There has been a view that environmental, social and governance (ESG) investing was just a fad, which would go away at the end of the bull market because it was expensive and just something nice to have while the going is good.
The Covid-19 crisis is therefore a good test of ESG, with many wondering how would it perform in these exceptional market conditions?
It's still too early to say anything much about how financial markets are going to turn out once this pandemic passes, but ESG has been a bit of a bear market phenomenon, with strong flows of money into ESG ETF funds during the first few weeks of the crisis, while other funds saw outflows.
Why is that? Well, it could be a number of things. Perhaps people have been buying companies that score higher in terms of ESG because they have appreciated how much less pollution there has been, or how much society has come together to beat the virus by locking down and keeping safe.
Maybe it's been felt that ESG investing was a way to change company behaviours by giving the nudge to good ESG companies and avoiding others.
Additionally, it appears that ESG indices have been showing better performance too.
This last point could be connected to the fact that ESG indices are typically made up of fewer companies that are dependent on market cycles or companies that look cheap but don't offer very good growth prospects.
The ESG indices also tend to have more companies that are so called "quality" or "growth" orientated, which have delivered relative outperformance compared with cheap value and cyclical stocks during the crisis.
Finally, ESG has in the past been a good indicator of company resilience, with ESG companies less likely to fail than those that score badly in ESG terms.
In bull markets some companies borrow heavily against their balance sheet, but find when cash flow dries up they struggle to survive.
When properly assessing the E, S and G factors, however, a high level of borrowing would raise warning signals over governance.
In a crisis like this there has been a flight from more risky companies such as these to those which are seen to be more resilient.
For all of these reasons, ESG stocks have shown their worth in the immediate shock of the crisis, both in terms of resilience and diversification benefits, and are likely to be a strong position when markets return to a growth trajectory.
But what are the longer-term prospects for ESG?