Examining Corporate Citizenship: How Ride-sharing Companies Respond to COVID-19? What They Promise – and How It Turns Out

G&A Institute Team Note
We continue to bring you news of private (corporate and business), public and social sector developments as organizations in the three societal sectors adjust to the emergency.  This is post #12 in the series, “Excellence in Corporate Citizenship on Display in the Coronavirus Crisis” – April 6 2020    #WeRise2FightCOVID-19   “Corporate Purpose – Virus Crisis”

By Yuyou Chen – Sustainability Reporting Analyst Intern at G&A Institute

Just four months after surfacing in Wuhan, China, the Coronavirus has been spread all over the world and affected about 1.3 million people in total to date.

Up until April 6, 2020, the Centers of Disease Control and Prevention (CDC) has reported 330,8919 COVID-19 cases and 8,910 deaths in the United States. CDC has recommended statewide citizens to practice social distancing and working from home.

With less on-site working, there is a sharp decline in the usual daily commuter activity. According to the Cities Commuter Activities report by Visual Capitalist, Los Angeles and New York experienced 95% and 97% reduction respectively in commuter activity respectively over the past three months.

The same thing is happening to the driver’s side. Ride-sharing companies face challenges in keeping their drivers at work.

Uber and Lyft in the Crisis

While some Uber and Lyft drivers who work on a part-time basis refuse to take any orders due to infection concerns, other full-time drivers may still stay on the frontlines to serve travelers for basic needs – or, they will face unemployment.

Ride-sharing, featured with convenient apps and affordable prices, has become a popular mode of commuting among people nowadays. With algorithms matching passengers to nearby drivers, the businesses are operated based on sufficient numbers and balance between commuters and drivers.

Uber and Lyft are two leading North America-based ride-sharing companies, both of which are headquartered in San Francisco, California.

For the past month, ride-sharing companies experienced a slight turndown in the stock market: For Lyft, share prices are down 2.00% (Nasdaq: LYFT); for Uber, down 3.63% (NYSE:UBER).

While each company declares that it puts well-being and safety of employees and customers as priority during the COVID-19 crisis, they set out somewhat differentiated business and risk management strategies.

Similarity: both companies state they enforce cleaning practices among their drivers and partially suspend their operations in some cases.

Looking at Uber

Uber says on their official website that they will temporarily suspend the accounts of riders or drivers who “confirmed to have contracted or been exposed to COVID‑19”.

Uber provides drivers with disinfectants to keep their cars clean for free, with manufacturers and distributors keeping enough cleaning supply. In particular, the surfaces being touched most often should be wiped.

In addition, Uber enforces “no contact” policy in their sub-brand – UberEats – specializing in local food delivery.

With the social distancing order from California Governor Gavin Newsom, the state’s residents are encouraged to work at home.

UberEats expects an increase in demand for food delivery given the less commuting population. To support local restaurant businesses, UberEats waived the delivery fee for more than 100,000 restaurants in North America.

For safety concerns, they allow customers to ask for leaving food at the door by leaving a note in the app. Food delivery companies like Doordash and Grubhub undertake similar policies. UberEats also provides free meals to health care workers, according to JUMP website.

Looking at Lyft

Similar to Uber, Lyft also says in their official website that they will distribute hand sanitizers and other cleaning supplies to their drivers.

Further, to comply with California state order of social distancing, Lyft paused shared riding in all metropolitan markets, including San Francisco and Los Angeles. They also enforce cleaning activities in their bikes and scooters.

Lyft has established the COVID-19 fund to help drivers who are diagnosed with the Coronavirus disease survive the individual quarantine. (Uber also builds an employee relief fund for impacted restaurant workers.)

However, it turns out that Uber and Lyft are unable to guarantee their sick leave compensation at this moment, according to CNET reporting.

What Is Happening With the Local Drivers?

CNET recently spoke with three Uber drivers and one Lyft driver — all from San Francisco — who exhibited COVID-19 or other disease symptoms and had asked for paid leave. All of them said their companies need an extended period of time to review and process requests for sick leave.

Similar situations are reported to be happening in New York, Illinois and Washington State.

According to The Washington Post, such delay in unemployment aid issuance resides in the fact that “gig” workers are categorized as independent contractors.

In contrast to full-time laborers, they are not eligible for unemployment benefits such as paid leave and health insurance under the current U.S labor system. Without guaranteed labor protection, the Coronavirus has been posing a threat to their economic survival.

While the U.S. Congress and local government officials seem to be progressing to list self-employed labors to be protected under the Coronavirus Aid, Relief, an Economic Securities (CARES) Act, the realization of unemployment benefit issuance still depends on the corporate themselves.

The Coronavirus infections are increasing at this moment, and the spread across the United States is projected to slow down no earlier than the next two months. It will certainly further affect the economy of the ride-sharing companies financially.

While struggling to maintain financial stability, the ride-sharing companies still need to spend time prioritizing drivers and customers’ interests and concerns in facing up the unprecedented challenge.

In the midst of bad news, a glimmer of good news: The Coronavirus is stressful to all of us, of course, but viewing it from an environmental perspective, the nation’s overall GHG emission would be reduced due to such a large decline in commuting all over the United States.

