What the coronavirus crisis can teach business: lessons in sustainability, adaptability and purpose
Fundamentally, markets ‘price the future’, reflecting what traders think will happen. And an uncertain future fosters market turmoil, as daily news resets reality and changes expectations of companies’ viability.
We now exist in a liminal period, between ‘before’ and ‘after’ COVID-19. Such times are characterised by uncertainty, ambiguity and disorientation. Liminality generates creative and destructive forces that can unleash rapid and radical transformation, which can destroy and create in equal measure. We all experience liminality, instances when normality is suspended and deep transformation is possible: it exists while we sit in waiting rooms or airports, and is present in coming of age stories or painful divorces.
Many sustainability practitioners occupy similar uncertain spaces daily in our desire to change the world we live in. What might be learnt from those who navigate liminal space regularly, and is there any indication of how this might play out over the longer term?
Resilience and adaptation are key themes in the field of sustainability. Understanding companies’ resilience to external shocks and how adaptable they are can help identify those more likely to navigate turbulent times successfully.
We’ve seen this with airlines, which operate on low cash reserves and correspondingly have low resilience to a sudden and prolonged drop in customers, exacerbated by limited adaptability – what else can you do with a Boeing 737? Where airlines have adapted it is to re-deploy workers trained in first aid to help the NHS. This adaptability can also be seen in (some) auto and manufacturing companies, whose just-in-time model of manufacturing has meant they can quickly pivot to producing much needed ventilators instead of vacuum cleaners or cars. It’s clear that during this crisis the most resilient companies are those able to adapt and meet their community’s needs with care and compassion.
As Abraham Lincoln said, this too shall pass, but what lessons will we take with us into life after COVID-19?
- Purpose: companies that focus on their customers and care about their staff have a strong social purpose that comes to the fore in times of crisis.
- Adaptability: organisations that can adapt quickly are sustainable businesses that will develop and grow in all conditions.
- Resilience: businesses that can withstand pressure like we’ve not experienced before are here for the long term.
We are already seeing that significant change is possible when there’s a collective will. Changes to our working days which were unthinkable last year are now the “business norm” as we adjust to the lockdown. “Zooming” has soared while flights are grounded. Whether this is a long term change is debatable, but it shows how quickly and radically we can respond in a crisis.
Longer term, will there be a legacy that changes our attitude to investments? It used to be inconceivable that you could do good and make money at the same time. I would like to hope that once we emerge on the other side, doing good will be the only way of making money.
Sustainable companies that are adaptable, resilient and have a strong social purpose will be rewarded by customers and investors while those that have shown their true colours will be unlikely to see their sales rebound. Reassessing what we really value and realigning our priorities will be the best legacy of these turbulent times. We will look back at this period and be able to say: this is when our transition to a better future truly started.
Scottish Widows has recently published its Responsible Investment framework, which is designed to help guide its investment decisions.
The authors are Maria Nazarova-Doyle, Head of Pension Investments, and Kaisie Rayner, Responsible Investment Lead at Scottish Widows.
This article is provided by Scottish Widows.
In partnership with Scottish Widows
Scottish Widows is a life, pensions and investment company.
