An ESG perspective: Evaluating companies amid COVID-19

In the current environment, three ESG indicators – experience of the board and management, corporate social responsibility and stakeholder capitalism – are of increased significance for identifying companies with likely sustainable growth.

The crisis management and business restructuring skills of executive teams and boards would be key in guiding companies through these turbulent waters and, therefore, a major differentiating factor among companies.

The pandemic and the aftermath should help identify companies engaged in “social washing” and those failing to focus on “stakeholder capitalism”. We explain this in the context of the COVID-19 response of some global banks and those US companies that signed the 2019 charter Purpose of a Corporation, committing to deliver value to all stakeholders

Key Takeaways

• Three ESG indicators – experience of the board and management, corporate social responsibility and stakeholder capitalism – are of increased significance in the current environment, for identifying companies with likely sustainable growth
• The crisis management and business restructuring skills of executive teams and boards would be key in guiding companies through these turbulent waters and, therefore, a major differentiating factor among companies
• The pandemic is expected to help ESG investors distinguish between companies that are “good corporate citizens” and those engaged in “social washing”. We reflect on the Purpose of a Corporation declaration signed by 181 CEOs of US companies, some of whom laid off employees within a month of the first COVID-19 fatality in the country
• In the current scenario, when many management teams are struggling to balance short-term business risks and long-term value creation, companies demonstrating “stakeholder capitalism” are likely to stand out from an ESG perspective. We explain this in the context of the COVID-19 response of some global banks