The Sustainable Development Goals. (Photo: United Nations)

Reflecting on the role of business in the SDGs

What should business leadership in the context of the Sustainable Development Goals (SDGs) look like?

This much debated-question was topic of a recent panel event hosted by the Brookings Institution. Headlining the panel was the flagship report ‘Better Business, Better World’ by the Business and Sustainable Development Commission (BSDC) – a key group of progressive business leaders that has stepped up to help shape the private sector’s role in sustainable development. Mark Malloch-Brown, the BSDC’s chair, presented the Commission’s much-anticipated answer to the question why and how business should engage in the Sustainable Development Goals (SDGs).

Oxfam has reflected on this question too. We recently published a paper asking business to ‘raise the bar’ when it comes to its engagement in the SDGs. So I was interested to see how much difference there was between BSDC’s and Oxfam’s perspectives on the envisioned role of business in the SDGs. The answer: Not very different in terms of the problem analysis; much further when it comes to proposed solutions.

The problem-solution gap

Let’s start with the problem analysis. The authors of BSDC’s report are adamant about the enormity of the challenge at hand. They openly question the sustainability of the existing economic model that doesn’t consider the true price of externalities and focuses on short-term financial gains. They challenge the reliance on fossil fuels, rapid urbanization, and resource use beyond our planetary boundaries and emphasize the risks and uncertainty associated with runaway climate change, violent conflict, extreme inequality, and the threat of nationalist politics. In sum, the report acknowledges the fundamental challenge and erosion of popular trust in the globalist project of steady global integration, which is co-led by business.

Yet – the primary solution advanced by the report is strangely detached from this holistic analysis of the challenge at stake. Instead, the primary guidance to business is to see the SDGs as ‘a compelling growth strategy for individual businesses, for business generally and for the world economy’. Put simply, the report appears to answer the question ‘what can business do for the SDGs?’ by asking ‘what can the SDGs do for business?’

This approach is problematic for two reasons as we outline in our paper. First, it neglects the problem of adverse business impacts on the SDGs. Thus crucially failing to acknowledge that sometimes the most beneficial thing business can do to support the SDGs is to restrain its activities (despite the presence of market opportunities). Its relative silence on the need for greater business respect for human rights underscores the view of experts, such as John Ruggie, who has warned business against approaching the SDGs by looking for business opportunities and not taking business’ responsibility to respect human rights as the guiding anchor of its SDG engagement.

Second, this approach biases priorities in favor of business, not public interests. It’s simple – the greatest business opportunities don’t necessarily overlap with the greatest potential for social and environmental impact – whether positive or negative. This is true in terms of issues and geographies. For instance, addressing rising economic inequality (e.g. through more responsible tax practices or paying a living wage) could come with significant social benefits but not with an immediate monetary value for business and are thus not mentioned as opportunities. Similarly, a business opportunity lens leads to skewed allocation of resources to countries with the greatest prospects for profit, not the greatest need for investment. Roughly one-third of the opportunities outlined in the report are expected to be in the US, Canada, and EU, with only around 60 percent going to developing countries.

What does it take to be a business leader on the SDGs?

So is the Commission’s report wrong on what it means to be a business leader on the SDGs? Not completely. In fact, the report contains a number of proposals that would be ground-breaking if adopted by the business community. While these proposals overlap with the key arguments of our paper, they unfortunately are strangely hidden within the report (mostly in chapter 5). Let’s take a look at three of the most important.

Business’ political role

The report recognizes businesses’ significant power and influence over governments, the mistrust this can form, and the need for businesses to influence policy in a responsible, transparent, and accountable way. It even proposes the idea of an independently compiled Responsible Political Engagement Index, which we very much welcome. After all, the most basic role that business should play in the context of the SDGs is to not obstruct the ability of governments to deliver them. This not only requires responsible political behavior but also responsible tax practices and the support of effective government regulation (e.g. labor protections, environmental codes).

Business models

The report argues that ‘business as usual is not an option’ as it will not achieve the transformative change needed for more positive business impact on the SDGs. It argues for innovative and socially-focused business models (circular, sharing, lean, big data, social enterprise) that better align business and the SDG agenda. The litmus test for these business models will be if they emphasize long-term value creation, are able to respect the interests of different stakeholders, and more equitably spread economic gains, particularly among workers and value chain participants.

Social contract

What’s arguably most relevant about the report is the Commission’s acknowledgment that we need a new social contract between business and (civil) society in light of the daunting global challenges we face. Oxfam welcomes the idea of a new and honest conversation about the different visions we see for business’ SDG role and responsibilities.  And we believe that progressive business leaders – including the members of the Commission – have a key role in initiating this conversation by bridging the divide between civil society and the larger business community.

We have come a long way from when business’ engagement in sustainability issues was charitable outlet with superficial impact. The SDGs represent an even higher level of ambition. The sustainable business leader of tomorrow is one who not only sees the opportunity to capitalize on sustainability but takes seriously its responsibilities vis-à-vis its societal stakeholders, becomes a disrupter of conventional business norms, and pushes new thinking on what’s expected of business in volatile economic and political times. We hope the Commission will lead the way in forging this movement.