How the common good can save business
COVID-19 has exposed the fragility of how businesses create shared value for the communities they serve, including employees, shareholders, and broader society. In a matter of weeks, it has created unprecedented levels of economic and societal disruption to the point where statistics can no longer truly encapsulate the scale of the impact:
- 3 million confirmed cases worldwide with 215,000 deaths1
- 58 million new unemployment claims across 20 of the world’s largest economies2
- 3% global GDP contraction in 2020, the largest since the great depression3
The final totals have not yet been tallied, and surely additional hardship lies ahead. As governments around the globe scramble to extend social safety nets to those already impacted, businesses too must evaluate the options available to protect internal and external stakeholders in the communities they serve. This crisis will reshape how we think about corporate social responsibility, how it can protect communities at all levels, and how it can drive economic recovery going forward.
COVID’s impact on the global economy began with major disruption to supply-side productivity – availability of resources, products, and services feeding downstream economic activity. The scope and scale of demand-side disruption is still unknown, though the core issues of financial uncertainty and access to care will continue to present obstacles for meaningful recovery on both sides of the equation. Government and private industry are racing towards better testing, treatment, and preventive measures, but businesses must also think ahead to what comes next. Two goals should inform action: 1) near-term mitigation of adverse health and economic outcomes, and 2) long-term strengthening of community health and financial wellness.
In the near-term, more can be done to address the acute health and economic stresses placed on communities by the pandemic. Broader implementation of alternate care access strategies, particularly for high-risk populations in critical business functions, should be considered. Corporations should also consider stop-gap measures to address liquidity issues for employees, business partners, and other stakeholders critical to day-to-day operations. Advance payments or small-scale loans are some of the measures being explored today, and have the potential to help avoid widespread collapse in supply chains world-wide. Finally, corporations should also broaden the mandate of their foundations and identify opportunities to contribute to organizations providing food and care access. Not all organizations have the financial stability, or frankly liquidity, to justify these types of contributions today. This highlights the need going forward to better integrate philanthropic activities in day to day business culture. Small dollars at the community level can make a substantial difference and galvanize action.
Longer-term strategies should also support the objectives of strengthening financial stability and access to care for both internal and external stakeholders. These two goals are more critical than ever, and require a more sophisticated set of tools to ensure programs are delivering on the impact they promise. This requires questioning of how we define the two of the three pillars of CSR:
- How has our supply chain been impacted by the global pandemic? What can be done to mitigate this impact going forward?
- How can we help expand access to care for all members of the communities we serve?
- How can we reduce the risks our employees are exposed to in their day-to-day jobs?
- How can we ensure profit and productivity is better shared within the communities we serve?
- How can our core business help to sustain impact and promote growth?
- What mechanisms exist for us include those who are underserved today?
Businesses have begun to make meaningful commitments to initiatives that build inclusive gains in the communities they serve. Since its foundation in 1006, B Lab has handed out more than 3,000 certifications to organizations from a variety of industries committed to using business as a force for good. The steps outlined here are an incremental step towards this goal, but necessary given the realities of this crisis. In the short term, failure to act will slow consumer return to economic participation. The long term consequences could be far more severe: continued erosion of social safety nets, diminished resiliency in future crises. The benefits of action, conversely, are clear. Corporate commitment to the principals outlined here can help build more durable supply chains, promote wellbeing for consumers and business partners, and drive productivity and connectivity among employees. This will be key to economic recovery going forward, and can better insulate us from future disasters.
Corporate social responsibility has grown from academic curio to staple of the modern economy because of the recognition that private enterprise has a meaningful role to play in the promotion of individual and community wellbeing. It has not, however, had to content with disaster on the scale we are seeing today. Businesses must broaden the focus of collective impact and rapidly evolve CSR programs to protect shared interest. We must examine fundamentally what purpose CSR can serve in the post-COVID landscape and how it can drive more meaningful outcomes for the communities it is meant to serve.
1 “COVID-19 Dashboard by the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU)” Johns Hopkins University, April 2020
2 “The effect of COVID-19 and disease suppression policies on labor markets: A preliminary analysis of the data”, The Brookings Institute, April 2020
3 “World Economic Outlook, April 2020” World Economic Outlook Reports, International Monetary Fund, April 2020