Covid 19, ESG and Real Estate Securities
Good environmental, social and governance (ESG) standards are important not just for corporates and investors, but for government administrators and local communities too.
In responsible investor circles, we talk about ESG issues being of material financial consequence and vital for the health of people and planet. Over the past thirty years, a raft of reports has attempted to make the business case, usually successfully so. But even as bush fires raged across Australia and North America, most likely due to our changing climate, sceptics have still argued that it is hard to make the link between ESG and environmental and social risk.
But if ever this link can be proven, the evidence is now plain for all to see. Despite some doubt about the precise origins of the corona virus, most likely it can be traced back to wet markets in Asia and more specifically China, but also to the illegal trade in exotic wildlife species. Animals in wet markets are penned or kept in miniscule cages unable to move, and slaughtered or sold live next to stalls selling fruit and vegetables. Places where domestic livestock, foxes, badgers and exotic animals excrete bodily fluids and are killed inhumanely next to fresh food do not sound like a good combination in the promotion of health and safety principles. They are an obvious breeding ground for the virulent novel diseases that cross the species barrier to humans and occasionally become pandemics.
Following the SARS virus in 2003, the Chinese government was criticised for responding slowly to the outbreak and concealing the seriousness of the illness. Standards of hygiene and animal welfare have improved at wet markets, but not enough and are not universal across Asia. ESG standards applied by local government have not been sufficient to prevent yet another corona virus spreading across the globe. It is hard to blame impoverished and perhaps poorly educated communities about animal welfare and health and safety standards, but those with more power and affluence and knowledge could do more. And such viruses now spread at rapid rates, with environmentally damaging airplane travel accelerating the contagion level of pandemics. Local communities in developed markets too have often flouted environmental and social guidelines on how to stay healthy, by still congregating in open spaces.
Scientists say the sale of animals in wildlife markets should be strictly prohibited to minimise the risk of future outbreaks. The unusual creature that is the pangolin is likely to be next in line to be eradicated as a scapegoat for society’s inability to adopt good ESG policies, encompassing health and safety, animal welfare and exploitation. Pangolins are the most-commonly illegally trafficked mammal, used both as food and in traditional medicine. Two groups of corona viruses related to the virus behind the human pandemic have been identified in Malayan pangolins smuggled into China. Although their role as the intermediate host of the current outbreak remains to be confirmed, experts say sale of these wild animalsin wet markets should be strictly prohibited to avoid future zoonotic [animal to human] transmission. Looking at the chart below, however, it seems only a matter of time before we have another such emergency. This chart appeared this week in an article published on Bloomberg. The article heralded the re-opening of wet markets in China as good news, as they are also places where consumers can get fresh, healthy food. But only one such market needs to be contaminated for viruses to germinate and spread...