How social inequalities have been brought into focus by Covid-19 and what it means for investors

Some have branded Covid-19 the “great leveller” because anyone can get infected. A closer observation of how the virus has impacted people’s health and finances would indicate that “great divider” may be a more appropriate characterisation. The picture that is slowly emerging shows that existing inequalities have been exacerbated in four areas: income, health, education, ethnicity.

Until very recently, tackling climate change and protecting the environment featured consistently in the news as climate change translated into extreme weather events and physical damage. For example, Time magazine named Greta Thunberg among the 100 most influential people worldwide in 2019. And then Covid-19 happened. More than anything, this crisis has thrust social imbalances into the spotlight. These have been a long time in the making but the added emphasis by Covid-19 might spur corrective action. Bridging the divide will require a collective effort. Governments worldwide have already stepped forward; and asset managers have a role to play too. Being able to integrate companies’ social impact in investment decisions as well as actively engaging with companies on social factors, particularly those relating to inequality, is going to be more important than ever. This paper looks at the increasing focus on the “S” of “ESG” (environmental, social and governance factors) and what it means for asset managers.

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