Strategic transformation to sustilience: learning from COVID-19

Abstract

Purpose

The authors seek to stimulate and strengthen learning for both institutional and corporate leadership to transform society toward sustainability and resilience. The authors use sustainability in the broader socioecological sense, rather than meaning merely financial survival. Based upon experiences by various parties in dealing with coronavirus disease 2019 (COVID-19) or (C-19) during 2020 and into 2021, we are all driven to ask, “Which lessons shall we learn?”

Design/methodology/approach

Based upon a brief review of environmental and management literature, the authors compare experiences with C-19 and those of socio-ecological sustainability to-date and distill both sources for optimism as well as pessimism in the face of technical and socio-political challenges.

Findings

Historical experiences are not particularly encouraging, but there are many opportunities for great improvements if institutional and corporate leaders choose to learn from both C-19 experiences and earlier efforts toward sustainability.

Practical implications

Procrastination by major industrialized economies in not taking major positive actions to control and reduce carbon pollution and other environmental damage is leading to human crises–hunger and thirst followed by migration, conflicts and healthcare system collapses. Organizational executives need to develop flexibility and embrace precautionary principles regarding many stakeholders if humanity is going to have a good chance of flourishing in the future.

Originality/value

The authors adapt the “wedding cake” model of Sustainability Development Goals (SDGs) and their relationships to the concept of “dynamic materiality” in both an organizational as well as a macro perspective. In addition, the authors introduce the word sustilience to describe an organization's combined ability to achieve “sustainability” through relatively stable conditions as well as the “resilience” to rebound after major external shocks.

Citation

Grant, J. and Wunder, T. (2021), "Strategic transformation to sustilience: learning from COVID-19", Journal of Strategy and Management, Vol. 14 No. 3, pp. 331-351. https://doi.org/10.1108/JSMA-07-2021-0151

Introduction

This paper is intended to help stimulate further discussion and analysis of questions which have been raised during the last year or so as the coronavirus disease 2019 (COVID-19) (C-19) pandemic and its variants have spread to many parts of the world. We will be seeking to achieve an “Overton window” [1] of socially acceptable discourse regarding at least two topics with deep political and socio-ecological connotations, but with the intent of provoking some introspection and illuminating paths to progress regarding climate change mitigation.

At the time of this writing, globally tens of millions of humans have been infected with C-19, and close to four million deaths attributed to C-19 have been recorded. A significant portion of the world's total population is under various levels of “lockdown” at peak times. “Social (or physical) distancing” has grown to become a new global norm of behavior, except at certain “mass gatherings” organized by politicians and religious leaders (Baldwin, 2021). The pandemic has affected nearly every aspect of daily life and thus has severely impacted the global economy, with many losing fortunes and lives, while a few like Amazon, Zoom and home delivery services have been winning in big ways.

Current inferences about the relationships of C-19 to sustainability run the gamut from Mann's (2021) “New Climate War,” Cullenward and Victor's “Making Climate Policy Work” (2021), Wallace-Wells' “The Uninhabitable Earth” (2019), Larsson's “Blind Guardians of Ignorance” (2020) and the earlier analyses of Busch and Shrivastava in “Carbon Crisis” (2011), the urgings of Stern (2015) or the writings of Kunstler (2006) to the more optimistic “The Future We Choose” by Figueres and Rivitt-Carmac (2021), Crist's “Abundant Earth” (2019), Zakaria's “Ten Lessons for a Post-Pandemic World” (2020) and Hayhoe's (2021, forthcoming) “Saving Us: Hope and Healing.” As we examine the balance between hope and fear a bit more closely, it seems that hope may be a better near-term motivator for human action and fear perhaps more influential when framed as a longer-term concern. Determining what is “longer term,” of course, depends on the fear one is considering; is it a disease moving around the globe via airplanes in months or sea levels thought to be rising over decades through forces barely “visible” to the general public?

As we seek to determine what might be learned from the global experience with C-19 that could be applicable to sustainability challenges, particularly with respect to climate, it may be useful to remember that both C-19 and climate change have been framed as threats moving at various speeds (Mann, 2021; Nadkarmi and Narayanan, 2007).

Schein has urged framing in terms of world-views, from ecological economics to developmental psychology (2015, p. 30). Some readers may be able to relate to the arguments regarding pay-offs and losses from gambling in Climate Casino by Nordhaus (2013). Others may prefer a physician's perspective, as in Christakis (2020). Leaders will work to choose their lessons carefully, consultants have suggested that “climate should not be the virus's next victim” (Herhold et al., 2020). However, the analyses of Lewis in his book Premonition (2021), released shortly before this paper was completed, paint a cautionary reminder of the many ways in which large organizations, even those deeply involved with public health, can lose track of their fundamental missions and become embroiled in short-term expediencies.

While we would like to claim to have a grand solution to offer the reader, our actual aspiration is to elevate and perhaps focus societal analysis and discourse for some surrounding the 26th UN Climate Change Conference (COP26 Conference) in Glasgow, now scheduled for November 2021. If readers feel the challenges facing civilization are modest, we encourage them to consider the world's recent experiences delivering and administering C-19 vaccines, even given the globe's trauma from the 1918 pandemic (sometimes dubbed the “Spanish flu”) and more recent experiences with Ebola, severe acute respiratory syndrome (SARS) and HIV/AIDS. In the age of “conspiracy theories” and largely unconstrained social media, will it be possible to achieve adequate “global environmental governance” dealing with the atmosphere, oceans, food supplies and other concerns of the UN's Sustainability Development Goals (SDGs) (Betsill et al., 2020)?

