Covid-19 and the new normality: multi-level responses to face the implications

By Ignasi Martí, Annachiara Longoni & Angel Saz

Developing a response to the Covid-19 outbreak and following a new normality is extremely challenging given the scale of the crisis and the rate at which it has evolved. The best response, of course, is to be ready before such a crisis arrives. However, even if we were not fully prepared there are measures that can be taken now. Although the long-term consequences are yet to fully play out, policymakers, companies, and civil society organisations have reactively started to take measures to face the implications.

In response to Covid-19, states have forcefully intervened in global trade through two main avenues, and this has huge implications for companies across the globe.

Firstly, many countries have imposed export controls on critical goods (such as medical and pharmaceutical products), thereby partially weaponising critical supplies. Many nations have also imposed limits on foreign direct investment and ownership.

Secondly, many countries have sought to stimulate domestic markets and bailout national corporations to overcome the pandemic and build "national champions."

Many countries have sought to stimulate domestic markets and bailout national corporations to overcome the pandemic and build ‘national champions’

In the EU, Germany and France have offered great quantities of public aid to national companies. Germany accounts for 52% of all public aid to companies given by EU countries. Moreover, both countries are calling for a relaxation of competition rules and the creation of "European corporate champions" to face American technology giants and huge Chinese state-owned companies.

From the company perspective, Covid-19 has shown the fragility of global supply chains. Most companies have been working to secure raw materials and components. However, the small minority of companies that invested in mapping their supply chains before the pandemic emerged better prepared. They could prevent and estimate possible disruption by knowing, for example, which of their suppliers had a site in the locked-down regions of China.

In the early stages of the pandemic, when Covid-19 appeared to be isolated to China, there was an increased call to backshore some activities due to the increased risks inherent in global supply chains.

While reshoring local production for local demand may reduce disruption and other risks, there are still plenty of items that should be globally sourced. Moreover, in local dispersed production, the economies of scale are lower, and the capital costs are higher. As everyone is now struggling with economic resources, this may be a good time for companies to adopt more ethical and sustainable relationships with suppliers by selecting them on costs and in terms of value provided.

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Related content: How Covid-19 is fostering conscientious companies

Being fair with payment terms can also affect relationships. Firms improving payment terms include Unilever – who recently announced that it will quicken payments for "the most vulnerable small and medium-sized suppliers." Ethics and sustainability are not "luxury" items only applicable during good times, and this behaviour will strengthen supply chains.

It is already clear that this is more than a public health crisis. Many hard and soft indicators show how the crisis goes beyond "just" more poverty and inequality, and may generalise the extreme conditions that were already observable at the margins of the system. The weakening of livelihoods and life projects, and the deepening of patterns of exclusion and marginalisation, is a complex problem whose many angles and faces are difficult to tackle.

At the moment, we can see how individuals at local and translocal levels are organising solidarity initiatives that include revitalising and re-signifying the role and importance of food-banks, shelter homes and housing initiatives, psychological and emotional support centres, and anti-discrimination efforts.

Many hard and soft indicators show how the crisis goes beyond 'just' more poverty and inequality

These initiatives are important and need to be nurtured and strengthened. In parallel, governments at various levels, and sometimes in partnership with private sector and civil organisations, are focusing on providing what are (and cannot be otherwise) fragmentary and temporary solutions to what is already a profound social, economic, and moral crisis.

There is shared preoccupation that the crisis poses challenges, risks, and limitations that prevent many from living a good and dignified life. What is necessary is the building of a broad consensus and the implementation of courageous responses across societal sectors that decisively embody ethical values of caring for those who become vulnerable.

It is impossible to anticipate the arrival of global crises such as the Covid-19 outbreak, but policymakers, companies, and civil society organisations can work to develop responses at multiple levels – transnational, national, supply chain, and organisational – to face the implications and rethink our society for the new normality and increase our preparedness in case of a new crisis.

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