As we claw out of the rubble from the pandemic, it is increasingly clear that we will not suddenly resume our pre-COVID ways of life. Though some of the changes made in response to the pandemic may ultimately revert back to normal, in other areas our understanding of what is “normal” has been irreversibly altered. One such case is our understanding of the role of the corporation in society, and the real drivers of enterprise value.

Pre-pandemic, there was plenty of talk, but not so much walk, about ESG and the need to move beyond the shareholder primacy model. Despite the Business Roundtable pledge last August1, corporations remained narrowly concentrated on quarterly earnings and short-term performance, rather than taking a long-term perspective on value creation that accounts for multiple stakeholders and external societal concerns.

The pandemic has detonated the shareholder primacy model. Corporations, shareholders, customers and employees are now unified around a singular goal: protecting public health. Regardless of their prior corporate mandates, leading companies have donated products and supplies, leveraged their intellectual capital to conduct research initiatives, contributed funds to developing countries, and repurposed their manufacturing facilities to produce ventilators and hand sanitizer2.

Although all businesses have of course been rocked by the pandemic, companies that were operating under strong ESG practices pre-COVID have weathered the storm a bit better, as their workers already had paid sick leave (which strikingly, one out of four American workers lack)3, health insurance benefits and flexible work arrangements. Many companies that did not share these priorities pre-COVID have suddenly found religion.