Impactful companies' response to Covid-19
For intermediaries only
In this article from fund manager M&G Investments, Veronique Chapplow, Investment Director at M&G Investments, explores impact investing in the current climate and beyond.
What’s impact investing? Why is it relevant to today’s crisis?
Impact investing is about investing with the intention to generate positive societal impact alongside a financial return. It is often perceived as a ‘nice to have’, or something which is really only appropriate for the ‘responsibly minded’. However, as Covid-19 severely disrupts markets and society, priorities are being reset, and viewpoints reframed, out of sheer necessity. This shift in focus could see impact investing move into the mainstream, as a world in lockdown focuses on the problems we are facing, and the need to find solutions.
Where can impact investing make a difference?
The social and human costs of the pandemic have made it obvious that more resources must be deployed in many areas targeted by the Sustainable Development Goals (SDGs) as a matter of urgency, not least of which being SDG 3, Good Health and Wellbeing.
This is where we believe impact investing can really make a difference, supporting companies who have at their core the intention to make a positive impact on society and the environment. This is not to say that these are philanthropic organisations – on the contrary, they will be judged on their ability to produce financial returns, aligned with the positive impact they are producing. At times like this, many of them will display a more inclusive version of capitalism by putting in place special measures to support their employees, their customers and the wider community.
Can you give examples of companies that have gone the extra mile?
On the healthcare side, at time of writing (20 April), US diagnostics leader Quest has managed to perform more than 940,000 Covid-19 tests since 9 March. Over that short period, it has grown its testing capacity from 10,000 to 50,000 a day, with testing performed across 12 different sites. And solutions are not just confined to healthcare. One of the M&G Positive Impact fund’s holdings, recycled packaging specialist DS Smith, has collaborated with food retailers across Europe to design and produce emergency provision or essential boxes that can be delivered to the doorstep of the most vulnerable.
What happens in a post Covid-19 world? Do we go back to our old ways?
Hopefully not. The immediate effects of this pandemic are horrifying, from a human, as well as an economic, point-of-view. But there might be a silver lining to the crisis, reminding us of the importance of a well-functioning healthcare system. Moreover, climate change, pollution and inequality will sadly still be with us on the other side of Covid-19. We hope that governments and industries will step up the effort to find solutions to our all too obvious societal challenges, and we are convinced that the commitment of impactful companies to combat them will remain firmly in place.
The value and income from the fund’s assets will go down as well as up. This will cause the value of your investment to fall as well as rise. There is no guarantee that the fund will achieve its objective and you may get back less than you invested.
The fund invests mainly in company shares and is therefore likely to experience larger price fluctuations than funds that invest in bonds and/or cash.
This financial promotion is issued by M&G Securities Limited which is authorised and regulated by the Financial Conduct Authority in the UK and provides ISAs and other investment products. The company’s registered office is 10 Fenchurch Avenue, London EC3M 5AG. Registered in England and Wales. Registered Number 90776.
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