“You have to decide if you want to make a difference or if you only want to run a business.”
Mads Nipper, the CEO of Grundfos, the largest water utility in the world, paced the dais of the United Nations (UN) General Assembly hall. He was not the first CEO to grace the chamber that day, but his message was clear. When it comes to addressing the Sustainable Development Goals (SDGs), corporate leaders have an important decision in front of them: embrace potentially disruptive innovations that contribute to achieving the goals, or blindly continue doing business as usual.
Nipper was just one of the hundreds of corporate leaders attending the UN Global Compact Leaders Summit in New York in June. The meeting represented the first convening of the members of the Compact since the ratification of the SDGs last September. Earlier that afternoon, UN Secretary-General Ban Ki-moon directly spoke to those convened. A humble yet persistent advocate for the goals, he encouraged corporate leaders to consider how to collaborate with government. “Governments and the private sector,” he said, “must align their investments and infrastructure decisions with the Sustainable Development Goals.”
The United Nations has advocated an ambitious agenda for the next 15 years, and the private sector will be a critical ally in making progress toward the goals. Today the UN Global Compact has over 13,000 signatories in 165 countries, and 80 local chapters that are the nexus of the UN’s plans to make #GlobalGoalsLocalBusiness, a hashtag that was anywhere you could look at the summit. Over the course of a day and a half, the UN Global Compact team hit home its most important message for its members: business is the turnkey for the goals. The agenda was strategically filled with a broad range of speakers, each of whom described how their organization or initiative was addressing anywhere from one to four of the goals. Initiatives to drive girls’ empowerment, access to healthcare, effective waste management, water, sanitation, energy, and education were all on display. Power and finance executives alike came to the stage to share how their companies are striving to advance the post-2030 agenda.
What’s in it for Business?
While the events of last fall were more closely aimed at celebrating the commitments of governments, this summer’s event was focused on the SDG-value the private sector can deliver, and of course, educating corporate leaders on the value of the SDGs to their bottom line. One speaker after the next pointed to an even bigger goldmine within the SDGs—bringing 1.2 billion people currently without power online; opening impact investment to provide access to finance; bringing two billion women into the global economy. These examples offered bold seeds of promise of what the next 14 years will yield, but the opportunity the goals represent for a particular company can sometimes be difficult for business leaders to decipher. “The goals reflect the complex, interconnected operating environment that companies face across the board,” said Lise Kingo, the Executive Director of the UN Global Compact. The goals effectively summarize the advances needed to address the landscape of challenges present in the world today, many of which require a private-sector response. In the past 15 years, dramatic changes have swept the globe, most notably the internet and mobile technology. These new market realities are forcing businesses to adapt, to forgo old habits and develop new products.
Francesco Starace, the CEO of the Italian power utility Enel, spoke about the way his company is adapting to the changing landscape. Previously, the company developed large, centralized power plants, which cost hundreds of millions of dollars and took a decade to build. During that time period, the investment is financially inaccessible to the company, while they wait for the plant to come online and start generating revenue. Imagine a plant under construction in 2002, which came on line in 2012. In that period, the number of internet users worldwide increased from 665 million to 2.5 billion. In 2002, the iPhone had not yet been invented, but by 2012, Apple would boast that they had sold 125 million iPhones worldwide. Enel has adapted to this rapid rate of change by favoring microgrids over traditional grid-tied plants. Many microgrids use solar power, making them both easy to build and environmentally sustainable. While the company could have seen the changes in the business landscape around them as a death knell, they saw it as a harbinger of market opportunity. “Open up your mind and heart to the endless opportunities of collaboration,” said Starace.
While Nipper encouraged the audience to believe that “social responsibility is not a department, but a way of doing business,” the gap between those who see the goals as a philanthropic initiative versus those who see it as a business imperative is still wide. While some goals are perhaps more relevant to different industries and sectors than others, the UN Global Compact hopes to help its members see the forest, not just the trees. The campaign to advance the private sector’s role in the SDGs is not about any one goal, but instead about the fundamental shift in business mindset it seeks to foster. The true benefits to business inherent in the global goals are the challenges reframed as opportunities. By developing solutions that advance the SDGs, business is investing in a dramatic market expansion opportunity.
Research Shows Growing Business Commitment to the Goals
Two reports featured prominently at this year’s Summit: the Accenture CEO study and the Global Opportunity Report. The 2016 UN Global Compact-Accenture Strategy CEO Study provided an overarching view of how business leaders see the role of business in advancing the post-2030 agenda. The study includes more than 1,000 CEOs from more than 100 countries, representing more than 25 industries, providing a comprehensive sample of the views of global business leaders.
In general, these leaders characterize their own responsibility for sustainability. According to the report, 70 percent see the SDGs providing a clear framework to structure sustainability efforts, 87 percent believe the SDGs provide an opportunity to rethink approaches to sustainable value creation, and 89 percent say commitment to sustainability is translating into real impact in their industry, although the definition of ‘impact’ in this case is left unexplored. A scant year into the SDGs, 49 percent of CEOs consider business to be the single most important actor in delivering the SGSs. Peter Lacy, Accenture’s Global Managing Director for Sustainability Services, who introduced the report, encouraged those convened to go further still. “Unlocking the power of business [to address the goals] will demand going beyond ideas,” he said. Indeed, accepting the clarity of purpose provided by the framework is only the first step.
