Better Business Better World by BSDC
Over the past 30 years, the world has seen huge social improvements and technological progress. We have experienced unprecedented economic growth and lifted hundreds of millions of people out of poverty. We’re benefiting from a life-changing digital revolution that could help solve our most pressing social and environmental challenges. Yet despite these successes, our current model of development is deeply flawed.
Signs of its failure and imperfections in today’s markets are everywhere. Natural disasters triggered by climate change have doubled in frequency since the 1980s. Violence and armed conflict cost the world the equivalent of nine percent of GDP in 2014, while lost biodiversity and ecosystem damage cost an estimated three percent. We continue to invest in high-carbon infrastructure at a rate that could commit us to irreversible, immensely damaging climate change. Social inequality and youth unemployment is worsening in countries across the world, while on average women are still paid 25 percent less than men for comparable work.
Median real wages have been stagnant in developed economies since the 1980s, generating deep anxiety about the impact of automation on both service and manufacturing jobs and opposition to more globalisation. Real interest rates are historically low, even negative, in several major economies, while total debt remains uncomfortably high. Economic views lurch unpredictably between techno-optimism and political pessimism.
The resulting uncertainty makes it hard for business leaders to see the way ahead. Rather than commit to longer-term investments, many companies are treading water – sitting on cash, buying back shares, paying high dividends. The latest global report on trust in business from Edelman shows a double-digit decline in the credibility of CEOs in 80 percent of countries.
What else can business leaders do in these circumstances?
There is a positive alternative: setting business strategy and transforming markets in line with the UN Sustainable Development Goals. For the past year, the Business and Sustainable Development Commission has been researching the impact on business of achieving these 17 objectives, known as the Global Goals, which UN member states agreed to in September 2015.5 Member states will aim their policies towards achieving the Global Goals for the next 15 years
Achieving the Global Goals would create a world that is comprehensively sustainable: socially fair; environmentally secure; economically prosperous; inclusive; and more predictable. They provide a viable model for long-term growth, as long as businesses move towards them together. The goals are designed to interact, so progress on them all will have much more impact than achieving only some. Of course, the results will not be heaven on earth; there will be many practical challenges. But the world would undoubtedly be on a better, more resilient path. We could be building an economy of abundance.
These are results that business leaders will surely support. However, they are less likely to feel responsible for delivering them: one survey shows that half the business community think this is government territory.
However business really needs the Global Goals: they offer a compelling growth strategy for individual businesses, for business generally and for the world economy. Second, the Global Goals really need business: unless private companies seize the market opportunities they open up and advance progress on the whole Global Goals package, the abundance they offer won’t materialise.
The challenge for every business leader is to embrace the Global Goals for Sustainable Development into its core growth strategies, value chain operations and policy positions.
Achieving the Global Goals opens up US$12 trillion of market opportunities in the four economic systems7 examined by the Commission. These are food and agriculture, cities, energy and materials, and health and well-being. They represent around 60 percent of the real economy and are critical to delivering the Global Goals. To capture these opportunities in full, businesses need to pursue social and environmental sustainability as avidly as they pursue market share and shareholder value. If a critical mass of companies joins us in doing this now, together we will become an unstoppable force. If they don’t, the costs and uncertainty of unsustainable development could swell until there is no viable world in which to do business.
The business case for sustainable development as core strategy gets much stronger as the world achieves the Global Goals. Our research shows achieving the Global Goals in just four economic systems could open 60 market “hot spots” worth an estimated US$12 trillion by 2030 in business savings and revenue. The total economic prize from implementing the Global Goals could be 2-3 times bigger, assuming that the benefits are captured across the whole economy and accompanied by much higher labour and resource productivity. That’s a fair assumption. Consider that achieving the single goal of gender equality could contribute up to US$28 trillion to global GDP by 2025, according to one estimate. The overall prize is enormous.