Across the USA, both climate change and C-19 continued to be highly politicized in early 2021, climate change having been such for decades and C-19 almost immediately after detection in December 2019. Deniers of the physical realities of climate change spent hundreds of millions of dollars over decades to “deny and deflect” attention to other “possible explanations,” but it took only a few days for Trump's White House to downplay the potential severity of C-19, in spite of expert advice to the contrary from many credible sources. Advisors close to the then President “did not want the public to panic (and perhaps adversely impact the stock markets),” while many healthcare professionals did want the public “to panic” and radically change their behaviors toward mask-wearing, physical (“social”) distancing and associated “public health measures.” How many thousands of human deaths could have been prevented if political leaders had moved quickly to follow the prevailing knowledge of the public health community? By March 2021, the public had already begun to learn that the “unnecessary human deaths” in the US alone numbered in the hundreds of thousands (Reston, 2021). Learning was similarly slow on the global sustainability front, as plans for building hundreds of additional coal-fired power plants across Asia continued unabated (Ambrose, 2021).

How many premature human deaths and how much biodiversity loss might be avoided if civilization employs various branches of science to lead big social choices ahead regarding climate actions? Alternatively, what damages might occur from social media frenzies provoked by political operatives with various short-term agendas? Bazerman and Watkins's book regarding “predictable surprises” some dozen years earlier (2008) tried to sharpen society's thinking about such matters, but to what avail? Very recently, Kahneman and colleagues have summarized the many sources of impediments to rational decision-making, based on extensive research, in their book “Noise” (Kahneman et al., 2021).

While reading this paper, it seems important for one to remember that the C-19 pandemic is a relatively small challenge in relationship to that facing humanity under the umbrella term, sustainability. It perhaps involves only 3 or 4 of the SDGs, which were not ranked or categorized in meaningful ways by the UN; whereas, sustainability includes all 17. Our concept of sustilience builds upon the tiered “wedding-cake” model of the Stockholm Resilience Centre (SRC), as documented by Rockstroem and Sukhdev (2016). The foundational SDGs of Water, Soil, Biodiversity, etc. support the Society goals, so the Economy can be structured, updated, etc. as major adverse shocks lead to set-backs and partial destruction.

A phrase that Michael S. Quirk and we coined to describe this episodic shifting from “sustainability” to “resilience” and back is organizational sustilience [2]. The globe's experiences with C-19 provides a good example of a “quick bounce back” pertaining to SDG # 3 (Global Health) because several thousand scientists had the broad support of billions of other humans, and governments supplied lots of research money, but the best of current “earth-system modeling” suggests that any “bounce-back will probably be very slow,” one tipping-point (e.g. thawing permafrost) begets further tipping points (e.g. electric grids collapsing from breaking grid lines or rapidly increasing electricity demand for air conditioners, food preservation refrigeration, etc.) Organizational sustilience encompasses technical (including ecological), organizational (human) and economic capacities, as they can often be substituted for one another. In the case of C-19, millions of people had to be “incentivized” (bribed) to accept or receive the vaccines, just as many people are having to be subsidized to relocate from flood zones in order to avoid political spectacles following heavy rains or hurricanes/cyclones.

As can be seen in Figure 1, the flow of this paper begins with the global context, then moves to the notion of sustainability, which has been subdivided into the SDGs (17 in total) for the sake of convenience, given the familiarity they have generated after the UN's promulgation in 2015. Our analyses of factors influencing organizational learning lead to the need for sustilience or the ability to rebound through transformation built upon innovations from ecological to technical and social systems.

After addressing global contexts, we then summarize some of the perspectives we have found useful in framing questions about society's capacity to learn from recent experiences, given very different sources of influence, e.g. “alternative facts,” varying time horizons, social media and perspectives regarding the future. Finally, we suggest that the concept of organizational sustilience is a useful way of integrating the uncertain variables into scenarios, not for preventing disasters, but for facilitating recoveries from the multi-faceted effects of various climate-related crises ahead.

Global contexts

Societies around the globe have been struggling to cope effectively with two concurrent threats to peace and prosperity or some form of “flourishing” for several decades. The global pandemic of the post-World War I (WWI) era had taken a devastating toll of an estimated 50 million lives [3], but many of the potential lessons seem to have been lost on the general public during the Great Depression, Second World War, and ensuing global mixes of euphoria and conflict. More recently, however, various transmissible (infectious) diseases have arisen or developed in different parts of the globe, from recent experiences with C-19 to earlier examples of HIV/AIDS, SARS, Ebola and others (Executive Office of the President, 2016).

Climate change, or “heating” in The Guardian's terminology, has been analyzed extensively for more than forty years, but the “climate wars” continue (Mann, 2021) between short-term private interests and longer-term public needs. The Paris Climate Agreement of 2015 provided varying levels of hope that global collaboration was finally becoming feasible. However, America's election of Donald J. Trump in November of 2016 under his “America First” mantra led to a quick reversal of the US's posture of cooperation. In apparent defiance of Trump's negative attitude toward climate science, many companies and cities adopted the slogan, “We're still in!” to emphasize that they continued to support the Paris Agreement in spite of Trump's position.

Likewise, the European Green Deal [4] released at the end of 2019 was designed to tackle climate change (CC) and environmental-related challenges at a new level by transforming the European Union (EU) economy for a sustainable future (Harvey and Rankin, 2020). It covers various elements: increasing the EU's climate ambition for 2030 and 2050, supplying clean, affordable and secure energy, mobilizing industry for a clean and circular economy, building and renovating in an energy and resource efficient way, accelerating the shift to sustainable and smart mobility, designing a fair, healthy and environmentally-friendly food system, preserving and restoring ecosystems and biodiversity, and a zero-pollution ambition for a toxic-free environment.

These global ecological and human conditions can be outlined in diagrammatic format, as adapted here from the National Intelligence Council of the US visualization in early 2021 (See Figure 2).

