Can ‘the year of social’ turn talk into action?
The Covid pandemic and racial injustice protests have thrust social investing into the spotlight this year. However, using this to achieve long-term change on the ground will be a tough job.
Social investing can often appear to be the poor relation in the environment, social and governance family. In theory, ESG investing covers each issue in equal measure. In practice, investors have tended to focus first on governance risks and more recently on climate change.
“In the past, a lot of companies hadn’t really highlighted social issues as being top of their agenda because they were in industries that were very focused on environmental or governance issues,” says Manjit Jus, global head of ESG research and data at S&P Global.
“They just didn’t feel social was relevant or key to their business, so they hadn’t emphasized reporting on those topics.”
Another ESG data provider puts it more bluntly: “Prior to Covid what we were hearing from investors was: ‘I understand the importance of governance and environment, but why should I even care about social?’”
The combination of a pandemic and racial injustice protests in the US and elsewhere, however, have changed all that.