The SDGs came into effect at the beginning of 2016 to provide a reference point for us all – governments, business, civil society and individuals – to reflect on the role we can play in transforming our world for the better. One year on, it’s important to assess whether that reflection is translating into action.
An encouraging sign is 120 countries ratifying the Paris Agreement to limit global warming to well below 2 degrees (SDG 13 Climate Action). Balancing this, the SDGs don’t always seem to have been on the minds of voters, with the Brexit and Trump votes signaling a focus on local rather than global concerns for many.
Some enlightened companies have looked at how their business activities could contribute to the SDGs, often through partnerships with not-for-profit organisations. Unilever, WaterAid and others established the WASH4Work coalition to improve access to water, sanitation and hygiene in the workplace and in the communities where workers live (SDG 6 Clean Water and Sanitation).
But there’s a growing realisation that fine tuning existing business models and practices will not be enough to achieve the SDGs. This is because the SDGs represent gaps and needs which ‘business as usual’ is not equipped to meet. Groups and communities which are hungry or have poor access to education or are discriminated against invariably lack financial resources – and traditional business models overwhelmingly serve the needs of those who already have money, and overlook those who do not.
Think about healthcare. There are many viable, responsible healthcare businesses which do a good job of meeting the needs of patients who are able to pay for medical treatment (whether from their own pockets or with the help of insurance or government funding). Less common and much more precarious are those businesses which aim to serve patients who have limited financial resources or support to pay for help.
All this means that achieving the SDGs will require business-unusual, on top of more responsible business-as-usual. Whilst only time will tell what the new SDG-solving businesses-unusual will look like, there are some important features they are likely to share. They will value long term impact and success over short term opportunity and profit. They will partner with others, understanding that doing things differently requires different skills and experience; and that there is typically no single fix for entrenched disadvantage. They will truly value their customers and suppliers, knowing that as these stakeholders thrive so will the business.
Some examples. The Net-Works partnership between Interface and the Zoological Society of London, harnesses the diverse capacities of a carpet company, NGO and local communities to deliver many positive impacts: a source of income for poor communities which collect discarded fishing nets for use in carpet making; reduced harm to marine life from less plastic waste in the ocean; and a sustainable raw material for carpet tiles.
Pollinate Energy sells solar lights to families in Indian slum communities, replacing kerosene lamps and delivering health benefits and fuel cost savings. To increase affordability for their poor customers, Pollinate sells the lights under instalment payment plans. They also build the business capacities of local Indians by supporting them to start their own businesses by distributing Pollinate’s solar lights and other products.
Turning to investors, what can they do to help make business-unusual like Net-Works and Pollinate Energy become the new business-as-usual, and so achieve the Sustainable Development Goals?
Investors need to be patient. They need to invest for long term returns, allowing the companies they invest in the space to build their businesses and markets.
Investors need to build their capacity to understand and analyse the new business models being developed to tackle the SDGs. Valuing an innovative company operating in a new market is more challenging than valuing a traditional company in a large, long-established market.
Investors need to explore opportunities for positive impact across all their investments. They can encourage large, established companies they invest in to modify and expand their businesses to achieve SDGs that are relevant to their operations. They can allocate funds to venture capital and private equity investments which support impactful early-stage businesses that have the potential to scale to meet SDGs demanding innovative solutions.
Australian Ethical’s long term, ethical investing approach is strongly aligned with investing for the SDGs. Many of the SDGs are already reflected in our Ethical Charter, including the alleviation of poverty, sustainable food production, responsible consumption and the avoidance of pollution and discrimination. We are longstanding investors in Interface and our CEO Phil Vernon has volunteered with Pollinate Energy in India.
Despite our long track record in positive investing, we continue to look for new ways to use our investment influence to achieve the SDGs. We are developing new ways to measure the social and environmental impacts of our investments, to help allocate capital in a way which maximises impact. We have recently extended our Community Grants program with the Australian Ethical Foundation, to increase our flexibility to commit capital to high impact innovation. We contribute to the work of Impact Investing Australia and the international Positive Impact Working Group, organisations which are committed to growing the market for positive impact investments.
The Sustainable Development Goals are a much needed catalyst for a public conversation about the responsibilities of investors, businesses, governments and individuals to all play a proactive role in building a better future. The SDGs demand that we not only avoid causing direct harm, but that we scrutinise how our acts and omissions may be sustaining a flawed system – a system which is failing too many people and which will ultimately fail us all if we do not act to remedy its flaws.