The use of science-based targets (SBTs) [5] is another important initiative within the global context as it allows ambitious global climate change aspirations to cascade into clear targets for regions and organizations to meet the goals of the Paris Agreement [6]. It was hoped that, as some say, “what's measured gets attention and what gets attention gets done.” During the first few months of the C-19 pandemic, news outlets were overrun with statistics and trend lines pertaining to mask wearing, infections, deaths, etc., but many politicians and citizens seemed unaffected by such data. However, when large refrigerated “morgue trucks” began to appear in certain sections of New York during the spring of 2020, the technical reality began to “soak in” for many. Leaders around the world were wondering if these ideas and similar examples would apply any better to the institutions financing fossil fuel investments and resulting greenhouse gases because even after the Paris Accord of December 2015, trillions of USDs had been committed and another two trillion dollars was planned for future years (Lee, 2020; Harvey, 2021). Would these outlays quickly become “stranded assets” or generators of massive additions of CO2 (carbon dioxide equivalent) and other greenhouse gases (GHGs)?

History has cautionary reminders of the difficulties of changing human populations' ways of thinking about the future. For example, Bernstein' Against the Gods (1996) described the intellectual battles between priests and statisticians that extended more than a century over which group had the best means of forecasting future events. As many readers have been reminded during recent years, Dr. James Hansen gave important testimony before the US. Congress in 1988 regarding the “dangers from climate change,” but CO2e continued to accumulate during ensuing decades from approximately 370 ppm at that time to 415 ppm in 2021. About 30 years prior to Hansen's report, James F. Black's research at the oil company now known as ExxonMobil warned internal management of the atmospheric dangers of large-scale burning of fossil fuels (Mann, 2021) and recent reports indicate similar understanding existed at other major petroleum companies decades ago.

As the squabbles over CC and GHGs were boiling, an emeritus professor of biology's 2010 article highlighting increasing “threats to the biosphere from interacting global crises” (Cairns, 2010) attracted attention to major ecological interdependencies and concerns beyond climate change, per se. More recently, Kolbert's The Sixth Extinction (2014) became a widely read account of the deteriorating environmental conditions of planet Earth, as interests vested in fossil fuels bombarded the public with disinformation regarding the causes for various changes in atmospheric conditions over a period of decades.

While the Bill and Melina Gates Foundation focused on communicable diseases, both their prevention and treatment during the 2000s, its leadership was also awakening to the major threats from the effects of global heating. Had they been influenced by Schellnhuber, the then Director of the Potsdam Institute's poignant Selbst Verbrennung in 2015 summarizing his decades of climate change research, with the title loosely translated as “self-immolation?” Or had the leaders of the Foundation been influenced by deeper understanding of the policy complexities associated with global accords like the Paris Agreement, as outlined recently by Cullenward and Victor (2021)?

In both the cases of C-19 and sustainability, large systems of factors must be coordinated in some manner in order to achieve positive results. For C-19, foundations in basic biochemistry need to be linked to manufacturing precision and then to timely distribution of temperature-sensitive products to cooperative governments and citizens. Sustainability is dependent upon even broader sets of sub-systems from the physical, e.g. soils, water and atmosphere, to the philosophical–is the future the responsibility of humans, the outcome of random events or within the domain of “the gods?”

Assessments of external global “sustainability reports” differed widely, as one might expect. Some had been reading, hearing and seeing reports from the IPCC (Intergovernmental Panel on Climate Change), the Paris Accord of 2015, the Laudato Si encyclical on ecology of 2017 from Pope Francis, the formation of Future Earth and the students' Friday for Future movement. In other words, individuals and groups with very different worldviews were pointing in similar directions (Schein, 2015).

Responses from global organizations like the United Nations (UN) and World Health Organization (WHO) have had mixed records. Many individual technical advances have been achieved, but the integration of such encouraging work with existing political systems has been sporadic at best (Betsill et al., 2020; Bierman, 2019; Cullenward and Victor, 2021; Sengupta, 2021; Friedman, 2021). At the national level, differences were very pronounced, as summarized in mid-2021 (Laville, 2021).

Efforts toward educating the public about the risks of C-19 have been hampered by many of the factors which will undermine progress toward sustainability as well. Gates' recent book has summarized many of the tools currently available to help address pending climate disasters, but he also underscores “breakthroughs we need,” including many technologies and political collaborations (2021).

Authors have attempted to stimulate actionable interest in climate change concerns in a variety of ways, ranging from expressions of concern to proposals for specific actions (Hawken, 2017; Mercator, 2021).

Shortly after John Kerry was named “global climate envoy” by President Biden in early 2021, he reminded broad global audiences, many of whom were preparing for the COP26 conference in Glasgow, that GHG emitters need to be prepared to make “5 times the progress of recent years.” The global sense of urgency had been building since before Lord Stern published his Why Are We Waiting? book in 2015, but as the globe began to emerge from the C-19 pandemic, the atmospheric CO2 returned to its upward trend, having learned little from the experiences of reduced emissions from travel during the pandemic. In preparation for COP26, Biden called for a virtual conference of 40 global climate leaders to meet on April 22–23 for updates, but the modest commitments of most countries were again disappointing to many analysts and leaders.

Contributing literature

The “organizational learning” (OL) concept has received considerable attention for many years, but it was accelerated by the updated book from Argyris and Schon (1996) and augmented by the research of Dixon (1994) and later by Gnyawali et al. (2005). Societal challenges pose “collective action” obstacles against complex and often “invisible” forces, such as GHGs one cannot see and viruses that are difficult to locate and analyze, given mutation processes (Tierney, 2014).

