People, Planet, Profit: How a pandemic can make us better
Attendant to the global threat that COVID-19 presents to health and freedom of movement, has been a dramatic plummeting of global financial markets and hard-earned profits of individuals and companies. In the course of several weeks, we have all had to recalibrate our relationships with our own health, risk, disease, freedom of movement, nearness to other people, the hit to our net worth and the inexact manifestation of our own futures.
Woven into the fray of market dynamics and the implications of a global pandemic lurks, as it always does, the disproportionate affect these events will have on emerging markets. There are risks and there are opportunities unique to emerging markets. As with all complex problems, many parts of this unfolding drama remain deeply uncertain. Will societies be resilient and adaptive in the face of change? Will a more balanced relationship emerge between people, the planet and market systems? Will smart companies and business leaders co-create a new social contract and code of ethics? Can businesses ride out the storm and find themselves transformed to be not just profitable, but more responsible in terms of how they relate to people and the planet?
Below, I zero in on the most relevant Social and Environmental implications of COVID-19.
Climate and Environmental Implications
Satellite images capturing key areas across the globe are showing a reduction in pollution of the air and the water systems. There is evidence of falling levels of nitrogen dioxide over China, largely due to the cessation of travel and manufacturing. Comparing satellite images to the regional and gradual quarantine spread reveals a direct relationship between reduction in human activity and improvement of environmental conditions.
Similar environmental improvements are observable in Italy and France. Time-lapse video footage is showing decreasing air pollution and many have observed the dramatic improvement in the water clarity and cleanliness of Venice canals and the Seine river in Paris.
There lies both hope and dread in these demonstrable environmental improvements. Humans have proven just how quickly we can reverse environmental degradation. The disappointing reality is that the economic impact of COVID-19 has been so devastating that the priority of governments, once the coronavirus is considered under control, will be reigniting and doubling down on the drivers of economic growth, which are also correlated with pollution.
Companies that can harness the momentum of positive environmental change to introduce measurement systems, adapt existing systems to reduce energy use, transition to broader adoption of distributed or remote work and establish a new normal will benefit disproportionately in the future. It will certainly be the case that when hungry capital is once again available to businesses in emerging markets, that the smart money will be drawn to those that became more resilient in the wake of a global pandemic. What does this look like? Depending on your industry, it can include measuring and tracking green house gas emissions and water use, and setting reduction targets; Implementing a recycling plan at your operation; and establishing an Environmental and Social Action Plan (ESAP) to guide decisions and allow for baselines against which improvements may be compared.
Habitat & Biodiversity
The opportunity for pathogens to pass from wild and domestic animals to people is, at this moment, unprecedented in history. As humans multiply and expand our physical footprint on the earth, we increasingly encroach upon wild spaces, bringing us in close contact with animals carrying diseases that can jump species.
Many suggest that nature is sending us a message. The hard truth is that the last few years have given us all good reason to reflect on the environmental impacts of human actions. From bushfires in Australia to the worst locust invasion in Kenya in over 70 years to a COVID-19 pandemic, we are coming face to face with our impact on the earth. In addition to COVID-19, Ebola, Middle East respiratory syndrome (Mers), sudden acute respiratory syndrome (SARS), bird flu, Rift Valley fever, Zika Virus and West Nile virus have all arisen in recent years and all are passed from animals to humans. Each has had a remarkably devastating effect on emerging economies.
The fact that COVID-19 fatality is low when compared with other diseases, should inspire us toward action. This is not the last serious and global disease to face humans, but it may be comparably mild to that which lies ahead.
Food companies that position themselves in opposition to the consumption of exotic mammals by offering viable, affordable, attractive protein alternatives, particularly throughout Asia and sub-Saharan Africa will be supported to affect the kind of food revolution that can only be won in the deepest corners of the global South, in rural communities where pathogen-spreading wet markets thrive still today. What would the Impossible Foods of the global South look like?
Jobs, the nature of work, employment
One’s job plays a serious role in establishing her sense of self. The negative social impact caused by unemployment is both direct (economic) and relational (socially, culturally), affecting not only the unemployed person, but also her family members and other dependents. In the US alone, more than 26.5 million people have lost their jobs due to the coronavirus, sending the real unemployment rate soaring past 20%.
