BUSINESS BEYOND COVID
LEILA FOURIE: Covid-19 offers chance to build back better than before
Our next threat is climate change and inexorably rising temperatures, but in trying to flatten the infection curve we inadvertently flattened the emissions curve
In the Business Beyond Covid series, CEOs and other business leaders and experts in their sectors look to the future after Covid-19. What effect has the pandemic and resulting lockdown had on their industries and the SA economy as a whole? Which parts will bounce back first and which will never be the same again? Most importantly, they try to answer the question: where to from here?
Earlier in 2020 on a trip to Cape Town, I was struck once again by the incredible inequality that exists in this country. Inequality is at its most graphic, for a traveller, when you drive from the airport into town past the informal settlements that abut the N2.
The concept of informal settlements and the gross inequality was a foreign concept to my Australian guests. Their first sighting stood in stark contrast to the leafy suburbs at the foot of Table Mountain. I’d just returned from visiting my family in Australia. When I was over there the bush fires were laying waste to much of New South Wales and Victoria. Ultimately, an area roughly the size of South Korea was reduced to ash before the rains doused the inferno in February.
The environmental and social effects of what we as humans do have always seemed to be relegated to the fringe. Covid-19 has changed all of that. The worst public health crisis in living memory has laid bare the true scope of inequality across the world. Everyone has been forced to reflect on their own mortality — as well as that of their neighbours. In the process it’s also ripped off the scabs of wounds wrought by injustice that have never healed.
Today, that festering hurt runs through the streets of just about every city and town in the US and beyond to Europe and the world. The pandemic has unequivocally reframed our view of the world — and the economy that pays for it.
Last October, UN secretary-general Antonio Guterres convened the Global Investors for Sustainable Development (GISD) Alliance. The grouping of 30 CEOs of asset managers, banks and bourses has a two-year mandate to galvanise the global investment community to pivot to long term sustainable development.
Early in June Guterres convened an extraordinary meeting of the GISD Alliance to conceptualise what a post-Covid-19 world would look like and to find ways of ensuring that business is aligned with the aims of the UN’s 2030 Agenda for Sustainable Development. The 2030 agenda envisages a fairer, more just and indeed sustainable world built on the three pillars of environment, social and governance.
Investors across the globe are showing stronger interest in sustainable investments. Sustainable funds attracted record inflows in the first quarter amid pandemic-related market turmoil. In the first quarter of 2020, Morningstar reported 51 out of 57 of their sustainable indices outperformed their broad market counterparts, and MSCI reported 15 out of 17 of their sustainable indices outperformed broad market counterparts.
However, Covid-19 still threatens to derail the progress on the ground. There is a huge risk of an even greater rise in unemployment, deeper social fractures and sovereign instability following the shuttering of the global economy. We also face a greater risk of destruction to our already compromised planet — alongside the sidestepping of good corporate governance — as the firms that survive the pandemic throw out the rule book to return to the old normal as fast as possible. But in the same breath, Covid-19 offers us an incredibly rare opportunity to reset what we do and how we do it, reimagining a future that is sustainable and resilient to future crises that threaten us all.
The GISD Alliance was set up to recalibrate international investment towards the 2030 Agenda’s sustainable development goals (SDGs). In so doing we hope to create a vaccine for the inherent short-termism in the market with its attendant volatility and highly negative collateral damage for developing markets.
It is also a call to action for responsible investing, for investors to make a positive contribution by being active owners ensuring more sustainability in the companies, countries, sectors and projects in which they invest. Companies in turn have to be far more transparent in their disclosure and concomitantly far more accountable.
The alliance — a group of 30 global CEOs of the largest institutions of their kind — committed at the extraordinary meeting to urge the broader business sector to better integrate the Sustainable Development Goals (SDGs) into their core business models, introducing long-term performance metrics, accelerating company disclosure and reporting on social and environmental issues. We also pledged to advocate for a co-ordinated international approach to financial regulation and encourage ratings agencies to incorporate sustainable development considerations into their decision-making.
The GISD’s strategy team has been defining sustainable development investing and working with the European Commission to develop a global voice to encourage and influence the international investment community to actively invest in vehicles like Covid-19 bonds, the SDG 500 Fund as well as renewable energy projects in the Middle East and a waste-to-energy project in India.
Here in SA, we need no reminding of the importance of good corporate governance after surviving a decade of state capture: corruption underpinned by corporate collusion. We certainly need no reminder either of pandemics, having survived the worst ravages of both HIV/Aids and tuberculosis. And we certainly understand the critical need for the 2030 Agenda; we are a country whose legacy of institutionalised racism and discrimination through apartheid haunts us today where we live, work and even learn and with it the international opprobrium of having the highest Gini coefficient in the world.
We are at the foot of a continent that will be the hardest hit by climate change, with unimaginable consequences for the youngest population in the world who will in all probability be forced to become climate refugees; displaced by wars over water, food and shelter.
Covid-19 offers us the chance, as Guterres has enjoined the world, to build back better, to work together to create a truly sustainable future for us and the generations that come afterwards. This starts with properly aligning business to the 2030 Agenda and channelling finance towards the SDGs. The lockdown has shown us that we can do it.
From the penguins out for a stroll in Simon’s Town to Indians being able to see the majestic Himalayas for the first time in 30 years, the world has a chance to heal. Global CO2 levels have declined to levels last seen a decade ago. The current 2.6 gigatons reduction is six times bigger than the previous record reduction seen during the last world financial crisis in 2009. The world will use 6% less energy in 2020 — that’s the size of India’s entire energy demand.
In 2019, year no-one would have said this was possible, but as Lancaster University professor Gail Whiteman told the BBC, we can actually emerge from this pandemic stronger and more resilient, because the world has shown that it is prepared to put humanity before the economy when faced with an existential threat such as Covid-19.
Our next threat is climate change and inexorably rising temperatures, but in trying to flatten the infection curve we inadvertently flattened the emissions curve.
I am constantly reminded of what one of my greatest mentors taught me. His greatest regret had been not to use the convening power of his office to the greatest benefit of society. Coming back to SA after moving to Australia, and then surviving this pandemic, I am determined to do what I can, where I can, to contribute towards a better, fairer, more sustainable world, starting right here.
• Fourie is group CEO of the JSE and co-chair of the GISD Alliance.