Research pick: COVID-19 and environmental, social, and governance investment - "Investment certainty in ESG investing due to COVID-19: evidence from India"

Research published in the International Journal Sustainable Economy looks at the impact of the global COVID-19 pandemic on environmental, social, and governance (ESG) investing in India.

Peeyush Bangur and Ruchi Bangur of the Women’s Institute for Studies in Development Oriented Management (WISDOM) in Banasthali Vidyapith in Banasthali, Rajasthan, Pratima Jain of the Prestige Institute of Management and Research in Indore (MP), and Abhikrati Shukla of the Shri Vaishnav Institute of Management also in Indore (MP), India, looked at ESG investment data for the period 2017 to 2021 with a particular poignancy on the point at which the novel coronavirus, SARS-CoV-2 was first recognised in China in the December of 2019.

Their analysis reveals major volatility implications for ESG investment apparently caused by the COVID-19 pandemic. Fundamentally, indicators show that certainty in the markets fell with the arrival of the pandemic. Moreover, ongoing news seemed to have a much more immediate effect on value and prices than it had in the period before the pandemic, suggesting that the markets were more sensitive to any news than they had been before. Indeed, the volatility has persisted and the team reports that market nervousness means that confidence among investors in the ESG area has tumbled in India from where it had been before the pandemic.

Perhaps such falls were inevitable, particularly in sensitive investment areas. Indeed, economies have suffered in many ways around the world. However, understanding the patterns followed by the markets when news of the novel disease first emerged and how they evolved with more news and the ultimate realisation that we were in a pandemic could be useful when we face the next pandemic. The team’s work could have implications, therefore, for investors, corporate executives, financial market regulators, academicians, and government officials.

“This study may assist in making more informed decisions regarding future consequences and maintaining market confidence,” the team writes. “The volatility implications may serve as a roadmap for initiating the first policy action in the event of similar incidents in the future,” they add.

Bangur, P., Bangur, R., Jain, P. and Shukla, A. (2022) ‘Investment certainty in ESG investing due to COVID-19: evidence from India’, Int. J. Sustainable Economy, Vol. 14, No. 4, pp.429–440.