Challenges to OL have been exacerbated in many places by “tribal pressures,” as described by Greene (2013), during the early 21st century regarding both C-19 and climate change. “Deniers” played important roles in discussions of both broad topics; all the while the scientific evidence from natural and physical sciences advanced.

Management literature and practice have long been negligent in failing to recognize many organizational externalities (Grant, 2007), and during recent years the calls for major changes in managerial actions have become even stronger (George et al., 2015). Earlier Bazerman and Watkins (2008) examined ways in which executives ought to be able to prepare for organizational shocks and thus avoid surprises, often with very bad consequences. The WHO had learned a great deal about pandemics during the four decades prior to the “C-19 tsunami” (Achenbach, 2021), but there still needed to be a “global public health wake-up” as researchers began to realize in early 2020 that instead of “probable thousands of dead humans” (like SARS), there might be “millions of human casualties” (like the 1918 pandemic). As pessimists would have predicted, many leaders around the world continued “playing the Blame Game” as PPE shortages appeared, hospitals in USA and parts of EU filled, etc.

Will the leaders of countries behave any differently when satellites from the Environmental Defense Fund (EDF.org/MethaneSAT.org) begin to detect major CH4 (methane) leaks from pipelines, permafrost and other major sources beginning in 2022? The Global Center on Adaptation (GCA.org) is another organization that is investing to achieve resilience in the face of sustainability challenges, as one can see with its recently announced new “floating headquarters” on a river in Rotterdam. With solar panels on the south-facing portion of the roof and a garden on the north-facing area, the overall structure is intended to be largely self-sufficient.

At the same time that many factors were encouraging individuals to move forward with personal sustainability actions, there were countervailing forces from some interests both inside and outside their organizations. Mann (2021) and others have argued that “deniers” of various sorts have tried to emphasize the importance of individual responsibility rather than systemic defects as the primary cause for sustainability crises. Others have pressured universities to “silence” professors who are public advocates regarding some of their sustainability concerns (Lockwood, 2017).

As we have witnessed from recent history, even analysts writing about a “new grand strategy” can get drawn into the consequences of recent set-backs and fail to give adequate attention to shifts in the “natural environment” being accelerated by billions of humans (Mykleby et al., 2016). Stranded assets are important transition challenges, but in spite of various crises caused by Ebola and SARS in locations distant from mid-America, the challenges of an emerging global pandemic were missed by most policymakers like those in the Trump administration who seemed determined not to learn from earlier leaders in their same roles!

As another example of the capricious organizational behaviors which haunt progress in OL, shortly after the C-19 pandemic was gaining momentum in various parts of the globe a debate boiled to the surface about whether or not the Obama Administration had left any public health pandemic guidelines for subsequent While House occupants. Obama Allies claimed to have left a notebook of about 70 pages that the subsequent Administration had decided to discard. Likewise, the previously assembled staff had been dispersed among various agencies (Executive Office of President, 2016). As of the time of this writing, sustainability was increasingly being threatened by polluting investment plans such as more coal-fired power plants by the hundreds across major countries of Asia (Ambrose, 2021).

Dimensions for analyses

Despite the fact that many global trends pertaining to pandemic responses and sustainability are moving in the wrong directions, there are many factors along which individuals and organizations can learn to improve performance. Table 1 provides a visual summary of several such factors or dimensions and links them between C-19 experiences and those reaching into many facets of sustainability.

Cognition: situational awareness and risk sensitivity

One lesson of C-19 we may expect is an improved situational awareness or risk sensitivity by various stakeholder groups, including legislators and investors as well as corporate decision-makers and their customers. All of them have experienced in the last 1–2 years what exponential development means. Even though many of us got accustomed to Moore's law and technology acceleration, it is still tremendously hard for the human brain to understand exponential growth once we get deeper into the “back half of the chessboard” [7]. (Readers of this paragraph may need only 30 linear steps to reach their front yard letter box; however, 30 exponential steps of one meter will take them around the Earth twenty-six times!) Since the start of the current global pandemic, leaders around the world have experienced what this “back half” of exponential growth curves looks and “feels” like. This learning may be transferred and leveraged to collectively “break” another giant wave which has been appearing almost simultaneously, approaching fast and building up high: the “Great Acceleration” (Steffen et al., 2015).

Marshall (2014) and Jones (2020) are among those who have reminded us of the many ways in which our individual minds and groups tend to process data that leads us to focus on the “here and now” and defer attention to the uncertain future. Given these conditions, it may be necessary for society to consider further the use of artificial intelligence (AI) to help make decisions that are difficult for most adults to make effectively (Balasubramanian et al., 2020). Such work would be an extension of AI work performed decades ago after the Three Mile Island power plant catastrophe to help reduce the risks of errors in human decision-making during potential catastrophes such as nuclear meltdowns.

For corporate management, this means the need to provide increased attention toward sophisticated corporate foresight processes as well as comprehensive vulnerability and risk assessments covering the biggest global challenges in terms of likelihood, as indicated by the World Economic Forum (2020): extreme weather, climate action failure, natural disasters, biodiversity loss and human-made environmental disasters. These macro-level problems may become specific corporate problems sooner than expected as indicated anecdotally by Justin Trudeau's speech 2018 in Davos: “The pace of change has never been this fast, yet it will never be this slow again.” Civilization and corporations cannot afford systemic risk being seemingly invisible until the socio-ecological systems bounce back as we have experienced with C-19. Such effects call for application of precautionary principles in corporate strategizing and decision-making.

