- COVID-19 reminds us that businesses must work in harmony with the planet.
- ESG investing focuses on environmental preservation and developing people.
- Global cooperation is needed to fulfil the potential of ethical investments.
When Infosys announced its ESG 2030 Vision amidst the current volatile business environment, questions arose around the timing of such a declaration. For us, the answer was clear – the COVID-19 crisis, in many ways, was a clarifying moment. Once again, human resilience was shining through with hope and optimism in the face of hardship. We knew this was the moment to reinforce our continued commitment to ESG investing for positive returns and long-term impact on society, environment and business performance.
Interestingly, this has also been a learning moment, spanning three dimensions—planet, people and policy—that ESG investing seeks to impact. While corporations have come to appreciate the fact that ESG investing is inextricably linked to shareholder value, because it helps shape sustainable business models, the crises reminds us all to act with urgency.
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This has manifested itself in several different, yet meaningful, ways. For example, the FMCG industry is looking to better manage working conditions for their workforce across the supply chain; financial services providers are finding ways to provide better risk-adjusted returns to investors; and sectors like our own are focused on areas such as digital reskilling, delivering stronger data privacy and security for information.
Others have said it in the past, and now seems the perfect moment to recount it: society has granted corporations a ‘license to operate’ and in turn corporations need to abide by the unwritten rules of that social contract and bring their might to move us all forward.
Warning to preserve our planet
The debate around climate change and its impact on the spread of infectious agents is multifaceted. Environmental degradation, including deforestation and destruction of natural habitats to make way for development, displaces creatures in a way that brings them into contact with animals they otherwise wouldn’t, and that creates opportunities for pathogens to enter new hosts and potentially humans too.
According to the WEF COVID-19 Risks Outlook, growing evidence suggests that large-scale infectious disease outbreaks may become more frequent as viruses stored in permafrost or polar ice shields get released due to global warming. Policy makers in many parts of the world, after their initial lassitude in tackling the pandemic, have come to see the enormity of the risks we are all up against.
COVID-19 could be viewed as a metaphor for the potential that climate change has to alter human existence. This realization needs to reenergize our exploration of new ways of working and reducing our own carbon emissions. A basic understanding of Scope 1/2/3 emissions should make us consider the numerous ways in which we impact the planet. By developing smarter processes and clean tech solutions across sectors, we must step up our efforts to transform the built environment to become net-zero, circular, healthy, inclusive and resilient.
What is the World Economic Forum doing to manage emerging risks from COVID-19?
The first global pandemic in more than 100 years, COVID-19 has spread throughout the world at an unprecedented speed. At the time of writing, 4.5 million cases have been confirmed and more than 300,000 people have died due to the virus.
As countries seek to recover, some of the more long-term economic, business, environmental, societal and technological challenges and opportunities are just beginning to become visible.
To help all stakeholders – communities, governments, businesses and individuals understand the emerging risks and follow-on effects generated by the impact of the coronavirus pandemic, the World Economic Forum, in collaboration with Marsh and McLennan and Zurich Insurance Group, has launched its COVID-19 Risks Outlook: A Preliminary Mapping and its Implications - a companion for decision-makers, building on the Forum’s annual Global Risks Report.
Companies are invited to join the Forum’s work to help manage the identified emerging risks of COVID-19 across industries to shape a better future. Read the full COVID-19 Risks Outlook: A Preliminary Mapping and its Implications report here, and our impact story with further information.
Pressing need to upskill workforce
Coronavirus is undoubtedly indiscriminate in who it infects but its impact is not the same for all. A Pew Research Center survey in the US has found that overall: one-fourth of adult Americans are struggling to pay their bills since the outbreak; a third have dipped into savings or retirement accounts to make ends meet; and about one-sixth have borrowed money or relied on support from a food bank. These are more common among adults with lower incomes, those without a college degree and amongst certain demographic groups.
On the other hand, corporations are coming to grips with the ‘new normal’ where consumers are embracing digital to shop, learn, work and even socialize. Clearly, the need has never been greater to reskill and empower disenfranchised people with new capabilities, including digital skills, to make them more employable in these changing times.
Corporate governance that benefits stakeholders
COVID-19 has made corporate governance a more nuanced task. Since the onset of the pandemic, boards have had to deal with a multitude of issues that range from: rewriting their strategies; tracking a wider set of operating and performance measures; overseeing a long-drawn menu of risks; rethinking policies governing compensation; and reimagining employee wellness and experience.
A business culture that delivers for all must lead from the top and be driven by an empowered, diverse and skilled board of directors – not only providing strategic oversight, but also outlining and exemplifying the company’s values with full accountability. This accountability needs to be upheld across the value chain by employees, partners and vendors.
Today society not only depends on governments, but also well-functioning companies to meet its needs; whether it is protecting shared ecological wealth, fostering equitable growth, creating mass employability or safeguarding the interests of consumers (the social contract and license to operate).
Collaboration between the public and private sectors has helped ease some of the world’s most urgent challenges, including the ones associated with the pandemic, opening doors to accelerated resolutions. Every ESG investment holds the promise that action today will shape a more welcome, more liveable future ‘new normal’. Ultimately, no business can shy away from doing its bit to unleash the potential for a new era of prosperity.