Viewed 899 times | Published on 2020-06-30 12:02:52
As you probably know, I hold an Italian passport and I am currently based in Italy.
Specifically, in Piedmont- one of the regions most affected (after Lombardy and head-to-head with Emilia-Romagna) by the current pandemic.
Actually, along with Veneto, those three regions are an industrial macro-region stretching from the border with France, to the border with Austria, roughly around the Po Valley (and we even tried to have something similar to the TVA, Tennessee Valley Authority- but we had no FDR around).
Currently we have few new infection cases, and even fewer deaths, and therefore there is a lot of demand for relaxing measures, but, for the time being, there is an ever greater demand for further financial support for anybody (from individuals to multinational corporations).
Anyway, you have to contexualize information.
Contextualizing the impacts of COVID-19
I used as a reference the Population projections for 2020 by the UN, as well as the data available on 2020-06-30 on the Johns' Hopkins COVID-19 site.
This small table summarizes, for few countries, the data.
Population, number of infected, number of deceased- and relative ranking for few countries.
Beware: there is still much discussion about the actual reliability of data about COVID-19, both on "testing" (as infected means "confirmed infected via a test", but there might be many neither showing symptoms, or having symptoms but avoiding to report them) and "counting" (as the only way to really account for COVID-19 impacts would be to test each deceased).
Recently, some preliminary research reported on potential long-term health impacts of COVID-19.
If confirmed, this will probably require a re-assessment of health systems.
Anyway, this is just an element of the "new sustainability".
So, what is sustainability, within the context of this article?
When you read "sustainability", generally everybody talks about the physical environment.
And, incidentally, recent elections e.g. in France showed some increased/returned appeal for political parties focusing on environmental issues- at large.
When I was attending an intensive course in German in Frankfurt in summer 2017 at Goethe Institut, I remember that in a lesson on the environment we were asked to give examples of what we were doing.
We ranged from closing the water tap to save water, to reducing the use of packaging and, of course, recycling.
In 2020, we learned (or were remembered) of other dimensions of sustainability.
An example that I often use in Italy is the following: we are still adopting XIX century social management approaches, while citizens' expectation is to obtain XXI century services and products.
We have obviously a "social sustainability", an "economic sustainability", and an overall "systemic sustainability".
If there is a(n at least) "two centuries long cultural gap" between expectations and operational reality, what you will obtain is what you can witness now in Italy.
Or: an individualistic society that, having considered the options, shifts toward those with no current voting rights (future generation) the bill of countless initiatives to obtain temporary "social sustainability".
In a complex system, the interaction between its elements generates the configuration of the system: isn't that a reason why, at least since the XVIII century, we talk of "separation of powers"?
And this requires at least guidelines and an accepted framework for sustainability, not a purely reactive approach.
There are, anyway, different roles and responsibilities, in a XXI century concept of "systemic sustainability".
Roles and needs
As I wrote repeatedly in the past, in the XXI century the increased speed and data-centric quantity and quality of interactions affects the roles to be expected in both society at large and business organizations.
Old systems of control do not work- and each individual is actually both a "consumer" and "producer" of data, and a "regulation element".
My country was used to laws and regulations that were routinely adjusted, both to continuously "tune" power distribution between tribes, and to strive to cover each and any possible case.
It was more or less acceptable when Italy was a country living off the land.
Albeit, back then, we were also unable to sustain our own population, e.g. see emigration waves beginning of the XX century, of after WWII.
As was discussed after WWI and and after WWII, when there were proposals to de-industrialize Germany: a country living in pre-industrial times would have had few millions inhabitants that would have been unable to sustain.
The Italian approach to law-making has had also a not-so-small impact on corruption: checkpoints and oversight turn into "paying points", as routinely shown by newspapers articles that I read since I started reading (early 1970s, before I attended elementary school).
In Italy, this micro-regulation approach coupled with the endemic "tribal" element generates also a curious element in social behavior, a kind of continuous class struggle but with a different kind of class definition.
Whenever there is a crisis, there are some "special benefits" that are set down- a way to conquer "social peace" that ranges from letting squatters start de facto commercial activities in occupied buildings, to creating special temporary or permanent cash (or cash-equivalent) benefits.
Now, the "different kind of class definition" goes as follows: if there is a potential benefit that doesn't require a cost provided by a regulation, also if you do not need it, it is customary to fill all the forms, get in all the lines, etc to obtain that benefit, and to build a coalition (a "virtual class", temporary or permanent) that has to be acknowledged.
The common concept is to consume whatever is provided... before others do.
But my friends in Brussels probably saw that routinely when there is a new EU-funded initiative: as I was told by somebody born in Belgium but originally from Italy and who had worked on "checking" funding requests, there was an highly developed degree of creativity in associating costs to initiatives.
The same applied when, in the early 2000s, decided to support Italian startups in preparation of my return in Italy (in 2005, realities on the ground all across of Italy showed me that returning to Italy wouldn't have been a wise choice- actually when I re-registered in 2012, it wasn't my choice, but a "push&call" fron Italians in Belgium and Italy).
Whenever somebody is interested in European support to initiatives, since 2004 I get often asked "what can we do that could be covered by X"...
...not really a constructive approach (the purpose of EU funding is usually to help develop business, not to consume currently available funding).
In the XXI century, there should be a different distribution of roles.
And this is yet another dimension of sustainability.
Doing you part
First and foremost: I am a strong supporter of the concept (if not the current form) of "integrated reporting", as was deeply skeptical of "sustainability reporting" attached to traditional financial statements.
Meaning: there are more dimensions that the mere financial or organizational sustainability, and all those, plus impacts, should be represented within a new form of "balance sheet" (ditto for GDP: nowhere good enough to describe our economies).
