The whirlwind that is the Covid-19 pandemic has severely impacted the operations and finances of entities, large and small, in both the public and private sectors — from governments to multinational corporations and the smallest of enterprises.
Such a far-reaching impact of one single virus raises a simple question: is there a systemic error in the way we operate, and what can be done to correct it?
It is all about saving lives and livelihoods, as politicians and corporate leaders would say. For ages, ideas and theories have been thrown about on how humans can improve the latter without risking the former.
But the recent episode has showed that we stand atop a fragile foundation that is not able to handle a systemic shock. The foundation was created by and for the uncontrolled chase for growth, achieved through leverage.
One entrepreneur recently quoted Professor Kate Raworth of Oxford University’s Environmental Change Institute and author of the influential book Doughnut Economics, “Instead of economies that need to grow, whether or not they make us thrive, we need economies that make us thrive, whether or not they grow”.
There will be other systemic shocks like the pandemic. Drought, famine and climate change, the failure of a monetary system, or energy security risks — these are real possibilities, as real as the pandemic, which were largely talked about in the past but did not happen on a global scale in the last 100 years.
It makes sense to seriously discuss the old ideal that is now more relevant than ever — sustainability.
Assessing our efforts to promote sustainability
Just like businesses, governments must operate sustainably. The security of our resources — from water and energy and food — can only be truly achieved if they are produced and consumed in a sustainable manner. This means developing a process that is repeatable for years without contributing to the natural decline of resources.
In a commentary, United Nations Sustainable Development Solutions Network Malaysia (SDSN Malaysia) chapter chairman Tan Sri Dr Jeffrey Cheah spoke about using this “pause” caused by the pandemic to “reset” the way we do certain things.
“In the wake of the pandemic, fulfilling everyone’s needs requires us to take a piercing look at ourselves as individuals, and as a society. It calls for us to emphasise values such as compassion, empathy, tolerance and inclusiveness,” he said. “It demands more equitable outcomes in policymaking by governments and market operations by the private sector.”
On that note, just how seriously does Malaysia consider sustainability as an agenda, and how far off the track are we?
From the environment perspective, Malaysians could do with a greater policy push to adopt environment-friendly habits like recycling, avoiding single-use products and greater waste management — in homes right to waste disposal sites.
We have not adopted a carbon tax to reduce the carbon footprint of businesses and factories. About half of the electricity we consume comes from coal power plants, although we have made progress in increasing our renewable energy generation mix.
In terms of finance, Malaysia’s household debt-to-GDP ratio has retreated but is still one of the highest in Asia at 82.2% of GDP as at end-June 2019. It is higher than the likes of the US and Japan.
And at the peak of the Covid-19 infection in Malaysia, it was reported that small and medium enterprises have cash reserves to last them for just two months. This is despite the common advice for blue-collar workers that they should have reserves of up to six months in case they are made redundant or their salary is cut drastically.
Nationwide, we face the challenge of increasing our federal government deficit in order to provide the necessary short-term aid as we fight against Covid-19.
Among other concerns, Malaysia, at 28th place on the 2019 Global Food Security Index, remains a net importer of food. The recent readjustment of the poverty line saw Malaysia’s absolute poverty rate at 5.6%. Relatively, the unemployment rate stood at 5.3% in May, which was the highest since 1989.
In a nutshell, the state of the nation warrants a more serious look at sustainability to protect ourselves from headwinds and better position ourselves to achieve growth.
Malaysia has the tools to adopt the sustainability agenda
The good thing is that there are many in Malaysia who champion the sustainability agenda, and the nation has the tools to achieve it.
For one, the UN has made Sunway City Kuala Lumpur Asia’s SDSN centre. The other two centres are in New York (for the Americas) and Paris (for Europe and Africa).
More and more people are advocating for us to gradually depart from conservative methods of measuring success, such as the number of As achieved in school examinations, the GDP of the country and the net profit of a company.
Cheah noted that in 2015, Malaysia joined 192 UN members in adopting the United Nations 2030 Agenda for Sustainable Development, which calls for action through long-term development pathways comprising 17 Sustainable Development Goals (SDGs).
“The good news is, the path towards this transformation has already been charted for us. These goals serve as a comprehensive and holistic global vision towards development that seeks to heal the socio-economic and environmental ills afflicting the world,” said Cheah, who is also the founder and chairman of Sunway Group.
The 17 SDGs are integrated, said Cheah. They recognise that action in one area will affect outcomes in others, and that development must balance social, economic and environmental sustainability. “For instance, many tend to think ‘climate change’ when they hear the term sustainable development. However, it is noteworthy that the first five SDGs — no poverty, zero hunger, good health and well-being, quality education and gender equality — prioritise people.”
One related initiative is for the SDG Academy, an online knowledge network, to draw up a curriculum on sustainable development that will be made compulsory worldwide for children ranging from kindergarteners to 12 year olds.
Recently, Employees Provident Fund (EPF) CEO Tunku Alizakri Alias lauded companies’ adoption of environmental, social and governance (ESG) practices — a standard used by investors to examine how a company impacts nature, how it impacts society such as stakeholders and communities, and how it deals with governance issues such as internal controls.
“ESG is not nice to have, it is a definite need to have,” Alizakri reportedly said, when noting the better share price performance of listed companies under the EPF’s portfolio that had adopted ESG practices as opposed to those that did not.
“If you practice ESG well, your company is most likely bound to succeed. [At EPF], we look into companies that embrace the social aspects of their businesses and turn them into real businesses,” Alizakri said.
SDSN Malaysia’s Cheah called for a switch — instead of looking into the sustainability agenda and efforts as something that is aspirational, one should take concrete action that is measurable and produces results. “To put it simply, I mean a capitalist system that motivates and incentivises us to do well by doing good — one that shifts the focus from the quarterly bottom-line of profits to the ‘Three P’ bottom-line of People, Planet, Prosperity, by taking into account the interests of all stakeholders.
“I submit that to build a better tomorrow, we must seize the opportunity to move beyond what some have called cowboy capitalism towards compassionate capitalism,” he added.
“Systemic change and a shift in values represent an immense challenge to humanity. Are we — as individuals, families, communities and nation — prepared to ‘reset’ our future?
“I believe we are, we can, and we must. We are all in this together,” said Cheah.