We need to stimulate a race to the top for companies and give guidance to investors on who is taking the Sustainable Development Goals seriously, says GAIN’s Executive Director Lawrence Haddad, in his latest blog where he talks about a new report by the Business and Sustainable Development Commission.
The Business and Sustainable Development Commission, launched in Davos in 2016, has published its flagship report Better Business Better World which outlines the gains to business from the achievement of the global goals (SDGs) and how business can contribute to delivering these goals.
The report’s commissioners are chaired by the highly respected Mark Malloch Brown, the former United Nations Development Programme (UNDP) Administrator and UK Minister. Most of the Commissioners are CEOs, with a sprinkling of development organisation members and academics. Eight funders supported the work drawn from aid agencies, established foundations and the Global Green Growth Forum.
The report describes itself as a “call to action” for current and future business leaders. “It explains why they should go for growth in line with the Global goals and how to lead that change in their own businesses and beyond”.
The rationale for the call to action is framed in different ways:
- Economic: achieving the global goals creates at least $12 trillion in opportunities for businesses
- Reputational: trust in CEOs is low – they need to change behaviour if their companies are not to be hurt. Moreover the report shares evidence that suggests that brands which have a social purpose tend, on average, to perform better
- Moral: “decent board members, employees, consumers and investors want to do the right thing”
The report focuses on four market opportunity areas: food and agriculture, cities, energy and materials and health and well-being. It identifies the 60 biggest market opportunities related to these four areas (see Exhibit 2 below).
For food and agriculture (nutrition is not addressed explicitly), four of the top five areas listed – reducing food waste in the value chain, developing low income food markets, reducing consumer food waste and product reformulation – are highly relevant for nutrition (the remaining area is Forest Ecosystem Services).
In terms of economic opportunity, reducing food waste in the value chain is valued at $155-$405 billion a year by 2030 while the corresponding number for “investing in supply chains and food innovation to give those on very low incomes access to food products that are more nutritious” is $155-$265 billion.
The report recommends six actions that business leaders need to undertake to realise these opportunities:
- Build support for the global goals as the right growth strategy: make the business case for the goals.
- Incorporate the global goals in corporate strategy: this sounds similar to the idea of creating shared value
- Drive the transformation to sustainable markets with sector peers: disruption by a few sustainable pioneers will not be enough to drive the shift, it has to be done in alliances
- Work with policymakers to pay the true cost of natural and human resources. Once true costs are incorporated then incentives will be more in line with the global goals. For example paying living wages will promote nutrition and health, which will drive further demand for goods and services. But ultimately these standards have to be set by the government so that no single company is disadvantaged by first mover status.
- Push for a financial system orientated towards longer-term sustainable investment: highlighting the need for more blended financial instruments (e.g. matched funding, social impact bonds etc.). GAIN is working with a number of such instruments across our project portfolio.
- Rebuild the social contract: the report suggests that 700 million people work directly or indirectly in global value chains — improving the workplace conditions for them will make a significant contribution to achieving the global goals and rebuild trust (as will paying taxes). GAIN also works a lot on these workplace issues.
The follow up actions committed to by the Commission are:
- Nurture the next generation of sustainable development leaders
- Create social transformation roadmaps for key sectors
- Create global goal league tables of company performance against the relevant global goal
- Support measures to unlock additional finance to achieve the global goals
- Develop a responsible political engagement index to assess companies against principles of transparent and fair political engagement
- I really like the fact that it is written for by business leaders for business leaders. This is unusual for a widely read development document and makes the report harder for sceptical business leaders to ignore.
- Nevertheless the report is quite silent on the barriers to moving this agenda forwards — it does not help CEOs too much to anticipate the barriers to undertaking the six actions they call for.
- The strong focus on accountability and metrics is welcome and very much in line with thinking at GAIN. We need to stimulate a race to the top for companies and give guidance to investors on who are taking the SDGs seriously. We also need to help businesses understand the SDGs, which were, after all, drafted largely by people outside the corporate world.
- The four nutrition related areas with the largest business opportunities as identified by the commission in the food and agriculture space — reducing food waste in the value chain, developing low income food markets, reducing consumer food waste and product reformulation—are areas where GAIN does a lot of work around fortification, marketplaces for nutritious foods, changing consumer demand, and post-harvest loss and waste. This is reassuring (for me at least!).
- However the PWC report that the commission draws upon for some key stats also shows that the companies surveyed saw SDG2 as a relatively poor business opportunity compared to the other goals, despite the fact that citizens surveyed in the same report saw it as one of the most important. We have some work to do to influence the companies, especially those outside of the food industry.
- Much of the analysis behind the report is drawn from a paper produced by the consultancy AlphaBeta. The estimates have a back of the envelope feel to them, but the sources of data and parameters seem appropriate. I would have more confidence if the paper had been through an external peer review.
Finally, I like the work plan the commission has laid out for itself. We at GAIN will work to help show businesses why they need the global goal on ending malnutrition in all its forms to be realised — and how they can make ever greater contributions to achieving that goal.
Better Business, Better World? Better Get Going.
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Published 30 January 2017