The Sustainable Development Goals are an unprecedented opportunity for governments, business and NGO's to collaborate to tackle the big challenges facing global society. To be successful, they will require strong leadership and engagement from business. On the 11th April, we asked if business is ready for systemic change.
The SDGs evolved from the most inclusive process in the history of the United Nations. They replace the Millennium Development Goals and set the global sustainable development priorities for 2030. They explicitly require the private sector to be a full and active partner… and therein lies the risk and the opportunity.
We collaborated with the Business and Sustainable Development Commission for this event. We heard a speech from Lord Malloch-Brown, co-chair of the Business and Sustainable Development Commission, on the journey ahead for the SDG’s. With our expert panel we explored the new social contract between government, business and society, covering issues such as;
The latest surveys suggest 23% of CEOs are fully aware of the SDGs and are planning a response, but this is fast moving space. This was a chance for internal experts, advisors and NGO’s to share thinking and add to the momentum.
The SDGs will only succeed if the private sector becomes part of the movement. The Global Commission was set up at Davos to mobilise business, and Clare Oh, the Business and Sustainable Development Commission’s Communications Director, will ask for thoughts on how to take the numbers of businesses involved to a tipping point. Can you help to build the movement?
The mission of the Global Commission is not to make a report; it is to create change. We want to create a business led movement. But, is that even possible?
- We are still in the beginning phase of the SDGs, maybe the start of the movement right now needs to be focused on understanding and awareness. Coca Cola’s sustainability manager ran an internal workshop on the SDGs with around 120 supply chain people; less than 1% had even heard of the SDGs, but after the workshop people were asking for the presentation.
- We see more businesses trying to be in some way involved with the SDGs.
One of the outputs of the commission will be a report. Are we still in the need for more data?
- Not in the need for more reports and data supporting the business case. We don’t need another business case for Sustainable Development, but the way the commission is now positioning itself – with a business led movement – that would have traction.
- The companies that are already convinced do not need another report. What we need is to wake up the dinosaurs that are still not convinced. But you do not convince them with another report.
- Launch the report inspirationally, launch it as a campaign.
Red Flags (warnings)
There is the challenge of the scope of the commission. We can’t be all things to all people. How do we get the commission well positioned?
- We’re are an SME, (IES) but our reach is huge, (20 – 30 thousand users in 140 countries). There are definitely things big business can learn from smaller businesses.
- Companies are already doing great things. Now we need great storytelling to communicate these great things back to the customers.
- Be careful that you do not only position the commission with the usual suspects – for example a launch event in Davos might only reach the companies that are already convinced.
What are the possibilities of collaboration and co-creation?
- Your own employees are very important.
- If we could connect the SDGs more to people’s values would be a great beginning. This will make the SDGs practical, human and very real.
- In the end we need consumers to choose for more sustainable brands over the non-sustainble brands.
- The movement needs to be both bottom up as well as bottom down.
Do we have some good examples of a movement around sustainable development?
- Make poverty death.
- Barclays adopted a digital go-to person in their organization. Could that maybe be an option to expend in the future to also entail a sustainability angle?
- Look at Ashoka for co-creation.
- Collectively are engaging with millennials on the topic of sustainability.
With business SDG strategies in embryonic stages, we’ll discuss engagement strategies. These include identifying existing relevant initiatives (cherry picking?), mapping and reporting against all SDG’s, data collection, and adding to the risk agenda. How does one start, and should we be thinking about core business?
Key Questions Raised:
• If everyone is just realigning how can we progress?
• Who’s the target for engagement, internal or external stakeholders?
• Are the Sustainable Development Goals just a tool to communicate what we are doing to our customers?
