Sustainability Investors Shift Their Focus to Social Issues

The global pandemic and social movements are accelerating change in the way investors, workers and the public view the role of companies in society.

The concept of sustainability has gained a solid foothold with investors in recent years as a way of evaluating companies on such matters as their environmental impact and commitment to diversity. But the coronavirus pandemic and this year’s protests over racial issues have brought social factors to the fore, with investors and other stakeholders viewing sustainability more in terms of a company’s ability to withstand the financial shocks from social upheaval as well as its ability to address some of these issues, both internally and externally.

“Pre Covid-19, environmental issues garnered much of the attention” of sustainable investors, says Vikram Gandhi, a professor at Harvard Business School. But with the arrival of the global pandemic and widespread protests calling for social justice, Prof. Gandhi says, “the focus is shifting to social issues such as how companies treat their employees, suppliers and customers.”

Under pressure from investors, employees, governments and other stakeholders, some companies, through large charitable gifts, setting up emergency production, diversity initiatives and other responses, are showing they are responding to their communities.

Racial issues

Concerns about the legacy and effects of racism are central to the two major social issues now confronting the U.S. The killing of George Floyd, a Black man, during a routine arrest by Minneapolis police ignited demonstrations around the world. Demographic statistics about victims of Covid-19, meanwhile, have shown that the disease has disproportionately affected people of color—an outcome, health experts say, tied to a lack of access to proper health care and a disproportionate presence in low-paying jobs at high risk of exposure for many people of color.

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