The market impacts of these numbers will be felt for years to come; and perhaps more deeply will be their emotional and psychosocial impact. What will it mean to have several million people suddenly idle? What will reduced earnings mean for families and communities? Demonstrations, mass unemployment and devastating agricultural cessation of trade on the back of depressed trading centers due to enforced social distancing are all sure to make the impact on emerging economies far more damaging and longer lasting than that seen in the global North.
Directing conscious capital toward responsible businesses will be critical, as countries claw their way out of the crisis. Private equity, private debt and impact investors will be wise to seek out and elevate the capital needs of businesses that protected jobs and weathered the pandemic in ways that demonstrate good stewardship and strong leadership. Altica Partners, a private credit fund focused on sub-Saharan Africa, is already developing and modeling a tactical pivot as a result of the pandemic to elevate and prioritize impact investments on the continent with a focus on companies and leaders that protected jobs and communities during the pandemic.
Fear and reluctance to travel
Of the industries hit hardest by COVID-19 and it’s resulting effect on the economy, the travel and tourism industry has been at the top of the list. Forbes indicates that the US is likely to see a $519 billion decline in direct travel spending, which results in $1.2 trillion in lost economic output. This places the financial impact to travel and tourism of COVID-19 at 9 times that of 9/11.
Much of the economic impact we are currently seeing results from state and nationally mandated shelter in place orders, which rule out long distance travel. What these numbers do not reflect is the lingering fear and trepidation to be felt by would-be travelers over the coming months and likely, years. We will be experiencing the contraction of the travel and tourism industry for some time to come, as both a factor of real risk and a factor of longer-term perceived risk.
Tourism and travel businesses in emerging markets can respond to these fears in a myriad of ways; however, there is a clear opportunity here to differentiate through strong Environmental and Social initiatives: by protecting employees, investing in communities that neighbor and bolster game reserves and other tourist attractions, elevating eco-friendly tourism options and distinguishing the types of tourism that await thoughtful, intentional travelers once free, international movement is safe. A shining example is the Rwandan Development Board, which invests a percentage of all tourism revenues directly in the communities that support and neighbor popular game reserves and conservation sites.
Mental Health
Over the last two months, we have seen the sobering increase in domestic violence, a threefold increase in call volume to the Disaster Distress Helpline and counselors across the globe are pointing to an increase in observed feelings of social isolation (as opposed to the physical distancing that is required to flatten the pandemic’s curve), concerns related to the pandemic and feelings of anxiety.
In past disasters, a common occurrence would be the physical coming together of community members, family and other support systems. One of the many unique aspects of the COVID-19 pandemic has been the importance of physical distance in protecting both ourselves and others. What human beings have always done to find comfort and security during times of distress — joining together in prayer, enjoying meals together, singing songs in groups, offering support through delivery of goods and physical connection — are all the things we have been told to avoid, for the sake of us all. We must avoid one another in order to save one another.
Business and community leaders are tasked with promoting social cohesion and connection in an era of physical distance. Transitioning toward remote and distributed work has been inevitable. But attendant to that shift has been an increase in the acumen and comfort with which professionals across the globe learn to connect, communicate and create ties with friends and colleagues in a virtual environment. By facilitating frequent professional and personal interaction using the various digital tools at our fingertips, business leaders can thoughtfully and subtly intervene in a condition quite isolating — one which surely contributes to feelings of separation and distress. Investments in digital tools to honor these ways of connecting were wise in the lead up to the pandemic and will surely be increasingly valuable in the future.
What now?
The effects of COVID-19, the coronavirus and the directly related though distinct economic crisis we are facing across the globe will be experienced most dramatically by the poor, the elderly, the disabled and those who look nothing like our national leaders. Globally, the hardest hit countries will be in the global South.
Times of crisis create unique opportunities to initiate big changes to social and economic systems. Considering what we have seen, do businesses really want to get back to “normal”, or do they want to be active participants in creating a “new normal”, where the relationship between people, planet and profit is a more equitable and generative one? What will it look like to be a good corporate citizen in a post-COVID-19 world? The coronavirus, the resulting contraction of industry and increased focus on the essential has given us all the opportunity to do business differently. These differences can enable not only improved people and planet conditions in the future, but also more robust opportunities for responsible, enlightened profit.