Boohoo’s travails this week (a 40% share-price crash following allegations of human rights abuses in its Leicester-based supply chain) are a reminder that environmental, social and corporate governance (ESG) issues are still front and centre of corporate life.
Boohoo might have got its risk management badly wrong, but we should not for a minute believe that a good approach to risk suffices for business today.
There are five compelling reasons why even in straitened economic times companies need to embrace positively and ambitiously sustainable change.
First, business has just received the biggest corporate welfare cheque in history. An enormous bailout.
Unlike in 2008 this one will come with strings attached. Some formal from government but many informal and set by society, such as putting something back in return for what you’ve taken.
And see, too, a generational switch as those under 40 reflect on their ‘settlement’ from today’s, largely, over-40, masters of politics and the economy.
Gig economy. Generation rent. Pension insecurity. Bailout costs to be paid back for decades. Environmental decay.
Some future; they will push hard for change.
COVID has also exposed how fragile the global economy is. How easily it’s smooth, just-in-time functioning can be brought to a juddering halt.
We have enough evidence now that the accelerating climate crisis and the weather extremes it is wreaking will be even more disruptive if left unchecked.
And, as Mark Carney recently noted, it’s not possible for us to self-isolate against the climate as we have done with COVID.
And while COVID is harming the middle classes, its greatest impact is on the poorest.
It’s surfaced the key, yet poorly paid, workers who have kept things going under huge pressure and personal risk.
It’s exposed the dark underbelly of poor human rights on our doorstep in Leicester.
It’s left 10,000 workers in Bangladesh unpaid as some clothing companies have ducked their contractual commitments.
That’s not fair. It won’t be acceptable in a world of hyper-transparency.
Plus, the Fourth Industrial Revolution is coming even faster than we thought – video conferencing, very obviously, although actually it is quite old fashioned when compared with AI, machine learning, personalised diets, healthcare and so on.
But who will be trusted to wield immense power as data becomes the new oil? Maybe it’s trust that is the new oil.
And lastly, sustainability is no longer just about viewing these issues through a risk prism.
It’s about marketplace opportunity as wind/solar/storage replaces coal; electric vehicles displace diesel; meat is usurped by a plant-based and lab-grown alternative; and fast fashion by re-sale platforms.
Be on the wrong side of these huge disruptions at your peril.
So, don’t be complacent. Don’t shy away.
Embrace a new future where a successful business balances the needs of shareholders, customers, colleagues, communities, society and planet alike.
Mike Barry is a strategic advisor at Instinctif Partners and former head of sustainability at M&S