What do climate change, deforestation, biodiversity loss, ecosystem degradation, population growth, eating habits, and communicable diseases have in common? They are all related to each other and our interconnected global world is accelerating and magnifying the negative feedback loops between them. There is strong scientific evidence behind this claim but I didn’t learn this from reading a scientific journal. I learned about it in a recent report, “Pandemic: The inextricable link between human, animal and ecosystem health and the emergence of communicable disease” by Anita D. McBain, Head of Responsible Investment and ESG at M&G Investments, a London-based active asset manager with $364 billion in assets under management as of December 31, 2019.

This is an unusual report to be written by an asset manager. When asked what motivated her to do this research, McBain explained: “Long term active asset managers like M&G need to be aware of all risks that may affect our customers’ investments – both financial and non-financial. The current pandemic has brought into sharp focus the unintended consequences of unsustainable behaviours and serves as a stark reminder that everything comes from somewhere.”

Anita McBain,Head of Responsible Investment and ESG | M&G INVESTMENTS

I believe this report has two important implications. The first is for how asset managers engage with portfolio companies. The second is for how asset owners exercise their stewardship responsibilities with external asset managers. I will elaborate on these points after summarizing this report. But first a bit of grim history.

The first of the 10 greatest epidemics in history (a pandemic is an epidemic gone global) was the Plague of Justinian in 541-542. It killed an estimated 100 million people, about one-third of the world’s population. It was followed 800 years later by the Black Death of 1346-1350 which killed 50 million people, about 10 percent of the world’s population. Five hundred years later came the Modern Plague of 1894-1903 which killed 10 million people (six percent). Since then, there have been seven more, all of which killed 10 million people or less except for HIV/AIDs at 39 million over the period 1960 to the present. As of May 15 , COVID-19 has killed some 300,000 people globally.

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