By Dr Roshan Boojihawon, Senior Lecturer in Strategy
Department of Strategy and International Business, University of Birmingham
COVID-19 poses to overshadow all of these strides towards sustainability as such issues typically take a back seat in times of economic uncertainty.
Global crises, like COVID-19, are complex because they come layered with a myriad of interlinked issues for business and society. The UK suffered during the 1930s Great Depression because of reduced international demand for its products, and stifling domestic poverty. The mid-1970s oil crisis stroke an even harder blow with unemployment rising to 120%, leading to a recession in the early 1980s and seeing the rise of Thatcherism. A decade later, just as recovery signs were up, the 2008 financial crisis almost brought the country to its knees with GDP at 8%, and introducing crippling austerity measures. And now, we stand glaring at an even worse drop in GDP at 12% for 2020, with the full socio-economic impact still unknown.
As in all of these crises, business acts: resilience is prioritised, budgets cut, jobs are slashed, salaries and recruitment frozen, recruitment drives halted, and everyone hangs on in trying to define a new normal. Weaker companies run into administration, and grip on to anything they can to survive. But never before has upholding sustainability been more important.
Before 2008, sustainability budgets did not even exist. However, economic recovery post-2008 saw a renaissance of genuine concerns by companies towards environmental and social well-being, commitment and alignment of business models towards SDGs, and more importantly, the introduction of sustainability leadership, strategies and budgets. But COVID-19 poses to overshadow all of these strides towards sustainability as such issues typically take a back seat in times of economic uncertainty.
Indeed, a study following the 2008 crisis showed that sustainability projects and budgets were amongst the first to take a hit when companies were strained financially. The study also supported that the extent of sustainability-related budgetary cuts was contingent upon the level of economic turbulence they faced. This is a crucial point now since COVID-19 is spearheading a much deeper and more pervasive level of economic turbulence, unseen before.
To add to this, sustainability crises related to climate change, social security, global food insecurity, volatile energy prices and energy security have only intensified over the past year. In fact, if we look more closely, as financial markets continue to take a hit, banks and governments get further stretched, and their economic stimulus packages exhausted, we will start to see a remarkable overlap and interconnectedness between COVID-19 and the pre-existing sustainability crises.
Sustainability initiatives and budgets have therefore become more important than ever and they need policy support now. If anything, COVID-19 has turned sustainability into an internal issue for most organisations where employees physical and psychological health and well-being; family and community care and welfare amidst new ways of working have become the added dimensions that weigh in. So, this is not the time to let go of sustainability but a time to redefine and reaffirm companies’ commitment towards it when considering their ways out of the COVID-19 crisis.