We clearly live in unprecedented times, yet COVID-19, compounded on top of Australia’s summer of bushfires, is a full dress rehearsal for the types of shocks we need to prepare for more frequently in coming decades.
Beyond the initial crisis management, we need to start assessing our larger response, and our role within this, to ensure we are navigating such times to come out stronger and more resilient. There are a number of distinct areas that responsible investors and sustainable financiers should be considering right now.
At a microeconomic level
Within our investment portfolios, we have a critical role of oversight to ensure that our investee companies navigate this crisis with the highest possible respect for their stakeholders, and that they preserve capital in all its forms (financial, human, stakeholder) in order to re-emerge as strongly and quickly as possible. Investors globally are already busy engaging companies to ensure they are protecting and treating employees and their customers well, to ensure a faster company recovery over the long term.
At a macroeconomic level
It is now that we must be considering the broader systemic issues that will dictate just how deep the damage to our economies and societies is, and subsequently, the damage to our portfolios. As a responsible investment and financial services sector with a massive footprint across our economy, we have an obligation to help shape that broader economic system, to ensure our economies are resilient in times of crisis.
Right now, for example, we are reminded of how critical adequate investment (public and private) in health and in science is, and that we all suffer the results of their underinvestment. The recognition of how interrelated we are to broader macro themes and policy positions has driven many responsible investors to step up their focus on public policy advocacy in recent times. This is one of the key reasons the finance industry has come together under the Australian Sustainable Finance Initiative and New Zealand Sustainable Finance Forum to prioritise work in this area, and a major reason that RIAA prioritises this work (see recent ASFI statement on COVID-19).
Read full article here.