Published: 21st May 2020

Businesses with strong environmental and social credentials have been more resilient during the coronavirus stock market crash, research has found. Chendi Zhang, a professor of finance at the University of Exeter Business School, and his co-authors measured the performance of US stocks in the first quarter of 2020, in which the financial market saw its fastest-ever collapse due to the coronavirus pandemic. They found that in the three weeks between the start of the stock market decline and the US government’s March 18 bail-out package, firms with high ESG (environmental, social and governmental) ratings outperformed those with low ESG ratings by 7.2%. ‘These policies act like a risk management policy,’ said Professor Zhang. ‘The COVID crisis has affected financial markets everywhere, but we found that firms with green policies or that take social responsibility seriously are less affected by the crisis.’ ESG ratings take into account factors such as a … (To read the full article, subscribe below)