Rethinking Sustainability

No Purpose, No Gain

MARIA CORONADO ROBLES AND

GAYATRI BHASIN DARKE
Not to be distributed without permission.

The data included in this document is accurate according

to Passport, Euromonitor International’s market research
database, at time of publication: October 2020
Rethinking Sustainability
No Purpose, No Gain

MARIA CORONADO ROBLES

GAYATRI BHASIN DARKE

CONNECT WITH US

© 2020 Euromonitor International

Contents

1 Introduction

2 From Sustainability to Purpose

4 Impact of Coronavirus on Sustainability

Purpose goes mainstream
Shift in societal expectations
Focus on climate change
Value for all
Supply chain safety
Build back better

12 Sustainable Development Goals Key to Purpose-led Leadership

Pandemic impact on the 2030 agenda

15 Sustainability Beyond COVID-19

Future investments
Digitalisation as an enabler of purpose
The risk of purpose-washing

20 Conclusion and Recommendations

21 About the Authors

22 How Can Euromonitor International Help?

© Euromonitor International
Introduction

The Coronavirus (COVID-19) pandemic has accelerated the rise of companies with a strong sense of
purpose, going beyond a traditional business “for-profit” approach.

In this white paper we explore the topic of purpose and what it means for the shifting sustainability
landscape. Insights are based on industry expertise and Euromonitor International’s Sustainability and
COVID-19 Surveys, fielded in June and July 2020. These surveys were taken by professionals working in
small, medium and large companies from 18 different industries in over 80 countries.

© Euromonitor International
From Sustainability to Purpose

COVID-19 has acted as a catalyst for change in sustainability with purpose taking centre stage. The rapid
response to the global crisis shows the enormous impact that businesses can have on society when they
look beyond short-term profits.

The definition of sustainability has broadened, evolving beyond environmental concerns and ethical
credentials towards a more holistic purpose. Companies are expected to be a force for good, enabling
access to sustainable yet affordable products while also helping to reduce economic, social and health
inequalities.

Purpose-driven businesses go far beyond the traditional concept of selling products and services that
create wealth for their shareholders. They aim to deliver value to all stakeholders, including society
at large, local communities and the environment. Companies such as Salesforce and Patagonia are
pioneering the trend towards giving a voice to the planet as a key stakeholder.

© Euromonitor International
 From Sustainability to Purpose 3

In response to the health crisis, businesses across all sectors are putting people and planet, transparency,
proximity and collaboration at the heart of their recovery.

People and planet

COVID-19 is catalysing change on many fronts. It is accelerating disruptive business
models and the adoption of innovative solutions that are more socially and
environmentally sound, often using new digital technologies. Vodafone UK gifted
technology to vulnerable groups in response to COVID-19, donating a one-button
communication device called KOMP to the elderly and people with low vision.
This allowed them to be in touch with loved ones during lockdown. Aspiration
bank launched a new feature called “Plant Your Change” in the middle of the crisis,
allowing customers to round up purchases to the nearest dollar with the extra few
cents going to tree planting. Over one million trees have been planted since its launch
in April 2020.

Transparency
With increasing scrutiny about how brands treat employees and suppliers and how
goods are sourced and manufactured, more businesses are making transparency
pledges. Online fashion retailer ASOS called for fashion brands to sign a ‘Transparency
Pledge’ in August 2020 following the Boohoo slavery scandal. It requires businesses to
regularly publicise their manufacturing supply chain.

Local
Local buying and local manufacturing is expected to grow as consumers look to
support their communities and locally produced items. COVID-19 supply chain
disruptions have created interest in re-localising production, bringing smaller local
businesses into supply and logistic networks. This creates greater self-sufficiency,
visibility and control. Apple’s main iPhone assembler Foxconn announced plans to
diversify away from extreme reliance on China in August 2020, due to political tensions
and supply disruptions caused by the COVID-19 pandemic.

Collaboration
The crisis has highlighted the advantages of greater collaboration across countries,
industries, businesses and supply chains to address complex social and environmental
issues. Innovative partnerships among companies are set to accelerate. On climate
change, a joint letter from the UN Global Compact and the Science-based Targets
Initiative (May 2020), representing more than 150 corporates including Carlsberg,
Coca-Cola European Partners, Stora Enso Oyj and SIG Combibloc, called on
governments to set zero-carbon targets.

