How the New Sustainable Development Goals Will Impact Business Practice... and Provide a Source of Competitive Advantage

The ink is still drying on the Sustainable Development Goals (SDGs) agreement signed by 193 countries last September. The fact that 193 countries committed to achieving 17 goals and the 169 targets that measure them by 2030 is in and of itself historic.

Governments haven’t yet asked businesses to help… but they will because achieving the SDGs is impossible without public-private partnerships and without the private sector getting on board.

This post looks at how the SDGs might impact business practice and what business leaders should do to get in front of the SDGs. (For an introduction to the SDGs read my first post; for a discussion of why the SDGs matter to the USA, read my second post).

Understand the Goals. Engage more deeply in the conversations that will continue to shape our understanding of the Goals and how the Goals impact business practice. Agreements like this offer a unifying purpose and common language. While not legally binding, economies are held accountable for their performance against the goals. The SDGs become soft laws that guide policy and practice.

The Goals and their targets have been developed for country-level discussion. Much has to be done to translate the targets to better reflect business practice. For example, Goal 3 deals with health and well-being and is measured in terms of infant mortality, life expectancy, the number of physicians per capita, the number of infants who are vaccinated, and the number of smokers. How does SDG 3 translate into business practice? What metrics can be used to define health and well-being at an organizational level?

There is ample opportunity for business leaders to offer guidance on how the goals translate to practice and to work with industries and organizations as they adjust and embrace the Sustainable Development Agenda.

It’s time to examine how the SDGs might impact your organization's strategy and how your organization impacts an economy’s ability to achieve the SDGs. Ask, how will the SDGs change the business landscape?

I believe that one of the most significant impacts facing business in a post-SDG world will be questions around whether pursuing growth for the sake of growth is good for society and the environment. Currently growth is central to our expectations of what “good” looks like. Economic growth remains a main focus of governments. Just the other day Donald Trump, for example, claimed he will generate economic growth of around 4% (which some believe is completely unrealistic in today’s context).

Similarly, organizations develop strategies to achieve higher revenue and earnings targets each year. Bonuses are tied to these metrics. There is a now a growing concern that economic growth has come at the expense of natural and social capital and that the way forward is to balance economic, social and environmental goals.

Add to that current consumer sentiment (think: millennials; or the number of people who voted for Bernie Sanders) and then consider Goals like SDG 12, which focuses on sustainable consumption and production patterns by, for example, educating and encouraging consumers to change their choices and lifestyle, and it is easy to see that high growth targets might be relics of the past.

As a CEO, what do you do when revenue growth is slow? The current expectation is to reduce or hold costs down, or improve productivity so as to meet earnings targets.

What might this mean? Wages are held constant, overtime is reduced, the organization is restructured and positions are eliminated, and when new people are hired they are brought in at lower pay rates, other costs are cut, and/or productivity gains are pursued. What is the outcome?

The Board and investors are satisfied because action has been taken and expected earnings are met. Executives are happy because bonuses, which are tied to earnings, are paid out. However, there are often subtle, if not dire, negative social and environmental consequences.

In the new SDG world, economic growth is still listed as a goal (although more for middle and lower income economies), but economic growth is to be balanced against the social and environmental consequences of meeting growth targets. This is what the new Sustainable Development Agenda, and the 17 Goals (or SDGs) that represent it, have been designed to do: to focus on inclusive and sustainable economic development.

Sustainable development could be misunderstood as only addressing environmental concerns. But sustainable development is more than that. To adopt the Sustainable Development Agenda means to make decisions that benefit the economy and help people, improve society and protect the environment.

What are the alternatives for business leaders? A more sustainable course of action is to hit reset and either: (1) change organizational expectations around growth; and/or; (2) add additional metrics that matter – metrics that reflect the interconnections between economic, social and environmental goals.

It’s time to align your strategy with the SDGs. Be familiar with the 17 goals and identify the one(s) that will become focal points within your organization. At the same time, understand how all of the goals are interconnected. Most organizations are likely to focus on SDG 8 and 9 as these address growth, employment, the workplace, innovation and industrialization.

Other organizations operate in sectors that are directly impacted by the goals – for example, if your organization is involved in food production then Goal 2, which relates to ending hunger, might be more relevant.

Some organizations undertake activities that have a noticeable and direct impact on other goals – for example, if your organization is involved in agriculture or fishing then Goals 14 and 15 require special attention as these relate to the sustainable management of natural resources.

Align your strategy with the SDGs, set SDG objectives, and energize your business around these Goals. Achieving the SDGs can provide a source of competitive advantage. Do you know where the opportunities are for your organization?

Instead of bolting sustainability or sustainable development onto the organization, sustainable development needs to be integrated into everything the organization does. Set your own Sustainable Development Agenda – where is the low hanging fruit? Are there projects you can launch to energize your team around? How do you drive a sustainable development philosophy deeper into the organization so that it ultimately becomes part of your organization’s DNA?

The message is clear: business as usual is not an option. But how are you going to lead your organization to make adjustments in the new world, a world where Sustainable Development is now a soft law governing policy and practice? Has your organization developed a point of view as to how the SDGs will influence your business? Do you know how the SDGs will provide a source of competitive advantage in some areas while necessitating change in others? Do you know where to start?

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