01.05.2020 Fabian Roschig

The state of sustainability in times of corona

The state of sustainability in times of Corona

A story of vulnerability, fast-learning, emerging opportunities, hopes and fears

Just before COVID-19, I wrote “A new climate for business and innovation — Why the current approach must change.”

A new climate for business and innovation — Why the current approach must change.

At that time, I was clearly referring to the upcoming challenges of climate change and the role of innovation, but I think the essential message is more valid than ever.

For a long time as business owners or innovators, we limited our ambition to optimize the financial bottom line and focused on business growth and the current crisis seems like a warning sign to reconsider today's practices.

Vulnerability

COVID-19 has shown more clearly than anything previously how vulnerable our modern, globalized world is to a fast-moving systemic shock.

It illustrates that environmental risks are almost always social risks as well and exposed painfully the interdependencies in our systems (such as the flow of goods and supply chains or the access to medical material etc.).

The crisis shines a light on the importance of a strong overall balance sheet, not only focusing on economic growth. It underlines the social injustice and points out, for example, which jobs are really relevant for the functioning of our system and our society.

The virus holds up a mirror in front of us. It forces us to become aware of our own behavior and its impact on the collective, on the system. That mirror gently invites us to make a few personal sacrifices that benefit the whole — to shift our inner place from ego to eco.Otto Scharmer

Further lessons learned perfectly described by Otto Scharmer here

Eight Emerging Lessons: From Coronavirus to Climate Action

Fast-learning and reaction

Many businesses saw the opportunity and felt the obligation to react to the most urgent needs.

There are a lot of companies adding value in times of Corona. To name just a few: Dyson developing and producing ventilators to help treat COVID-19 patients, Lego donating 500,000 LEGO sets and 50$ million to children in need, Prada and other fashion brands producing face masks, Condor and other airlines flying urgently needed medical protection equipment to Germany, initiatives such as Startups against Corona, #TheGlobalHack: 500 people-powered solutions to COVID-19 in 48 hours and many many more.

Probably the biggest collection of smart initiatives can be found here via “Business of Purpose”:

Covid Innovations

The (business) world has clearly shown its capability to quickly adapt to new realities and even cross-industry collaboration has been possible in these challenging times as seen in the case of Aldi and McDonald staff-Sharing deal in Germany.

The question will be: How will we use these demonstrated capabilities? Where do we go from here? Do we link our recovery plan to sustainability goals? How do we adapt to post-pandemic times?

A moment of truth for sustainability — Short-term 2nd priority or thrive

As stated above this seems to be an inflection point.

While in the short term it’s necessary for companies to prepare for the upcoming downturn and stabilize the core of the business, we should not allow the “Climate Change Movement to take a substantial hit and experience a big pause when it comes to the momentous energy it was gaining before Covid” (Angela Buck). It is clear that climate change will remain an urgent challenge after the corona crisis is over; despite images of wildlife returning and clear water, it hasn’t stopped being an immediate threat.

Climate change isn’t pausing during the lockdown. — Nico Rosberg Sustainability entrepreneur | F1 World Champion 2016 | Driving positive change for a better future

COVID-19 is a fast-moving systemic challenge that has upended business and life as usual virtually overnight. The issues targeted by the SDGs and the Paris Agreement — including climate change, inequality, and biodiversity — are slower moving, but near enough that we can be sure that they will transform commerce and social structures in this generation.

Nobody has invented a reliable crystal ball yet, but in my opinion, there are 2 potential post-pandemic scenarios for sustainability:

The positive post-pandemic scenario for sustainability

  1. More companies begin to see their interdependent relationship with society and the planet. “Public and private sectors learn to think in more systemic terms, to anticipate and plan for probable futures whether we like the scenarios or not, and to build resilience capable of meeting the challenges those scenarios deem most likely regardless of our preferences or beliefs.”- COVID-19 and People, Planet and Profit: Where to from here?
  2. More people in business recognize that economic models of continual growth do not take into account the world’s limited resources.
  3. Purpose takes a huge next step, not only consolidating its position in the business mainstream but establishing its influence even further, allowing Purpose-driven activity to become the dominant business paradigm.
  4. As stated by Yuval Noah Harari a crisis serves to speed up historical processes. In this scenario, just as the financial crash of 2008 helped to introduce the concept of Purpose, the Covid-19 crisis speeds up the next phase of business transformation and the arrival of a more socially-centered form of capitalism.
  5. Companies use emerging opportunities to create a more fair, equal, and stable economy.
  6. Organizations will be increasingly judged on the basis of their relationships with their workers, their customers, their communities, as well as their impact on the environment at large. Consumers expect companies to give more back. There is a notable shift in consumer mindset as they increasingly demand companies to be socially responsible. (Deloitte: The rise of the social enterprise 2018)
  7. The European Green Deal will be a central and essential part of the recovery plan post-Corona. That was the message from thirteen European climate and environment ministers who circulated an open letter on Thursday. 09.04. “we need to maintain ambition in order to mitigate the risks and costs of inaction from climate change and biodiversity losses.”- ”Any attempt to restart the economy should incorporate long-term goals and sustainable infrastructure spending, or risk wasting time, money, and resources.”

