Webinar: Stewardship in a time of crisis

16 July 2020
Watch the latest responsible investment webinar from Royal London Asset Management (RLAM)

Carlotta Garcia-Manas, Senior Responsible Investment Analyst and Sophie Johnson, Senior Corporate Governance Analyst at RLAM discuss the Responsible Investment response to the crisis, themes and trends and engagement.

The current COVID-19 crisis has exposed the attitudes of corporates to their employees, to their customers, and therefore society as a whole. The pandemic has had a seismic impact on corporate behaviour and corporate governance. 

With many companies struggling and concerns over profitability and ultimately viability, will this focus on responsibility and sustainability be a short-lived response to the crisis? Or will we see a long term and enduring change? 



SPEAKER: Kate Parker

Good afternoon and welcome to RLAMs first event of our Responsible Investment Network series for 2020. This series builds on the success of last year's sustainable breakfast roundtable series where many of you joined us for breakfast and thought-provoking discussion at the Gherkin.

I'm Kate Parker, I work within the institutional team at all I am responsible for developing relationships with public sector not for profit clients. I'm joined by two of our eminent responsible investment experts - Carlotta Garcia-Manas is a senior responsible investment analyst with over 16 years’ experience in high profile corporate engagement and ESG research, with a focused on areas such as climate change and board  diversity and Sophie Johnson a corporate governance analyst with over six years’ experience. Sophie is responsible for proxy voting and corporate governance analysis and engagement.

Today’s webinar is titled Stewardship in a Time of Crisis - The Increasing Importance of Governance and Engagement. The current COVID 19 crisis has exposed the attitudes of corporates to their employees, to their customers, and therefore society as a whole. The pandemic has had a seismic impact on corporate behaviour and corporate governance. Sustainability, executive pay and diversity have risen up boardroom agendas over the years, but now there is a renewed focus. There will be winners and losers in the corporate world. Those that acted for the greater good of society, those that acted responsibly towards employees and transform their businesses to the benefit of their customers. Conversely there were those who plainly disregarded employee safety and customer interests, who failed to cut executive pay whilst freely using the government's furlough scheme.

With many companies struggling and concerns over profitability and ultimately viability, will this focus on responsibility and sustainability be a short-lived response to the crisis? Or will we see a long term and enduring change? Carlota and Sophie intend to present for about 40 minutes. I'll interject throughout with a few questions. Carlota will start by looking at the Responsible Investment response to the crisis, themes and trends and engagement and then Sophie will provide some fascinating insights into the recent voting season. Looking at executive pay and the transformation in corporate behaviour.

SPEAKER: Kate Parker

So, Carlota over to you.

SPEAKER: Carlota Garcia-Manas

Many thanks, Kate. Multiple leaders from the world have come to the realisation that any steps taken today in rebuilding the economy will have a long-lasting impact on the resilience of societies and the environments where they thrive. In the next slide we will show you how RLAM has positioned of one of the first investors to call on countries and companies to build back better, a call for a rethinking of economic sustainable development.

Let's get started.

On the twenty ninth of May we published our expectations and plans to address the post-COVID economy. This is a call for action from governments and companies to think beyond the immediate crises. A call for governments and companies to think holistically about the future and to evaluate the actions they take now that create wealth and value in the long run. We set our position. I see lots of our client’s capital. This position focuses on our continuous advocacy for sustainable businesses that integrates environmental and social considerations into their strategic thinking. We will continue using our analysis, engagement, capabilities and voting to promote an agenda that takes care of the immediate crisis but that does not lose sight of long-term sustainability considerations.

SPEAKER: Kate Parker


Carlota, if I could just interrupt you there and ask you why did RLAM feel the need to articulate this call for action?

SPEAKER: Carlotta Garcia-Manas

Well, we find the Industrial Revolution brought a large field of good things, it addressed millions from poverty, it provided access to clean water health care comfortable leaving. However, this also brought a number of technologies for what we call the economy uncovered costs, such as pollution emissions and other use of resources. As if I'm going to associate logged downs have forced me on any activity to be on pause. We found this is the perfect stocktaking opportunity to restart the economy. But addressing past inefficiencies.

