Better Business, Better World
Over the past 30 years, the world has seen huge social improvements and technological progress. We have experienced unprecedented economic growth and lifted hundreds of millions of people out of poverty. We’re benefiting from a life-changing digital revolution that could help solve our most pressing social and environmental challenges. Yet despite these successes, our current model of development is deeply flawed.
Signs of its failure and imperfections in today’s markets are everywhere. Natural disasters triggered by climate change have doubled in frequency since the 1980s. Violence and armed conflict cost the world the equivalent of nine percent of GDP in 2014, while lost biodiversity and ecosystem damage cost an estimated three percent. We continue to invest in high-carbon infrastructure at a rate that could commit us to irreversible, immensely damaging climate change. Social inequality and youth unemployment is worsening in countries across the world, while on average women are still paid 25 percent less than men for comparable work.
Median real wages have been stagnant in developed economies since the 1980s, generating deep anxiety about the impact of automation on both service and manufacturing jobs and opposition to more globalisation. Real interest rates are historically low, even negative, in several major economies, while total debt remains uncomfortably high. Economic views lurch unpredictably between techno-optimism and political pessimism.
The resulting uncertainty makes it hard for business leaders to see the way ahead. Rather than commit to longer-term investments, many companies are treading water – sitting on cash, buying back shares, paying high dividends. The latest global report on trust in business from Edelman shows a double-digit decline in the credibility of CEOs in 80 percent of countries.
What else can business leaders do in these circumstances?
This report offers a positive alternative: setting business strategy and transforming markets in line with the UN Sustainable Development Goals. For the past year, the Business and Sustainable Development Commission has been researching the impact on business of achieving these 17 objectives, known as the Global Goals, which UN member states agreed to in September 2015. Member states will aim their policies towards achieving the Global Goals for the next 15 years (Exhibit 1).
Achieving the Global Goals would create a world that is comprehensively sustainable: socially fair; environmentally secure; economically prosperous; inclusive; and more predictable. They provide a viable model for long-term growth, as long as businesses move towards them together. The goals are designed to interact, so progress on them all will have much more impact than achieving only some. Of course, the results will not be heaven on earth; there will be many practical challenges. But the world would undoubtedly be on a better, more resilient path. We could be building an economy of abundance.
These are results that business leaders will surely support. However, they are less likely to feel responsible for delivering them: one survey shows that half the business community think this is government territory.
Our research tells a very different story. First, it shows that business really needs the Global Goals: they offer a compelling growth strategy for individual businesses, for business generally and for the world economy. Second, the Global Goals really need business: unless private companies seize the market opportunities they open up and advance progress on the whole Global Goals package, the abundance they offer won’t materialise.
Those of us on the Commission who lead companies are choosing to incorporate the Global Goals for Sustainable Development into our core growth strategies, value chain operations and policy positions. This report argues that other business leaders should do the same and soon, whatever the scale of their operations.
Achieving the Global Goals opens up US$12 trillion of market opportunities in the four economic systems examined by the Commission. These are food and agriculture, cities, energy and materials, and health and well-being. They represent around 60 percent of the real economy and are critical to delivering the Global Goals. To capture these opportunities in full, businesses need to pursue social and environmental sustainability as avidly as they pursue market share and shareholder value. If a critical mass of companies joins us in doing this now, together we will become an unstoppable force. If they don’t, the costs and uncertainty of unsustainable development could swell until there is no viable world in which to do business.
This is new territory. Moving business to a sustainable growth model will be disruptive, with big risks as well as opportunities at stake. It will involve experimenting with new “circular” and more agile business models and digital platforms that can grow exponentially to shape new social and environmental value chains. Knowing how to move first and fast is critical; so is reducing exposure to the risk of assets being stranded by the shift to low-carbon, more automated economies.
The report that follows is a call to action for current and future business leaders. It explains why they should go for growth in line with the Global Goals and how to lead that change, in their own businesses and beyond.
To download the full report, please click here.