Countries with strong social and governance traditions are seeing fewer deaths and more economic stability during the coronavirus pandemic, according to a new report by FTSE Russell.

“The analysis shows that investing in [environmental, social and governance] themes has overarching benefits, both for economies and investors,” wrote the report’s researchers. “While it results in more preparedness and agility when addressing unpredictable events for economies, good ESG performance also provides security, stability and lower risk for investors.”

In assessing a country’s overall ESG performance, the report used a rating system based on more than 200 ESG indicators. Countries received grades for political effectiveness and social effectiveness in the three years leading up to the pandemic. Those with high scores in both categories saw, in general, fewer deaths per capita as a result of the coronavirus than those with lower scores.

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“During the COVID-19 crisis, we [have seen] that some social and governance indicators, like the number of hospital beds and physicians, research and development and government effectiveness, are important in how each economy was impacted by the crisis. Therefore, economies which invest in and pay attention to ESG performance should be more stable, effective and, to an extent, likely to better manage unexpected and disruptive events.”

Countries that performed exceptionally well in one area, but poorly in another tended to have higher mortality rates overall than countries with more even scores, noted the report. For example, Canada, which has seen 783 deaths from the coronavirus per million citizens, received better than average grades in both categories. The U.S., which has seen 2,454 deaths per million citizens, received a higher grade for its social effectiveness, but lagged behind on its grade for political effectiveness.

According to the researchers, the findings are an indication that countries with strong social and governance traditions may hold more appeal to institutional investors than other countries. “In conclusion, this study could serve as an ex-post case for continuous investment in a sustainable and responsible array of public policies.”

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