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MARKET INSIGHTS - The Impact of COVID
on the Sustainability Trend

Nowadays, to be successful in the long-term, businesses need to be able to follow sustainable development. New and more strict regulations are being issued, and many investors now have twin goals: generate returns without compromising their values.

To be successful in the long-term, businesses need to be able to follow sustainable development. New and more strict regulations are being issued, and many investors now have twin goals: generate returns without compromising their values. In fact, long-lasting businesses will be those that are ESG oriented, as the public opinion and international regulations will force the economy to move in this direction. Therefore, asset managers will need to keep a close eye on companies that are able to keep up with these new industry requests. The companies that are working towards the implementation of a significant ESG identity are following a variety of strategies, such as reviewing internal policies and performing financial and equity operations.


The implementation of the Next Generation EU in the near future will also be a significant boost for these green-oriented firms: indeed, 37% of its capital will be allocated to support a green recovery. Furthermore, it is worth mentioning that the current pandemic not only had short-term environmental benefits, but it also highlighted those companies that have solid governance.


Our chief purpose here is to assess if ESG investing could be an efficient investment strategy in the future and if it could be considered a safe harbor during market downturns. We run an analysis considering both qualitative and quantitative methodologies in order to understand the hypothetical future importance and popularity of such products.


Firstly, it presents an overview of the sentiment concerning ESG products with a description of the main strategies adopted by fund managers. Secondly, we run a quantitative analysis to evaluate the time series returns of a sample of 24 ESG funds during the recent Covid-19 pandemic. The objective of the evaluation is to find reliable overperformances and a possible reduction of variability in such performances. Finally, we analyzed qualitatively the new package of stimulus, the Next Generation EU, in order to provide some details of how it can boost the growth of ESG products in the European environment.

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