COVID-19 will be without doubt a defining moment in history. It has brought home how we are all connected, and the urgency with which we need to plan for a more sustainable future. As we all continue to deal with the impacts of the COVID-19 pandemic, there are developing discussions on what the future will look like for companies as we begin to emerge from the pandemic.
One of the things that has struck us in recent weeks is the public policy debate on the role of science in decision making. Having discounted the role of experts in recent years, our politicians are suddenly urging us to ‘listen to the science’, whatever that means. But, as we are learning, good science cannot simply be magicked from the ether. In the face of a new virus and limited data, creating a consensus on what we should do is not straightforward. This has a striking resemblance to the debate on climate change. Both issues require trust and understanding of the science, a coordinated response from government and business and recognition that the only way to succeed is through a collaborative global response.
More than 50 CEOs from the banking and assurance sector recently formed the ‘green recovery alliance’, recognising the importance of aligning economic recovery after the coronavirus crisis with the ecological transition. A the same time the Institutional Investor Group on Climate Change (IIGCC), which manages more than $34 trillion in assets, nearly half the world’s invested capital, issued a statement urging governments to do more to ensure the economic response to the coronavirus crisis aligns with the Paris Agreement on climate change. So, we can expect investor pressure on companies to respond and disclose to grow.
Sustainability reporting is becoming an important aspect of communications to investors, customers, and wider society. As demonstrated throughout the COVID-19 pandemic, how companies behave in times of crisis towards their employees and maintain standards of environmental protection, for example, is an important test of their underlying commitments to responsible business practices, approach to transparency and ultimately their core values as a business.
No 2020 Sustainability Report will be complete without a COVID-19 section, detailing the impact and response to the pandemic. Hot topics will be describing how employees were supported through the crisis and providing wider context for overall performance during 2020. For many, emissions and other environmental metrics will see reductions due to reduced economic activity. Economic and community development issues will increase in relevance too, if the threat from COVID-19 driving half a billion more into poverty is realised.
Those companies that have adapted products and services will have a particularly strong story to tell. From aircraft manufacturers to F1 teams and distilleries, businesses that have responded by manufacturing ventilators, hand sanitisers and PPE will have the opportunity to link this back to their core values as a company.
The issue of tax has once again been thrust into the limelight too, as public perception points towards government bailouts not being granted to companies who have negated their tax obligations. This will put further pressure on companies to not only disclose tax payments, but also describe how their approach to tax is linked to the business and sustainable development strategies of the organisation. Back in January 2020 we noted in an insight piece ‘Tax doesn’t have to be taxing’ that the new GRI Tax Standard alone won’t pressurise companies to pay more tax. This observation still stands, but COVID-19 might indeed be that pressure that causes companies to react.