At a glance
In response to the COVID-19 pandemic, the initial short-term setbacks for environmental sustainability, such as an increase in single-use products for hygiene reasons, have been counterbalanced by the scope of commitments from many governments to ensure a “green” economic recovery. Sustainable portfolios continue to hold up well during the rebound from the COVID-related market drawdown. Looking ahead, we already see signs of the growing interest in the "social" aspect of ESG, and the green recovery commitments mean environment-related opportunities will remain in the spotlight. So we see plenty of opportunities in sustainability and recommend investors seek exposure to it, especially in areas such as healthtech, renewable energy, and impact private market strategies such as in oncology.
Sustainable investment opportunities during COVID-19
The setbacks for environmental sustainability during the COVID-19 crisis, such as an increase in single-use products for hygiene reasons, have generally proven to be temporary. As lockdowns ease life in many countries is returning to some version of normality, even including the use of ceramic coffee cups again.
Sustainable portfolios held up relatively well during the March 2020 drawdown and continue to benefit from defensive positioning and a supportive policy environment. The European Commission, along with a host of governments, has reaffirmed its commitment to a "green recovery," suggesting that sustainability remains a priority. We expect increased investor focus on ESG considerations as a consequence of the pandemic, an elevated importance of "social" for companies and investors, and investor focus to remain on environment-related opportunities.
There are ample ways to gain exposure to sustainable investment opportunities, including the following:
Key investment takeaways:
- We expect an increased focus on ESG considerations after COVID-19 from investors and governments, with a reduced tolerance for unsustainable practices.
- As COVID-19 has focused the world's attention on public health, any social changes that emerge, such as investment in healthcare or elderly care, will ultimately be reflected in new investment opportunities.
- We highlight healthcare, access to medicines, and social bonds as areas that we think will rise in importance to investors.
- Investors can seek diversified exposure to sustainable investing opportunities, or channel their capital in a manner more exposed to a specific issue important to them. Many SI approaches have defensive characteristics, while SI themes provide growth and upside potential.
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