“We need business leaders to use their enormous influence to drive inclusive growth and opportunities. No company can afford to ignore this effort, and there is no global goal that cannot benefit from private-sector investment.”
António Guterres, Secretary-General of the United Nations
The SDGs require leadership and action from businesses
Although the implementation of the SDG agenda will depend primarily on governments, the fact is that it will not be carried out without the private sector.
The vital role that companies must play
A driver of economic growth and employment
The private sector is well-positioned to improve the lives of the poorest segments of society around the world. In developing countries, businesses account for 84% of GDP and 90% of employment opportunities. This gives them the potential to fulfill the promise of sustainable and socially inclusive economic development worldwide.
A driving force for technology and innovation
The SDGs will not be achieved without groundbreaking innovations in various fields, such as energy, construction, food, and mobility. Much of this development and innovation will stem from ongoing creative processes and from the research and development carried out by companies.
A source of financial investment
The United Nations has estimated that between 4.8 and 6.8 trillion euros in annual investment is needed to achieve the SDGs by 2030. Businesses have a role to play in meeting these investment needs.
Addressing negative impacts throughout the value chain
It is important not to underestimate the impact that companies can have on the SDGs by mitigating their most significant negative impacts on people and the planet. In particular, efforts to ensure that companies respect human rights throughout the supply chain have the potential to positively influence the lives of some of the most vulnerable people in society.
Why Companies Need the SDGs
Although the SDGs depend on businesses, this relationship is entirely mutual. Businesses cannot thrive in failing societies, and their long-term success depends on the achievement of the SDGs.
The private sector has a clear interest in working to develop and expand sustainable business solutions, using the SDGs as a framework for addressing challenges, building a solid growth strategy, and accessing new markets along the way.
The SDGs represent an ambitious and transformative agenda. Companies that take an active role in leading this transformation and place the SDGs at the center of their operational decisions will ultimately be better positioned to capitalize on opportunities in emerging markets, manage risks, and secure a lasting license to operate through 2030 and beyond.
Unlock 11.7 trillion euros in market opportunities
A report published by the Committee on Enterprise and Sustainable Development in 2017 shows how achieving the SDGs could unlock 11.7 trillion euros in new market opportunities per year by 2030, creating more than 380 million jobs in the process.
2.25 trillion euros related to food and agriculture
Opportunities include:
– Reduce food waste throughout the value chain (between 151,000 and 395,000 million dollars)
– Promote sustainable forestry and prevent deforestation in the supply chain (136,000–356,000 million euros)
– Innovate in food solutions for low-income markets (between $151 billion and $258 billion).
3.61 trillion euros related to cities
Opportunities include:
– Affordable housing (between $634 million and $1,054 million)
– Energy-efficient buildings ($542,000–752,000 million)
– Electric and hybrid vehicles ($302,000–312,000 million)
4.1 trillion euros related to energy and materials
Opportunities include:
– Development of a circular model for vehicles (463,000–791,000 million euros)
– Expansion of renewable energy options (from $161 billion to 590 billion euros)
– Develop a circular model for equipment and machinery (between 297 and 512 billion euros).
1.75 trillion euros related to health and well-being
Opportunities include:
– Pooling of risks to provide health insurance that prevents health risks in all regions (341,000–488,000 million euros)
– Remote patient monitoring (292,000–429,000 million euros)
– Telehealth for remote patient diagnosis (126,000–312,000 million euros)
Reducing the cost of capital through alignment with the SDGs
There is growing evidence that companies that demonstrate a positive impact on the SDGs ultimately benefit from a range of advantages when it comes to accessing capital. Many of the world’s largest institutional investors view the SDGs as a key framework for addressing the growing demand for impact investing. They are increasingly seeking to align their portfolios with the SDG ambitions by channeling investments toward organizations that can demonstrate a strong impact on the SDGs.
Other emerging financial instruments, such as SDG bonds—pioneered by Enel, HSBC, and the World Bank— SDG-linked lending facilities, and blended finance mechanisms, are providing further evidence that alignment with the SDGs has the potential to be a key factor in reducing the long-term cost of capital.
Improving Risk Management
Integrating the SDGs into a company's strategy and operations can protect an organization from various risks.
– Operational Risks
As environmental and social problems continue to increase in prevalence and severity, companies that have not implemented plans risk feeling the impacts more acutely. Long-term economic growth may be hindered, and markets disrupted, by extreme weather events and social unrest. Taking action to address the SDGs is not only best for the planet, but also necessary to safeguard companies’ future performance.
– Regulatory risks
As the 2030 deadline for the SDGs approaches, many governments may introduce new policies to ensure that the Goals are achieved on time. Regulations that impose costs on greenhouse gas emissions and other unsustainable business practices could mean that companies that fail to comply risk paying the price in the form of higher taxes—or even losing their license to operate.
– Reputational risks
Stakeholders around the world expect companies to step up and take the lead in achieving the SDGs. Companies that fail to take action—or that do not provide robust reporting on their progress—risk further eroding the already dwindling trust in the private sector and may suffer long-term reputational damage.
This article was originally published in English at: https:// sdgessentials.org/what-the-sdgs-mean-for-business.html