Let me provide you with some more detail on this rationale. This pandemic has come at a time when the remaining carbon budget or emissions before temperature increases exceeds the Paris goals of below 2 degrees, is almost depleted. Carbon policy that will result in a climate related global cost estimated around 150 trillion to up to nearly 800 trillion by 2100.  Economies have called for early action to tackle climate change. Economic stimulus that delay action or that keeps that emissions trajectory unchanged will compound the current cost of economic reconstruction with a rapid exhaustion of the remaining carbon budget.

Governments have committed already big sums just to keep our households and businesses afloat. This is leading government finances challenge and crudity to policy will be brought with a station and budget cut that without a holistic evaluation of this short medium and long term implications could be fatal. Some companies are also facing significant balance sheet damage damages and will want to address resourcing and spending plans with some urgency. In this context we hope that governments and companies will realise that embedding sustainability into a recovery plan can have significant and long lasting effect. Part being echoed by the UK Commission on Climate Change or UK Triple C in our recent letter to the prime minister. In communication the UK triple team outlined six recommendations for a resilient recovery that included using climbing climate investments to support the economy recovery and job creation.

As long term investors, addressing climate risk reducing that that international intergenerational inequity of having future generations of savers paying for the impact of fossil fuels consumed by previous generations. Let me give you an example. Protecting as asset today, let's say a hotel in Bali, will not only meet its current employment enjoyment but a section against ocean levelled racing for future generations of tourists and investors.

We feel that by taking an active interest in a sustainable recovery, companies will lower their exposure to climate change risk. This is good for everybody. And it's also likely to increase market certainty for future investment and may reduce future volatility. By proactively aligning with their goals for their party agreement, companies are not at the mercy of an orderly interventions of countries close their policy gaps to reduce their emissions. It’s important to note that economic growth coupled with decarbonisation is not only realistic but has already been happening. For example, the Office of National Statistics stated in in 2019 that GDP per head in the UK grew by more than 70 per cent between 1985 and 2016. While CO2 emissions fell by 34 percent. This was attributed to economic and structural changes, technological advances and the application of environmental regulation. This means that economic growth, with its associated benefits of good quality jobs, comfortable homes, and access to health care is compatible with a reduction in emissions.

SPEAKER: Kate Parker


Carlota, there will clearly be countries that recognise the long term benefits of incorporating climate change into their cosy recovery plans, like the UK with their build back better, build back greener.

But how do you think the biggest carbon emitters and those that are far more focused on economic recovery post-COVID, such as the US and China, will approach the issue if at all?

SPEAKER: Carlotta Garcia-Manas

What's interesting is you mentioned those two countries as they seem to be taking quite different approaches not just to climate change, but even more extreme views on managing the pandemic.

I think it's difficult to disentangle all the factors that are having an impact on recent financial moves but let's focus for us taken on one example the oil and gas industry. On the one hand this industry has suffered major swings in oil prices. Now you can say that those had a combination of growth and demand due to a lack of economic activity, plus also an intervention from OPIC plus. In an additional way that current U.S. administration intervenes to support the industry. But that intervention that doesn’t seem to be providing the expected consequences. As you know, we just woke up this week to renewables on one of their major fracking firms in their US filing for bankruptcy. It's also important to note these are the pandemic has not changed the underlying dynamics of renewables becoming cheaper and instead have exposed explosive on their ability so the fossil fuel sector to reduce demand. So, I think our tax-payers money could be better served by investing in technologies that are aligned with our long-term economy economic development, and where countries far currently align or not with the Paris goals. I think the consensus is that long term future looks low carbon.

Let's look now at some of the ESG area that we have seen align with COVID this year. Of an analysis of MSCI world we found 63 companies have 337 stories since the beginning of the year linked to coal bed and other ESG issues.

More than half of those cases were from North America with the UK a second country of greater exposure. The second with greater exposure to this combination of COIVD and ESG were oil and gas, with nine companies. Followed by the food industry, mining, autos, and aerospace with five companies each.

