It should not come as a surprise that improvements in international sustainable development cannot stem solely from government intervention. The UN’s Sustainable Development Goals (SDGs), as well as their predecessor, the Millennium Development Goals (MDGs), both ambitiously sought to promote solutions by involving several global actors. With the SDGs, the private sector has embraced the responsibility in advancing the global goals like never before.
In order for any of the 17 SDGs to be realistically achieved, or for serious progress to be made by 2030, the involvement of non-governmental actors is essential. An approach sufficiently supported by the private sector is more likely to succeed than a governmental approach on its own. The SDGs require action on every level of society and government regulations and contributions alone are not pervasive enough.
According to a 2016 Brookings report, private investments and financial flows have drastically increased over the past two decades. Official Development Assistance (ODA), donated by governments now accounts for just 10% of financial flows; private flows comprise the remaining 90%. Furthermore, a Sustainable Development Solutions Network (a Global Initiative for the UN) Report explains that the SDGs compel a global partnership, one in which states must coordinate and cooperate with multinational businesses in order for the SDGs to be realistically achieved. Although the success of this multi-faceted approach is hard to concretely measure just yet, certain assessments (such as the statement from the World Bank Group’s Vice President on Development and Finance) suggest that the private sector must contribute more for the SDGs to be reached.
The private sector’s importance as an actor in the global sphere is increasing while the power of the nation-state is declining—and has for some time now. We live in a world where a company can command more financial capital than an entire country’s GDP (Apple’s finances surpass two-thirds of countries’ GDP). About 50 percent of assets (under management) worldwide belong to the largest banks, and it is an unwritten requirement for large businesses to shed their national ties and embrace global value chains. In many cases, the private sector recognizes and takes advantage of its international ties and financial power in comparison to the state, whether avoiding country tax laws by moving capital overseas, or explicitly attempting to override the government’s agenda, as hundreds of companies did in forming the “We Are Still In” campaign in response to Washington’s withdrawal from The Paris Agreement.
Developing the SDGs and adopting them in 2015 involved the private sector; the private sector forms the financial backbone of the state, and the financial sector itself is becoming more global and less national. In essence, it was smart for the establishment and adoption of the SDGs to be a truly global process (including state governments as well as the private sector), because corporate power and influence is increasingly global and unconfined by state borders. As previously mentioned, the private sector possesses a significant portion of the world’s wealth today. That is one reason why, as former UN Secretary-General Ban Ki-moon said during a UN Forum, “I am [we are] counting on the private sector to drive success.” The inclusion of the private sector as a stakeholder of the SDGs is practically a necessity.
But is the private sector willing to foot the bill post-2015? Despite its status as the most flexible financial muscle in the global economy today, so far it looks like the private sector is reluctant to throw many punches regarding sustainable development. This is somewhat unsurprising; such progress in terms of global development supported by the private sector has never happened before. Judith Rodin, former President of The Rockefeller Foundation, notes an issue facing the private sector in recognizing that, “while there are many pathways forward to achieve the SDGs…business as usual is not an option,” and not nearly enough to tackle the funding gap. In essence, the SDGs require businesses to consistently go out of their way for the greater good. But are businesses today really structured to look out for the greater good?
The short answer is not really, but they can be. It depends on the adoption of a new business strategy: shared value. According to Michael E. Porter and Mark R. Kramer, if businesses reinvented their purpose as creating “shared value,” the private sector could create value in a way that also benefits society. Social success alongside company success, because social success would be part of the company’s new bottom-line. The current approach to creating value in business is focused on short-term financial achievement; however, it is the opportunity for consistent financial achievements over time that has the most power to ensure a company’s survival and long-term success.
And the time to change is now. Consumers are becoming frustrated with businesses, and the capital system in general (as can be seen by the recent wave of populism across the globe). Furthermore, consumers are becoming increasingly well aware of their purchasing power. A Cone Communications report shows that 90% of people surveyed would boycott a company if they discovered that the company was using dishonest or irresponsible business practices, and 84% already search for products and judge them based on their responsibility.
Although the UN proclaims that progress has been made towards certain SDGs, it is hard to measure and even harder to attribute the changes to specific actors. And certain stakeholders believe that no significant progress has been made at all (according to research from the Overseas Development Institute and a recent Globescan/Sustainability Survey). Despite the UN’s 2016 Sustainable Development Goals Report, which highlighted small signs of progress, more action is needed to reach the vast majority of goals by 2030. During the High Level Political Forum, one UN representative notably said, “leave no one behind” (a key component of the SDGs meaning the SDG targets must be pursued for everyone), “isn’t something that will happen by everyone just repeating that phrase again and again at the UN.”
Perhaps the SDGs are too broad and ambitious for progress to be accurately and extensively measured only about two years in. Regardless, a large part of the disputable lack of progress is due to a seemingly intractable problem: what is good for society as a whole is not always perceived as good for business (whether or not that may be true). According to the aforementioned Globescan/Sustainability Survey, businesses primarily support SDGs when they see an opportunity to align business interests with those of broader society. To accomplish this, businesses need to reevaluate the social environment and their consumer base, and embrace the concept of shared value. The business case for promoting international development relies on the active realization and alignment of business and society’s objectives. And businesses should strongly consider realigning, if they want a future society full of healthy and financially secure people to buy their products and services.
Photo by Etienne Boulanger via Unsplash.