Sustainable recovery: Decisions, planning and goals after lockdown

Green transition 28 April 2020 James MacGregor Henrik Stener Pedersen

Recovery from the Covid-19 pandemic must be based on long-term planning for an inclusive and prosperous strategy that take all aspects of economic, social and environmental sustainability into account. In this article, four of Ramboll’s experts within social and economic impacts propose a framework for understanding the likely progress of Covid-19 and its impact on economies, and the entry points for businesses and governments to react.

Expert columns
8 min

Written by James MacGregor, Henrik Stener, Lara Alvarez and Stepan Ruzsicka.

The COVID19 pandemic is having an unprecedented impact on global economies, businesses, governments, society and our natural environment.

It is too early to fully comprehend the economic implications of the pandemic, but few question the scale of the challenge ahead. Businesses and governments are diverting investments, focusing on new pressing issues, experiencing market turbulence, and facing fresh stakeholder pressures. Furthermore, while some organisations can adapt to travel restrictions and working from home, others cannot, and are shuttered.

At local levels, the lockdown is proving to be a ‘watershed moment’ for the natural environment. Air quality has dramatically improved in all cities, without cars on roads and curtailment of industrial emissions. Freshwater and terrestrial habitats alike are improving, and wildlife appears to be flourishing in some countries as reduced human activity enables birds to nest on unexpectedly empty beaches, and cutback in road traffic increases habitat connectivity and wildlife roaming. Local shops are being seen by consumers as beacons of food security, rather than as convenient secondary stores, and local producers previously focusing on wholesale and logistics are now selling directly to the public.

The fabric of society has also changed, albeit with a balance of positives and negatives, as workers commute and travel less, but also interact less in person. The pandemic has exacerbated existing inequalities in societies globally, cruelly exposing misalignments of access and vulnerability among socioeconomic groups, genders and generations.

Yet, we are concerned that after relaxation of lockdown, organisations will seek a quick return to ‘business-as-usual’, swiftly trading environmental and social improvements in search of a strong economic rebound. For instance, Global Energy Monitor reports data on the approval of coal-fired power plants in the first three weeks of March 2020 exceeding total approvals for 2019. Compounding this is the exacerbated differential among renewable and fossil-fuel costs owing to historically low oil prices.

In Ramboll we want to support the achievement of ambitious environmental, social and economic goals sooner and with greater clarity. We believe this pause in economic activity can be used to engineer, strategise and plan towards objectives that are truly sustainable.

Our concern is that if we don’t, the recovery period will be longer, more polluting and less beneficial to our economies, society and natural environment. We risk locking our future into unsustainable models which are less resilient and more exposed to future shocks, be these economic, epidemiologic or environmental.  

We raise some questions for immediate consideration: 

  • How can society’s voice be better heard?
  • Can we demand a sustainable recovery?
  • What are we willing to trade-off? And how?

In this article we propose a framework for appreciating the likely progress of COVID19 and its impact on economies, and the entry points for businesses and governments to react. We propose how to ensure that the way out of lockdown is sustainable. 

How we understand sustainability 

Sustainability means different things to different people. How we each define sustainability requires consideration of long-term conditions and developing strategies to adapt and thrive. Financial and economic health is intimately linked with social and environmental sustainability and has long been beneficial to businesses, governments and society.

The pandemic is generating fresh trends in sustainability, including the following:

The pandemic is altering our appreciation and valuation of sustainable activities and decisions in numerous ways. However, leveraging these into long-term behavioural changes will not be simple. When the taps turn on again, these will be the same taps, same water, same challenges.

Pre-pandemic, sustainability was notoriously difficult to retrofit, expensive to build, and crucially lacked mainstream will from businesses and governments. It requires leadership to overcome short-term political and investment cycles, and the long-term costs of inaction and the benefits of an early and more gradual transition. 

While the environment is flourishing in some respects in these times, the pandemic has at the same time put the environment under threat– e.g. lower donations, closed visitor attractions, and cancelled fundraising. In addition, we are keen to stress the importance of ensuring progress on key sustainability elements is continued: 

  • Decarbonisation initiatives – such as Net Zero
  • Sustainable development – such as progress on the SDGs 
  • Environmental protection – such as the maintenance and restoration of our Natural Capital 
  • Sustainable compliance – such as private voluntary standards, industry norms and global benchmarks. 

Looking into three stages of the pandemic 

We see three key stages, some of these already set in motion around the world: 

Stage 1:

Lockdowns: Triggered by a need to balance population health and economic health, governments are targeting healthcare and food security, alongside interventions to ensure financial stability, safe access to workplaces for key staff, and compensation schemes to allay income and revenue loss owing to isolation policies. During lockdowns, businesses are focused dually on survival via maintaining supply chains and cashflows and readiness to respond effectively to lockdown relaxation and the anticipated surge in economic activity.

We anticipate relaxation of lockdown restrictions to generate two distinct simultaneous Stages – covering a return to some form of ‘business-as-usual’ (Stage 2a) and a new set of businesses, products, services and innovations which both build on business-as-usual and disrupt it (Stage 2b).

