We are living through an unprecedented time as responsible and sustainable investors. The nature of the COVID-19 pandemic not only threatens our health and well-being, but it has also thrown the global economic landscape into a tailspin.
What has been encouraging however, is that the values of community and mutual support have in some ways, never been stronger at all levels. As the corporate community has sought to formulate a response to the fallout of the coronavirus, by and large the actions that have been taken have been far more centred on protecting and caring for individuals and communities than just protecting profits. The extent to which some businesses are going to try and protect staff, or serve the communities around them by redeploying and volunteering resources or capital to help people, is inspiring to see.
Here, we felt it important to outline some of the responses that we have seen from companies within our portfolio. As a responsible and sustainable investor we aim to invest in companies that are upholding high standards of business ethics and that care about making an impact on the world around them. We’ve therefore been glad to see a number of our holdings utilising their resource and influence as a force for the greater good in these times.
Medtronic is getting vital medical equipment to those who need it most
Medtronic produces ventilators of both low grade specification, used for less severe COVID-19 cases, and the more complex high grade specification ventilators used with critical care patients. As the outbreak has intensified across Europe and the US, governments are indicating they are dangerously short of ventilators. Medtronic have been working hard to expand production to meet the need both through ramping up own internal production and via third party partners. Tesla is one such manufacturing partner, working with Medtronic to produce their high grade ventilators, with the New York Gigafactory due to reopen as ventilator production facility as soon as possible. In a unique move, Medtronic have made their low grade ventilator specifications open source, making these ventilators available globally to be manufactured by anyone.
Roche is ramping up production to meet testing and treatment needs
Difficulty in testing for COVID-19 at scale has been a core issue in monitoring the spread of the virus. Roche received emergency approval from the FDA for their COVID-19 diagnostic test, also approved in Europe and elsewhere that recognises the CE mark. The diagnostic test was the first commercially available in the US and takes just over 3 hours, a marked improvement over prior methods. The test is available for use with existing machine base of fully automated cobas® systems which are widely used globally. Roche targeting production of millions of tests a month to meet demand.
On the pharmaceutical side, Roche also has an existing drug currently being assessed for use in treating COVID-19 patients. Actemra, an anti-inflammatory used to treat rheumatoid arthritis, is in phase 3 trials with the US FDA as WHO are also conducting their own trials into drug candidates and combinations for COVID-19 treatment. The drug has already been recommended by the Chinese government for use in COVID-19 patients after showing promising results in combatting coronavirus caused pneumonia. Roche are working to ramp up production of this drug effectively to meet trial demand and respond if there is a surge in requirement.
Cisco is enabling flexible working across the globe
Amid the current health crisis, enterprises are utilising collaboration tools at an unprecedented rate as businesses and workforces adapt to working from home. In recent weeks, Cisco Systems’ Webex platform, which provides tools for video conferencing, online meetings, webinars and cloud-based telephony, has experienced an unprecedented increase in usage.
In the first 11 business days of March, Webex hosted 5.5 billion meeting minutes, and the number of daily and monthly active users on the platform stands at record highs. At peak hours, the volume of traffic has risen 24 times from where it would be normally. Cisco also offered free access to Webex in response to the virus outbreak, drawing 240,000 new subscriptions in the first 24-hour period.
According to CEO Chuck Robbins, Cisco is enabling more than 12 billion meeting minutes across 4.5 million meetings every day. Notably, Webex has facilitated virtual response meetings for the French, Canadian, German, Colombian and other governments around the world.
The extent to which some businesses are going to try and protect staff, or serve the communities around them by redeploying and volunteering resources or capital to help people, is inspiring to see.
Orange is helping fund the front line response
French Telecommunications giant, Orange, has endowed the Orange Foundation with an additional €3 million as part of the fight against Covid-19 epidemic. This sum will be specifically aimed at supporting prevention, protection and care actions in all the countries that Orange is present. This sum is in addition to the €5 million in contributions already committed by Orange Foundation for the Group’s operations across EMEA. Specifically, in Africa, each of Orange’s countries will receive monies from €5.5m set aside to help NGOs, local health authorities to carry out emergency action, as well as buying protective kit. In association with its Solidarity FabLabs, where they train young people in digital tools to develop their skills and improve their employability, Orange Foundation will support the manufacture of reusable protective visors via digital tools for healthcare staff in hospitals.
Alphabet’s real-time data response
Google is playing a leading role in disseminating information on COVID-19. Partnering with governments across the world, it has developed a website dedicated to COVID-19 education, prevention and local resources. Google is also publishing COVID-19 Community Mobility reports, which provide data insights on individuals’ travel behaviours to help public health officials manage social distancing measures.
Google is also an enabler of remote working, education and communication. The company has created new distance learning resources, including G-Suite for Education, which provides technical support for educators to host online lectures and seminars, and a new YouTube Learning Hub, which contains learning resources for teachers and students. For companies, Google has made premium G-Suite features – video conference calls for up to 250 people, live streaming for up to 10,000 people and being able to record and save video meetings – free to all subscribers until 1 July.
Thinking long-term matters in a responsible and sustainable approach
We believe that these, and other incredible responses to the COVID-19 crisis that we have so far seen from companies, have been aided by the emergence of a more progressive mind-set in the corporate world, one which reflects a shift in our society’s values towards caring more about how business is done, not just that it is.
These are the values that have always been embodied within EdenTree’s responsible and sustainable investment approach, driving us to achieve ‘profits with principles’. It’s a trend that we believe will only continue to gather pace in the face of increasing consumer interest in environmental, social and governance issues.
We do know that companies will face a difficult balancing act over the coming months, with their futures deeply intertwined with that of their broader stakeholders, with management faced with a need to remain financially prudent in the face of uncertainty, whilst they also try and retain and care for their workforce.
But the behaviour and action of corporations during this unique health, economic and social crisis will be more sharply judged than ever before. When we do emerge from this, consumers will remember the businesses that behaved responsibly and those that did not. A strong balance sheet will not necessarily be enough to salvage them from reputational damage.
Investors should therefore take heed that companies’ short-term actions now will affect perhaps their very ability to survive in the future. Central to our responsible and sustainable investment approach has always been the belief that the companies acting responsibly today will be the companies that thrive tomorrow. We believe that in a post- COVID-19 world, this mantra will only continue to gather pace. In which case, as responsible and sustainable investors we will be on the forefront of a new era of investing to do good, not just for profit.