It must be said the food industry fair and fed and field does particularly poorly as we will see next. And this actually ignited the passion of those that advocate on meatless diet. Some of the linkages between ESG and COVID were obvious. We found many stories about labour issues, unions and attempts by companies to lay off staff that were staging a walkout. We also found the acerbation of the impact on communities from competing access to water and health care, to the spread of the virus from workers to their community. We found this was particularly acute amongst mining industries and in particular prevalent in Latin America.

Health and Safety controversies were particularly prevalent among the mining and the meat industry. This shows the exposure of miners and meat packers to coal is due to the difficulty to maintain social distancing and the lack of protective equipment. A number of mines closed operations. While the scandals off of the meat industry is still live in Germany, U.S., and other countries.

We also found less obvious stories. For example, in a time of respective solidarity and beating together we found a number of anti-competitive prices. Particularly in medical and other supplies like price gouging of particularly sensitive items such as facemask or some hand sanitizers. But we also found price intervention in farmers and buyers. Again, particularly concerning with stories about price fixing in the meat industry.

We found some stories around climate change and COVID that puzzled us but when we looked in detail we saw that there were calls from governments for destructive industry not to delay climate action on their basis of their health crisis. There have been some concerns about human rights and corporate complicity in the context of data privacy. As a consequence of requests of Health reports from workers, particularly in Asia. Our analysis also found a number of COVID related cases of poor employment conditions particularly in emerging markets where the quarantine conditions of worker were described as deplorable.

We found numerous stories about misleading communication spanning from pharmaceutical products safety to the accuracy on how  retailers were sanitizing in their shops, enforcing social distancing or how they downplayed or high cases of COVID amongst employees.

The pandemic has brought up well a number of violations of national legislation. These were both related to existing and new legislation responding to that pandemic. So, we found cases cover unlawful regular retaliation against striking workers, as I mentioned before. We also found fines for breaches of COVID related health and safety rules and we also found the presence of more workers in an office than there were officially permitted. We must say that there were very few sectors that came unscathed. For example, the banking industry we found stories of on loans offered to COVID affected businesses that were guaranteed with owner's personal wealth.

SPEAKER: Kate Parker

Carlotta, have you found any particular trends in terms of countries or sectors?

SPEAKER: Carlotta Garcia-Manas

Well, as you've seen there were quite a lot of stories across many jurisdictions and many sectors. But it's important too to notice the social aspect of these stories and the impact on labour, particularly for countries with lower labour standards. For example, their lack of paid sick leave and access to health care has been noticeable in the US. The impact on supply chains and of supply chains also was particularly relevant in emerging markets and has exacerbated tensions that already existed due to poor human rights record. But also, now with the closure of many borders in trouble with restrictions et. Are we thinking of local or local sourcing could become an area of national security of supply and job protection.

SPEAKER: Sophie Johnson

So, if we delve further into the trends that we are seeing emerge one of the biggest that we've seen is a greatly increased focus on the S of ESG. So, on the slide with included some of the most common issues that fit into that category, so Diversity, Inclusion, human rights, labour standards and training.

Social factors unfortunately, has really been the poor relation up until now in ESG world and has been generally tagged on to governance and environmental discussions. But they've rarely been the primary focus.  In large, we think this has been because there's been a lack of information or a lack of consistent reporting for many of these factors. And also, in our view an incorrect assumption that they have less financial impacts on their companies.

So if we take the example of workplace relations or workforce engagement some companies are now beginning to produce much more comprehensive reporting on how they manage their workforce. Including and improving things like parental leave policies diversity and inclusion initiatives and descriptions of how they're dealing with the requirement in the UK, for much more formalized workforce engagement mechanisms. But unfortunately, many companies still don't provide this comprehensive reporting and you can see how reporting around these issues could differ from environmental governance reporting whether it's much more concrete targets or expectations that companies can of course against.

