Foreword: The COVID-19 virus which began in China and spread around the world has wreaked havoc on economies and caused the life of millions of people to come to a standstill. With health and GDP dominating the world agenda, entrepreneurs wishing to navigate the turbulent waters of opening a new enterprise focused on sustainability will need to keep an eye on where the world is heading to. This analysis is an attempt to speculate which directions are most likely.
Our analysis follows the two-axes technique which utilizes the drivers with the highest importance and uncertainty to form the basis for possible scenarios. With this exercise, we aimed not to forecast the future, but rather, to stimulate thinking on probable outcomes.
With new vaccine approvals and mass vaccination plans popping up around the globe it begins to seem like the end is in sight. At the same time, accounts of a more powerful and infectious version of the virus have been recorded in Europe which raises questions of whether the promise of a vaccine will indeed lead to the end of the pandemic as we have experienced it so far.
The four scenarios evaluate the state of the world and the attention sustainability topics will likely get in a post-pandemic era. According to our analysis, that future world state will depend primarily on the development of 15 drivers of uncertainties such as the duration and resurgence of lockdowns, global and local geopolitical stability, the development of a vaccine, attitude towards science, among others. As a result, the four scenarios paint a picture of how these advancements will likely affect the pace of economic recovery and sustainability.
It is important to note that, at this point, some uncertainties have already vanished. The results of the U.S. elections are now long known and at least seven promising vaccines have been glooming all over the news. China pledges to have immunized over 1 million people and the U.K. has begun its journey. Despite all that, we believe that the scenarios remain relevant. Whether these developments will lead to a solid recovery is yet to be proven valid and despite all enthusiasm and activism for more serious action against climate change, there is still room for a healthy dose of scepticism.
What place will sustainability have in a post-pandemic world? The following scenarios elaborate on that.
Scenario 1: Thunderstorm
Strong economic growth rebound, sustainability urgency has shifted out of the political agenda
In a Thunderstorm world, the COVID-19 crisis has been short-lived. The strong growth rebound has led to a V-shape recovery and economic activity is in full swing. All over the globe, mass vaccination has enabled the world to contain the virus. Consumer sentiment is strong, and the recovery is driven mostly by high spending consumers who kept their jobs while working remotely and were able to save massively as a result of restricted travels and leisure. Despite the rapid recovery, the crisis narrative prevails and ends up leaving a feeling of uncertainty of which opportunistic politicians make use of to justify business as usual.
Social distance measures exercised during the lockdowns have engrained into people’s habits and turned into a culture. The world evolves into an ultra-liberal society in which the individual is central in spite of the group. In a liberal world that puts its sustainability goals aside, flying is again the norm and people make full use of it to make up for the time they spent indoors longing for time abroad.
Businesses are eager to have their employees working from the office and going on business travels again so that they can re-establish the relationship with international clients and partners. Only a small fraction of the workforce has decided to work primarily from home, although they still go at least once a week to the office.
Although high-paying workers enjoy the full benefit of the recovery, the poor parcel of the population, which was the most affected by the crisis, still struggles to make ends meet. Leftover debt from the crisis has piled up and accumulated. This new deeply unequal society gives a fake feeling of absence of poverty mostly experienced by the population above the middle class. As a result, the tension between classes grows stronger and stability deteriorates. Protests and riots erupt at the smallest sense of injustice across borders and within. In this world, technology keeps advancing and Artificial Intelligence is used as a tool to advance our society beyond limits. Donald Trump has lost the election, but his style of leadership keeps spreading around the world making nations increasingly more self-centred. By leaving office under the narrative that the election was rigged, he has already begun his campaign for a come back within four years.
Scientists who speak up for the dangers of the changing climate are taken as fake news. Even in Europe where the Green New Deal has just been signed and leadership for sustainability is strong, leaders struggle to keep pace in a world that does not abide by the same rules. Border tariffs back-fire, damaging local businesses instead of promoting a level playing field. In this world of quantitative easing, there is an explosion of poorly performing business with unsustainable practices which accelerate the climate crisis and could lead to the next bubble. Humanity is leading itself into a landslide.
Scenario 2: Murk
Recession with a prolonged downturn, absence of a sense of urgency or commitment for sustainability goals
The world in a Murk scenario is dark and hopeless. The crisis has dragged itself for way too long, way too deep and, as a result, there is wide-spread poverty. Countries experience a virus recurrence despite mass vaccination attempts and the slow growth is insufficient to deliver a full recovery. After so many incentive packages, central banks slept into dangerous territory and inflation skyrocketed. Because the crisis has taken so long, many businesses have vanished and the ones who survived are struggling to stay afloat. The recession has hit economies across the globe like a rock and consumer sentiment is low. People who saved are afraid of spending and investors are jumping into safer funds. Even when vaccines start to show effectiveness giving a sign that the end might be close, the virus keeps mutating and mass vaccination cannot keep up with the pace at which the virus transforms itself. When it becomes clear that after so many recurring infection waves a deep recession is inevitable and money printing will not solve it, markets all around the world plum for a second time causing massive sell-offs, panic, and hysteria.
