Transforming the Businesses that are Transforming our World

LJD

By Dr Isabella D. Bunn, Research Fellow in Governance and Global Ethics, Regent’s Park College, University of Oxford


This blog is part of a special series exploring subjects at the core of the Human-Centred Business Model (HCBM). The HCMB seeks to develop an innovative – human-centred – business model
based on a common, holistic and integrated set of economic, social, environmental and ethical rights-based principles. Read more about the HCBM here, and check out an event about it here
The HCBM project originated in 2015 within the World Bank’s Global Forum on Law, Justice and Development and is now based at the OECD’s Development Centre.

 

Mario-KantsukeThe 2030 Agenda for Sustainable Development – under the banner of transforming our world – is a call to action. All countries and all stakeholders are invited to implement this agenda, including the private sector. In fact, the 2030 Agenda acknowledges that ‘’private business activity, investment and innovation are major drivers of productivity, inclusive economic growth and job creation. We call on all businesses to apply their creativity and innovation to solving sustainable development challenges’’ [§67].

But, how is business responding? Around the world, companies of all sizes and sectors are forging new strategies and collaborations to help realise the SDGs. Organisations such as the UN Global Compact and the World Business Council for Sustainable Development offer practical guidance. The UN Development Programme identifies potential projects through its “Business Call to Action.” Multiple institutions are shaping mechanisms for green finance. Further impetus comes from the business case for the SDGs; the Business and Sustainable Development Commission confirms the multi-trillion dollar scale of this opportunity.

The scope of private sector actions, bolstered by diverse partnerships, is impressive. Yet, advancing sustainable development will depend on more than what business might do. It will also depend on what business might become. Thus, the real opportunity is for policy makers, business leaders and other stakeholders to leverage the 2030 Agenda to create lasting change within the private sector itself. Consider the following five themes as potential leverage points for change.

Responsible Business Conduct: The SDGs reinforce sound business principles such as those promoted through the UN Global Compact, the OECD Guidelines on Multinational Enterprises, the UN Guiding Principles on Business and Human Rights, and the standards of the International Labour Organization. Moreover, the concept of “global public goods” may offer another way of embedding sound business principles within the broader economy. Global public goods have been described as “institutions, mechanisms and outcomes that provide quasi universal benefits, covering more than one group of countries, several population groups, and extending to both current and future generations.” Within the SDGs, examples include mitigating climate change and controlling the spread of epidemics. What’s the potential for responsible business conduct to be construed and advanced as a global public good?

“Race to the Top”: The SDGs recognise that “a dynamic, inclusive, well-functioning and socially and environmentally responsible private sector is a valuable instrument that can offer a crucial contribution to economic growth and reducing poverty and promoting sustainable development” [§268]. The process of economic globalisation has long been criticised for inciting a “race to the bottom” in social and environmental protections. However, the SDGs call for higher standards in everything from women’s empowerment to workplace safety to waste recycling. Thus, how can the 2030 Agenda encourage a “race to the top” across jurisdictions by creating positive competitive advantages both for conducting local business and attracting foreign direct investment?

Time Horizons: The SDGs reflect more than a generational shift; sustainability, by definition, is about the duties owed to future generations and the planet they will inherit. But this long-term perspective is often at odds with the pressures businesses face to deliver short-term results, driven by quarterly financial reporting requirements and related management incentives. Short-termism can lead to chronic under-investment in everything from employee training programs to product R&D to industrial technology. What changes are needed to support a different, long-term time horizon across private sector operations?

Values and Culture: The SDGs provide an opportunity for business leaders to build a more responsible and resilient foundation for their organisations. They could draw on elements of the vision and values affirmed within the SDGs to help shape corporate culture and sustainable business practices. A strong corporate culture – grounded in integrity, accountability and trust – has long been part of the discourse on business ethics. But the topic is now being reinforced as a vital component of business management by industry associations, regulatory commissions and financial advisors. In the United States, for example, the National Association of Corporate Directors issued a report entitled Culture as a Corporate Asset. How can the values underlying the SDGs become embedded in corporate culture, thereby supporting effective governance and successful sustainability strategies?

New Business Frameworks: Numerous recent critiques target the failings of the private sector and the capitalist system. At the same time, efforts are underway to re-think the very nature and purpose of the corporation, looking beyond profit maximisation to a broader understanding of shared value and social impact. Innovative business models are evolving, including social enterprises and public benefit corporations. Consider a research project launched by the British Academy on the Future of the Corporation. A range of academic experts, along with leaders from business, finance, law and civil society, are reimagining the role of business for the 21st century. Their comprehensive recommendations will set forth “a new framework that combines and connects defined corporate purposes, a commitment to trustworthiness and an enabling corporate culture … The purpose of the corporation is to produce profitable solutions for the problems of people and planet … But the purpose of business is not to produce profits per se, nor to profit from producing problems for people and planet.” In this context, how might relevant insights be harnessed to ensure that the private sector makes an enduring contribution to sustainable development?

The challenges posed by the SDGs are re-defining the relationship between business and society. They are at the core of the quest for a more equitable, inclusive and sustainable global economy. So, guided by these five themes, we need to continue reflecting on how best to transform the businesses that are transforming our world.