Building Back Better for the Next Normal

‘Build back better’ has become the new mantra for post-COVID-19 hopes and ambitions. As people, companies and governments are coming to terms with the crisis and starting to consider the post-pandemic world, many are realizing that going back to how things were is neither possible nor desirable. Just like disruptive technologies throughout modern history have swept away what humanity thought was the best or only solution and replaced it with something superior, the disruption brought on by COVID-19 has also opened the door for making and accepting some long-overdue changes. To truly leverage the opportunity to correct the destructive course on many fronts, responses to the pandemic must involve going beyond adapting to the new normal and focus on shaping what we want the next normal to be. Investors can play an important role in this transition by aligning their strategy and active ownership with progressive long-term objectives.

Regulatory Standards and COVID-19: Is Oil and Gas Being Given a Hall Pass on ESG?

Globally, oil and gas companies are weathering a storm like no other in their history. Although volatility seems to have settled somewhat since the early months of 2020 (when the Russia-Saudi Arabia oil price war experienced its most heated moments yet), cost-cutting and debt borrowing continues to plague the industry as the vast majority of COVID-19 related restrictions remain in place worldwide.

How China’s Electric Vehicle (EV) Policies have shaped the EV market

As CO2 emissions are inherent to Internal Combustion Engine Vehicles (ICEVs), Electric Vehicles (EVs) are widely considered to be the logical alternative towards realizing zero emissions. With the continuation of ongoing technological refinement and years’ of heavy investment, EV manufacturers have significantly upgraded the performance of their products and improved economies of scale making EV production more economically feasible allowing for EVs to become a more widely considered consumer choice. Improving economies of scale, in both the EV manufacturing and the recycling of decommissioned batteries along with the grid’s transition towards renewable energy will make the positive impacts of EVs increasingly undeniable.

Tomorrow’s Board: Challenges in a Fast-Changing World

The world is changing faster than it ever has. As a result, companies are increasingly facing numerous and complex challenges with both immediate and long-term impacts. Today, companies are facing a health crisis, a social justice crisis and a fallout economic crisis. The ongoing COVID-19 pandemic and the social justice crisis, calling for the end of systemic racism, have reinforced the need for more diverse boards.

Antitrust in the Digital Age

On July 27th, the chief executives of four (Alphabet, Amazon, Apple and Facebook) of the world’s most prominent technology companies will appear before the US Congress as part of an ongoing antitrust investigation into their market power.[i] This is the latest in a series of developments that includes federal and state-level investigations in the US into the market practices of these companies. Back in 2018, as part of Sustainalytics publication, ESG Risks on the Horizon, our team had noted that the antitrust related scrutiny of major technology companies is likely to persist given the market concentration these companies had established within the digital economy. While there is significant uncertainty as to the ultimate regulatory response, given the outsized position of these four companies in the S&P 500 and sustainability indices, this type of regulatory and market scrutiny is an area that is important for investors to examine in terms of long-term risks to the enterprise value of these companies.

The Race to Net Zero: Decarbonization Commitments in the Oil & Gas Industry

Recent reports concerning record decreases in global greenhouse gas (GHG) emissions due to the COVID-19 pandemic have spurred hope for a “green shift” in our global economy, post-pandemic. The importance of this shift cannot be understated, given that capital investments made within the next five-to-ten years will determine the world’s carbon pathway to 2050 and beyond.

Airlines Post-COVID-19: The Challenges to a Climate-Friendly Recovery

Planes grounded, borders closed and passengers staying at home: the past months haven’t been easy for the airline industry. COVID-19 has led to the deepest crisis ever in the history of the sector.[i] Airlines are in dire need of cash to recover, while at the same time the industry is also expected to adapt and prepare itself for the more critical crisis ahead that is climate change. Despite the slowdown of air travel, long term prospects of mitigating carbon footprint of the industry are not clear. Carbon commitments supported by comprehensive programs are in place, nonetheless, our research suggests that existing measures may not be sufficient to curve down emissions and mitigate climate change.

The Shift to Remote Work: Examining the Risk Landscape

This blog post is the first in a two-part series. In our initial article, we will explore cybersecurity and remote work during the COVID-19 pandemic and its role in expanding an enterprise’s attack surface. In our next blog post, we will examine privacy issues related to COVID-19 contact-tracing.

