by Mihaela Dragneva — Marketing and Community at uIMPACT
How businesses can incorporate SDGs into their business strategies and what are their benefits for doing so? What are some of the challenges that companies may face when implementing SDG-based strategies and how they can overcome them?
The 5 P’s of Sustainable Development, UN
What are the Sustainable Development Goals and How do Businesses Fit In?
The Sustainable Development Goals (SDGs) are a set of 17 global goals, adopted by the United Nations in 2015. The 17 goals have 169 targets that aim to address global challenges such as poverty, inequality, climate change, and environmental degradation by 2030.
Recent research made by SDSN Europe shows that progress on the SDGs in the EU has stalled. Even the top performers like Finland, Sweden, and Denmark face difficulties in reaching SDGs related to poverty, life expectancy, and unemployment.
But how can businesses have an impact?
A business plays a significant role in achieving the SDG by creating sustainable products and services, investing in renewable energy, and reducing its carbon footprint.
According to Article 67, Transforming our world: The 2030 agenda for sustainable development:
“Private business activity, investment, and innovation are major drivers of productivity, inclusive economic growth, and job creation. We acknowledge the diversity of the private sector, ranging from micro-enterprises to cooperatives to multinationals. We call on all businesses to apply their creativity and innovation to solving sustainable development challenges.”
A KPMG study in 2018 found that 84% of top companies have identified the SDGs that are most relevant to their business, but small and medium-sized enterprises (SMEs) often do not have the time for higher-level strategic thinking on sustainability. SMEs account for an overwhelming majority of private sector businesses in both developed and developing countries.
It is no secret that small businesses play a pivotal role in the global economy, making it essential for us to comprehend the potential contribution they can provide toward meeting sustainable development goals. Understanding why SDGs are so important is key to achieving success.
Understanding the Challenges of Achieving Sustainable Development Goals
There is a deficit of understanding of the SDGs among businesses. As a result, many businesses are unaware of how they may contribute to the Goals or what benefits they can derive from doing so. Moreover, there is a lack of clear directions on how corporations may put the SDGs into action. This makes it difficult for businesses to know where to begin when it comes to incorporating the Goals into their operations.
There are some key factors that need to be considered.
How to Incorporate the SDGs in Your Business Strategy
The SDGs are an opportunity for businesses to contribute to a more sustainable world. However, the very first step for companies to understand the SDGs is to learn more about each of the goals, the relevant targets, and Key Performance Indicators (KPIs) to see how they are directly and indirectly related to their business activities. Businesses can contribute to the SDGs in many ways, including:
Improving their products and services to make them more sustainable
Reducing their carbon emissions
Supporting the concepts of equality, diversity, and inclusion (EDI)
Engaging with suppliers to improve their sustainability performance
Working with governments and NGOs to tackle social and environmental issues
Financing sustainable development projects
“The only way for the SDGs to be realised is when people, governments, companies, and other organisations cooperate rather than compete.”
Companies should prioritise SDG targets depending on which will have the most impact in terms of risk or opportunity in the medium to long term, and which goals the firm can help achieve. Although a company may contribute to all 17 goals, when allocating resources and creating a timetable, it is vital to start with the goals that will have the most impact.
Once the core SDGs have been determined, it is critical to relate those objectives to actual business targets and KPIs in order to monitor and convey progress.
The Benefits of Incorporating Relevant Sustainable Development Goals and How This Impacts Your Bottom Line
There are many benefits of sustainable businesses, including:
Generating new revenue, by accessing new early-day markets for products and services in the field of Sustainable Development
Improved supply-chain resilience by taking into account supply-chain sustainability
Becoming more attractive to investors
Improved brand image and reputation - increased customer loyalty, attraction, and retention of top talent
Reduced risks, costs, and improved financial performance
SDG alignment is the next big way for many organisations to make a positive impact as well as attract investments from climate-conscious investors. Fiduciary duties demand that investors consider the SDGs from an ESG (environment, social, and governance) perspective. SDG-aligned companies offer investors steady returns by creating a competitive advantage in their portfolios, which is a compelling business case.
A report made by the Business and Sustainable Development Commission - “Better Business, Better World” revealed that the business models related to the SDGs could open opportunities worth up to $12 trillion and increase employment by up to 380 million jobs by 2030.
This research is a fitting example of how by putting sustainability as a business strategy, not only is one business benefiting from investments, but it is contributing to a more socially equal and better future - Goal 1 “No Poverty” | Goal 2 “Zero Hunger”
The SDGs can be used by businesses to develop, manage, and communicate their plans, goals, and actions.
Global concerns present a market opportunity for companies that can develop innovative and effective solutions. Companies can also protect and create value for themselves by integrating sustainability into their value chain.
Consumer purchasing decisions are increasingly influenced by their perception of a company's sustainability performance, and the SDGs are a well-known set of criteria that can help shape their decision. One interesting survey made by Randstad collated views from 35,000 employees around the world, and it shows how younger generations have higher requirements when it comes to sustainability.
Source: Workmonitor 2023 survey
Concerning employer values, 77% stated that sustainability, diversity, and transparency are essential to them. However, there is an age difference regarding the subject of sustainability, with over half of young (Gen Z) respondents saying they would reject to work for a business "that didn't make a deliberate effort to be more sustainable". Only 35% of their senior peers felt the same way.
Implementing the SDGs fosters coalitions based on shared aspirations. Developing relationships with stakeholders, customers, or employees.