Can the SDGs turn business risks into opportunities?
Whether driven by regulation, technology, consumer demand or resource availability, the transformation of the global economy currently underway will touch virtually every industry you can name. For companies, that means considering whether "business as usual" will cut it in the long term. However, figuring out which measures to use when planning for the future can be daunting.
The United Nations Global Compact, which represents roughly 10,000 participants, believes companies can and should use the U.N. Sustainable Development Goals (SDGs) as their guide. "We encourage all of our participants to see the 17 goals as a way to turn business risks into opportunities and as an inspiration for innovating your company’s business and products in a way that prepares it for the future," Lise Kingo, CEO and executive director of the Global Compact, told GreenBiz at Bloomberg’s Sustainable Business Summit last week in New York, where she was a featured speaker.
An ambitious, global plan put into place in 2015, the SDGs tackle poverty, health, hunger, education, gender equality, climate action and ocean conservation, among other aims. The framers set specific targets and a deadline of 2030, and over the past year, efforts to increase the participation of the business community have ramped up.
Taken at face value, companies easily might view the SDGs simply as operational and philanthropic guideposts. For example, a business might make an effort to hire and promote more women, curb its carbon emissions and make donations that support the education of children in poor countries. But what Kingo advocates is a much bolder, more existential interpretation of the SDG framework: one that shapes future business models.
"Clearly, many industries these days find themselves in the midst of a huge transformation," she said. "And in my mind it’s much better to be proactive in the way you develop your business than suddenly being faced with a series of challenges or problems you have to solve or to become obsolete."
Four years ago, BCD’s consultancy arm Advito began mulling the possibility of offering a service that might seem counterintuitive for a travel agency — an offering that helps clients stay put. When Kathy Jackson, executive vice president of BCD's global client management operations as well as the Advito division, first approached the company’s executive board with the idea, they responded as one might imagine. "We’re going to help them reduce travel? How are we going to make money?" recalled Jackson, who also spoke at the Bloomberg summit.
The BCD executive team eventually decided that any short-term financial loss related to this service could be recuperated over the long haul. "Obviously if you’re reducing customer spend, you just need more customers to make up for it," Jackson told GreenBiz. "Also, the longer-term impact is that our clients see the value added, so we can retain customers by being creative."
One client featured in BCD's 2018 sustainability report, a global agricultural firm, cut travel costs by $5.5 million in just five months by avoiding more than 900 internal trips. (For BCD’s customers, 30 to 40 percent of business travel is related to internal matters, Jackson said.) The BCD client also cut carbon emissions equivalent to the annual energy use of 112 American homes, not to mention the less tangible benefit of helping improve employee work-life balance.
So how did the SDGs help inform this shift in BCD’s business model?
When a company decides to incorporate the goals into its sustainability plan, it generally chooses to focus on those most relevant to its business. It makes little sense to tackle all 17. Most companies choose three to five goals to prioritize with their strategies, Kingo said.
Being in the travel industry and already having a program in place that aims to reduce clients' carbon emissions made SDG 13, climate action, a natural fit for BCD to use as a guidepost. Climate action is one of five SDGs the company chose to focus on, establishing a baseline for measurement in 2017.
The fact that existing programs or practices can be used to help a company incorporate the SDGs into its business more holistically is good news for those who may feel overwhelmed by the scope of the goals and unsure of where to start. In reality, a company already may be supporting initiatives that aim to deliver on at least some of what a number of the goals set out to accomplish.
So then why does focusing on the SDGs make a difference?
Because the goals offer a common, global framework that requires measurement and transparency. As Nancy Cleveland, CEO and founder of Sustrana, wrote here at GreenBiz, "The SDGs identify real-world problems and proposed targets, with specific metrics to evaluate the success of solutions."
They also provide a blueprint of where the world is headed, or attempting to go, anyway. And that might be worth considering when looking at your company’s future business model.