Jane Nelson at the Harvard University campus in Cambridge, Massachusetts. Photos by Dominic Chavez/IFC
When the global economy is in crisis, the call for corporations to “lead with empathy” is no longer theoretical. Jane Nelson, founding director of the Corporate Responsibility Initiative at the Harvard Kennedy School, offers guidance.
Does having ethics pay off? Jane Nelson has been answering some version of that question for years. As the founding director of the Corporate Responsibility Initiative at the Kennedy School of Government, Harvard University, she has helped shape empathy-driven models of corporate leadership and define environmental, social, and governance priorities across the globe.
But the COVID-19 pandemic—wrecking lives, economies, and business strategies—has posed an entirely new set and scale of questions for private sector leaders. That’s why, with the organization Business Fights Poverty and support from the UK’s Department for International Development (DFID), she has co-created the Business and COVID-19 Response Framework and online platform—helping companies identify innovative solutions and learn from each other during this humanitarian and economic crisis. From her home in Cambridge, Massachusetts, she spoke to IFC Insights about how CEOs and managers can balance the needs of vulnerable employees, consumers, small business partners, and communities with financial and operational continuity.
Q: How do you define Corporate Social Responsibility, or CSR, in the coronavirus era, and how are leading companies responding to these needs?
A: CSR to me is not simply community and philanthropy engagement. It is how companies identify and manage the most material and salient human rights, social, environmental, and governance risks and opportunities for their business. I see it very much as a core business issue.
This is an unpredecented leadership challenge, and there are three key elements of leadership taken by responsible companies in responding to this humanitarian and economic crisis. First and foremost, they are protecting lives and the health and safety of employees, customers, and other core stakeholders impacted by the company’s operations. Secondly, there is a focus simultaneously on business continuity, supply chain resilience, financial liquidity, and overall resilience. This can vary depending on industry sector, but it’s happening at the same time as crisis management. Third, the leading companies are taking a very thoughtful look at who are most vulnerable among their employees, workers, small business partners, customers, and the communities where they operate.
Companies are exploring how to support those who are most vulnerable by harnessing core business capabilities as well as corporate philanthropy and community engagement through partnerships with government and non-governmental organizations, as well as policy dialogue. For example: health care and biotech companies are working collaboratively with research institutes to develop testing diagnostics, therapeutics, and vaccines; information technology and mobile operators are working with governments to develop contact tracing platforms and more reliable and affordable internet access.
Q: How can corporate leaders model these responsible practices to their peers across the private sector?
A: The first and foremost thing they can do is lead through demonstration. This is a time where your business has to be able to demonstrate that the company is serious about the growing conversation around “stakeholder capitalism” —the idea that stakeholders, such as employees, consumers, suppliers, other business partners and communities, are as important as shareholders in managing shared risks and creating and sustaining shared value.
When I talk about corporate leaders, I’m referring not just to chief executive officers, but site managers, or regional managers in companies. They should also show they care—because this crisis is fundamentally about people's lives, both our actual lives as well as livelihoods. Leading with empathy and a sense of connection with employees, business and community partners, and customers is key, despite physical distancing requirements —as is acknowledging that no one has all the answers.
At consumer goods companies such as Unilever, P&G, Coca-Cola, Nestlé and AB InBev, to name just a few, corporate executive teams and country managers are coordinating efforts to reach millions of consumers with essential health messages and products, and rapidly sharing lessons through joint leadership platforms such as the Consumer Goods Forum and World Economic Forum. There are hundreds of examples of both executive and operational-level leadership that are underway in companies around the world, including mechanisms for employees and community partners to identify and mobilize resources to support innovative solutions.
Q: Although governments are leading the COVID-19 response, what should the private sector’s role be?
A: In addition to the actions private sector leaders are taking in their own businesses and value chains, these leaders have a very important role at the moment in engaging in policy dialogue with governments. I’ve always believed that the private sector and markets really matter for development and addressing poverty, inequality and environmental challenges. At the same time, this pandemic is a very important reminder to all of us just how important government is, and good governance especially. The role of private sector leaders, either individually or collectively through trade associations and business groups, is to engage with government on national, state, and local levels and examine their joint priorities.
