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Credit: NTB | Lufthansa planes grounded due to COVID-19


Henry W. M. Repard

Henry is a Senior Analyst within the Team of Responsible Investments (RI), where topic of interest includes researching and analyzing companies and portfolios to identify material Environmental, Social and Governance (ESG) risks and opportunities. Companies ESG practices are then followed up through engaging with companies, both directly and through investor initiatives. The RI team works closely with the Portfolio Managers across the funds.

Henry joined DNB Asset Management from KLP Kapitalforvaltning, where he was also a responsible investment analyst. Before this, he spent four years at CDP (formerly the Carbon Disclosure Project).

Henry holds an MSc in Environment and Sustainable Development from University College London and a Bachelor of Science in Pharmacology and a Bachelor of Commerce in Investment Finance and Corporate Finance from the University of Western Australia.


As part of the World Economic Forum (WEF)’s global risks landscape report published every January, infectious diseases were flagged as one of the top 10 economic risks to the global economy. This is something we have seen actualise, with implications from COVID-19 being felt in markets worldwide since January.

Our areas of interest are still very relevant to the current crisis

Henry W. Repard

In recent months, we have begun to see the social and economic impacts of the virus, as many governments closed off countries, shuttering industry and limiting leisure activities - taking early action in an attempt to minimise causalities and lessen long-term financial impacts. Great uncertainty remains around which economic, social and political consequences the virus will have both in the short- and the long-term, but there is no doubt that it will affect society, both locally and globally, even after the situation stabilises.

Relevance in the face of crisis

Many ESG topics are now being widely discussed in relation to the coronavirus. We see ESG as an important differentiator, particularly for our actively managed funds, with our engagement work a key means by which to add value. In our annual evaluation of our engagement strategy, we chose to focus on product safety and quality, deforestation and land-use, emerging markets supply chains, oceans and biodiversity as thematic focus areas for 2020. These are in addition to our long-term focus areas – water, human rights and climate change. These focus areas remain highly relevant in the face of the current crisis, but our approach to working within these may be adapted, such as choosing to strengthen our focus within certain areas.

Is the future still green?

The environmental impact of the virus has received attention due to the significant reduction in greenhouse gas emissions we are seeing, due to reduced economic activity including decreases in transport and industry. To date, bottom-up estimates indicate a 4-5% reduction in total emissions for 2020.

The IPCC estimates that annual global[1] emissions reductions of 6% will be required between 2020 and 2030, to deliver on the 1.5C target of the Paris Agreement[2]. This gives an indication of the enormous transition required to decarbonise our economies, whilst also highlighting how fragile our systems are in the face of the unknown challenges presented by climate change. Further, the decisions to postpone COP26, the UN’s annual climate change conference, and disruptions to meetings on the United Nations Convention on Biological Diversity, represent challenges to the collaborative efforts and risk slowing action.

Many countries are now experiencing visible improvements in air and water quality.

Henry W. Repard

That said, an upside resulting from the global slowdown in consumption and production linked to the virus is that many countries are experiencing visible improvements in air and water quality. This has led to some viewing the current situation as an opportunity for a paradigm shift - to start anew and improve on the environmental issues that exist in the world. If it does provide the impetus to push past a tipping point to a greener future, some indicate the more difficult it will be for fossil industries to rebound and be competitive, made increasingly difficult by an elongated period of slowdown.

An increased focus on social factors

While climate change has been at the forefront of most responsible investors’ agendas in recent years, the social impacts of the coronavirus have acted as a catalyst, bringing social elements to the forefront of ESG discussions. This development is in line with our long-term anticipation that social issues were to gain momentum within the responsible investment space, as environmental and governance issues have arguably taken precedence up until this point. The discussion now centres on the current pressure on companies and workers, resulting in layoffs, resignations and sick leave, in addition to extraordinary measures coming from governments.

