Sustainable Development Goals were created to build a better world for people and our planet by the year 2030. They offer an inclusive and sustainable future for everyone. All 193 members of United Nations have agreed to pursue the SDGs, but the goals have value not only for governments. They also provide a holistic framework for businesses to apply, show the contribution and manifest the company purpose.
BCtA referred to SDGs as “roadmap for business opportunity”. Recent research of Global Compact Nordic Survey 2019 shows that most of the businesses know about SDGs yet not all of them see the relevancy. So how are the SDGs relevant for the business? In this article we will focus on the 5 most important aspects of SDGs relevancy:
- Creating new market opportunities
- Engaging the employees in the company with a purpose
- Managing risk and assuring the licence to operate
- Optimizing business resources and creating more value
- Staying ahead of your competition
Creating new market opportunities
One of the most obvious incentives for businesses is the direct financial aspect. According to the latest report of the Ministry of Foreign Affairs of Denmark, Sustainable Development Goals present new market opportunities worth USD ~12 trillion by 2030 globally and they will create 380 million new jobs.
In Denmark itself new SDGs can lead to business opportunities for Danish businesses worth up to 400 billion DKK towards 2030. It means that SDGs could increase the Danish GDP by ~15% by 2030. Those widely recognized benefits bring a lot of attention and more and more companies are joining the cause. Besides the monetary value working sustainably with emerging markets is morally valuable.
Engaging the employees in the company with a purpose
Millennial Employee Engagement Study by Cone Communications showed that three-quarters of millennials would take a pay cut to work for a socially responsible company. This study shows that employees are more loyal to a company that helps them contribute to social and environmental issues. Research also shows that employees believe job is more fulfilling when they are provided opportunities to make a positive impact on social and environmental issues.
Besides the younger generation there are generally more employees looking for companies with a clear purpose and sustainability in the centre of the business. Implementing Sustainable Development Goals in a company business strategy is a good way to achieve higher employee satisfaction.
Managing risk and assuring the licence to operate
All of the United Nation members signed an agreement to pursue the SDGs and those countries might use legislative measures or cause reputational scrutiny in order to achieve the goals. Companies that want to ensure stabile and continues performance need to step up and make sure that they are relevant in the future.
Sustainability is a trend that is not worth to go against. There is more and more pressure from policies in emerging markets on transparency, accountability and environmental responsibility. This drastically rises risks associated with license to operate in those countries. Addressing regulatory compliance and staying “ahead of the curve” will help companies with managing risk.
Optimizing business resources and creating more value
Another benefit of SDGs is creating a potential for optimization of raw materials. Decreasing the amount of for example water and energy decreases the costs and reduces environmental impact. This allows to demand higher prices for product as customers are willing to pay more for environmentally friendly products. By marketing sustainable characteristics companies can add extra value to their product while maximizing the efficiency of production.
The World Economic Forum (WEF) identified both water and biodiversity as having high impact and high likelihood, serious potential disruptors to business operations. This is another side of the importance of focusing on optimizing environmental impacts of businesses.
Staying ahead of your competition
Sustainable Development Goals bring a lot of benefits. Plenty of companies realised that and already joined the purse for the better future. According to Global Compact Nordic Survey 2019, 79% of the Nordic Global Compact companies are in an active process of establishing and/or adjusting policies to incorporate sustainability visions and goals throughout their strategies. This number is expected to grow significantly through the next years.
According to research by NYU Stern Centre for Sustainable Business that partnered with IRI, products marketed as sustainable across all categories, delivered $113.9B in sales in 2018, that is 29% more compared to 2013. During those 5 years sustainable products grew 5.6x faster than products not marketed as sustainable. One of the reasons for this rapid growth is that more and more customers demand sustainable products and they demand corporations to act responsibly and sustainably.
According to “State of the Connected Customer” report 2019, where Salesforce Research surveyed over 8,000 consumers, 65% of customers actively seek to buy from environmentally sustainable companies and 73% percent of customers say a company’s ethics matter more than they did a year ago. This shows how fast the demand for sustainable businesses is growing.
According to the PricewaterhouseCoopers research, more than every third company in Denmark already incorporated SDGs into their company strategy.