The Sustainable Development Goals (SDGs) provide business opportunities to create shared value. Considering the challenges India is currently facing and also acknowledging the resource limitation for development, the CSR investments through the private sector should be channelized towards SDGs.
The SDGs are the new, de-facto global standard for businesses to design, measure and account for their contribution to sustainable development. Companies that are serious about being agents of social change will have to expand the boundaries of their strategy, engagement and impact assessments. The ambitious SDGs cannot be delivered through siloed efforts, and many will need to collaborate outside their comfort zones. At the macro level, business has a stake in realising the vision set out in the SDGs. Establishing peaceful, stable, prosperous communities that live within the environmental limits of the planet is good for everyone. But a closer look at the SDGs reveals potential business opportunities at the sector and company level too.
Innovation and market development
The SDGs essentially highlight and address the huge gaps in development that exist across the globe – whether it be lack of access to finance, clean water, food or education. These ‘development’ gaps also represent unmet market needs. As governments direct their policy and resources towards meeting these needs, businesses can benefit from analysing which of these may present opportunities for innovating new products, services and business models.
Efficiency and cost savings
Many of the SDG targets aim to tackle the pressures on the environmental system and encourage economic growth. The impact of limited natural resources will increasingly be felt by businesses through rising costs and volatile supply. The impacts of climate change will exacerbate this effect. Doing more with less will become imperative for every business – helping to save costs in the short-term and reduce risk in the long-term.
Some SDGs clearly point to the elimination of the negative impacts that result from the activities of the private sector: pollution, environmental degradation, child labour. Tackling these issues is vital to building and maintaining trust with key stakeholders and maintaining a company’s licence to operate.
The SDGs aim to tackle many issues which pose significant risks to ‘business as usual’ over a longer time frame. These might be risks in the supply chain or financial, regulatory or technological risks, to name a few. Businesses can minimise their vulnerabilities by understanding the way the Global Goals impact on their sector and value chain. The SDGs will also increasingly shape the regulatory environment for business. Businesses that respond proactively will increase their resilience in a challenging operational and regulatory context.
Let’s have a look at the business opportunities and risks of each industry sector:
Oil and Gas
The SDGs provide opportunities but also many risks that need to be managed and mitigated if the sector is to maintain its licence to operate. SDG 7 sets out a vision for a world reliant on sustainable and affordable energy. The implications for the Oil and Gas sector are significant. With time horizons for exploration and development that span over 20 years, the sector needs to act now.
SDGs 14 and 15 aim to protect land-based and marine ecosystems and create a “land degradation neutral” world. This requires the Oil and Gas sector to do more to reduce and mitigate its environmental impacts. Given the high-risk nature of certain jobs related to the sector, SDG 8 targets on health and safety will also be relevant. Often operating in areas affected by conflict the sector needs to consider SDG 16: Peace, Justice and Strong Institutions.
A fairly diverse group of companies means that each sub-sector will have its particular SDG relevance and linkages. There are some broad themes however at the high level. This sector feeds many other companies downstream in the value chain. Growing demand for ‘greener’ products from downstream companies looking to tackle their own impacts, will create innovation and growth opportunities. Packaging in particular is a key focus for Consumer Goods and Services companies.
Given the nature of the industry, however, there are particular negative impacts to be managed. On the social side, the well-being of large numbers of unskilled workers, for example, in addition to the significant environmental impacts of the sector.
The sector is characterised by complex supply chains that increasingly extend across the globe. This sector is therefore a key driver of change both upstream and downstream in the economy. Often comprising consumer-facing brands, this sector is particularly exposed and therefore can drive demand for more sustainably sourced commodities and materials. It also innovates to tackle impacts in consumer use. This sector can play a powerful role in a number of challenges such as malnutrition, sanitation, health, sustainable farming among others.
Healthcare is one of the few sectors with a direct correlation to a single Goal (SDG 3: Good Health and Well-being). This sector has been under scrutiny for some years, so the opportunities and risks presented by SDGs are not new. The healthcare sector will need to find new models to deliver affordable healthcare and medicines to the most marginalised. It will also need to contribute to potential ‘growth limiters’, by supporting capacity and infrastructure in emerging markets.
As business tycoon Anand Mahindra famously said at the Bloomberg Global Business Forum in New York: “(The SDGs) are the single biggest business opportunity for the next couple of decades. To my mind, anyone not looking at these opportunities is going to miss out on growth.”