Building Sustainability and Resilience into the Post-Pandemic Recovery
Sherif Elsayed-Ali Sherif Elsayed-Ali
June 22 13 min

Building Sustainability and Resilience into the Post-Pandemic Recovery

In the post-pandemic recovery, businesses need to focus on addressing their negative impacts on society and the environment, to help prevent future disasters, as well as build greater resilience for when they do occur. This blog is part of a series of events and articles launching our AI for Climate program and are a call to action for using AI create a healthy society. The next event is a public discussion with Yoshua Bengio as part of SG Innovate’s “Deep Tech for Good: Partnership for the Future” on July 23rd, 9am-10am (Singapore Time / UTC+8). Register here.

The COVID-19 pandemic has resulted in an unprecedented disruption to the global economy and society. Beyond the direct impact on health and life, the coming 12-18 months will see a lot of economic pain; many businesses won’t survive, and hundreds of millions, if not billions, of people will suffer from economic hardship.

The fingerprints of environmental damage, social deprivation and racism are all over the pandemic: the increased risk of viruses jumping from wild animals to humans, the greater impact of COVID-19 on poorer communities and racial inequalities exacerbated by a stalled economy.

Businesses, in the way they operate, run their supply chains and develop their products, play a key role in the health, and often fragility, of our global communities. For the private sector, the lesson to heed from the pandemic is that it is critical to invest in sustainable business practices that minimize environmental harm and maximize societal benefits, while building resilient organizations and supply chains that are well prepared for future crises.

By making this investment now, we will not only be working to reduce the impact of future disasters, but even prevent them in the first place. This moment is an opportunity to attack our problems from both sides.

No more business as usual

Some of the important trends we see emerging include:

  • From Offline to Online More remote work, less international travel, fewer in-person trade shows and conferences. Some business sectors could permanently shrink; the pandemic may prove to be the final nail in the coffin for many physical retail chains, with business moving online.
  • Austere Spending Businesses will look to reduce costs and focus on the essential. Spending perceived as superfluous or “nice to have” will be reduced drastically or ended altogether. They will focus on where they provide real value to their customers—services and products that customers still consider a priority.
  • Redesigned Supply Chains The pandemic created shocks to both supply and demand. Businesses need to recalibrate to new demand, and be prepared to do it again. Expect near-shoring of production and localized supply chains, both for redundancy as well as personalization.
  • Increasingly Sophisticated Forecasting and Modelling Governments and businesses won’t want to be caught off guard again. Those who survive the pandemic will look for any edge they can to get ahead of future disruptions.
  • Government-Led Recoveries Most businesses are hobbled by the global shutdown, leaving governments to lead the recovery. Early indicators from even fiscally conservative governments are leading to predictions of spending comparable to that of the post-Great Depression and post-World War II eras.

These investment trends amount to a massive opportunity to reshape our infrastructures so as to simultaneously revive economies and achieve the green transition. But it is not inevitable that leaders will see this win-win scenario. We need to seize it.

Sustainability to set the goal

While “sustainability” is commonly linked with the environment, we agree with the experts who argue that businesses aiming at sustainability must also reckon with societal impact. As the Harvard Business School puts it: “When companies fail to assume responsibility, the opposite can happen, leading to issues like environmental degradation, inequality, and social injustice.” All of these negative impacts are the ingredients of future global disasters that can affect the livelihood of billions.

There is a growing consensus within both international environmental and human rights agencies that the environment and human rights are intrinsically connected. The climate and biodiversity emergencies are, arguably, the most prominent human rights issue, because without a habitable environment, there can be no society.

As human rights are legally enforceable rights in the vast majority of the world’s countries, they will continue to be an essential component of corporate sustainability. The UN Guiding Principles on Business and Human Rights is used by many governments to measure business compliance with human rights standards and has been adopted by numerous multinationals. It is often used to evaluate the social impact of a company’s policies and practices, and has also been used as a framework for AI ethics.

The UN Guiding Principles on Business and Human Rights place a responsibility on corporations to avoid causing or contributing to adverse human rights impacts through their own activities, and to prevent or mitigate adverse human rights impacts that are directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts.

