COP26 may be delayed, but don’t let coronavirus distract you from your ESG agenda

April 15 2020

Dr Arthur KrebbersHead of Sustainable Finance, Corporates

View bio

Phil LloydHead of Market Structure & Regulatory Customer Engagement

View bio

Other insights

View more insights

3 minute read

Some may wonder whether sustainability is still a valuable topic for 2020. It certainly will be…

In his widely applied Time Management Matrix, American author Stephen Covey distinguishes ‘urgent-important’ from ‘not urgent-important’ activities (see “The 7 Habits of Highly Effective People”, first published 1989). During the current pandemic, for most companies their liquidity falls in the first, while ESG strategy will sit firmly in the latter – even if their operational carbon footprint has, for the time being, dramatically reduced.

Stephen Covey’s Time Management Matrix

Delays to major sustainability initiatives such as the COP26 could make some wonder whether sustainability is still a valuable topic for 2020. It certainly will be.

Even in these volatile times it would be a mistake to narrow your focus solely to the ‘urgent’ category. The post-coronavirus era will likely place a greater premium on sustainability strategies than the time preceding it. In the coming months we will study this in greater detail through a series of thought pieces. This article introduces some of the areas we will be focusing on.

Regulation moving on

Regulation is one factor. The call for “greenification” of the financial system is being heard by a growing coalition of monetary authorities, as the recent addition of another nine new members (including Brazil) to the Network for Greening the Financial System (NGFS) makes clear. Even the US Fed chair Jerome Powell has indicated they’ll “probably” join this grouping of like-minded central banks, which currently has 63 members.

Despite the pandemic, policy makers are still aspiring for breakthroughs in green and climate change regulation in 2020. Several examples include:

Investors are keeping an eye on the long term

The buy-side also remains on the offensive. The Principles of Responsible Investment (PRI), whose signatories represent over $85 trillion AUM, has called for a sustainable recovery to the coronavirus emergency  aligned to “the climate and biodiversity emergency and the level of inequality”. Over 250 investors have signed the Investor Statement on Coronavirus Response, setting out their current ESG areas of focus, such as paid leave, maintaining employment and financial prudence.

In time, we expect this ESG lens to broaden. The focus will then likely shift towards how companies have improved their supply chain and their operational and financial resilience as well as the ways they’re supporting communities and governments in the economic recovery.

Corporate reliance on fiscal and monetary authorities

Coronavirus is also showing that no corporate in today’s interconnected world can “go it alone”. There is strong dependence on fiscal and monetary authorities. And, while they all have differing priorities, it’s evident that climate change action in many countries reaches across the political divide.

Yes, there is a risk that in the short term government resources and focus gets diverted as it implements urgent relief programmes. Yet electoral pressure around sustainability will only grow, with countless surveys highlighting strong millennial support for climate change and broader sustainability action (e.g.

ESG agencies keeping a close watch

While credit rating downgrades have been hitting the wires, ESG rating agencies are biding their time. They’re analysing how companies’ responses to coronavirus impact their sustainability profile – such as their human capital and community relations scoring. Firms seen to be disregarding broader stakeholder interests (such as employees and the community) will find themselves being downgraded. Particularly controversial decisions may take years to fully recover from.

Some corona driven ESG greenshoots?

Fortunately, there is hope for optimism. Many companies are finding that certain operational sustainability measures are critically important in their response – for example digitised service delivery, employee flexible working and well-being schemes.

A few firms are going the extra mile, establishing unprecedented collaborations to address urgent social needs – suggesting the same could be done for longer-term environmental pressures. Five of the biggest companies in the IBEX (Spanish stock market) have jointly committed €150m to acquire medical equipment and use their logistics infrastructures to support the government.

In the UK, some distilleries are switching to  manufacturing hand sanitizer, and supermarkets such as Sainsbury’s and Iceland have introduced special opening hours for senior citizens. Turning to the capital markets, we’ve seen the first Sustainability bond issue from a pharmaceutical company (Pfizer), which includes financing for global public health initiatives.

Corona sped-up effect of what could happen to ESG outcasts

The past weeks in the capital markets are a condensed account of what likely awaits firms deprioritising sustainability policies – particularly around environmental issues. Growing regulatory, investor and legal pressure will lead to falling share prices, steepening credit curves and a drying up of liquidity.

The coronavirus epidemic has led to some shifts in corporate thinking around ESG. Let’s hope this will translate into longer-term sustainability action.

To find out more about how coronavirus is impacting the regulatory agenda…read this article.


This document has been prepared for information purposes only, does not constitute an analysis of all potentially material issues and is subject to change at any time without prior notice. NatWest Markets does not undertake to update you of such changes.  It is indicative only and is not binding. Other than as indicated, this document has been prepared on the basis of publicly available information believed to be reliable but no representation, warranty, undertaking or assurance of any kind, express or implied, is made as to the adequacy, accuracy, completeness or reasonableness of the information contained in this document, nor does NatWest Markets accept any obligation to any recipient to update or correct any information contained herein. Views expressed herein are not intended to be and should not be viewed as advice or as a personal recommendation. The views expressed herein may not be objective or independent of the interests of the authors or other NatWest Markets trading desks, who may be active participants in the markets, investments or strategies referred to in this document. NatWest Markets will not act and has not acted as your legal, tax, regulatory, accounting or investment adviser; nor does NatWest Markets owe any fiduciary duties to you in connection with this, and/or any related transaction and no reliance may be placed on NatWest Markets for investment advice or recommendations of any sort. You should make your own independent evaluation of the relevance and adequacy of the information contained in this document and any issues that are of concern to you.

This document does not constitute an offer to buy or sell, or a solicitation of an offer to buy or sell any investment, nor does it constitute an offer to provide any products or services that are capable of acceptance to form a contract. NatWest Markets and each of its respective affiliates accepts no liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this material or reliance on the information contained herein. However this shall not restrict, exclude or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not be lawfully disclaimed.

NatWest Markets Plc. Incorporated and registered in Scotland No. 90312 with limited liability. Registered Office: 36 St Andrew Square, Edinburgh EH2 2YB. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. NatWest Markets N.V. is incorporated with limited liability in the Netherlands, authorised and regulated by De Nederlandsche Bank and the Autoriteit Financiële Markten. It has its seat at Amsterdam, the Netherlands, and is registered in the Commercial Register under number 33002587. Registered Office: Claude Debussylaan 94, Amsterdam, the Netherlands. Branch Reg No. in England BR001029. NatWest Markets Plc is, in certain jurisdictions, an authorised agent of NatWest Markets N.V. and NatWest Markets N.V. is, in certain jurisdictions, an authorised agent of NatWest Markets Plc. NatWest Markets Securities Japan Limited [Kanto Financial Bureau (Kin-sho) No. 202] is authorised and regulated by the Japan Financial Services Agency. Securities business in the United States is conducted through NatWest Markets Securities Inc., a FINRA registered broker-dealer (, a SIPC member ( and a wholly owned indirect subsidiary of NatWest Markets Plc.

Copyright 2020 © NatWest Markets Plc. All rights reserved.