At the United Nations (UN) summit in New York in September 2015, the Sustainable Development Goals (SDGs) were launched to replace the Millennium Development Goals (MDGs) which expired at the end of 2015. The Sustainable Development Goals, also known as Global Goals, are a proposed set of global targets adopted by governments that will ultimately impact the way business operates. They will run from 2016 to 2030. The MDGs, which have undoubtedly resulted in general progress, fell short in some respects as they were focused on poverty alleviation in the developing world and had loose reporting requirements which meant that countries were not all responding consistently. The SDGs are different – they are globally applicable and integrate economic, social and environmental aspects.
I recently attended a workshop on the SDGs run by PwC looking at their implications for business. I also recently attended the annual Marketing Society Conference (see my blog Go Beyond
December, 2015 http://www.davidcpearson.co.uk/blog.cfm?blogID=4370
) in which Amanda Mackenzie, CMO of Aviva, explained her role seconded as Executive Adviser, Project Everyone, a charity set up by Richard Curtis to promote the Global Goals to everyone in the world.[i]
The MDGs were launched in 2000 for a 15 year period with high ambition in eight areas:
1. Eradicate extreme poverty and hunger
2. Achieve universal primary education
3. Promote gender equality and empower women
4. Reduce child mortality
5. Improve maternal health
6. Combat HIV/AIDS, malaria and other diseases
7. Ensure environmental sustainability
8. Global partnership for development
They were thus focused primarily on the developing world and while there were some great achievements, business was not highly engaged. “The MDGs fell short by not integrating the economic, social and environmental aspects of sustainable development …People were working hard – but often separately – on inter-linked problems”. [ii]
Areas where they fell short included a failure to consider the root causes of poverty; 1 billion people still live on less than $1.25 a day; it would take another decade for child mortality to fall by the target; the actual contribution of the MDGs is debated as countries like China have in any case economically migrated to middle income status; those most in need of the MDGs – the poor, most fragile countries, benefited last.
The new SDGs have been increased in number to cover 17 areas:
1. No poverty
2. Zero hunger
3. Good health and well-being
4. Quality education
5. Gender equality
6. Clean water and sanitation
7. Affordable and clean energy
8. Decent work and economic growth
9. Industry, innovation and infrastructure
10. Reduced inequalities
11. Sustainable cities and communities
12. Responsible consumption and production
13. Climate action
14. Life below water
15. Life on land
16. Peace and justice – strong institutions
17. Partnership for the goals
Other differences include the fact that 193 countries have agreed and committed to achieve common goals with world-wide support from civil society, business, parliamentarians and other actors. The MDGs targeted developing countries, particularly the poorest while the SDGs will apply to the entire world – rich and poor. There is a single framework in one language with a real determination to implement change and measure success in real time. The programme links development with the private sector and integrates economic, social and environmental aspects. It tackles discrimination and protects human rights. The concept of “no one left behind” has been adopted with an explicit focus on disabled and vulnerable people.
The next steps are for Governments to be invited to create cohesive national sustainable development strategies supported by national financing frameworks. Each country is responsible for its own development and the role of national policies is critical. Governments will look to society, and business in particular, to help them meet the Goals. There will be a focus on the private sector, investment and innovation, economic growth and inclusion. Thus this will represent a major change for business with a need to refocus strategy, contribute evidence and provide data. No doubt one risk is an increase in regulation but the corresponding opportunity is for businesses to be seen “to step up to the plate.”
A key issue is measurement. As well as 17 areas there are 169 individual targets. A global indicator framework is to be developed by the Inter Agency and Expert Group on SDG Indicators. This is to be agreed by the UN Statistical Commission by March 2016. Governments will develop their own national indicators for monitoring progress on the goals and targets. Measurement will be nationally owned and led, thus providing the foundation for regional and global reviews.
So what does this mean for business? The member states will look to business to help them achieve the goals to which they have signed up. CEOs will want to know how their business supports or detracts from government’s goals, especially if they want to be on the receiving end of ‘fair’ regulation and a welcoming license to operate. Such license is not meant purely in the legal sense, but also in the sense of the court of public opinion, because consumers want business to engage.
