The Sustainable Development Goals (SDGs), or Global Goals as they’re also called, provide a powerful framework if your company looks to do well as business while having a positive impact on social well-being and protecting the environment. It doesn’t matter if you’re a small or large business or in which sector you operate, supporting the Global Goals can open up important market opportunities in both developed and emerging economies. Still, many companies hesitate to incorporate the goals into their strategies. They shouldn’t. Below, we share 10 good reasons why your business should deliver on the SDGs.
This is a blog post in the FairChange series Social Impact: Strategies for Success, about 5 key areas of opportunity to upscale the value you create for society – and for business.
In our work with companies I often hear managers and team members say, sure, they’ve heard about the Sustainable Development Goals, but shouldn’t governments and international NGOs deal with them in the first place? Smaller businesses often think that aligning their strategies with the Global Goals is complex, time-consuming, and costly.
And then, some companies haven’t heard of the SDGs at all. In that case, their first question is what are these goals? And the second, why should they care?
Well, here are 10 answers to that question, and that we will detail in this article:
- Use the SDGs inform your company’s strategic planning
- Take advantage of new market opportunities by supporting the Global Goals
- Upscale your social impact by achieving the SDG targets
- Incorporate the Sustainable Development Goals to address costly global risks
- Promote innovation through the Global Goals
- Implement the SDGs to improve worker well-being and productivity
- Responsibly manage your supply chain through SDG support
- Reach new customers who care for sustainable development
- Demonstrate SDG related impacts to enhance access to capital
- Embed the Global Goals to stay ahead of new rules and guidelines
Do you prefer to read and keep this article as a downloadable file, with some extra facts and bonus tips? Get the eBook on the Business opportunities of delivering on the SDGs here!
Before we dive into the 10 reasons why supporting the SDGs is good for your business, let’s recap what the Global Goals are and what is the role of the private sector.
What are the SDGs and why should your company care?
The Sustainable Development Goals are the most comprehensive universal roadmap to date to achieve full economic growth that benefits everyone, environmental protection, and just and inclusive societies, by 2030.
The SDGs were approved by the 193 government members of the United Nations after a three-year consultation process with multiple stakeholders from around the globe, including businesses and industry representatives. The goals form part of the Agenda 2030 for Sustainable Development, which is inspired by the commitment to “Leave no one behind” and came into force on January 1, 2016.
With 17 goals, 169 targets, and 232 performance indicators, the SDGs are a voluntary action framework that is applicable in all countries – developed and developing economies alike. They call for action from sectors across societies. Businesses and other private sector organizations are key players in this joint global effort.
Large companies can provide the necessary financial resources, technical know-how, and capacity for innovation. Small or medium-sized enterprises, especially if they’re operating in disadvantaged markets, create the local employment and market development opportunities to make ‘leaving no one behind’ a reality for vulnerable workers and consumers who are often overlooked.
Too ambitious and out of tune with business?
That said, the SDGs have been criticized for being too broad, lacking focus and, from a business point of view, for being formulated in a way that does not resonate with daily operating realities. In fact, if you read through the extensive list of targets you can easily be discouraged by the sheer number of topics and the abstract language that appears to mainly address governments.
However, this should not stand in the way of your company taking action on the SDGs. The Business and Sustainable Development Commission (BSDC) estimates that ‘first movers’ who align their resource use and workforce management with the Global Goals today, will have a 5 to 15-year advantage over companies who don’t.
That’s why more and more businesses around the globe are starting to incorporate the SDGs into their strategies. If you are a company that’s already experienced in making a profit while respecting people and the planet, the Global Goals will inspire new actions to upscale existing efforts. Are you a startup or has your company just taken the first steps on its sustainability journey? In that case, the SDGs are an essential starting point.
Now, let’s find out why.
10 Reasons why delivering on the SDGs opens opportunities for social and business value
There are many benefits of supporting the SDGs. Below, we’ll detail 10 business opportunities that your company can seize when it commits to creating a positive social impact:
1. Use the SDGs to inform your company’s strategic planning
According to a recent study by BSR/ GlobeScan, companies around the globe are increasingly using the Global Goals for target-setting. Europe tops the list with 49% of surveyed companies that are currently using the SDGs for setting performance targets and 27% intending to use them in the future. For Asia, Latin America, and Africa combined, these figures show that 40% of businesses use the SDGs, and 31% are planning to do so.
