The intrinsic link between sustainability and survival
Exploring the intrinsic link between sustainability and survival, Emperor’s first event in the ‘Keeping communications out of lockdown’ series took place on Wednesday 15 April.
The initial business response to COVID-19
Why COVID-19 will drive business to serve society and planet better
How a company can start to respond to the COVID-19 challenge and integrate sustainability more deeply into its business
The mix of attendees across sustainability, communications, finance and company secretary roles demonstrated the growing importance – and relevance – of the subject at all levels and in all parts of our clients’ organisations.
All change as businesses respond to COVID-19
These are unprecedented times. Nearly every industry has been affected and the retail and leisure industries have closed almost entirely. Between 19 February and 23 March, a third of the FTSE 100’s value was wiped off, with the UK economy potentially facing a 35% decrease. In three weeks, most employees went from rarely working at home to working almost exclusively there.
Organisations have striven to strike the right balance of economic well being with societal health. From offering free services and content and donating supplies, to modifying product lines and prioritising the care of their employees.
Initiatives can be categorised more broadly into four areas: business adaptation; philanthropy; collaboration with like-minded businesses for greater good; and shared value, as they play to their key strengths to ensure the social and environmental impact on their stakeholders is minimal.
Businesses have in the past found it hard to work together. In the future, we are going to need shared platforms across sectors and shared values to drive change. This is demonstrated by Mercedes finding ways to work on ventilators rather than just lending a pair of hands to some effort unrelated to their sphere of knowledge and innovation. Today’s question is ‘What skills can you provide to society in a crisis?’
There’s a real opportunity to address the new future, and sustainability is going to be the heart of it – both for the good of the planet and our businesses, as commercially, sustainability can bring real competitive edge.
Business must serve society and the planet better
With even Larry Fink and Greta Thunberg broadly aligned on their expectations of business, it’s clear that post-COVID, businesses will be held to account if they don’t act. All eyes are on them. As Fink said in his 2019 letter to CEOs:
companies must demonstrate their commitment to the countries, regions, and communities where they operate, particularly on issues central to the world’s future prosperity.
We are at the end of a 40-year cycle of capitalism, which was already limping towards the knacker’s yard. Coronavirus has accelerated the end of capitalism as we know it, ushering in a fourth industrial revolution.
There are five principles that should be observed during this transition:
1. Be useful, in all that you do, all of the time
The C-Suite need to lead this endeavour – this is not about a small team keeping NGOs or consumer groups at bay. Do you pay your taxes? How do you treat your workers and suppliers? More and more businesses will follow the model of ethical capitalism, such as that championed by entrepreneurs like Julian Richer.
2. Energise citizens around a shared vision of a thriving society and planet
The vast majority of sustainable activity has been happening behind the scenes: around TCFD, product life cycles and so on, but it hasn’t engaged the wider world. Businesses now need to demonstrate to stakeholders that they are useful and engage them in the change themselves. It is about being more human and encouraging responsible consumption and habits.
3. Take a systems approach, in thought and deed
The government risk register knew that a pandemic was the UK’s number one risk in 2017, but had failed to act and prepare. COVID-19 is not a ‘black swan’ (i.e. an unforeseen event with extreme consequences). This was all predictable. But we have shrunk our businesses and their relationships down to the point that they are no longer viewed as part of a living system of shared responsibility, capability and need. The future will be about viewing the ecosystem as a whole and about honest consideration of the meta risks through adequate risk assessment and collaborative action plans.
4. Make the fourth industrial revolution work for all
Big data, 3D printing, personalised medicine – it all brings us to a crossroads. So much that can be used for bad (like rigging elections) can be used for good, like sector forums to collectively drive change (such as the Consumer Good Forum).
5. Double down on partnerships
We need to rebuild better. All future business has to have ‘green’ and social good at its heart and this cannot be done alone. True collaboration in a highly competitive commercial world has previously proved thorny and been underwhelming. However, the coronavirus crisis appears to have reset companies’ attitudes to partnering. As we move out of the crisis, levels of partnership should not only remain but grow.
