COVID-19 has revealed yet another reason for investors to pay attention to a company's actions on sustainability: “companies that do well on sustainability criteria are likely to be more resilient than those that do not when an unexpected crisis occurs.”
Portfolio manager Vincent Durel and sustainable investing analyst Aela Cozic, both of Fidelity International, note that, since the onset of COVID-19, “We found a strong positive correlation between a company's relative market performance and its ESG rating, with ESG leaders outperforming laggards across asset classes.” And they highlight three companies that have shown impressive resilience: L'Oréal, Danone and Unilever.
“Good sustainability credentials proved to be an indicator of quality and effective leadership, as well as of greater resilience to market fluctuations. As a result, ESG characteristics look set to become even more important for assessing a company's readiness for the future, whatever that future may look like.”