The United Nations unveiled the Sustainable Develop Goals as a roadmap to a greener, fairer future – but that plan is in danger of losing its way.
“Our progress towards the Sustainable Development Goals (SDGs) has faltered and even gone into reverse on some important targets,” warned UN Deputy Secretary-General Amina Mohammed in March.
Companies could play a bigger role in putting that plan back on track.
Many firms are already seeking impact beyond the financial bottom line. The young talent they want to recruit desire a deeper purpose in their work, while financiers, equity holders, and governments are eager to avoid the risks of ignoring sustainable decision-making.
My colleagues and I researched how companies interact with a loose network – or ‘purpose ecosystem’ – of consultancies, investors, financiers, NGOs, and development agencies to incorporate sustainability into their organisational purpose and business strategies.
Here are five key steps to help firms embrace the SDGs.
Senior leaders may agree with all 17 SDGs, but need to decide which ones to prioritise. Companies should play to their strengths and values.
Materiality matrices or stakeholder frameworks can help, as can the UN Global Compact, which has created tools and resources to help companies translate the SDG framework into practices and actions that can be adopted by management.
Executives should also review the overlap between the SDGs and firm’s environmental, social and corporate governance (ESG) concerns. Many companies focus solely on a compliance-driven ESG framework, but that may not identify all the risks of failing to adopt certain SDGs.
2) View the SDGs as opportunities
Most leaders are not attuned to think of SDG solutions as commercial opportunities, but they often embody what society and the environment need most.
The provision of food, education, health and green energy, for example, are essential for the world to prosper and progress, so have intrinsic value.
Executives should ask how they could provide the innovative solutions, products, and services needed to achieve those goals on a commercial basis.
3) Align and integrate
This means aligning the organisation’s purpose with the SDGs and integrating them into all functional areas, including marketing, operations, and product development.
Possible approaches include setting internal targets, adapting KPIs, providing revised performance incentives, ensuring the board includes representatives with sustainability expertise, and revising policies to integrate the chosen SDGs.
This helps to shape the strategic direction of a company and its supply chain and identify further opportunities to make a positive contribution.
4) Establish a co-operative network
Companies should work towards their chosen goals in co-operation with external entities such as academic institutions, financiers, social movements and NGOs. This collective action will multiply any impact.
Co-operation with other companies, including competitors, is often essential to transform sectors such as packaging that involve multiple actors and require a critical mass for change.
Companies must also collaborate with local and national governments to ensure regulations are well designed. Organisations that want to move further and faster may suffer a commercial penalty if regulation doesn’t keep up.
5) Create a purpose ecosystem
It may also be possible for larger companies to create and co-ordinate their own purpose ecosystem, behaving in a similar way to the smaller entities in our research.
For instance, Danish multinational brewer Carlsberg has taken on the role of changemaker, leading changes in its packaging and supply chain to achieve its sustainability goals.
This can mean divergent approaches to the same SDG as different companies play to their own strengths and respond to their unique environments. While all approaches should move us closer to the UN goals, some may prove more effective than others.
These steps are part of a long journey, but a vital one if the world is to meet its net-zero targets to save us from catastrophic climate change and bring about a just, equitable society.
This article was written by Frederik Dahlmann, Professor Associate Professor of Strategy and Sustainability at Warwick Business School (WBS) and was originally published on the WBS website. Find out more about WBS’s Social and Environmental Sustainability MBA specialism and Leading Sustainability Transitions six-week online programme.