The only necessary thing — Take it or leave it
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
Author
Charanjit Singh joined Acuity Knowledge Partners in October 2019 as the head of ESG Research. He has more than 20 years of experience in investment research and advisory, with a focus on ESG, climate change and clean energy. Previously, he was a Senior ESG Strategist with HSBC and the co-head of its India Onshore Research Centre. During his tenure of over 11 years at the bank, Charanjit was instrumental in building and leading three sector teams for the bank’s global research business in India.
Charanjit has been rated in the Asia Money survey amongst the top five analysts in India/ Asia during 2012–15, for his sector coverage. He has been voted in the EXTEL survey during 2010–14 and in 2017 for Climate Change and SRI research. A research report co-authored by Charanjit received the first-runner up prize at the FARSIGHT Awards from London Accord in 2012. Charanjit is also a recipient of Chevening Fellowship from the British Government. He has also been a consultant on assignments funded by DFID, CIDA, and the World Bank.
