Firms that managed the COVID-19 downturn in 2020 in a more socially responsible manner were shown to provide better equity returns to their investors. According to Arabesque's proprietary S-Ray model rating system, a sample of companies that saw their rating on social responsibility rise during the crisis saw average year-to-date returns of -4.86% through morning trading June 3, compared to the -40.8% return of those that saw their social scores decline. Removing Amazon (up 33.8%) from the latter group reduces the average return to about -47%.
Better social actors handle the downturn better
While just a small sample of companies among the 7,000 Arabesque monitors globally, the data does show the impact of negative press and the effects of corporate citizenship on the value of an investment.
Amazon was the clearest outlier, as the online giant has greatly benefited from stay-at-home orders. Its social score was most impacted by its firing of two employees who spoke out against the company's warehouse conditions amid the pandemic according to research.
Arabesque concluded its research with a quote from Andrew Carnegie: "As I grow older, I pay less attention to what men say. I just watch what they do."