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An Ethical Investor Response to COVID-19

We hope you and your loved ones are healthy. The first serious, global pandemic in over one hundred years is ample justification for fear and anxiety. But we trust you are doing what is necessary to keep yourselves and your neighbors safe now and in the weeks to come.

Over the next few months we expect markets to be unsettled, as investors grapple with the humanitarian and economic implications of a world-wide quarantine. It is now clear to many observers that a sharp recession is imminent. Governments are stepping in with unprecedented fiscal and monetary assistance, in an effort to keep businesses and the newly unemployed afloat. 

The stock market has survived many things: a Civil War, two World Wars, a Depression, a Financial Crisis, and the horrific influenza outbreak of 1918. Recalling this makes us confident in the long-term resiliency of our economy and our markets. The financial history, however, does not make this crisis any less alarming from a societal or personal perspective.

That said, we have been largely heartened by the response from corporations. Cisco Systems pledged $225 million to support the global and local response to COVID-19, including $8 million in cash and $210 million in product donations such as technology resources for healthcare, education, and governments. Google’s parent company, Alphabet, said it will donate over $800 million in funds towards producing medical supplies as well as ad credits for small businesses and ad grants for the WHO and government agencies. Other companies such as PayPal have made pledges that they will not layoff any employees due to the coronavirus pandemic. Salesforce’s CEO has also called on other corporate leaders to take a 90-day “no layoff pledge.” Danone has committed 250M EUR to tens of thousands of small businesses in its ecosystem. Comcast, Verizon, Google, Sprint and others have signed a pledge to keep Americans inter-connected for the next 60 days, even if people cannot afford to pay. Many more such commitments can be found here and here.

A JUST capital project tracking the COVID-19 response of America’s 100 largest publicly-traded employers buttresses these anecdotes with some encouraging statistics. According to JUST capital, 54% of these employers are providing work from home options, 38% have set up rotating shifts, and 39% are offering paid sick leave. Only 7% have reported layoffs, and 9% are actually hiring more workers. Another 31% have started a community relief fund, and 29% are contributing community services as part of their response.

To help ensure this level of corporate responsibility is shared consistently across all major companies, our response to the crisis has included signing on to a statement from institutional investors that makes five key requests, including paid leave covering subcontractors, part-time and temporary workers, prioritization of health and safety, the maintenance of employment (to support workers as well as to avoid the long-term negative impacts of turnover or discriminatory risks), the maintenance of supplier and customer relationships, e.g. through prompt payments and/or temporary financial assistance, and finally, heightened standards of financial prudence and ethical management, including avoiding share buybacks or excessive executive compensation during this time.

We believe the statement, which has been covered by media outlets including Forbes and Reuters, can provide crucial support for the many companies who seem to be responding out of genuine concern for all stakeholders during this crisis, and, we hope, provide meaningful incentive for those who haven’t. Our hope is to continue to see investors and corporations pushing in the same direction: providing vital support to the communities in which we operate, buttressing the courageous efforts being made by many state and local governments, and supporting healthcare workers and others on the front lines of the crisis. We believe nothing short of this concerted effort can get us through another, unprecedented humanitarian and economic challenge.