The phrase ‘build back better’ was used a lot in 2020. To actually do it though, we need a progressive social economy, one that leaves no one behind.
COVID-19 has provided us with a unique opportunity. It has given us time to pause, reflect, and helped us realize that our world has gone off kilter. Massive inequality, a global health crisis, and civil unrest made headlines daily in 2020 and into this new year. The pandemic has shown us that our systems are vulnerable — within businesses, supply chains, healthcare, economies, and political institutions. It has also shown us just how interconnected everything and everyone is. If we don’t build back better, climate change and biodiversity loss will lead to further global crisis with even greater social and economic damage.
If we want to thrive, a new breed of capitalism needs to emerge. We have seen massive unemployment this past year, exposing major social inequalities among the rich and poor. In the past, we measured our success through economic growth and job creation alone. We must now start emphasizing other elements that improve well-being, such as job quality, housing and health, and overall improvements in citizens’ sense of wellness. We can’t move forward if our most vulnerable are left behind. A progressive social economy is an economy that includes all.
Our recovery plan must also be green, aligning with emissions reduction goals to fight climate change and aiming to reduce biodiversity loss. In 2019, millions of youth worldwide protested in the streets, declaring a “climate emergency”. In January 2020, climate change and biodiversity loss topped the World Economic Forum’s list of global risks. Nations must begin preparing their workforces for a transition to a green economy and corporations must assess operational risks, ensuring they are helping, rather than harming the planet.
Investors have a large role to play in creating a new breed of capitalism. For the past decade, interest in non-renewable energy investments has declined due to sustainability issues, and oil and gas prices have fallen by 30% in 2020. Investors are now turning their attention to renewable energy sources both at home and abroad. In fact, developing countries’ renewable investment exceeded the level in developed countries for the first time in 2015, according to DWS’ senior environmental social and corporate governance strategist, Murray Birt. By 2019, developing countries accounted for 54% of renewable investment at $152 billion.
Digitalization, artificial intelligence, automation, biotechnology, fintech, and clean technologies have emerged as other sustainable areas of investment. And new technologies aren’t the only areas of focus for investors. Gender and LGBTQ+ equality have risen as key issues for those hoping to persuade corporations to treat all employees fairly. And since 2018, many ESG investors have been urging companies to create more welcoming and accessible workplaces for those with mental and physical disabilities.
Despite the need for a solid, resilient recovery plan, governments in some countries are falling behind, just as they did after the 2007–08 financial crisis, when newly created policies increased inequality and ensured unsustainable outcomes. We must work together to ensure that governments and businesses create sustainable recovery plans, to ‘build back better’, and to address the vulnerabilities that the pandemic has exposed. We need resiliency, sustainable and equitable growth, and a total reinvention of capitalism. The old system no longer works.
Written by Jill Mersereau for Riddl
