Why COVID Has Increased the Need for Corporate Sustainability Innovation
By Amanda Greenwood, Tax Cloud and Myriad Associates
90% of businesses believe that COVID will change the way they do business over the next 5 years.
One area that’s already changed because of the pandemic is the importance of and focus on corporate sustainability. Four in ten businesses have reported that their day-to-day corporate sustainability efforts have been impacted by the crisis.
But why does corporate sustainability matter? How has COVID changed corporate sustainability strategies? And how can businesses reduce the impact of COVID on their corporate sustainability activities?
Read on to find out…
What is corporate sustainability & why is it so important?
Climate change is projected to have 10x the impact that something like the COVID-19 pandemic has had on the world’s population.
It’s, therefore, no longer enough for businesses just to focus on their revenue and bottom-line figures. They have to balance their economic desires with social and environmental responsibilities too. This is where corporate sustainability comes in.
“Corporate sustainability is connected to the extent to which people and product quality meet the economic, social and governance dimensions.” – MDPI
It’s become the norm for governments, communities and stakeholders to expect corporations to engage in business practices that are good for people, the environment, and the profit margin.
But, despite its importance, corporate sustainability often ends up at the bottom of the priority list during times of crisis, like this one. Because when simply trying to make ends meet is a struggle, why and how on earth can they?
How corporate sustainability has been affected by COVID
COVID is testing corporate sustainability strategies across the globe. Environmental and ethical business conduct has fallen by the wayside in favour of staying afloat.
Thanks to the pandemic and the social distancing laws, self-isolation, border restrictions, lay-offs and the global economic turbulence that it’s brought with it, organisations are experiencing short and long-term financial strain. Lack of resources and the pressure to survive has meant that commitment to long term corporate sustainability has waned.
Although this is understandable, companies that have deprioritised corporate sustainability over the last few months may be missing a trick.
Why it pays to prioritise corporate sustainability during a pandemic
Although COVID has brought a lot of companies to their knees, it has given some an opportunity. It’s offered them the chance to push their corporate sustainability agendas and support their customers and the environment in ways they couldn’t, or wouldn’t have thought of, before.
Supermarkets started allocating specific opening hours for the vulnerable and the elderly and donated food to food banks. Manufacturing companies transformed their factories into PPE, sanitiser and ventilator production lines. And banks even waived interest on overdrafts over a period of time.
These acts of corporate sustainability meant that they built stronger relationships with their customers and boosted their public reputation.
“Consumers would feel proud of their brands helping their employees, donating money and equipment during the crisis.” – NCBI
What companies can do to combat the effects of COVID on corporate sustainability
As we established earlier, COVID has offered organisations a great opportunity to move towards more genuine and authentic corporate sustainability activities that address urgent social and environmental challenges.
With this and the rise of the fourth industrial revolution, innovation has now become the key driver of corporate sustainability.
“It shapes future production, strengthens competitiveness and improves human well-being as well as decreases the environmental damage” – Intechopen
But with 47% of businesses anticipating budget cuts for their sustainability efforts within the next 12 months and the high risks associated with research, development and innovation, how can organisations use innovation to make their corporate sustainability activities a priority?
If organisations invest in new business practices or partnerships with social entrepreneurs and employee “intrapreneurs,” they’ll develop a natural culture of innovation. This will make the cultivation of innovative corporate sustainability ideas, activities or processes that address social challenges and support business reputation and growth, easier.
But it’s all well and good having an innovative idea, but to have the resources and funds to execute it could be tough during hard times like these. This is where the government-funded R&D tax relief incentive comes in.
Any organisation within any sector could be eligible to claim up to 33% of the costs associated with the research and development of their innovative corporate sustainability activities.
“These measures should encourage firms to maintain ethical business practices and fulfil their CSR commitment to their various stakeholders.” – NCBI
So, what types of activities could organisations potentially receive R&D tax relief for?
An example of corporate sustainability innovation
Barclays have an internal accelerator that allows them to develop commercially sound finance solutions to social and environmental challenges.
The Barclays accelerator provides a physical site for Barclays employees to develop their innovative ideas from within a safe, secure, intrapreneurial lab setting. They then get three months of internal mentoring before they’re given the chance to pitch their ideas to senior executives.
The projects that have come out of the accelerator include a credit card that “rounds up” the bank expense charges and donates them to social purposes; a loan with reduced credit charges for people who wouldn’t normally qualify for such rates; and a suite of impact investing products.
“Innovation can turn into enhanced corporate sustainability by influencing inequalities, supporting the creation of hybrid organisations, promoting new business models for social objectives and for specific peripheral market segments, and finally pushing towards new sustainable solutions for the environment” – MDPI
The impact of the pandemic and the ongoing economic ups and downs have put companies under immense pressure to build more resilient businesses whilst also addressing challenges facing society, the transition to a net-zero economy and the rise of automation and AI.
Companies that want to enhance their corporate sustainability can use innovation to meet social, economic and environmental needs. For instance, to meet social needs they can develop innovative ways to make their products or services more transparent and accessible, so the customer experience is enhanced. To meet economic needs, they can create digitally enabled innovations which have the potential to reduce costs and reach a wider audience. And, to meet environmental needs, they could invest in green projects.
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