Covid-19: a crash course in Sustainability

Jun 19, 2020 | Blogs, News

Some people think that sustainability in business is optional, a fad among large companies, or a plus for reputation enhancement. But the current contingency has brought to the fore, in a brutal way, the importance of the capacity of businesses to sustain themselves over time, and the multiple social, environmental and cultural factors that determine this.

In other words, Covid-19 gave the word “sustainability” a meaning that was never more real. A large number of companies at the global and local level are gambling with the survival of their business in these months. Being sustainable is no longer a luxury or a fashion, but a determinant to remain active in the market.

In Chile, this pandemic was preceded by a social explosion of proportions. Both events, each on their own and even more so since they have been linked, have generated the effect of an intensive course of sustainability.

We have learned that it is no longer enough to adhere to mere legality, and that society expects companies to do the right thing, beyond what regulations and laws allow or prevent them from doing. We have learned that the minimum is not enough, and that the expectation is that companies will go further and, to the extent of their possibilities, do what is necessary to reduce the gaps and inequalities that separate us.

Sustainability represents a broader view of the risks and opportunities presented by the environment. Beyond the financial risk factors or the risks inherent in each business, this look looks at factors that can influence the value of the company. Ethical management, innovation, climate change strategy, relationship with communities, all are part of this look and sooner or later can have a significant impact on the operation. Companies that have exercised this muscle to prevent possible scenarios are much more resilient to a crisis like the one we are experiencing because of the coronavirus, even if they did not prevent this particular scenario.

As Blackrock’s CEO said, this pandemic has revealed the fragility of the globalized world and the added value of sustainable portfolios. In fact, funds managed with sustainability criteria are performing better than the market in general during the Covid crisis. For example, MSCI ESG funds are performing better than their traditional peers. And an analysis in mid-April looked at the performance of 17 ESG funds during the crisis, and found that 12 of them had lost less value than the S&P 500

Today companies are being evaluated, not only on their financial performance, but also on how they are acting ethically today, for example with employee salaries and benefits, and support to communities to flank the COVID-19. We all hope that quarantine will stop the spread of the pandemic, but if there is one thing that quarantine will not succeed in stopping, it is the advance of sustainability

Published by  Diario SustentableJun 2, 2020