Finance: sustainable criteria and ESG disclosures

Based on C-19 learning about the uses of money to try to address unfolding crises, we may well expect regulators and political decision-makers to enhance money flows and sustainable finance initiatives to try to improve resilience of our global economic, natural and social systems. An example is the European Green Deal and the corresponding EU taxonomy. The EU will leverage the highly regulated financial industry to transform the economy toward sustainability. This means that investors and banks will have to apply new forms of future viability assessments for their investment decisions and credit checks, and companies must fulfill these new expectations in their strategies and business models. There are more and more original equipment manufacturers (OEMs) in various industries telling their suppliers that if they do not provide a credible vision for becoming a “sustainable” company and demonstrate how they will transform their businesses within the coming years, they will not meet requirements of tenders/contracts and will get no orders in the future.

Similarly, principal banks are approaching their corporate clients with questionnaires asking for transparency about scope levels 1, 2 and 3 assessments regarding climate impact measurement and management, as well as other ecological and social damage they are causing or exposed to along their supply chains. The breadth of the business system to be included in such sustainability analyses and disclosures is still being widely debated in many political and financial jurisdictions. In summary, one can say that scope 1 is most narrowly focused on a specific organization's internal operations and scope 3 is the broadest system that extends beyond the directly controlled operations and the supply chain of goods and services and covers all upstream and downstream activities. The pressures for expanded analyses and disclosures regarding scope 3 have often been stimulated by activists seeking the “comprehensive truth” about the effects of corporate or governmental actions impacting the environment as well as human conditions impacted directly or indirectly.

Furthermore, C-19 demonstrated how hard it is to cope with an issue that does not recognize regional maps in a world of borders. The lack of alignment in international and even federal countermeasures to deal with the pandemic revealed how deglobalized our social and political systems are when orchestrated action is necessary. Consequently, corporate decision-makers can expect evolving efforts by multinational institutions to develop and define more internationally aligned standards in dealing with global issues like climate heating. Currently, there are hundreds of environmental, social, and governance (ESG) indicators companies can pick from to disclose what they may label “sustainability performance.” However, there are many different views of what “sustainability” means (reflected by corporate decision-maker mindsets, reporting standards, investor perceptions or rating agencies), what indicators are relevant to best reflect the corresponding understanding, and what corporate initiatives will directly impact these indicators. In other words: Companies may be able to invest in and claim that they fulfill selected ESG criteria even without considering a transformation of their potentially unsustainable conventional business models toward those which will achieve sustainability.

Various initiatives around the globe are moving aggressively toward standardized ESG disclosures, as can be seen in the work of the Value Balancing Alliance (2021) or European Financial Reporting Advisory Group (EFRAG) as well as the planned collaboration of CDP, Climate Disclosure Standards Board (CDSB), Global Reporting Initiative (GRI), International Integrated Reporting Council (IIRC) and Sustainability Accounting Standards Board (SASB) (World Economic Forum and Deloitte, 2020). Making ESG performance of companies comparable is supposed to drive the internalization of external costs and provide transparency needed by other stakeholders.

Many business leaders are recognizing that what used to be highly “invisible” and “for free” will be become increasingly transparent and expensive. Consequently, so-called “superstar” rankings based purely on earnings before interest and tax (EBIT)-margins will change significantly and “business as usual” may not be a viable option for certain companies (Henderson, 2020). To prepare for a standardized ESG disclosure, strategic priorities need to shift from being purely top and bottom line driven toward integrated strategies that drive superior performance in both economic and socioecological terms across all business areas, functions and processes.

Timing: double and dynamic materiality and systems perspective

Another lesson learned from the C-19 pandemic is that it underlines the dynamic nature of materiality, which is illustrated in Figure 3. Today, only a portion of macro-level sustainability matters which are impacted by enterprise behavior along its entire value chain (scope 1–3) are considered to create or erode enterprise value and thus perceived to be “material”. This reflects the notion of double materiality articulated in EU climate-related reporting guidelines as it highlights issues that are both (1) financially material for companies depending on their specific business (e.g. industry, geography) and (2) material for civilization (i.e. the environment and society). Only a portion of these “double material” matters may be addressed by the enterprise through its current business model. However, the distinction between macro-level systemic and enterprise-level sustainability matters is often just about time horizons (World Economic Forum and Deloitte, 2020).

The concept of dynamic materiality indicates that certain macro-level sustainability matters considered financially immaterial by the enterprise today will sooner or later become highly relevant for its top- and bottom-line performance (Eccles, 2020). The C-19 pandemic revealed how rapidly abrupt changes in the organization's environment can shift such sustainability matters not addressed in strategies and business models today on the agenda of corporate strategists and decision-makers.

For example, scientific analyses of C-19 origins have indicated that the pandemic is strongly related to biodiversity (e.g. zoonoses and impacts on ecosystems), which is reflected in a SDG that is considered as financially not material by a variety of companies across industries. How is it that an “immaterial” sustainability issue may cause corporate damage to the level of “zombification” or even bankruptcy within a 1–2-year time frame? Note that, despite a reduction of bankruptcies in 2020, the number is expected to increase as governmental measures of crisis relief are lifted across various countries and bankruptcy proceedings are restarted. Furthermore, the number of zombie companies (i.e. mature firms that are persistently struggling and are not expected to perform strongly in the future) are expected to increase after the C-19 crisis in certain sectors, e.g. wholesale and retail trade or accommodation and food service (Haynes et al., 2021).

This example of biodiversity highlights the reciprocal relationship of macro- and micro-level issues. Global ecological, social and economic sustainability matters, as expressed in the SDGs, planetary boundaries, or various kinds of sustainability principles, gradually or rapidly become corporate issues. And company-level impacts on the environment, people or the economy ultimately “roll up” collectively to the systemic level.