© Euromonitor International
Impact of Coronavirus on
Sustainability

Prior to COVID-19, sustainability was focused on environmental problems such as climate change and
plastic waste. In Euromonitor International’s 2019 Voice of the Industry: Sustainability Survey most
companies linked sustainability to “reducing environmental impacts” (87.3%), followed by “incorporating
energy saving processes in production” (63.6%).

While “reducing the impact on the environment” remains the top definition for sustainability in
2020, COVID-19 has brought social purpose to the fore, with two thirds of surveyed companies defining
sustainability as “supporting local communities”, a 15% increase compared to the previous year. 51.4%
of survey respondents are connecting sustainability to supporting employees in 2020 and 48.7% are
associating the term with providing support to suppliers and business partners.

The survey reveals that sustainability has evolved beyond a box-ticking approach to the genuine
embracement of the “purpose over profit” movement. Companies are aligning their mission, values,
vision and strategies to a higher purpose that has an overall positive impact, creating value beyond
monetary earnings.

While corporate action on social issues was accelerated during the outbreak, environmental initiatives
were forced to slowdown or take a pause. However, as the world heads towards a new normal, businesses
are now reassessing priorities and exploring sustainability issues. The core pillars underpinning the
“build back better” agenda range from purpose leadership, social awareness and climate emergency to
stakeholders capitalism, business resilience and sustainable investing.

© Euromonitor International
 Impact of Coronavirus on Sustainability 5

Purpose is the New Normal

Purpose goes mainstream

• With more business leaders jumping on the purpose-driven bandwagon
Purpose-driven leadership
to weather the pandemic storm, sustainability is finally getting a
well-deserved seat at many company boardroom tables.
• Purpose-driven leadership is set to remain strong beyond COVID-19.
Shift in societal expectations
• The pandemic has put social issues in the spotlight with companies
Social purpose playing a key role in helping countries to deal with social disruption.
• Demand for ongoing social commitments from brands is expected
to remain strong, with close attention paid to how companies treat
employees and serve the society.
Focus on climate change
• Despite many sustainability initiatives related to the environment being
Climate emergency temporarily paused due to COVID-19, climate emergency has climbed
up to the top of sustainable recovery plans, with 2020 expected to be
a crucial year in the fight against climate change and the transition to a
low-carbon economy.
Value for all
• As the health crisis evolves, the pandemic business mantra of people
over profit is reverberating rapidly, redefining the purpose
Stakeholder capitalism of corporations.
• The shift from shareholders wealth to stakeholders value is
accelerating, unlocking the next wave of global growth, one that
is resilient and sustainable.
Supply chain safety
• With supply chains experiencing intense disruption during the
Build resilience
outbreak, COVID-19 has made a strong business case for resilience.
• In the COVID-19 era, preventing and minimising future risks of disruption
will be critical for businesses.
Build back better
• The pandemic is giving businesses the opportunity to reset their
Sustainable investing strategies and transform their business models.
• Amid the economic crisis, sustainable finance is set to play a key role
in resetting the economy with many investors planning to align their
portfolios with their values.

© Euromonitor International
6 Impact of Coronavirus on Sustainability

Purpose goes mainstream

The “purpose-driven” approach to doing business was occupying increasing amounts of boardroom
time even before the Coronavirus pandemic. Leading organisations were aligning their purpose more
closely with growth and strategy, mirroring consumers sentiment towards brand purpose. Just weeks
before major lockdowns were announced across the world, about a quarter of consumers were buying
from purpose driven brands and boycotting brands that did not align with their social and political views,
according to Euromonitor’s Lifestyles Survey, 2020.

During the COVID-19 outbreak many businesses were forced to put purpose first as an emergency response,
helping countries to close existing gaps in acquiring essential supplies, re-purposing operations at
speed and supporting employees, suppliers and local communities. Over half of surveyed companies
considered themselves to be purpose driven in June 2020 according to Euromonitor’s Voice of the
Industry: Sustainability Survey. While the board’s attention to sustainability has risen, as shown by
the increasing number of CEOs pursuing a sustainability agenda compared to previous years, 24.7 % of
employees still report the lack of commitment of senior management and / or the board as a key barrier
for corporate sustainability.

