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Active ownership: Corona crisis puts the spotlight on social factors

The health and safety of employees has been important during the corona crisis – and Danske Bank’s new active ownership report outlines how social factors, corporate social responsibility and a robust business model now have greater significance for companies.

The corona crisis has had serious negative consequences for businesses and economic activity and it shows in Danske Bank’s new active ownership report for the first half of 2020. The report describes how social issues, such as “business model resilience” and “employee health and safety”, have risen to the top of the agenda of ESG topics that Danske Bank’s investment teams discuss with companies. Social aspects also comprise a greater share of the dialogues, accounting for 29 percent during the first six months of 2020 compared to 23 percent in 2019.

Commonly discussed ESG-topics

A viable business

The corona crisis has proved to be a tough test for companies, says Simon Christensen, chief portfolio manager at Danske Bank. At the start of the crisis, Simon and Danske Bank’s investment teams focused on stress-testing companies to assess whether they had a resilient business model and could get through the crisis.

“We found it important to focus our dialogue on those companies that were hit the hardest by the crisis in both short and long term and where there was greatest uncertainty on the viability of the business. Another important aspect was to analyse and discuss the potential behavioural changes prompted by the crisis, including a shift in demand for e-commerce, payment services or IT solutions that could significantly impact the growth potential of many companies,” explains Simon Christensen.

He points to the US company VISA, which has the world’s largest payments network. VISA’s business has been negatively affected by the reduction in travel activity caused by the crisis. However, while it is uncertain when and to what extent this area of the business will grow again, VISA has grown stronger as a result of the crisis. Greatly increased online shopping, in particular, has helped offset the fall in revenues, and this trend has also further speeded up the conversion from cash to card payments. In addition, many shops have encouraged customers to use payment cards rather than cash, as they are more hygienic.

Companies expected to be socially responsible
How a company acts during the crisis will very much define how consumers and society in general view the company, and this has a significant impact on the company’s business opportunities – after the crisis too. That is the assessment of Martin Slipsager Frandsen, senior portfolio manager at Danske Bank. He explains that this is why Danske Bank’s investment teams have focused on the degree of social responsibility companies have exhibited and how they have, for example, addressed and ensured employee health and safety, and contributed to stopping the spread of the virus and protecting the business.

The crisis has deeply underlined society’s expectation that companies should not just make profits. They also have a broader social responsibility and should contribute to mitigating the consequences of the corona crisis.

Martin Slipsager Frandsen

Senior portfolio manager, Danske Bank

“The crisis has deeply underlined society’s expectation that companies should not just make profits. They also have a broader social responsibility and should contribute to mitigating the consequences of the corona crisis. How companies handle health and safety has been an important aspect of our dialogues, where we, for example, focused on companies not prioritising earnings higher than employee health and ending up having to completely shut down production due to outbreaks of the virus. We have seen companies criticised for a lack of social responsibility, which can harm their reputation and potentially also their earnings,” says Martin Slipsager Frandsen.

Employee lay-offs and pay cuts have also been an important issue during our active ownership discussions, adds Martin Slipsager Frandsen. From a business point of view, cutting employee numbers or wages can make sense, but it should be done responsibly, and the company should have a solid foundation that will allow the business to continue after the crisis.

Increased sustainability ambitions

While the crisis has put pressure on companies and severely cut earnings, it has also provided the impetus to strengthen sustainability ambitions. US company Starbucks has been hit hard by the crisis. Yet, Starbucks has decided not only to expand and improve employee health coverage and childminding options but has also implemented more ambitious sustainability targets to strengthen their business.

“Starbucks is an inspiring example of how the corona crisis can accelerate a company’s sustainability strategy. The company has also signed up to the climate initiative Transform to Net Zero to contribute to a climate-neutral and sustainable economy. These new initiatives and ambitions will help develop and future-proof Starbucks, and that makes the company attractive from an investment perspective,” concludes Thomas Fabricius, ESG chief analyst and senior portfolio manager.


Danske Bank’s sustainable investment strategy is called ESG Inside® and is all about bringing sustainability inside our investments. We integrate environmental, social and governance (ESG) factors into our investment processes across strategies and asset classes. We engage with companies on material matters to contribute to change and improvement. ESG Inside® also entails that we have investment restrictions for controversial weapons, tar sands, thermal coal, and tobacco.
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