When we do finally emerge from the COVID-19 crisis, the world will employ a magnifying glass to assess how businesses responded to the crisis – and the steps taken to recover and rebuild. Leaders are already recognizing that rebuilding a “new normal” affords businesses an opportunity to recover in a more responsible, sustainable and, ultimately, better way. As BlackRock Chairman and CEO Larry Fink highlighted in his recent Chairman’s Letter to Shareholders: “The world will be different. Investors’ psychology will change. Business will change. Consumption will change. And we will be more deeply reliant on our families and each other to stay safe.”
The world has changed – and so have sustainability and communications imperatives
What place will sustainability and corporate responsibility have in a post-pandemic world? Unlike with the 2008 financial crisis, which served to highlight the important role played by environmental, social and governance (ESG) principles, can sustainability even be prioritized once corporates turn to repairing their bottom line? Our position is that the issue of sustainability and corporate responsibility will occupy a central place in corporate decision-making and that the answer to both questions is a resounding “yes.”
In fact, the current situation marks a turning point for sustainability and corporate responsibility. In recent weeks, we’ve witnessed corporates around the world do something unimaginable: change dramatically overnight – from complete shifts in how global workforces behave and interact on a day-to-day basis, to total operational transformations in manufacturing essential medical equipment.
We are also seeing a resurgence in corporate citizenship – that is, businesses being guided by not only their economic interests, but equally by their social, ethical and environmental responsibilities. We don’t expect this to be a flash in the pan. Businesses that are responding to COVID-19 with strong corporate citizenship and strategically communicating their actions are reaping the benefits. Data from the global Kekst CNC Covid-19 Opinion tracker in April found that businesses who are good corporate citizens can accrue reputational and customer loyalty benefits in the future.
That said, people are divided on what governments’ priorities for a changed economy should be as we emerge from the pandemic, as the May edition of the global Kekst CNC Covid-19 Opinion tracker revealed. In the public’s mind, the key priority is to look after the most vulnerable in society; climate protection, at the moment, is not a top priority. But that is likely to change once the immediacy of the crisis lessens and people begin to look more to the future. This factor underpins why a strategic long-term and fact-based corporate response to the COVID-19 crisis is even more critical. In this context, JUST Capital CEO Martin Whittaker, who leads the non-profit research organization, stated in a recent Financial Times interview: “We believe this is the acid test for all this talk about purpose and stakeholder capitalism. This is when we find out who was just talking the talk and who is walking the walk.”
In addition to that, companies will not only be under closer scrutiny from the general public, but from the investor community as well. In particular, the index fund giants, such as BlackRock, Vanguard and State Street, are increasingly making ESG and sustainability performance a key priority. The same is true of the activist investor community where we are seeing the focus on social issues solidify. Kekst CNC recently spoke to senior activism-defense bankers at six of the leading global banks who confirmed that the activist investors will apply a “look back” test on whether management teams of their target companies managed the COVID-19 crisis responsibly. Overall, corporate citizenship and societal responsibility need to be prioritized alongside environmental sustainability as key components of any strategic narrative.
Against this backdrop, we recommend three key considerations for corporate sustainability communications in a post-COVID-19 world:
1. Reassess the meaning of sustainability and corporate responsibility, and reshape how it is communicated
Sustainability and corporate responsibility will take on a new meaning. Since the United Nations Climate Change Conference in 2015, corporate sustainability has placed a spotlight on decarbonization, in line with the Paris Agreement. While the realities of climate change remain unaltered, the social and human side of sustainability will become increasingly important. The way businesses deliver and communicate on their social responsibilities – from supporting employees along their entire value chains, to innovating in order to create and distribute necessities – will hurt or help their reputation, customer base and sentiment.
2. Consider how to reflect the impact of COVID-19 on the value chain in communications
During the crisis, we have been reminded of the multinational nature of large corporations. For example, we watched as supply chains broke early in the outbreak in China and impacted the supply of goods in other parts of the world. And we saw how the overnight shutdown by European retailers of manufacturing sites due to low consumer demand set off a ripple effect that impacted the livelihoods of workers in less-developed parts of the world. This interconnectedness is not about to go away – as corporations rebuild, they will be expected to improve and repair livelihoods. For many businesses, this will require tailored sustainability and corporate responsibility narratives to more precisely reflect their industry, stakeholders, supply chains and geographic reach.
3. Shift from narratives about responding, to rebuilding
We will undoubtedly reach a point where COVID-19 communications fatigue sets in. Companies will need to decide the right moment and approach to shift from crisis-response communications to more proactive sustainability communiqués about how they’re rebuilding. It will be crucial for that messaging to be built around authentic, tangible and effective sustainability and corporate responsibility plans, and to be sensitive to the fact that the pandemic’s impact will vary by market and that the process of recovery will also likely differ.
Ultimately, it is too early to tell whether COVID-19 will prove a watershed moment for responsible business, but there is no doubt that leaders will need to carefully reconsider what sustainability means for their companies in the new world, and how to best talk about it. In fact, this crisis has illuminated just how critical it is for corporates to have strong communications tailored for all stakeholders – whether that entails delivering urgent or crucial updates, fostering connections built on trust and transparency, or expressing empathy in a rapidly changing world.