Protecting Human Rights

The UN Guiding Principles on Business and Human Rights place a responsibility on corporations to avoid causing or contributing to adverse human rights impacts through their own activities, and to prevent or mitigate adverse human rights impacts that are directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts.

Bottom-line economic recovery priorities should not trump the pressing human rights risks that are intrinsic to the modern economy, such as:

  • Privacy violations in digital technology products
  • Online abuse and disinformation on social networks
  • Health and child labour issues in supply chains, ranging from cotton to the cobalt used in rechargeable batteries
  • Discriminatory risks in machine learning applications
  • Abuses against migrant workers in various industries

COVID-19 has impacted progress on global climate policy. This year’s Conference of the Parties to the Framework Convention on Climate Change (COP 26), the world’s top meeting on climate policy, has been postponed to November 2021. However, that does not make the need for rapid and deep action to cut greenhouse gas emissions less urgent. The climate and ecological emergency threatens to become the biggest crisis in modern human history. That is why, at Element AI, we’ve chosen to turn our entire AI for Good program into an AI for Climate program that will help our clients reduce their environmental impact (while still focusing on respecting and supporting human rights in all of our work).

Willingness to change

We are hardly alone in emphasizing environmental sustainability in the post-pandemic recovery plan. There seems to be greater political will for the green transition from the realization that destruction of natural ecosystems creates opportunities for pathogens to move into new species, and is likely responsible for 70% of emerging human diseases. Perhaps leaders will also be more ready to listen to the scientific community on climate change when it is done saving us from this pandemic.

Businesses will be expected to demonstrate much higher awareness and action to stop environmental degradation linked to their operations. They will also have a vested interest in helping prevent future crises, as well as building resiliency if they do happen, whether it’s another pandemic, natural disaster or other events that lead to economic shock. With three major economic crises in the space of 20 years, organizations can’t afford to be complacent.

As governments invest to restart the global economy, we’re seeing significant policy focus on emissions reductions and the green transition—Europe has already dedicated itself to a green recovery that achieves its European Green Deal. However, these new systems have their own fragilities that need to be complemented by investment in greater resilience to make them feasible, and to help ensure more immediate human rights abuses are eliminated.

Resilience that accomplishes the goal

2020 has exposed severe vulnerabilities in international supply chains. Even before the COVID-19 epidemic in China shut down factories and led to sudden, severe disruptions, the US-China trade dispute was threatening the stability of supply chains in many industries. The global pandemic’s added travel restrictions, closed borders, social distancing measures and staff shortages wreaked havoc on global supply chains. We saw just-in-time manufacturing break down. Shortages in everything from personal protective equipment for frontline health workers, to hand sanitizer, pasta, toilet paper and game consoles have, at best, caused significant unmet demand, and at worst undermined public health measures and caused a great deal of suffering for those living with poor food and economic security.

When supply chains break, they increase the severity of any crisis. How can we build more resilient supply chains, ones that may bend, but not break, during these disruptions?

There are a number of compelling options to consider that can add to the resiliency of supply chains without foregoing the benefits of global trade, including strategic inventories, diversified sourcing and added redundancy to hedge geographic risks.

Onshoring, and to some extent near-shoring, could add redundancy and optionality. While in many cases this will result in higher personnel costs, it can reduce carbon emissions associated with transportation and allow greater control over the energy mix used in manufacturing. Companies and countries can also have greater oversight of environmental and human rights risks in their supply chains if they are located in the same country or in a neighbouring country that shares a common legal framework as is the case for EU countries.

Setting environmental and social crises aside, we are also witnessing a significant shift in consumer behavior that will very likely endure and make a good case on its own for rethinking supply chains. There are more ecommerce orders and more stores acting as fulfillment centers, placing greater onus on on-shelf availability, reducing stock-outs and knowing exactly where the inventory is on the shelf at all times. Further financial, public health, political and cultural changes can all have significant impacts on demand for any product or service. Flexible business and manufacturing processes that allow for products and services to be customized and/or shifted to meet changing demand will be an asset. The ability of auto, aerospace and domestic appliance manufacturers in the UK to start manufacturing ventilators, or of gin and perfume producers to make hand sanitizers show the importance of this flexibility. This needed flexibility is also cause for not abandoning farshoring supply chains altogether, maintaining the ability to serve and adapt to different regions in the global marketplace.

