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The business opportunities in addressing the Sustainable Development Goals

The Sustainable Development Goals (SDGs or Global Goals) present a framework for addressing the most pressing challenges that humanity faces today. Each goal is paired with a series of targets and indicators that calls upon government, non-governmental organisations, civil society and private sector to contribute to in order to achieve delivery by the target year, 2030.

To meet the Global Goals by 2030 will require investments estimated at US$2.4 trillion each year.1 It requires contributions from the private sector and long-term planning, which many are not doing as companies often only plan for three-year intervals,2 and investors prefer short-term gains and liquidity.3

However, what if there was a shift in perception, where addressing the SDGs was less of a burden and more of a business opportunity. How can business benefit?

A 2017 report published by the Business and Sustainable Development Commission estimates that the SDGs present a US$12 trillion opportunity for the private sector, comprised of both savings and revenue gains. It has the ability to create 380 million jobs – nearly 90 percent of which are in developing countries. And that’s not all, as this report only looks at four areas – food and agriculture, cities, energy and materials, and health and well-being, there remains additional private sector opportunities in other SDG areas, such as gender equity. A recent McKinsey reportfound that in a full potential scenario, in which women participate in the economy equally to men, would add up US$28 trillion to annual GDP in 2025 compared to the a business-as-usual scenario.

There is a strong business case in addressing the SDGs that opens new markets, improves efficiency, enhances company reputation and drives innovation. Think not just corporate responsibility, but also capital returns.

But first, it is important to find out not just how your company can work with the Global Goals, but how they can work with your company. With any sustainability strategy, contributing towards the SDGs requires strategic alignment with the nature of the business. Below are three examples of diverse approaches companies are taking when integrating the SDGs into their own business.

Ayala Group

Ayala Group has been working with the SDGs even before their official launch, first declaring alignment in their 2014 Sustainability Report. Their approach to sustainability and the SDGs is embodied in their 360° Sustainability Framework, where they translate each risk to an opportunity. Within their yearly integrated reports, Ayala states that sustainability and business strategy are not separate. Rather, they are committed to contributing to the SDGs in such a way that creates shared value – implementing profitable business models which address Philippines economic and development challenges.

The linkages between SDGs and Ayala’s business was first developed in 2014 after connecting indicators to specific business targets defined by a in depth materiality assessment.

Figure 1 Ayala’s 360º Sustainability Framework

The approach has gained the company international recognition, where in 2017, Ayala’s CEO, Jamie Augusto Zobel de Ayala, was distinguished as one of the ten SDG Pioneers, the first Southeast Asian business to make it to the list.

BASF 

To BASF, the chemical company, there are three sustainability pillars: Economy, ecology and society. For a product to be deemed sustainable, it must meet minimum requirements in profitability, eco toxicity, human toxicity and human rights. In 2012, BASF developed a way to evaluate their portfolio to ensure a more sustainable future for their company, the Sustainable Solution Steering. Using a transparent methodology (see Figure 2), BASF is able to categorise all products into four categories: Accelerator, Performer, Transitioner and Challenged.

Figure 2 BASF impact check

For a product to be deemed as an Accelerator, it must make substantial contributions to sustainability within the value chain. Meaning, positive contribution to at least one sustainability criterion (and no negative impacts on other criterion) relevant in the life cycle, such as cost savings downstream, climate change and energy, resource efficiency, water, emission reduction (air, noise, soil), biodiversity and renewables, health and safety, and hunger and poverty – all of which are linked to the SDGs. Accelerators must also perform better than a sufficiently large share of alternative solutions, and must not be directly linked to challenged or disputed societal license to operate.4

BASF has set a concrete goal of increasing the proportion of sales from Accelerator products to 28% by 2020. In 2017, BASF has reported that they have 13,000 Accelerator solutions, valued at €15.5 billion (~US$18.1 billion) in sales.5

Gammon Construction Limited

Gammon is a construction contractor headquartered in Hong Kong, with a strong reputation in delivering high quality projects throughout China and Southeast Asia. Gammon’s approach to sustainability is long-term, devising strategies which span several years (for example, the recent Sustainability Roadmap 2020 covering the years 2012-2020).

In 2017, Gammon began to develop their next forward-looking sustainability strategy, bringing the company to 2030. The SDGs will play a large part in this strategy, where Gammon is taking a strategic approach by consulting stakeholders, both internal and external, mapping the SDGs to their business and consulting the SDG Compass to determine areas where they can make the biggest impact. By doing so, Gammon will ensure that their strategy will be integrated within business operations. Their new strategy will be launched in 2018.

To help more companies build their understanding and start contributing to the SDGs, this year, the CSR Asia Summit will feature a breakout session on “Aligning Commercial Objectives with Achieving the SDGs.” In an interactive format, participants will be given the opportunity to work with their peers to discuss the opportunities within their own business to addressing the SDGs, from new products to embracing technology. We will be hearing from three speakers on the ways in which they are working to address the SDGs in such a way that bring in a profit, and is beneficial to people and planet.

For more information on the session, please contact Julia Whitney at Julia.whitney@elevatelimited.com.

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