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The changing face of sustainability

03 June 2020

Written by Justin Hallett BDO

Justin Hallett, Executive Director at BDO in Guernsey, considers the future for sustainable finance after the coronavirus pandemic.

Covid-19 has triggered many global environmental improvements – take air quality and the reported resurgence in wildlife as a result of the growing restrictions on the movement of people due to enforced lockdowns.

However, the impact of the pandemic on vulnerable populations who lack access to sufficient financial wealth, to food and medical services is becoming a real concern as we move through this scenario around the world.

Global markets and business operations themselves are being challenged in wholly new ways. As economies feel the full implications of the pandemic, for many businesses, the stability of supply chains, investors, clients and lenders may still be unclear.

All of this makes the future shape of sustainability hard to predict. The aims of any global sustainable development goals in the aftermath of this pandemic are not yet fully visible.

Yet it seems obvious that sustainability, in whatever form it may develop into, will feature on every corporate agenda. To prepare for the ‘new world’, we recommend all parties to revisit their sustainability strategies, which could include:

  • Non-financial reporting within annual financial statements such as a voluntary section on ESG/CSR.
  • A review of the wider environmental impact assessment.
  • Undertaking supply chain environmental and stainability assessments of the underlying investments and the environmental impact of service providers.
  • Refreshing acquisition due diligence to give due attention to ESG and sustainability factors beyond financial impact, although financial will continue to be a driver.
  • Looking to obtain appropriate and genuine kite marks and branding such as TISE Green and Guernsey Green Funds.

Following Covid-19, once investors have had time to stabilise their own portfolios, it is likely that they will become even more focused on the social impact of their investing activities. Consequently, investors may entertain a reduction in returns for increased social impact.

Many current best practices could become hygiene factors, so the challenge is for funds and asset managers to be innovative and establish their own unique green and sustainable practices to make them stand out in what will most likely become a crowded marketplace in the aftermath of the pandemic.

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