The outbreak of COVID-19 is continuing to cause disruptions for every small, medium and large company in Canada, fundamentally changing the way business is done in almost every industry. Over the past few months, boardrooms across the country have adapted swiftly to protect the health of their employees and customers, dealing with today's challenges and getting ready for what comes next.
Even as companies fight to keep their footing in a COVID-19 world, business leaders are starting to see the possibilities of embedding more sustainable and responsible business practices into their plans for the future.
The pandemic has raised the stakes for consumers too. Public scrutiny is rising, and will continue to rise, on any practices that fly in the face of corporate citizenship. In March, a global study from Edelman showed consumer expectations of businesses increasing during the crisis, with 78%1 of Canadians expecting companies to act to protect employees and the local community.
Clearly, during the current crisis, the safety of colleagues, customers, cash flow and business continuity take precedence. But, even now, there is a compelling short-term business case for environmental, social and governance (ESG) practices that are directly linked to better outcomes for business and society.
Five steps to a sustainable advantage
Keep consumers at the heart
The research is clear. Demand from consumers for responsible and sustainable products, services and practices is rising during the crisis. Customers expect businesses of all sizes to step up – to do right by their customers and help broader communities. Many companies have earned accolades for the COVID-19 support they have been providing. Others have faced reputational damage that will be hard to overcome. The response of every business during the pandemic will make or break their long-term relationships with consumers. According to Edelman’s latest ‘Trust and the Coronavirus’ survey, 71%1 of respondents in Canada said companies that prioritized profits over people would lose their trust forever. 65%1 agreed that how well a company responds in a crisis will impact future purchasing decisions, while 26%1 began using a new brand based on its actions during COVID-19.
Engage your employees
The COVID-19 crisis is a defining moment for employers. In the short term, many are being tested to make tough decisions, such as furloughing staff, reducing salaries and cutting bonuses. Others are planning for medium-term moves that set the stage for a more resilient, sustainable future, coming together with employees to reshape working practices for the greater good. Every business leader recognizes that the most powerful driver to a post-COVID recovery will be the human capital in their company. And those that can communicate difficult decisions today in ways that align with responsible, sustainable business values that their most valued employees share – on climate change, equality and human rights – will retain and attract the best talent.
Work with suppliers
If there was ever a time to put thoughtful, sustainable practices into supply chains to ensure more resilience, it’s now. Businesses do not operate in a vacuum. The Canadian economy is dependent on complex supply chains that span the globe. And while the pandemic may have exposed weaknesses in some models, it has opened the door for companies to create shorter, stronger, simpler supply chains that can react more quickly in crisis situations. This will also help with more sustainable, transparent and environmentally friendly production. In shifting to shorter supply chains, businesses will be able to reduce pollution levels and emissions, and leverage new technologies to be more efficient.
Consider the environment
Even in a pandemic, resource efficiency – such as energy and water conservation – benefits the bottom line. A reduced carbon footprint can result in tax credits, reduced costs and higher profitability. But the benefits go beyond the balance sheet. There has been cleaner air over Canada’s biggest cities over the past two months as a result of a near total shutdown of the big sources of pollution. In Toronto and Montreal, the nitrogen dioxide levels fell more than 30%2, reducing illnesses like asthma attacks and heart attacks. COVID-19 has catapulted Canadian companies to a future of flexible remote working, driven by technology, that’s reducing costs and helping to dramatically cut emissions and waste.
Think longer term for your investors
Sustainable investing (the integration of ESG factors into investor analysis and decision making) has also seen a remarkable rise over the past couple of years. A company’s credentials as a ‘corporate citizen’ are now a major backbone of today’s investment trends. So far, the coronavirus outbreak hasn’t stopped the growth of sustainable investing. In fact, it’s been a catalyst for better-than-average returns. Stocks of companies with strong ESG credentials have proven a safe haven in disrupted markets, elevating sustainability even further up the investor agenda. Investor expectations of businesses to create, and live up to, more purposeful missions and values will only increase.
The pandemic has produced a variety of shifts that will change how successful businesses operate in Canada. Companies that commit to sustainability during the crisis can be put in a stronger position. By doing so, they may create more solid customer relationships, improved employee loyalty, enhanced supply chains, higher productivity and increased corporate reputations.
Smaller businesses without the resources of a large enterprise can use the Government of Canada’s SME Sustainability Roadmap as a guideline to becoming more sustainable.
1 2020 Edelman Trust Barometer Special Report: Trust and the Coronavirus
2 Environment and Climate Change Canada