Pandemic-created challenges become corporate responsibility opportunities
Wednesday, May 26, 2021
This article first appeared in Chief Executive.
Uncertainty caused by the COVID-19 pandemic has plagued businesses around the globe — particularly those in the supply chain community — accentuating weaknesses never seen before. However, if considered from a different perspective, it has given rise to opportunities for these same companies to shine like beacons in the night.
When the pandemic first hit, supply chains were disrupted — so much so that an everyday consumer quickly understood what the supply chain was and how it might impact being able to access goods in a timely manner.
Businesses quickly realized the supply chain was a weak point as lockdowns created global disruptions and wreaked havoc on nearly every single industry. The risks were felt worldwide, tying together a common tread in nearly every single company.
Assessing the risks
The Cybersecurity and Infrastructure Security Agency (CISA) suggests COVID-19 has exposed three primary stress points on information, technology and communication (ICT) supply chains: inventory management, supply chain transparency, and single-source and single-region suppliers.
These three areas have long been weak points in the supply chain, but the pandemic accentuated them. We’ve seen regional disasters — such as earthquakes and plant shutdowns — expose these challenges, but the pandemic marks one of the first times we’ve seen the impact on a global scale.
Numbers from Accenture show that roughly 94% of Fortune 1000 companies have seen supply chain disruptions from COVID-19, while 75% of companies have had negative or strongly negative impacts on their businesses. Nearly every business has experienced some sort of setback.
Still, now more than ever the opportunity exists to improve corporate social responsibility policies and establish or boost efforts toward fostering sustainability, alleviating causes of climate change, promoting resiliency, adopting the circular economy and more. PwC’s COVID-19 CFO Pulse Survey finds 75% of respondents expect that their business would be back to normal within three months if COVID-19 were to end immediately.
What’s more, improving resiliency in the supply chain creates the opportunity for sustainability initiatives.
Many enterprises — construction, manufacturing, healthcare, retail and more — have shored up their business. The businesses that have done this in the wake of the pandemic understand that they must be involved in continual reinvention and innovation. They recognize the importance of the IoT (Internet of Things), AI (artificial intelligence) and more. They understand that with challenge comes opportunity.
In a McKinsey survey from May 2020, roughly 93% of supply chain executives reported they plan to take steps to make their supply chains more resilient, including building in redundancy across suppliers, nearshoring, reducing the number of unique parts and regionalizing their supply chains. Perhaps the answer comes in the form of environmental, social and governance (ESG), as well as through innovation.
At its core, ESG is the objective of a company to operate in a way that is socially and environmentally conscious, while also keeping in mind the corporate goals of the company. In a 2020 Manufacturer’s Alliance for Productivity and Innovation study, more than 70% of manufacturing executives say ESG goals will become important in the next 12 months.
Consider the example of US Foods, which recently released its 2020 Corporate Social Responsibility Report. While it instituted policies and procedures to prevent the spread of the virus, as many businesses did, it also donated nearly $43 million in food and supplies to banks and charitable organizations across the country. All the while, it has experienced a 6.9% reduction in gallons of fuel used per case delivered since 2015 and achieved a 7.3% reduction in Scope 1 and Scope 2 emissions since 2015. Amid a pandemic, it was also able to reach its 2020 responsibly sourced seafood goal.
Sustainability, climate change, resiliency, circular economy and even corporate social responsibility are part of the corporate mission and vision of a highly successful company. Now, we are seeing a focus on these areas, as corporations are looking at how to move on to a better normal following the pandemic.
What comes next is a stronger and more resilient world in which businesses recognize with disruption comes opportunity to focus on environmental, social, governance, and more, to save our ecosystem.
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