May 21, 2020
Even amidst the COVID-19 pandemic, consumers continue to show high interest in sustainability issues. In Spring 2019, “Earth Day” Google searches peaked at 65% interest, while in Spring 2020, “Earth Day” Google searches hit 100% interest.
We know that consumer brands that prioritize socially sustainable business practices, particularly during a crisis, fare better overall. In Q1 alone, JUST Capital’s COVID-19 corporate response tracker assessed that companies who prioritize employees have financially outperformed those who have not put employees first by more than 7%. Responsible investment management company Calvert also found that companies with lower scores on their financially material ESG (environmental, social and governance) policies and performance had difficulty responding effectively to COVID-19.
Companies are now under greater scrutiny as stakeholders watch every move to understand how the business reacts to the crisis as an indication of its long-term ability to function sustainably. If a company fails to communicate the actions they are taking in response to the pandemic and signal business continuity, it can risk losing its audiences’ loyalty for decades to come.
The “S” in “ESG” is paramount
In a world where food delivery workers are now on the frontlines of a health crisis, it is critical for companies to communicate how they ensure the health and safety of employees, customers and communities. As a result, there has been a rising investor interest in the “S” – or social component, of ESG issues.
In the last decade, sustainable business practices have transitioned from a “nice to have” to a “must have.” Consumers have a heightened desire for environmentally and socially conscious products, and investors increasingly see social aspects of ESG as part of risk mitigation, such as transparent manufacturing practices and fair and safe working conditions. The severity of the public health risk that COVID-19 presents and its swift impact on the economy has shed new light on the urgency of integrating social aspects of ESG into business models and transparently communicating about these efforts.
When face-to-face consumer transactions are possible again, consumers and investors will likely demand more information around how a company prioritizes its employees every step of the way – including those in fields, factories, storefronts and delivery vans.
Each business must consider its entire supply chain to determine how it can ensure the safety and health of its key stakeholders. The best results come from being agile and innovative. Below are a few examples of social sustainability leadership:
- To support employees, social sustainability may mean raising minimum wages, ensuring seamless work-from-home set-ups and providing protective equipment to workers.
- CVS awards bonuses for employees required to be at its facilities and has partnered with a daycare provider to help employees with family care needs. The company also plans to fill new positions with furloughed staff from existing clients like Hilton and Marriott.
- To protect consumers, social initiatives include free contactless delivery and installing safety equipment in-store, like sneeze guards and one-way shopping lanes.
- Uber requires drivers to submit mask selfies before they can pick up passengers and waives cancellation fees if a customer does not feel safe.
- For communities, companies provide discounts and freebies for services and products that are essential to the public’s well-being.
- Chicago distilleries, like CH Distillery and Koval have pivoted operations to manufacture hand sanitizer for healthcare workers and first responders.
Continued Importance of Social Sustainability
This pandemic has trigged a rise in the role of “social” responsibility in ESG, and we have seen companies who have committed to protecting employees and communities perform better than competitors who do not.
Sustainability is not a zero-sum game. The increased value of social issues is not at the expense of the environment, the two are now getting equal attention as the pandemic puts increased pressure on employee and consumer health and safety.
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