Most, if not all, Sustainable Development Goals and targets relate directly to risks and opportunities for your business. This makes them a powerful tool to inform your organization’s strategic planning. An example is Goal 12, which calls for action on sustainable consumption and production in developed and developing economies. Another is Goal 5 that focuses on promoting gender equality at all levels of society, including in the economic sector and the workplace.
The long-term scope of the Agenda 2015-2030 makes it easier for your company to prioritize goal achievement over time, including them in 2, 3, or 5-year strategic planning cycles. Whenever it makes sense, you can team up with other businesses as well as public and civil society actors to address the SDGs that your organization has identified as priorities. The local networks of the UN Global Compact can help you find allies in your country, with a portfolio of multi-stakeholder action platforms to explore new market opportunities.
2. Take advantage of new market opportunities by supporting the Global Goals
According to the BSDC, a commitment to the Global Goals by companies around the world can open up 12 trillion US dollars in market opportunities. This “SDG prize” is reflected in four key economic systems: food, cities, energy and materials, and health and well-being. SDG uptake by businesses across other sectors, including information and communication technologies, education, and consumer goods, could create a further 8 trillion dollars a year of additional value.
More than 50% of the opportunities unleashed by business support for the SDGs are concentrated in developing countries. Several trends are making these opportunities even more compelling, as demonstrated by the SDG Industry Matrix. It cites UN prospects on population growth in developing regions, expected to increase from 5.9 billion in 2013 to 8.2 billion in 2050. In developed regions, the population will remain around 1.3 billion people. At the same time, between 2010 and 2020, the world’s bottom 40% will nearly double their spending power from 3 trillion dollars to 5.8 trillion dollars.
Whether you are a domestic company in a developing market or a firm with international operations in emerging economies, you can benefit from these changing demographics by developing products, marketing activities, and distribution channels to reach these expanding customer segments. With socially and environmentally responsible goods and services that are high-value and accessible to low and middle-income clients, you’ll support the sustainable development of these new markets.
3. Upscale your social impact by achieving the SDG targets
Many SDGs with their related targets and performance indicators address the basic needs, well-being, and rights of people and communities. This makes them a useful blueprint if your company wants to develop or upscale social management and measurement initiatives.
Are you developing health programs or initiatives that promote access to education for at-risk communities? Global Goals 2 and 4, focused on healthy lives and well-being, and on quality education for all, respectively, can be easily translated into social impact targets and key performance indicators (KPIs) that respond to specific needs in local operating contexts. These are just some of the many opportunities for social impact planning and measurement the SDGs offer. The ‘people-centered’ SDGs account for almost half of the 17 Global Goals, and the ‘green’ goals that focus on responsible environmental management have a positive impact on people’s well-being, too.
The SDG Compass, an initiative from the UN Global Compact and the Global Reporting Initiative (GRI), offers an inventory of existing business indicators mapped against the Global Goals. This is a useful tool to start with, allowing you to pick the SDG-related indicators that best fit your company’s impact measurement needs.
4. Incorporate the Sustainable Development Goals to address costly global risks
If your business incorporates the SDGs into its strategies, it helps mitigate global risks that are placing important constraints on the world’s future growth prospects. Many of these risks, such as violence and armed conflict, ecosystem damage, and corruption, have a direct or indirect impact on business operations and international supply chains. The cumulative economic impacts of these and other global burdens are equal to one-third of the global gross domestic product (GDP), according to the BSDC calculation of the SDG-prize.
As the World Business Council for Sustainable Development (WBCSD) points out, the cost of inaction –doing nothing to address the growing list of environmental and social threats that restrain future growth prospects– represents a mounting business cost. That’s why experts agree that acting on the SDGs is not an option: it has become a necessity if we want to preserve secure and stable business environments in the long term.
5. Promote innovation through the Global Goals
The SDGs provide multiple inputs for business innovations. This issue is addressed by the three “I’s” of Goal 9: infrastructure, industrialization, and innovation. According to the Voluntary National Reviews 2018, this goal is addressed as a major priority across continents. Are you operating in one of the many countries where national policies help promote favorable environments for innovative business? Then this is an opportunity worth seizing.