So when we're trying to assess and engage with the company on some of these issues listed sometimes do we really have to go on hearsay because there is this lack of comprehensive reporting. So, whilst the pandemic has affected all of us in a number of different ways, hopefully we're seeing some movement in the way that companies have had to respond and engage with their workforce in response to this. The media backlash that we saw at the start of the pandemic, the two particular companies in the UK that you know admittedly both had a fairly poor track record to begin with -Sports Direct and Whetherspoons, were signals really that society is not prepared to continue accepting that sort of behaviour. So, if we start with Sports Direct as an example, back in March they stated that they stores were going to stay open as they believed themselves to be essential, irrespective of the safety of their staff or their obligation to protect our customers. They thought they should stay open and at the same time they also raise the prices of fitness equipment ready for the surge in sales that came when everyone had to start exercising from home when all the gyms were forced to close. There's also been rumours circulating in the press about staff being forced to work in the warehouses and stores and just general working conditions that have actually plagued the company for quite a few years now and aren't going away. The boss of Whetherspoons was similarly, I think the word is probably insensitive, at the start of this stating back in March that he would stop paying his staff and essentially told them to go out and get jobs at supermarkets instead, because they needed staff and he then, his one concession was that he would prioritise old staff jobs if they reapplied after the pandemic. And that would be the only real sort of step that was taken.

If you contrast this to the huge number of companies that have done the opposite and they've stepped up by switching their production lines, so from brewing beer into making hand sanitiser or has completely shut down despite being deemed essential, to help protect their staff and customers whilst they work out how to adapt. And you've got companies like IKEA that are being celebrated in the press because they didn't use the UK furlough scheme but continued paying their staff. And in the countries where they did use government money to help payment help them pay their staff, they've committed to paying that back. And things like that really stick in the minds of us as investors but also their customers and their employees. So, we think that a company's reputation, whilst that always been really important, will be thrown into much sharper relief by their actions over the last few months. And the idea of corporate purpose, which has really been floating around for the last few years and was starting to gain traction before the pandemic, is something that again will be definitely thrown a spotlight and is ultimately the idea that a company should stand for something much more than just making money.

So realistically speaking we're not expecting companies to address all the evils in the world and solve them. But we do expect them to address things that they have direct control over. Whether that's their own staff and how they treat them, but also the services and the products they offer. And ultimately the impacts that they're having on society. So, we think our role as an ESG team over the next six to twelve months is to assess who has actually responded well to the situation and who hasn’t. At this stage, it’s difficult to claim a correlation but we think it's those companies who have a purpose, aside from just producing profit, who have an engaged workforce, and an agile supply chains and well#-functioning government structures who seems to have successfully adapted to this. And from a practical perspective we're all going to remember which shop saw online delivery services - we managed to buy things like toilet paper but from back in March when all of our supply chains are really struggling to cope with demand when we all suddenly switched to ordering things online

SPEAKER: Kate Parker

Sophie, diversity and inclusion has been high on company agendas for some time with varying degrees of action and success. Now, the crisis has really exposed issues around diversity be it the poor treatment of migrant workers in abattoirs, the disproportionate number of BAME people dying from the disease, to the pressure on working mothers home schooling their children, which is something very close to my heart. Do you think COVID is helping or hindering diversity issues?

SPEAKER: Sophie Johnson

So, you know, we really do hope that this might be one of the few positives to take from the current situation and will help further many these issues because it's become so clear over the last few weeks and months where these disparities do exist in our society, in a way that we probably didn't acknowledge as we should have done in the past. And I think a lot of the issue we're going to have is how to keep that momentum going. So, in the same way that the #MeToo movements around gender issues a few years ago, really helped reinvigorate and draw the conversation back to gender diversity.

