COVID-19: Implications for ESG Investing (American Century)

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by Guillaume Mascotto, Vice President, Head of ESG and Investment Stewardship

There’s no doubt COVID-19 is altering global societies and economies. Yet the virus is affecting investment theory, too. There is a growing consensus among many investors that the so-called neoclassical economic theory must evolve past the sole focus of maximizing firm profits.

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These investors assume what is good for the long-term viability of our economic system and society will also lead to good stocks and good companies. As a result, investors are increasingly measuring company performance by more than just financial profit and loss. While key trends were already altering the investment management landscape prior to COVID-19, we believe the virus’ escalation to a global pandemic will hasten the shift in mindset toward sustainable investing. This shift does not seek to splinter socio-economic development. Instead, it seeks to achieve a balance between environmental, social and economic considerations.

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In the midst of a global pandemic, Apple announced one of the corporate world’s most ambitious environmental blueprints – to reduce the climate impact of every Apple device to net zero by 2030. The plan involves cutting 75 per cent of the company’s existing carbon footprint, not only for its own business but also across the manufacturing supply chain and product life cycle.

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