Why should companies be concerned about achieving the SDGs?

Monday, 6 august 2018 | Redacción CEU

In 2015, the United Nations set seventeen global goals in order to combat the main problems which humanity faces: poverty, inequality, environmental protection and the guarantee of peace and prosperity. These goals, which were planned for the next fifteen years since they were set, are ambitious but also necessary, and they can only be fulfilled if the possible agents of change -governments, civil society, citizens and the private sector- play their part. Therefore, companies have a fundamental role in the future of sustainability. However, why is it so important for companies to get involved in the Sustainable Development Goals? Why should companies care about the SDGs' compliance? Is this just a normative issue or an ethical mandate?

At first sight, it may seem that the fulfillment of the Sustainable Development Goals (SDGs) falls just on the shoulders of the respective governments of the 193 countries that adopted this commitment, and, therefore, it is only their duty to ensure their future achievement. It is true that the different world leaders who represent their states agreed to safeguard the sustainability in an international commitment in 2015. However, it is nonetheless the case that forgetting about these goals on the part of the business sector may have a dramatic impact. This international commitment will be practically impossible to achieve, as long as companies do not get involved in fulfilling it.

What are the goals?

As the heirs to the Millennium Development Goals, the Sustainable Development Goals aim at completing and setting the new goals which are needed to overcome the main challenges that the world's current population faces. At this point, we consider that it is essential to enumerate these seventeen goals. Not only because of the interest they can have for companies, but also because, to the extent of their possibilities, each individual can align with them to try to contribute to building a more sustainable and fairer world.

No poverty
Zero hunger
Good health and well-being
Quality education
Gender equality
Clean water and sanitation
Affordable and clean energy
Decent work and economic growth
Industry, innovation and infrastructure
Reduced inequalities
Sustainable cities and communities
Responsible consumption and production
Climate action
Life bellow water
Life on land
Peace, justice and strong institutions
Partnerships for the goals

Indeed, companies have a direct influence on certain SDGs like decent work and economic growth, responsible consumption and production, the reduction of inequalities, gender equality, and industry, innovation and infrastructure. However, there are areas that although at first do not seem to be related to the business world, even if it is in an underlying and indirect way, they definitely are. For example, a corporate decision about the packaging of the food products can have a major impact on underwater life; the plastic is used in the packaging, the less plastic that will end up in the sea (incidentally, this is a hot topic nowadays).

Spanish companies and SDGs

The Organization of the United Nations considers that companies have a fundamental role as key agents for the Sustainable Development Goals. That is why reports such as SDG compass: The guide for business action on the SDGs include recommendations for companies to be in accordance with these goals:

Getting to know and understanding the SDGs
Analyzing possibilities and defining priorities
Setting an action program with indicators and goals that are announced publicly
Integrating the program in the company
Communicating and reporting the achievements

The SDG Observatory of Spanish companies has also carried out a report which is focused on the role of enterprises in this area. Specifically, this study was born with the aim at evaluating the contribution of Spanish companies to the goals of sustainable development. According to it, only 50.3% of firms that presented company reports (80% of the total analyzed) provided information which is not exclusively financial. Technological businesses are the ones that had more reports of this kind (90%). These are followed by construction and energy companies (70%), and the firms that are specializing in financial services, tourism and engineering. The companies that work in the goods and services sector occupy the lowest position in this ranking.

The information gathered in this report, which was published in May, includes data corresponding to the year 2016. That may have led to the fact that the SDGs have a limited presence on a large part of the sustainability reports of the companies that were analyzed; out of 143 companies only 41 cited them in their reports (28.7%). The goals that most appeared in them were: decent work and economic growth, action for climate and industry, innovation and infrastructure. By contrast, they focused less in: life on land, zero hunger and underwater life.

More than an ethical mandate

The SDGs have a more aspirational than legislative dimension. Besides, those aspects that are closer to the business activity are those that are more regulated by governments. That means that the mere regulatory compliance does not guarantee that companies exploit all the potential which they have when it comes to promoting sustainable development. In other words, the decision to align with these goals is a responsibility of the companies themselves and this is a mandate which is rather ethical than legal.

The SDGs can serve as a compass when it comes to setting business goals and envisioning a horizon to go to. In previous articles, we analyzed the different reasons why leadership and ethical commitment lead companies on the path to success. In the same way, the pursuit of these objectives contributes to creating new opportunities such as the access to new markets and businesses, the reduction of expenses, the increase of reputation, the optimization of resources and the strengthening of relations with the rest of the actors of the global ecosystem.

It is true that in comparison to some countries, Spain keeps an advanced position. However, according to the SDG Index & Dashboards, our country reach any of the seventeen goals. It is important to bear in mind that in an increasingly globalized world that is subject to constant change, companies are more profitable when they are more sustainable, and when it is also their environment.

At The CEU IAM Business School, we believe that in an ecosystem like the current one, which is marked by the digitalization and the blurring of borders, it is important to keep a business approach that takes into account a deep ethical sense of business. This is the premise which has guided us when designing the program of our Global MBA.