While these principles might seem intimidating, businesses will be forgiven for making mistakes while trying, but not for apathy in this new world. CEO’s will be held to rights over their activity or lack of it. Fallibility is allowed, as the CEO of Zoom experienced in the positive reaction to his apology and admission that their video conferencing service had fallen short in terms of privacy and security.
How companies can start to respond and integrate sustainability more deeply
Talking practically about how a business can respond to the crisis, it’s useful to ground your ambition around three key elements: why; what; and how.
Why do you need to do better?
Be clear about your purpose. There’s quite an industry in generating purpose, mission and values for corporates. Most, however, feel generic, derivative management speak; the best align with a company’s heritage and listen deeply to their customers and employees. If a company was asked to ‘shrink’ themselves down to one word, what would it (desirably) be? At M&S it was ‘quality’, so Plan A added a new emotional dimension to quality beyond the functional.
Be on the right side of marketplace disruption. Understand the rapid shifts that are bringing ‘better’ products and services to customers. For example, coal to wind/solar; the internal combustion engine to electric vehicles; meat to plant/lab based; throwaway to circular fashion. Don’t think ‘disruption is for everyone else, not me’. Every product will, in the next decade, be redefined through the sustainability lens.
Be a consistently bold and brave leader. The CEO and board need to lead personally, internally and externally, championing their vision to be better all of the time, not just having a foreword ghost written section in the annual report.
What are you committing to do?
Set clear bold goals. Articulate what your social and environmental footprint is and what you will do, not just to reduce it but to create net benefit too. It is not just about environmental issues either – too-often-forgotten social issues, such as tax, lobbying, privacy, zero-hour contracts and mental health, also need time-bound and measurable targets.
Hold yourself to account. Create a CEO-led governance system that assigns clear accountability for delivery and is supported by accurate, regular, granular management information on performance.
Be transparent about how you perform. Report openly and honestly about your performance – for example, by adopting the Global Reporting Initiative standard – and look outwards, wherever possible use external benchmarks to provide a baseline, such as World Benchmarking Alliance or Corporate Human Rights Benchmark.
How are you integrating sustainability into all that you do?
Engage your employees. Be good to them in how you reward, develop and recognize their efforts. If ‘better’ is all that you want to do, it needs to be all that they do too. Make it easy for them to get involved, know what’s expected of them and listen to their ideas, they will often be superior to yours! Train them in better business.
Be active participants in partnerships for change. The economy is too big to change alone. You have to find platforms to drive change together, whether by sector, on a national scale, or globally.
Engage your suppliers. Know who they are, where they are and what they do. Set standards for them and measure their performance in exactly the same way you measure your own. But also focus on unleashing their creativity, their ideas and their commitment to build ‘better’ together, rather than treating it as a matter of compliance.
Engage your customers. They have to know you care; that you are committed to them, their families, communities, society and the planet through all you do. Through your products, the services you offer, your physical presence in their neighbourhood, your contribution to the public good. Your entire suite of communications (brand, product and social) need to be tested for their ability to communicate what makes you better in an open and transparent way.
Sustainability is intrinsic to survival
Environmental, social and corporate governance are the three central factors in measuring the sustainability and societal impact of any organisation. If the last few months have taught us anything it must surely be how intrinsically linked sustainability is to survival.
Recognise the commercial headwinds we all face, irrespective of sector, and find your short, medium and long-term strategies to help your business weather the storm and emerge stronger and best prepared to benefit from the inevitable post-pandemic economic upturn. The business of tomorrow is likely to be different to the business of yesterday and it is now more likely than ever that the most transparent, sustainable and purposeful companies are also most likely to succeed financially.
Get in touch with Leighton Barnish, Head of Sustainability at [email protected] if you have any questions.