Knowing doing gap made up of three main issues:
• Social loafing - lack of leadership “we are going to tackle this” but who is we
o Governments need to all buy into it – not happened so far
o Business has been a receiver of these goals from government, but now needs to be seen as a leader – which is a difficult transition
• Lack of clarity – for SDG 13 (climate change) there are key metrics (CO2 emissions) but harder to quantify for the others also uncertainty of what impact these new goals will have on current efforts
o Too much time spent reporting and too many different reporting bodies – if there is no return on investment, it’s hard to get buy in from senior parties
o 17 goals is too many to remember, for either external or internal stakeholders – difficult to engage people if it’s overcomplicated
• The wrong environment to foster change
o If the goal is to inspire innovation then compliance is not going to be the tool - You cannot legislate innovation
o Shareholder return is still the only key metric at the moment – that priority trumps all others
o Short termism –companies often don’t look more than 2 years ahead (due to quarterly reporting etc.)
o If you cherry pick there is no comparison which means there is no competition between peers however if you don’t you lose relevance
Red Flags (warnings)
• If you compare across all sectors it makes it difficult to benchmark – but if you don’t benchmark it’s hard to motivate companies to change as they can’t see if they are better or worse than their equivalents.
• Who evaluates success –if it’s self-evaluation companies can look back and align success but that will not result in positive future changes
• Communications – average Joe doesn’t get it!
Simplify to increase clarity:
• Cherry pick to make sure you make an impact – materiality is key as it defines what you have a meaningful impact on and what you should focus on
• “Badge” what the business has already done to link existing reporting with new SDGs
Foster the right environment
• Business ranking (within regions)– then look at it from a risk perspective if you rank very low
• Focus on purpose rather than profit
• Partner with government, third sector and other businesses to overcome challenges – blended funding is essential – especially in emerging markets
• Introduce legislation and compliance regarding material risk analysis and reporting against goals
• Capegemini: internally use DJSI etc. but use SDGs to communicate externally
• GRESB– competition based framework where companies can find and act on gaps in the sustainability of their built assets
• IBM collaboration to collect data on disease and quality of life in emerging markets
SDG 7 is to "Ensure access to affordable, reliable, sustainable and modern energy for all". How should a business with operations in developing countries interpret this goal? How about a business whose primary operations are in the UK? What defines a “modern” energy strategy, and how can business report against this goal?
Applications of Goal #7
• Smart Cities: with high population growth in much of developing world, how do we make cities smarter? Why would an organisation go to a certain city to develop it? Clearly, it is difficult to support the development of big infrastructures with green technologies only. Also, newly smart cities may need to ensure they can share their surplus (or deficit) energy across borders. Energy storage is thus a major issue – many places are not ready to store enough energy and may have to limit their production to due to this constraint.
• Energy Strategy: Should companies report uniformly on their energy strategy? Lots of companies struggle to report on all requirements. For some larger organisations, SDGs can be aligned with existing frameworks and help reinvigorate old approaches. For smaller organisations, they can be a useful guideline.
Important considerations and red flags
• There is a great uncertainty of investment regarding the newest technologies. Some things will become defunct and not usable by the time they are put in place. Thus, companies may be incentivised to delay their investment. Finally, the pace of change is very quick and organisations may need to focus resources in areas at which they are best.
• Challenge in developing countries: need to take some of the traditional model that works. We can’t have only green energy from the start.
• What horizon are people looking at when they make energy investments? The standard horizon is around 2 years, with some far-looking firms perhaps reaching 5 years. However, even this is sometimes not long enough, as many prospective investments need to be ruled out.
Prospects and solutions
• If energy sharing across borders were made possible, governments would need to get involved and pay for the interconnections. Also, finding ways for storage capacity improvement should be rewarded. Fortunately, energy sharing with countries in Africa could take place if costs continue to fall at the rate they have been falling so far.
• The uncertainty regarding the ultimate standard set of guidelines can be approached by rigorous collection and analysis of existing data – and adjusting it to fit the purpose of the new standard.
• We need smart business – there needs to be collaboration not only between business and government but also among companies. Incentives to act can be set if an organisation shares both risk and opportunity with other firms in approaching larger problems.
• When firms go to developing countries, they first need to understand what the local needs are. There need to be incentives for firms to go there and develop infrastructures but also an understanding for what the needs are in order for the projects to be successful.
