The Socially Inspired Investor Guest Article

COVID-19 in Context: Addressing Systemic Sustainability Risks and Opportunities and the Role Social Bonds Can Play

Martina Macpherson, SVP Strategic Partnerships & Engagement
Moody's Corporation

Coronavirus fears have led to a historic collapse in economic activity over the course of the course of the first half of 2020, with leading economies, such as the UK, entering a recession. It’s inspiring to see that the emergence of social justice movements globally is fuelling the demand from society, businesses and investors to identify long-term solutions to address systemic sustainability issues and opportunities, with a focus on human governance, health, safety, security and resilience.

The global COVID-19 outbreak has emerged as a systemic social – health, safety and security – crisis. It threatens the well-being of the world’s population, especially the elderly and those with underlying health problems. In addition, millions of people around the world are impacted, or will be impacted, from the resulting economic downturn and the loss of employment opportunities.

At a sovereign level, there is a growing question whether our social infrastructure, systems and services can withstand this pandemic, now and in the future. Governments are being asked to refocus and adapt their social efforts linked to health and safety, housing, transportation and international collaboration.

And while science suggests that the speed and impact of this crisis have likely been accelerated by the onset of global warming and the destruction of biodiversity and natural habitat, the interconnected and systemic ESG risks and opportunities can be seen across the investment value chain. 

  • For example, some consumer sector companies quickly provided good examples of innovation and adaptation by changing their production pipelines to provide healthcare equipment and services1.
  • However, key questions remain about the global workforce weathering this storm, especially in the context of low-paid and zero-hour contract workers operating within the “Gig Economy”2.

Essentially, the crisis has put the “stakeholder model” of capitalism to the test: COVID–19 has emerged as a test case for multi-stakeholder collaboration on social issues, with challenging trade-off decisions between business strategy, employment continuity and worker health. And as high performance along the social dimension remains difficult to define, let alone to measure, there is a clear need for profound and trusted social and governance data sets3 and dedicated financial instruments.

1See Four Twenty Seven’s blog on Responding to the COVID-19 Crisis: Can Industry Help?, 26 March 2020,

2See recent by Vigeo Eiris, From Bad to Worse: How COVID-19 has exacerbated Social Risk in the Gig Economy, 31 March 2020,

Are social or sustainability bonds the answer to address public funding gaps?

Over the last decade, many green and sustainable bonds were focused on addressing risks posed by climate change. However, in the he last 5 years, social, sustainability and Sustainable Development Goals (SDG)-linked bonds4 have emerged as new instruments to address social issues and funding gaps linked to healthcare and community services.

Over the course of 2020, these instruments have also been used to assist in coronavirus pandemic response efforts and are seen by investors, issuers and by the Green Bond Principles standard setter, ICMA5, as tools that can potentially improve private and public sector preparedness.

It hence comes as no surprise that combined social and sustainability bond volumes are driving this surge and could total US $150 billion by the end of the year, with ”E”,”S” and “G” bonds combined even heading for a record size of US $375 billion.6 If concerns over “social washing” can be addressed through Second Party Opinions or other transparency and assurance assessments, social and sustainability bonds may be well on track to make a difference for real economy outcomes and social resilience.

Further references:

For more information on COVID-19 and implications for managing systemic ESG risks and opportunities, please listen to Moody’s Corp’s Sustainable Finance webinar and a recent COVID19 systemic ESG risks and opportunities webinar supported by Moody’s Corp.

3 See e.g. Vigeo Eiris COVID-19 data set, launched in 2020:

4 This reference includes a broad definition of labelled and non-labelled sustainability bonds, including sustainability-linked and KPI-linked bonds.

5 See ICMA, Q&A for Social Bonds related to Covid-19,

6 Moody’s Investors Services, Q2 2020 Sustainable Finance Outlook, August 2020:

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