In Kenya, for example, a group of companies has come together to form the National Business Compact on Coronavirus, working with the Ministry of Health, the UN Country-Coordinator and AMREF, among others. Similar COVID-19-dedicated business leadership coalitions have been mobilized in Zambia and Nigeria.
Other national and global business leadership platforms such as the Confederation of Indian Industry, Business for South Africa, Instituto Ethos in Brazil, the US Chamber of Commerce, the World Economic Forum, and the World Business Council for Sustainable Development, to name just a few, have created dedicated COVID-19 response initiatives to mobilize their member companies to take action.
Q: How far should these private sector leaders be pushing the government for change?
A: They can advocate for government to do things differently if they feel that there are certain systemic challenges that aren't being addressed or certain inequalities that aren't being addressed. They can employ a combination of leading by example, through their own companies, their own industry sector, in their own communities. Then they could engage in policy dialogue and institution-strengthening with government partners and civil society partners, and trade union partners.
This is how the leading CEOs and their colleagues are stepping up at the moment. It’s not easy because in almost every industry sector, they're also having to worry about their operational continuity and financial resilience of the business. It really is a call to leadership on a level that most have probably not experienced before.
Q: So far, are companies able to balance their short-term needs and their long-term interests?
We’re seeing much more alignment than we've ever seen, certainly in my career, between companies balancing financial performance and operational performance on the one hand, and good environmental, social, and governance performance, on the other hand. This has been an ongoing trend over the past few decades that has started to gather momentum in recent years as complex, system-level threats such as climate change and inequality become more material to sustaining business success in selected countries and industry sectors. The COVID-19 pandemic is arguably highlighting more than ever before the tensions between and the need to meet both shareholder and other stakeholder needs, manage both financial and non-financial goals, and balance both short-term and long-term imperatives.
Q: You and Business Fights Poverty came up with a COVID-19 Response Framework within the first month of the pandemic to help guide business leaders toward proactive solutions that will help vulnerable people and communities, including their own workforce and employees throughout their supply chains. Will this be developed further?
A: Yes. There’s a lot of difference among industry sectors, so we are doing deeper dives to look at specific industry sectors, and also on particular issue areas, such as supporting vulnerable workers and micro- and small-scale enterprises in corporate value chains, implementing handwashing and other preventative measures, supporting and innovating with NGO partners, building national business coalitions, and tackling gender-based violence. Gender-based violence, for example, has increased in many countries and the particular elements of responding to this challenge cannot be captured by a very broad framework.
Q: You’ve written that the pandemic’s long-term impact will have a disproportionate effect on women. Can you expand on this?
A: In a broad sense, the COVID-19 pandemic has brought into sharp relief and exacerbated existing inequalities in the system and exposed existing cracks in our social, economic and health systems. Within this, there are several areas where we see particular vulnerabilities and challenges for women and girls. Gender-based violence is one. In addition, we know that between 60 to 70 percent of health workers and social workers in most countries are women, and many of the retail workers are women. So you’ve got a whole category of what are now known as essential workers—women on the front lines—who are exposed to the pandemic.
We know that women are doing most of the unpaid care work, a burden that has skyrocketed because of kids at home as well as the need to look after the elderly, parents, and community members. We are also looking at potential long-term threats on women’s and children’s health issues, due to the potential of scarce resources being shifted away from women and girls’ health, ongoing losses in jobs, and high-levels of burden sharing, for example. As much as possible, we need to have women leaders as decision-makers at the table, both in government and business and civil society to address these.
Q: Do you see any opportunities arising from this crisis after the worst of it has passed?
A: I hope we as a society can think very seriously about social safety nets, universal basic income and health care, and living wage for so many people who don't currently earn a living wage, and yet are among essential workers on the front lines. I also hope this pandemic will accelerate the conversations that were already underway around what many people are calling stakeholder capitalism. Capitalism has created incredible wealth, produced goods and services for millions of people around the world, and created jobs, but the pandemic is highlighting and exacerbating key market failures and governance gaps. I’d like to see this shift so that in addition to the explicit commitment to shareholders, we see a commitment to other key stakeholder groups and to proactively managing ESG issues, with comparable metrics to track performance on these. Lastly, my hope coming out of the pandemic is the recognition that good governance really, really matters.
This article was previously published on IFC Insights and is reproduced with permission