Different industries are at different stages on the purpose-driven path. The beauty and personal care
industry leads the way in corporate sustainability, with 56.3% of companies considering themselves
purpose-driven in 2020. The travel industry lags behind other industries in terms of acting with purpose,
with only 36.7% of respondents saying that their company is purpose-driven, compared to the 51% average
across all industries. In terms of leadership, travel and tourism also ranks low with less CEOs leading on
social and environmental issues, compared to other industries.

As economies come back to life with stricter lockdown measures easing slightly, companies are coming
under increased scrutiny. Consumers are paying more attention to corporate behavior, rewarding or
boycotting brands based on their values. For example, Swedish plant-based milk brand Oatly is facing
a boycott by sustainability-conscious consumers in the UK. This is because the private equity firm
Blackstone, whose investments have been accused of driving Amazon deforestation, acquired 10% of the
company (USD200 million).

Shift in societal expectations

The pandemic has forced companies to put social issues at the core of their decisions, with nine in ten
companies supporting employees, and around a third helping local communities, suppliers and other
business partners. There are many examples of companies putting the welfare and financial health of
their workforce before profits. For example, Unilever South Africa paid salaries to approximately 10,000
employees and temporary workers during April, May and June 2020, with third-party employees and
agents out of work supported with a daily living allowance.

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 Impact of Coronavirus on Sustainability 7

While businesses across all sectors have taken action to protect people, the travel and tourism industry
lags behind the curve compared to all other industries, with just over half of travel and tourism companies
supporting local communities.

Despite the overall COVID-19-driven spike in social initiatives and recent efforts to put people over profits,
there is still a long way to go to achieve reasonable success in issues such as diversity, inclusion and
equality. The imminent global economic recession adds to the stress businesses are suffering. By July
2020, over a fifth of companies had downsized to reduce operational costs, one in eight businesses were
not providing sick paid leave to employees, and just 3.2% offered childcare to their workforce (Voice of the
Industry: COVID-19 Survey, July 2020).

More positively, 71.1% of surveyed companies are planning to invest in employee support programs such
as the promotion of work-life balance, flexible hours and the ability to work from home according to
Euromonitor’s Voice of the Industry: Sustainability Survey, July 2020. For example, the food delivery
company Just Eat announced plans to stop using gig economy workers across Europe in August 2020.
This followed its success during the first half of 2020 when orders increased 34% in its three biggest
European markets. The company expects to improve the work-life balance of employees, providing access
to benefits such as paid holidays and workplace protection.

Focus on climate change

Despite the disruptions caused by the pandemic, action on climate change remains a priority for
companies, with 63.6% of businesses defining sustainability as “incorporating energy saving processes in
their production” and 61.1% of them planning to invest in energy-related sustainability initiatives over the
period 2020–2025 (Voice of the Industry: Sustainability Survey, 2020).

68.4% of companies expect to keep pre-COVID-19 environmental sustainability commitments despite the
unfolding economic crisis. Corporate engagement with climate-related Sustainable Development Goals
(SDGs) remain unchanged, specifically those related to “Climate Action” (SDG 13) and “Affordable and
Clean Energy” (SDG 7). This, coupled with the recent government commitments to a green recovery
across Europe, could ensure that climate change action comes to the fore in the post-pandemic era.

© Euromonitor International
8 Impact of Coronavirus on Sustainability

Multinational corporations are renewing their efforts towards a net zero carbon strategy, with Microsoft
launching the “Transform to Net Zero” initiative in July 2020, alongside FMCG heavyweights Nike,
Unilever and Danone. This cross-industry coalition aims to support businesses to achieve meaningful
emissions reductions by leveraging technology, promoting collaboration and fostering innovation.

The ability to stay afloat in trying economic times will ultimately determine whether companies can
push forward with climate-focused initiatives. Industries leading the way remain those less badly hit by
the pandemic, with a significantly larger proportion of retail and packaging companies (12.1%) reporting
an acceleration in energy-related sustainability initiatives. The opposite is true for travel and tourism,
where 18.4% of companies have paused or postponed such initiatives, despite the industry’s significant
environmental footprint.