PwC conducted a survey in 2015 to assess the level of engagement by business in the SDG process.[iii]
It found that 80% of businesses plan to assess its impact, but most have only some of the SDGs in mind and 20% have no such intention or don’t know. The survey shows, not unsurprisingly, that there is quite a difference between business and consumer attitudes to the different SDGs. When asked to rank the five SDGs that could represent a business opportunity for their company in the future, businesses prioritise decent work and economic growth; industry, innovation and infrastructure; affordable and clean energy; responsible consumption and production; and climate action. Asked to prioritise, citizens prefer zero hunger; climate action; quality education; no poverty; and clean water and sanitation. These differences could prove an area of frustration but if politicians engage with business properly all of these areas that preoccupy citizens are also areas of business opportunity.
Citizens, (or customers), have great expectations but these are not generally matched by business. 90% of citizens expect business to sign up to the SDGs and 50% expect business to embed them into their strategy. But only 31% of business is working on this now and only 41% think they will have done it within three years. Interestingly in this global survey UK consumers had the highest levels of expectation.
The Global Goals programme may, and indeed should, drive new business behaviour. First of all, it is impossible to see how anyone can object to the direction of these goals. The issue comes when the business leaders mistakenly ask themselves “But what’s it got to do with us?” The answer is everything if you want your business to survive and prosper. It will not be possible for a business of any size, particularly with international reach, to ignore this process.
A board should first understand the different national SDG priorities and hotspots. Then you should conduct a company analysis assessing your impact on the SDGs. You require a global view of your operations, supply chain and impacts with respect to each SDG area. Then you should check the results, define the company strategy and messaging, set goals and define metrics.
The key is to understand your impact. Traditionally businesses have sought to maximise value to shareholders/owners, that is profit, and overlooked value to all other stakeholders. However, other stakeholders, whether customers or suppliers, employees or the community at large, are increasingly influential, determining your license to operate and your reputation. Hence, to ensure long-term success stakeholder value must be maximised.
In the workshop I made the point, as I have made many times before, that the 2006 Companies Act brought these obligations into law. The act is the longest piece of UK legislation ever and did not come into force until 2009. It may be that is its effect is still not widely understood but among other far reaching changes it codified directors’ duties for the first time. These include an obligation to promote the success of the company, to consider the community and the environment, the interests of employees, and to be fair to shareholders. It can only be a matter of time before test cases are brought against company directors by suppliers who have been unfairly put out of business or by members of the community who argue that a company’s actions are damaging the environment.
Several businesses have already made announcements in support of the SDGs. These include Anglo American, ANZ Bank (Lao), Ltd., Aviva, Bayer, Fuji Xerox Co., Ltd. GSK, LEGO Group, MasterCard, Pearson, Safaricom, Suez, Sumitomo Chemical, and several more.
PwC believe that Global Goals are a board discussion and suggest the following questions for your board to consider:
· Is your board able to evidence how they are helping or hindering governments achieve their goals?
· How will your company’s license to operate be affected by a government striving to achieve the Global Goals.?
· Are the Global Goals a new strategic lens to review decision making?
· What’s your company’s risk exposure if the Global Goals are or are not achieved?
Richard Curtis is one of the most altruistic people I have met (see my blog Richard Curtis
March 2014 http://www.davidcpearson.co.uk/blog.cfm?blogID=320
). Amanda Mackenzie has been seconded to his charity Project Everyone to help bring the Global Goals programme to the awareness of as many people in the world as possible. They have made a great start and believe that already over 3 billion people have been made aware. One programme was to teach the same class in the subject to over 500 million school children in many countries in the world including North Korea. As part of my Master’s year as Master of the Worshipful Company of Marketors I plan to run a one day conference on my theme “Marketing for Good is Good Marketing” and I am delighted to say that Amanda has agreed to address the conference. Make a note of the date: Friday 2nd
October, at New College, Oxford University.