Coronavirus ESG Monitor: Black Lives Matter

Blog June 4, 2020

Black Lives Matter

Each week, Truvalue Labs provides an overview of the key trends and patterns from our Coronavirus ESG Monitor and dataset.  This week we focus on the issues of race and inequality.

Black Lives Matter

As a black man, and the author of the Coronavirus Weekly, it would be unconscionable not to address the social issues surrounding race that have emerged in focus recently. The fact is that these conditions have always existed as the underlying context within which we all operate, both as individuals and as businesses.

As we have empirically documented in recent months, the impact of COVID-19 has laid bare the holes and torn fabric of societal issues. For example, African Americans have died from the disease at close to three times the rate of white people (50.3 per 100,000 vs. 20.7). Factors driving this include evidence suggesting that black people who visited hospitals in February and March were less likely to get tested or treated, are generally more likely to be frontline workers, as well as a host of other systemic issues.

In The Financial Ecosystem: The Role of Finance in Achieving Sustainability, Satyajit Bose, Guo Dong, and Anne Simpson astutely point out that “the flows of capital controlled by the financial sector are larger than those available from governments and multilateral agencies…it would be naïve to imagine that governments alone might have the capacity to address the awesome responsibility that economic theory thrusts upon them: that of protecting the natural and human capital upon which the continued circular flow of savings depends.”

So, can investors and modern-day corporations affect change in real-world outcomes by shifting the deployment of capital? Well of course, it is this assumption which underpins the core objectives of ESG.

Nevertheless, as corporations and brands have begun to speak out, investors must prioritize the impact of core operations and actual actions, rather than empty PR statements. For example, Citigroup, JPMorgan, and Wells Fargo all issued statements of support, yet all have been accused of issuing loans to African Americans with rates 3.38x, 2.28x, and 2.21x times higher than other borrowers.

Calvert CEO John Streur suggests that the pitfalls of such analysis—driven by a lack of information required to assess companies’ racial diversity—exists even within the realm of ESG investing, noting “As investors, we need to do a better job of differentiating companies based on where they stand on these critical issues and push hard for positive change. We need information from companies about the outcomes they are achieving, not only the values they espouse, and it is our duty as shareholders to hold them accountable for inaction”.

Truvalue Labs data is capturing company responses in this critical moment, providing insight into how stakeholders perceive the actions firms are taking. While the outsized and intense attention on this issue will inevitably pass—will sentiment and actions by corporations and individuals permanently change?

Here we highlight a few of the Spotlight Events addressing or related to issues of race consuming the US narrative in the last week. Is the dearth of Spotlights telling?

spotlight-events-address-black-lives-matter-movement

We will continue to add highlights of the data trends within our Coronavirus ESG Monitor.  We will also send out a weekly Coronavirus ESG update featuring key insights and noteworthy trends. Subscribe here.