The willingness of companies to forge ahead with reducing their carbon footprint and finding renewable
sources of energy demonstrates a recognition that action against climate change is an urgent issue.
It requires long-term planning that is resilient to temporary shocks and setbacks. Businesses that see
value creation and long-term cost saving in climate action and can demonstrate this successfully to
shareholders, investors and consumers are those most likely to see it through.

Value for all

Stakeholder capitalism is based on the idea of an economy focusing on the needs of all constituents. It
was introduced as a theory in the 1950s and 60s and remerged following the financial crisis of 2008. The
theory is gaining traction again now, with more businesses accepting that the stakeholder model provides
a roadmap for building purpose-driven businesses against the backdrop of a climate crisis and global
pandemic.

The World Economic Forum’s annual meeting, held in in Davos in January 2020, pushed the stakeholder
agenda forward by encouraging companies to strive for shared and sustained value creation, serving not
only shareholders but a wider range of stakeholders including employees, customers, suppliers, local
communities, society at large and the planet.

The pathway to stakeholder capitalism requires a greater harmonisation of social and environmental
disclosure standards, allowing investors and other stakeholders to evaluate a company’s approach to
sustainability and purpose. Larry Fink, CEO and Chairman of Black Rock, the world’s largest investment
management fund, has committed to making sustainability the new standard for investing. He is urging
CEOs to ensure businesses are making a positive contribution to society, pushing them to disclose their
climate risks in accordance with the industry-specific sustainability accounting standards issued by the
Sustainability Accounting Standards Board (SASB).

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 Impact of Coronavirus on Sustainability 9

Some regions are keener than others to embrace stakeholder capitalism. The European Union (EU)
is developing a roadmap to stakeholder capitalism with the Non-Financial Reporting Directive. This
requires public disclosure of documents that report on environment, social and governance (ESG)
impact, ensuring that being ‘stakeholder oriented’ is one of the six key principles of companies’
non-financial reporting.

16.1% of surveyed businesses consider good governance and internal policies for reporting and
accountability a key aspect to sustainability. Identifying appropriate standards for measuring ESG impact
and reporting faithfully and regularly to these standards provides a clear picture of where change is
necessary and a benchmark from which to measure progress.

As standardised and consistent reporting on the impact of businesses on stakeholders emerges, companies
must work to demonstrate the long-term value of sustainable practices and stakeholder-oriented
decision-making to shareholders. This will shift stakeholder capitalism from the realm of public relations
to an economic reality for business.

Supply chain safety

The pandemic has proved the need for more resilient supply chains, with 44.9% of surveyed companies
reporting an extensive impact of COVID-19 on their operations, 35.4% are affected by shortages of supplies,
30% experiencing transportation disruption during lockdown and 27.8%
expecting some kind of disruption during the second half of the year
according to Euromonitor’s Voice of the Industry: COVID-19 Survey, July
2020.

While cash management is the number one current priority for surveyed
businesses, the health crisis has put renewed and increased attention on
supply chains. Around half of companies are planning to allocate budget to
build supply chain resilience between 2020 and 2025.

Geographic dependence is an important factor to consider when assessing an industry’s supply chain risks
and a quarter of businesses are actively seeking ways to diversify their supply chains to reduce dependence
on a single country or supplier. In June 2020, 15.1% are considering bringing home offshore manufacturing
to minimise or avoid similar disruptions in the future and build resilience.

Momentum towards digitalisation is likely to increase, with more companies leveraging supply chain
technology to improve visibility, resilience and efficiency and to forecast demand. Post-COVID, investments
in digital tools, robotics and automation are expected to accelerate. Three in ten companies are planning
to invest in automation and digital supply chain technologies such as artificial intelligence, Internet of
Things and digital supply networks (DNS).