Corporate decision-makers who embrace these kinds of insights from the crisis will strive to strengthen their businesses by lowering or even eliminating their negative sustainability impacts, which will ultimately make them more resilient (Schaltegger, 2021). Strong foundations developed by pioneers like Daly (1977) with his Steady State Economy, Meadows et al. (1972) and the Club of Rome as well as Robèrt (2002) and The Natural Step with its framework for strategic sustainable development are all based on an understanding of a nestedness of ecological, social, and economic systems, as also illustrated by Senge et al. (2008, p. 102). Given our global experience with C-19 to-date, now seems to be the time for applying this kind of systems perspective to tackle root causes of unsustainability instead of merely reporting on symptoms, as recently stated by Bansal et al. (2020).

Interdependencies: cross-sector collaboration

The C-19 pandemic has clearly exposed the level of vulnerability that is rooted in our global interconnectedness ranging from supply chains to multinational businesses and cross-border tourism. Despite making the need for collaboration noticeably clear, this pandemic also revealed great inefficiencies and even dysfunctionalities when it comes to tackling global issues through collaboration of private-sector companies, governments, and plural-sector associations and communities. In some countries, orchestrated planning and execution of the public sector was compromised by cross-purposes of state leaders, economically driven private sector lobbying and conspiracy-driven plural sector resistance caused by various reasons (Hasselbach, 2021; Pfeifer, 2021). This confrontation and collision of sectors, which are supposed to collectively help solve global issues, can lead to a downward spiral of counterproductive activity, whereas the opposite would be vital for tackling a global sustainability crisis. It is reasonable to expect the C-19 system failure is only a small fragment of socio-ecological issues on the sustainability horizon. Tackling the latter problems, including climate change, requires an ascending spiral of consolidation in which the three sectors are constructively collaborating and reinforcing each other's efforts (Mintzberg et al., 2018).

Like C-19 issues, sustainability matters such as environmental degradation, inequality or climate change are also global systemic problems that cannot be solved by one country, sector or company alone but need international cross-sectoral multi-stakeholder collaboration (Kuenkel, 2016; Hull et al., 2020). Some of the most promising sustainability solutions on the horizon like circular economy models or sustainable business ecosystems for mobility, food and energy require a mindset-shift from competition to collaboration. The noticeable failure of public sector leaderships regarding C-19 crisis management in various countries as well as the related division of society increases the need of private sector organizations to step up and take on a significant role in driving sustainability transformation. From an organizational perspective, C-19 learning reemphasizes the need for open strategy and coopetition and are likely to enhance the purpose movement in which both customer and shareholder value creation as well as socio-ecological value creation is seen as a raison d'être of the company or other organizations (Porter and Kramer, 2006).

Strategizing: pro-active leadership

As we have seen with C-19, some well-intended initiatives have only reduced the growth rate of infected people and casualties, but they did not change the course of the pandemic's trajectory for a significant time. Such results can be considered as reminders of the shortfalls of contemporary sustainability reporting and ESG management, which have been addressing symptoms more than root causes of unsustainability. While companies have been focusing on financially material issues and reporting on incremental progress through reducing their own “unsustainability,” this has not changed course at the level of systemic sustainability, as we can see in the current state of the planetary boundaries and social foundations which inhibit collective action. They have helped to slow down the velocity of deterioration of our ecological and social systems, but they have not changed the course toward sustainable development (Pucker, 2021). Similarly, C-19 “testing” (aka “reporting”) allowed people to feel good through increased opportunities for socializing and shopping, but it did not solve the underlying health issues.

This reminds strategists of a long-term strategy principle: In times where behavioral change in terms of “doing things differently” is vital, if one only reports improvements on “doing the same things,” the impacts may prove to be insufficient. Consequently, a pro-active “integrated strategy” that combines economic, ecological and social strategic goals in a meaningful way for both the micro- and macro-level can be seen as a prerequisite to meaningful “integrated reporting” and ESG disclosure, as such indicators are supposed to operationalize strategy and not vice versa.

Based on the previous elaborations, it is reasonable to assume that C-19 learnings will make corporate decision-makers more sensitive to the urgency as well as the magnitude of strategy adaptation required for their organizations to become sustilient. Exponential developments require pro-active leadership that does not wait until the socio-ecological systems bounce back and cause abrupt changes in the operating environments. Instead of standing by and waiting for some kind of crises or catastrophe to trigger action, strategists should realize that they are better off by starting to transform their strategies and business models now. They can identify new business opportunities through providing sustainability solutions or preparing their organizations before a socio-ecological tsunami hits along with enforced regulations and other forms of stakeholder backlash (sustainable strategizing “as usual”). This requires a sustainable strategizing mindset which is based on a systems-based view of strategy (see Figure 4). Here, the focus is not only on creating business cases through sustainability or some form of shared value (sustainable strategizing 1.0: “what can sustainability do for my business?”) but on the related long-term negative or positive impacts caused by the enterprise on ecological and social systems in which it is embedded (sustainable strategizing 2.0: “what can my business do for sustainability?”). The focus of strategy on creating, maintaining and renewing competitive advantage is supplemented with the goal of creating viability advantages by making the enterprise both sustainable and resilient at the same time (Wunder, 2019), what we now refer to as sustilient.

For management practice, the two-dimensional matrix, as illustrated in Figure 5, may provide business leaders and corporate strategists some guidance for clarifying the initial strategic position of their firm. Some companies, such as those in food distribution or financial services, may be able to apply a more incremental strategy adaptation process for dealing with socio-ecological systems disruptions (strategy evolution) or just focus on “fire-fighting” activities for solving short-term sustilience issues (strategy crisis). Others such as in the automotive, aviation or energy sectors are increasingly pressured to either gradually but fundamentally change their strategies (strategy disruption) or develop completely new business models based on sharing or circularity (strategy revolution) for staying viable as their current business logics are simply not compliant with the idea of a sustainable future (Wunder, 2021).