Stage 2a:

Traditional recovery: Government focus is on rapid but stable financial and economic growth, supporting job security and creation while supporting key sectors. With a focus on their commercial recovery, businesses are seeking to reduce overheads, increase efficiency, re-secure supply chains, alongside both the ongoing ramifications of the pandemic and the new health and safety guidelines for workers and customers. Societal and environmental considerations are not prioritised. 

Stage 2b:

Recalibrated recovery: Governments will accelerate convergence on a sustainable future, embedding equality, long-term sustainability, and attendant targets, while supporting growth and innovation in key ‘bleeding edge’ sectors, such as technology, finance and health. New businesses and business units of existing companies will learn from Stages 1 and 2a, but with a focus on long-term goals, will actively plan for Stages 3 and beyond, embedding youth, sustainability and digital innovations in fresh services, products, supply chains, and priorities. Social and environmental sustainability considerations will be at the forefront, with upskilling of current workforce, automation, and ambitious industrial, transport and liveable cities strategies strongly integrated. 

Stage 3a:

Conventional stabilisation: Environmental, social and economic policies remain uncoordinated, with a Government focus on short to medium term risks and costs. Economic growth remains a priority, with environmental and social considerations getting more visibility due to growing stakeholder demand but subject to competing pressures and market incentives. Lack of coherent, comprehensive and coordinated goals and glacial change leave the economy and society largely exposed to environmental, economic and epidemiological shocks. 

Stage 3b:

Resilient stabilisation: Demonstrable economic, social and environmental benefits coexist, decoupling economic development from environmental damage and growing inequality. In order to achieve this, the enabling environment necessarily requires policies, laws, standards and market mechanisms that truly support the poor and vulnerable and account for environmental benefits and disbenefits. Results are monitored and assessed for continuous improvement in a virtuous cycle of environmental, economic and societal gains, innovation, diversification and production as part of an iterative process. Economic growth will be based around these new sustainable development priorities.

Exiting lockdown sustainably? 

At the time of writing, governments are expressing their keenness to relax lockdown, and enter Stage 2, with the main triggers being a sustained fall in COVID19 cases and deaths. We see two main trends around the existing strategy, a swift but short-lived recovery and a more gradual but stronger recovery. 

Some emerging information shows a Stage 2a, business-as-usual pathway, including US EPA suspending environmental law enforcement, bailouts announced for some fossil fuel-based industries, and reductions in renewable energy bought by national grids.

Alongside many instances of decisions being made to progress to Stage 2b: conditionality baked into bailouts in several countries, and the European Parliament and Commission proposing a recovery and reconstruction package that “should have at its core the Green Deal and the digital transformation in order to kick start the economy”. 

Ensuring a sustainable recovery 

Ensuring the health of global populations and their national economies will dominate the headlines for the foreseeable future. For human societies to emerge stronger, more efficient, equitable and liveable, we need a new way of thinking about the future, clearer long-term goals and pathways to achieving these. Furthermore, governments, business and society must collaborate and avoid working at cross purposes to achieve accelerated sustainability goals. And we need decisions to be taken today, and over the coming weeks and months to integrate these goals. 

We are already seeing in sectors preparing for lockdown relax, the beginnings of Stage 2a. But we wish to see a greater emphasis on long-term sustainable planning in these relaxations. Stage 2b should be given due thought, incentives, investments and the opportunity to succeed. 

Among the raft of investments and decisions on legislation and targets we perceive several key principles for a ‘sustainable recovery’: 

  • Collaboration and alignment – the key stakeholder groups (governments, businesses, investors and civil society) are more closely connected, with strong alignment and knowledge sharing, and all need each other, and all need to play a role. 
  • Triple-bottom line trade-offs – balance among environment, economy and society need to be both transparent and not just financially-based. Clearly, for a quicker, deeper sustainable future, some industrial sectors deserve preferential investment, and others less so, rather requiring, for instance, M&A in inefficient sectors. Natural, human and social capital considerations and trade-offs should be ingrained into decision-making. 
  • Inclusive – genuine sustainability requires consideration of how costs and benefits of recovery, stabilisation and transition are distributed equitably among all stakeholders. 
  • Capacity building – building a workforce for the sustainable recovery and future will require some re-training, enlarged investment in appropriate education delivery, and new skill development across the entire workforce – keeping abreast of wider technological progress, hyper-automation and other emerging trends. 
  • Strategy - transition will be painful in the short term but will save costs in the long term while enabling a resilient recovery. We cannot leapfrog to sustainability, but we can collectively discern a strategic transition based on identifying and integrating long-term targets, structural imperatives and societal goals. Trade-offs among strategic timeframes, risks, natural capital and sustainability imperatives necessitate adequate governance structures are both in place and routinely employed. 
  • Digital – governments must work with both the private sector - to incubate start-ups, invest in digital architecture, and boost SMEs – and the public sector - to address and upgrade digital aspects of its service delivery. 
  • Liveability – new approaches to design are needed, based on the principles of sustainability and smart solutions, that strike the right balance between dimensions of people, planet and prosperity to make integrated, inclusive and intelligent liveable urban spaces, neighbourhoods, cities, buildings and infrastructure.
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