Let’s be clear: to date most businesses have barely registered the importance of working sustainably.
Back in 2001, when the UN Millennium Development Goals (MDGs) were launched to make global progress on reducing poverty and hunger, increasing access to education and health care, and decreasing our environmental footprint, it was assumed that foreign aid would finance these efforts, driven by governments, with the support of non-governmental organisations.
This was despite the fact that some of the MDGs could only be achieved in close cooperation with the private sector, such as improving access to affordable essential drugs and technology. As a corporate executive once told me, “there was just nothing in the MDGs that would have inspired us to engage.”
Yet almost by happenstance, business ended up playing a huge role in the MDGs. Extreme poverty for example is a third of what it was in 1990, the baseline year for those goals. This is largely thanks to jobs created by businesses, particularly in China where companies employed millions of people—though not always offering them decent working conditions or adequate incomes.
Businesses have also been paying taxes and investing, which in turn has helped to reduce poverty. In Africa, corporate taxes account for almost a third of all taxes, contributing to 15% of total government revenue. The private sector provides two thirds of fixed capital investment in low-income countries, and in sub-Saharan Africa the share is over 70%.
Additionally, many pharmaceutical companies agreed to pricing mechanisms that made drugs for HIV/AIDS, malaria and tuberculosis affordable to poor people in developing countries, contributing to MDG 6 which focused on health.
None of this, however, was done with the objective of meeting the MDGs by 2015. In fact, businesses have often undermined these goals by trying to avoid corporate taxes—as the Panama Papers have shown—as well as lobbying against progressive regulations, exploiting workers and continuing to degrade the environment.
Now, the SDGs
Fast forward 15 years to 2016. The MDGs have been succeeded by the much more ambitious Sustainable Development Goals, or SDGs, a set of 17 goals and 169 targets to accelerate the achievement of significant global social and environmental progress by 2030. They include eliminating extreme poverty and hunger, as before, but now also include, tackling climate change, reducing inequality and putting sustainable water supplies, energy sources and industry in place.
The good news is that globally, the world has made great strides. It is already for example halfway to meeting the goal to eliminate extreme poverty by 2030, with various projections on what this progress will look like broadly in alignment, as shown in the graph below.
Now the bad news: none of the SDGs will be met without increased efforts, and some of them such as climate change and inequality are actually going backwards. Greenhouse gasses (GHGs) fueling global warming are already at levels that the International Panel for Climate Change consider so high that it will be difficult for the world to be able to address this problem effectively.
Similarly, income inequality is set to worsen globally if current trends continue, as four out of five people live in countries where the bottom 40% of the income distribution has experienced slower income growth than the average population.
And this is where business—particularly the world’s 100,000 multinational corporations—comes into play, since, alongside government, it is the main actor capable, whether deliberately or not, of delivering the SDGs.
Consequently, the Business and Sustainable Development Commission approached the Overseas Development Institute (ODI), the UK’s leading think-tank on development issues, to analyse the scale of the challenge of meeting these new goals—and, crucially, the role that business can play to achieve them.
This time around, at least some businesses took part in shaping the SDGs. Unilever in particular galvanised the process by formulating and coordinating a position for business contribution to these goals, making them much more accessible to business than the MDGs.
Some businesses are already leading the way, and planning to operate sustainably. The drug-maker GlaxoSmithKline, for example, has announced it will stop seeking patents for its drugs in low-income and least developed countries, to enable the world’s poorest people access copycat versions of its medicines at more affordable prices.
Questioning a thousand companies from 90 countries, the PricewaterhouseCoopers SDG engagement survey shows 92% of respondents are aware of the goals (compared to 31% of citizens) and 71% are laying out future plan to operate sustainably, particularly on SDG 8: decent work and economic growth.
Crucially, they added that they were motivated not just by the potential of doing good for society, but also by financial interests.
The problem is that these visionary companies still represent a very tiny percentage of all business. So the question remains: what will it take to convince businesses that sustainable development and the SDGs represent the most significant opportunity for market transformation and inclusive growth? This is where the Business Commission and its work will be critical.
We also looked at what shape the curve will need to be to reach each goal. On Goal 8 for example, looking at the youth employment target, progress will need to look something like this:
The bad news is that on the key goal of reducing climate change and income inequality, the world is heading in the wrong direction and does not only need to improve, it needs a complete volte-face. The graph below shows the scale of the challenge on income inequality (Goal 10).
Alarmingly, overall we show that, without increased effort, none of the SDGs will be met. And this is where businesses come into play. They have the capacity to bend the curve on progress on these goals, as shown by the progress made against the MDGs. Business should especially increase investments in sub-Saharan Africa, the region which is farthest off track from meeting the SDGs. And they should do so, at minimum, for the sake of their own commercial well-being.