We humans are a spectacularly resilient species. Wars, famines, plagues, economic crashes – we dust ourselves off and press on. So we will get beyond COVID-19. But is it too much to hope that, devastating as the virus’s effects are proving, our survival could lead on to a better world?
We’re already seeing some sources of optimism amidst the general gloom. A study by the Centre for Research on Energy and Clean Air, for example, suggests that in April there may have been as many as 11,000 fewer deaths from the effects of pollution in Europe compared to the same month last year. If something similar is happening in major centres of pollution in Asia and elsewhere then the number of lives actually saved during the pandemic could be substantial.
However history tells us that things don’t just get better on their own. We have to take action. So what do specialists in sustainability in the world’s business school community think that companies should do once the crisis begins to abate to make a better world a reality?
#1 Flatten the curve– Wolf Ketter, Professor of Information Systems for Sustainability and Director of the Institute of Energy Economics at the University of Cologne believes that COVID-19 is a classic example of ‘demand congestion’ with too many patients stretching hospital capacity to breaking point. And tackling it has called for a flattening of the curve of demand to give health systems the time and space to manoeuvre. He hopes that the ways this is being achieved might inspire key industries, such as the utilities, to meet their own demand challenges in the future. “In the energy transition, we’ll need to flatten the curve differently in different places” he says. “Each utility provider will need to react quickly to peaks in demand in their unique markets. Such intricate measures will require a machine-to-machine economy to manage interrelated systems and artificial intelligence to help individuals easily respond to immediate market circumstances. Fortunately, ‘energy flexibility’ businesses are already developing innovative approaches to flatten the curve. AI and machine learning will become a sleepless task force protecting a publicly-critical service.”
#2 Engage with the local community at a grass roots level– “There are clear lessons in the COVID-19 crisis on how to contribute to create societies that are economically, socially and environmentally healthy, stable and resilient,” says Mary Martin, a senior policy fellow at LSE and director at UN Business and Human Security Initiative, LSE IDEAS. “However, when discussing the implications for sustainable business from the pandemic, we must look further than simply targeting individual goals such as minimising emissions or even improving healthcare. Supporting human security in all its diversity, working with communities and individuals to protect people and address a mosaic of issues that affect their lives, must become a core facet of corporations’ business models. Companies should see local communities as partners in achieving human security, sustainability and resilience. Working at a local level to identify specific needs, capture local knowledge and generate community solutions, will improve companies’ standing in the eyes of ordinary people and be fundamental in winning the fight for a happier world and a healthy environment.”
#3 Realise the global impact of your actions– According to Nicolas Béfort, assistant professor at NEOMA Business School and member of the Chair in Industrial Bioeconomy, the COVID-19 pandemic is revealing just how considerable an economic impact an ecological crisis can create. And it’s also showing just how inter-connected everything is in this age of globalisation. “The virus is of biological origin,” he says “but it’s the destruction of natural habitats that is behind its transmission of to human beings. And the international division of labour is massively accelerating the spread of the virus and the intensity of the pandemic. The just-in-time organisation of production makes value chains very sensitive to the slightest disruption. This sensitivity is heightened by the accumulation of private debt, which undermines the resilience of the system because the prospect of a default anywhere in the value chain is likely to generate an economic crisis. Economic models are therefore oriented towards the prospect of the strongest possible growth. Furthermore, if European states can boast a relatively low contribution to greenhouse gas (GHG) emissions compared to China, it’s only because of the relocation of polluting industries in Asia and the exportation of our GHG emissions. Finally, the unsustainable intensity of air and maritime traffic increases human contacts (and therefore transmission vectors) and GHG emissions that contribute to global pollution. This crisis therefore illustrates the need to rethink production, trade and consumption models in the direction of sufficiency, instead of continuous growth.”
