The coronavirus pandemic has rallied a remarkable response from governments, NGOs, businesses, healthcare professionals and citizens. Arguably, this period of crisis has also exposed vulnerabilities in our economies and the systems on which we all rely. Looking ahead, we think investors will increasingly use sustainability as a lens to highlight major global risks and test the resilience of businesses and systems. Environmental, social and governance (ESG) factors will become even more important to assess the ability of both corporations and governments to weather a crisis of this scale. Our sustainability team has identified five ways in which this crisis may change the priorities for businesses – and investors.

People may seek out greater financial security and better access to healthcare

The coronavirus crisis has shown people just how quickly their lives can be turned upside-down, and how powerless they can be in the face of these challenges. Many citizens are experiencing a sudden loss of ability to earn an income, which may lead to a greater emphasis on insurance, investments and rainy-day savings. The outbreak has also demonstrated the fragility of life, which could lead people to focus more on healthy living and the importance of a good healthcare system.

Until now, some pressing healthcare issues have gone unaddressed because of concerns about high costs. But in the aftermath of this crisis, societies will likely demand that their governments sustain a suitable healthcare model. Governments will, in turn, ask their societies for support, both financially and through changes in behaviour, such as healthier food choices, a greater focus on hygiene and increased exercise. Regardless of how these behavioural changes manifest themselves, we think healthcare systems will become increasingly important in daily life, and we expect people will demand better access to high-quality care.

Supply chains could shorten; remote working could become the norm

Many international companies were already rethinking the geographic footprint of their production processes and adopting more local supply chains, partly due to geopolitical tensions. The coronavirus outbreak is likely to accelerate this process, fuelling the trend towards simpler supply chains that are easier for firms to control. As companies grow more local, they may also place a stronger emphasis on community relations, which should encourage more responsible behaviour and sustainable practices that will enhance brand value and customer loyalty.

Furthermore, companies will want to show how they will cope with similar events in the future. They may seek to formalize the infrastructure needed for employees to work and collaborate from home and serve clients without meeting face-to-face. The recognition that much commercial activity, socializing and learning can be carried out remotely should help those businesses that support these activities; tourism may also be affected. While there’s likely to be demand for improved virtual collaboration tools, companies will want to double down on cyber-security and data security as even more of our lives move online.

Read the rest of the article here at The Asset ESG