© Euromonitor International
10 Impact of Coronavirus on Sustainability

The low level of diversification in the electronics industry creates supply-side risks because production
is concentrated in five countries. Companies were struggling to find new suppliers during the peak of
the outbreak. With half of consumer electronics companies experiencing shortages in supply chains
and fearing production stoppage or suspension during the second half of 2020 (Voice of the Industry:
COVID-19 Survey, July 2020), the industry is leading the way when it comes to supply chain automation
and digitalisation. 60% of surveyed consumer electronics companies were planning to invest in these
technologies in July 2020, well above the all industries average of 29.9%.

Build back better

COVID-19 will likely result in the worst recession since the great Great Depression, with an unprecedented
scale of societal and economic disruption threatening the sustainability agenda. One of the most affected
areas during the outbreak was the development and launch of sustainable products, followed by waste and
recycling initiatives.

At the beginning of the crisis, companies took a step back in the war on the throwaway culture,
temporarily pausing the use of reusable and refillable containers. This was due to consumers’ health
concerns about touching products that have passed through other people’s hands. The pandemic caused
a four-month delay in the launch of Loop’s online refilling platform in the UK. The pilot program was
originally meant to be up and running in March but launched on 15th July 2020. Despite the delay,
COVID-19 is expected to bring opportunities for innovation in reusable packaging products that are safe
and hygienic.

After the initial shock and despite higher pressures faced by businesses to contain costs, sustainability
efforts are expected to remain strong. Over half of surveyed companies are expecting pre-COVID
sustainability investments to stay the same after the outbreak. Businesses are thinking beyond short-term
cost cutting, with 51.2% of companies considering sustainability to be extremely important to improve
business resilience against unexpected risks or challenges. 39.2% are planning to invest in sustainability to
reduce risks and build resilience.

© Euromonitor International
 Impact of Coronavirus on Sustainability 11

Barriers to Invest in Sustainability

Source: Euromonitor International Voice of the Industry: Sustainability, 2019 and 2020 surveys

Stronger legal and financial incentives for a sustainable recovery alongside higher corporate awareness
at a senior level, are set to change the investment landscape. In August 2020, a coalition of global leaders
representing a combined annual revenue of over USD100 billion and a total workforce of over 500,000,
signed an open letter proposing an economic roadmap to build back better post-COVID-19. In the letter 14
senior executives, from companies such as Danone, Philips, L’Oréal and Mastercard, called on businesses
and governments to accelerate the transition towards an inclusive, resilient and sustainable economy that
recognises and enables purpose-first businesses to thrive. This initiative was set in motion by Leaders on
Purpose, a global platform that brings together world leaders from all sectors to build a purpose-driven
economy.

Some countries are promising to build back better, reaching net-zero carbon emissions and reducing
inequalities, with Europe leading the way. The EU Green Deal is at the core of the EU’s COVID-19 recovery
package, aiming to be the region’s new growth strategy, fostering inclusive, resilient and climate friendly
innovation.

© Euromonitor International
Sustainable Development Goals
Key to Purpose-led Leadership

In 2015, the United Nations launched its Sustainable Development Goals (SDGs) as a global framework to
achieve sustainable development by 2030. A set of 17 goals and 169 targets, originally designed to achieve a
more sustainable future, are becoming a widely used framework for purpose-led businesses.

Businesses’ voluntary commitments to support the achievement of these goals have increased rapidly,
with 69.1% of surveyed companies defining sustainability as achieving the SDGs. 2020–2030 has been
termed the “Decade of Action” for the SDGs and requires ambitious, wide-ranging and coordinated action
from state, individual and corporate players.

PEOPLE PLANET
Education SDG 4 Water Scarcity SDG 6
Political Instability and Terrorism SDG 16 Consumption of Fossil Fuels SDG 7
Hunger and Health SDGs 2 and 3 Resource Scarcity SDG 12
Gender Equality SDG 5 Pollution SDG 11
Unfair Wages SDG 8 Climate Change SDG 13
Inequalities and Poverty SDGs 1 and 10 Forest and Biodiversity Loss SDGs 14 and 15

Partnerships SDG 17
Industry, Innovation and Infrastructure SDG 9

© Euromonitor International
 Sustainable Development Goals Key to Purpose-led Leadership 13

Pandemic impact on the 2030 agenda

The COVID-19 pandemic and subsequent global recession is expected is expected to put progress towards
acheiving the 2030 SDG agenda at risk. The 2020 SDG Progress Report, published by the United Nations
in July, highlighted the negative impact of COVID-19 on the achievement of these goals.

