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Cautious optimism. This was the tone shared by business and government leaders at the SDG Business Forum at the United Nations (UN) headquarters in NYC on July 17.
The Business Forum was held alongside the UN’s 2018 High Level Political Forum and focused on bringing stakeholders together to foster dialogues, develop partnerships and explore new solutions for advancing the SDGs. And while it had all the makings of a dry, bureaucratic event, the discussions were surprisingly honest and constructive about the progress made, and more notably the obstacles that remain.
This was particularly evident when an early panelist level-set the room by explicitly stating “The private sector is not the piggy bank for sustainable development. We need to support business by shifting markets.”
And it was from this point forward that a particular theme emerged and permeated throughout all the discussions, questions, and calls to action: the need to shift and change public policy.
To unlock potential, we must unlock old systems.
After years of neglecting the private sector (outside of asking for financial support), the launch of the SDGs was a clear recognition of the role businesses can and must play in advancing global sustainable development. But it took several more years for development stakeholders to realize that the ability of business to significantly invest and advance the SDGs through core business activity had market limitations.
Through multi-stakeholder dialogues like the SDG Business Forum, NGOs and governments alike have recognized the need to help motivated businesses tackle the obstacles set by short-termism in capital markets.
The importance of multi-stakeholder approaches to shifting and changing markets to further advance global sustainability was repeated frequently. And while this certainly puts emphasis on SDG17 for collaborative partnerships across sectors, many attendees pointed out the need for business to be more transparent about their actions and more outspoken about the changes needed.
Public policy is sustainability’s next frontier.
Aside from a handful of bold outliers such as Unilever and Starbucks, even the most well-intentioned businesses are hampered by shareholder pressure, quarterly reporting and market competition that make investing in and innovating for sustainability at scale difficult.
But overcoming these obstacles is desperately needed for the transformational change required for achieving the SDG 2030 agenda and the key reason for why sustainable leadership from businesses will now be measured by a company’s commitment to shifting markets and influencing policy.
It’s about to get a little uncomfortable.
Businesses have long spent significant resources to exert political power, but only in recent years have we seen some of these dollars go toward the sustainability agenda. Unfortunately, not nearly enough of these resources are being leveraged.
But what is more interesting is the more recent stakeholder demand for transparency on where companies are spending their lobbying resources and political capital and the extent to which these align with their corporate sustainability messaging. This also goes for corporate membership and affiliations. As corporations push sustainability messages with greater frequency and intensity, stakeholders are now asking whether the public policy activities of a business are aligned with its “so-called” sustainability values and aspirations.
An example of this alignment in values is from DSM’s decision to put an internal price on carbon and publicly advocate for a carbon tax in Washington. As a client of Salterbaxter, I asked Hugh Welsh, DSM’s General Counsel, Secretary and President for the North American operation, to share the company’s perspective on this topic.
DSM makes no political contributions, but is active in advocating for change on issues that are not only important to our business, but also those that are important to society and the communities within which we have the privilege to operate. One of those issues is Climate Change, and the need to put a price on carbon quickly to help mitigate Climate Change and drive innovation, investment and employment in a low carbon economy. In addition to imposing a €50/ton carbon price on ourselves we publicly advocate in Washington and around the world for a price on carbon; from applauding recent House Bills on a carbon tax as a good first step, to our CEO serving on the World bank’s Carbon Pricing Leadership Coalition as co-chair.
In the last year, we have seen several companies walk away from organizations they no longer felt comfortable supporting due to differences in opinion on issues such as climate, with Exxon Mobil being the most recent example. Nonetheless, most businesses still have quite a bit of work to do before reaching true alignment.
Walking the talk.
Now more than ever, businesses need to align their dollars with their words.
Let’s be clear, however, this is different than the rise of CEO activism and the recent trends related to brands taking a position on highly political social issues. This is a fascinating and interesting trend worthy of discussion, but very different than businesses aligning their public policy and lobbying efforts with their sustainability strategy. Corporations should be working with organizations and individuals that are advancing the interests and values they have publicly outlined in their sustainability messages.
So what does this mean for companies moving forward? While it is a trend that is still evolving, here are a few things we believe sustainability professionals should do in the near term:
Review all corporate partners, memberships and alliances to identify areas of risk with regards to values and actions.
Conduct an audit of the company’s public policy positions, activity and spending for complete clarity of the picture.
Be crystal clear on your material issues and have an action plan for the top five.
Consider the company’s upcoming sustainability report and how you can improve transparency and disclosure of the company’s policy influence and activity across your material issues.
Meet and discuss with the company’s government relations team to open up dialogue and more frequent sharing of information.
Business support for the SDGs has never been higher, but the 17 goals are lofty and no one stakeholder group will successfully carry us to 2030. They require all stakeholders, especially companies, to be ‘all in’ in every way. Companies need to, quite literally, put their money where their mouth is and set ambitious goals that break down old paradigms, engage new partners and transform systems.
So, is your business ready for this next wave of sustainable leadership?
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