Data studied by the MIT Sloan Management Review and the Boston Consulting Group, demonstrate that business innovations aimed at promoting sustainability clearly pay off. Companies that commit to sustainable business –most notably in Australia, Europe, and Latin America– achieve significant efficiency gains and lasting business value.
Innovation doesn’t necessarily mean costly solutions driven by advanced technologies and knowledge from developed countries. An increasing number of companies in low-income markets are creating new products and services that are affordable and provide clever solutions to pressing local needs. These are high-impact innovations that improve social well-being and environmental sustainability, as researchers Bubell et.al. show in their overview of new trends in emerging-market innovations.
6. Implement the SDGs to improve worker well-being and productivity
Aligning business models with the SDGs is estimated to lead to the creation of over 380 million jobs in four key economic systems: food, cities, energy and materials, and health and well-being, according to the BSDC.
Many of these new jobs will be in small and medium-sized businesses and in developing markets. The OECD and the World Bank calculate that in emerging economies, MSMEs (micro, small, and medium enterprises) create four out of five new positions in the formal sector. Often, these are jobs for poor people and marginalized groups such as women or at-risk youth.
Several SDGs provide guidance if your business is committed to investing in more jobs and better working conditions. Global Goal 8 promotes employment for everyone and the protection of labor rights for all workers. SDG 4 provides another opportunity for strategic alignment in favor of employee well-being, with targets on the promotion of vocational training and continued skills development for workers and job seekers.
A 2018 meta-analysis of independent studies across industries in 73 countries finds a strong positive correlation between employee wellbeing, productivity and firm performance. In 2015, a University of Warwick study showed that happiness made workers around 12% more productive. Incorporating SDG 5 about gender equality also pays off. According to a McKinsey study (2017), data from countries across the globe shows that firms with a significant number of women on their executive teams were 21% more likely to outperform on profitability.
7. Responsibly manage your supply chain through SDG support
Does your company source its materials from suppliers in poor regions of the country? Or are you an international business with a global supply chain that works with local enterprises in emerging markets? The SDGs provide multiple approaches if you want to take action on responsible supply chain management and mitigate supply chain risks.
The BCSD lists driving sustainability through the supply chain as one of the top four actions that companies should take to seize the opportunities offered by SDGs. SDGs we already mentioned such as goal 8 (decent work and economic growth) and goal 12 (responsible consumption and production) are good starting points. Related targets address improved worker conditions in global supply chains, efficient use of natural resources, and environmentally sustainable sourcing of materials.
According to MIT Sloan and Boston Consultancy Group, the most common sustainability opportunity that successful businesses have benefited from is to develop supply chain efficiency. So, by coupling efficiency gains to ethical business practices, your company helps achieve socio-economic inclusion and prosperity for all.
8. Reach new customers who care for sustainable development
In its Policy Note on sustainability, the OECD cites evidence that consumers in both developed and developing markets are increasingly looking for goods that are made in a way that respects people and the planet. A meta-study by Tully and Winer shows that people are willing to pay a significant premium for goods that contribute to a positive social impact, by 17% on average.
Supporting the Global Goals allows your company to serve consumers who prefer to buy from businesses with a proven social impact. You can do this by incorporating SDG targets related to decent jobs for everyone, including at-risk youth and migrant workers, to stop child labor and modern slavery, and to promote access to quality education and healthcare for vulnerable populations.
“Green” Global Goals such as SDG 7 (affordable and clean energy), SDG 13 (climate action), and SDG 15 (protection of terrestrial ecosystems, forests, and biodiversity) also include workable targets if your business commits to responsibly managing of the environment and its consequences for people’s well-being.
9. Demonstrate SDG related impacts to enhance access to capital
The Sustainable Development Report 2019 of the Bertelsmann Stiftung and the Sustainable Development Solutions Network highlights a growing trend among investors to channel their investments into organizations that can demonstrate how their actions have a proven impact on the SDG targets. Expert organizations predict that this trend will intensify. According to the Cambridge Institute for Sustainability Leadership, it is probable that in the future all funds will be expected to explain how they relate to the priorities set by the Sustainable Development Goals.