Transformation: long-term and precautionary perspectives

When analyzing the current strategic situation regarding the evolving global sustainability context, leaders are advised to recognize two key elements: First, strategy adaptation requirements are not only triggered by current financial materiality perceptions but also by the urgency and magnitude of macro-level sustainability issues that may not be directly and currently linked to the firm's business model and processes. Strategic “materiality” considerations of a particular enterprise need a long-term, precautionary and dynamic perspective, as explained earlier. The relevance of a certain sustainability issue for a particular business can change abruptly as we have seen with C-19. Second, the future is not something “external” that somehow evolves based on socio-ecological system developments which need to be anticipated to best position the company, but the future is often largely what an organization makes it.

With several sustainability tipping points on the horizon, corporate leaders need to avoid the collapse of our socio-ecological systems by following a precautionary principle and implementing timely strategy adaptation. It requires business model innovation for a strategy context (“new normal”) in which doing business must not damage the socio-ecological systems the enterprise depends on or may even need to regenerate these systems. In the C-19 context, this can be compared to strategy adaptation requirements for a post-COVID business context in which, for example, established business models that were based on physical presence, such as traditional retail business or higher and executive education, need to be transformed to digital solutions. In this respect, C-19 can be considered as a “Big Bang” for digital transformation. Hopefully, with responsible and farsighted organizational leadership, society will be able to pro-actively drive sustainability transformation without a devastating “Big Bang” in the form of massive food or water or energy shortages.

While we think the above factors will provide the greatest OL leverage as society seeks more effective actions toward climate change, several others will also deserve more future attention. Space limitations require that we treat these other factors very briefly.

Media generation and distribution

The conflicts among various “climate action advocates” and “climate deniers” existed long before the arrival of the C-19 pandemic, but in the United States the epidemiologists analyzing the virus characteristics and transmission quickly found themselves facing “deniers” of various origins, including a President who preferred “China virus” to “coronavirus” for political and perhaps other purposes. With the rise in the importance of social media, various aspects of communication have recently been summarized by Rustin (2021) in the context of the climate crisis, and these issues will surely deserve much further attention during the months and years ahead.

Sufficiency is a concept that addresses the notion of adequacy for the needs of a particular individual or group. Bocken and Short (2016) have outlined the importance of this concept in terms of resource allocation, perspectives of justice and the prevention of physical conflicts. A decade ago, Gardiner (2011) examined extensively the ethical issues regarding the climate element of sustainability.

Human behavior has been difficult for many of us to understand in the many settings where the C-19 pandemic has spread its dreadful effects. Around the globe, millions of adults have refused to take preventive measures, including vaccinations, for reasons as diverse as religion, historical ethnic mistreatment and political signaling. Sustainability activities from nutrition to carbon emissions controls and beyond are being haunted by similar sources of denial and resistance.

Inequalities across ethnic and geographic lines became readily apparent from the early stages of the C-19 pandemic, as many marginalized groups found accessing adequate medical facilities to be extremely difficult. With sustainability often focused on access to security and freedom, the world is witnessing many situations where those who have contributed the least to the problems are being impacted most severely by the effects. What will be the consequences if political and legal systems do not provide conditions of ecological justice for a significant majority of the diverse populations?

Legal actions frequently accompany the introduction of new medical treatments and constraints, especially under urgent conditions. In the sustainability arena, lawyers from non-governmental organizations (NGOs) like Earth Justice in the US to those involved with private class action suits against parties causing major environmental damage have been gaining momentum in many jurisdictions.

Capabilities for dealing with C-19 have been rather narrowly focused, but those needed for adequately addressing sustainability are much more diverse. Some capabilities will need to be developed, but others will benefit from creative new applications of skills, as exemplified by several “windfall” examples provided by Funk (2014).

Purpose, in organizational parlance, has been given many meanings by various authors. In dealing with the C-19 pandemic, this was viewed by some organizations as a race or fight to save human lives. From a cynical political perspective, some saw the unifying purpose as protecting or enhancing an official's reputation for leadership during a crisis. In the sustainability arena, many writers think that meaningful impact can only be expected if organizational purpose is not only linked to such sustainability-aversive customer wants (e.g. “joy of driving”) but also to societal needs (e.g. “sustainable mobility”). To make purpose happen, it is suggested that it be translated it into strategic goals and fully embedded in the organization through business processes and corporate performance management systems (Gartenberg et al., 2019; Henderson, 2020). If effectively integrated in an organization, purpose can positively “emotionalize” the necessary transformation of strategies and business models toward sustainability. This way it can help to overcome structural and cultural inertia which prevents organizations from adapting to socio-ecological systems disruption even though the necessary magnitude and speed of change required are clear (Wunder, 2021).

While the factors or dimensions in Table 1 can provide one means of linking C-19 actions to those of sustainability, a level of analysis approach provides another way of viewing connections. For example, one can also think about connecting from the foundations of the “natural world” upward through linkages among human institutions, as with SDG # 17 or “partnerships.”

From a “movement” or global vantage point, presentations by one of the authors led to a paper designed to improve organizational performance measurements for addressing sustainability issues. A summary of the “green GDP” project in China early in the 21st century was instructive as to why overly narrow measurement systems can lead to devastating outcomes for civilization, as will GHGs invisible to the human eye then and C-19 viruses similarly invisible during 2020 (Grant, 2008).

