The Business has the Unique Opportunity to Embrace the SDG
It is not possible to have a strong, functioning business in a world of increasing inequality, poverty, and climate change. The business has the unique opportunity to embrace the SDG agenda and recognize it as a driver of business strategies, innovation, and investment decisions. Doing so makes business sense and will give them an edge over their competitors. The SDGs offer the greatest economic opportunity of a lifetime. With an estimated investment of $2-3 trillion a year, the potential value that can be unlocked for society will be immense. In some sectors, it is estimated to be worth hundreds of billions, and even more in others. This is a very high payout for this global agenda and markets are already starting to react.
The 2015 Paris Agreement sent a clear sign that the governments of this world are committed to decarbonizing our economies, and this is felt in banks, stock exchanges, and boardrooms. It is a sign that the private sector is starting to embrace the business case for a rapid transition to a low carbon world, which will be discussed this week at the Business & Climate Summit in London, but more needs to be done. This is the spirit we also need for the SDGs.
Not fast enough
Fortunately, we are not alone. More and more businesses are seeing the potential of a more sustainable business model, driven both by the firm belief that business can be a force for good and by the realization that the cost of inaction often exceeds the cost of action—notably when it comes to the growing threat of climate change and water scarcity.
Sustainability after all is no longer a niche issue. 54% of consumers want to buy more sustainably. Many already are. Consumers in both emerging and developed markets want it all—high-performing products, the right price, and a purpose that they can connect with. Regrettably, however, we are not yet seeing the scale and speed we need.
There is still too much reluctance by business leaders and investors to fully embrace the change to this new type of business model. The focus still tends to be on occasional corporate social responsibility (CSR), rather than embedding sustainability at the core of their business. They need to realize that the potential gains from working sustainably are huge and that this approach needs to be more than a simple CSR exercise.
Implications for business
It has become a cliché that environmental problems are substantial and that economic growth contributes to them. A common response is stricter environmental regulation, which often inhibits growth. The result can be a trade-off between a healthy environment on the one hand and healthy growth on the other. As a consequence, business opportunities may be constrained. However, some forms of development are both environmentally and socially sustainable.
Sustainable development is good business in itself. It creates opportunities for suppliers of ‘green consumers’, developers of environmentally safer materials and processes, firms that invest in eco-efficiency, and those that engage themselves in social well-being. These enterprises will generally have a competitive advantage. They will earn their local community’s goodwill and see their efforts reflected in the bottom line.
Seven steps are required for managing an enterprise according to sustainable development principles. These are set out below.
- Perform a stakeholder analysis
A stakeholder analysis is required to identify all the parties that are directly or indirectly affected by the enterprise’s operations. It sets out the issues, concerns, and information needs of the stakeholders concerning the organization’s sustainable development activities. A company’s existence is directly linked to the global environment as well as to the community in which it is based. In carrying out its activities, a company must maintain respect for human dignity, and strive towards a society where the global environment is protected.
Company strategies were directed primarily towards earning the maximum return for shareholders and investors. Businesses were not expected to achieve any other social or environmental objectives. The exploitation of natural and human resources was the norm in many industries, as was a lack of regard for the wellbeing of the communities in which the enterprise operated. In short, corporations were accountable only to their owners. Developing a meaningful approach to stakeholder analysis is a vital aspect of this management system, and one of the key differences between sustainable and conventional management practices.
- Set sustainable development policies and objectives
The next objective is to articulate the basic values that the enterprise expects its employees to follow concerning sustainable development, and to set targets for operating performance. Senior management is responsible for formulating a sustainable development policy for its organization, and for establishing specific objectives. Sustainable development means more than just ‘the environment’. It has social elements as well, such as the alleviation of poverty and distributional equity. It also takes into account economic considerations that may be absent from a strictly ‘environmental’ viewpoint.
In particular, it emphasizes maintaining or enhancing the world’s capital endowment and highlights limits to society’s ability to substitute manmade capital for natural capital. Nevertheless, a policy on environmental responsibility is a good first step towards the broader concerns of sustainable development. Management should incorporate stakeholder expectations.
- Design and execute an implementation plan
It is important to draw up a plan for the management system changes that are needed to achieve sustainable development objectives. Translating sustainable development policies into operational terms is a major undertaking that will affect the entire organization. It involves changing the corporate culture and employee attitudes, defining responsibilities and accountability, and establishing organizational structures, information reporting systems, and operational practices.
Managing this type of organizational change requires leadership from senior management. They need to lead by example, and to set the tone for the rest of the organization. As a starting point, after the board and senior management have established their sustainable development objectives, these should be communicated to the various stakeholder groups. It is also important to determine any modifications that should be made to the organization’s systems and processes to ensure that day-to-day activities are performed in a manner that is consistent with these objectives.
To Conclude: Sustainable Business For A Greater Impact
When objectives become a purpose, a powerful story is established. That story will drive your mission and allow you to create an actionable plan. Don’t worry if results don’t come immediately; the road to 100 percent sustainability is long and may require testing a few different approaches for you to make the greatest impact.
