IHS Markit Perspectives - The Importance of Social Initiatives within ESG - Part 11

IHS Markit's Perception Analytics team engages in in-depth discussions with investors and analysts daily. Given recent market volatility and significant economic uncertainty, IHS Markit will be speaking to investors and analysts on a regular basis over the next few weeks to assess how the current situation with COVID-19 is impacting their evaluations of and engagement with corporate issuers. In our eleventh installment we gathered feedback on how social impact initiatives within ESG influence a company's investment case.

Highlights include:

Several investors and analysts assert that a company's social initiative efforts have become more material to their investment case. In particular, they highlight the importance of diversity across the corporate workforce.

"Social initiatives and efforts relating to diversity and inclusion are pretty important. If a company is blatantly not taking efforts on issues relating to this or even creating negative waves, then I am sure this would have an impact on the share price at some point. "

Furthermore, many respondents note that it is critical for companies to have consistent communication that highlights their commitment to fair social practices.

"Social impact initiatives do have an impact on how we view an investment because companies have to walk the walk. A lot of people are signing up to pledges, but it needs to be visible that a company's efforts are making an impact."

A few participants remain skeptical of public issuers' progress and impact as it relates to true social justice reform.

"It seems to me that they are talking about social issues because it is in the news rather than because it is something that the people at the firm have been waking up and thinking about immediately for the last 10 years."

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IHS Markit's Perception team will continue to gather real-time market feedback as the situation unfolds, so please look out for the next part of this series.

View Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8, Part 9, and Part 10

IHS Markit provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.