Private Sector's engagement in Sustainable Development Goals
This year’s High Level Political Forum on Sustainable Development (HLPF) focused on the theme of “leaving no one behind.” The discussion at the HLPF emphasized that the Sustainable Development Goals (SDGs) can only be achieved through cooperation, collaboration and inclusion from all sectors and people. Although member states are officially responsible for meeting the SDGs by 2030, other sectors also have the moral responsibility as well as the valuable ability and capacity to help governments achieve their targets. The private sector, civil societies and representative organizations play a vital role in collaborating with member states to make the sustainable development goals become a reality.
On July 19th, the 2016 International Chamber of Commerce (ICC), the UN Department of Economic and Social Affairs (UN-DESA), the UN Global Compact, and the Global Business Alliance (GBA) for 2030 co-hosted a “Sustainable Development Goals: Business Forum.” The aim was to assemble businesses from different backgrounds within the private sector, discuss practical solutions and share resources to help other actors implement the 2030 SDGs. The discussion highlighted that private sector engagement in pursuing the SDGs could have financial as well as social and environmental benefits.
The day-long meeting was divided into four main sessions: 1) business for agenda 2030, 2) private sector investment in the 2030 agenda: going from billion to trillions, 3) private sector participation in partnerships, and 4) monitoring the SDGs: the business perspective. Each session was led by a moderator and supported by panelists from different backgrounds, ranging from the United Nations Development Program (UNDP)
policy advisor to the Vice Chairman of Corporate Investment Banking (Citigroup Inc.) to the Founding President and CEO of World Ocean Council. In addition, companies such as Mastercard, Pfizer and Microsoft presented examples of their own contributions to achieving the SDGs.
Education is fundamental and those who need it the most are the ones that do not have access to it. As a part of its Corporate Social Responsibility (CSR), Microsoft implemented projects in Kenya to establish internet networks and provide training for teachers and give computers to schools. Providing a resource of knowledge outside local capacities will dramatically improve the education of the individuals left behind, providing new skills and opportunities. Access to such resources would also enable individuals to become more creative, innovative and participate in platforms to share information. Social contributions, similar to Microsoft’s project, will improve economies as individuals that were once unable to participate in the workforce due to the lack of training or education will be able to offer new skills. Governments would be able to allocate more time and resources to other serious social, environmental or economic issues if private sector companies begin to play a larger role (such as providing capacity, means and resources) in achieving SDGs.
John Danilovich, Secretary General of the International Chamber of Commerce, argued that businesses need to integrate sustainability goals into their plans rather than producing a separate CSR report. Mastercard demonstrated this approach by taking initiatives to reach those left behind by integrating the SDGs into its business model instead of pursuing a separate effort to fulfill Corporate Social Responsibility (CSR). Mastercard raised the issue that people off grids or in conflict zones are often excluded from financial services; many marginalized people in regions of instability and turmoil cannot safely store or access their money. In addition, some of the individuals do not even have an identification card to create a bank account. This leads to further hardships, due to inequality in access to financial services. In response, Mastercard invested into building digital paths for individuals who do not have access to secure financial services. One of its initial efforts involved collaborating with the Nigerian government to provide print governmental identification card with a chip. The “smart card” would allow individuals to electronically store, access and transfer their finances. Mastercard demonstrated how the private sector can integrate CSR into business models to help achieve the SDGs, while aiding corporate growth. Individuals benefit by being more able to secure and access their finances, while companies benefit by being more able to expand their markets.
Although companies benefit by positive social actions, their initiatives should not be viewed attempts to exploit social and economic misfortunes. Jay Collins, Vice Chairman of Corporate and Investment Banking, Citigroup Inc, stated that “profitability cannot be a bad word in the world of development.” Businesses exist to make profits. The ideal goal and challenge is to achieve profitability through positive social actions. In consequence, company would benefit and society would also benefit. However, for businesses to have a significant engagement in sustainability, there may also need to be another incentive for them. Simon Gaviria from Columbia’s Ministry of Planning stated in the morning meeting, “if we leave it to cooperate altruism, that might not be enough.”
Adopting more efficient green corporate business models may initially be costly, requiring a lot of foundational investments into the process of change, but will be more cost efficient over the long run. The issues of climate change and planetary boundaries are compelling such changes and will continue to do so in the future. If the company aligns their business models in with policies consistent with pursuing the SDGs now, they will not have to drastically adapt to structural and market changes in the future. In addition, initial investment will eventually be paid off, reducing the long term cost for the company. Aligning their operations with the SDGs could thus benefit businesses as well as benefit the extended community. New employment opportunities will emerge with the increasing demand for the skills and knowledge necessary for the advancement of the private sector to become more involved in combating SDG issues. Therefore, the orientation of business models toward sustainability would provide long term benefits for the private sector in addition to lifting people in need.
Working towards sustainability can be viewed as a moral obligation, for which all citizens should take responsibility, but sustainability is also an economic imperative. John Danilovich, Secretary General of the International Chamber of Commerce, asserted that “businesses cannot succeed without the SDGs” and that they need to “define responsible business as the new normal.” The private sector's’ involvement in achieving SDGs would benefit global economies and societies. Bi-directional benefits could be realized as the private sector implements strategies to achieve SDGs, which in turn would positively affect the economy, and later react positively in favor of the private sector, creating a virtuous cycle. In addition, new employment opportunities will arise from individuals who posses the skills, innovation and creativity that contributes to achieving the SDGs. Consumers are also most likely to react positively to businesses that take green or social measures, increasing market shares and revenues to those businesses.The growth of companies addressing SDGs could contribute to economies as new fields of employment are created, and the goods and services from such companies would be demanded in a competitive setting.
Blended finance is another method that the private sector could contribute to the efforts of achieving the 2030 SDGs. Investments are necessary in propelling sustainable development projects. However, engaging in the sustainable development investments entail risks since not all ventures achieve high success rates or returns. Financial instruments, such as blended finance, is a solution as it could provide confidence to the investors in putting money into potentially risky projects. In blended finance, both national governments and the private sector spread risk and share benefits, enabling both sectors to provide efforts and resources to increase capacities to achieve SDGs. Insurance companies should also step in to make possible for investment opportunities specific to efforts towards SDGs. If a state is able to create an environment in which the private sector is able to operate comfortably, invest confidently, and rely on public sector cooperation, resiliency can occur. Climate change poses external issues, threatening economies and states. If an environment is present in which the private sector can operate with little limitations, support from the public sector and an economy that is providing bidirectional benefits, states will become more adaptable and prepared to the inevitable planetary changes. Thus, private and public sectors should work together to gather the initial funds to first propel the economic support for sustainable development.
In conclusion, the 2030 sustainable development goals and progression towards sustainability in general could only be achieved through the collaborative efforts of all actors: private sector, civil societies and representative organizations. Private sector, specifically, plays a crucial role in supporting the efforts to move towards sustainability. They could provide the monetary, resources and innovative capacities in assisting the furthest behind. By engaging in such positive social actions, not only the society benefits but the private sector can also greatly benefit from this action. Aligning business models with the SDGs would reduce long term costs for companies, expand their markets and benefit the economy that they depend so much upon. Companies, thus, should work towards sustainability not just for morale’s sake by contributing to short term corporate social responsibility but actually integrating the sustainability factor into the company’s business plan as well. Why not do something that everyone, including the actor itself, could benefit from?