World Economic Forum
This report originally appeared on the World Economic Forum.
In April 2020, the World Economic Forum, in collaboration with Bain & Company, brought together leading financial investors—institutional investors, private equity funds, pension plans, hedge funds, sovereign wealth funds and venture capital firms. The goal: for this global community of investors to collaborate and share their experiences on actions supporting economic, financial and social recovery during and in the aftermath of the Covid-19 pandemic, through a series of virtual meetings at the strategic (chief executive officer/chair) level and at the implementation (senior executive) level.
Concurrently, we interviewed a number of investors who took part in these meetings. The investors interviewed represented a broad mix of asset classes, geographies and sector coverage, with more than $1 trillion1 in assets under management (AUM) combined. The interviews explored the actions they took to help their investments through the recovery period and how they are preparing to retool their businesses to thrive in a future that will continue to be marked by significant uncertainty and disruption.
A number of important questions kept presenting themselves, leading to some naturally recurring themes:
- How can we stabilize and rebuild our businesses, and those we invest in, to emerge stronger following this crisis?
- How can we continue to meet our fiduciary responsibilities, and maintain momentum on our goals of investing with impact and purpose?
- How do we embrace this period of disruption as an opportunity to be leaders in retooling our businesses and to innovate and thrive in the face of change?
This white paper outlines the insights gained from our discussions. Covid-19 forced a significant reset of the investment industry by accelerating existing disruptions and shaking up the macro outlook. This requires that investors:
- Reset their investment strategy, revisiting asset allocation, assessing country and asset exposure, and adopting a more activist approach, and enhance their approach to diligence across all asset classes
- Take a new, ESG-focused approach to risk management. Environmental, social and governance (ESG) is increasingly viewed as a source of value protection and long-term upside for investments
- Redefine resilience, which includes resilience of the business itself, with a new emphasis on digital tools and advanced analytics to improve responsiveness and flexibility, and resilience of the people and the organization, while embracing new ways of working and a more holistic approach to talent management
To be successful in the post-Covid-19 world, investors will need to be more active, efficient and digital, as well as being socially and environmentally aware.