It is no exaggeration to say that COVID-19 has had a major impact on our daily lives and is likely to be felt for a considerable amount of time to come and the Coronavirus, along with the ensuing lockdown present a unique set of challenges for everyone, not least businesses. At this time, we want to find out more about how our investee companies are coping with the current set of circumstances from both a financial standpoint as well as maintaining our focus on environmental, social and governance factors.
Top of the list for companies is, of course, protecting staff, customers and other stakeholders from the physical threat posed by the virus. Looking past the “here-and-now” of today and this week, many directors are facing immense challenges to the future viability of their business and, clearly, corporate failures have hugely negative consequences for employees, suppliers, investors like us, and the wider economy.
We believe that well-run, socially responsible companies will be the long-term winners in any market and this is why we, using our B.E.S.T methodology, invest clients’ funds in these businesses. The sad fact is that this crisis presents us with a unique, if unwanted, opportunity to examine the corporate behaviour or citizenship of the companies we own, beyond our usual engagement. Under extreme duress, are they “walking the walk” or just “talking the talk” when it comes to their environmental, social and governance (ESG) commitments? Put another way, are the companies we invest in still meeting the requirements of what some investors describe as their “social license to operate”.
To gather evidence to develop our understanding of what we think is happening in the economy and how it is impacting our investee companies, we decided to conduct a survey.
We contacted over 130 companies which are held across our Castlefield B.E.S.T Sustainable Funds; the European Fund, UK Opportunities Fund, UK Income Fund and UK Smaller Companies Fund. There are fifteen questions in the survey, a mix of closed questions to help us gather hard data as well as open questions and the option for companies to provide further comment. Questions cover areas such as furloughing staff, dealing with suppliers, recruitment, accessing government support and financial resilience.
The directors and investor relations teams who received the online questionnaire have responded well so far, especially in the length and detail of their written comments; 34 companies completed and returned the survey in the first two days. They seem pleased that investors like us are concerned for the welfare of their business and the people who work in it. We will be sharing our findings in due course and will look to engage further with companies where we may have concerns and seek to share examples where companies have developed innovative methods of conducting business in the midst of the crisis we are facing.
Information is accurate as at 29.04.2020. Opinions constitute the author’s judgement as of this date and are subject to change without warning. This material may not be distributed, published or reproduced in whole or in part.