Financial Standard

Oil and Gas Publishers Note: We are under unprecedented financial pressure in the energy markets, and we are seeing that ESG is playing a larger role than it ever has in history. Not only are investors looking at the ESG plans in place for corporations, the consumers are also reviewing external ESG messaging. The EnerCom Consulting Services group has almost an unprecedented number of clients requesting help. While I do not agree with everything in the article below, I am always willing to discuss both sides of the “climate change” issues. The underlying ESG story is dead on right. 

As the world celebrates Earth Day today,the environmentally conscious in the investment industry have said COVID-19 could be the crisis that causes us to take climate change more seriously.

Calvert Research president and chief executive John Streur said he sees a connection between climate change and COVID-19.

“Why do, we as humans, have such a hard time grappling with these risks? Why didn’t we prepare for a pandemic, even when researchers laid out the problem for us?” Streur said.

“Why aren’t we dealing effectively with climate change, even though researchers around the world have been ringing the alarm bells for a considerable period of time and we’ve had a full day drawing attention to the needs of the planet and environmental stewardship, Earth Day, since 1970?”

Calvert director of corporate engagement John Wilson added that COVID-19 has demonstrated how fragile even large corporate entities can be in times of extreme uncertainty.

“This Earth Day, our engagement may be more vital than ever because the COVID-19 crisis has exposed just how important it is for companies to be prepared and resilient in the face of global disruption. These risks are not just risks to society, but also to the companies we invest in,” Wilson said.

“These risks are not just risks to society, but also to the companies we invest in. They include the decline in biodiversity, the importance of sustainable agriculture, protecting water resources and global climate change.”

Fidelity International, which introduced a proprietary ESG rating system last year, has said that its research indicates that during the COVID-19 pandemic companies with stronger ESG scores have outperformed.

In analysing 2689 companies, Fidelity found a positive correlation market performance and ESG scores.

Each ESG rating level was worth around 2.8% of stock performance versus the index during pandemic, Fidelity said.

In the 36 days between February 19 and March 26, the S&P 500 fell 26.9%.

Fidelity meanwhile found that the price of a share in companies with a high Fidelity ESG rating dropped less than that on average, while those with a low rating fell more than the benchmark.

Fidelity International global head of stewardship and sustainable investing Jenn-Hui Tan said that the February to March slide market crash was the first of the sustainable investing era.

“Our thesis, when starting the research, was that the companies with good sustainability characteristics have better management teams and so should outperform the market, even in a crisis. The data that came back supported this view,” Tan said.

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