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Written by Matthew Rickard
on May 08, 2020

 

Back in January 2015, the United Nations General Assembly gathered to discuss the sustainable development agenda for a world in the midst of rapid change.

The product of these talks was the adoption, by all member states, of the 2030 Agenda for Sustainable Development which has 17 SDGs (Sustainable Development Goals) at its heart.

These goals are an urgent call to action for global cooperation and partnership in tackling the most pressing issues of our day. They are, essentially, a set of guidelines that member states will be expected to use as a framework, when forming political policies and agendas in coming years. 

It’s a unified strategy that aims to eliminate world poverty and hunger through improvements in health and education standards, inequality reduction and sustainable economic growth, all while making climate change and environmental preservation central pillars of the overall plan.

The SDGs are a continuation of the more narrowly focused MDGs (Millennium Development Goals) which were a set of 8 guidelines that, whilst broad in their scope, failed to address the vital issues of economic development, gender inequality and human rights. The SDG’s make up for this shortfall with new goals addressing these areas. 

As of 2015, there were still around 1 billion people existing on under $1.25 per day and 850 million people who weren’t eating enough food. Women around the world were, and in many regions still are, having to fight for their equality with huge numbers still dying during childbirth. 

A recent PWC survey of more than 700 global companies, found that 72 percent of companies reference SDGs in annual corporate or sustainability reports, 50 percent identify priority SDGs, and 54 percent mention them in their business strategy. 

The SDG’s are growing as an adoptive framework for business to address triple bottom line and ensure they adapt to the wants and needs of their workforces. So let's look at 5 reasons why incorporation of the SDGs into your company’s development plan is vital for future success.

Recruitment

Millennials are the biggest demographic in the workforce and by 2020 will make up 50% of the workers in the USA. There is now a stack of research that reflects the attitudes of Millennials in the workplace, with one theme that shines through - Millennials want to work for businesses that are socially and environmentally conscious! 

A 2016 study yielded the following revealing results: 

  • 64% of Millennials said they take a company's dedication to environmental and social issues into account, when choosing who to work for and they wouldn’t work for a company which didn’t take these issues seriously
  • A massive 83% said a socially and environmentally responsible company would inspire a higher level of loyalty among them
  • 88% of Millennials are more fulfilled when their job gives them the opportunity to make a difference, socially and environmentally
  • 75% of Millennials said they would even take a reduced salary to work for an environmentally responsible company

It’s safe to assume that these trends are going to continue rising with subsequent generations, particularly when you look at the situation the world is facing with Covid-19 - and how that could potentially have been avoided if we had a more balanced relationship with the planet; it's various ecosystems and resources. 

Once aligned with the SDGs, your company will be more attractive to a wider range of employees (including the very best), who will be more likely to stay committed to your business and be willing to work for a potentially lower salary.

Even on a micro-level, socially responsible programs that allow employees to make a difference, such as a recycling program or volunteering opportunities, can go a long way to fostering employee satisfaction and loyalty.

Even on a micro-level, socially responsible programs that allow employees to make a difference, such as a recycling program or volunteering opportunities, can go a long way to fostering employee satisfaction and loyalty. 

Economic opportunity

In the future, conscious brands will continue to out-sell their less progressive rivals. Research shows us that customers across the age-range, hold companies with strong social policies in higher esteem and are Organisations that continue to place profit above society are going to struggle in the business environment of the future.consequently more likely to buy their products and use their services. 

There are many social issues that customers deem important, with environmental responsibility topping the list. This is a trend that is only going in one direction, so unless your customer base isn’t concerned with environmental issues, it's an area that simply cannot be ignored. 

The ultimate competitiveness and profitability of your company is framed by how closely it’s aligned with the environmental conscience of its customer base. This is especially important to Millennials and Gen Z, who will make up the bulk of customers within 15 years. 

Companies that can gain the trust of these generations will prosper whilst also doing their bit to affect real and tangible change.

Sustainable GrowthESG-business300

Companies which develop sustainable business models based on the UN SDGs, will ultimately be more attractive to employees and customers alike. This can translate into a healthier balance sheet and company expansion in the form of job creation. A benefit to both companies and the economic wellbeing of the countries they are based in.

Too often, wealth and job creation comes at the expense of environmental and social concerns that get ignored in the rush for profits. Companies that have models in alignment with the SDGs, can look forward to job creation and profit generation that doesn’t rely on the exploitation of people or the environment. 

Addressing risk

Creating capital in the long term is going to be increasingly difficult if social and natural capital is being diminished elsewhere. Each of the 17 SDGs indicates an area of risk that is already posing significant problems for business and societal development. Risk that will continue to grow, if left unchallenged.

Addressing risk makes sense as customers, employees and stakeholders, who hold companies responsible for the role they play in adding to social and environmental issues in the world. What’s at stake here is a company's social licence to continue operating and this is decided in the court of public opinion. 

The SDGs and underlying targets can help to address risk by providing a framework for a common way of referencing contribution to a more sustainable world, and thus strengthen investors' Environmental, Social and Corporate Governance (ESG) frameworks.

Companies that do not make social and environmental policy a thread within their organisational fabric, will surely be left behind as new models for assessing opportunity and risk become the norm.

Attracting capital

Now, and in the future, there will be an increasing redirection of capital flow towards the challenges highlighted by the SDGs. Companies that have aligned themselves with these development goals, will be much better placed to take advantage of any government or private sector capital that has been allocated towards achieving the goals.

The World Bank alone issues between US$50-60 billion in Sustainable Development Bonds in the global capital markets every year, to help countries find answers to the challenges of sustainable development. 

16-impact-300x294

Impact investing is also playing a role with investors fuelling solutions to the global challenges framed by the 17 SDGs. The T100 Focus: The Frontier of SDG Investing report pulled data from 76 Toniic member portfolios, totalling $2.8 billion in committed capital.

It shines a light on where the most active impact investors see investable opportunities that advance the SDGs across asset classes.

Companies all over the world are slowly but surely realising the potential that a more sustainable model of business can create. And many are coming to the conclusion that the cost of doing nothing in this regard, often exceeds the cost of taking action, especially when it comes to the environmental threats we face through climate change. 

We are at a point in history, like no other, where businesses have to be brave enough to adopt new ways of operating that will create sustainable value, not only for their companies, but for the societies they are dependent on and who they exist to serve.

Organisations that continue to place profit above society are going to struggle in the business environment of the future. 

Organisations that continue to place profit above society are going to struggle in the business environment of the future. Public opinion is inexorably moving in a direction that embraces the triple bottom line and those businesses focused on people and planet, as well as profitability, will have the ability to retain the highest quality staff. 

Now is the time to make sure your business exists to create a more optimistic future for all. The best way to do this is through acceptance and adoption of the UN sustainable development goals as the gold standard of business practice.

Exploring these topics further

If you'd like to know more you can watch a recording of a webinar we held on 24th March, with guest speaker Marc Buckley who presented on how to integrate the SDG’s into your companies operational business model.

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