Companies that treated employees well during the cutbacks of 2020 are the ones now coming out on top with investors, according to Jason Hoody, vice president of research at LPL Financial.

Treatment of employees—from retaining jobs despite Covid-19 to promoting women to providing career paths—is top of mind for investors who are interested in environmental, social and corporate governance issues, Hoody said in a recent interview.

“The ‘S’ in ESG investing has moved to the forefront during the pandemic and is becoming part of how advisors are shaping portfolios,” he explained. “The companies that did not cut back on the number of employees and that treat employees, suppliers and customers well are gaining investors’ attention.

“Those companies are rewarded by consumers who respond positively to the brands,” he added.

By most measures, sustainable investing gained traction in 2020 as pandemic-related social and environmental concerns spurred investors to take action, LPL said. Sixty-five percent of advisors’ clients want to include ESG factors in their investment choices, according to LPL research, and more than 90% of investment professionals expect their firm’s ESG research to increase this year, LPL said.

The administration of President Joe Biden is expected to push ESG issues and to implement policies to positively impact climate change, which will increase the awareness of investors who are thinking about ESG issues as they relate to their portfolios, Hoody said.

LPl saw an 80% increase in its sustainable Model Wealth Portfolio, which was one of its strongest performing models in 2020. Studies have shown it is safer to invest in businesses that prioritize ESG than it is to invest in companies that do not. “Despite unprecedented market volatility last year, ESG investing has remained a priority for investors, and will continue to be top of mind in 2021,” the firm said.

In particular, investments that have a positive impact on local communities will become extremely important this year, LPL predicted. “As the world looks to solve social and environmental issues, such as climate change, racial injustice and other problems, we can expect to see more capital directed towards traditionally underserved individuals and communities,” LPL said.

Paying attention to ESG issues can help “future-proof” a business and prepare businesses for unforeseen challenges, which is good for the bottom line and for investors, the firm said. “Companies and investors that fail to see the value in ESG will be left behind as the rest of the world continues to progress and evolve.”

Advisors can structure portfolios with ESG goals in mind by excluding certain investments, such as guns, tobacco and alcohol, or by including industries and companies the clients want to help. “Money is not neutral: it can be used to push companies in a direction investors want,” Hoody noted.

Businesses are beginning to report more information on their operations and providing more transparency on their ESG policies, Hoody said. Advisors can use that information to help their clients make decisions and thereby cement the relationships they have with them.