With and beyond SDGs: how can businesses adapt to a world of challenges?

Luca Osvaldo Uccello, Corporate Social Responsibility Officer at United Nations Global Compact*, French Local Network, and an alumnus of ESCP Business School, shares his take on where businesses stand with the SDGs today.

With Covid-19’s positive impact on carbon emissions only temporary and a bigger economic struggle than before Covid on the horizon, are companies and governments putting environmental SDGs aside to focus on their own survival?

Luca Osvaldo Uccello: As a trained economist, I tried to rationalise what kind of impact Covid-19 could have on the economy. We observed 500 million full-time jobs lost on a global scale by mid-2020 and over 119 million people pushed back into extreme poverty in 2020. This is probably one of the worst economic crises we have seen before, but this specific crisis has reset our ideas around what is really important to us. As never before, many governments have coordinated social measures, from unemployment aids to entrepreneurship supports and fiscal delays.

Of course, the 2030 Agenda and the Sustainable Development Goals’ (SDGs) progression are experiencing delays and the United Nations Global Compact has put in place a Covid response to raise awareness about this slowdown. The UN Secretary-General, Antonio Gutierrez has stated that:

Now more than ever, as big decisions are made about our future, companies need to address environmental, social and governance risks holistically and move beyond business as usual.

UN Secretary-General, Antonio Gutierrez

We observe an emerging positive trend: a lot of resources have been directed to the economic transition toward a greener and more sustainable future. We are talking about the biggest economic plan in human history. The Marshall Plan was about $150 billion of today’s dollar value, while the “Next Generation EU” is about €1,824 billion, an amount of money destined for green and resilient activities. At the same time, the EU has passed an unprecedented milestone: European Taxonomy. This means companies should not only be greener, but they must comply with minimum safeguards, such as the UN Guiding Principles, that consider human rights and international labour standards. 

Even though the pandemic has delayed the progress of SDGs, I am quite positive about the exit from this crisis. For instance, more than 400 companies worldwide, members at the UN Global Compact, have subscribed to the SDG Ambition Accelerator, one of the programmes that support companies in implementing operational metrics and achieving the SDGs. We seem to be abandoning the competitive attitude against the ecosystem and embracing a more collaborative spirit.

Do the SDGs represent a competitive advantage for business? If so, how?

Yes, there is evidence that companies who are committed to corporate social responsibility are better performing, resilient and ready than those who are not. In this sense, SDGs represent a competitive advantage. When looking at data by Arabesque and the University of Oxford on the meta-analysis of over 200 studies looking at ESG performance, results show that strong ESG measures result in a lower cost of capital for companies in 90% of studies, in better operational performance in 88% of them, in better stock price performance by 80%, and 7% higher Return on Equity for companies. Even Bloomberg reported that during pandemics companies with higher ESG scores performed 50% better than their peers.

These performances show a new perspective of the competitive skirmish. Companies have abandoned linear thinking and embraced systemic thinking, and those who are better prepared for this multivariable competition have embedded SDGs in their strategy. When we look at well-performing companies, we also realize that their success comes from a strategic plan that has gained maturity and experience. This could be possible if the company has gone through an internal debate on their future and how they would like to relate to the environment. Lastly, a company’s reputation is key, as is outlined in the OECD studies. This is the number one priority for companies. Today, companies who have a negative impact on the environment pay that reputation in terms of higher costs of transaction.

This summer has seen a surge in the number of natural disasters, for example, as well as extreme temperatures around the globe. How can businesses and the SDGs help? 

The World Meteorological Organization and the IPCC are raising the alarm about the fact that if we do not decrease CO2 emissions, natural disasters will increase. Each time we buy a product we buy the manufacturing, social and political systems behind it. If I buy a product from a company that respects human rights, labour, environmental and anti-corruption standards I am financing that kind of system. Consumer choice counts more than ever. Companies that sign the UN Global Compact and embed the SDGs in their strategy report yearly on their progress, which can be publicly consulted on the website of the Compact.

If efficiency is about the fastest way to get to the result in 2030, in this sense SDGs are very efficient because they act on many systemic variables. Step by step, economic actors, consumers and politicians raise the standards at the pace of technological development, which is also a key factor in the transition to a sustainable economy.

Are SDGs the best way for companies to have an impact on real-world issues such as poverty, hunger and climate change? Regardless of the industry they operate in? 

The Sustainable Development Goals are not all about climate change; they address Planet, Prosperity, Population, Peace and Partnership issues. They are all interconnected, and do contribute to the fight against climate change. If companies do not apply a circular economy approach we will continue exploiting soils and natural resources, depauperizing lands. So even if the circular economy comes under SDG 12, this affects life on earth (SDG 15), it affects water resources (SDG 6), and by pushing the reasoning to the extreme, then a depauperized land will create inequalities, as people living near natural resources will see their territory affected the most, with increasing levels of CO2 and increasing natural disaster events. This could then lead to migrations and endanger peace (SDG 16). Companies that have understood these effects are working on reducing their impact in terms of carbon emissions and in terms of the circular economy, as both are key to fighting climate change.

So how exactly can companies implement a framework compatible with the SDGs?

My first suggestion is to look at the UN Global Compact, which has the mission “to accelerate and scale the global collective impact of business by upholding the Ten Principles and delivering the sustainable development goals through accountable companies and ecosystems that enable change”. Companies that are not mature regarding the stakeholder approach to corporate social responsibility tend to experience a kind of cultural revolution when they get in touch with the Compact.

Companies that are good on the Global Goals cannot avoid complying with the Ten Principles of the UN Global Compact. One key step is to start an internal and external debate with stakeholders that allows them to reflect more deeply on the Sustainable Development Goals (SDGs). The SDGs are objectives that can be operationalised on a corporate level if the company management thinks systematically, considering all variables and externalities.

In this changing context, making a choice is the most important vector of evolution. We can decide to rely on a glorious past and not deal with our current problems, or we could choose to embrace the challenges leading to the possibility of a better future.

*This article reflects the point of view of the interviewee, Luca Osvaldo Uccello, and not that of the UN Global Compact.

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