Shortly after the 17 SDGs were identified by the UN, a framework for organizing relationships among the SDGs emerged from a unit of Stockholm University. A team led by Johan Rockstrom, then of the SRC, focused on categorizing and developing linkages among the SDGs. In an effort to integrate these goals, the SRC created a static three-tiered “wedding-cake” model (Rockstrom and Sukhdev, 2016), with water and soil quality along with biodiversity in the foundational layer. In the wedding-cake model, this bottom level represents the “biosphere,” (what some might visualize as the “natural environment”). This is where concerns about the quality and sustainability of soil, water, atmosphere and biodiversity and their implications reside. SDG numbers 6, 13, 14 and 15 are logically assigned to this level. These SDGs provide the “building blocks” upon which other goals can develop and gain sustenance.

As we build further on the work of Carlson and Grant (2021, forthcoming) the middle level addresses “societal” concerns. Included are factors ranging from food insufficiency to poverty, income and wealth disparity, social and political instability, inadequate or limited health care, injustice and insecurity, gender inequality and educational inadequacy. SDG numbers 1, 2, 3, 4, 5, 7, 11 and 16 comprise this intermediate level. A society's progress on these various goals determines the immediate contexts within which individual managers, employees and investors gain guidance about the treatment of other humans in terms of physical existence and notions of justice and fairness.

Given the above conditions, it seems fair to conclude there will be no synoptic solution to the climate change effects ahead. Rather civilization more likely faces decades of episodic progress followed by regional or global setbacks that will be costly to biodiversity, including the human species. This sustilient process will lead to extinction for many species and organizations, but will offer opportunities for others to flourish.

Conclusions

In summary, this paper has served to integrate the authors' experiences with the C-19 pandemic in two countries separated by the Atlantic Ocean, culture and language. While analyzing many factors which impact what can be learned and transferred to sustainability issues, it became clear that major challenges remain in the protection of the global commons. We hope our incorporation of the work by many others will underscore the diverse concepts contributing to our understanding and help to inspire proactive efforts across business firms, NGOs, universities and governments because accelerated attention to the SDGs and other sustainability matters is urgently needed around the Earth.

Figures

Figure 1

Flow of this paper

Figure 2

Global sustainability context

Figure 3

Systems-based view of strategy and concepts of materiality

Figure 4

Evolving mindsets for linking strategy and sustainability

Figure 5

Sustainability-related strategies

Table 1

Factors linking COVID-19 learning and sustainability transformation

Factors or dimensions	COVID-19 (C-19)	Sustainability
Cognition, e.g. situational awareness and risk sensitivity	Broad shift of understanding from linear to exponential thinking re pandemic	“Exponential understanding” becoming more solid, “tipping points” lurk beyond detection
Finance	Government subsidies broadly across economies	Competing investments by corporations, governments and NGOs, including “deniers”
Materiality	“Static” from perspectives of individuals or countries in terms of deaths and long-term health effects	“Dynamic materiality” for the planet, as per R. Eccles
Time horizon	Short-term physical remedies/consequences and indefinite “variants”	Long-term uncertainties about physical and human systems
Interdependencies	Supply chains linear, but who gets which brand and when are both economic and political questions	Connections among factors are seemingly endless, as emissions impact temperatures which affect crops and thus population centers, etc.
Strategizing and pro-active leadership	Reactive, except for a few global NGOs; focused with research and development (R&D) and heads of governments	Proactive to mitigate risks, given re-insurance, ESG disclosures and “precautionary principle;” diffused tech, geography and incentives
Transformation	Post-crisis: business transformation to post-C-19 context after “fire fighting” the pandemic	Pre-cautionary: business transformation with long-term and dynamic perspective to avoid crises
Other
Media	Science vs “anti-vaxxers” and deniers; many effects are debilitating or deadly, but mostly short-term	“Merchants of Doubt” and Allies continue to deflect and diminish concerns; effects are lagged, comingled and long term
Sufficiency	Sharing vaccines to gain “herd immunity” for protecting populations	Reducing CO2e accumulations to reduce human mass migration
Human behaviors	Conflicted among the “aggressive seekers” and “the fearful;” tribal behaviors are strong; subversion quite limited	“Precautionary principle” vs “risk-takers and selfish;” tribal behaviors persist; subversion wide-spread
Inequalities	Lock-down impacts differ for rich and poor, old and young, majority populations and minorities	Similar differentiated impacts from heat, SLRise, and food, depending on income/wealth
Legal actions	Slow to emerge most places, but vaccination “line jumping” is posing conflicts	Litigation is moving aggressively because of limited ESG disclosures, etc.
Capabilities and value capture	Pharmaceutical firms have capabilities and may capture reputational value, but healthcare system is seriously strained and facing ethical choices	Participation toward solutions can be widespread, with some experiencing “windfall” benefits and others hardships. Many ethical dilemmas regarding “the commons” and private property
Purpose	Save lives of “front-line workers” and the elderly (or alternatively, “the most productive”)	C-19 has focused stakeholders toward the “purposes” of sustainability, e.g. biodiversity protection

Notes

1. “Overton window” describes a scope or range of discourse which is acceptable to a general audience in social or political terms at a given point in history. The phrase is named after Joseph P. Overton, who developed the concept, but adaptations have been used for more specific readers or listeners.

2. While finishing this article, we learned of a dissertation from India by Rajesh in 2017 that used the word sustilience in the narrower context of supply chain research.

3. See, https://www.nytimes.com/2021/04/27/magazine/global-life-span.html for 100 million estimates.

4. See, European Commission (2021).

5. See, https://sciencebasedtargets.org/for science-based targets initiative (Accessed: 2 July 2021).

6. According to the latest climate science this means limiting global warming to well-below 2°C above pre-industrial levels and pursuing efforts to limit warming to 1.5°C.

7. This phrase is used in reference to the point where an exponentially growing factor begins to have a significant impact. Doubling the number of grains on each square of a chess board leads to a large number of grains on the first half of the chessboard. However, the quantity on the second half of the board is vastly (2³² > 4 billion times) larger.