Unlock Your Potential: Profit From SDGs Integration

15-07-2019

Companies need well-defined guidelines and an efficient approach on how to integrate SDGs into their business models.

On the heels of the recent report by the Trucost group ‘Discovering Business Value in the United Nations Sustainable Development Goals’, and urgent call to actions from the UN Secretary General with only 12 years left to meet the SDGs, we thought it a good time to give a little more attention to the business case for sustainability.

“Strategies associated with sustainability are a great engine for companies’ success. It is not a sacrifice, it is actually an advantage. And if they are smart about it, they can make 50 to 80% more profit.” – Bob Willard

The statement sounds promising for any company trying to or already working with sustainability. But how does it translate to real life? What factors influence the successful integration of sustainability and what are the key steps for any organization to build an efficient and beneficial sustainability strategy?

In 2015, 193 countries, 9000 companies, and investors with more than $4 trillion in assets pledged their support to the United Nations Sustainable Development Goals (SDGs). 3 years in, the actual implementation of transformative action on SDG-aligned business strategies and capital allocation has proven to be a challenge.*

“As beautiful as these goals are, as much as we all support what they stand for, 17 goals and 169 targets are too much for any businessperson to deal with” 
-Peder Bakker, CEO of the World Business Council for Sustainable Development

Hence, it is clear companies need well-defined guidelines and an efficient approach on how to integrate SDGs into their business models. However, as confidently stated by Bob Willard, the companies that have already managed to align their business revenues with SDGs indeed generate more profit. The Trucost report found that the 13 leading partnering companies generated almost $233 billion of SDG-aligned business revenues in 2017 – That is 87% of their total revenues.

Wondering how can you follow in their footsteps and identify the SDG-aligned business value for your organization? Below we take a closer look at the SDG Evaluation Tool developed by the Trucost group.

Align Business Models with the SDGs and Expand Access.

Focus on delivering products, services, and technologies that address specific SDG needs. It is critical to have an overview and understanding of the SDGs, as well as your company’s current product/business model. Consequently, such knowledge and efforts can be expanded into new markets and countries that need them most. For example, the sale of water storage equipment may be beneficial in all countries but will be most beneficial in those countries where water is scarce and water utility infrastructure is poor. Understanding different markets, needs, and dynamics will make it easier to evaluate how your company can successfully align with SDGs.

Investment Opportunities are Identifiable

As an investor, your greatest opportunity is to go beyond alignment to raise and direct new capital towards progress on the SDGs and redirect the investment to the areas least set to meet the SDGs. Such an approach not only significantly contributes to meeting the SDGs on a global scale, but is also a great opportunity to enhance or develop new revenue streams.

SDG Risks and Opportunities are Local

Understand that both risks and opportunities are always dependent on local conditions. Taking the geographical context in which different activities of the corporate value chain take place into account, is vital, That way, your organization can closely examine the need for progress on each SDG within the areas it currently operates in- as this varies greatly from country to country. This approach lets organizations simultaneously map out different market opportunities already aligned with the social or environmental needs and the SDGs.

Take a Whole of Value Chain Perspective

Implementing SDGs-driven business strategies only to a chosen part of your supply chain is highly inefficient, and will not bring the desired outcome. Virtually every company these days operate on a global supply chain, most likely opaque, and being exposed to intermediaries and suppliers in a broad range of geographies, each with their own distinctive SDG challenges and opportunities. Mapping out your whole supply chain, with different geographical locations and different SDG challenges can bring you closer to evaluating what actions are needed at which part of the supply chain. This strategy takes the variety of interdependencies within your supply chain into account. That way, your company can not only work towards SDGs within the whole value chain but also proactively foresee any disruptions e.g. due to climate change, mitigate risks and act upon them in an efficient, informed manner.

Broadening the Focus of ESG Strategy

Being proactive is a critical step to success. Taking a deep dive into the SDG risks and opportunities can bring accelerated action to combat these topics that have gained less traction among organizations. That way companies can fast-forward the transition towards the least integrated SDGs and stay ahead of government regulations. A great example is the SDG 13- Climate Change, on which companies reveal only limited disclosures of their actions, yet different government regulations and legal obligations towards corporations will only keep increasing.

Engaging Beyond the Sustainability Department

Companies must acknowledge that sustainability strategies and SDG driven-business value must be integrated throughout the company, as a part of its core that every employee relates to, understands and strives towards. The SDGs cover a comprehensive variety of issues that must be collectively dealt with both within the internal organization, as well as externally with a multi-stakeholder approach. This is where SustainOnline can facilitate you in the process of educating and engaging all your employees via our micro-courses, and where employees can build their projects to better integrate sustainability in their new or existing initiatives with our tools and collaborate across teams and departments.

 

References and Further Reading List:
*Trucost. 2018. “Discovering Business Value in the United Nations Sustainable Development Goals ( SDGs ) Insights from the Inaugural Application of the Trucost SDG Evaluation Tool.”

**Watson, Bruce. 2015. “How Can Companies Integrate Sustainable Development Goals?” The Guardian. 2015. https://www.theguardian.com/sustainable-business/2015/oct/12/united-nations-sdg-un-global-compact-sustainability-world-business-council.

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