The Global Pandemic and Social Unrest as Catalysts

By Mark Peters, CFA, Managing Director and Jude Erondu, Associate

During 2020, the global pandemic and the death of George Floyd were catalysts for raising awareness of health risks and social inequity. This heightened awareness changed how individuals and businesses interact and amplified dialogue around the health and well-being of employees and social issues such as diversity and inclusion.¹ In addition, we have seen a rising concern for climate risk during the year.² This heightened awareness may also coincide with a heightened interest in environmental, social, and governance (“ESG”) perspectives.³
 

In early March, the World Health Organization declared the Coronavirus as a global pandemic, leading to a worldwide lockdown. The lockdown impacted basic human interactions, causing massive disruption to cross-border travel, education, the supply chain industry, and overstretched health care systems.⁴ Companies were forced to deal with unanticipated challenges, and those that were well-positioned were rewarded. Companies that were unable to adjust faced diminished revenues and fixed expenses. Ultimately millions of employees lost their jobs, and an untold number of employers went bankrupt.⁵ The travel, hospitality, and food industries were the most severely hit by the lockdown.⁶ Amidst the disruption, there was a rise in innovation and a heightened awareness of the need for work/life balance. Although clouds have cast dark shadows since March of 2020, there is renewed hope as governments race to distribute vaccines that scientists developed in record time.⁷ 

As the world dealt with the lockdown of 2020, the death of George Floyd resulted in social unrest and protest in cities across the United States. The protests helped shed a strong light on the social and economic inequality that exists between the “haves” and “have nots,” with minorities more likely to work on the front-line and more likely to suffer adverse health consequences.⁸ Many businesses responded by committing to address social and economic inequalities.⁹ 

Awareness of climate risk was also heightened during the year. Pope Francis urged 1.2 billion Catholics worldwide to divest from companies with fossil fuel exposure.¹⁰ Major academic institutions such as the George Washington University, The University of California, and Cornell University moved toward becoming fossil fuel-free.¹¹ And recently, the Federal Reserve committed to join the Climate-Change Club for Central Banks next Spring.¹² 

As the grim reality of 2020 gradually fades away with vaccine distribution in 2021, we expect a gradual easing of the challenges presented by the lockdown. We are optimistic much of the innovation and awareness that emerged during 2020 will continue to thrive and that ESG and diversity, equity, and inclusion (“DEI”) issues will be given more prominent consideration within investment and business decisions. 

 

 

Citations
¹ Karin Brulliard. “At dinner parties and game nights, casual American life is fueling the coronavirus surge as daily cases exceed 150,000. “ Washington Post. November 12, 2020. Accessed December 2, 2020. https://www.washingtonpost.com/health/2020/11/12/covid-social-gatherings/ 
² Jerry Schwartz. “In 2020, AP photographers captured a world in distress.” Associated Press. December 1, 2020. Accessed December 2, 2020. https://apnews.com/article/ap-photos-2020-virus-racial-injustice-2dffd369c407c5b313f3db0c1fa35377 
³ Pippa Stevens. “Sustainable investing is set to surge in the wake of the coronavirus pandemic.” CNBC. June 7, 2020. Accessed December 2, 2020. https://www.cnbc.com/2020/06/07/sustainable-investing-is-set-to-surge-in-the-wake-of-the-coronavirus-pandemic.html 
⁴ Julia Belluz. “ 9 questions about the Covid-19 coronavirus pandemic, answered.” Vox. March 12, 2020. Accessed December 2, 2020. https://www.vox.com/2020/1/31/21113178/what-is-coronavirus-symptoms-travel-china-map 
⁵ Jonah Lipton. “What Ebola taught me about coronavirus: panic will get us nowhere.” The Guardian. March 11, 2020. Accessed December 2, 2020. https://www.theguardian.com/commentisfree/2020/mar/11/what-ebola-taught-me-about-coronavirus-panic-will-get-us-nowhere 
⁶ Adam Behsudi. “Wish You Were Here.” International Monetary Fund. December 2, 2020. Accessed December 2, 2020. https://www.imf.org/external/pubs/ft/fandd/2020/12/pdf/impact-of-the-pandemic-on-tourism-behsudi.pdf 
⁷ B. Rose Huber. “ COVID-19 shutdowns disproportionately affected low-income Black households.” Princeton School of Public and International Affairs. November 30, 2020. Accessed December 2, 2020. https://www.princeton.edu/news/2020/11/30/covid-19-shutdowns-disproportionately-affected-low-income-black-households 
Kevin Stankiewicz. “ CEOs are offering plans and investments to address racial inequality after George Floyd death.” CNBC. June 11, 2020. Accessed December 2, 2020. https://www.cnbc.com/2020/06/11/ceos-unveil-plans-against-racial-inequality-after-george-floyd-death.html 
⁹ Id. 
¹⁰ Bill Holland. “Vatican’s call for fossil fuel divestment could have long-term impacts.” S & P Global. June 30, 2020. Accessed December 2, 2020. https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/vatican-s-call-for-fossil-fuel-divestment-could-have-long-term-impacts-59221023 
¹¹ Deirdre Paine.” George Washington University Commits to Divestment From Fossil Fuels.” The DC Post. June 30, 2020. Accessed December 2, 2020. https://thedcpost.com/george-washington-university-U.U.U.C.vestment-fossil-fuels/ 
¹² Rachel Frazin. “Federal Reserve applies to join group of banks managing climate risks.” The Hill. November 11, 2020. Accessed December 2, 2020. https://thehill.com/policy/energy-environment/525538-federal-reserve-applies-to-join-group-of-banks-managing-climate 
Please see the PDF version of this article for important citations and disclosures.

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