At the beginning of 2020, the sudden coronavirus pandemic caused unprecedented impacts on the global economy. Facing the great challenge of global economic development and the increasingly complex international relationships, it is the primary task of all enterprises to learn to be resilient and transform the risks into opportunities during the crisis and uncertainties arising from various aspects, in order to show their corporate responsibility, bear the historical mission and enhance risk adaptability.
It is widely acknowledged that the ESG issues and plans for sustainable development under the pandemic will meet the dilemma of being put aside just as the consequences of the financial crisis in 2008. The facts and research manifest that many governments are gradually taking measures, including temporarily cancelling the environmental constraints in relation to air pollutions and fuel economy (e.g. the US National Highway Traffic Safety Administration and the US Environmental Protection Agency announced that the new SAFE rules will replace the previous CAFE rules, in order to mitigate the impact of the outbreak on the US economy and boost the economy at the cost of environmental benefits) and supporting the enterprises from various industries suffering the hardship with lenient management in relevant health, safety and emissions standards. Does it indicate that the ESG and sustainability-related topics will gradually fade away from the stage of social and economic recovery and corporate development? GreenCo believes that the answer is negative. A number of governments, enterprises, investors and other stakeholders actually have been or are cumulating the experience, seizing the opportunity and promoting the reform of sustainable development during the fight against the pandemic.
“The crisis has shown how interconnected everything is. That’s what ESG is all about”
During the outbreak, international societies, organisations, governments and enterprises raised and effectively implemented a host of measures for environmental protection, which indicated that ESG matters did not take the backseat. The Korean government recently announced that it will introduce the new green policy in its economic stimulus plan, including investing vastly in renewable energy, levying carbon emission tax and gradually halting the finance in international coal business of public organisations. The total cost will be approximately 110 billion US dollars to avoid economic recession, which also marked that Korea is the first Asian economic entity to pledge that by 2025 it will become net-zero emission economy. At the corporate level, Shell will realise zero emission from the manufacture of its products by 2050 at the latest (all emissions from Scope 1 and Scope 2), and reduce the net carbon footprint of its energy products by around 65% by 2050 and around 30% by 2035. S&P will design and launch a series of Paris-aligned and Climate Transition (PACT) indices, which cover climate- and sustainability-related goals and metrics.
The description of Davis and Blomstrom about corporate social responsibility in 1975 was that social responsibility is an obligation for management and regardless of the benefits for the entire society or organisation, the enterprise should take actions to protect and improve its social responsibility. It was found in a study by Optimy in 2017 that 60% of customers were willing to pay higher for the prominent brands and products from companies with good value, while 71% of millennials preferred to work for the company that had made contributions to the local community and fulfilled its commitments. Robbins believed in his book ‘Management’ that fulfilling social responsibilities can bring long-term profits and increase the stock price of the company. An increasing number of corporate practices and research outcome also suggested that there was a positive correlation between the fulfilment of social responsibility and corporate financial performance, which could help build a great business reputation for the enterprise. As a globally well-known brand in the B2B E-commerce, Alibaba actively responded to and fully implemented the principles of Six Protection raised by the CPC Central Committee, which was to ensure security in job, basic living needs, operations of market entities, food and energy security, stable industrial and supply chains, and the normal functioning of primary-level governments, by allocating funds and resources worth CNY3.356 billion for epidemic prevention and control as at the end of 31 March that made Alibaba the first internet enterprise that disclosed the details of corporate donations in epidemic control. In supporting the medics, infection prevention and control with technologies, upholding economy and protecting people’s livelihood, Alibaba fully exhibited its major mission and responsibility in fighting against the COVID-19 epidemic and stabilising economic and social development, and its inherent characteristics and spiritual core and leadership in the industry as the top enterprise in the world. This also reflected the management philosophy of Alibaba in fulfilling its social responsibilities as shown in its ESG report – 凝聚阿裡味兒：責任導向的價值文化管理’.
There is no denying the fact that the adaptability of human beings will be emphasised more after the pandemic, which will be directly shown in the change of internal management approaches of companies. The outbreak put countless enterprises at risk and shrank their business scopes. The massive lay-off and pay cuts also forced entrepreneurs and investors to re-evaluate the ‘fat’ in business systems and pay more attention to the resilience building and risk management ability of companies in facing public health emergencies. As more investors perform re-analysis of corporate management models and frameworks during and after the pandemic, KPIs including the salary ratio between senior executives and general staff and the incentive policy that links the target completion in the social responsibility of the management will be evaluated and scrutinised more by various parties more strictly. Sands China (HK.1928) announced that as a giant enterprise in Macau, it has inescapable accountability for its staff and decided to raise their salary by from 2% to 4.7%, which was in effect on 1 March that covered 99% employees. This measure under the pandemic also reflected its determination to regard its employees as the valuable assets and its management resilience in corporate governance.
The huge slap of this COVID-19 epidemic on most enterprises made it hard for us to imagine how the aftermath and indirect impacts of the disaster will change the socio-economic structure and business development models. In the post-pandemic era, how to cumulate the experience from setbacks and use the brand new financial values and management system called‘ESG’to empower corporate sustainability development will be a new trend of global development.
