Seismic events put strategy, resilience, social responsibility to the test

The rare confluence of three seismic events—COVID-19, deep-seated social unrest, and a global recession—poses unprecedented challenges for companies and boards in the weeks, months, and perhaps years ahead. Few companies, if any, will come through these challenges thinking or operating the same as before—and every company’s strategy, resilience, and responsiveness to its stakeholders’ expectations will be put to the test.

As many of the directors and business leaders we’ve spoken to recently have emphasized, the stakes are high: much of corporate America is at an inflection point, there’s no playbook for many of the issues companies are now grappling with, and boardroom leadership will be pivotal to the outcome.

While each of these events poses a unique set of challenges for business leaders and boards, they are interrelated in at least one important respect: they all highlight a range of social issues that have long been unaddressed or ignored, and they put an even brighter spotlight on corporate social responsibility. Just what is the company’s role and responsibility in society? Are companies doing enough to make real and lasting changes to combat systemic bias and racism? Are workers at every level viewed as essential drivers of long-term corporate value? These questions have gained new urgency alongside the challenges of restarting and operating in a post-pandemic environment.

To understand how boards are addressing these challenges simultaneously, we spoke with lead independent directors, hosted a series of virtual meetings with board and business leaders, and surveyed more than 300 directors. Five major themes emerged:

• In the near term (6–12 months), COVID-19 will continue to redefine business as usual for nearly all companies—and their boards—regardless of industry, size, or geography.
• Boards are asking whether their companies are doing enough to make real and lasting changes to systemic bias and racism.
• Boards are encouraging their management teams to plan now for the longer term (12–24 months) when companies will begin to recover.
• As the view becomes clearer with hindsight, boards are beginning to focus on gaps and areas for improvement revealed by COVID-19.
• Boards are encouraging their management teams to consider the implications of COVID-19 for business and society more broadly.

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