Corporate responses and treatment of relevant stakeholders during this time will potentially have lasting implications for companies and their reputations. Moving forward, we may also see permanent changes including a greater focus on healthcare benefits (particularly for contract workers), increased utilisation of digital solutions for education and work, which may subsequently result in reduced travel from employees. The supply chain disruption caused by the coronavirus has also catalysed discussions around Chinese supply chain dominance. In recent years, China has been reducing its reliance on foreign inputs whilst growing its exports of intermediate goods. Global manufacturing companies, on the other hand, have become increasingly dependent on intermediate goods from China. We may, therefore, see a greater focus on supply chain diversification as a result of the pandemic.

Other concerns centre on increases in inequality experienced throughout the world as a result of the virus and looks set to if not negatively contribute, at least hinder, the attainment of the Sustainable Development Goals.

Within our focus area of Emerging markets supply chains; we consider issues of supply chain diversification, living wages, modern slavery, healthcare benefits, and working conditions.

With the COVID-19 pandemic, we are increasingly seeing issues relating to modern slavery, and issues for migrant workers who are unable to travel back to their home countries. For some, it is due to travel restrictions and without jobs it makes it challenging to survive, for others they struggle with debt taken on during unethical recruitment processes that are increasingly common practice. Additionally, with many companies under increased pricing pressure due to global economic challenges and concerns around consumer spending, there is a higher risk of use of modern slaves in the supply chain.

The risk of becoming involved in criminal actions such as corruption, bribery, child labour, slavery, and serious environmental pollution, might increase during a crisis. It is therefore vital that companies are vigilant in the management of their supply chains, and that due diligence processes, specifically regarding social issues, are more important than ever as the world experiences this social, health and economic crisis. For these reasons, will, therefore, remain one of our key focus areas.

What about data privacy and security?

One of the largest areas of concern we have identified since news of Covid 19 first surfaced relates to privacy and data security. Specifically, breaches in personal information and information security - more prevalent due to our increased online presences. There are undoubtedly many looking to (and succeeding in) take advantage of our increasingly online lives, for nefarious gains.

The requirements for social distancing, implemented across the world to slow the spread of the virus, are undeniably changing the way we interact, both professionally and socially. We are increasingly utilising our personal devices to connect with one another across a range of applications and services. While we are requiring more from telecom and social media companies to ensure we can connect, we are at the same time putting more of our personal information into these systems, increasing the power these organisations have in their ability to utilise these data. It is for this reason, that companies that capture or manage personal data, must have strong systems and policies to ensure they are well protected. Therefore, our work with companies, as part of our product safety and quality focus area, to ensure companies are effectively managing the risks associated with personal data and security, couldn’t be more pressing.

Increasingly national governments are producing contact tracing phone applications, intended to collect data on the individual users' movement and contact with others. The purpose is to make contact tracing easier and effective, to help slow any potential future outbreaks, however this is raising alarm bells with some who see it as a considerable risk and view it as a violation of individual freedoms. These are linked to concerns for the risks associated with weakening of democracies caused by the governments using this information to maliciously monitor individuals. Therefore, our engagement with technology companies about the utilisation of these services are vital.

We can’t forget about governance

It is imperative that we maintain our focus on governance and corruption in our active ownership approach to companies. There is a risk that an increased focus on the virus may provide opportunities for less than perfect monitoring of these risks, allowing some to take advantage of the situation. Through our internal processes, and work with external service providers, we are continuing to ensure companies are held to the same standard - maintaining good governance and responsible taxation practices, and to not engage in corrupt practices.

The ESG path ahead

It is too early to definitively conclude what the short- and long-term economic, social and political consequences of the virus will be. However, it is certain that there will be many political and economic discussions on both domestic and international stages in the aftermath of the virus – with potentially considerable changes to be felt. These have the potential to impact both current business models, while also creating opportunities for new businesses. Despite the current political and economic uncertainties, it is our expectation that companies continue to pursue best practice with regards to considerations for governance, social, and the environment. As we have seen with the impacts of the virus, there have been several impacts that could not be predicted due to lack of available information. It is for this reason that we need clear and complete ESG disclosure from companies, so we can have a complete picture and assess how they are likely to be impacted and whether or not they are well placed to take advantage of available opportunities.

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