Report Highlights Social Dangers of COVID-19

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Stockholm (NordSIP) – A team of researchers from the Stockholm School of Economics (SSE) Mistra Center for Sustainable Markets (Misum) released a report exploring the effects of COVID-19 on sustainable economic and investment practices.

The Misum report, Sustainability, Covid-19 and keeping focused on the longer term, is part of the ‘Sweden through the crisis’ series and explores the social dimension of the adverse effects of the response to the crisis. It considers the effects of social distancing, economic lockdowns and related governmental responses to the health crisis. It concludes that a more holistic picture must be kept in mind when navigating out of the crisis.

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The report is divided into four parts, focusing on social inequality, evidence from earlier pandemics in emerging markets, the effect on long-term investments and the impact of COVID-19 on SMEs, start-ups and innovation. According to the authors, these effects have been detrimental to the creation of more sustainable markets.  Much of the sustainability focus of the report is about the social impact of the Coronavirus. Little or no reference is made to the pandemic’s effects on the climate or corporate governance.

The research highlights the unequal access to remote working opportunities between high and low-skill workers to highlight the fact that the crisis is likely to have widened the gap between the haves and the have-nots. While the health effects of COVID-19 appear to have been relatively limited in south-east Asian emerging market economies, the authors worry that the economic consequences have been more profound. As the crisis echoed through supply chains, the report notes the arbitrary contrast between the behaviour of Swedish clothing retailer H&M and Walmart. While the first agree to pay its suppliers for the current orders to maintain the relationship, the American retailer cancelled its orders.

As in previous crises, although corporate decision-makers are forced to focus on short-term concerns as they battle for survival, there is evidence to suggest that companies with higher corporate social responsibility (CSR) ratings have suffered less. Citing a survey from the University of Edinburgh Business School, the report notes that the crisis also appears to have caused entrepreneurial projects to be halted.

The report includes more than 40 articles by around 50 well-merited researchers – among them Tore Ellingsen, Professor of Economics, and Per Strömberg, Professor of Finance, both on the Committee for the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.

Image via Wikimedia Commons

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In the current economic environment, even the strongest companies will face challenges from the impact of the COVID-19 pandemic. Perhaps now more than ever, understanding the factors that could have a material impact on a company’s sustainability will play a role in investment decision-making.

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