The bequest of Covid

As we go into the first WEF Summit outside Davos and prepare to discuss the idea of “Better Capitalism”, the spectre of Covidś seems to be finally receding in many parts of the world. In India, we hope the vaccine will drive the final nail into the virus’ coffin and in the US and the UK, we are depending on the vaccine to bring the still marauding virus to a screeching halt. A sense of hope is creeping into 2021 after a truly annus horribilis .

The pandemic has made the economic alarm bells ring vigorously. Nineteen of the G-20 countries experienced negative growth in the second quarter of 2020 and 18 did so in the third quarter as well. But growth forecasts from the IMF indicate that a sense of hope is not misplaced. As per the IMF Blog dated October 2020, the GDP for 2020 is expected to de-grow by -4.4 per cent, from -5.2 per cent predicted in June, and 2021 should see 5.2 per cent growth.

Prior to Covid induced economic chaos, countries were pursuing paths to economic growth and making steady, though slow, progress on social development. It was environmental well-being that was taking a beating and a huge effort was on to make the planet leg stronger so that the three-legged stool of people-planet-profit could balance itself and the world could be more sustainable.

The lockdown conditions created a situation in which economic growth was halted, social well-being suffered, but the environment shows signs of rapid rejuvenation. Unfortunately, both the pre-Covid and the during-Covid trajectories are unsustainable as environmental, social, and economic well-being are tightly interrelated.

The pandemic has made the lack of a backup plan very evident. If a weather disaster strikes one place, people can be evacuated to another for safety. But when a pandemic spread across the world there was no other place to be evacuated to! As the former Secretary General of the United Nations said, “There is no Planet B!”

“Only a crisis — actual or perceived — produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around.” So said Milton Friedman many moons ago. We have faced a crisis if ever there was one. If a crisis does lead to implementation of ideas lying around, what can we expect to see?

Digital push

We can expect to see acceleration of the digital revolution that had started before Covid. The need for social distancing propelled simpler, safer, faster digital transactions. Many more people made purchases on e-commerce platforms, bought food online, and saw shows and big-budget movies on OTT platforms.

During the period of lockdown teachers used digital platforms to conduct classes, and organisations used them for meetings, conversations and events. The finance industry innovated to make transactions simpler! This digital deluge will surely intensify.

Social distancing has reminded consumers that individual actions matter. Enquiries for electric vehicles have increased and it is just a matter of time before they shunt conventional vehicles into the background. Conversations on clean hydrogen have intensified as have investments and policy nudges. Investors are taking greater cognisance of corporations with strong ESG practices and that should rejuvenate the old idea that business is about the well-being of society (stakeholders) and not only about shareholders.

But perhaps the biggest Covid triggered acceleration of an idea lying around has been of shorter vaccine development time. While vaccines normally take more than five years to be developed, Covid vaccines have been successfully launched in a record time of 12 months through coordinated effort.

Great reset

All these ideas are components of a desire to build forward better. As they become mainstream, we will be able to cause a great reset, not just a regular restart.

A great reset can happen. Mahindra’s 2019 study titled ‘Alternativism’ revealed that 89 per cent of the people wish to adopt planet-friendly products if they are available, and 27 per cent of the respondents have already made the effort to adopt one or more sustainable products. Another study by the Shelton Group discovered that mainstream consumers had started changing their buying behaviour to align with their values pre-Covid. Post-Covid this trend can be expected to accelerate.

Many MSMEs affiliated with Chambers of Commerce and Industry are discovering the wonders of energy-efficient technologies, renewable energy, water productivity and creating value from waste. Many who are in an international ecosystem have begun using recycled, green materials and are being guided to make recyclable products. A recent study by Edelman revealed 78 per cent of people expect their employers to behave responsibly. In addition, a massive push to get Governments to deliver on climate commitments made at Paris is around the corner and together these should accelerate the pursuit of a great reset.

The resulting energy transformation, value created from waste, and water security will reduce costs, boost the bottom-line and reduce operational risk. Sustainability practices will bring in investments and being responsible will help attract and retain talent and enhance employee loyalty. Perhaps the biggest benefits for business will come from the innovation and new product development required to build planet-friendly solutions for customers.

These are strong reasons why the statement “sustainability is a part of our DNA” should move from being a public relations assertion to be an integral part of business culture.

As we entertain the possibility that Covid shall pass, the spectre of climate change looms large on the horizon. The Covid caused disruption may be the trailer of a magnum opus, a harbinger of much bigger things to come. If the Covid experience leads to greater acceptance of human impact on the environment and triggers impactful climate action, the persona of Covid may change from being that of an ogre to that of a lighthouse. We will be able to say that something good came of an otherwise forgettable year.

The writer is Chief Sustainability Officer, Mahindra Group

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