In this world, there is no time for long-term ambitions or investments in climate change. World leaders are too busy trying just to survive. Climate scientists must find new specialism and advancements in Artificial Intelligence continue, but only in the places where its leadership has already been settled like China and the US. The lack of resources leads to a more egoistic society; we help each other less because the resources one disposes of are needed to support oneself.
Scenario 3: Dawn
Recession with a prolonged downturn, strong sense of urgency and commitment for sustainability goals
The world on Dawn is sober. The crisis has lasted longer than expected but resilient communities are holding up strong. An effective vaccine has been developed and mass immunization begins slowly. Trump has lost the election and a sense of hope and optimism begins to emerge despite the circumstances. Countries jointly make plans on how to get out of the crisis. International agreements and cooperation are the norms and the Paris Agreement becomes stronger and lived up to. European leadership is strong on climate and it resonates with its alliances. Economies that before denied the urgency of the environmental agenda need to compromise if they wish to stay relevant in the global arena. This survival mode leads to stronger climate commitments popping up at country, corporations, and citizen levels. The CO2 price under the European Trading Scheme goes up as an effective market tool to pressure fast decarbonization. Border tariffs defend local industry while creating the so much desired level playing field.
Because the economy is still not fully recovered and recession is still the norm, scientific advice is carefully followed. As a result of tight expenditures, there is less room for errors and science has gained a boost by helping the world get out of the pandemic. Because money is short, there is not enough for everyone and especially for businesses that do not abide by the new sustainable norm. Support packages set thresholds for companies to comply with if they are to apply for subsidies. As a consequence, environmentally damaging business models are not supported, and relief packages end up working as clean-up systems. Flying is still not back to normal levels and might never be.
People have learned to appreciate their own countries and they tend to travel shorter distances and opt for more environmentally friendly ways of transport such as choosing the train for the car or the airplane. Remote work is still the preferred mode and widespread business travels are also a phenomenon of the past. Technology keeps developing and Artificial Intelligence is now widely used not only for capitalist goals but also to support the sustainability agenda. The Sustainable Development Goals are taken up by companies and ingrained into business operations. Although the economy is still in bad shape, a society that has come to appreciate and respect science might emerge stronger after the storm.
Scenario 4: Sunrise
Strong economic growth rebound, strong sense of urgency and commitment for sustainability goals
In the sunrise scenario, economic recovery follows a V-shape pathway. Successful vaccine developments have ensured that the virus stayed contained and wide optimism led to strong economic growth. The support packages put out by federal banks have proven sufficient to keep most businesses above the water until all restrictions ended.
The Green New Deal in Europe is stronger than ever, and a great deal of relief packages goes to support economic growth aligned with sustainable practices. Countries stay committed to the Paris Agreement, but old blame and shame discussions remain. Highly polluting emerging nations keep lobbying for a right to pollute because, as they argue, current rich economies have had their chance too. In the rich economy that resurges after the crisis, there is still a sense of care for the environment, but society struggles to reduce its consumerism. Companies cash out on green marketing practices by using sustainability to leverage their market position, but not all is marketing.
Most corporations understand the importance of sustainable practices for the continuation of their business. As a result, companies set up strong economic strategies aligned with a trustworthy sustainability narrative by setting up bold, science-based climate targets. Artificial Intelligence developments continue at full speed across all sectors and help advance society beyond limits including sustainability. Remote work is still the norm and business travels never return to old levels. Vacationers tend to travel shorter distances with sustainable transportation modes such as choosing the train instead of cars and planes. The world emerges richer and with a more sustainable mindset.
Although climate actions are strong, they are not enough to retard climate change, but the economic growth discounted throughout the years might be enough to pay for climate adaptation.
As we approach the end of 2020, trying to guess, at this stage, which scenarios are more likely to develop would be no more than a guessing game. By the end of 2020, there are at least five to seven serious vaccines being developed with two major ones already approved for inoculation in the U.S. and one in Europe. In fact, as we write, the American Centre for Disease Control and Prevention (CDC) has just released the announcement that over 1 million shots have been administrated across the country. In addition, Democrat candidate Joe Biden has won the elections and already pledged that the U.S. will immediately re-join the Paris Agreement, allowing for a breadth of hope that sustainability will remain high on his agenda. That is also obvious for Europe and to some extent, China with its bold targets for climate neutrality in 2060. Will it hold true for the rest of the world? How long measures to avoid the spread of the virus will still be enforced?
At last, there is just so much we still do not know. The four scenarios are an attempt to take a glimpse into the future but any slight move in one or other direction could lead to developments not even imagined. Because no one can predict the future and because the pace of transformation is so rapid, our main takeaway for entrepreneurs is to stay alert and agile. Whether your focus is on circularity, the great energy transition, or the preservation and restoration of biodiversity and ecosystem services, it is still time to work on helping companies set and overachieve CO2 emission targets and make the SDGs part of their business strategy as long as you are flexible enough to adapt to a constantly changing landscape. Capital has never been so readily available, and the time has never been so right.