#4 Empower employees to make them happier and more productive – Widespread remote working, which many organisations have been experimenting with for several years has suddenly become an imperative. And it may mean that, once some form of normality returns, the workplace may never look the same again. But Pascale Peters, Professor of Strategic Human Resource Management at Nyenrode Business University in The Netherlands, warns that getting the best out of talent in this new environment may call for a significant change in management thinking. “Working from home has the potential to make people both happy and productive in the context of virtual working.” But this only seems to happen in practice if employees feel genuinely empowered. And his research suggests that, while organisations may think they have empowering systems in place, the results don’t always back this up. What appears to be needed is the good, old-fashioned human touch. “Effective home-based working calls for the building of trusting relationships characterised by supportive leadership, mutual support, and shared commitment.”
#5 Don’t try to ‘go it alone’ to solve difficult problems – A clear lesson of the pandemic has been the need to pool as many relevant resources as possible to find ways to tackle a major challenge. And, according to Michael Butler, Professor of Organisational Analysis and Development at Aston Business School in the UK, it’s a lesson that the commercial sector should be taking careful note of. “Collaboration is a fruitful way forward because it brings together inter-disciplinary experts who collectively have creative insight to identify solutions,” he says. However, his research shows that making it work requires participative and authentic leadership. And it’s possible that the response to COVID-19 could accelerate the development and spread of new collaborative models. “Open strategy could significantly change innovation processes because within it businesses acknowledge what they do not know, especially during uncertainty, and so reach out to various stakeholders who help with supply chain inputs to decision making and future preparedness. But key to successful collaboration is a combination of factors, leading change, but also an inclusive and productive culture which needs to be underpinned by revised reward systems and promotion paths to embed partnership.”
#6 Don’t make profit your sole priority– Is it perhaps time to stop chasing every buck, no matter the collateral damage that might cause? Professor Konstantinos Stathopoulos, Chair in Accounting and Finance at Alliance Manchester Business School certainly seems to think so. “The COVID-19 pandemic has highlighted the role of governments in protecting their citizens and the resources they need to do so effectively,” he says. “Fair and balanced corporate taxation has a primary role to play in ensuring sufficient public resources in the future. So firms should act in a socially responsible way by paying their taxes during normal times as opposed to hiring armies of ‘tax advisors’ to mitigate tax liabilities.” However, being a good corporate citizen is not enough. He also believes that we might need to rethink a key business model that has become so popular and widespread since the 1980s. “Running a lean organisation based on ‘just in time’ operational principles and their associated financial strategies is the profit maximising thing to do. However, this leaves firms exposed to and unable to react to significant market volatility. Even though it’s impossible for most firms to set aside sufficient resources to deal with a major crisis, having some financial slack would allow them to insulate key stakeholders, such as employees, customers and suppliers, for a period of time from the impact of a crisis. The strengthening of the capital requirements in the financial sector post-financial crisis had exactly this principle in mind. However, this mentality simply isn’t prevalent in other sectors.” Perhaps now it’s time it was.
#7 Embrace ‘green capitalism– At Belgium’s Vlerick Business School David Veredas, Professor of Financial Markets, believes that the post-pandemic world might need, not just a rethink of how capitalism operates, but what capitalism is actually for. “A growing number of people understand that the original raison d’être of capitalism was to improve the lives of all stakeholders of a corporation, not only shareholders,” he says. “And COVID-19 represents an opportunity to come back to these origins. A good example of stakeholder capitalism is the cooperative, whereby stakeholders are also shareholders. In Europe we have some really good examples of successful companies that, in some sense, follow the cooperative system. A well-known case in Belgium is the financial conglomerate KBC which has a stable core of shareholders who are local Flemish financial and rural cooperatives. And they’ve been at the heart of the transformation of the region from a rural economy to one of the most advanced and entrepreneurial areas of Europe, and with one of the best education systems in the world.”
Like all great crises, this one will come to an end. And whether we emerge into a better, more sustainable future will depend on how many business leaders have the vision – and the courage – to follow at least some of the advice these experts offer. For all of our sakes, let’s hope there are plenty of them.