Sustainable Development Goals leading to better business?

The Sustainable Development Goals (SDGs) were ceremoniously published last autumn at the Summit organised in New York in connection with the UN General Assembly. What made it unique is that every one of 193 UN Member States committed to executing the concrete and ambitious Sustainable Development Goals and the related Agenda 2030. The goals bind all of us: states, organisations, individuals – and companies. How successful these goals will be in changing the role of companies as the enablers of and partners in sustainable development, remains to be seen.

The SDGs are a bleak summary of the current state of the world and the challenges it is facing. They outline 17 global sustainable development challenges, which are described in more detail through the 169sub-targets. Together these form an overview of the hurdles and problems that we face today. The same list of goals and targets forms the 2030 Sustainable Development Agenda . The goals are in a way an account and a working plan of what has to be done globally over the next 15 years. The goals must be met. Otherwise, the challenges facing our societies will snowball to such proportions that we will jeopardise our possibilities to achieve a humane and environmentally sustainable future.

Even before its official publication, the list of goals generated a positive stir and hope of something better among a very large group of different actors: States showed unanimous commitment to execute the ambitious agenda on national level. Non-governmental organisations started to plan their new projects and activities in line with the goals. Individuals were asking themselves what role they played in the formula for sustainable development.

I think the most interesting aspect was the reaction of companies to the high-level UN goals: a significant number of companies large and small took ownership of them from the word go. Some company directors travelled to the Summit to show their support for the goals. Many discussed them within their networks and spoke of how the company was going to ensure that their business operations would be in line with the goals. This was not a surprise as such, since many of the sustainable development goals are directly linked to companies’ daily activities: sustainable consumption and methods of production; youth unemployment; decent work regulations are all among the themes covered by the goals and ones which company decision-making influences directly. Company directors are indispensable to achieving certain goals, and there is no hope for achieving them, if the private sector does not commit to shaping its activities to meet the goals.

Pair of sustainable development glasses for company management

In my view, what makes the SDGs interesting is their comprehensiveness: they spell out the complexities of our society and the interdependences of issues, making complex sustainability challenges more accessible and understandable for company directors who may previously have been unfamiliar with the topic. The SDGs emphasise the fact that no development is sustainable ifeconomic, environmental and social aspects are not in balance throughout a company's value chain. In other words, it is not enough that a company uses state of the art technology for energy management and waste treatment in its production plant if the environmental impacts of their product's life cycle are not considered at the product development phase. It is not enough that the company’s own personnel are fairly treated, if a peak to the supply chain in developing countries exposes the exploitation of child labour, discrimination due to gender or race or inhumane working condition - let alone slavery. It is not enough to be a good tax-paying corporate citizen in Finland but resort to bribes and illicit facilitation payments elsewhere.

The Sustainable Development Goals challenge companies to evaluate the impact of their decisions, processes and products throughout their value chains – from the source of the raw material to the final stage of the product’s life cycle. I would like to see companies use the SDGs as "a pair of sustainable development glasses"; a tool which can help companies see the positive and the negative impacts of their activities on their immediate stakeholders as well as on the wider society.

Reducing the negative impacts of operations makes sense on risk management and cost basis alone: it is cost-effective to operate energy efficiently. It is also foolish to operate in a way that harms the surrounding society also from the view point of reputation management.

Recognising the positive effects of activities helps companies make their value creation to the society more concrete – who receives added value from the company's operations and how? A company pays wages to its employees and dividend to its owners – but do the company's products, for example, bring something positive to the world too?

Increasing pressure for sustainability from customers, investors, regulators and other stakeholders

By recognising and being vocal about the positive effects of their activities on the society, companies can stand out in the ever-tightening competition and gain a better licence to operate. Customers and their stakeholders now, and increasingly so in the future, demand sustainability from companies and are also prepared to vilify those who clearly need to step up on sustainability. I believe that the pressure from stakeholders will only increase in the near future. The FIBS 2016 corporate responsibility survey, for instance, reveals that Finnish companies have over the last few years seen solid interest and increasing demands from their customers and investors when it comes to sustainable business practices. The framework provided by the SDGs offers companies an ideal opportunity to consider what is essential for their stakeholders, then pick what is relevant to their own operations and incorporate these into their development projects. Once a company has integrated sustainable practices into its strategy and business processes, it should also communicate this to stakeholders.

I predict that, with the Sustainable Development Goals and also the growing regulation, the next few years will see increasing demands for sustainability of business processes. At the time of writing this article, a number of sustainability-related schemes are being developed that will inevitably make life harder for unsustainable businesses, whether we talk about aggressive tax sheltering activities or business operations that rely heavily on the use of fossil fuels.

It makes business sence for the company management to identify the company’s problem areas related to the Sustainable Development Goals, and make an action plan to address them in a timely manner.

SDGs – a wealthy customer's shopping list

The SDGs also provide opportunities for pioneering companies and businesses that can offer interesting solutions to the challenges the goals outline. I believe that companies should look at the goals as a list of requirements which will bein demand and probably a recipient of both public and private financing. The SDGs are like a shopping list – we will have to wait and see whose products and services will end up in the shopping baskets of this significant, wealthy customer. Any company providing, for example, health, education, water supply management and sanitation-related products and services should be showing interest in the markets to be created by the SDGs. The goals will undoubtedly also increase investment in and funding for projects that promote energy efficient, resource wise and clean technologies as well as projects that utilise information and communication technologies to improve the use of resources. There is a huge demand for commercially developed solutions.

I do believe that the Sustainable Development Goals are not a hindrance to businesses; quite the opposite, they are an opportunity particularly to companies that promote sustainable business operations. Those companies that are among the first to react to the SDG’s are likely to get a significant head start in the competition to capitalise on the business opportunities brought about by sustainable development.

Need for innovative partnerships

The challenges defined in the SDGs are significant. Meeting them will require new and innovative partnerships, whether for companies or other players. To find these partnerships, companies should look beyond their traditional cooperation partners: Maybe non governmental organisations could offer a perspective which would help the company recognise the sustainability risks in its own operations before they materialise? Perhaps an educational establishment would be able to provide the kind of insight the company needs when developing sustainable products? Maybe companies should seek their customers’ opinions and input when developing new and innovative solutions and services? At their best, innovative partnerships create added value that goes beyond what anyone had hoped for. The demand for partnerships and innovation is immediate; otherwise, we will not be able to achieve the Sustainable Development Goals by 2030. The goals concern us all, you and I too. With this in mind, I will conclude with a question: What will you do to contribute to achieving the Sustainable Development Goals?

HELENA KEKKI
Manager, FIBS
helena.kekki@fibsry.fi

The article was first published in Baltic Rim Economies Review 5/2016