After the Covid crisis, can we build back better?
The call to ‘build back better’ as we emerge from the pandemic has come from many quarters, including the United Nations, World Health Organisation, the Mayor of New York and the director-general Confederation of British Industry.
Prior to the crisis, issues such as climate change, inequality and the future or capitalism were high on the agenda. As Covid-19 evolved into a pandemic, and most of the world’s developed economies went into lockdown, the business response to the virus was placed under the spotlight.
During the lockdown we have also seen a strong sense of compassion awakened by the crisis, with the plight of the more vulnerable members of society a genuine cause for concern.
As we begin to emerge from lockdown, what can the business world do to help “build back better”? Here are the key points that emerged from the discussion.
Take the lead: Businesses can be nimbler and more effective than politicians; where business leads, governments follow. Praise has been heaped on those businesses that have responded well to the crisis, be it offering sick pay to staff on zero-hours contracts, repurposing operations to provide PPE or sanitisers , or honouring contracts with overseas garment manufacturers who would otherwise suffer a devastating loss of income. There is a real sense that the public is looking for a new approach to business. We are also seeing this in the investment community, with fund managers scrutinising company behaviour in response to the crisis, adding real weight to the S in ESG.
Transparency: Recognising complexity and admitting mistakes builds rather than erodes trust and shows greater respect for those being addressed. This applies equally to corporates and the way in which they interact with stakeholders. Respectful consultation and engagement with stakeholders will build more trusted businesses.
Compassion: Can the principles of compassion be introduced into the business model? Studies by Michael West for the NHS have shown that compassionate leadership and team building have saved the NHS money. Can this approach add value to businesses? How can we recognise those businesses that have shown compassion during the crisis? Is compassion the right concept in the business context or is a focus on business ethics and business fairness more resonant?
Pressure from investors: Fund managers are assessing the corporate response to the crisis in more than simple financial terms, suggesting that access to funding will become increasingly contingent on how management treat stakeholders and how sustainable and resilient a business might be to external shocks.
Equitable treatment of stakeholders: Businesses can take the lead in ensuring that all stakeholders are treated fairly. This would include issues such as paying a real living wage; shorter payment terms for suppliers to facilitate cash flow through the system; meaningful commitment to building greater diversity and engaging with local communities to assess the impact of the business at a local level. Where businesses face a funding crisis, those with the broadest shoulders should be asked to take on the biggest share of the burden. Protecting top executives’ pay while pushing out vulnerable temporary workers is not a fair or reasonable approach to survival.
Environmental impact: One consequence of the crisis has been the realisation that a significant amount can be achieved without the need to travel or meet face-to-face. Studies show that within six weeks of the lockdown starting, an estimated 7,000 lives had been saved as a result of the significant reduction in air pollution that resulted from the cessation of activities. Businesses have a significant role to play in the re-evaluation of how operations can be conducted to prevent a rapid return to pre-crisis pollution levels.
It will clearly be some time before we fully emerge into a post-pandemic world. The choices we make now will shape what that looks like. As the key drivers of our economies, businesses have a crucial role to play.