In many cases, the biggest impacts of the Covid-19 pandemic have been accelerations of existing societal trends rather than shifts in completely new directions. The surge in online shopping, for example, has added to a trend towards ecommerce that pre-dated the pandemic; so too the growth in moves to more flexible styles of working. A third example is the increased focus on investment with an environmental, social and governance (ESG) tilt – and that looks set to continue.
Flows into ESG funds were increasing rapidly well before Covid-19 came along – in the UK alone, the sector was attracting £124m of new investment a week last year according to data from Morningstar. And in a post-pandemic world, we can expect such figures to rise even higher.
For one thing, Covid-19 has prompted people to think about the way they live their lives and to question what is most important to them. But also, the pandemic has once again underlined how it is possible for investors to do well by doing good. For example, when stock markets plunged during March as investors began to appreciate the severity and scale of the Covid-19 pandemics, companies with good ESG ratings provided some protection: such stocks outperformed in 94% of cases.
In this context, research from Dianomi suggests there is a great deal of appetite amongst investors to read about stocks and to find out more about the broader ESG phenomenon.
There are some very obvious areas of interest. For instance, Dianomi’s data shows a massive increase in recent months in the consumption of online financial content offering coverage of healthcare and biotechnology. These sectors figure prominently in many ESG portfolios and are attracting huge interest in the context of their frontline role in the battle against Covid-19. In some months during the spring and summer, the number of investors consuming coverage of healthcare and biotech increased significantly, Dianomi’s data shows.
More broadly, however, Dianomi’s analysis also suggests investors are focusing determinedly on the way all companies behave for good or for bad. The most widely read ESG article online last month was MarketWatch’s coverage of S&P’s updated ESG scores for leading businesses, Twitter, Walmart, Equifax and others dropped by S&P from its ESG index, while Costco is newly included. Elsewhere, Fast Company’s World Changing Ideas Awards 2020, focusing on the impact investments that have generated the greatest societal benefits alongside a financial return, was also widely consumed.
Other top-ranking articles underline the point. Investors are anxious that the businesses in which they invest do not lose sight of the importance of sustainability during these challenging times. As Reuters reported, Goldman Sachs has launched a council of traders, sales staff and others to share expertise on sustainable finance and investing, to meet demand from clients. Business Insider pointed out how consumer-facing businesses are now recognising that “sustainability sells”.
Clearly, investors are determined to examine their consciences in the wake of the Covid-19 pandemic – to seek out opportunities to embrace social responsibility, both in an investment context, but also in the choices they make as consumers. Many are looking to build portfolios of stocks with high ESG ratings, or to identify funds that do the job for them, delivering strong returns from investments with which they feel ethically and morally comfortable.
For generators of online financial content – both in the media and the investment industry itself – supporting investors as they pursue these goals will be ever more important. Having decided they do not wish to return to business as usual, investors will be looking for practical advice on how to remain on track with their financial planning objectives while simultaneously embracing ESG styles and concepts.
