The strong get strongerApril 13, 2020By John StreurPresident and CEO, Calvert Research and ManagementWashington - 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.2This 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.