At the time a few years ago, we were really struggling to drive that gender diversity conversation and there was a sense of sort of general fatigue both on our side and also with companies when we were discussing the issue, as there's been so little movement on change over a few years. And then suddenly when this all happened people couldn't really get away with brushing the issue aside when you asked the question and could no longer treat it almost as an annoyance when you raised it in sort of a governance meeting. And of course, we haven't reached the point that we want to with that, but people are much happier to have frank discussions and I think there's been real movement at least in people's attitudes. If that's not always reflected yet in the absolute numbers of women on board or that type of kind of absolute figures yet. So, lots of points that you've mentioned. Kate the disproportionate impact of COVID on people from minority backgrounds and the protests that we've seen both here and, in the US, and people's real anger about the lack of progress on this means that I think we're in a similar tipping point on these sorts of issues. And unfortunately real change can take quite a long time to filter through and it can be quite frustrating for this to happen from all sides, but from what we are seeing doing out role and people's real desire for change, but also some of the public responses that we've seen from places like Lloyd's of London and Greene King who have come out and apologised publicly for their historic links to the slave trade - you know we're seeing the right fine come through and that people's minds have really been focused on these issues, so we're quite hopeful that COVID has actually helped some of these issues and will really help accelerate that response and really kind of drive it forward.

So, if we now move on to an area that I spend an awful lot of my time on, executive pay. We think this is going to be a really interesting case study to see how companies have adapted and reacted to the current situation. At the start of the pandemic, the press and my inbox was, full of statements from companies about temporary salary reductions and freezes on bonuses, and various other commitments that they were making. All of which at the time seemed very sensible, particularly when we started to understand just how long the lockdown was potentially going to be in place for. But after a few weeks it did start to feel a bit like people jumping on the bandwagon as more and more companies came out with these commitments and these are largely symbolic but are also quite powerful in the statement that they were making at the time, as we were going into lockdown. So, there are fewer examples on this slide. So, the first one ran to kill initiative in the UK so they were one of the first to come out and announce that they were implementing Q2 salary reduction. The CEO donated 65 percent of their salary to an employee support fund. They cancelled bonuses for the first half of the year and they postponed their equity share awards for 2020. Then the next example United Group who run student housing in the UK. Again they suspended their bonuses for the whole of 2020. Their executives took a 30 percent salary cut for four months,  Tremble in the US which is a software and technology company. They announced one of the biggest reductions that we saw a 50 percent salary reduction to some of the top executives. And another example is Santander in Spain. Their executives announced a 50 percent pay cut to her total pay. So that's including she gets salary extravagant pension awards, so that was giving 25 million to a medical equipment fund in Spain.

So all of these seem very positive particularly when we're very used to headlines about how much a certain CEO is getting paid. But unfortunately, a lot of these cuts has come with very specific timeframes. Whether it's three months and lock down those parts of the year and some of them we're already starting to see be with us at what could be said to be the worst possible time, when we’re just starting to see the consequences of lockdown really come through. I mean only this morning we saw another company announce that they would be having to make another 5000 of their staff redundant as the recovery was taking longer than they initially anticipated. So, what will be most interesting and most telling is looking at these commitments in a year's time at the next shareholder meeting and the end of this financial year. Currently we don't know the full financial implications of lockdown for each of these companies and how their workforces has fared, you know what the furlough bill is and how many of these redundancies we can expect over the next few months. But once we have a clearer picture of that we can start assessing who actually made legitimate commitments and are reflecting the experience of their workforce in what they are paying their executives.

SPEAKER: Kate Parker

Executive pay is an area focused during every voting season but none more so than this year clearly. Sophie, from your conversations with companies, do you get a sense for whether meaningful action this year a short-term response to the crisis is just? or whether COVID it has transformed the executive pay for the long-term?