Goals related to education, poverty, peace and some of the environmental goals have seen a decrease in
levels of engagement in 2020 compared to previous years. However, goals focused on decent work, health
and wellbeing, responsible consumption and production and reducing inequality have seen increased
corporate engagement (Voice of the Industry: Sustainability Survey, 2019 and 2020).

Change in the Level of Engagement With the Sustainable Development Goals (SDGs), Pre- and
Post-outbreak

Decent work and economic growth (SDG8)

Industry, innovation and infrastructure (SDG9)
Responsible consumption and production (SDG12)
Good health and well‐being (SDG3)
Reduced inequality (SDG10)
Gender equality (SDG5)
Climate action (SDG13)
Affordable and clean energy (SDG7)
Zero hunger (SDG2)
Sustainable cities and communities (SDG11)
Clean water and sanitation (SDG6)
No poverty (SDG1)
Life below water (SDG14)
Partnerships to achieve the goal (SDG17)
Life on land (SDG15)
Peace and justice strong institutions (SDG16)
Quality education (SDG4)

‐25% ‐20% ‐15% ‐10% ‐5% 0% 5% 10%

% growth

Source: Euromonitor International Voice of the Industry: Sustainability Surveys

Note: 2019 survey (May 2019; n=556) and 2020 survey (June 2020; n=1,017).

The idea that sustainability and wellbeing are inextricably linked has come to the fore as a result of the
pandemic. According to Euromonitor’s Voice of Industry: COVID-19 Survey, 45.4% of surveyed companies
believe that the attention paid to how companies treat employees and consumers during the COVID-19
pandemic will become permanent. 39% are planning to invest in employee health and welfare to prevent
risks similar to COVID-19 in the future with most companies also planning actions to support the workforce
health and wellbeing.

© Euromonitor International
14 Sustainable Development Goals Key to Purpose-led Leadership

In addition to reducing gender and health inequalities within and beyond their businesses, addressing
racial inequality is increasingly important for companies, especially against the backdrop of anti-racism
protests in the US and Europe. PepsiCo pledged USD400 million over five years to “to lift up Black
communities and increase Black representation at the company” in June 2020. Paypal committed USD530
million to advance racial equity and inclusion and Apple committed USD100 million to a new racial justice
initiative in the US.

While corporations are embracing SDGs aligned with social sustainability in the context of the COVID-19
pandemic, overall engagement with the UN Sustainable Development framework remains low and varies
significantly by industry. The beauty and personal care industry displays the greatest engagement and
integration of the SDGs across all strategic business decisions, whereas surveyed packaging and retailing
companies are engaging the least with UN goals. Food and beverage companies are less likely to use the
SDGs to inform their sustainability strategy than their counterparts in the beauty industry.

Companies need swift and decisive action on the SDGs that can be easily imbedded in their operations.
Achieving the SDGs by 2030 will require meaningful collaboration between both state and corporate
actors to develop multi-stakeholder programmes and scale up global action.

© Euromonitor International
Sustainability Beyond COVID-19

The pandemic has put corporate sustainability leadership to the test, accelerating discussions and actions
at board level and stimulating the transition to a new corporate leadership. 23.4% of surveyed companies
considered their CEO a sustainability activist in June 2020, speaking out on issues related to social,
political and environmental causes (Voice of the Industry: Sustainability Survey, 2020).

During the outbreak, brands have seen the benefits of going the extra mile in taking care of people and
the planet. Some are accelerating sustainability efforts, piloting new social and environmental projects,
as well as keeping their pre-COVID-19 commitments. UK department store Selfridges announced its plans
to embed sustainability in retail, covering materials, business models and mindsets in August 2020. The
company is planning to launch its first own brand resale model called” Resellfridges” in September 2020.

With over half of surveyed businesses expecting the crisis to hit their employees harder than the
2008–2009 global financial crisis, demand for social purpose is forecast to remain strong, with most
businesses planning to keep looking after the workforce as the recession unfolds.

