Were seeing it all: CEOs taking pay cuts amid layoffs, Gap and Zara producing masks in their factories, General Motors and Ford building ventilators, and social media sites such as LinkedIn and Instagram replete with examples of corporate generosity in this crisis-ridden time. But what are the deeper lessons from the coronavirus pandemic that will help companies be more sustainable going forward?
It is somehow evident to me that we are still “living in the past,” and that many companies continue to subscribe to the Milton Friedman dictum that the “social responsibility of business is to maximize profits.”
This crisis, like many others before it, has shone a light on the phenomenon of the “Tragedy of the Commons,” the notion that when individual companies or industries try to maximize private gain, it inevitably leads to collective loss, typically in the form of degradation to our people and planet. Case in point: Firms such as Gap or Starbucks that kept their doors open until last week in pursuit of sales put people their workers and customers at risk of catching the virus and spreading it to many others.
Currently, the plastics lobby is trying to overturn the ban on single-use plastic bags, at great cost to the planet, citing dubious public health concerns with reusable shopping bags. This myopic focus on the single bottom line of profits needs to be replaced by the embrace of the triple bottom line of people, planet and profit. And this shift in perspective can be achieved only by adopting the fourth “P” the compass of Purpose, which forces us to address the all-important question of “why we do what we do.”
Defining a sense of purpose inevitably will lead all companies to realize that business belongs to society and not the other way around. This is a powerful step forward to becoming more stakeholder-centric and not just caring about shareholders but other key stakeholders as well, including employees, consumers and communities.
Jobless claims have shot up to a record high of more than 3 million in the last week alone. To make matters worse, 40 percent of American households cannot afford an exigency payment of $400. Why? This is because profit continues to trump people, and rank-and-file employee pay and benefits remain abhorrently low in the U.S. Workers at Amazon had to strike to protest inhumane working conditions, which does not speak well for one of the richest companies in the world. Similar stories abound, despite plenty of research to show happier and engaged employees are way more productive and contribute positively to company profitability.
The current crisis shows in unequivocal terms that the frontline and shop-floor employees surviving hand to mouth are more vulnerable than the rest of us. The same is true for climate change and other impending crises.
Unlike their CEOs, poor workers living in Manhattan have no place to go when the sea level rises. In this vein, it is key for companies to realize that the United Nations Sustainable Development Goals of addressing climate change and ending poverty are related and the poor amongst us will be disproportionately affected when the climate crisis hits.
Now is the time to strengthen our social fabric. Companies must lobby to increase social protections for the less privileged a living wage, health care and other forms of insurance that European citizens take for granted to increase societal resilience. Writing checks each time a crisis hits is a bad idea.
This crisis also teaches us that companies cant go it alone to solve difficult problems: Collaborations are a must. When collaboration breaks down (as is evidenced by the current spats between the U.S. and Chinese governments) or does not take root (as in the current global race to find a vaccine), everybody stands to lose.
The same is true of climate change. Topics such as deforestation, effluents in waterways, buying minerals from the Congo these are all germane issues that can be addressed only by a consortium, where each party, again, needs to rise above self-interest and think about the wellbeing of the collective.
This is a hard and unusual issue for companies as they often have to collaborate with traditional competitors. My book, “Small Actions Big Difference,” proposes several strategies that companies can implement to collaborate and adopt the “us-us” rather than “us-them” mentality. Sustainability needs to be put in the pre-competitive space, as there is no profit without planet and people.
In case you didnt realize, global warming is in large part the result of companies pursuing profit maximization without regard for planet and people and urging consumers to keep buying and discarding things at an ever-accelerating rate.
This way of conducting business certainly has created a mess: We are consuming 1.5 planets-worth of resources, a figure expected to go up to three planets by 2050 under the business-as-usual scenario. Last time I checked, we still only have the one planet.
Looking at the picture of the skies before the lockdowns and now and seeing firsthand that the planet is healing managers must implement new ways of doing business. That might mean using technology and flying less for business meetings to asking their consumers to buy less (yes, you read that right) and consume responsibly. If the current crisis shows us anything, it is that most of us can indeed get by on less.
In closing, small actions by individual companies can lead to a big difference for humanity. This simple dictum must be implemented by all of us to beat the next crisis. Or else, in the words of Bob Dylan, “Its not dark yet, but its getting there.”
greenbiz.com, 1 April 2020