This is good news if your company is committed to social and environmental sustainability. A compilation of best practices published by the Global Impact Investing Network (GIIN) shows how funds provide capital for companies and projects promoting progress towards a variety of Global Goals. With a strong focus on developing markets, these impact investors finance sustainable infrastructure, clean energy, agribusiness, healthcare, and education, among other topics, while integrating related SDGs into their investment management and impact measurement processes.
So, aligning your commercial activities with the Global Goals and demonstrating real impact can open new opportunities to attract capital. This, in turn, will improve your capacity to make a positive contribution to people and the planet.
10. Embed the Global Goals to stay ahead of new rules and guidelines
More and more national governments and international bodies, such as the European Union, are installing policies aimed at achieving the SDG targets and mechanisms to control and measure results. In the near future, new regulations requiring businesses to incorporate the SDGs are to be expected. Not strategically integrating the Global Goals today represents regulatory risks for companies in the medium term.
Policy makers’ increasing commitment to the SDGs also holds potential for your business. The European Commission’s new leadership, for example, identified action on the SDGs and the future of the planet as a priority and announced measures to help small and medium enterprises in this effort. Are you based outside of the EU and exporting to European Union countries or planning to do so? In that case, aligning your production processes with the Global Goals is a logical step to stay ahead of your competition within the EU-market.
At the same time, the Voluntary National Reviews 2018 show how countries from regions such as Europe, Latin America, and Asia are introducing government policies to promote enhanced sustainability reporting among businesses. In the near future, your company should expect more countries and multilateral organizations to include reporting requirements aligned with the SDGs into their regulations. The Reporting on the SDGs Action Platform, launched by the Global Reporting Initiative (GRI) and the UN Global Compact, helps you with a series of practical guidelines.
Your next steps to contribute to a just and sustainable world
In this blog post we’ve given you 10 compelling reasons why your business should not wait to support the SDGs.
Prioritizing those Global Goals where your business can have significant impacts will help you transform lives while preserving the environment. You´ll find complementary strategies in the other eBooks in our series: Social Impact: Strategies for Success. These will help you dive deeper into impact opportunities such as human rights promotion, conflict prevention and stakeholder engagement.
You can find the complete series on the FairChange Academy Digital Learning Platform, where you’ll also have access to other resources to help you put your social commitment into practice!
- UN Sustainable Development Goals (SDGs)
- Resolution adopted by the UN General Assembly on 25 September 2015: “The 2030 Agenda for Sustainable Development”
- Business and Sustainable Development Commission: Better Business Better World
- “State of Sustainable Business 2018”, a study by BSR/ GlobeScan (2018)
- Global Compact Action Platforms
- United Nations Global Compact: SDG Industry Matrix
- SDG Compass: Inventory of Business Indicators
- Business and Sustainable Development Commission: “Valuing the SDG Prize in Cities”
- World Business Council for Sustainable Development (WBCSD): CEO Guide to the Sustainable Development Goals
- Voluntary National Reviews 2018 Report
- Report: “Corporate Sustainability at a Crossroads“, by MIT Sloan Management Review and The Boston Consulting Group
- Article by D. Bubel, Z. Ostraszewska, T. Turek and A. Tylec: “Innovation in Developing Countries-a New Approach” (2015)
- OECD and the World Bank: “SMEs and SDGs: challenges and opportunities”
- The London School of Economics and Political Science: “Happy employees and their impact on firm performance”
- University of Warwick Publication: “Happiness and Productivity”
- McKinsey & Company: “Delivering through diversity”
- OECD: “Policy Note on Sustainability”
- Study: “Are People Willing to Pay More for Socially ResponsibleProducts: A Meta-Analysis”, by S. Tully and R. Winer (2012)
- Bertelsmann Stiftung & Sustainable Development Solutions Network (ed.): Sustainable Development Report 2019
- Cambridge Institute for Sustainability Leadership: “In search of impact – Measuring the full value of capital: Update: The Sustainable Investment Framework”
- Global Impact Investing Network (GIIN): “Financing the Sustainable Development Goals: Impact Investing in Action”
- Reporting on the SDGs Action Platform