The dual crises of Covid and climate change have brought into sharp focus the vulnerability of traditional operating models. A return to business as usual is not a viable option, says Nick Hughes.
It is a little over a month since coronavirus restrictions in England were lifted and the hospitality sector was able to fully reopen (Wales and Scotland have subsequently eased most remaining restrictions although some have been maintained in Northern Ireland). Despite the damp and dreary weather, the mood music from businesses has been largely positive with customers eager to return to restaurants, pubs and other out of home settings, boosted by the popularity of summer staycations.
During a recent Footprint40 podcast, Wahaca co-founder Thomasina Miers expressed how “wonderful” it was to be “open and feeding people again”. The whole point of hospitality, she noted, was for people to come together, to share a physical space and to eat.
Where trading capacity has been below maximum levels, businesses report the cause has invariably been issues over staffing or supplies rather than any reticence on the part of the general public to support the hospitality trade. And with coronavirus infection rates plateauing and three quarters of the UK population now fully vaccinated, the initial optimism that we won’t see a return to the enforced closure of the sector is slowly edging towards certainty.
So as businesses recalibrate and recover, it’s useful to reflect on what the pandemic has meant for the sustainability agenda so far.
A decade ago, as the country recovered from the 2008 financial crash, I recall writing articles reporting that sustainability considerations had been “parked” or “put on the back burner” while businesses focused on the task of getting their balance sheets back in order. The dominant narrative of the time was that commercial and sustainability considerations were contravening forces rather than complementary pursuits.
Fast-forward to 2021 and the narrative has changed. As we emerge from an even more discombobulating crisis, all the talk now among businesses (and ministers) is of a “green recovery” and “building back better”.
You could argue this is simply a case of companies (and politicians) parroting the lines they think the public and campaign groups want to hear. Certainly there may be an element of cynicism and opportunism among some, but my sense is this is only at the margins.
Perhaps it’s the fact this crisis has exposed the vulnerability of our economic model to environmental forces that refuse to yield to the power of capital?
Perhaps, as one speaker at a recent Footprint Responsible Business Recovery Forum (RBRF) expressed, it’s the fact that many of us have been able to experience nature in a new way, through clean air, empty roads and quiet time for contemplation?
Or perhaps it’s the apocalyptic images of wildfires raging on Greek islands, or tube stations submerged in flood water, that has hammered home the real and present dangers of the next great global emergency – that of climate change?
Either way, I see no evidence of businesses decoupling commercial strategy from environmental ambition and shifting sustainability to the bottom of the corporate in-tray. On the contrary, environmental commitments have never come thicker nor faster. Prior to covid-19, businesses with a net-zero commitment were outliers; now a major employer without a net-zero commitment is fast becoming the exception (although it should be noted the hospitality sector, with its significant share of small and medium-sized enterprises, is not among the trailblazing industries).
On climate specifically, the pandemic has focused minds on the devastation that can be wrought when the red warning light on the dashboard is ignored (because scientists, lest we forget, have been warning about the risks of a pandemic for decades).
The ruinous financial consequences of repeated lockdowns, which if they haven’t sent businesses to the wall have saddled many with long-term debt, makes a powerful practical case for acting now to avert the worst effects of the climate crisis. Are foodservice operators really prepared to see kitchens flood every six months and face paying the exorbitant insurance premiums that will surely follow?
The commercial case for action is evident in a newfound sense of the public wanting businesses to operate more responsibly. As one RBRF speaker noted: “Animal welfare has shot up [the agenda] in terms of consumer priorities. Prior to the pandemic it wasn’t in the top three of people’s concerns.” Businesses that respond to these consumer concerns, by sourcing higher welfare meat for instance, will be best-placed to prosper.
Then there’s the regulatory case for action wrapped up in future requirements: disclosure of climate-related financial risk and levels of food waste, for instance, and proposed bans on illegally produced commodities like soya and palm oil. And not forgetting the institutional case as investors pile pressure on businesses to reduce their exposure to unhealthy foods, water and climate risks and questionable employment practices.
Whether your motivation is moral, practical, commercial or regulatory, the conclusion has to be the same: there is no future business model that doesn’t have sustainability at its core.
Businesses, of course, are still working through some of the challenges caused by the pandemic, which in many cases have been exacerbated by Brexit. These may appear separate from sustainability concerns but are in fact symptoms of long-term structural challenges that risk becoming embedded unless businesses prioritise the highest standards of environmental and social governance.
A shortage of food supplies (one procurement professional revealed at the RBRF that delivery levels have been running as low as 80%) has been largely attributed in the media to the so-called ‘pingdemic’. Yet speak to businesses and it’s Brexit and the exodus of EU workers (so crucial to the functioning of food supply chains) that is cited as the root cause of shortages, not only of farm workers and delivery drivers but of waiting and kitchen staff too. One manager at a well-known London restaurant told me that staff departures are a daily occurrence – staff are being poached by rivals prepared to pay a higher wage, such is the imbalance between labour supply and demand.
Both the pandemic and Brexit have presented an opportunity – in fact they have made it a necessity – for employers to reset relationships with workers so they are better paid, better trained and able to see a clear career path in the food and hospitality sector. “To some extent we deserve this, because when things were going really well, we didn’t look after our staff,” one London restaurateur told Euronews recently.
Food supplies may return to normal as transport routes reopen and gaps in short-term labour supply are temporarily plugged. In the long-term, however, those businesses with long, complex supply chains must be aware they are exposing themselves to climate-related shocks as harvests fail and supply chains are compromised by failing infrastructure and insecurity of labour.
I get the sense that most businesses understand this and are already working on building greater resilience into their business models, but barriers to doing so persist. Perhaps most significantly, there is a huge data gap in the out of home sector that manifests itself in many different ways: from a failure to trace the source of key commodities like soya and palm oil and have full visibility of labour rights (and abuses) in supply chains, to an inability to measure and report on greenhouse gas emissions, sales of nutrients such as sugar and salt, and levels of food waste. Closing the data gap will be critical to the success of any “building back better agenda”.
So too will changing organisational cultures that continue to reward unsustainable behaviours. As one RBRF contributor put it: “Buyers at a category level are still rewarded based on cost reductions rather than the sustainability they deliver.”
Yet if there is a will to do things better then businesses will ultimately find a way. Perhaps the most compelling evidence that sustainability will lie at the heart of the coronavirus recovery is the fact that businesses are not sitting back and waiting for governments to lead. As part of a Better Business Act coalition, companies including Bidfood, Brewdog, Jamie Oliver Group and Danone have asked the government to change Section 172 of the Companies Act to ensure that company directors are responsible for advancing the interests of wider society and the environment alongside those of shareholders.
This feels like a breakthrough moment for corporate social responsibility, ESG, sustainability or however you care to phrase it. It’s taken a crisis to get there but businesses are finally alive to the fact that business survival and sustainability are two sides of the same coin. There is no viable future business without a viable planet.