It’s long overdue for us to stand up and work together to shape a future which is just, equal, inclusive and deeply grounded in fundamental human and civil rights.

Fully addressing systemic racism and inequality will be neither simple nor straightforward, but we cannot shy away from the challenge any longer. It will require a unified approach, pulling together the voices and resources of the whole of society—including individuals, community groups, policy-makers, corporations and investors—putting those most impacted at the heart of the conversation.

Today we’re calling on the PRI community and all responsible investors around the world to answer this call to action. As long-term stewards of capital we have the ability, and in fact the duty, to create change not only through our words, but also through our actions in leveraging the global financial system.

As long-term stewards of capital, we have the ability, and in fact the duty, to create change not only through our words, but also through our actions in leveraging the global financial system.

As part of our investment processes, we must prioritise engagement on ESG issues which directly and indirectly perpetuate inequality. To hold corporations and policy-makers to account, we must push for public disclosure on racial diversity and related metrics by which we can assess progress against concrete outcomes.

We must work to tackle inequality through embedding the UN Guiding Principles for Business and Human Rights into our investment process. Enabling awareness, facilitating education and ensuring a trusted safe space for people to effectively promote respect for human rights is paramount. And we must work to support and maintain our democratic institutions as an important pillar that underpins fair and just societies and the rule of law. This includes facing issues around modern slavery and human trafficking in supply chains, labour force reform, living wages and social protections for employees.

We must also reflect inward at the composition of our portfolios, the stakeholders we work with and invest in and the diversity, inclusion and values within our own workforce. Our industry has a long way to go to achieve these things. We’re urging the global financial services community to join us at the PRI in recommitting to make these issues our top priority, both within our own organisation and the world we operate in.

Racism, discrimination and inequality are entrenched in both the personal and systemic foundations of our society and they will continue to violate the human rights of black people unless we confront them head on. Responsible investors have a powerful platform and a critical role to play in creating a better future. We must seize this moment in history to listen, learn and seek solutions together.

Fiona Reynolds is the CEO of the UN-supported Principles for Responsible Investment, or PRI. A version of this article was first published on unpri.org.

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While there are certainly parallels with the global financial crisis just over a decade ago, there are also signs of change – and evidence that some valuable lessons have been learned.

This time around, in response to the virus, we’re seeing values of community and mutual support shine through and a far more human-centric economic response from governments, business and the investment community alike. This evolution in response has been aided by the emergence of a more progressive mindset over the past decade, one that reflects a shift in values that has been embodied in the environmental, social and governance (ESG) philosophy. How corporations and finance respond to this new crisis will be more sharply judged against this ESG criteria.

The landscape has changed around us. Accountabilities will be redefined and some corporations and investors will be unmasked as the lack of substance behind their ESG rhetoric becomes clear.

Nowhere has this shift been more evident than in the announcement last year from the Business Roundtable in the United States. It released a formal statement seeking to redefine the purpose of corporations, moving away from shareholder primacy to include a commitment to all stakeholders, including customers, employees, suppliers and communities in addition to shareholders. Now is the time that this new purpose will to be put to the test. Will their statements prove to be worth more than the paper they’re written on? Only time will tell.

How responsible investors should respond

As for the responsible investment community, it’s time for us to step up and play our role as long-term holders of capital, to call corporations to account. It’s time for asset owners sitting at the apex of the investment chain to lead the financial sector through this crisis. We need to maintain a focus on long-term horizons and support collective action while trying to understand the real issues companies are facing from COVID-19 as well as the effects to our individual portfolios.

Most importantly, asset owners need to look to the interests of their beneficiaries and understand the impacts of the crisis at both an individual and systemic level. Short-term decisions up and down the investment chain all contribute to volatility and value destruction. Meanwhile, collective action by the financial sector and investors supporting sound government policies all reduce the overall impacts—another lesson from the last crisis.

As we attempt to deal with this new crisis, COVID-19 raises several challenges for investors, including how to deal with their normal stewardship practices. At PRI we recommend that most engagement with companies in the short-term is re-prioritized so that discussions not relevant to COVID-19 are postponed. Of course, even in COVID-19 related engagements, unless there is evidence of irresponsible behaviour, we must allow companies adequate time and capacity to crisis manage and put plans into place.

Investors can also begin publicly signalling their support for a “whole-of-economy” response. This will provide much needed backing to governments for critical interventions and unprecedented stimulus packages that will help to deliver a successful and just recovery. We should also be vocal in saying that there must be a green and sustainable backbone to the stimulus.

Aligning the recovery with social and environmental outcomes

The pandemic has temporarily shifted public focus away from the climate and biodiversity emergency, but they are intrinsically linked. Destruction of habitats and ecosystems only risk further pandemics as diseases spread between animals and humans. As COVID-19 is stabilized, efforts to address these systemic issues are more critical than ever.

The crisis has already shown us what is possible when government, business, investors and civil society all come together. It has also shown us that we need to listen to the science and post-crisis we need to apply these principles and the same sense of urgency to the climate emergency.

But it’s not just environmental issues that need to be prioritized following the crisis. The responsible investment community needs to step up its actions on social issues as well, particularly those around human and labour rights. For far too long we have ignored the modern forms of exploitation surrounding the gig economy. Now we’re seeing the desperate consequences for millions of workers in precarious positions, shadow economy roles and day-to-day existence workers as COVID-19 takes hold across the globe, exacerbating inequalities.

The road ahead: working with PRI signatories

To assist investors in working through both the short- and long-term implications of the crisis, PRI will be convening COVID-19-focused working groups. We will work with our global signatory base to deepen our position in response to the crisis and to seek practical inroads towards implementation. Our briefing, How responsible investors should respond to the COVID-19 crisis, is the first step in determining our response to the pandemic, including seven key actions for investors.

If there is any silver lining in such a devastating crisis, it’s the prospect it presents us for change. Looking ahead to the recovery from COVID-19, investors are offered a unique opportunity to re-evaluate our global financial system and to bring a wider, deeper drive towards sustainability issues.

Responsible long-term investment is more important than ever before. People talk about sustainability being mainstream, but as those of us who work in this space know, we are far from a world where all investors fully take account of ESG issues. This must change and when we emerge from the COVID-19 crisis, we need to ensure that responsible investment is the only acceptable norm.

Now is the time for decisive, collective action. It’s time to demonstrate that the global financial sector can respond to the immediate crisis while shaping a recovery which prioritizes social and environmental outcomes. The actions we collectively take over the coming weeks, months and perhaps even years will lay the foundations for a more stakeholder-driven and sustainable global economy—one that aligns people, profit and planet.

Fiona Reynolds is the CEO of the UN-supported Principles for Responsible Investment, or PRI. A version of this article was first published on unpri.org.

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