Cover story – Responsible investing & Covid


outperformance of RI strategies and there is a sensible reason- ing for that. “It is pricing in where the world is going to be in the next five or 10 years and these things are becoming more important and have been accelerated by Covid,” he says. Making a difference


It is almost universally accepted that once the virus is con- signed to the history books, life will not return to the normality we experienced at the start of 2020. So, how will social impact investing change post-Covid? Sattar says this crisis could show people what is truly impor- tant. “A hospice is not a discretionary purchase. Elder care when you are old is not a discretionary purchase. Aftercare is not a discretionary purchase. We are beginning to see what is important when you face crises in your life. The social issues that seem fluffy and woolly become the hard ones when you are up against them.” He compares the importance of these issues to the issues mak- ing the headlines such as how the high street is changing. “Rel- ative to hard social issues, there is something of what is real that we are beginning to see.


“The world that we live in is one that we made up,” Sattar says. “It was observed in the last financial crisis that the economy is based on confidence. We have agreed that a lot of stuff we think is real is actually vulnerable or transitory.” Sattar uses the River Thames as an example. “The fast-flowing, grey murky river should be sitting in a wide floodplain, should be clear blue water and we should be able to see green reeds at the bottom of it. “So much of what we believe is the world we live in and how it is structured is increasable transitory,” he says. “The global financial crisis and this pandemic are big wake up calls for anyone of us who think that the world is a safe, struc- tured place. It gets pretty wild at times. “Along with climate change, these are hard issues that we have to tackle,” he adds.


Staying responsible From what we have heard in the discussion so far, these asset owners are unlikely to ditch their RI strategies, despite the eco- nomic conditions. In fact, these challenges could create oppor- tunity for responsible investors, if they know where to look. “COP-26 has been delayed until next year,” Price says. “That presents an opportunity for us to learn from what is happen- ing. At the moment, there are supply chain issues that compa- nies are facing. It is almost a vindication of risk factors that could come if they do not deal with climate change. “We will not see companies pulling away from the objectives and strategies that they have set,” she says, pointing to Unile- ver as one company that has in the past few weeks announced


28 | portfolio institutional October 2020 | issue 97


The social issues that seem fluffy and woolly become the hard ones when you are up against them.


Danyal Sattar, Big Issue Invest


its commitment to their long term and interim targets. “Part of the challenge is not if companies are pulling away from the targets they have set, it is if they go far enough in deal- ing with the risks and opportunities that they face and, again, look under the bonnet to analyse if what they have announced is meaningful or are they paying lip service. “In the long term, companies are realising that if they do not deal with these risks it will hit their bottom line and their sustainability. “Just because we are in a pandemic does not mean that climate change has disappeared,” Price adds. “It is still a real risk that we are facing and we need to deal with that problem and imple- ment the tools to make companies as sustainable as possible.”


Build back better


The destruction caused by the pandemic means that a major rebuilding plan is needed to re-boot the UK economy. “Build back better” has become a mantra for the government in this area, but build back greener has elbowed its way into the debate to ensure that the environmental and social aspects are part of


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