, education and equality, actually leads to a much better living environment for us. Blue skies, clearer waters, less pollution and less CO2 emissions. The global carbon project estimates that carbon output could fall by more than 5% this year. It is the first time since the global financial crisis (-1.4%) this has happened. However in the past we have seen that after a dip due to a decline in economic activity, if nothing changes in the system, emissions come back with a vengeance when economic activity picks up again. Not to mention the vast amounts of CO2 that has already accumulated in the earths’ atmosphere.

Where the coronavirus created a world-changing event that few saw coming, climate change and loss of biodiversity are slowly moving trends, that we can all see coming. And they can have equally detrimental effects on our societies and economies. So without losing sight of the pressing social issues we face now, and the interaction between all ESG issues, we better remain focused on solving climate change and keeping biodiversity. The earth can do without the economy, but the economy cannot do without the earth.