Responsible investment in a time of crisis

June 8th 2020




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The cost for individuals, societies and economies of Covid-19 is almost impossible to quantify and as the virus continues to wreak devastation across the globe, LAPFF is more committed than ever to demanding the highest possible standards from the companies in which we inves

It is such high standards of governance; robust employee health and safety; and long-term sustainable strategies that are needed now more than ever from company boards. Major businesses are turning to the markets to raise capital, furloughing staff, and suspending dividend payments. Some will make significant losses; others will be fighting for their survival. We understand that each company has its own unique set of risks and that ensuring long-term value can only be possible if a company survives in the short-term, but that does not negate our obligations as responsible investors.

We are engaging with CEOs and key decision makers to ensure that short-term survival plans are not made at the expense of delivering long-term value.

LAPFF will reiterate the importance of limiting bonuses and executive pay; management cannot be disproportionately rewarded while so many workers are on reduced pay or face the threat of redundancy.

We expect companies to protect those workers who face the very real health risks from working on the frontline and we will call out those who fail to provide the necessary equipment and conditions to keep employees safe.

We will also engage with those companies calling on state support by demanding they reciprocate appropriately not least with regard to corporate taxation. These issues have taken on a new urgency in the crisis and all lie at the very centre of the engagement work the Forum undertakes.

The transition to a low carbon economy must also remain at the forefront of the Forum’s engagement activity. We can already see the impact of coronavirus on working patterns; technology is now at the forefront of allowing many of us to work from home.

As the world continues to shift to greener technologies and new ways of working, there are plans in place to help individuals and sectors adapt. We have seen an abrupt transition in play, and will continue to work to ensure it is a just transition and can deliver equitable change.

As our chair, Cllr Doug McMurdo, has said: “Responsible investors always need to be sensitive to the varied and variable operating markets that companies inhabit. However, this does not mean giving companies a free pass in hard times, which would be self-defeating. It is time now to double down to protect sustainable business practices and long-term shareholder returns in the downturn and lay the foundations for their growth in the recovery.”

For the full LAPFF coronavirus statement click here: