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The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Calvert disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Calvert are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Calvert fund. References to individual companies for Engagement or Research purposes are provided for illustrative purposes only and may not be representative of the results of all of Calvert’s engagement efforts. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Past performance is no guarantee of future results.

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      By John StreurPresident and CEO, Calvert Research and Management

      Washington - None of us knows how long the current pandemic will take to run its course in the US and globally. However, sustainable funds were able to weather this storm better than their non-sustainable counterparts, and we believe are poised to emerge stronger than ever after the health crisis ends.

      An article published by Morningstar on April 3 reported that in the first quarter, sustainable funds outperformed their conventional, non-sustainable counterparts, based on a comparison of the returns of 206 US sustainable equity open-end and exchange-traded funds versus those in their respective categories.1 Morningstar found that 70% of sustainable equity funds ranked in the top halves of their categories in Q1 2020, while 44% ranked in their category's top quartile. Only 11% finished in the bottom quartile, and in many cases, sustainable funds outperformed their benchmarks.2

      This isn't a surprise to us at Calvert. More stable, more secure, well-managed companies with solid environmental, social and governance (ESG) practices have generally responded well to the crisis. Companies that have sent a positive message both internally and externally, creating a safe place for both employees and customers, are both acting responsibly and creating trust, which will help protect their brands in the future.

      This response is in contrast to what occurred in 2008/2009, when it seemed like much of corporate America had a hard time doing the right thing and, as a result, damaged trust and confidence with customers and employees. We believe many companies learned from previous experience and are getting off to a better start here, because they recognize how they treat employees and customers today will have a big impact both now and for years to come.

      Examining how companies assess and address their ESG risks in light of this crisis, and its potential aftermath, is particularly important as we consider preparations for a restart of the economy. Companies likely will face considerable pressure from some stakeholders to reopen before the danger from the COVID-19 threat vanishes. Companies will respond in different ways depending on which stakeholder interests prevail, and some in the same subindustry will take different paths. How will companies assess and balance the well-being of communities and employees with the well-being of their businesses will be telling.

      If companies don't have a strategy for dealing with these challenges, investors may have unknown risk in their portfolios. That is why both ESG research and disclosure are so important.


      Bottom line: How companies behave during COVID-19 will impact their businesses, reputations and viability for years to come. Over the long term, we believe the value of sustainable investing lies not only in delivering solid financial performance, but in advancing a more stakeholder-centric model of corporate behavior.