In the wake of the economic volatility created by the COVID-19 pandemic, it is clear that environmental, social and governance (ESG) issues are material factors that businesses must manage appropriately. From immediate relief efforts to long-term recovery strategies, sustainable finance is a key part of the solution.
The International Monetary Fund (IMF) forecasts that global GDP is set to decline by over 3 per cent this year, causing significant impacts on developing countries in particular.
Sustainable investments have performed better in the downturn. An analysis by Morningstar showed that 24 out of 26 ESG index funds yielded higher returns than their non-ESG benchmarks in Q1 2020.
The sustainable index funds focused on emerging markets performed even better. All three emerging-markets sustainable index funds in the study were able to outperform their benchmarks.
A study by HSBC shows that companies that prioritize ESG and climate issues have seen their equities outperform their peers by up to 7 per cent since the beginning of the pandemic.
Issuers have raised over US$ 100 billion in social and sustainable bonds in 2020, the majority of those to fund COVID-19 responses.
The global market for responsible investment now stands at over $30 trillion.
Millions of companies worldwide are in danger of being forced out of business, which has grave consequences for the global economy.
Companies are now faced with a range of unprecedented challenges that require an even stronger focus on their impact on people and the planet.
The annual investment gap to finance the Sustainable Development Goals (SDGs) — currently estimated at US$ 2.5 trillion in developing countries alone — is likely to grow.
With corporate debt continuing to rise at unprecedented levels, the increased debt will make it more difficult to recover from the global recession caused by the COVID-19 crisis
Companies can work together with banks and investors to ensure business continuity and mitigate the impact of the pandemic on operations, especially where there is a risk of disruption of essential products and services.
Banks can make available special credit lines and relax repayment terms for existing credit products for at-risk populations and businesses that deliver essential products and services.
Explore financial instruments to fund commercial enterprises that support critical prevention and mitigation activities required by the crisis where appropriate. Insurance companies can ensure prompt and seamless payments of short-term disability and unemployment insurance benefits for employees and other workers affected by COVID-19.
Maintain focus on long-term sustainability goals, seize opportunities and take advantage of new incentives to accelerate progress on areas such as climate transition
Thanks to the UN Global Compact - a are a voluntary initiative based on CEO commitments to implement universal sustainability principles and to take steps to support UN goals for this information