Business

How the SDGs can work for your business

The Sustainable Development Goals are gaining traction with business internationally. What’s the right way for businesses in New Zealand to engage?

How the SDGs can work for your business

The Sustainable Development Goals (SDGs) are a global development agenda ratified by the United Nations. They encompass 17 goals ranging from ending poverty and hunger, reducing inequalities through to promoting peaceful and inclusive societies. Action on climate change is the most supported SDG amongst corporates (63%), followed by decent work and economic growth (52%), and responsible consumption and production (51%); the latter being particularly popular among apparel, FMCG and manufacturing companies.  Perhaps disappointingly, the least supported goals by business are SDGs #1 and #2, eliminating poverty and hunger, scoring 22% and 20% respectively in a September 2016 study by Corporate Citizenship.

Does this mean that business-people don’t care about poverty and hunger?  Or does it reflect a more fundamental question about how businesses are struggling to engage with the Sustainable Development Goals?

According to Ethical Corporation’s State of Responsible Business 2016 report, which surveyed 2,045 sustainability professionals globally (36% of which worked for a company or brand), fewer than half of companies worldwide plan to engage with the SDGs.  And yet, the 17 goals have been agreed to by 193 governments across the world reflecting a consensus of importance.

After reviewing the latest research and opinions on the SDGs, we have two clear conclusions about whether, and why, businesses in New Zealand should consider the SDGs as part of their corporate sustainability initiatives:

  • SDGs provide a robust shared framework. Whilst there may be a current lack of clarity about exactly how to engage with the SDGs, they gift an obvious opportunity to businesses with a strategy to reinforce their social licence (or privilege) to operate, and a framework to report against.
  • There is no one right way. There’s a divergence of approach among those businesses that are embracing the SDGs.  Some focus on particular goals that have the best fit with the nature of their business; others are taking a more holistic approach to show how their activities impact across the full suite of goals and targets.  Neither approach is wrong, and the ideal approach will depend alignment with identified material issues and strategic intentions.

Purpose: a new way of talking about sustainability?

It’s important to remember that the SDGs are global goals for sustainable development, not just the sustainability of any particular industry or business.  It’s about working towards a sustainable world, which is why the goals relating to meeting basic human needs, like poverty, hunger, wellbeing, education and gender equality are fundamental.  Whilst harder to align with business goals, ensuring a more inclusive, whole of society approach to economic development that leaves no one behind is an absolute necessity for a healthy and stable future for global society.

Watch this video to hear WBCSD CEO Peter Bakker explain the holistic intention of the SDGs in the context of the 4 big global systems of food, energy, cities and materials – and how one food initiative will address 14 of the 17 goals simultaneously, by intentional design. He also explains why the 7% of global companies already reporting against the SDGs in their sustainability reports is set to soar, as the SDGs redefine the corporate competitive agenda for the coming years.

 

Over the past few years a growing number of companies have begun to think beyond their role as just producers of products or deliverers of services, as they start to reflect on the question of their purpose in society.  Why?  Because companies are noticing that society is looking at them with more searching eyes and asking, ‘are you the sort of business we want in our society?’

The idea that a business operates under a social licence (or, privilege) reflects the reality that customers and consumers can, in most cases, choose whether they support a particular company or whether they don’t.  And the evidence clearly shows consumers are increasingly making these choices.

In New Zealand, research in 2016 by Colmar Brunton suggested that 83% of Kiwis would stop buying a product if they believed the brand was irresponsible or unethical.  The same research showed that, for Kiwis, ‘No poverty’ was the most important SDG, followed by ‘Good health and wellbeing’ in second place, and ‘Quality education’ in third.

What this shows us is that in New Zealand, as in other developed societies, people are expressing their growing awareness that social issues are fundamental to a healthy future, and they expect the brands and companies they support to recognise and acknowledge that.  Increasingly, people – and particularly the so-called millennials – prefer to work for companies that adopt a positive approach to corporate responsibility; and they also place more trust in those that work proactively to have a positive influence on society – sometimes referred to as a corporate ‘handprint’.

Against this context, the SDGs provide a golden opportunity for business.  They offer a credible and global framework for companies to tell their story about the ways in which they are aware of, and addressing, the full range of big issues – both socially and environmentally.  It’s an opportunity to demonstrate an alignment between corporate purpose and social licence; and to show a serious intent for positive influence.

