Is COVID-19 anticipating the future? Evidence from investors’ sustainable orientation

In this paper, we discuss the attractiveness of green and sustainable assets, from an investor perspective. Inspired by the current state of the art, with researchers positively (re)considering the added value of stocks associated with the fulfilment of sustainable development goals, we analyze whether such stocks demonstrated: (1) a different and (2) an outperforming dynamic during various stages of the COVID-19 pandemic. In particular, we examine sustainable-indexed assets and companies with a fully bio-based production system, against a counterfactual group of non-indexed activities operating in the same sectors. Asset connectivity is investigated by means of a correlation network, and portfolio optimization is applied to measure profitability. The results show: (1) fewer connections between bio-based assets and the “rest of the world,” suggesting that, given their potential long-term resilience, investors might consider them capable of mitigating COVID-19 systemic risk, and therefore a valid investment to hold; and (2) the effectiveness and profitability of bio-based assets in portfolios. Considering the latter finding, we document a switching effect after the hard lockdown phase, during which rational investors (seeking an optimal mean–variance) may have inferred the efficacy of capital re-allocation from simply sustainable assets to bio-based companies. Here, we discuss the potential role of the pandemic as an accelerator of the sustainable green transition, considering the welfare implications in terms of socio-economic wellbeing and reduction of negative environmental externalities deriving from the conversion of the traditional production and management system. The profitability of the returns investments might increase the attractiveness of sustainable management organizations, causing the diffusion of these virtuous systems to increase further.