Social concerns are overtaking environmental ones for investors who value ESG investing, said Sarah Bratton, head of sustainability in North America for Schroders, a global financial firm based in London with $658 billion in assets under management. The firm puts a focus on sustainable investing.

The pandemic—and companies’ reactions to it—has shifted the emphasis for investors to such things as homelessness, treatment of workers, job losses and community impact.

“In 2019 the E of ESG (environmental, social and governance) dominated investing for those who value these issues,” Bratton said in an interview. “In 2020 we have seen a massive swing to people valuing the social issues,” which has been caused in large part by the pandemic and the death of George Floyd.

The social concerns are manifesting themselves for investors in the way they now view companies’ performance in the pandemic.

“People are looking at companies’ performance during the pandemic. They want to know how companies treated their employees and their communities,” Bratton said. “For instance, companies that shifted to producing and distributing personal protective equipment received a boost in goodwill from investors that will last over the long term.”

And she noted that consumers and investors are increasingly concerned with how companies are treating all their stakeholders in this crisis, and that the global conversation around diversity and anti-racism is furthering the search for companies that have good policies and perform well.

Bratton said that diversity in company officers, boards of directors and employees is becoming more important to investors.

Some people still believe investors have to sacrifice returns if they use ESG guidelines for their investments, which has been shown not to be true in numerous studies. “But it is still a headwind we have to fight,” she said, noting that firms that rank well on by ESG standards proved their mettle during this crisis.

Eventually, she added, the emphasis will swing back toward environmental issues and create a situation with both environmental and social issues being of equal concern, with the needle being moved back toward environmental issues by things like the wildfires that have devastated several parts of the world.

Schroders looks at companies within a variety of industries that operate by ESG standards, rather than just look at particular sectors that are doing well such as technology, healthcare and biotechnology.

Companies of all types and from many sectors were doing well because they were operating in a bull market for so many years. “Now they have been tested in a bear market and we will look for those companies that did well," Bratton said. "Continuing to provide education for advisors about ESG investing is the key to growing the market segment. The pandemic has made sustainable investing more important to more people.”