Today, businesses are shaken up by Covid-19. The pandemic has amplified the demand for companies to address complex supply chains and become more transparent. And the growing focus now is on how businesses are responding to this pandemic.

There are growing environmental, political and social pressures for the world to find a more sustainable and responsible path towards development. Organisations are expected not only to apply socially responsible practices but also to become responsible business leaders. More organisations are expected to establish and operate ethical value chains and run their processes with integrity. In short, it is all about bringing renewed attention to the importance of corporate transparency on sustainability issues.

This is somewhat akin to the 1966 World Cup. Brazil, although the winner of the previous two tournaments, were eliminated in the first round. Sadly, their star player Pelé failed to perform as he was fouled frequently and flagrantly. It was a point in time many felt the glory days of Brazil are over.

But four years later, Brazil won the World Cup. This time with grace and style. The 1970 team is still widely regarded not only as the best team but also the most beautiful team with a unique attacking style. And Pelé was named player of the tournament. The question is how did Brazil turn around after one World Cup? The answer is innovation by building a cohesive team and it required leadership, both in management and on the field.

Since the pandemic has raised the need for businesses to address complex supply chains and become more transparent, the growing focus now is on how businesses are responding to this pandemic. The emphasis is on board composition and quality, environmental risks and opportunities, corporate strategy and capital allocation, compensation that promotes long-term growth, and human capital management.

In short, it is all about bringing renewed attention to the importance of corporate transparency on sustainability issues. It is time to relook at business models. The model should focus on “sustainability” which then looks at resilience, reforms and reimagination. The 1970 World Cup final should provide some food for thought. Hence, there is a need for companies to understand how they are responding now and how they should respond in the future. Here, there is a need for consistency and completeness besides accountability. Such focus will help provide sustainability against shocks.

While managing Covid-19’s immediate impacts will be the top priority for businesses, reporting historical environment, social and governance (ESG) data and performance remains essential. A slight delay of this year’s reporting is understandable, yet businesses must still strive for the same level of coverage as previous years and continue to improve their disclosures, moving forward, with the aim of ensuring their performance on key social issues are even more thoroughly examined than usual.

Besides, accountability is vital in this new reality. Reports should provide sustaining account as to how businesses are responding to the pandemic. The degree to which companies do this now or in the future will depend on which part they are in their reporting cycle

Source: AmInvest Research - 5 Aug 2020