Posthaste: How the coronavirus crisis could change the way we invest

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The coronavirus and its fallout will trigger a “skyward surge” in the sustainable investing known as Environmental, Social and Governance (ESG) funds, says global financial advisory firm deVere Group.

In the recent rout that sent markets plunging into a bear market within days, the average ESG fund fell by half the decrease of the S&P 500, according to Bloomberg data.

ESG is a class of investing that focuses on environmental issues such as climate change and renewable energy, social issues such as workers’ rights and governance issues such as corporate transparency and board diversity.

“ESG investing was already going to reshape the investment landscape in this new decade – but the coronavirus will quicken the pace of this reshaping,” said deVere CEO Nigel Green.

Green says the pandemic will trigger a surge in sustainable investing over the next 12 months for three reasons.

First, even before this crisis, ESG investments often outperformed the market and had lower volatility over the long run. “Since the Covid-19 public health emergency up-ended the world, the latest broad analysis shows that ESG funds have typically continued to outperform others,” he said.

Second, Green says the pandemic has served to expose the vulnerability and fragility of societies and the planet. “It has underscored the complexity and interconnectedness of our world in terms of demand and supply, in trade and commerce – and how these can be under threat if not sustainable,” he said.

And lastly, millennials. Earlier this year deVere did a global survey that found 77% of millennials said that environmental, social and governance investing was their top priority. This beat anticipated returns (10%) and past performance (7%) in importance in their investing decisions.

“This is crucial because the biggest-ever generational transfer of wealth — likely to be around $30 trillion — from baby boomers to millennials will take place in the next few years,” Green said.

Meanwhile, the pandemic has sharpened the focus of ESG funds on how companies are treating their employees during this crisis.

“We’ve sought to find companies that invest in their employees rather than treat them as disposable,” Jonas Kron, who helps oversee US$3 billion as director of shareholder advocacy at Boston-based Trillium Asset Management, told Bloomberg.

Funds are looking at whether employers keep paying workers during shutdowns, provide adequate medical insurance and allow employees to work from home.

“People will remember how companies treated their workers and how they behaved within the community,” John Streur, chief executive of Eaton Vance Corp.’s responsible-investment unit, Calvert Research and Management told Bloomberg.

Here’s what you need to know this morning:

• Canadian heavy oil cheaper than a pint of beer as North American demand for fuel plummets
• ‘It will no doubt get worse’: Canadian unemployment rate may already top 10 per cent, as global jobless claims surge
• Stock futures fall after strong three-day rally as virus threat continues
• WHO Urges Trump, Johnson to Step Up Fight Against Coronavirus
  
• Mexico’s automakers want to delay USMCA rules, cite coronavirus, lack of time
• Oil mixed on stimulus hopes and demands fears
  Magna to make masks as 2,000 Canadian manufacturers step up to fight COVID-19
• Ottawa asks banks, credit-card companies to lower interest rates over COVID-19
• VW burning through $2.2 billion a week as coronavirus halts production – CEO
• European banks should halt 2020 dividends due to epidemic – trade body
• China’s auto industry wastes no time coaxing drivers back to showrooms after lockdown

• Here’s what the investing pros are buying in the fastest bear market in history
• ‘From nobodies to essential workers:’ Truckers now key to getting goods on empty shelves in the coronavirus crisis
• This Ontario man may have to delay retirement after coronavirus crash wipes out 20% of his investments
• When all this is over, green oil is going to be a thing in Canada

• Parliamentary Budget Officer releases a report on the potential economic and fiscal implications of the COVID-19 pandemic and recent oil market developments
• The Prime Minister will address Canadians on the COVID-19 situation at 11:15 a.m. ET
• Government of Canada officials will hold a news conference to provide an update on coronavirus disease at 12 p.m. ET
• Deputy Minister of Health and Chair of the COVID-19 Command Table Helen Angus will be joined by Matthew Anderson, President and CEO of Ontario Health and Dr. Kevin Smith, President and CEO of University Health Network, to hold a media briefing on Ontario’s efforts to address capacity issues at intensive care units and slow the spread of COVID-19 at 2 p.m. ET
• B.C. Health Minister Adrian Dix and provincial health officer Dr. Bonnie Henry provide an update on novel coronavirus
• Today’s Data: Canadian payroll employment, earnings and hours, U.S. personal income and spending, University of Michigan consumer sentiment index

North America now has data on how the coronavirus is affecting the economy, and wow, it’s one for the history books. Initial jobless claims in the U.S. released Thursday soared to a record 3.3 million, five times higher than the peak reached during the Great Recession. “What seemed impossible just two weeks ago is now reality,” said Oxford Economics. Markets took the data in stride, betting that stimulus would help ease this pain. But economists expect this is just the beginning. Oxford forecasts 15 to 20 million jobs in the U.S. in coming weeks with the unemployment rate surging above 10% in April.

— Please send your news, comments and stories to pheaven@postmedia.com. — Pamela Heaven @pamheaven

With files from The Canadian Press, Thomson Reuters and Bloomberg