Applyng the humble principles of ESG during the Covid-19 crisis

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The coronavirus is an unplanned global catastrophe, and corporate South Africa has no choice but to step in and assist its employees, however difficult it may be.

Already we are seeing some evidence of this and companies that are rolling up their sleeves are to be applauded. In these current uncharted waters, proactive governance and managing social aspects both from within and outside company offices are paramount, not only for sustainability but also for survival. In this respect we should remind ourselves of what Nelson Mandela said when it came to a society coalescing: “If you want the cooperation of humans around you, you must make them feel they are important and you do that by being genuine and humble.”

Right now, a little humility will go a long way. During any time of crisis companies need to re-focus on the important principles of ESG – environmental, social and governance – which refers to the central factors in measuring the sustainability and societal impact of an investment in a company.

This philosophy is now even more pronounced after government’s declaration of a national disaster and a 21 day lockdown which makes the national executive primarily responsible for co-ordinating measures for the mitigation, prevention and recovery and rehabilitation from disaster.

This in turn means companies have to be responsible for implementing many of these measures. It also means company leaders will find themselves working in a completely different and untested paradigm and will have to adapt quickly. They will have to ensure continuity management in the organisation, taking heed of the wellbeing of its employees at all times. Doing this correctly can only enhance the reputation of companies during this difficult time. Organisations can also use the coronavirus pandemic as an opportunity to showcase their ability to adapt to real crisis management, practically demonstrating robust governance. Disclosure of proactive policies and processes by companies also provides an insight to how well the sS (social) component of the ESG impact is being taken into account.

The management of human resource policies and supply chain disruption provides insights to the g (governance) of the ESG of companies. This will provide investors and society with strong insights into companies that have a better chance in getting out of the crisis stronger and more productively if they are led by ethical leaders who have taken into account sustainable human capital – the S in ESG. Boards of directors and management also need to be fully aware of the coronavirus impact on the brand and strategic reputation of companies.

The kind of support companies need to provide to their employees ultimately assists in flattening the curve of infection which will range from its supply chain management, work from home, resources and infrastructure, paid sick leave and taking the elderly and pregnant women into account. It’s also incumbent on corporate leadership to critically and constantly evaluate the dissemination of crucial information regarding the virus to assist employees in making informed decisions.
By doing this companies are reflecting their investments in people but unlike other investments, the dividend will be reaped in creating sustainable competitive advantage and a loyal productive workforce. It also goes without saying that as part of its governance employers have a legal obligation to ensure a safe workplace. Now more than ever before a company’s work practices directly affect their ability to contain the virus and manage business disruptions in general.

Dr Anushka Bogdanov has 26 years of international risk management experience. She also has a PhD degree in International Financial Management from the London Business School.

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