This renewed focus on social initiatives is highly unlikely to cast a shadow over pre-COVID-19
environmental concerns such as climate change, waste or air pollution. 7 in 10 companies expect
consumers to be more concerned about sustainability issues than they were pre-COVID, with many
companies expecting the increased use of plastic packaging and the lower demand for second-hand
products to revert to pre-pandemic levels in the short to medium term.

Future investments
In 2020, most professionals consider sustainability strategies critical to business success and an important
component of their value proposition, helping companies to attract employees, consumers and investors.
Therefore, despite the initial pause of some initiatives during the peak of the outbreak, especially those
related to the environment, more companies are planning to invest in sustainability in the aftermath of
the pandemic than they were before.

While waste and recycling top the list of future investment areas, the development of sustainable products
and sustainable sourcing are two areas of investment accelerated by the pandemic.

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16 Sustainability Beyond COVID-19

COVID-19 has changed the way companies look at the workforce and supply chain security, with 71.2% of
businesses planning to expand remote working and 29.9% planning to invest in automation and supply
chain technologies (Voice of the Industry: COVID-19 Survey, July 2020).

Planned Sustainability Investments

Source: Euromonitor International Voice of the Industry: Sustainability, 2019 and 2020 surveys

According to the financial services firm Morningstar, sustainable funds outperformed their traditional
counterparts between April and June 2020, hitting a record high of USD1.1 trillion. Sustainable funds
consider environmental, social and governance criteria in the investment process.

As ethical funds prove to be more resilient during the economic volatility created by the pandemic,
investor interest in sustainability-related initiatives is also expected to increase steadily, playing a key
role in COVID-19-related finance stimulus.

© Euromonitor International
 Sustainability Beyond COVID-19 17

While the current global challenges present risks to business operations, they also bring vast opportunities
to achieve a more inclusive, greener and resilient growth. Many companies are announcing investments in
purpose-led sustainability. In September 2020, Ikea owner, Ingka Group, announced an additional EUR600
million investment in sustainability over the next 12 months. They are looking for solutions that have
a direct positive impact on the Climate Paris Agreement and the Sustainable Development Goals. This
increases its overall investment in sustainability to EUR3.8 billion, with the company also reviewing local
and global pension funds across 31 countries to ensure they align with the ESG standards.

Digitalisation as an enabler of purpose

Prior to the pandemic, many companies were already flirting with the digital world, investing in emerging
technological innovations with promising applications in the sustainability space. When looking at
pre-COVID-19 investments across different digital technologies, the cloud, the Internet of Things (IoT)
and artificial intelligence (AI) topped the list of future investments planned by businesses across all
sectors over the next five years.

When comparing responses between the April 2020 and July 2020 Voice of the Industry: COVID-19
Surveys, appetite for investment in digital technologies is up in most areas, especially in those related
to remote work. Companies are increasingly using these technologies to be more efficient, transparent
and accountable, enabling supply chain transparency and business model innovation. Digital solutions
foster greater collaboration and decision-making, while also having the potential to boost corporate
sustainability credentials.

COVID-19 has affected industries to differing extents, resulting in different responses. The home and tech
sector is leading digital investments in digitalisation of the supply chain, remote working and digital
strategies. Quicker to react, and with stronger digital assets compared with other sectors, tech companies
plan fewer future e-commerce investments than most other industries, except for packaging and tobacco.

Forced to close during lockdown, beauty and apparel retailers are leading investment in e-commerce
and omnichannel distribution. They are lagging behind in investments in automation and supply chain
technologies, despite greater pressure for apparel brands to create supply chain transparency. The
packaging and tobacco industries plan the lowest investments in reshaping digital strategies, along with
e-commerce and omnichannel distribution.

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18 Sustainability Beyond COVID-19

Future Business Digital Investments

Source: Euromonitor International Voice of the Industry: COVID-19 surveys, 2020

Note: Fielded in April and July 2020

Businesses have a unique opportunity to build back better, with digital technologies increasingly seen
as an enabler of purpose-driven innovation. Companies that are agile in integrating digital tools into
their sustainability strategy will gain a competitive advantage and the necessary social license to operate.
Whereas companies relying on offline operations that are slow to adapt will face the risk of losing
consumer trust and becoming outdated.

