Crisis Intervention and Sustainability
by Gudrun Timm
Weathering the storm: From securing liquidity to climate action
Wo aber Gefahr ist, da ist das Rettende auch (Friedrich Hölderlin)
Current interventions such as massive liquidity inflows, loan programmes and tax reliefs for companies are a lessons learnt from the global financial crisis of the last decade: In a crisis of this dimension, governments need to act fast, and massively. Unlike the financial crisis of 2008, not banks are bailed out but companies in order to keep the real economy intact, avoid substantial layoffs and encourage resuming production as soon as the pandemics allow.
The corona crisis came without much warning: In mid-January 2020, with Chinese would-be attendants to the World Economic Forum in Davos summit already staying home, the World Risk Report described „infectious diseases“ as a major risk in terms of impact, however has not included it into the top 10 risks in terms of likelihood. A month later, the epidemic broke in Europe. Two months later, nearly all European countries face a shutdown.
The corona crisis added to a perception that a long economic upturn has ended, and that the current ways of capitalism and unchecked globalisation pose a risk for the survival of mankind. The pandemics has succeeded to achieve what climate conferences have not: Many nations will probably achieve the 2020 goals of Paris climate agreement despite national policies mostly failed to stay on track.
For companies, the first shock wave is characterized by a nearly standstill through most industries, a drastic rapid halt in revenues for many, and fighting for survival. Later, companies will resume their commercial activities. We believe that the weeks of enforced absenteism provide the time to reflect on business models, and prepare for a re-birth after Easter.
Companies will rebuild their supply chains, and endeavour to catch up with the backlog and new orders. And they might also re-define their market position. Awareness has grown that businesses need transformation not only to live up to the era of digitization but also more localized economies that can sustain. The dependence on global markets – which was a long time considered as cost-efficient, thus adding value – has proved a weakness when the constant stream of raw materials and finished goods were virtually interrupted. Undervalued jobs in industries such as in healthcare, retail or transport have suddenly been recognised as vital to master an acute crisis.
Sustainability has many features. Profitability will climb the priority ranks again. But it has become clear that efficiency and cost arguments can suddenly become obsolete when production is at risk. Companies will need to re-consider a business model that allows to sustain their business in the coming decade, and in a more localized world. Companies also set an example of responsible behaviour and rapid change, mobilising all resources to help communities now. Let´s not forget them and buy from them, invest in them, and work with them in the „new normal“. Any examples in your vicinity? I´d love to hear from them.
Sources
https://www.unenvironment.org/resources/emissions-gap-report-2019
