How business got to the table on the Sustainable Development Goals
The 17 Sustainable Development Goals, (SDGs) adopted by world leaders at the United Nations last week, will steer our collective management of global economic, social and environmental affairs over the next 15 years.
In developing these new goals, we’ve seen a major change of tack: whereas the now-expired Millennium Development Goals (launched by United Nations in 2000) were primarily a product of intergovernmental negotiations, this time non-state actors have been actively involved –including business.
The process appears more grounded in the realization that we can only reach the ambitious goals through broad collaboration involving a range of players. As a result, several of the Goals formally adopted last week, are directly relevant for business, such as Goal 8: ‘Decent work and economic growth’, Goal 9: ‘Industry, innovation and infrastructure’ and Goal 12: ‘Sustainable consumption and production’.
How did we get here?
This change is illustrative of the radical shift we have seen over the past two decades in how we understand the role of business in society. Only 15 years ago, societal and environmental problems were often blamed on market failure and the so-called reckless pursuit of profit by global business at the expense of the planet and people.
Today, we have a much greater understanding of the complexity of challenges we face, and our sights have shifted towards widespread governance failure and the inability of political authorities to reach important global agreements. As a result, business is seen as a natural, even critical partner in decision-making processes and is actively bringing solutions to the table.
In our recently released study of the impact of the world’s largest voluntary corporate sustainability initiative, the United Nations Global Compact (June 2015), we explore the many drivers that have influenced the evolving relationship between business and society.
Here, we will shed light on some of the most crucial: some which fall into the category of standalone events and crises which are hard to predict, but can have substantial, sometimes disruptive impact on the world. Others are longer-term trends, such as population growth and climate change, which more gradually but no less influentially shape the world we live in.
Together, these events and trends have not only changed attitudes towards business, they have radically altered the environment in which business operates.
From optimism to backlash on globalization
At the end of the 1990s, a period of turmoil and protest began in many Northern countries. The feeling of optimism of the 80s and early 90s — and unfettered belief in openness and economic liberalisation — was slowly shifting. Economic development had delivered remarkable prosperity in large parts of the world over the course of a century; however wealth was seen as built by exploiting nature and people in less developed countries.
Its benefits were very unequally distributed. A series of high-profile scandals in the 80s and 90s (notably the devastating chemical disaster in Bhopal which killed thousands of people, and the Exxon Valdez oil spill in the pristine Alaskan environment) shifted attention onto the negative environmental and social costs of economic activity.
Trade associations and human rights organisations globally rallied against big corporations and economic governance institutions. The anti-globalisation movement reached its height in 1999 with “the Battle in Seattle”, where thousands mobilised in protest outside the WTO negotiations. Companies were held to account, and demand grew for business to deliver benefits beyond financial profit. The modern corporate sustainability movement was born.
Fragmentation: Polarisation, inward-orientation and diffusion of power
In the past few decades, the world has witnessed a gradual fragmentation of power, both at the international level and within nations. The old world order is gone, and governance in the new multi-polar world, characterised by a widespread loss of legitimacy of traditional institutions of power and authority and diffusion to a whole new set of actors, is more complicated than ever.
At the international level, economic and political power has migrated largely South and East, and more countries — including frontier markets like Nigeria, Turkey and Mexico — are demanding a bigger piece of the pie.
The financial crisis that swept across the globe in 2007 not only destroyed the reputation of the financial sector, revealing serious shortcomings of the current global economic system; it also caused a massive erosion of trust in traditional institutions of power.
The long-term fallouts, in terms of economic stagnation pushing millions of people into unemployment and severe public austerity measures to tackle sovereign debt, has resulted in a general perception that the public was left to suffer whilst the main culprits got away.
At the same time, the inability of governments to reach critical international agreements, such as in the area of climate change, has caused a massive loss of faith in political processes , and has reduced belief in multilateralism and cooperation at the global level.
At the same time, the world is struggling with an alarming acceleration of religious radicalisation and extremism. This fuels conflict and terror across the globe, and further nurtures polarisation both within and between countries and regions.
As a result of these and other forces, we see the pendulum has swung back in many countries toward more inward-orientation and prioritisation of national priorities, followed by a surgence of old political ideologies which legitimise extremist, nationalistic and xenophobic political narratives.
Within this shifting landscape, where power is diffusing to new actors, business not only can but should take on a new role and responsibility for ensuring the necessary conditions for business to operate: stability, security, cooperation.
All hands on deck: Mounting challenges on a fragile planet
Awareness of the serious challenges the world is facing has grown tremendously, particularly over the course of the past decade. Climate change, extreme weather, and unprecedented pressure on natural resources have exposed the fragile state of our planet. At the heart of this is the recognition that the past century’s progress has come at the expense of the environment, and that human activity is now threatening the future of the planet.
In the midst of this, concern is growing over the destabilizing effects of rising income inequality, both between and within nations. Although poverty rates have gone down globally, distribution has not followed suit: wealth is increasingly concentrated in the hands of the few. In 2014, the World Economic Forum ranked income disparity as the fourth greatest risk facing the world, threatening economic and political systems, social stability and security at a global scale.
The rising social instability is enforced by corruption and tax evasion. According to the Financial Times, the total amount of fines and settlements paid by some of the world’s biggest banks, reached a total of 56.7 billion USD in 2014. As a consequence, society is left to deal with long-term, spin-off effects.
We are facing a “perfect storm,” which no nation or sector is equipped to tackle alone. We need all hands on deck.
The winds of change: business is bringing solutions
In the face of unclear or lacking governance over many of these common challenges, the past few decades have seen an explosion of voluntary business initiatives to make a positive contribution in areas such as environmental responsibility, transparency or social justice — taking a step ahead of regulation.
Today, there are numerous examples where business is leading the way. For example, the Sustainable Apparel Coalition consists of companies, organizations, and individuals that are working on a common sustainability index for the apparel sector; Microsoft and Toyota are enhancing technology for intelligent energy consumption; Coca-Cola and Heinz are together developing more sustainable containers.
Proactive businesses are now strategically positioning themselves as a positive force in society.
Entering the era of mass collaboration
As we head a more turbulent reality in the decades to come, forging new alliances across traditional sectoral and geographic boundaries will become ever more important. We must learn to work together, and we must learn to do this effectively. The stage is set, now we need to act.
The launch of the new Sustainable Development Goals represent a unique opportunity to do so, and we should now all take responsibility and mobilise around these new goals. Every nation, every organization and every company should actively explore how they can contribute in the best way. At DNV GL, we are certainly committed to do so. We invite you all to join us on this journey.