Today COVID-19 is upending how we define work, what companies and organizations represent and what they do.
Amid high market volatility and unprecedented peacetime pressures on businesses and the economy, some voices are asking how these developments reconcile with ESG.
We see ESG in the actions of businesses and other organizations in thinking how best to provide for – and more than that, drive – the long-term sustainability of their specific communities. Because these communities help to underpin the foundation of society, the economy and the global capital markets.
We see it in the heightened awareness of the common saying “people are our most important asset.” Today the “S” of human capital management is constantly top of mind. Leadership is more important than ever. There is a tremendous need for leaders to assure and inspire people – workers, customers and other stakeholders – during this period of uncertainty and upheaval. So much, too, rests on a healthy, confident and empowered workforce. Workers who feel protected and safe while facing potential risks to their health on the “frontlines.” And workers who, for the first time, are regularly working from home, juggling work and the needs of young children, parents and other relatives and those who may require special care.
Even with these immediate concerns, the “E” challenges continue – climate change, resource limits, waste management, energy efficiency, pollution and other matters represent short- and long-term systemic risks. Challenges which may carry significant repercussions for businesses and communities alike.
In times of crisis, there is an opportunity for boards and companies to think strategically about how they can achieve a better outcome for their organizations, from supply chains to their customers – by extension, to greater whole that is society and the global economy. We’re seeing companies innovate their approach to communications as they respond to COVID-19. We’re also seeing companies demonstrate their commitment to broader stakeholder needs, with long-term sustainability in mind.
This past decade, the greatest disruptions to “business as usual” has been the pace, breadth and depth of changes forced by the confluence of developments in technology, consumer behavior, demographic shifts, geopolitical risk, global health threats, natural resource scarcities, and climate change. Strategy-focused board meetings, which were historically held once or twice a year, have become continuous – along with a more dynamic approach to risk oversight.
More recently, we saw heightened attention to corporate purpose and calls for a more inclusive approach to capitalism from corporate leaders and multi-billionaires to the common worker. We also saw greater attention to ESG, climate change, as well as increased efforts by historically separate stakeholders to collaborate on common goals toward business sustainability – whether by working to move the needle on greenhouse gas emissions or other elements of the UN Sustainable Development Goals.
ESG is critical to business resilience. It helps organizations to better identify emerging non-traditional risks and opportunities, to weather shocks and stresses, and to accelerate the changes that may be needed for organizations, societies and ecosystems that are sustainable in the long run.
While ESG by itself isn’t the solution, it gives room for optimism. Because resilience reflects what we do before, during and after disruptive events, and it’s built on effective governance practices. Governance applied with a view toward long-term inclusive growth.
Our global vulnerability and experience with disruption today will likely accelerate calls to strengthen our resilience in the face of future challenges.
Let’s use this moment to improve our ability to mitigate and absorb the systemic stresses and shocks we’re now facing. And let’s harness the power of the crisis to focus, adapt, innovate and transform. We can start now to build something better for the long-term. We need to.
As individuals, as companies and organizations, and as a society, let’s work together to get through this and, in the process, create a better tomorrow.