Sustainability moves from add-on to business opportunity

Since 2015, with the Paris Agreement and the Sustainable Development Goals, front runners have increased their efforts to show the value of including sustainability in their business strategy. They are moving from ‘doing no harm’ to focusing on ‘doing better’.

Better business, better world

Business is changing. No longer is there solely a financial focus. Today, businesses also aim to contribute from a social and environmental perspective. In their communications, businesses increasingly focus on their efforts to do so by highlighting their contribution to the Sustainable Development Goals (SDGs). The Valuing the SDG Prize in Food & Agriculture report (October 2016) published by the Business and Sustainable Development Commission states that companies could unlock $2.3 trillion (€2 trillion) a year in the food and agriculture sectors by 2030 with an annual investment of $320 billion (€280 billion) in sustainable business models. This could also lead to more than 80 million jobs!

Common language and framework

The SDG agenda, although initially set for governments, provides a common language and framework for businesses, governments and NGOs alike. For governments, the SDGs provide sustainability goals for the coming twelve years. For companies, SDGs are an opportunity to align their strategy and sustainability policy with country policy. They are one of many frameworks (like the Global Reporting Initiative (GRI) and the International Integrated Reporting Council) companies can use to better understand global priorities and their stakeholders’ areas of interest.

Applying sustainability

The Pet Sustainability Coalition (petsustainability.org) Toolkit provides guidance that ranges from a Quick Impact Assessment (QIA) to more detailed support on aspects such as strategy, supply chain and packaging. The QIA is a starting point for evaluating your company’s strengths and weaknesses before developing a customised sustainability strategy.

It indicates the benefits of a sustainability strategy, that is, saving money, increasing employee satisfaction and productivity, reducing risks, innovating products and services, and meeting increasing social and environmental expectations from retailers and consumers. And it helps you to understand the impact of your business on the SDGs, so you can be transparent about your contribution to solving global challenges. Customers, employees, society and investors increasingly expect that of you.

SDG guidance for businesses

Initiatives such as the SDG Compass (Figure 1) and the Cambridge Institute for Sustainability Leadership have started to translate the SDGs into useful company targets and indicators. The aim is to provide businesses with guidance on how to align their strategy with the SDGs, and to enable them to measure and manage their contributions. The SDG Compass, authored by GRI and the UN Global Compact, can help businesses navigate through the process and identify synergies between the frameworks they are already working within.

Over 60% of businesses globally recognise the importance of taking action on the SDGs. Organisations should focus on the goals that are the most relevant for their core activities. These are the activities where a company can achieve the greatest impact. But besides these primary goals, it is also important to take the other SDGs into account, as an organisation’s actions might have conflicting effects on the SDGs. An example of this was an effort to reduce CO2 emissions when generating energy for a factory. A large dam was created to provide hydro energy. This benefits the company’s contribution to lowering carbon emissions, enabling it to report on positively impacting on SDG 7 (Affordable and clean energy) and 13 (Climate action). However, it negatively impacts on SDG 14 (Life below water) and 15 (Life on land), as it changes a large part of a region’s landscape and natural habitats, and affects the communities living on and from it. It is important to bear in mind that there are trade-offs, and to be open in your communications.

Developing your sustainability strategy

Since the 169 targets within the 17 SDGs are relevant to countries rather than businesses, most companies keep the SDGs in mind when developing a strategy, but not their specific indicators. A business will research and use the many key performance indicators that are relevant to them, enabling them to compare their progress with others and use that as a benchmark. Identifying the SDGs within their focus also allows a company to find partners to increase the effectiveness of their own strategy. The SDGs can therefore serve as a framework for businesses to grow and become more competitive, especially in an increasingly volatile and complex world.

Communicating your SDG progress

Even though more and more businesses are using the SDGs, this is often not reflected in their revenue streams. A missed opportunity. Philips is an example of how it can be done. The company aims to improve the lives of three billion people a year by 2025. This goal is linked to SDG 3 (Good health and well-being). 95% of Philips revenue is now SDG-related, mainly by linking the percentage of product revenue made using eco-design and circular economy principles to SDG 12 (Responsible consumption and production).

A current trend within sustainability communications is omitting the positive contribution to society and only indicating the costs of the effort. All organisations should show how the SDGs affect their activities, both positively and negatively. Transparency is increasingly expected by customers, employees, society and investors. So it is also vital for getting your projects financed, retaining your customers and employees, and gaining access to the brightest young talent for making your business sustainable.

Author

Bianca Nijhof

Global Sustainability Programme Manager, Arcadis