Businesses are committing to sustainability initiatives as they realise the benefits of doing so, including gaining consumer loyalty as well as stronger investor confidence. What started as a simple CSR activity is now becoming an integral part of company core strategies.
Sustainability offers a wide range of business opportunities including scope for disruptive innovations and starting new markets, higher productivity, a wider talent pool, higher consumer affordability, a more stable ecosystem that provides greater assurance for smooth business operation, cost advantage, stronger competitiveness, brand loyalty and consumer credibility.
The Sustainable Development Goals (SDGs)
Source: Euromonitor International
Aligning with these SDGs creates many opportunities for business. These include the possibility to:
- Create new products, services or categories through improving innovation (SDG 9). In combination with other SDGs this is particularly powerful, for instance innovation to meet demand for responsible products (SDG 12).
- Increase the consumer base by targeting a host of SDGs from no poverty (SDG 1), good health (SDG 3) reduced inequalities (SDG 10) to peace and justice (SDG 16).
- Achieve cost-savings and increased profit from reducing waste (SDG 12), or switching to greener energy in order to tackle climate change (SDG 13).
- Attract and retain talent through tackling gender equality (SDG 5) and providing good jobs (SDG 8).
- Build a skilled workforce by promoting quality education (SDG 4).
- Form stronger relationships with suppliers and partners through working with them on SDGs including gender equality (SDG 5) and providing good jobs (SDG 8).
The depletion of natural resources before being replenished can disrupt and in extreme cases halt the production process on account of limited supply. Some challenges are:
- Prevent potential depletion of natural resources: Environmental degradation where renewable natural resources cannot self regulate anymore is a major threat to companies as this is likely disrupt or even halt production in the future and give rise to commodity price volatility. There is already evidence which illustrates this phenomenon and according to the EU there are 20 critical raw materials with high risk of supply shortage. Some of them include beryllium, chromium, indium, magnesium and the platinum group metals making responsible consumption and production necessary (SDG 12 and 13).
- Avoid damaging consequences of climate change: Climate change is increasing the frequency of natural disasters, which are costly for businesses, again reinforcing the need for actions that can ease pressure on the environment and natural resources (SDGs 12 and 13).
- Comply with government regulations: One of the key roles of governments in SDGs is developing an effective regulatory environment. Not complying with regulations can lead to fines and other regulatory measures including the loss of licence to operate.
Many businesses, including Google and Nestle, are committing to incorporating SDGs into their business developments. According to a PwC survey, 71% of companies have stated that they have started taking actions to comply with the SDGs, but there are still gaps which need to be addressed to be able to meet the deadline. A way to help meet this deadline is the process of aligning company operations with SDGs. This needs to be escalated to boardrooms to ensure company strategic directions are steered in line with the SDGs. A challenge for these new goals is that companies tend to select the SDGs which are easy for them to meet or least costly. Overall, It is important that companies assess their performance against all SDGs.