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Using alt data to assess the impact of COVID-19 on ESG

While environmental concerns have dominated the ESG agenda in recent years, the coronavirus has renewed focus on social and governance issues. In this report, we highlight the critical impacts of COVID-19 on the ESG industry and outline the alternative datasets that provide sustainability insights in these challenging times.

INITIAL IMPACTS

The pandemic raised havoc on global markets. Many ESG indices, however, outperformed their benchmarks during the outbreak. This is consistent with the view that companies with superior sustainability performance are better equipped to weather the storm. While this has been enough to advance the strategic case for sustainable investing for many investors, there are other performance attribution considerations to make here. Particularly as assessing the ESG performance of firms can widely differ across industry groups.

SOCIAL AND GOVERNANCE ISSUES TAKE CENTRE STAGE

What we can be certain about is that the characteristics of the pandemic brought many ESG issues into the spotlight. What began as a healthcare crisis quickly manifested into severe ramifications across global labour markets, governments and social inequalities.

In particular, concerns regarding employment conditions, sick leave provisions, access to healthcare and supply-chain management issues have been brought to the forefront. Social media and news sites have been quite active in naming and shaming companies that have been neglecting responsibilities in these areas. This has made the gap between ESG leaders and laggards more apparent.

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