European Green Deal must be central to a resilient recovery after Covid-19

To make our societies resilient to future shocks and our economies more sustainable, the Commission must set up a Paris-compliant economic recovery and put forward an ambitious climate target of at least 65% emissions cuts by 2030 — Director of the environmental lobby group Climate Action Network Wendel Trio

The negative post-pandemic scenario for sustainability

  1. “The Covid crisis and its fallout will stimulate a reactionary shift back to more predatory forms of capitalism. Here, short-termism and quick profits win out. This will decrease the rate of Purpose adoption, or — worse still — see a wholesale rejection of the ideas and values held within it.” — Mandalah (A Moment of Truth for Purpose)
  2. “If companies don’t make money and economies aren’t robust, climate change, environmental concern and gender equality fall by the wayside.” — President and CEO of Huntsman Corporation

The business opportunity of sustainability

The data is available and there is no “Profit despite purpose” anymore. As shown by Afdhel Aziz in his post “The Power Of Purpose: The Business Case For Purpose” you´ll find all the relevant statistics to demonstrate that purpose and sustainability might be the biggest opportunities of our time.

To give you a better idea of what I am talking about:

As stated by the Business & Sustainable Development Commission, achieving sustainable business models opens up US$12 trillion of market opportunities and creates up to 380 million jobs.

“An explosion of empirical research on why Purpose-driven companies perform better than their non-Purpose counterparts; the growth of the B Corp movement and Conscious Capitalism; Business Roundtable’s shift away from shareholder primacy; the Davos Manifesto for better capitalism; and the Edelman Trust Barometer showing 75% of the public believe that business can be a force for good in society as well as being profitable.” — Mandalah (A Moment of Truth for Purpose)

81% of global consumers want companies to improve the environment, while 88% try to buy products from sustainable companies and 66% are willing to pay a premium for sustainable goods. 92% of workers seek an environmentally friendly employer, and millennials, a generation who believe employers should play a role in addressing issues such as income inequality, hunger, and climate change will make up an increasing percentage of the global workforce in coming years: A projected 75% by 2025. “— BCG Digital Ventures (Even in These Tough Times, ESG Remains Vital)

“Environmental, social and governance investing was growing in popularity before the virus began to circulate, as investors flocked to companies that have taken steps to manage nonfinancial risks related to matters such as climate change, board diversity or human rights issues in the supply chain. But the pandemic has demonstrated on a large scale the importance of other factors that are paramount to ESG investors. Among them: disaster preparedness, continuity planning and employee treatment through benefits such as paid sick leave as companies direct employees to work from home.” — Wall Street Journal — March 25th, 2020

“Early analysis of information from Morningstar, Bloomberg and Blackrock suggests ESG investments and companies that are strong ESG performers have been weathering the impacts of the virus better than others.” — COVID-19 and People, Planet and Profit: Where to from here?

Conclusion

The first thing is that I think the pandemic makes it increasingly hard to hold on to the idea that the business of business is merely business, that we only need to worry about the health of the free market and someone else will take care of everything else. — Rebecca Henderson, author of Reimagining Capitalism in a World on Fire

It’s clear that for too long we focussed only on economic growth without considering potential harmful effects on a more systemic level, but as Oasis said, “Don´t look back in anger”. It’s a time for leaning forward into the unknown and create a better economic model. More resilient, more protective, more sovereign, and more inclusive as requested by European politicians, companies, lawmakers, and activists in an open letter for green investment to restart growth after the coronavirus pandemic.

Taking the long view, couldn’t that also be chance for us (the world) to review all of our industries, our bad habits, and find a new way forward together, to adjust for a better, greener future that will benefit all of us and not just a chance to get us back to business-as-usual? Shouldn’t the sustainability visionaries from the business world be planning for that discussion with governments and company leaders now? I really hope we don’t miss such a unique opportunity should it arise. — Angela Buck EP/CD/Consultant/HOP/Futurist/Innovator/Strategist/Program Lead/Curator/Entrepreneur

I am convinced that there will be a lot of emerging opportunities for design and innovation to contribute to this positive development (I´ll get to that in my next post) and to use Angela’s words I also really hope we don’t miss such a unique opportunity. Let’s go for it.

It´s time to reboot capitalism. And purpose is the source code. — Afdhel Aziz Expert on Brand Purpose, Cause Marketing, Social Entrepreneurship, Forbes Contributor

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Originally published at http://fabianroschig.com.

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