Change is afoot: The uprising of ‘S’

Short-term profitability must be disregarded and well-being of employees prioritised, or it may be difficult looking back to understand how anything else was considered acceptable


Jon Mowll, responsible investment analyst, EdenTree

The global spread of covid-19 has created a more extensive awareness of systemic issues which pre-date and have been exacerbated by the pandemic. It has led to questions of who and what we (or rather, our economic systems) value, the nature of work and of our collective humanity, and the role of business in society.

In the UK and elsewhere, we see that the narrative of such public health crises being “great levellers” is patently false. As ShareAction’s Simon Rawson has remarked, “Covid-19 has shone a spotlight on the social (‘S’) component of ESG in a way that we have never seen before.” We see that those people who form the very bedrock of our societies are often poorly paid, working long hours in precarious, sometimes menial jobs. Nurses and carers, shelf-stackers and cashiers, delivery drivers and fruit pickers. They are at greater risk of contracting covid-19, because they cannot work from home. Without them, society would slow to a halt. And yet many are paid scarcely enough to make ends meet.

Pre-existing inequalities are also reflected in other ways. Air pollution – a problem felt most acutely by poor communities living in inner cities – has left many people with heart and lung conditions, making them more susceptible to the virus. Unhealthy diets among lower earners similarly contributes to underlying health conditions such as obesity and weakened immune systems. We reflected, last year on the fact that a person’s socio-economic status has a profound impact on their physical health, quality of diet, life expectancy, and so on. Covid-19 shows it all too clearly.

If we broaden our scope to the Global South, it becomes clear that a strategy of “physical distancing” is really a luxury of wealthy nations. For people living in refugee camps, slums, or shanty towns, with very high population densities, social distancing is impossible. Disease burdens are already high, and access to medical care beyond the reach of millions. It is therefore both the inequality within countries, and the inequality between countries that covid-19 throws into sharp relief.

The role that investors and businesses can play in the immediate term is clear. Short-term profitability must be disregarded, and the safety and wellbeing of everyone in a company’s sphere of influence, including in supply chains, prioritised. If and once that happens at scale, it may be difficult for us, looking back, to understand how anything else was considered acceptable.

Some deep injustices – and indeed absurdities – of globalised capitalism are also laid bare. How can it be that Bangladeshis in the apparel sector are reliant on unsustainable consumption levels in the Global North to earn what amounts to a poverty wage? That when such consumption grinds to a halt (a necessity from an ecological perspective), millions in the Global South face unimaginable destitution? That people go without food whilst crops wilt in the fields? That airlines burn jet fuel to fly empty planes around the world so they don’t lose their slots at airports? Ultimately, these are the results of a system which in which financial profit, reaped by so few, is sometimes placed before the lives and livelihoods of so many – as well as before the integrity of our collective life support system, the Ecosphere.

In the longer term, we need to recognise that the economic systems and dynamics which have predominated since the 1970s (and, in some senses, date back to the 1500s) may not be fit for the 21st century. We have seen, in recent years, shifts towards the ideas of “stakeholder societies”, “inclusive capitalism”, and so forth. Change is afoot.

We are already seeing some of the seeds of a new economy emerging, though their success is by no means guaranteed. At a company level, for instance, Medtronic have made their low-grade ventilator specifications (used in less severe cases of covid-19) open source, making these ventilators available globally to be manufactured by anyone. Such collaborative, knowledge-sharing initiatives (or ‘knowledge commons’) will be central to tackling global challenges at a local scale. 

At the level of the city, economist Kate Raworth’s ‘Doughnut’ model has just recently been adopted by Amsterdam, as it seeks to recover better from the dislocation caused by covid-19. The aim is to create a city that meets the needs of all without putting undue pressure on the ecosystems that support it. EU Finance Ministers, alongside many other stakeholders, are pushing for a continent-wide “green recovery”. 170 Dutch academics have put together a five-point plan for a post-covid-19 economy, building on many ‘degrowth’ principles.

From a social perspective, one of the most intriguing development of the last few months has been the introduction – across much of Europe – of policies which could more or less be described as universal basic income (UBI), i.e. the State guaranteeing a level of income to all citizens. Spain has already intimated that its UBI will persist after the pandemic has passed.  Perhaps most surprising was that UBIs were even mooted by the editorial board of the Financial Times in an article which included the following assessment: “Radical reforms – reversing the prevailing policy direction of the last four decades – will need to be put on the table…Redistribution will again be on the agenda; the privileges of the elderly and wealthy in question. Policies until recently considered eccentric, such as basic income and wealth taxes, will have to be in the mix.”

UBIs are a means of ensuring that everyone can meet their basic needs. Their impacts would be profound, not least in removing the coercive forces that ‘push’ people into (often socially-useless) work. UBIs would fundamentally alter the power dynamic between labour and capital. People would be able to negotiate better working conditions, form new ways of working and ultimately refuse work if they choose to. At the societal level, removing coercion to work also has the potential to stymie the over-production that places unsustainable strain on the Ecosphere.

Probably the greatest challenge of our time is ensuring that societal wellbeing across the globe is maintained or improved whilst we regenerate the natural systems which we have degraded, break free from what ecological economist Tim Jackson has called the “iron cage of consumerism”, and place our economies at the service of societal and planetary wellbeing.  Our task is mapping the role of business and investment in a socially aware economy.

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