An Interview with INSEAD’s Luk Van Wassenhove on “non-Black Swans” and the Next Wave of the Crisis Sweeping Over the Developing World

May 15, 2020 Sylvain Guyoton

We are pleased to bring EcoVadis Scientific Committee member and INSEAD Emeritus Professor, Luk Van Wassenhove’s perspective on the COVID-19 crisis. Here, he is interviewed by Sylvain Guyoton, Vice President of Research at EcoVadis. Van Wassenhove has been leading INSEAD’s Humanitarian Research Group (HRG) for nearly 20 years. He created and directed INSEAD’s Social Innovation Centre, the predecessor of the current Hoffmann Institute for Business in Society (HGIBS). HRG is actively following the crisis in collaboration with other experts, like Professors Steve Chick and Prashant Yadav, who bring insights from key organizations and decision-makers.

Luk Van Wassenhove, Director of the INSEAD Social Innovation Centre

 

 

 

Luk Van Wassenhove, 
Director of the INSEAD Social Innovation Centre

 

 

 

Sylvain: Luk, do you consider the COVID-crisis to be a black swan event?

Luk: This crisis is everything but a black swan event. As late as October 2019, expert authorities (including Brundtland) warned of an imminent outbreak of a major pandemic! If one considers the past 20 years, we have had multiple epidemics that could have become the big one we’re experiencing now (Ebola, MERS, H1N1, SARS, etc.). It was just a matter of time.
 
Most organizations had to drastically reduce preparedness measures, like stockpiling, due to huge budget cuts in recent years, despite promises that were made after the Ebola crisis. France still suffers from acute shortages because of budget cuts in previous years. Even in the current crisis, we lack basic protection items as well as respiratory equipment and intensive care units. But Trump similarly short-changed the US response, and so did many others, with the UK perhaps being the key example of a completely under-resourced health system. Some countries did not take that route and invested heavily (e.g. Germany), and we see the impact.
 
So, this is not a black swan at all. It is more like the great novel of Gabriel Maria Marquez: “Chronicle of a death foretold”.  

S: I follow you here, indeed it was not 'unexpected,' and we could have been better 'prepared'...hence not a black swan event, per se. Some people are saying that we overreacted, and that it's going to kill us... Do you see the COVID-19-wave in countries with developing economies, or is it life-as-usual?

L: Developing economies will soon be hit with COVID-19, but we’re not sure how this will pan out. Some say the young populations in Africa will somehow remain protected, but these young populations live very close to one another, especially in bidonvilles, both in Africa and Asia. The lack of a decent medical system and particularly specialized hospital equipment could become a major issue (for the more serious cases).
 
The humanitarian world (World Food Program, Logistics Cluster of the UN, World Health Organization, and others) is starting to build emergency supply chains to bring support into Africa in case the outbreak becomes very serious there. This requires setting up hubs and transport lines (for goods and medical personnel) given that the usual supply chains (e.g. airlines) are not operational and travel across countries has been limited or banned. It’s hard to help people if you cannot reach them, but we are closely following these evolutions with my research group.
 
Note that developing countries are even more severely affected because of simultaneous ecological and economical issues. In some countries, a locust plague is destroying entire harvests at an enormous scale. This will most surely lead to famine in a few months. Some of these countries, like Ethiopia, are threatened by COVID-19 and have also seen their important economic sectors collapse. Since florist shops are closed here and planes hardly fly, a large part of the fresh flower sector in Ethiopia is dying, leading to a major drop in income. Other countries suffer from the collapsing crude oil prices. Locusts, flowers, COVID-19, all this together is much worse than what we experience here since their situation was already vulnerable. Note that, for the first time in at least a decade, growth in Africa will be negative, and this is happening just as people were becoming enthusiastic about the great future prospects for the continent. Covid’s economic lockdown will hit developing countries and, given that we have our own problems, chances are that there will be little help or solidarity . My prediction is that we shall see multiple unexpected negative knock-on effects in the months to come. Major humanitarian crises, like hundreds of millions of starving people, may be the consequence.

S: A final question: Many (including EcoVadis) foresee that, once we are past this crisis, we’ll emerge changed, and globalized business will be transformed into a “New Normal".  But we have another “non-black swan” event in progress already -- the climate crisis. Will the COVID crisis distract the business world from addressing this far more dangerous threat - using it as an excuse to make poor tradeoffs and sacrifices purportedly in the name of human - and economic - health? Or, will the wake-up call for building resilience accelerate us towards a better solution? 

L: If the past is a good predictor of the future, it’s hard to be optimistic. Did we fundamentally change things after the financial crisis of 2008? Chances are that economic and financial concerns will dominate. Note that this is not necessarily bad in this situation since we clearly cannot afford a decade-long depression. We need to seriously reflect on the right incentives and strategies to rebuild our economies. These strategies should incorporate the UN Sustainable Development Goals, i.e. focus on innovation that creates growth and prosperity, while preserving a healthy and safe place to live, leaving no one behind, as the UNSDGs state…

There are opportunities to innovate using modern technologies to adequately monitor potential outbreaks and quickly respond, reducing future chances of pandemics like COVID-19. I do believe that we, as individuals, carry great responsibility. If we demand a safe, healthy planet, our politicians will follow, and business will happily comply, provided the rules are clear and they can compete on a level playing field. My point is that it is too easy to always blame business and politicians. We all carry a heavy responsibility for the planet we want to live on. 

The final point I would like to make is about the value of science. In times like this, the only thing one can trust is scientific evidence. Scientists have been exemplary since the start of this pandemic, using full transparency and engaging in global collaboration. This has happened amidst the chaotic political and media communication, full of alternative truths, often irresponsibly contradicting scientific facts. Sustainable development needs to go together with a return to  trust in responsible science, regardless of whether one is debating viruses or climate change. 

 

 

 

About the Author

Sylvain Guyoton

Sylvain Guyoton is Senior Vice-President of Research at EcoVadis since its founding in 2007. He brings almost 20 years of experience in Sustainability and CSR. At EcoVadis, he oversees rating operations and methodology development, and sits on the Executive Committee. Sylvain holds an M.S. in Industrial Management from Cranfield University and an MBA from INSEAD.

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