• A certain level of literacy about these issues is needed. For instance, in a randomised controlled trial, the Energy Consumption Analysis Project (part of Early Learning Project to inform the Smart Metering Implementation Programme) installed smart energy meters to measure impact of smart metering. Communities with smart meters resulted in cleaner and more socially aware areas. Sheer knowledge about how much money can be saved may induce action, while business can also educate and build the necessary mentality.
SDG 13, "Take urgent action to combat climate change and its impacts", was recently ranked as the second biggest opportunity area of the 17 goals in a recent business survey. How can business leverage this goal, both for themselves and for the SDG movement? Is it OK to “cherry pick” this goal, or does it need to be part of a comprehensive engagement with all goals.
How will goal 13 become something meaningful and useful for businesses?
- The Steel industry has highlighted sustainability as an area that they want to focus on, but it’s a massive challenge for them. Emitting carbon is part of the process. What they can so is create a more efficient product which has a longer life. If you lengthen the use phase of steel it can actually contribute to Goal 13.
- Transparency in the steel industry is difficult because normal people don’t really know what the data means, or if there is data. Responsible steel, what does this mean? Its complex with steel, because, for eg, Steel can be made out of scrap, but its hard to find where that original product is from.
- But there are ways even difficult industries can work towards goal 13. However, short termism is the death of sustainability in nearly ever sector.
- Construction industry still thinks short term but this is something they want to look at.
- Water industry find it difficult to talk about climate in the abstract and prefer to talk about weather that people can see out of their windows, this seems to make the goal more meaningful to people.
Cherry picking goals
- Some sectors are never going to be able to work towards all the goals. A water company in the UK is not going to be able to solve world hunger, but they can make steps towards things like more efficient water use and reducing the emissions of their operations.
- Is it more about aligning the SDGs with targets/goals already existing? Can we link the SDGs link with COP21?
- A single company wont be able to have a positive impact on all 17 goals. So you need to make sure you are not part of the problem.
- Carbon is easy to measure. Cherry picking is inevitable to a certain degree, but push your business to do more.
- Can we look at the goals as groups, so you don’t have to go for all of them?
- Can the goals work within the frame work companies already have? Most of the goals are things companies already do. The goals should already be in your companies ethos if you are into sustainability.
- The goals are fundamental enough to not be prescriptive, a shift in thinking rather than an actual target.
- What can SMEs do to contribute to goal 13? The goal is very global and ambitious so it will be difficult for them without partnership.
- Small companies can look to their clients and rather than focusing on their own operations they look at their clients’ impact. Or ensure their supply chains working together towards the goal.
- Partnerships in the water industry do happen, but they deal with long term projects like infrastructure building and partnerships take time to develop. So is this too long for the 15 year goals cycle?
- It’s difficult to make partnerships across sectors and it takes time to build the trust to make these partnerships.
‘Badging’ the goals
- It’s easy to link the goals with company targets that already exist and you can badge it up as something more.
- Most companies already have their own plans, throwing something else isn’t wanted. Some companies are confident in their own sustainability practices.
- Consumers may just see through it as a badge and think of it as green washing.
- SDG goals do sound good for clients though. It’s a framework that people respect and its useful to badge it. Externally its useful. Internally its useful too because it’s easy to get behind it when it’s a common language.
- The challenge is that there are too many different ways to measure CSR. Everyone have their own ideas and reporting. So are the SDGs adding to the problem or are they actually cutting through the noise?
- Transparency is important here because without it, people don’t have the trust in a company’s claim. Can ranking companies on these goals help us achieve results? Transparency is like a big stick. But it goes back to not wanting to highlight people doing badly. Carrots are always more appealing as an incentive. The reality of business is that you can’t be great on everything, customers will appreciate the honesty.
