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Sustainability Insights: How To Find Income In a Sustainable Way? Invest in Corporate Resilience

ESG and Sustainable investments

Sustainability Insights: How To Find Income In a Sustainable Way? Invest in Corporate Resilience

The COVID-19 pandemic has taken the world by storm. Apart from taking a huge toll on human health and life, this crisis has also put global markets in flux, highlighted the importance of sustainability, and accelerated the search for yield in a 'low rates and low growth' world.

But is it possible to get a decent amount of yield in a sustainable way? Our report discusses possible ways to achieve comparable risk adjusted yield over the investment cycle in a sustainable way by investing in resilient companies.

  • The outbreak of the Coronavirus pandemic led to extreme market volatility, triggered a sudden and sharp global recession and has further accelerated search for yield amongst investors in a 'low rates, low inflation and low growth' world.
  • Corporate response to deal with the crisis has been heterogeneous, especially with regards to employees' working conditions and health benefits, supply chains and repurposing of operations.
  • But at the corporate level, one important factor that has come to the fore is the importance of the 'R-element', i.e. 'Resilience' of corporates to deal with unforeseen shocks like COVID-19. Companies are now realising that climate change too could bring about similar tail risks which could hugely disrupt their operations, diminish profitability and threaten their very existence.
Can yield and sustainability go hand in hand?
  • But 'how do corporates become resilient to such shocks?', we hear you ask. The answer is, by taking into consideration the financial materiality of Environmental, Social and Governance (ESG) factors and embedding the principles of sustainability in the core of their existence. Environmental sustainability has permeated all aspects of business strategy and is becoming increasingly synonymous with business sustainability.
  • But can sustainable companies perform financially well and deliver decent returns in this environment? Does one not need to give up profitability for doing good for the environment and society? Can yield and sustainability go hand in hand?
  • Our report discusses these important questions on every investor's mind whilst finding ways of earning a decent yield, with sustainability, in this uncertain, post COVID-19 world.
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