How Covid-19 Has Accelerated the Garment and Financial Investment Industries’ Adoption of Environmental, Social and Corporate Governance (ESG) Standards

Abstract

The transition of the apparel industry to an ESG business model will have a cascading effect in the whole supply chain (upstream, midstream and downstream) and will generate greater value for all stakeholders. The ESG investments are registering exponential growth in equity and fixed income markets due to the following benefits: 1) lower risk and long-term stability, 2) the returns of portfolios and indices with ESG criteria are not inferior to traditional investment, 3) the positive externalities associated to ESG criteria and 4) the reputation and gain of market share by responding to the demands of a new generation of consumers willing to pay a surcharge for sustainable goods and services that consider ESG criteria. Currently there are expectations that once the Covid-19 crisis is over there will be a grand quantity of capital inflows toward ESG investments on emerging markets, a situation that will drive the transformation of companies; particularly those that have made progress in incorporating ESG factors like the utilities and financial sector.