SDG 15 is about protecting and restoring ecosystems, with a focus on forestry, desertification, land degradation and biodiversity loss. This fits with the Natural Capital agenda, but raises questions about how it works with the emerging frameworks – an accelerant or a complication? Could CEO interest in the SDGs help to raise the profile?
• Few years off solid metrics to quantify impacts
• So many standards have come and gone in the food and agriculture industry - tick box exercises are not productive
• CEOs are only in place for around 5 years - short termism, need a longer term approach to these goals
• Awareness of the public around ecosystem damage is not high
• Technology could also be destructive - e.g. internet allows ordering of goods across the world leading to increased emissions
• Legacy operating systems in business will suffer if they cannot change to address the SDGs
• Natural Capital agenda has some yard sticks to measure yourself against but are these enough to hold businesses to account?
• Useful tool, but the key purpose of the business must be aligned to them - can help business to move away from short-termism
• Can create inertia - another set of goals and standards to report to - have to pick one or two that are relevant and focus on them
• 15 years ago business was not talking about climate change - now this is very different owing to government intervention (Carbon Trust etc.) – we will also need their input on the other SDGs
• Now it makes business sense to be sustainable - electric cars. Cost/benefit of tech will drive sustainability
• Consumers will have to pay higher prices for more sustainable agricultural products
• Who gets the (direct) benefits from protecting ecosystems? Economic argument is more compelling. Monetising biophysical units is an accelerant to communication.
• HSBC - CEO not overly interested in sustainability matter but was at Paris etc. Makes it easier to push the sustainability agenda - helps with comms - CEO going out to talk to investors about these matters
• Gap between CEO position and procurement within the organisation - how far do organisations go to ensure SDGs are in procurement guidelines - little deselection on basis poor sustainability criteria
• Lots of examples where destroying nature to become more productive has been extremely negative – e.g. Beijing air pollution
Many businesses will already be tackling some of the SDG themes but not necessarily considering them formally or fully. How does an organisation ensure that the SDGs are fully considered? What existing mechanisms can we use to understand the SDGs and the relevance to our business?
- It was generally agreed that many businesses are already tackling some SDG themes whether they are formally aware of this or not e.g. through their sustainability and environmental policies/various certifications. Organisations should look to evolve in addressing SDGs rather than completely changing their business operation; it will take time to implement change.
- It was agreed that SDGs are relevant to all organisations/business units if they wish to be successful (now and in the future). It was considered that customers/consumers are starting to become more interested in sustainability/environmental goals (where products come from, how they are made etc.)
- Tackling and addressing the SDGs depends on the organisation's priorities, is the organisation financially driven or more socially driven to achieve these goals (there is less obligation, financial, legal or otherwise, for companies to be socially minded).
- A key obstacle is awareness of SDG's and understanding of what they mean in the context of their business activities – how do we start rising awareness and who has the ultimate responsibility? What processes do we put in place to enable companies to fully consider all 17 SDGs? Should organisations look to consider all SDGs even if they are not relevant?
- Who should ultimately be responsible to ensure that the SDGs are fully considered; should this lie with exec staff, a sustainability officer/manager or should responsibility be bottom up and come from employees, even consumers? Should the governments take the leading role?
- How can SDGs be tested and measured within an organisation? How will this integrate with existing risk and materiality lists and matrices? The jury still out.
- The idea that business, as a minimum, should not undermine any of the other SDGs was briefly discussed. The challenge will be in measuring and demonstrating this effectively and consistently so that there are comparable results across businesses, sectors, nations.
- It was noted by a participant that some aspects of sustainability are not covered by the SDGs e.g. Animal welfare. Is there a risk that if the SDGs are pushed to become mainstream, then certain unspecified risks, issues and opportunities may be omitted/ignored?
- A follow on concern was over the possibility that organisations could become reliant on SDGs as a default position, but this will be dependent upon how they are implemented across an organisation.
- The use of social media in promoting company’s sustainability achievements was discussed. Participants noted that their organisation had been achieving element of some of the goals for a long time through various programmes but this had not been promoted to customers (e.g. the collection and redistribution of un-used medicines to those in need for the pharma sector). A concern was raised as to the possibility of greenwashing consumers if organisations start to promote the ways in which they meet the SDGs. How much do consumers really care?
