When Will Sustainable Investing Take Off Again? | The Corona Correction | Refinitiv

TL;DR

ESG principles in lending have taken a backseat during the COVID-19 crisis, facing criticism but showing potential for future alignment.

Transcript

Welcome to the Corona Correction Series in association with Refinitiv, I'm your host, Roger Hirst. There were a number of investment themes that were gaining momentum prior to the Corona crisis. One such theme was ESG, environment, social and governance investing. Over the last few months, investors have by necessity taken emergency steps in order ... Read More

Key Insights

• 🔬 The COVID-19 crisis has shifted focus from ESG investing to financial preservation in lending.
• 😀 Airlines, majorly impacted by the crisis, received substantial financial support but faced criticism for lack of ESG commitments.
• 🥅 Pressure is increasing on corporations to align financing with environmental goals, especially with state-supported guarantees.
• 🤔 Creative thinking is emerging for better lending practices with increased accountability and global sustainability in focus.

Questions & Answers

Q: How has COVID-19 impacted ESG investing in the lending sector?

The pandemic has seen a decrease in sustainability-linked lending as companies prioritize capital preservation over ESG principles due to the urgent financial crisis.

Q: Why did airlines receive significant financial support without ESG commitments?

Airlines tapped into financial markets heavily to sustain operations, focusing on liquidity and economic recovery rather than ESG goals amidst the crisis.

Q: How are environmental groups and shareholders responding to the lack of ESG commitments in financings during COVID-19?

There is growing pressure for aligned financing practices with environmental goals, especially when state-backed guarantees are involved, emphasizing sustainability and profitability requirements.

Q: Will the focus on ESG principles in lending make a comeback post-COVID-19?

Despite current market pressures on wealth preservation, there is optimism that ESG investing criteria will regain importance as markets stabilize, emphasizing accountability and sustainability in lending practices.

Summary & Key Takeaways

• ESG investing was gaining traction pre-COVID-19, but the pandemic has led to a drop in sustainability-linked lending.

• Airlines, hit hard by the crisis, received significant financial support without ESG commitments, drawing scrutiny.

• Pressure is mounting for corporations, backed by states, to align financing with environmental goals for long-term sustainability.