The corporate diaries

3rd July 2020

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William Barrett

“I suspect an awful lot of the environmental agenda and targets will be put on the back burner,“ said Ryanair's chief executive Michael O'Leary at an event hosted by the Financial Times last month. “I think the much greater political issue is going to be massive unemployment across Europe and massive government indebtedness.

From what I have seen, this thinking represents the exception, not the rule. You can't move for stories about the “green recovery“, “building back better“ and, a new one for the hospitality sector, “reopening right“.

In some countries, government bailouts are being linked to carbon commitments. Air France-KLM, for example, has secured ‚Ǩ10bn (£9bn) in emergency coronavirus funding, but in return has to slash 40% of its French domestic flights by next year. In Canada, large businesses that apply for government loans must publish annual climate disclosure reports.

Consultants have noticed a spike in interest related to risks, including climate change and resource scarcity. “It will be quite hard to explain why you are not consulting experts about risks, to make informed decisions,“ says Peter Skinner, chief operating officer at SLR Consulting.

Forward-thinking companies were already getting to grips with resilience – and there are signs that firms with decent environmental, social andgovernance (ESG) scores are faring well during the pandemic. But could coronavirus see this spread?

Interest in the Taskforce on Climate-related Financial Disclosures (TCFD) is also up. The TCFD was launched by Mark Carney, former governor of the bank of England, in 2015. Writing in The Economist recently, he said: “After the COVID crisis, it's reasonable to expect people to demand improvements in the quality and coverage of social support and medical care, greater attention to be paid to managing tail risks, and more heed to be given to the advice of scientific experts. The great test of whether this new hierarchy of values will prevail is climate change.“

Momentum was strong pre-lockdown, but will it be enough? In its COVID-19 Risks Outlook: a preliminary mapping and its implications report, the World Economic Forum (WEF) warned of a “vicious cycle“ of climate degradation, biodiversity loss and infectious disease outbreaks. The 2030 Sustainable Development Goals could also be in jeopardy. But this is all in the balance.

“Single-use plastic has had a good pandemic“

“On the one hand,“ the authors wrote, “calls for a green recovery by a range of leaders, sustainability-focused stimulus packages by large economies, and potential changes in production models and consumer behaviours may support the sustainability agenda. On the other hand, brown stimulus measures, cuts in sustainability investment, weaker commitments to climate and nature action, and the impact of low oil prices create new risks of stalling progress.“

Take oil prices. Waste was a hot topic at January's WEF meeting in Davos, with Nestl√© chief executive Mark Schneider promoting a £1.68bn package to accelerate the shift to recycled plastic. Nestl√©'s website states: “It's cheaper [...] to produce virgin plastics than it is to produce food-grade recycled plastics. Our plastic suppliers need to receive financial assurances to make the leap.“

That price gap has since widened further – and single-use plastic has had a good pandemic. Lobbying to delay plastic and packaging policies has intensified, and the 'single-use is safe' message is seeping into the consumer psyche. Whether this is scaremongering or science-based is hotly debated.

But let's keep the (reusable) cup half full. The challenges we face have not changed. Rather than stall progress, we could see it speed up, leaving O'Leary – like the end destination of one of his flights – an outlier.

David Burrows is a researcher and freelance writer.

Picture credit: Shutterstock


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