- Will there be cost and resource implications if organisations are to fully consider all SDGs? I.e. through the employment of consultants/new employees, introduction of or revised stakeholder engagement models, extended reporting regimes, etc.? This could be a particular issues for smaller businesses. Although, participants noted that in their experience, all changes implemented to date through considering SDGs have saved money in the medium to longer term.
- It was considered that employee/customer engagement, collaboration and awareness is key.
- SDGs provide a good litmus test; this combined with COP21 enables business to think about achieving goals allowing people without sustainability knowledge to feel empowered and to gain understanding.
- SDGs could be used as a benchmark/checklist to indicate a company’s sustainability performance at a glance. The SDGs could be used as a sense check tool and a driver for setting realistic business goals.
- SDG's can to be a metric in financial reports, which could ultimately link to company profitability.
- Materiality matrices can be used by an organisation to decide which CSR initiatives to invest in. There was a common agreement that companies address the SDG's by linking the goals to their business operation i.e. the SDG's can be used to codify what the company already does well and select a goal which best suits the organisations business.
- Organisations amend and adapt existing sustainability/environmental policies as required; that is, there should not be a need to overhaul policy and process, but maybe one to revisit, revise and intensify in certain areas of relevance.
- There are a lot of companies less mature in implementing sustainability initiatives and therefore may wish to consider using the SDG's as a base/starting point and then tailor their initiatives. SDG's should be incorporated into the business strategy.
- SDGs provide organisations with an opportunity to ‘tweak’ their business models and it was suggested that they could help to test boundaries, gain perspective and provide direction.
- Most participants agreed that it is not about making people understand each SDG, but about translating the goals into "user friendly" language, making stakeholders aware of the issues and what they can do to implement actions.
- For companies to meet the SDGs, there will be a clear need to collaborate with suppliers and business partners, even consumers, to align all vested interests as one.
- One of the participants who works for a pharmaceutical company noted a programme that they currently run which enables employees to volunteer in NGOs/charities for 6/12 months to share business skills and gain new experiences. This programme provides an existing mechanism to better understand the context of the SDGs and inform the organisation through its engagement for longer term value creation.
- Another participant reported that they had asked current employees what they consider to be the most important of the SDGs so that they can look to focus upon those first rather than considering profitability in the first instance (starting from the inside).
If business is going to make visible progress against the SDGs, does it need to get better at measuring social impact? With this being an embryonic area for many businesses, we discuss the obstacles and solutions to measuring impact. Is it realistic to imagine business assessing and reporting impacts through an SDG lens?
• Easy things that have a measurable and quick financial benefit get prioritised, as opposed to more difficult initiatives with less tangible benefits.
• With social impact, how can you show tangible benefits? Surveys are an obvious solution, but survey fatigue is a common problem here.
• Organisations often track the ‘hard’ data such as number of hours volunteered or the number of employees volunteering, but this does not demonstrate impact.
• Many companies find it easy to track outputs, but are not tracking impacts well. KPIs are not necessarily impact-based. Some companies are even tracking data from what employees do outside of work, which is not relevant to the impact the organisation is making.
• Organisations find that there are many employees doing voluntary work, but it is more about following their interests than using their skills to make a real impact. It is difficult to strike a balance between encouraging employees to leverage their skills in a certain way and disengaging them altogether.
• When measuring impact, it is important to distinguish whether you are measuring SROI or social impact.
• Investors want to look for companies that are making an impact, but they are unsure how to do so. What kind of measure can capture this in a manner that is fair to businesses of all sizes, not just larger ones?
• Reporting is often dependent on a partner to provide information, which an organisation cannot always influence.
• To measure and communicate social impact, we need to allow the impacted communities to tell the story in their own way.
• Qualitative data tends to engage people more than numbers.
