“We need business leaders to use their enormous influence to push for inclusive growth and opportunities. No one business can afford to ignore this effort, and there is no global goal that cannot benefit from private sector investment.”
António Guterres, United Nations Secretary General
The SDGs need business leadership and action
While it will fundamentally be up to governments to implement the SDG agenda, the simple fact is that it will not be realized without the private sector.
The critical roles business has to play
An engine of economic growth and employment
The private sector is well positioned to improve lives in the poorest areas of society worldwide. In developing countries, businesses are responsible for 84% of GDP and 90% of employment opportunities. This gives them the scope to deliver on the promise of sustainable and socially inclusive economic development globally.
A driver of technology and innovation
The SDGs will not become a reality without breakthrough innovation across a variety of fields such as energy, construction, food and mobility. Much of this development and innovation will stem from the ongoing creative processes and research and development conducted by companies.
A source of financial investment
The United Nations has estimated that between USD $5 trillion and USD $7 trillion of annual investments are needed to realize the SDGs by 2030. Business has a role to play in meeting these investments needs.
Addressing negative impacts throughout the value chain
It is important not to understate the impact that business can have on the SDGs by mitigating its most salient negative impacts on people and planet. In particular, efforts to ensure corporate respect for human rights throughout the supply chain have the potential to positively impact the lives of some of the most vulnerable individuals in society.
Why business needs the SDGs
While the SDGs need business, this dependence is entirely mutual. Businesses cannot thrive in societies that fail, and long-term success hinges on the SDGs being realized.
The private sector has a clear and vested interest in working to develop and scale up sustainable business solutions, using the SDGs as a lens to address challenges, build a strong growth strategy and access new markets along the way.
The SDGs represent an ambitious and transformative agenda. Businesses that take an active role in leading this transformation and position the SDGs at the heart of operational decisions will ultimately be better placed to harness emerging market opportunities, manage risks and consolidate an enduring license to operate through to 2030 and beyond.
Unlocking USD $12 trillion of market opportunities
A report published by the Business and Sustainable Development Commission in 2017 shows how pursuing the SDGs could unlock USD $12 trillion in new market opportunities per year by 2030, generating more than 380 million jobs in the process.
USD $2.3 trillion related to food and agriculture
Reducing food waste in the value chain (USD $155–$405 billion)
Telehealth to remotely diagnose patients (USD $130–$320 billion)
Lowering the cost of capital through aligning with the SDGs
There are increasingly strong signals that companies which demonstrate having a positive impact on the SDGs ultimately stand to enjoy a range of benefits when it comes to access to capital. Many of the world’s largest institutional investors see the SDGs as a key framework to serve the growing demand for impact investments. They are increasingly seeking to align their portfolios with the ambitions of the SDGs by channeling investments into organizations that can demonstrate robust SDG impact.
Other emerging financial instruments such as SDG bonds, pioneered by the likes of Enel, HSBC and the World Bank, ESG-linked loan facilities, and blended finance mechanisms are providing yet further signals that SDG alignment has the potential to be a determining factor in lowering the cost of capital in the long term.
Enhanced risk management
Integrating the SDGs into business strategy and operations can protect an organization against several risks.
As environmental and social issues continue to grow in prevalence and extremity, businesses that have not put plans in place risk feeling the impacts more acutely. Long-term economic growth can be hindered, and markets disrupted, by extreme climate events and social unrest. Taking steps to address the SDGs is not only what is best for the planet, it is also necessary to safeguard future business performance.
As the 2030 deadline for the SDGs comes closer, many governments may introduce new policies to ensure the Goals are achieved on time. Regulations that impose costs on greenhouse gas emissions and other unsustainable business practices could see companies that do not comply risk paying the price in terms of higher taxation, or even in terms of their license to operate.
Stakeholders around the world are looking for businesses to step up and lead when it comes to realizing the SDGs. Businesses that fail to take action, or to robustly report on their progress, risk fanning the flames of already decreasing trust in the private sector and stand to suffer long-term reputational damage.
Test your knowledge
The SDGs are our sustainability roadmap for 2030, but how much do you remember about the benefits of aligning your business with them?