Eric Johnson on Why ESG Investing Has Accelerated Through the Pandemic

While the COVID-19 pandemic has created obstacles for investment strategies that consider environmental, social, and governance (ESG) factors, it has also cast the business value of these factors into sharp relief and could spur increased adoption of ESG frameworks. 

In a recent Law360 article, Eric Johnson, partner and co-leader of Winston & Strawn’s ESG Advisory Team, says “Many companies are becoming increasingly attuned to the relationship between ESG factors and their bottom lines.” He adds, “While a lot of people were worried [the pandemic] might stall the advancement on the ESG front, I think we’ve actually seen the opposite and it's actually been an accelerant.”

Social factors that have come to the fore during the pandemic include companies’ work-from home policies and employee and customer safety. 

The pandemic has also accelerated some trends around environmentally conscious operations and investments—particularly in the energy industry, Eric said, where the plunge in oil demand has intensified the push toward alternative energy and renewables. He adds, “Especially in the energy space, here in Houston, we’ve seen [COVID-19] as an accelerant: Companies have become more focused, for example, on alternative energy sources and energy transition issues.”

This makes the response of the private markets even more important to the future of socially conscious investing. Private actors such as banks and other lenders have already been adopting social and environmental investing frameworks in greater numbers, and an economic recovery could free up additional capital for ESG-oriented investing, Eric said. 

“I think as we get on the far side of the pandemic and as we see a recovery, we’re going to see ESG really turbocharge.”

View the full Law360 article here (subscription required).

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