SPEAKER: Sophie Johnson

So having worked in and around this industry for six years and dealt with executive pay for most of that time, I'm quite cynical, unfortunately. I think a lot of companies are treating this as a temporary measure. But my hope is that temporary means that they will match what the workforce and the general public are experiencing. So, whether that's for a particular company means six months or five years hopefully they will be mirroring that. This morning actually, Michael O'Leary from Ryanair was on the news talking about restarting some of their flights, and specifically mentioned that his 50 percent pay reduction would last until at least next March. So, that's a full financial year for them. But at the same time they're also asking their staff to take between 5 percent and 20 percent pay cuts to help them avoid more job losses. So, they're definitely not a good example of pay starkly but it be really interesting to see what they do come March and you know how far that commitment actually extends. At the time, they also mentioned that I think after 9/11 when airlines were grounded for four days it took them a year to recover and they've all now been grounded for four months. It's going to take them a very long time to get up to pre-COVID levels particularly in those sorts of industries around leisure and travel and hospitality. And it will be around assessing just how quickly they attempt to sort of get back to those previous pay levels. Unfortunately, I think it's inevitable that a lot of companies will try and rush back to how things were previously. But it's on us as asset managers to try and exert some pressure where we can and try and remind companies to consider the bigger picture when they're making these decisions. Hopefully a lot of them have learned lessons over the last few years that they don't want to be the ones that are called out publicly in the press by people like us for a particularly myopic approach. And we have seen some movement in recent years on issues like excessive pensions for executives. So, we really are hoping some of that behaviour will be reinforced and we'll definitely be trying to do our part and make sure that that is the case moving forward.


SPEAKER: Carlotta Garcia-Manas

Before I get into some of the examples of direct engagement that I have done or I have observed, I would like to pause for a second on the positive side that we have found companies supporting society in a number of ways. Sophie mentioned some of these examples already. I found very interesting what I would call the other side of the coin. This being, they're very minor but I have just mentioned we're seeing impacting communities, were also becoming lifelines for those communities.

We've seen this through their provision of goods and services that their governments were unable to fund. Also, the same retailers that were not living up to their employees and unions expectations were providing essential goods, such as groceries to self-isolating people. A number of businesses under extreme pressure, pivoted, such as industrial manufacturers producing ventilators or various other firms as Sophie mentioned before producing alcohol-based hand santisers or face masks. But I think looking up there are the bigger picture and also with me stick in the long term the bigger winners that we've seen have been the providers of digital communications as a great proportion of businesses went into working from home formula.

So, let me give you some examples on how the engagement community has reacted to this unprecedent challenge. Early on, the Principles for Responsible Investment published a call for action for investors to engage with their holding companies in a two-step fashion. The organisation set up to engagement groups on the long- and short-term implications of their pandemic. Likewise, the Access to Medicine fFundations launch a call for engagement with the pharmaceutical industry. We as we do with every engagement collaboration that we get involved with, we found out that we evaluated this call and found that the industry was reacting to the pandemic in ways similar to those requested by this initiative. And after our review of the project we decided to continue with our own engagement on the topic. The majority of our engagements on the issue were are associated with engagement programs or as respond to requests from companies. So, for example we engage with McCarthy and Stone a developing our manager of retirement communities on their request. Their request consideration as to whether they should focus on ESG issues or focus on COID. We actually follow a very similar approach to what the PRI recommendations were and recommend the company to focus on the media financial prudency and solvency particularly because of the business model and the company's exposure and impact by the risk of residential homes. But we also recommend not to lose sight of a lot of the bigger picture and their long-term importance of other ESG issues too.

Also through our engagement program that we trigger before the pandemic became so evident we engage d with companies on cyber security concerns and we asked some of their companies as we were in lockdown particularly some of the ones we were focusing on the health care space, how the pandemic had resulted in additional risk. And this could be linked to diversion of resources for example from risk management, that they had generally, but to address the immediate crisis. We also focus on the potential opportunity saying we've found a few companies benefiting or focusing on these opportunities particularly those with a strong cyber security system that they fund in these circumstances they could capitalise upon us. The pandemic has particularly increased the cyber security risk so.

SPEAKER: Kate Parker

So, Carlotta, what's next for RLAMs engagement post-COVID?

SPEAKER: Carlotta Garcia-Manas


Well first of all I must mention that the period of the last say two / three months has been one of the busiest for their responsible investment team. Having said that, there have been a number of company meetings that have been postponed. So, I think we will try to get meetings back on the agenda. We also hope to expand our cyber security engagement following the importance that I just mentioned on this area particularly in our world relying more and more in digitalisation of the economy and in focus a lot on e-commerce and working from home point of view. But many let me put the past to Sophie for some more insight.