• For Southeastern, community investment and engagement is now key focus area. The company wants to have a narrower focus that’s aligned to the business to support local community.
• For Sainsbury’s, the SDGs provide a way to decide which programmes to pursue. The company can see how well aligned potential programmes are to the SDGs and choose in that manner. Small companies can also use this approach.
• Many roundtable speakers agreed that their companies were going to align their core business strategies with the SDGs, arguing that the whole point of the SDGs was to make a difference to the way businesses are run. One member added that integrating the SDGs into a business is a lot of work to begin with and it would not be worth the effort unless the commitment included core business strategy.
• However, it is a matter of luck whether or not your strategies are already fairly well aligned with the SDGs. If so, it makes it much easier to commit to integrating them. Some companies have come forward to say they will be going against the SDGs as their existing commitments are not in line with them.
Do you agree that the spirit of the SDGs suggests business should be reporting against all 17 goals? What obstacles need to be overcome, and are they overcome-able? Whilst a 2015 PWC survey found 1% of businesses are planning to assess against all SDGs, some investors are calling for SDG dashboard. Pie in the sky or game changer?
Companies are urged to report only on their material issues. Materiality in this context is defined as the environmental, social and governance issues that are considered important by the company and its stakeholders. But some organisations are urging companies to report on all 17 SDGs, whether material or not, which is burdensome. What should take precedence: materiality or the SDGs?
This tension is interesting – climate change, water and communities cover 6 of the goals and are relevant to others. CDP is prescriptive, participants are scored on how well they answer questions. Not all questions are material to all companies but good to measure. You don’t know what is material until you measure, must go through this process. Institutional investors and customers are interested. What do you put in your annual report? How do you decide what is material you need large data set.
How do you compare companies if they are deciding themselves what they report on? Sector specific measurement is needed to work out the relative impact to the company. CDP is a significant reporting burden on companies and this will be a disincentive.
Achieving targets will plateau – only way is to embed at all levels and getting language purpose and change at the heart of the organisation. Also a commercial dashboard is a good idea.
We would not have problems we have today if business was a good agent for change. That is why important to report on all 17. Cherry picking is dangerous. Oxfam will look carefully at materiality and look at the total effect on communities – for example emissions as well as health materiality. Must be doing no harm on the SDGs they don’t report on.
We should look at the point of reporting, it must not an end in itself. There is a perception is that they are separate. Point is to have a positive impact and the company has done materiality study. There should be clear robust roles and internal conversations before external, Cherry picking recognising where impacts are. Embed meaningful reporting To embed this means it is streamlining and strategic.
Global goals are a “Trojan horse” at board level through integrated reporting.
SDG reporting identifies value at risk. What are global priorities in the country of operation? Key is how to minimise risk. The proliferation of reporting frameworks is means the goals are not meaningful – people are worried about timescales and failing to comply in time. This needs a shift in perception.
The banking sector is concerned about compliance and negative publicity and needs to have good sustainability practices. It is not just reporting, the banking sector wants to do more but has top management holding off. For this reason, mandatory reporting is good.
Competitors read sustainability reports. They are good to have at events. Sustainability reports are proof because they are factual.
Materiality is the most important factor. SDGs are a global materiality process. We should constantly be feeding this back. However, this should be less burdensome process. SDGs are sexy so getting attention against other frameworks.
Is the biggest opportunity to impact the SDGs through employees? Is there a link with the ability to hire and retain staff? We’ll discuss initiatives that can create real change, including creating champions, embedding sustainable actions into BAU, volunteering and innovation hubs. Should employees draw up the plan, or can a top down approach work?
