Investing in a Solution: Private Sector Response to COVID-19
Unleashing the power of the private sector on a global health crisis can scale-up recovery—both human and economic.
With the global outbreak of COVID-19, private enterprises are reconnecting the positive relationship between capital investment and improving society in a mutually reinforcing cycle. The pandemic is demonstrating that the health of the one is determined by the health of the other.
“Coronavirus is a major public health issue, but it’s also an issue for economic growth and economic vitality,” Mastercard vice-chairman Mike Froman told Fortune magazine on March 10th. “As a global company, it’s in our interest that we get back on track with our economies. We thrive when economies thrive around the world.”
Mastercard just committed up to $25 million in a collaborative initiative with the Bill & Melinda Gates Foundation and Wellcome, a U.K.-based global health foundation, to speed the development of treatments for COVID-19. Currently, treatments for those infected do not exist. The initiative, called the COVID-19 Therapeutics Accelerator, will distribute $125 million in seed money to coordinate research efforts and remove barriers to drug development. The Gates Foundation and Wellcome are each contributing up to $50 million toward the initiative.
The move is both a generous humanitarian action and a smart business move. The mission-driven consulting firm FSG, founded by Harvard Business School Professors Michael E. Porter and Mark Kramer, report that companies are already “stepping up,” in an article published on March 12th. FSG calculates the total philanthropic spending in response to COVID-19 in excess of $1 billion globally—of which 80 percent is derived from companies and their foundations.
Alongside a whole-of-government approach, nonprofit funding and assistance from multilateral donor banks (e.g., on March 3rd, the World Bank announced that $12 billion is available to assist member countries), private sector investment is paramount to jump-start the recovery that will follow the pandemic—especially in investments toward broad-spectrum antivirals or immunotherapies to fight this virus and future pathogens. And, ultimately, a vaccine.
WHY IT MATTERS
Most of the companies “stepping up” have deliberate, profit-driven social impact built into their business models, or what Porter and Kramer term “shared-value.” Their contributions to support the health and welfare of all their stakeholders—employees, customers, shareholders, and the communities where they operate—also deliver superior shareholder returns.
“[T]here is compelling evidence that superiority in identifying and harnessing selected social and environmental issues relevant to the business can, over time, have a substantial economic impact on companies and even entire industries,” assert Porter, Kramer, and George Serafeim in their article, Where ESG Fails.
In fact, the top-performing Change the World companies listed in Fortune magazine from 2015 to 2017 intentionally tied the social and environmental causes they supported to their business strategies. As a result, in 2018 they outperformed the MSCI World Stock Index by an average of 3.9 percent.
Like the example of Mastercard’s partnership with the Gates Foundation and Wellcome, the companies responding most forcefully to the COVID-19 outbreak are ensuring the future health of their bottom lines once the pandemic is over as well as the health of their stakeholders.
Below is a summary of who these businesses are and how they are making a difference.
FSG: WAYS FOR BUSINESSES TO RESPOND TO COVID-19
FSG offers four ways to guide a company’s “societal purpose” in response to the current crisis. Their recommendations reflect the Business Roundtable’s recently revised Statement on the Purpose of a Corporation that includes supporting all stakeholders—communities, suppliers, customers, employees, and shareholders. They include:
1) Leverage Your Core Business Assets
- Manufacturers: Increase production on items in demand (medical supplies, sanitizers) and donate.
- Media and communications: Report science-based, measured, and non-partisan facts and guidance.
- Health insurers: Waive COVID-19 testing co-pays and deductibles.
- Research and Development: Accelerate treatment, testing, and, ultimately, prevention of COVID-19.
2) Generosity Still Matters
- Follow the advice of Lauren A. Smith: Listen to what the community needs, help nonprofits, attend to vulnerable and marginalized communities, coordinate with local government structures, and ensure their approval and consent.
3) Compassion vs. Costs
- Balance the bottom line with a sensitive and adaptive approach to employee sick leave and personal time.
4) System Problems Require System Solutions
- In the U.S., COVID-19 testing and treatment failings will expose the deficits in its existing health care system. In the future, how will a company’s purpose guide its long-term commitment to improving healthcare and public health infrastructure and systems?
- Be an influential voice for strengthening health care and public health systems.
- Support accessible and affordable health insurance.
- Champion the public health systems necessary for a company to have a safe, healthy community in which to function.
SHARED-VALUE CHAMPIONS IN THE COVID-19 RESPONSE
For Mastercard, financial inclusion, empowering women, and international development are integral to their core strategic positioning. Their company’s stated goal is “inclusive growth,” achieved through applying their best tools and technologies—and entering into partnerships that improves people’s lives and communities around the world. Their most recent partnership with the Gates Foundation and Wellcome in response to the COVID-19 pandemic was already part of their business model. Here is a list of just a few companies. For a complete list, the Kaiser Family Foundation is tracking donor funding in response to COVID-19.
Merck donated a total of $225,000 to Direct Relief, Project HOPE, and Give2Asia to support procurement and shipping of needed supplies to China, as well as aid for frontline health workers and hospitals.
Facebook is providing the World Health Organization with free advertisements on the website.
The Vertex Foundation, the charitable arm of the Boston-based biotech company Vertex Pharmaceuticals, has donated $500,000 to Partners Health Care, the largest health system in Massachusetts. The funding is intended to “support the needs of patients and health care providers and bolster preparedness and response to the ongoing novel coronavirus outbreak through enhanced testing capacity,” according to a March 13th press release.
Microsoft is continuing to fully pay 4,500 vendor hourly service providers even though their work hours have been reduced. Microsoft employees in the Seattle area and in Northern California are now working from home to reduce the spread of COVID-19.
Walmart, Apple, Uber, Olive Garden, and other service industry employers are updating their paid sick leave policies to care for workers who are under quarantine or sick with COVID-19.
Google has donated over $1 million in relief efforts, and has launched an SOS alert to connect people with authoritative information from the WHO about the pandemic.
SMALL BUSINESSES RESPONSE MAKES A DIFFERENCE, TOO
Although a small business lacks the massive assets of a major financial, tech, or pharmaceutical company, its response to COVID-19 also matters. The National Federation of Independent Businesses (NFIB) offers suggestions on how to keep employees healthy, encouraging telework if possible and flexible sick leave policies.
Small businesses are by nature agile, and can quickly adapt to changing circumstances and adopt new practices. By incorporating social impact values into their business models, small businesses can achieve a competitive advantage over their peers by building a culture that attracts and retains top talent.
Washington Business Dynamics, a Service-Disabled Veteran-Owned Small Business, is responding to COVID-19 by first and foremost providing for the health and safety of our employees, our most valuable assets. They in turn support the American people through their work with our clients, including the Departments of Defense and Homeland Security, and the U.S. Agency for International Development. Besides adhering to the best practices as outlined by NFIB (above), the firm has established new procedures to support its employees in the event they become ill or quarantined. An employee-led committee has organized to work with local structures in our communities in response to the coronavirus outbreak.
About the author: Mary Jane Maxwell, Ph.D., is a Lead Consultant with Washington Business Dynamics, a Service-Disabled Veteran-Owned Small Business that supports USAID in implementing its Private Sector Engagement Policy across the Agency. The PSE Support Mechanism provides technical support services to USAID in Washington, DC and at its Missions around the world.