It was the same when talking in the 1990s about ISO9000 or other compliance elements: adding as an ex-post reporting duty is a PR/"spinning" activity, not something generating impacts.
In my simplistic view, "social businesses" should be businesses that have a different approach, but still businesses, and still integrated within real supply chains.
Sustainability reporting should not be just a "feel good" or PR element, but embedded within strategy and, therefore, show impacts within corporate reporting to the public that integrates these elements "organically".
Having said that, I think that a business is still a business: should not be a replacement for a failed or missing welfare state.
Being European, I consider a "welfare state" just one element of the picture- and would prefer less "tycoons turned into good-causes sponsors", and more allocation of resources to what the society at large democratically decides to support.
Otherwise, you distort society twice: first, when you drain resources from the priorities defined by the welfare state; second, when you use those resources that did not contribute to the "common good" to force your own political agenda.
If, after contributing your fair share, then you still have willingness to support causes, of course it is welcome- but robbing Peter to pay Paul isn't, in my view, an appropriate approach.
Therefore, I see that businesses at least since the XX century have a political role (but actually well before was so, "corporations" were created for that purpose).
A political role implies also political duties: a bottom-line that is sustainable, i.e. its inputs should be costed appropriately, so that its profit-generating outputs do not transfer costs (and the costs of inputs) to others (pollution being the most visible element).
Having said all that, if there are resources available to support businesses, it is normal for the CEO and CFO to identify which resources they should apply for.
To be practical: fine for Atlantia or FCA to apply for credit lines "sponsored" by the Italian State, but, as in any other case on the market when you ask somebody to act as TPG, it is up to the latter to set conditions for "sponsorship".
I will let aside the Atlantia/Autostrade point discussed in previous articles.
In automotive, it is quixotic to support a 6.5bln EUR line, and then not add conditions, moreover considering that FCA is undergoing a merger that most observers foresee will transfer the actual managerial control in France.
Hence, if the 6.5bln is to support occupation in Italy, that doesn't match the (potential) commitment of full occupation to resume only few years down the road, considering all the forthcoming (in some countries, current) changes within the automotive industry products and ways used to interact with the market.
So, I do not fail a company for doing what it is entitled to, or individuals for being used to extract as much as possible.
...it is a matter of looking forward
As discussed in previous articles, Italy has a double issue: it has been unable to define an industrial policy since decades (some would say that since after WWII, we were "tagging along" the common consensus); and also on digital transformation is few decades behind.
Not just in terms of infrastructure (whenever the broadband deployment plan is updated... there is a further delay), but mainly on the cultural side.
Industries such as automotive, banking, retail, and transportation are already changing, but Italy hasn't yet fully assessed the potential impacts, and defined an "organic" plan to phase-out the old, and phase-in the new.
At most, we still talk in terms of "incentives" to buy new cars (and disincentives to the use of the old ones), a "forced obsolescence" approach that I saw evolving in business information systems since the 1990s.
In business, forced obsolescence implies that a company has an increasing chunk of its budget focused not on innovation or new initiatives, but on doing what has already been done with lesser budget.
Also, forced obsolescence when applied to individuals can actually support some of those "GDP reduction" movements, i.e. generating a negative feed-back from consumers.
During the few months of lockdown, many Italians got used to cut down some expenses and "rituals" we were used to.
Now, many are actually considering: is it worth? is it needed?
You can certainly "drive demand" (no pun intended)- but it is not "sustainable demand" if it is based on cohercion ("forced obsolescence by regulation").
Thinking a new model would be in the best interest of both citizens, companies, and States (including the Italian State), as would remove excuses for inertia.
Inertia? Well... refrain from innovation using replacement costs as an excuse to both do nothing and "drain impetus" from any innovation trend..
E.g. by having so little budget allocated to innovation, that new innovative suppliers relying on that spread too thin across too many customers to be able to fund a systainable lifecycle for their new technology.
The reason why I shared that COVID-19 table at the beginning was to show that probably, if recent research is confirmed, we will need not to reconsider, but to expand the "welfare state", and current apparent successes (less new cases, almost no new fatalities) might mask a more compex picture.
Unless proved otherwise, consider this case: if having been infected (with or without symptoms) might affect your body, we could have, along with the issue of obesity in kids (which could require health monitoring across the whole life), further demand for what would be practically health services to monitor and make socially sustainable chronic diseases.
So, we are currently in a perfect storm: a need to redefine priorities, consumption, impact of technologies- and potentially embed in our life a higher level of continuous health monitoring.
In Italy, way too many are talking about "streamlining bureaucracy"- but, in reality, the point is phasing-out a concept of State-citizen (individual and corporate) relationship, while phasing-in new roles.
New roles, where both citizens and businesses as "individuals" aggregate on purpose-based initiatives (as in Italy also companies are over 90% below 50-100 employees), while larger companies and the State will have to think in terms of continuity during a transition, and "channel management" in exchanges with those purpose-based aggregation (including for data exchanges as a way to improve services, organizational structures, infrastructure).
In Italy, also businesses forget that a "transition" implies often a temporary increase in costs and activities, i.e. a time when you have both do what you were used to, and start doing what you will need to do later.
So, it is a paradox: we will all have to become more "political", i.e. active members of the poleis, both as individuals and as "corporate citizens", while feeling more often than not as Charlot in "Modern Times"- a cog in a (data) wheel.
How this will impact on the relationship between politicians and corporations, is yet to be seen.
But, frankly, when companies such as Coca-Cola monitor their market, and see that it is the time to pull advertisement from Facebook to change the latter's stance on news, we are talking about what I called "meta-politics" (the politics of doing politics") in a book that published in 2014 (you can read for free here - in Italian).
Next: an article about democracy.