The Global Opportunity Report provides specific actionable recommendations for how business can use the SDGs as a lever for greater profit and impact. Smart farming, the digital labor market, closing the skills gap, and reducing food waste are identified as the greatest opportunities facing business.
Marianne Hahr, who manages the report, shared three insights to help corporate leaders decide where and how to take action:
- “The core can kill you,” Hahr said, meaning that companies that are too focused on core business are blind to what’s happening on the fringe where, Hahr says, most of today’s disruptive (and profitable) innovation is taking place. “If you zoom in too much on the core,” she said, “it blinds you to the edges,” where today’s growth opportunities are found.
- “Risk is rescue,” she advised, pointing to the fact that in 35 years, simple infections will likely claim more lives than cancer, due to resistance to antibiotics. But market failures create business opportunities. “Now,” she said, “there’s a whole market responding to resistance.”
- “Access is everything,” she said, reminding Fortune 500 CEOs and grassroots entrepreneurs alike that the innovation itself is not enough. “The cell phone is not going to eliminate hunger,” she joked. Ensuring the world’s under-served are empowered to use the resources and technology at their disposal will help. For example, she pointed to a new app modeled off Uber that provides farmers with on-demand access to tractors when they need them, showing how a disruptive innovation in one market can be adapted to another. “If we don’t scale, we fail,” she reminded the audience, emphasizing access over acquisition, and meeting consumers where they are.
A few of the corporate leaders I spoke to acknowledged that a key victory occurs when SDG-linked sustainability metrics are tied into the CEO’s performance criteria. The old adage, what gets measured gets managed, has never been more true. According to the survey, 62 percent of the Global Compact CEOs report being willing to link their compensation to “independent measures of my firm’s performance on sustainability.” CEOs who acknowledge that a company’s sustainability is as important as its profits are most likely to lead the way in reinventing the future of business.
Common Cause Creates Potential for Unity of Purpose
Some companies continue to cling to antiquated philanthropic efforts that might best be characterized as “greenwashing.” The UN Global Compact leadership, however, is encouraging companies to closely scrutinize their entire corporate footprint, to stop using visible charitable causes to offset negative social and environmental effects. “Doing good in one area cannot compensate for doing harm in another,” said Kingo.
The UN has laid out a comprehensive set of goals, which provide a common framework to help companies align their business strategies with meaningful efforts to address the world’s greatest challenges. “Never before have we been so united,” said Kingo.
Adena Friedman, President and Chief Operating Officer at NASDAQ, remarked on how difficult such unity can be to achieve. “Catalysts are needed to drive diverse interests together,” she said, referring first to the way the New York Stock Exchange adapted its closing practices, in response to reported challenges. The SDGs, Friedman suggested, can similarly catalyze changes in business practice. Among the many innovations featured at the Summit was the Global Compact 100 Index. Developed by Sustainalytics and launched in 2013, the index is composed of a representative group of Global Compact companies, selected based on implementation of the ten principles and evidence of executive leadership commitment and consistent base-line profitability. After two years, it provides significant evidence of the profitability of compliance with a broad set of environmental and social standards, not just attention to the bottom line.
All for One and One for All
Poet Sarah Kay, offered a supporting perspective, describing a childhood spent seeing the neighborhoods of New York reinvent themselves again and again, watching “a Jewish diner, become a Korean deli, become a clothing boutique.”
My city sheds its skin and reinvents itself again and again
And within it, I am always in a continuous process of becoming.
And isn’t that always how it feels?
Just when you start getting used to something, it begins to change.
Kay reminded her audience of a fable, a young girl who approaches a group of men at work. Asked what they are doing, each has a different answer. Laying bricks, says the first; building a wall, says the second; building a temple, says the third.
She asked her listeners to realize that each answer is correct, and that attention and persistence are better than one right way.
You can lay bricks until walls are constructed, until a temple is built
Or you can dream towards a temple
Until you figure out which walls to build and which bricks to lay.
Recognizing that everything is circular, and that “there can be multiple fronts in the same war,” Kay wove a web of aspirational collaboration around a room of 500 world leaders, encouraging passion, persistence, and patience.
You want to solve world hunger or fix global warming
You want to build a temple all by yourself
But you feel like your hands are too small
They are not—lay some bricks.
Lay the bricks until the walls are constructed, until the temple is built
Or dream towards the temple until you figure out
Which walls to build and which bricks to lay
Allow your perspective to shift and shift again
You are in a continuous process of becoming.
Since the UN published the first set of goals in 2000–the Millennium Development Goals– business understanding, responsibility, and commitment has expanded remarkably, but there is still much to do. There are more corporate leaders who need to be educated about the SDGs, more innovations that need to be invented and scaled, more commitments to be made. The UN has articulated a shared vision and a platform on which to convene, which should not be confused with an explicit road-map. The challenges to be addressed are significant.. Adapting entrenched corporate cultures and traditions to the SDG agenda will not be easy. And,fifteen years will be gone in an instant. But with a little bit of determination, a good helping of collaboration, just enough luck, and some good bricks, there is great possibility and opportunity.
Photo credit: UN Global Compact.
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