Cruising Post-COVID-19: Lessons and Challenges for the Cruise Ship Industry

In this blog, we assess the impacts of COVID-19 on the cruise ship industry by taking a closer look at the four biggest cruise companies and their COVID-19-related controversies since February 2020. We also gauge their management of product governance and human capital issues, with the aim of informing investors of each company’s preparedness to address relevant risks as well as challenges and potential hurdles in the industry’s post-pandemic operations.

Responsible Cleantech: The Processes Behind the Products

The growth of the cleantech industry seems resilient from an economic perspective. For it to maintain its social license-to-operate, however, it will also need to formulate answers to the environmental and social challenges throughout its value chains.

COVID-19 and ESG at a Reasonable Price in Australia

“We are living in extraordinary times” seems to be these days’ mantra. It certainly reflects well the dynamics of global share markets, including Australia’s, as shown in the chart below.

Beer, Wine & Spirits in the Era of COVID-19

Companies operating in the Beer, Wine and Spirits subindustry have suffered from knock-on effects of COVID-19 lockdown measures, as governments across the globe have moved to close hotels, bars and restaurants, and ban large events and gatherings, such as festivals and sports events. Given that these venues are an important source of revenue for alcohol companies, investors within this space may benefit from a closer look at how firms have adapted to the rapidly changing market conditions.

Coronavirus: Are We Protecting the Most Vulnerable?

As the COVID-19 pandemic swept across the globe at the start of 2020, frontline medical care became a top priority in stopping the virus. Contrary to the improvement in case management at hospitals, the number of cases in long term care homes (LTCH) rose sharply. With the situation evolving by the hour at times, the number of infections and deaths rose exponentially in the US.

Coronavirus Healthcare Update: Pricing, Profit and Public Opinion

With this post, we continue to examine the ESG risks and opportunities inherent in the worldwide race to develop a treatment or vaccine for COVID-19.

Coronavirus: Food Security in a Global Pandemic

As Covid-19 continues to ravage the world, governments have responded with movement restrictions and border closures. While necessary to protect public health, these stricter safety measures are disrupting food supply chains globally, forcing prices upward and increasing the risk of social unrest.

Sustainable Fund Labels: Diverse Definitions of Sustainability

Sustainable financial products are marked with an increasingly large list of tags, from green, sustainable, socially responsible to thematic ESG, water, carbon or impact funds, and not every investor might know how to make sense of these terms. Sustainable fund labels can be one way to signal to the market that the fund has a dedicated responsible investment strategy.

ESGarp Scores: In Search of Reasonably Priced, Low ESG Risk Stocks

The COVID-19 pandemic is likely to further amp up the market’s interest in ESG investment research. It’s not just that ESG funds and indices have generally outperformed their non-ESG counterparts since the COVID-19 sell-off began in mid-February.[i] It’s also that the pandemic itself has drawn attention to ESG issues ranging from biodiversity and habitat loss to employee relations and supply chain management.

Vehicles and Ventilators: An ESG Lens on Automakers Pivoting to COVID-19 Solutions

Automakers have been hit hard by the COVID-19 pandemic, with widespread plant closures, stalling demand for vehicles and mounting tensions between corporate management teams and government bodies. On the upside, several auto companies have responded to the global health crisis by pivoting parts of their business models to supply the growing demand for ventilators needed for patients suffering from severe respiratory symptoms of COVID-19.

2020: The Year of the Flexitarian

The Economist named 2019 the year of the vegan; however, veganism is one part of a much greater trend away from animal proteins. While vegetarianism also continues at a steady growth rate, it is the flexitarian – i.e. traditional meat eater who makes a conscious effort to reduce their meat intake – that is having a notable impact on the market. This has been further accelerated by COVID-19 and the disruption to the fresh meat industry.

Future of Cement: Low-Carbon Technologies and Sustainable Alternatives

At a time when climate change has caught global attention and efforts are being made to meet the UN sustainable development goals, however concrete – the most widely used man-made material on earth – is a significant source of carbon dioxide (CO2) emissions and often overlooked. Cement, a key ingredient in concrete, accounts for about 7% of global CO2 emissions and is the second-largest industrial emitter of CO2 after the iron and steel industry [i]. The cement production process is responsible for 95% of concrete’s carbon footprint. Under the International Energy Agency’s sustainable development scenario, cement producers will need to reduce their carbon intensity at an annual rate of 0.3% per tonne of cement produced up to 2030 [ii]. With carbon emission regulations tightening globally to meet the 2-degree scenario (2DS) targets, cement companies that fail to adopt low-carbon processes and improved energy efficiency could face risks in the form of potential fines from non-compliance and lost opportunity costs by failing to innovate processes.