Danone's directors, L & # 39; Oreal and Philips are among the signatories of a new open letter calling for the creation of an economic system that, through the Covid-19 recovery effort, puts "purpose first, so that our planet and." our society can thrive ".
The letter is openly addressed to all public and private sector executives and offers a six-point framework developed by the Leaders On Purpose (LOP) platform. LOP claims would lead to "better reconstruction" after the pandemic's initial economic shocks.
Governments should "recognize the purpose-first sector," the letter said, and design recovery packages that prioritize companies with a strong track record of improving their social and environmental footprints or providing goods or services that are more sustainable Development are designed. Recognition can take many forms, including targeted policy incentives for purpose-driven businesses, targeted policy barriers for high-carbon businesses, finance and capacity building.
Other organizations, including academics, philanthropists, and investors, can help businesses and policy makers work together to create these incentives and guidelines.
Recognizing the key role funding will play in implementing key frameworks such as the Sustainable Development Goals and the Paris Agreement, the letter recommends that new incentives be developed to encourage the financial sector to innovate its products, valuation models and risk assessment strategies. and rating processes to help. Therefore, new standards for the measurement and disclosure of values should emerge. Since Covid-19 was first declared a pandemic in March, a number of banks and investors have strengthened their sustainability goals and requirements in light of the rapidly growing interest in ESG.
The letter also calls for a "just" recovery, one in which developing countries are not left behind and in which the up-front costs and long-term benefits of a sustainable future are fairly shared among socio-economic groups. and for fees for current education, training and collaboration systems in line with the transition to a "purpose-built" economy.
The final call of the letter is for governments and businesses to implement processes and develop cultures that will encourage transition after the initial recovery from Covid-19. Both companies that already have an embedded purpose and those who want to change should receive long-term support, so the conclusion.
A quote from UN Secretary General Antonio Gutteres is contained in the letter: “Everything we do during and after this crisis must be geared towards building equitable, inclusive and sustainable economies and societies that are more resilient in the face of pandemics, climate change and the many other global challenges we face ”.
The managing directors of Mastercard, Mahindra, Interface, Danone, DSM, Philips, L & # 39; Oreal, Natura & Co, Beiersdorf, Omnicom-Ketchum, ICC, Equity Bank, Fortune Media and Space Voyager Holdings have signed the letter. Together, these companies employ more than half a million people and have annual sales of more than $ 100 billion.
Ex-Unilever boss Paul Polman also offered support.
System level thinking
In related news, asset manager Impax published a study examining the impact of the pandemic on the transition to a more sustainable economy with an emphasis on finance.
The report highlights how the pandemic uncovered supply chain vulnerabilities and raised business awareness of system-level risks, ultimately leading to stronger action in the areas of climate, nature conservation and worker protection.
It also shows a trend towards companies that are strengthening their sustainability goals and changing their business models in anticipation of legislative changes. The majority of companies believe that governments that cover their operations will try to create a "green" recovery package, or at least make changes to support high-carbon industries that have already struggled.
While it notes that many companies are likely to be scaling back their investments right now, particular investment opportunities are highlighted in the areas of automation and digitization, as well as the obvious area – health, safety and wellbeing. Investors are also increasing their requirements for the measurement and disclosure of climate-related risks and natural risks. The World Economic Forum previously concluded that $ 44 billion – more than half of global GDP – is exposed to risks from natural loss and global warming.
"The Covid-19 crisis has had complex, interconnected consequences resulting from an unsustainable economy," said Bruce Jenkyn-Jones, Impax executive director and co-head of publicly traded stocks. "Investors, policymakers, businesses and consumers have a chance to avoid the same missteps when the next crisis of this magnitude comes."