by Hank Boerner – Chair & Chief Strategist – G&A Institute
What might our world look like when the COVID-19 global emergency finally winds down and we move into the “recovery and restoration” phase? What is in store for business in the transition? And beyond? Looking at risk and opportunity through an ESG lens.
BNP Paribas Asset Management has offered up some important perspectives. ESG Analyst Anupama Rames asks and answers: (1) Will the world go back to status quo when we exit the current dis-location? (2) Probably not.
“We believe,” she writes, “that the learnings from the go-remote experiment are here to stay.”
Last year BNP Paribas offered up the “3-E’s” – their methodology for addressing what the large asset management firm sees as the three key sustainability challenges of our time: (1) Energy transition; (2) Environmental sustainability; (3) Equality and inclusive growth.
Now, analyst Rames is determining the risk, changes, risk mitigation strategies and opportunities in each of the categories.
The examples she cites:
There’s now a 20% drop in global oil consumption and negative regional oil pricing; the energy sector is under-performing equity and high-yield indices. Such factors as lower plastic uses (petro is a key component), electrification of transport and climate mitigation policies add up to dampened oil demand.
Changes in work patterns (more remote working, distancing), reductions in personal and business travel mean less oil demand today. Key concern going forward: stranded oil & gas assets over the long-term.
Possible winners in the opportunity zone: renewables, conservation measures, energy storage (capturing the energy from the windmill).
And, BNP Paribas ESG integration methodology aims to differentiate winner and losers in the transition, post-emergency.
Analyst Rames brings up a topic not really being discussed (yet) in broader public dialogue – the disease transmission path, from animal to human, such as with COVID-19, SARS, MERS, and other virus infections of recent years. Natural habitat destruction and global wildlife trade are factors. Vectors move in times of climate change and bring diseases with them!
Equality and Inclusive Growth
The urban-rural divide — with many differentiations in the access to opportunities, access to the digital economy, mis-information overload, access to affordable healthcare — are key issues being confronted by society (and with varying results during the crisis).
The virus crisis is accelerating the transition to “remote” and digital connectivity in our personal and business lives. This can be positive – and quite negative in the socio-economic divide.
A positive: on the opportunity side, remote healthcare can bring benefits to rural areas. The virus crisis day-by-day brings society closer to a “digitized” future. Analyst Anupama Rames sees this: Of all industries being re-shaped, healthcare will be most affected.
And an important note to corporate leaders: BNP Paribas is viewing transformations and market shifts through the lens of its 3E (ESG) framework, to identify public companies being proactive in finding solutions to the societal issues that can support “sustainable returns” for the long-term.
There are more details for you in the Top Story.
Will COVID-19 lead to sustainable change?
Source: Investors-Corner (BNP Paribas Asset Management)
Will the world go back to ‘status quo’ when we exit this dislocation? Probably not. We believe the learnings from the ‘go-remote’ experiment are here to stay. The implications for the future of energy, real estate, work…