As we mourn the people we've lost and continue to battle through the Covid-19 pandemic, some corporate and investment leaders are planning for an acceleration of the transition to sustainable finance and stakeholder capitalism.
For many, the drive towards this transition has been their life's work. Responsible investors, corporate governance advocates, sustainable and impact investment leaders have all been working to transform capital markets to make them more sustainable, more just, more fair.
And we've been winning. Even free market stalwarts now acknowledge the shift from shareholder value maximization to stakeholder theory and the need for investors to embrace their stewardship obligations. They're recognizing that “one of the consequences of the pandemic must be a redrawing of the relationship between business and society." (Virus Puts Responsible Capitalism to the Test, Editorial Board, Financial Times, March 29, 2020)
Among the leaders in this effort, the International Corporate Governance Network (ICGN) has launched a Global Statement of Shared Governance Responsibilities, aimed at both corporate boards and investment institutions.
Led by investors but with a membership that includes board directors, corporate leaders, academics and governance experts, ICGN has a collective asset base of US$54 trillion. In the midst of the pandemic, ICGN is calling for the prioritization of employee safety and well-being, a long-term view on social responsibility, fairness and sustainable value creation to build a stronger economy and society. For too long, business and investors have prioritized efficiency over the environment, people and resilience. Those days are over. Environmental, social and governance (ESG) measures can help advance economic institutions that serve all stakeholders and better able to weather future systemic shocks.
The Covid-19 pandemic has shone a spotlight on the fragility of our economy. It has ignited an acute recognition of social failures and deep gender, racial and income inequality. It expands our recognition of the materiality of biodiversity and reinforces our commitment to fighting climate change.
There are no guarantees. It's up to each of us. The pandemic has taught us that our individual actions are crucial. But the signals seem clear: we are now moving into a new era of engagement, cooperation, collaboration. Things will not be the same.