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Crisis acts as catalyst for the ‘S factor’ in ESG, says Aegon AM

The coronavirus crisis and nationwide lockdown have given clarity on how to evaluate companies’ ability to tackle social issues, “crystallising” what the S in ESG stands for, according to Bas NieuweWeme, CEO of Aegon Asset Management.

The impact from coronavirus and the changes to the way people have had to both work and live means this has now come to the forefront, according to the investment manager.
“The lockdown has allowed a crystallisation of the real performance on social issues versus mere policies and positioning,” said NieuweWeme.
He continued: “We can now look at how companies have behaved during this crisis. For example, are they providing employees with sufficient equipment and appropriate facilities to do their jobs, have they shared the burden of the crisis when it comes to future board remuneration, and have they abandoned their employees or customers in these difficult times?”

In NieuweWeme’s view, the importance of employees’ health and safety in terms of both mental and physical wellbeing has risen in prominence during the lockdown and is at the forefront of our emergence from it.

“Previously we have usually relied on discussions with executive boards, while assessing policies on areas such as diversity & inclusion, childcare and flexible working among others, while using sites such as Glassdoor to get a feel for corporate culture. Key events sometimes highlight poor performance on social issues and provide us with an opportunity to engage with the worst performers, but coverage is limited to what is reported publicly,” he added.
Going forward, Aegon Am will monitor how companies implement new rules and regulations around employees’ safety and wellbeing, as well as the executive and shareholder remuneration of those companies accepting public bailout funds.
More broadly in terms of the economy, NieuweWeme commented that the current crisis was a clear catalyst for change.
“From an investment perspective, if there is any good to come from this episode, it is the fact it has created greater awareness about Environmental, Social and Governance issues,” he said.

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