April 10, 2020
Through the unfolding of the COVID-19 crisis, the commendable actions of many companies have created blueprint for good corporate citizenship in the post-crisis era.
By now we’ve seen the response of many companies to the COVID-19 crisis. Their moves to protect their employees from the virus and financial distress, to give price breaks to customers and to donate dollars and personal protective equipment to health care providers is admirable.
It has very quickly become clear what ‘good’ corporate citizenship looks like in a crisis of the magnitude of COVID-19. But to these companies, and to their employees, customers, communities and investors, has the coronavirus changed what defines a good company?
For years, we’ve been helping companies understand what a ‘good’ company look like. In our view it requires a commitment to adding value not just for shareholders, but for all stakeholders, and actively addressing ESG-related risks.
None of that is going to change because of COVID-19. The virus may not necessarily lead to the fundamental change many think it will. Already we’re adjusting, and getting on with our lives under a new set of conditions.
What the virus is more likely to do is accelerate pre-existing trends – one of which is the shift towards a multi-stakeholder approach to business. The difference may be that prior to COVID-19, that concept was mostly talk. Now, with many companies’ respective responses to the crisis, we’re seeing that talk being put into action.
What have we learned that might define how companies need to operate in the future? It’s probably best to think of the answer not as a collective set of actions, but rather in relation to three broad themes:
- Transparency. The most successful companies in the future will operate openly. They will be clear about their strategies. And they will report fully on the impact of their operations – including reporting on ESG factors, like their carbon footprint. They will consistently communicate their strategies, intentions, results and ultimately their reasons for being, internally to their employees, and externally to their customers and investors. Revenue and capital will depend on this because consumers and investors will demand it.
- Empowerment. One of the planet’s most progressive firms – Unilever – empowers its employees to make decisions within the context of a clearly articulated strategy. In an interview about Unilever’s response to the crisis, CEO Alan Jupe noted that employee empowerment, combined with a clear cultural imperative, has allowed Unilever’s employees to undertake their own COVID-19-related initiatives, in addition to the many actions the company had already undertaken (guaranteeing the income of employees and donating healthcare products to communities in need, as examples). Empowered employees are more productive and make a company nimbler and more resilient – essential for the times ahead.
- Culture. The ‘best’ companies today – the companies that have clearly articulated strategies to sustain their businesses – consistently have a strong, future-focused culture. It’s true of Unilever, and it’s true of one of NEI’s longest standing engagement partners – Suncor. After a decade of working together with us to assess the company’s climate-related risks and plot a strategy for viability in a low carbon economy, Suncor has fully recognized the importance of instilling a culture of resilience. That watchword – resilience – will drive the cultures of our most successful companies as we emerge from this crisis.
The positive actions we’re seeing through a period of intense crisis today, are all linked in some way to those three overarching themes. And it is those themes that will continue to drive positive action that benefits all stakeholders – including shareholders – in the future.