In essence, the SDGs provide a ready-made framework to show how a business balances its efforts to generate financial capital for shareholder interests, with its consequential impacts on ecological and social capital stocks that, whilst legally permissible, are not truly accounted for on the profit and loss statements.

Reporting against the SDGs: what’s the right way?

In short, there is no single right way to report against the SDGs.  Generally, businesses are either focusing on a small number of specific goals that are closely connected with their business area, or they are reporting more generally against the full range of goals to show a broader consideration of their positive influence.  Neither of these approaches is wrong, and other approaches that merge the SDGs with existing materiality assessments or other reporting frameworks are already emerging.

The key point to bear in mind is that the global SDGs come as a package.  That means all the goals need to be addressed to achieve sustainable development.  For example, it’s all very well for a company to show how it is contributing to ‘Decent work and economic growth’, or ‘Responsible consumption and production’; but if – as a global community – we are not at the same time eliminating poverty, hunger and inequality, we may fail to achieve the level of sustainable development that can serve the longer-term interests of our societies globally.  The bottom line is that solving sustainability challenges as single, rather than connected issues is not going to achieve the goal of sustaining the quality of life we aspire to for our developing human society.

The other point to note is that social issues like poverty, hunger and inequality are not just developing world challenges – they are everywhere, although admittedly at different scales.  New Zealand has its own challenges relating to poverty, hunger and inequality that the business community can help solve through their supply chain practices, and the way they design their operational business processes and systems – if they make a conscious effort to do that.  It’s not just about philanthropic support, it’s about designing business activities to be part of the solution, in a way that shows respect and concern for a genuinely healthy society and thriving local communities.

Taking the broad approach to generate more value

Incorporating an element of broad reporting against the SDGs can achieve a number of benefits for a business.  First, it serves to keep the wide range of goals front of mind to highlight opportunities where it’s possible to make a real difference, even if only small.  Second, as explained above, it sends a clear message that the business is committed to having a positive handprint on society as a whole, which supports an ongoing licence to operate.  And, third, it credible way of talking about a range of initiatives that don’t make the list of key material issues for more established sustainability reporting under the GRI or <IR> frameworks.

It’s worth noting that the GRI is already working with the UN Global Compact to develop a sustainability reporting standard that will integrate the SDGs, with the aim of further mainstreaming sustainability non-financial reporting among the global business community.  However, in our view, there’s no need to wait until then.  For those organisations which see the benefits of communicating about how they’re contributing to the SDGs, and which already have experience with sustainability reporting, should have little difficulty in finding appropriate ways to communicate and tell their story.

Final words

A report by risk management firm DNV GL highlighted 17 firms (including Unilever, Marks and Spencer, Siemens and Danone) taking action on specific SDGs and concluded that these companies are characterised by their ability to see the potential of combining business growth with sustainability, and seeing the SDGs as a way to achieve competitive advantage.  Companies like these have already clarified the business case for innovation to solve environmental and social issues associated with their activities, and so the SDGs are a natural fit.

In New Zealand, with fairly low general awareness about the goals currently, companies and organisations are not under any immediate pressure to integrate or report against the goals.  However, for those organisations that already understand the value of clearly articulating their purpose in the context of a social licence to operate, the SDGs present a fairly easy opportunity to add further credibility and value, by showing they truly understand what is needed for sustainable development.

Looking to the future, the extent to which the SDGs become mainstream in New Zealand is likely to depend on the extent to which leading companies embrace the SDGs, and how the Government proceeds with its proposed cross-Government effort.  Former Minister of Foreign Affairs, Murray McCully, advocated for a targeted approach, focused on practical outcomes that make a tangible difference, with renewable energy and fisheries as being the ‘game-changers’ for the Pacific region.

While we wait to see how that pans out, we believe there is an opportunity for organisations to use the SDGs as a further reference point in their non-financial reporting.  They offer a different, and globally relevant, perspective about how an organisation is in sync with society, and how it is working to justify its social licence to operate.  As pressure on environmental and social systems continues to mount from the impacts of an unsustainable economic model, the value of a brand with evidence to support its social licence is going to be more valuable than ever.

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