Covid-19 accelerates ESG issues, finds IR Magazine research

ESG was already being mentioned as a key objective by a third of IROs before the novel coronavirus took hold, but the issue has been accelerated as a result of the pandemic, according to a new report from IR Magazine.

Research for the IR Objectives and Challenges report, which was conducted before the pandemic set in, shows that a third of IR objectives mention ESG – with investors ranking ESG as the biggest challenge for IR teams through 2019 and 2020.

The study shows that 32 percent of IR objectives mention ESG – already a big jump on 2019, when just 7 percent of IR objectives mentioned the issue. But further research, conducted once the pandemic had set in across the globe and published in the Covid-19 and IR report, shows that, for many, the virus has pushed ESG even further up the agenda. 

The report, based on the findings from 187 online interviews conducted between May 12 and May 21, 2020, with members of the IR Magazine research panel, notes that ‘46 percent of panel members agree that Covid-19 has increased the importance of ESG issues.’ There are big regional variations, however, to the degree that more respondents based in the US – where there is traditionally a lower focus on ESG – believe Covid-19 has not increased the importance of ESG than those who believe it has.

In Asia, more than two thirds (68 percent) agree that Covid-19 has increased the importance of ESG; in Europe, the figure stands at 46 percent. 

Conor Murtagh, director of strategy and IR at Irish homebuilder Glenveagh, is one of those seeing an increased focus on ESG. ‘The pandemic has really accelerated the ESG agenda,’ he says. ‘We’ve seen how highly rated ESG stocks have performed relative to other stocks – and there has been that outperformance. 

‘That has accelerated the need to ensure that while you might be doing the right things internally from a governance or risk-management strategy perspective, as far as ESG is concerned, it’s very important that you’re communicating it in a clear way to investors.

‘[It’s also important] that you’re communicating in a way that can be picked up easily by all of the ratings agencies, particularly when your reports are being scanned by computer algorithms, for example.’