- Employees losing interest in participating in CSR activities and volunteering through the complexity of the 17 SDGs (difficult engagement)
- Different activities through CSR and volunteering are preferred by employees to take place within their local environment/community rather than on a wider/global level
- Approaches on the activities regarding CRS may be given different names every time they occur creating discontinuity and confusion to the employees
- Companies with operations and offices located at different locations have and added difficulty in engaging employees in CSR activities from the Head Office
Red Flags (Warnings)
- When employees are assigned to be CRS champions/ambassadors may not have the drive to create and run events in the location/department responsible
- The financial incentive of the contribution to the different activities (e.g. voucher) may not be relevant to the specific group of people involved
- Activities should align with the core business of the company
- To increase the interest of employees in the engagement of different volunteering activities that they are interested in rather that the company trying to cover the different goals outlined in the SDGs and perhaps at the local scale where the positive impact can be seen by the employees
- There are 17 Goals that the CSR team can focus and align their activities with them while ensuring that the activities proposed are favoured by the employees
- To allow continuity and engagement in the firm’s/company’s efforts in the CSR activities, the activities proposed or implemented should be budged (employees can relate to previous events)
- Engaging employees at different locations of operations can come from a ‘bottom-up’ approach where employees at the different locations can take the initiative (or are assigned by the company) in organising events aligned with CRS and SDGs.
- Allow employees to choose to become advocates of CRS and volunteering practices who are passionate about what they are doing in order to engage more people and satisfy the likings and preferences of the colleagues they are representing. This can also be linked with the marketing department and build momentum and return ensuring alignment with corporate strategy creating a shared value
- Communication of the goals that need be achieved can happen within the same level or responsibility (Operation Managers at different locations) in addition to communication with the headcounters. The exchange of ideas may be easier in this way
- Skills from the company can be used in CSR activities aligned with SDGs while in addition promote the core business of the company
- To have an overview of employees opinion some companies have created ways where the employees can communicate their opinions and suggestions to the manager responsible which in turn can make aware the top management
- ‘Innovate a Team’ create friendly competition through activities between same departments of the same company or contractors working for the same project
- Recognition of the efforts put in the different activities through awards or platforms where they can share the thoughts and opinions or a simple ‘Thank you’ for their contribution in a collective action
The elimination of poverty by 2030 would open up major new markets, but how do individual business find the commercial rationale to engage and invest capital? What obstacles need to be overcome, and what might influence CEOs? The Business and Sustainable Development Commission's Co-Chair, Lord Malloch Brown, will share his thoughts to start the discussion.
What are the obstacles and barriers to more business involvement with the SDGs?
• It is a huge opportunity, we’ve heard many versions of why. Yet, we are still not doing it or enough. Lots of people and companies are talking about it, but why is there no acceleration of action?
• Financial hurdle is difficult to overcome. The first number executives look for is the performance of the company, the second is sustainability.
• It is about the narrative. You need to position it not as the ethically or morally right thing to do, but as an opportunity to manage risk and thereby reduce costs. It should be positioned as directly feeding the bottom line.
• FMCG companies are way ahead of others, mainly because they have been in the developing markets for much longer.
• Leadership is so important. You need to have the right person at the top, who understands what sustainability is all about. It is no use to have a sustainability committee which defines it as sustainability, rather than focus on management of risk on resources.
Why have we seen such a rise in climate action by companies, but we’re not doing the same on the SDG agenda?
• Difference between climate change agenda and SDG agenda; a lot of sustainability questions will be about home geographies. Poverty is about away geographies which are considered foreign, instable, where purchasing power is very marginal.
• How can we easily change the business narrative for the SDGs? It must clarify that it will help them avoid problems, and that if they don’t, the problems will just become more acute. There won’t be another time for short-term easy profits.
• Reporting is too complicated; 169 indicators! However, each business has many departments, with x number of KPIs. Companies should be encourage to pick SDG indicators that can relate to the business.
What market forces or market barriers are there to business involvement with the SDGs?
• The timing of the Commission is not that good. Great intellectual interest, but markets are not being very kind. All big BRIC economies, being cutting investment, rather than increasing it. There is no economic appeal.
• For example, if you bought a Greek port, it would cost less than building a new port in East Africa. Opportunities like this will drive them away from long-term investments. Depreciation of Southern European assets.
What can be done?