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About the Author
Yuyou Chen works as a Sustainability Reporting Analyst Intern at G&A Institute. She is currently a senior working towards a B.S in Environmental Science and Management and a B.A in Economics at the University of California, Davis. She is interested in ESG investing, Sustainability Reporting, and Urban Mobility. She had previous internship experience in a British environmental consulting firm where she engaged on research and analysis of an eco-labeling project for a China paper making company.

Attention Boards & CEOs: The Conference Board Has Important Insights to Share To Help Your Company…Survive and Succeed!

by Hank Boerner – Chairman, G&A Institute

The Conference Board is one of the most prestigious and important (for corporate managements) of our membership business associations, as well as credible research think tank on management issues and topics. The Board has long had corporate governance in focus and has been a major factor in helping to advance effective, responsive, accountable governance in the USA.

The Conference Board was one of the early organizations serving boards, C-suite and key functional managers to expand the governance research and advisory services to include social and environmental issues & topics: ESG is on the of the agenda for many aspects of Board operations.

Members of boards and CEOs and C-suite-ers receive Director Notes on key topics and issues with practical advice needed to improve performance and better serve society.

Today’s issue of Director Notes is worthy of close reading — and re-reading — by sustainability professionals: “Navigating the Sustainability Transformation.” The introduction is bold:

“CEOs and Directors making key business decisions regarding the company’s strategy for the year ahead and beyond would be well-advised to change the current boardroom conversation. Driven by factors tied to sustainability, over the next 15 years, every company in every industry sector will need to transform itself to survive and succeed. Board members, CEOs and he executives advising them need to ask: “How should we plan for this major transformation?” (emphasis mine)

The report describes a four-stage model for companies to progress from engaging initially with sustainability to accelerating, leading, and ultimately transforming their business.”

Addressing the practical aspects of corporate sustainability (board style), the report focuses attention on a host of corporations that are embracing sustainable strategies, actions, programs, engagements.  These include “new brands” such as Airbnb, Google, Tesla, and Uber — all of which have disrupted old business models and achieved leadership – fast! — in their categories (Airbnb vs. the hotel business, Tesla vs. old line auto manufacturers, etc.).

Established companies — some dating back a century or more — are featured in the report, with explanations of how they have achieved success (and frankly, heartily survived) in a business environment (and investment mindset) where disruption is prized over proven models.  These old-line companies have succeeded by being transformation, often disrupting their own cash cows!

Examples include:  3M; General Electric (with its Eco-magination); BMW; DuPont; Dow; Unilever; Michelin; HP; SC Johnson; Nike; Kimberly Clark; McDonalds; Wal-mart Stores; Starbucks; NRG Energy; Newmont Mining; Coca-Cola Company; IKEA; Interface; Sony; BT; Tesco; Azko Nobel; Xcel Energy; and Waste Management;.

Waste Management’s transformation from a traditional waste hauler to strategy and service provider to corporate customers is one highlight of the report.

Sustainability professionals will want to read The Conference Board report’ views on the 4 stages of progression for companies. I think this could become a top-of-agenda discussion in board rooms and C-suites in the weeks ahead.

The stages are (1) engagement with sustainability; (2) accelerating progress; (3) leading (sector, industry, peers, etc); (4) transforming.  There are many companies at stages 1 and 2, a few moving on to 3, and very few to point to as stage 4 (yet).  Many companies exhibit characteristics of stages 1 and 2 — these are examples in the report.

Moving into the transformation stage is challenging, of course. Given the dramatic upheaval in so many businesses, in such a short period of time, will make looking ahead 10 or 15 years to the critical period to 2030 and beyond…daunting, for sure.

But there are practical, realistic things going on in our world that make such exercise ( closely examining where your company is in the 4 stages of sustainability) necessary.  Natural resources (“natural capital to many) grows more scarce in many parts of the world.  It looks like there will be stranded assets on many corporate balance sheets (and in investment portfolios) as we shift away from fossil fuels. (We won’t always have plentiful, easy-to-access USD$48 crude oil available!)

The Conference Board report found a few examples of what could pass for stage 4 companies: “Few companies today are solidly at 4, but a growing number of leaders have one or more stage 4 attributes.  Airbnb, Google and Uber are ‘sharing economy’ companies; DuPont, Novelis, Unilever, and Waste Management are examples of long-established enterprises…”:

The 4-Stage Model is explained in the report.  We can see this having a powerful impact, similar to Professor Michael Porter’s work with Mark Kramer: “Creating Shared Value” (Harvard Business Review, January 2011).

the Conference Board makes the report(s) available for your reading — information is at:  https://www.conference-board.org/publications/publicationdetail.cfm?publicationid=2885

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The Director Notes are a series of publications the Board engages experts from various disciplines to contribute to, including experts in leadership, corporate governance, risk oversight, and sustainability.

The current issue was authored by Gilbert (Gib) Hedstrom, principal of Hedstrom Associates.  Content includes excerpts from his coming book, “The Sustainability Scorecard TM Handbook/”  Hedstrom is director of the Conference Board’s Sustainability Council.  He invited me to be guest presenter on corporate sustainability reporting and related topics at a recent Council meeting in Washington, D.C.

Matteo Tonello is managing director for corporate governance at The Conference Board; he is editor of the Director Notes series.

Melissa Aguilar is a researcher in the corporate leadership department of the board and is executive editor of the series.

Conference Board information is at: http://www.conference-board.org/