Doing Business in A Post-Pandemic World: Will Covid-19 Make Companies Better Corporate Citizens?
By Davit Mikeladze, Project Manager at CiDA and Global Compact Network Georgia
Despite calamities from economic recessions, wars and famine to a virus pandemic afflicting the Earth, a study conducted in 2009 in the aftermath of the global financial crisis, by the University of Kansas and Gallup indicated that humans are by nature optimistic. We will certainly see the similar studies after the Covid-19 pandemic, and I believe the results will not be any different. If it was so, the mankind would have ceased its existence long time ago. This is why I want to suggest the below optimistic reflection, arguing that even though current pandemic has brought enormous damage to the world, if the global community, particularly business sector thinks strategically, strengthens intersectoral cooperation and shows solidarity to other parts of our society, we might very well be able to get companies as better corporate citizens coming out of the Covid-19 crisis.
Lise Kingo, CEO & Executive Director of the United Nations Global Compact, argues: “Covid-19 has already taught us a very important lesson: we are interconnected with and interdependent on each other in ways we did not fully understand before”. And it is absolutely right – what we observe currently is that disease does not differentiate humans by their social, economic or political status, it can equally harm the leaders of the states, members of the royal families and world-known celebrities. It also made us aware about the necessity of having proper healthcare sector and importance of personal hygiene anywhere and anytime. One more major lesson what Covid-19 has taught us is that digitalization can provide diverse solutions would it be working and learning from home, or conducting corporate meetings and large-scale events without physical travel. Hence, digitalization will further progress in a post-pandemic world reducing an environmental impact business generates in different parts of the world.
Business sector should analyze the current situation and make right steps ahead to ensure not only survival during the expected worst economic downturn but to gain trust among its core stakeholders, would it be employees, customers, communities they operate in, or suppliers, who all together should ensure their business continuity. It has been encouraging to see the business sector responding to Covid-19 crisis so far, and it indeed strengthens the optimism in regard to more responsible business conduct we can witness in the future. Hereby I will point out a few such examples which can be considered as the role models for good corporate citizens.
Walmart helping small business partners – A variety of small businesses operate inside Walmart Supercenters – hair and nail salons, optometrists, restaurant franchises, veterinary clinics, local and regional banks. Walmart decided to waive rent for all property partners during the crisis with a hope that this rent relief will help these businesses financially weather the current situation and take care of their employees. Walmart is also working with many of its partners to encourage their impacted employees to apply for the 150,000 temporary jobs Walmart has created recently. Furthermore, Walmart is making changes to its Supply Chain financing program to allow qualified suppliers to get payments faster.
Banco Santander cutting executive pay and creating a €25 million fund for medical supplies – The fund will be financed through a reduction in senior management, board compensation and voluntary contributions from Santander employees. Santander’s Executive Chairman, Ana Botín, and CEO, José Antonio Álvarez, have decided to forgo 50% of their total compensation (salary and bonus) for 2020 and non-executive directors will have their compensation reduced by 20%.
Mercedes-Benz offers support with the production of medical equipment - In normal times, Formula One is all about fast cars. But these days, the Mercedes-AMG Petronas Formula One Team is working together with six other Formula One teams in order to help. So-called CPAP breathing aids, which have been developed in record time in cooperation with the University College London, are already in use in hospitals. The knowledge required to make the device – such as details on design, materials, tools and kit used in the prototyping process – is freely available for industry manufacturers, academics and health experts. This is indeed an excellent example of valuable cooperation among business and academia sectors.
These real-life actions taken by the companies operating in various industries, those we are observing currently, is an encouraging development, and as Ola Källenius, Chairman of the Board of Management of Daimler AG and Mercedes-Benz AG puts it: “Individuals have to keep their distance from each other, but at the same time societies are coming together”. It is also important to highlight the positive role the national governments and supranational organizations can play to support and encourage efforts driven by the business sector. In this context a truly optimistic message was voiced just a few days ago by Commissioner for Justice Didier Reynders. As he stated, European Commission will introduce a legislative initiative next year on mandatory due diligence for companies. Based on a recent study, Mr. Reynders highlighted a need for EU-wide, mandatory legislation encouraging companies to identify, account and mitigate negative human rights and environmental impacts in their supply chains. Commissioner Reynders’ message to the companies was that acting sustainably and responsibly pays off. According him, Covid-19 crisis has shown that those businesses that have environmental, social and governance measures in place, weather the storms better and outperform others. He also said that the forthcoming legislation would be part of the EU’s Covid-19 recovery package.
Based on the above mentioned tangible efforts made by the business sector and solid regulatory initiatives voiced from the government side, I foresee companies becoming better corporate citizens in a post-pandemic world. This will naturally improve overall business behavior in terms of their corporate responsibility would it be a big corporation or small business partner supplying certain goods and services to bigger players in their respective industries.
This article has been published within the Swedish Government funded project "Leadership for SDG in Georgia".