• We need an app! Technical yet analytical tool that can show companies when they have done x to my local supply chain, the app will tell you what the contribution is to the SDGs. Modelists do it all the same, we know how to do it. PWC is already looking at how we can build that into the modelling.
• The challenge is that sensors are bit shaken; we need good data on which to make the decisions; what is the commercial case, why is the decision worth making in the first place?
• Messaging on the opportunity. It has taken 15 years to accept price on carbon. Price on water, price on clean air. People say there isn’t enough capital available on good investments. Not true. There is, but they aren’t being presented with the right opportunities.
• Consumer activism. Purchasing behavior is still driven by quality and price. There is lack of translation of ethic. You need to tell the story to the consumers; the good they are doing by making that purchase.
• Small & Medium Enterprises. Talking about low-hanging fruit. Managing on risk; focus of sustainability programs. Little add-ons, it’s not major investment, could reach x hundred thousand people. A lot less scary for smaller companies.
• Another driving is burden platform. They can get to safer ground quicker, most interested in cost and sales. It becomes integrated, not separate. Better management of resources. Better way of running company.
What are the risks?
• Is there a risk for green washing exercise? That it is all just a PR exercise? Once you set yourself up for doing that, then expose yourself to huge amount of risk. When companies is changing its whole investment horizon, across supply chain, escapes green wash risk.
The SDG's call for renewed collaboration between government, civil society and business, amounting to a new social contract. After opening thoughts from Dinah MacLeod from the Business and Sustainable Development Commission, the table will share their thoughts on what this new social contract might look like. Is this a chance for business to rebuild trust?
The Edelman Trust Barometer was cited as an example that shows that people actually trust business more now than at any point in history (although this is tempered by geographical variations, especially in the UK where trust is much lower). Indeed, some businesses have made sincere efforts to gain, build and (in some cases) rebuild trust.
• Tax, governance and transparency, where trust is often completely broken.
• Is our current model of setting up and structuring businesses working? Should we be re-organising corporate governance? (The word ‘governance’ is problematic in many parts of the world, so there has to be a way of addressing the issue without using the word.)
• The largely voluntary nature of reporting and accountability is seen as an artificial construct to get businesses to act.
Scorecards and reporting
• Businesses may be performing very well in some areas (those it deems materially relevant enough to report on) but can at the same time be undermining other SDGs without reporting it.
• There’s a challenge for businesses to share a more rounded picture of their activities that isn’t just self-selecting.
• GRI is a reporting standard, not a performance standard, leading to misunderstanding about the role of GRI. You may be a very transparent company, but you may not be any good.
What kinds of business platforms are needed to help build the key elements of a new social contract?
• It’s not just about business platforms – that’s a very siloed approach. Any platform must be multi-stakeholder and have a proper governance structure (which could be the UN, or a multi-stakeholder structure to oversee the platform) and has to bring everyone to the table.
• WBCSD and UNGC are already there, but they fall short, as they’re not really being challenged, and WBCSD doesn’t really have a structure that enables challenge. They must talk about capital, financial markets and good governance (though note earlier comment on use of the word ‘governance’).
• If the SDGs were the cornerstone of a new social contract, then businesses, civil society and government could use these and state that they will not undermine them and do what they can to further them. The draft UN Guiding Principles used Yes/No questions; perhaps this could be applied here?
• The government has a key role to play in driving change, by challenging bad practices and being bold. You only get real change with legislation (e.g. Modern Slavery Act, UK Bribery Act) because there are implications. For example, carbon reporting is still voluntary, but the government could drive real change here too.
• Policy change comes from grassroots and it needs people to drive it through.
• Some great projects have already happened in countries where governance is not very good, but the model could be used to show the good work that has been done, to encourage more of the same.
• Businesses love scorecards and benchmarking schemes, but it would be more interesting to have multi-stakeholder input into these to give a more realistic picture.
When is it legitimate for businesses to lobby?
When a business has a mandate from its customer, and stakeholders, and acts in collaboration with other actors.