With markets facing acute pressure from the global pandemic and a possible prolonged recession on the horizon, how can investors and private sector leaders reinforce their commitments to sustainability and stakeholder purpose?
The first of the series of virtual roundtables, (Re-)Building Resilient Economies in a New Era of Instability, focused on strategies investors can adopt to accelerate the revival of more resilient and equitable economies, as they maintain a commitment to the Sustainable Development Goals (SDGs) while responding to current global crises and market turmoil.
The roundtables mark what would have been the World Bank and IMF’s spring meetings and are focused on sustainability and corporate response to the COVID-19 pandemic.
Representatives from Guggenheim Partners, The Rockefeller Foundation, Willis Towers Watson, and S&P Trucost came together for the first Goal 17 Partners sponsored virtual event. The roundtable was moderated by Maha Eltobgy, Senior Director, Head of Investors Industries, Member of the Executive Committee, WEF.
You can watch the video of the panel here.
In her opening statement for the event, Eltobgy touched on the concerns presented to us during this crisis. “Obviously we’re faced with a serious pandemic,” she said. “How can we build resilient economies and what is the role of the private sector?”
The participants made it clear that even in the face of adversity, the private sector cannot lose sight of protecting citizens in the short and long term. Dr. Judith Rudin, former President of the Rockefeller foundation, said that a crisis such as this should be used as an opportunity for transformation. “Resilience building begins with preparation and awareness” she stated, “but the mistake is made if we prepare again for only this type of crisis. Resilience is about developing the capacities that allow us to prepare for any crisis.”
Jim Pass, Head of Project Finance at Guggenheim Partners, noted that the concerns of the current pandemic are two-fold—the healthcare of citizens and restoring stability to the global financial system. But the world’s appropriate preoccupation with these concerns makes it “extremely timely” to reinforce the importance of maintaining its focus on sustainability objectives. “Sustainability is a belief system,” he said. “Rather than letting the crisis undo progress in sustainability or meeting the SDGs, we should be using it to validate them.” He discussed how his firm has remained focused on the pillars of their sustainability agenda, which is driven by the goal of bringing institutional capital to sustainable infrastructure investing.
Rowan Douglas, Head of Capital Science & Policy Practice, Willis Towers Watson, underscored the necessity for accounting for the cost of extremes. Reinsurers are expected to prepare for extreme events that occur every 100 to 1,000 years. Douglas argued that this approach to preparedness should apply to more than reinsurers. “One of the challenges we’ve found is getting governments, companies, and even ourselves to focus on managing extremes, and putting a value on the risks of extreme, but infrequent, events,” he said. “Once the cost of risk is calculated, resilience can be valued.”
Policy is something that Richard Mattison, CEO of Trucost, a part of S&P Global, is watching very closely. “Policy response will dictate how we rebuild our economies over time,” he said.
“The estimated cost of the fiscal stimulus committed across the G20 and the EU in March was about $5.1 trillion, but the annual cost of keeping the world within a 1.5 degree Celsius pathway is between $1.6 and $3.8 trillion.”
Trucost is tracking the ability for the recent wave of proposed stimulus packages to build a more resilient and more sustainable economy. Along with policy making endeavors, Mattison pointed out that while there are massive outflows from equity markets, ESG oriented funds have seen inflows. “ESG indices are actually outperforming their traditional counterparts.” Mattison has found that not only does a sustainability lens encourage a better future for us all, but it also has a positive real-time monetary impact.
You can watch the video of the panel here