What will become of the word sustainability, after the cyclone that the Covid-19 emergency has unleashed on the markets, in world economies and for companies? How important will the acronym ESG (environmental, social and governance responsibility) be for those who invest? The Financial Times, reasoning, in an article signed by Billy Nauman, on what will happen to the dividends, for now not distributed – in response to the crisis resulting from the virus – of large companies, from Disney to Rolls Royce, just to give two examples. In a normal situation, shareholders would only have some time to wait before they can cash out. Well, today many analysts are not so convinced that what was not paid in the months of the lockdown returns to the pockets of the shareholder. Why could the pandemic have changed (perhaps forever?) The rules of the game, and have convinced companies that that money must be invested to speed up the achievement of the three ESG criteria in the corporate strategy. In short, under pressure from governments and investors themselves, companies are moving more and more clearly – reports the British financial newspaper – towards a new concept of responsibility: towards society, the planet and their own people, the employees. Without forgetting that many countries have hooked the delivery of aid precisely to the waiver of the dividend.
Recession and liability
“This is the first recession in which the Esg agronomy plays a leading role,” wrote Morgan Stanley analyst Jessica Alsford in the report quoted by the Ft. In a “typical” recession, however, we would try to safeguard the dividend by cutting investments and costs. Today there is a new trend, which emphasizes rather than shareholders, employees, customers, society “. The news is clear because in 2008, Alsford notes, the principles of responsible investment of the UN had just been born, and the 17 sustainability objectives of the Agenda to 2030 beyond to come (they were set in 2015). investors who focus on sustainability are clamoring for this change, from the top of the 23 trillion dollars (data 2019) invested responsibly in the world.
Rich, always richer
In New York, the Center on Corporate Responsibility brought together 322 institutional investors with 9.2 trillion assets invested to sign a letter asking their companies to prioritize issues such as health and safety, and to maintain employment. Nicholas Lusiani, Oxfam’s senior advisor, noted that many people in the US have lost their jobs because of the “short-term” vision of companies, focused on shareholders and profit rather than defending their people: better firing than dealing with in short, safety at work. “The impact of Covid has been devastating precisely because no investments have been made in this direction in the past”, summarized Lusiani to the Ft. Not to mention that dividends always go into the pockets of the rich, ending up widening the range of social inequalities and economic, worldwide. Oxfam research has shown that 97 percent of all dividends paid in the United States go to already wealthy, “obviously white” families, Lusiani notes.
“Change and inequalities are one of the most obvious risks for the markets of the future,” says Andrew Lee, head of sustainability and impact investing at UBS Global Wealth Management. Is the road therefore marked? “Everything will really change if there are rules to be respected for companies. We cannot rely on enlightened CEOs, on companies that voluntarily do good things. We need to change the rules of the game for everyone to go in this direction », concludes Lusiani.