Facing a global crisis - how sustainable business models helped firms overcome COVID

• DOI: https://doi.org/10.1108/CG-07-2020-0309
• Published date: 18 January 2021
• Date: 18 January 2021
• Pages: 1100-1116
• Subject Matter: Strategy,Corporate governance
• Author: Marina Mattera,Federico Soto Gonzalez,Carmen Alba Ruiz-Morales,Luana Gava

Facing a global crisis - how sustainable

business models helped f‌irms

overcome COVID

Marina Mattera, Federico Soto Gonzalez, Carmen Alba Ruiz-Morales and Luana Gava

Abstract

Purpose –The purpose of this study is to analysehow implementation of corporate social responsibility

(CSR) policies following United Nations’ Global Compact (UNGC) guidelines can contribute to firm’s

performance during a global crisis, such as the case of COVID-19. Based on the triple bottom line

theoretical framework, this work explores the relation between the creation of value and sustainable

business modelswith long-term strategies and strong policy commitments,and their performance in the

stock market years later during a crisis. By doingso, new insights on strategic management to create

value and consolidatesustainable business modelsare provided.

Design/methodology/approach –The present study analyses firms within the context of the

European Union, considering the involvement of the region in achieving sustainable development. In

particular, the long-term impact in the usage of the UNGC management model and the firm’s

sustainability performance based on the results during COVID-19 crisis. To achieve this goal, energy

firms operating in Spain and subscribing to UNGC were evaluated, specifically those publicly listed in

the IBEX35, benchmark index of Spain’s Stock Market Interconnection System. In addition, firms were

also considered regarding the strong impact within their industries not only nationally but also

worldwide.

Findings –Findings show long-term CSR strategies and a strong commitment to sustainable

development contribute to firm’s overcoming periods of economic crisis. In addition, considering the

environmentalimpact of the firms’ actions, transitionto sustainable business and widening portfolioin the

case of energy firms provedto have a positive impact in overcoming a hard context such asCOVID-19.

The virtuous cycle can be created by honouring the social contract, yet the tools and management

modelsshall be further tailored to ensure an effectivewin-win situation.

Originality/value –This study evaluates a company’s strategic involvement in sustainability,

considering the UNGC 10 principles and SDG and the effects of these strategies in the long-term.

Specifically, the role of UNGC management model is evaluated in designing effective policies that can

help firms better overcome a context of crisis such as COVID-19. Consequently, researchers studying

business strategy can incorporate the findings in strategic planning. Practitioners can learn the

implications of CSR strategic planning in the long-term. Moreover, work illustrates corporate results in

sustainability mattersafter the first decade of the UNGC management model and the impact of a crisis

context.

Keywords Business model, Corporate governance, Corporate social responsibility, COVID-19

Paper type Research paper

1. Introduction

In recent years there has been a stronger focus on companies’ environmental and social

impact. In addition, natural changes in climate, as well as diverse issues being brought to

attention, such as respect for human rights, equal pay, enabling access to the workforce to

individuals with diverse abilities, are some of the factors that have been slowly taken into

consideration in firm’sstrategic design.

Marina Mattera,

Federico Soto Gonzalez,

Carmen Alba Ruiz-Morales

and Luana Gava are all

based at the Department of

Economics and Business,

School of Social Sciences

and Communication,

Universidad Europea,

Madrid, Spain.

Received 30 July 2020

Revised 26 October 2020

3 December 2020

Accepted 8 December 2020

PAGE 1100 jCORPORATE GOVERNANCE jVOL. 21 NO. 6 2021, pp. 1100-1116, ©Emerald Publishing Limited, ISSN 1472-0701 DOI 10.1108/CG-07-2020-0309

Therefore, corporate socialresponsibility (CSR), including a company’s impact in societyas

well as the planet, has become an increasingly relevant topic. CSR strategies address

individuals’ wellbeing and impact on the environment, while improving businessoperations,

seeking to create a win-win context. Additionally, in many cases, they contribute to

identifying new business opportunities, together with gaining a better understanding of the

market where they operate.

In designing these strategies, three elements are considered: people, profit and planet,

known as the three “Ps” or “triple bottom line” (TBL) theory. This constitutes a strong

theoretical model that sets a basis for the development of sustainable business in the long

run. To this end, it is fundamental to consider these three elements and there are diverse

ways in which they can be incorporated. Although to this date there is no consensus on

which standards are the best, the Global Reporting Initiative, the United Nations (UN)’

Global Compact (UNGC) and United Nations Sustainable Development Goals (SDGs) are

the ones firms typically implement.

These standards provide guidelines to create a solid baseline to balance the three “Ps”. In

turn, this contributes to building a strong business model that would help firms to navigate

diverse contexts, including fewer positive ones. Authors such as Blagov and Petrova-

Savchenko (2020) affirm that the involvement of companies in achieving the SDGs creates

new opportunities for the transformation of their corporate sustainability model. However,

there is still a lack of understanding of how they impact firms’ performance and corporate

reputation in the long run. In addition, there is a gap with regards to considering the TBL in

diverse socio-economic contexts, particularly when firms must overcome a context of crisis

such as the one evidenced during the 2020pandemic.

It is therefore crucial to have a greater understanding of the existing relationships between

these variables. The present study aims at providing insight on this matter by establishing

the links between TBL theory and sustainable business model, during a harsh socio-

economic context such as the COVID-19crisis. To achieve this goal, the paper analyses the

context of firms operating in the European Union (EU), as it is one of the regions that

suffered the most during the 2020 pandemic while at the same time being one of the

regions with the highestpromotion of people-profit-planet alignment and CSR policies.

The analysis is based on firms implementing the UNGC guidelines in Spain, one of the

countries which was hit the hardest by the 2020 pandemic. Specifically, the paper explores

the long-term impact of commitments and strategies six years after the companies had

launched them. The results were measured during the first semester of 2020 in terms of

corporate reputation and stockmarket value. In particular, the energy sector was studied as

it is one of the most relevant in terms of the relation to the national gross domestic product

(GDP), heavy investment, impact on employment and other activities generating wealth,

and lastly, because this sector exerts a multiplier effect on other industries of the economy

(Stern, 2015).

First, the conceptual model and hypotheses are developed in the literature review section.

Second, the empirical analysis is described, together with the methodology, followed by

detailed results. Finally, the study concludes by addressing contributions for researchers

and practitioners, main limitations and suggestions for future research in this area. To the

author’s knowledge, there are no empirical studies testing these effects, particularly during

a tough socio-economic crisis.This will be our contribution.

2. Literature review

Firms’ usage of resources and inputs to produce goods and service is of great relevance

when understanding sustainable development. Firstly, because it can limit or ensure

whether future generations will also be able to continue exploiting the resources. Secondly,

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