Fiona Reynolds, chief executive of the Principles for Responsible Investing (PRI), has called on investors to view the coronavirus crisis as an opportunity
“If there is any silver lining in such a devastating crisis, it’s the prospect it presents us for change,” Reynolds wrote in a blog.
“The actions we collectively take over the coming weeks, months and perhaps even years will lay the foundations for a more stakeholder-driven and sustainable global economy—one that aligns people, profit and planet.
“Looking ahead to the recovery from covid-19, investors are offered a unique opportunity to re-evaluate our global financial system and to bring a wider, deeper drive towards sustainability issues.”
Promoting systemic change
In a briefing, the investor organisation, which has more than 2,000 signatories and represents over $80trn (€72.3trn) of assets, outlined seven ways (see below) to proactively respond to the crisis.
These, it said, “must be predicated on the basis of systemic integrity and long-term universal returns being more important than relative company performance”.
Investor action should adopt a carrot and stick approach, by supporting sustainable companies through the crisis, “even if that limits short-term returns”, while also scrutinising company responses on their sustainability.
Reynolds wrote: “As for the responsible investment community, it’s time for us to step up and play our role as long-term holders of capital, to call corporations to account.
“It’s time for asset owners sitting at the apex of the investment chain to lead the financial sector through this crisis.”
Investors should back governments to deliver unprecedented stimulus packages, which will deliver a successful and just recovery.
“We should also be vocal in saying that there must be a green and sustainable backbone to the stimulus,” Reynolds urged.
Both environmental and social issues around human and labour rights need to be prioritised following the crisis.
“Destruction of habitats and ecosystems only risks further pandemics as diseases spread between animals and humans. As covid-19 is stabilised, efforts to address these systemic issues are more critical than ever,” she said.
Reynolds recommended that engagement with companies in the short-term is re-prioritised to topics relevant to covid-19.
The PRI outlined seven actions in its briefing:
– Action 1: Engage companies that are failing in their crisis management;
– Action 2: Engage where other harm is being hidden behind, or worsened by, the crisis;
– Action 3: Deprioritise engagement on other topics;
– Action 4: Publicly support an economy-wide response;
– Action 5: Participate in virtual AGMs;
– Action 6: Be receptive to requests for financial support; and
– Action 7: Maintain a long-term focus in investment decision making.
The PRI also announced that it will convene covid-19-focused working groups to support investors dealing with the short- and long-term consequences of the crisis.
This article first appeared in ESG Clarity’s sister title Expert Investor.