Putting technology to work

In an emergency, addressing severe disruption is often done by throwing more time, people and inventory at the problem, but this comes at a tremendous cost. There is a significant technology component to making the above feasible:

  • Optimization reducing the footprint of manufacturing - Onshoring or near-shoring is becoming more economical thanks to more efficient manufacturing processes and adaptive automation. Reducing waste and the cost of renewable energy sources is also making the option much more palatable for countries. We are close to various tipping points that require more investment to surpass.
  • Complex forecasting for scenario planning - As well as traditional quantitative economic and supply chain indicators used for forecasting, better preparation will require taking into account other important factors, such as geopolitical conditions, behavioural modelling and climate risk. More complex forecasting that incorporates causality and the relationships between multiple variables will require advanced mathematics, computational power and significant access to data.
  • Digital twins to fill in the blanks - Simulations of entire supply chains can bring significant insights for scenario planning by helping to fill in the blanks where critical data signals are unavailable, and allow businesses to test their plans and execution in "what-if" scenarios. The ability to model a large number of scenarios based on reliable data and sound insights will be important for managing risk and for organizations to be ready to adapt to unexpected disruptive events.
  • Transparency and traceability to add control - The above technology will depend heavily on the digitalization of the supply chain. These sensors and controls will underpin the forecasting, on-the-fly adaptations and better enforcement of laws protecting the rules of sustainable industry and human rights.

Even as businesses work to recover from the pandemic and shore up vulnerabilities, we can continue to expect further crises, particularly linked to the climate and ecological emergencies and their related impacts on human rights. For businesses and society to become more resilient in the face of future disruption, we must prevent, and hopefully even reverse the worst of climate change and ecological destruction. Lasting business resiliency is therefore not possible without sustainable business practices.

The emergency response to the pandemic is demonstrating the possibility of drastic changes in practice and to whole industries; it’s likely that policy makers will be more inclined to require radical changes from industry. Building resilient business operations and supply chains will take a great deal of collaboration between organizations as well as nations. Sharing data and infrastructure could prove to be a crippling bottleneck, so promoting open data sharing, developing effective privacy and anonymity and spreading the benefits will be key. But the economic, environmental and societal benefits could be vast.

Let's evolve industry

The pandemic is causing a lot of suffering. It comes with a heavy cost to physical and mental health, lives, societies and economies. It is also exposing deep economic inequalities and entrenched racism in many societies. There has been a heartening response from numerous businesses—from supermarkets keeping countries in lockdown fed, to technology companies offering their technical expertise, and perhaps most importantly, the pharmaceutical sector joining forces in ways that would have been unimaginable a few months ago to develop and manufacture vaccines.

This can be seen in one of two ways. The cynical view is that because the pandemic is affecting everyone, companies have a self interest in finding solutions to the crisis and would go back to business as usual once it’s over: pursuing profit with at best a token focus on their societal impact and at worst a complete disregard for it. The optimistic view is that the crisis we all find ourselves in has ignited a sense of civic duty across the business world and that there is a real emerging commitment to contribute to both a sustainable and resilient future.

We are choosing to believe in, and champion this optimistic view. There have been four widely recognized evolutions of industry over the past 250 years: the first was mechanization in the 1780s, followed by electrification in the 1870s, automation and globalization in the 1970s and 80s, and today’s digitalization, known as industry 4.0. We should be more ambitious: not just developing and adopting new business tools, but making industry work for people and the planet. The 2020s should be a decade for much deeper transformation: to make industry work for society.

We are actively building AI solutions for our customers that fight climate change and to create more flexible and resilient supply chains and manufacturing, and will be publishing more detailed work on AI’s application in these spaces.

A special thanks to all those who contributed to this work including Buffy Price, Collin Mechler, Valérie Bécaert and Simon Hudson.