SPEAKER: Sophie Johnson

So, we thought we would share some specific engagement topics that we've been working on as a team over the next few months. So, they are the perennial issue of executive pay, a greater focus on the promotion of ethnic diversity alongside our traditional focus more on gender diversity, and also workforce engagement as I mentioned earlier.


So firstly around executive pay, we've really only just finished this proxy voting season which was relatively calm compared to previous years but I've already has calls with a number of different companies who are already testing the waters around executive pay, asking what we as investors think is reasonable for them to potentially pay their executives at the start of this year, and how they can reinstate bonuses and those types of awards. The argument that we get from companies is always that they need to incentivise their executives somehow, even if it is in a smaller way than they had originally planned to this year. You know everyone would have to work extremely hard and very testing circumstances over the last few months and we think it's quite right that that deserves to be recognized. Our position however, remains that everybody has had to go through that, not just those at the top and we think that if a company hasn't furloughed any staff, there's been no redundancy and there is a pot of money at the end of the year for bonuses then by all means companies can go ahead and pay out the bonus to staff. But you know if a company has made a significant portion of their workforce redundant, borrowing money from the government to help pay wages, we're really struggling to see how you can justify paying out even a small portion of a bonus or share rewards for top executives. So that will really be one of our biggest focuses over the next six months to try and understand exactly what companies are proposing they're going to do at the end of this year.

So diversity and inclusion and ethnic diversity in particular as Kate mentioned earlier there is increasing amounts of evidence that COVID 19 and working from home has disproportionately affected certain groups in society, particularly the female population. And although this is definitely a generalisation and isn't always the case, there is a perceived increased pressure to deal with household chores and home-schooling requirements on women and there has been on some men in these households. So, most employers we think are currently dealing with this admirably by granting people the flexibility that's required to deal with these situations. But what we think the interesting aspect is, is what steps these companies are taking to ensure that certain groups within that workforce are not detrimentally impacted by a future working from home arrangement, and also that companies use this as an opportunity to further their diversity and inclusion cause. So we'll be talking to companies to make sure that these considerations don't fall down the agenda. And it's actually used as a way to push it up the agenda of almost.

So, ethnic diversity was always a topic that we were going to engage on this year and was put in our plan back in December/January as part or a review and former board target to representation came to play this year, and the importance of this has only increased in everyone's minds over the last few weeks and we're starting a formal engagement project on this topic to understand just what is being done at companies that we invest in and what we can do to help encourage that progress.

And then on workforce engagement. This was included as a requirement in the 2019 update to the UK Government's code that companies need to adopt a much more formal ways to engage their workforce. Either by appointing an employee nominated director to the board or via a more formal feedback mechanism and having a board member responsible for overseeing that. And now more than ever we think that it is important to ensure that that process is adequate so workforces are largely physically distanced at the moment whether through people like us who are working remotely or the implementation of social distancing measures in roles that can't work from home. And we think it's really key that companies adequately rise to the occasion on this. And it's those that have a strong culture and work with buy in that are really adapting best to this situation. And we think it'd be really interesting to try and understand which companies are doing well on this, which aren't doing quite so well and the issues that they're facing and how they're adapting to that.

So we thought we would and with these quotes from the former governor Bank of England, Mark Carney from April of this year as it really sums up a lot of what we've been talking about today. So, he said “that companies will be judged by what they did during the war, how they treated employees suppliers and customers, by who shared and who hoarded and that this crisis is a test of stakeholder capitalism.”

SPEAKER: Kate Parker

Well thank you both very much for a really interesting insight into how the pandemic has shaped and continues to shape corporate behaviour, corporate governance, and responsible investment.

Now we always look for a silver lining in a time of crisis so let's hope that a resilient recovery with a meaningful and lasting impact on sustainability and society is that silver lining.

Thank you very much for joining us this afternoon. We hope you'll join us again in September when we look at one of our core sustainable themes the healthcare sector and next generation medicine particularly pertinent in the current environment. Until then we wish you all very well and goodbye.




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