By Priya Thachadi
A new report argues the business case for sustainable development
Even as the US administration takes what seems to be many steps backward with regards to the environment and sustainability, it has been encouraging to see that many companies have continued to pledge their support to continue to fight to build a sustainable world. What will it take for sustainability to become the norm? Here is a group that is leading by example.
Leading the path for sustainable development is the Business and Sustainable Development Commission. The Commission was set up in January 2016 in Davos, brings together 37 ‘Commissioners’ — leaders from business, finance, civil society, labour, and international organisations. The Commission’s mission is to map the ‘economic prize that could be available to business if the UN Sustainable Development Goals (SDGs) or the Global Goals as they are known are achieved’, and how business can contribute to achieving them.
Its recently published report Better Business, Better World is a call to action to business leaders to ‘embrace more sustainable and inclusive economic models.’
Rising tide against globalisation
Today, across the developed and developing economies, we are seeing a tide against globalisation – polarised politics, a move towards nationalisation, call to close borders, opposition towards immigrants, and against international integration. This anger and opposition could be attributed to the widening inequality gaps across the world, despite the strides that we have made in economic growth – the benefits have not ‘trickled down’ to all segments of society.
This report argues that business leaders must work with government and civil society to provide solutions – not only an environmentally sustainable one, but also one that turns poverty, inequality and lack of financial access into new market opportunities for ‘smart, progressive, profit-oriented companies.’ A path that is mindful of limited resources and that includes those who have been left behind and excluded from the market in the last 50 years of progress is the need of the hour.
‘Global Goals need business, Business needs Global Goals’
The 2015 intergovernmental initiative, the Sustainable Development Goals or the Global Goals, identifies business as a critical partner for sustainable development through its Goal 17. However, the report rightly recognises that many companies view the Global Goals as a CSR activity helping showcase their social commitment to their stakeholders. But an increasing number of companies are including sustainable development in their strategic agenda – Unilever, whose CEO Paul Polman is the co-founder of the Commission, is a leading example.
This report reasons that other companies must do the same as the private sector will need the Global Goals to accelerate their growth. Why? Just one big reason – achieving the goals opens tremendous new market opportunities – as it addresses the vast majority of people – an untapped market with millions of potential customers with unmet needs.
And for the Global Goals to succeed it needs business – private sector capturing market opportunities is a way to do address this sustainably. The Commission advocates collective action from ‘actors in the world’s markets’ to create innovative solutions to the biggest needs of the low-income communities.
At least a USD 12 tn market opportunity can be unlocked
Framing their research around the Global Goals, the report maps market opportunities for businesses that develop inclusive models – it identifies 60 market ‘hot spots’ worth USD 12 trillion by 2030 in business savings and revenue with more than half being in developing countries. About 15 out of the 60 market ‘hot spots’ – in food and agriculture, cities, energy and materials, and health and well-being – account for 50 per cent of this ‘economic prize’.
The report estimates that reaching the Global Goals in just these four economic systems can create 380 million new jobs by 2030, almost 90 per cent of them in developing countries, with affordable housing, accounting for almost one-fifth (70 million) of these jobs.
The biggest market opportunities
The report identifies key market opportunities across the six economic systems:
The food and agriculture sector faces deep challenges in meeting the demand for food as well as addressing environmental problems that threaten supply – business models that can address these challenges could open up over USD2.3 trillion. For example, reducing food waste in the value chain (USD 155-405 bn) to mitigate the wastage of food post-harvest, creating low-income food markets (USD 155-265 bn) as the poor spend up to 60% of their income on food are top areas. While in Health and Well Being, the report highlights key market opportunities lie in risk pooling (USD 350-500bn) to address out-of-pocket healthcare expenses for the poor, remote patient monitoring (USD 300-440bn) to bring access to healthcare.
Whereas in energy, the growing demand coupled with the risks and costs of new sources create a role for businesses, in areas like expansion of renewables (USD 165-605 bn) in parallel with the increasing share of renewable energy. By 2030, 60 per cent of the world’s population will live in cities, so affordable housing, with an estimated USD 650-1,080 billion, is one of the biggest opportunities while energy efficiency in building represents USD 555-770 billion, to address the consumption in the building sector. Read the full list of opportunities here.
Inclusive Business models are leading the way
The Commission presents 27 case studies from large multinationals like Unilever (Lifebuoy) in health and well being, Vodafone (Women First) providing access to finance and technology for women, Nissan and Enel (electric cars) promoting clean energy cars to digital disruptors like M-PESA, MicroEnsure’s SMS-based insurance platform, to social enterprises like ¡Échale! a tu Casa in affordable housing to projects led by stakeholder coalitions like Tropical Forest Alliance, a coalition of private sector, government and civil society pushing for deforestation-free production. Each of these models include the poor as customers, suppliers, distributors, or retailers in the company’s value chain.
This report presents these cases as a positive reinforcement of what is at stake – solving the world’s challenges has at least a USD 12 trillion value but it also will help build a wealthy global economy, one where business is trusted by its consumers. The case studies show that the opportunities in working with the low-income groups and building responsible and sustainable models create profit and social impact.
Business leaders need to take action now
The Commission lays out actions for business leaders to act now – building support for the right growth strategy, incorporating the Global Goals into the company strategy, driving a collective sectoral move to sustainable markets, working with policy-makers to reflect the costs of doing business, pushing for a financial system that is oriented towards long-term sustainable investment and, last but not the least — owing to the erosion of trust in businesses since the global financial crises — rebuilding the social contract.
But it is not all about giving advice – the Commission has also set out actions for itself for the next year, starting with nurturing and mentoring business leaders, by reaching out to current CEOs, and future CEOs through working with business schools; to working with sector stakeholders by creating sectoral transformation roadmaps in key sectors; creation of a publicly available Global Goal league tables along with other players in the financial sector; by supporting measures to unlock additional capital needed to achieve the Global Goals through advocating for new public-private collaborations; and creating an independently compiled Responsible Political Engagement Index. A tall order for sure, but a holistic approach.
The Commission is a much-needed peer voice in making the business case for sustainable development. It has set itself an ambitious mission – to convince companies to embrace the Global Goals as part of their core strategic models – one that will require a commitment from many boardrooms. What is very encouraging is that the Commission is willing to take action and has a roadmap to get its agenda going. Check out their presentation that you can download and use to inspire more people to join in. Or you can go to one of their events across the globe.
We will be certainly watching and following the voice of the Commissioners!
Priya is the co-founder-CEO of Villgro Philippines, an early-stage incubator in the Philippines, which she set up in 2016. She is also a leading inclusive business consultant in Southeast Asia. These days you can find her mentoring and training impact entrepreneurs in Manila, when not exploring the beautiful beaches around the Philippines.