The risk of purpose-washing

While the pandemic allowed many companies to demonstrate their social value during the first months
of the coronavirus outbreak, it is still to be seen how many will emerge with stronger values and purpose.
Will businesses remain loyal to their promises, using purpose to drive growth and rebuild the economy in
a better way?

© Euromonitor International
 Sustainability Beyond COVID-19 19

With consumer values increasingly rewarding purpose-driven businesses, companies striving to appear
authentic may fail to do so. As with green-washing and SDG-washing (terms used when companies use
green credentials or the sustainable development goals as a marketing tool rather than a core business
value) there is real risk of purpose-washing.

The unfavorable economic landscape will inevitably push some brands to focus on profit to stay afloat,
making it more difficult to maintain purpose-driven promises. According to Euromonitor’s Voice of the
Industry: COVID-19 Survey, half of surveyed companies expect a worse impact on their company’s revenue
compared to the 2008–2009 global financial crisis.

With demand for corporate purpose expected to maintain momentum

post-pandemic, and consumers and investors becoming less tolerant of
unsustainable business practices, businesses have a unique opportunity
close the gap between commitment and action and become agents of
change in the transition towards a “purpose-first” economy.

Accurate, measurable and standardised metrics are needed to track

progress towards purpose-driven commitments. These metrics will
distinguish companies that are genuinely embedding purpose in their
strategic outlook, re-focusing their actions and investments to help the transition towards a net-zero,
inclusive and greener economy, from those that are merely purpose-washing.

© Euromonitor International
Conclusion and
Recommendations

The Coronavirus pandemic has propelled organisations to redefine what purpose means for their
business. As we move from the peak of the pandemic into economic recession and uncertainty, there
are a number of things companies can do to embrace the shift from sustainability to purpose, including:

1. Connect purpose with missions and strategy Position purpose as a source of competitive
advantage and resilience, guiding strategic decision making and capital allocation. Close the
gap between commitments and action and engage with relevant Sustainability Development
Goals (SDGs).

2. Embrace purpose-driven collaboration Develop partnerships to support an inclusive and green

recovery, developing industry-wide initiatives with competitors and creating more collaborative,
mutually beneficial and long-term relationships with key suppliers.

3. Focus on diversity and inclusion Diverse organisations tend to be more innovative and more
resilient. Ensuring a strategy of diversity and inclusion needs to be at the core of corporate
strategies, filtering through to all aspects of the business both internal (recruitment, leadership and
employee welfare) and external (products, services and advertising).

4. Leverage the COVID-19 disruption Use the disruption created by the health crisis to shift
seemingly immovable barriers and entrenched ways of working and make room for purpose-led
innovation.

5. Embrace and accelerate digital transformation There is a great opportunity for businesses
and investors to further develop digital solutions that can accelerate a sustainable recovery
from the pandemic, improving business performance, reputation and resilience and supporting
sustainability reporting.

6. From shareholder to stakeholder COVID-19 has catalysed the shift from maximising shareholders
profits to stakeholder value creation. Use new tools for decision making to balance a diverse range
of stakeholder interests across the business, including society at large and the planet itself.

© Euromonitor International
About the Authors

MARIA CORONADO ROBLES

Sustainability Insights Manager
Euromonitor International

Maria provides strategic insights on sustainability trends. She is responsible for the creation
of Euromonitor’s Environmental Sustainability Index and is responsible for the Ethical Living
Megatrend. She is an accomplished conference presenter and has authored a number of reports
on topics including ethical living, SDGs opportunities, circular economy, the shift from sustainability
to purpose, an analysis of the impact of shifting environmental pressures on business, and the
impact of COVID-19 on sustainability strategies.

GAYATRI BHASIN DARKE

Head of Research
Euromonitor International

Gayatri Bhasin Darke is a Head of Research at Euromonitor International with a focus on Western
Europe. Based in London, she has more than 10 years of experience in market research. In her
role, Gayatri works with research managers and analysts in Western Europe to deliver high quality
research and drive client partnership. In her previous role at Euromonitor, Gayatri developed
Euromonitor Consulting’s Sustainability Practice. The practice provides actionable and strategic
insight to support clients on their path to sustainable business.

© Euromonitor International
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