Thomas Singer is a principal researcher in corporate leadership at The Conference Board, Inc. This post is based on his Conference Board.memorandum. Related research from the Program on Corporate Governance includes The Illusory Promise of Stakeholder Governance by Lucian A. Bebchuk and Roberto Tallarita (discussed on the Forum here) and Socially Responsible Firms by Alan Ferrell, Hao Liang, and Luc Renneboog (discussed on the Forum here).
The COVID-19 pandemic is requiring companies to focus on survivability—whether they have the financial, human, and other resources to make it through this period of intense disruption. This is also a time, however, for companies to consider the value of their existing sustainability strategies. [1] Companies with robust sustainability programs are more likely to perform well during a downturn. And five key elements of a fully developed sustainability program—a defined corporate purpose, a clear view of what is material (and what is not), an awareness of broader societal challenges, a robust level of engagement and transparency with stakeholders, and a collaborative culture—should improve a company’s ability to prosper in the long run.
Rather than setting aside their sustainability strategies, companies should view the current crisis as an opportunity to reevaluate and strengthen their sustainability programs.
Almost a decade ago, The Conference Board released a report outlining the business case for sustainability. The report highlighted that “awareness has increased among leaders that durable business models cannot be solely based on the maximization of financial performance, and that shareholder value is feeble if the company fails to recognize a broader nexus of stakeholder interests—including those of employees, customers and suppliers, regulators, and the local communities where the company operates.” [2]