It is “critical” that companies have the best leaders and governance structures to make the right decisions during the coronavirus crisis, the Local Authority Pension Fund Forum (LAPFF) has said.

With employees potentially being required to take greater risks to fulfil the requirements of their roles, the organisation commented that strong relationships between management and employees, as well as high health and safety standards, had never been so important.

Despite the tough economic situation facing financial professionals, the LAPFF argued that long-term value creation could be achieved through maintaining the highest standards of corporate governance and corporate responsibility.

It added that a focus on responsible investment and constructive engagement “remains as valid now in a crisis as in better times”, stating that “responsible investors always need to be sensitive to the varied and variable operating markets that companies inhabit”.

The organisation said companies need to be careful as they would face “heightened scrutiny”, adding that “in a time of a global health pandemic it is not just reputations that are at stake”.

“Major companies are turning to the markets to raise capital, furloughing staff, and suspending dividend payments. Some will make significant losses; others will be fighting for their survival. We understand that each company has its own unique set of risks and that ensuring long-term value can only be possible if a company survives in the short-term, but that does not negate our obligations as responsible investors,” said LAPFF.

The organisation pointed out that issues such as data protection, executive pay, share buybacks and the reliability of company accounts would not simply be swept under the rug due to the pandemic.

The LAPFF also highlighted that the “destruction” of certain sectors ought to demonstrate to employers how important a strong transition to a low carbon economy will be in tackling climate change, with shifts to working from home and online having seriously altered the world of work.

The statement concluded: “With the stakes so high and change occurring so rapidly, now is not the time to lose focus on this mission.

“Instead, it is time now to double down to protect sustainable business practices and long-term shareholder returns in the downturn and lay the foundations for their growth in the recovery.”

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