Last week’s Soapbox discussed resilience, corporate culture and the importance of companies doing the “right thing” in the current situation. This made me think further about positive changes that may come out of these dark times.
Firstly, what behavioural changes may occur? It often takes an enforced shock to the system to make you evaluate what is actually important. My hope is that in light of the current situation we will all reconsider certain norms we have become accustomed to and whether there is a better way of doing things.
For example, take the way businesses interact, both internally and externally. This has been fundamentally challenged by working from home but thanks to online collaboration applications, many businesses in the service sector have been able to stay in touch without significant disruption.
Certainly, we should take a look at the implications for our own industry. Fund management is no angel when it comes to business travel (I myself am guilty in this regard…) and has always placed a heavy reliance on face to face contact. However, a recent article suggested clients are seeing very little downside to moving meetings online and in fact, many now prefer this medium. There will always be some interactions where face to face meetings are necessary but this period will hopefully make us reconsider what “necessary” is, and whether we can reduce time spent and emissions generated through travel to meetings that could just as effectively be held online.
There is also a more intangible, social side to this behavioural change. As Craig alluded to last week, many (but not all) companies are doing the right thing and realising that this current situation is bigger than them or their next quarterly profit. This ranges from independent local cafes providing free hot drinks to healthcare workers, to large listed companies putting principals before profit. Belgian chemical company Solvay is a great example. It is setting up a solidarity fund financed by senior executives and the company itself to provide both financial and non-financial support to employees and their dependents facing hardship as a result of the pandemic. I really hope the culture of initiatives like this lasts longer than the current crisis.
We have written in the past that fairness can be a source of competitive advantage (see here, here, and here) and this strikes me as an evolution of that belief . Being fair not only to your customers and suppliers but to society as a whole. This isn’t some anti-capitalist rallying cry, but I can’t help thinking companies that take action like this will be rewarded by employee and customer loyalty when conditions improve, thus helping their competitive position over the long term.
Lastly, perhaps the current crisis also brings about change in terms of what investors perceive to be “sustainable” companies. Traditionally, this has been very heavily skewed towards obvious things like renewable energy (and with good reason – we are facing a climate emergency), and healthcare (again, with very good reason). However, this situation has shown that companies helping us to continue to function in the crisis (i.e. be sustainable) are just as important. This can include companies involved in logistics, software that supports businesses, payment systems move online and business recovery functions. There are nuances to each case but it’s important as investors that we look beyond the “obvious” solutions to sustainability and support businesses making a tangible contribution across a range of areas.
Linking back to my earlier point, it often takes an abrupt change to prompt realisations like this. Some of the changes will be easier to make than others and there will of course be unforeseen consequences. However, my hope is that this most troubling of times can be a catalyst for positive behavioural changes going forward, contributing to a more efficient and sustainable economy and one that acknowledges its role in wider society.
About the author
Iain Snedden is an investment specialist in the equities team. He has responsibility for representing the firm’s equity capabilities both within and out with the firm, with a particular focus on our suite of global equity products. This involves ensuring colleagues and clients are kept up to date on developments within the funds and the wider market. Iain joined us in 2015 to work in the Client Management team with responsibility for a portfolio of UK-based institutional clients. Prior to that, he worked at Baillie Gifford and held roles within the client accounting and business risk functions. Iain graduated from University of Edinburgh with a first class honours degree in Accounting and Business Studies. He has 9 years’ industry experience. *As at 30 November 2019.