On the occasion of Global Goals week 2018 (September 22-29), members of the IMD Community share their views on why business should participate in the achievement of the UN Sustainable Development Goals and how management education can make a difference.
We caught up with four IMD experts to discuss the issue: Vanina Farber, elea Professor for Social Innovation, Jan van der Kaaij, Executive-in-Residence and co-author of the book “Winning Sustainable Strategies”, Natalia Olynec, Sustainability Partner, and Brian Bolton, Associate Director at the IMD Global Board Center.
Why is the participation of business essential for the achievement of the UN Sustainable Development Goals?
Vanina Farber: As we celebrate progress towards the Sustainable Development Goals, it’s clear that well-meaning solutions created in silos are usually stillborn. These challenges are global in scope and not limited to national boundaries. The private sector has a key role addressing them.
Solutions can only come from collaboration, as corporations transcend national boundaries, can harness the power of the market to scale, and possess resources that are often greater than those of nations and entrepreneurs bring renewed purpose and disruption to old business models
Brian Bolton: Businesses control so much of the investment capital and the marketplace. They will always follow the money; thus, if the right incentives or subsidies can be provided by governments and individuals such that they are aligned with the goals, businesses will lead the way towards achieving those goals.
Governments may not have the vision to focus on long-term sustainable development. Business participation is therefore critical because businesses can have the biggest short-term impact on behavior. To give one example of how positive change can be encouraged: Many European countries have instituted quotas for the number of women that should serve on boards of directors. Norway was the first, requiring that 40% of directors are women. That was in 2008. Today, 45% of directors in Norway are women.
Why does it make business sense to look beyond financial results and measure impact on society and the environment?
Natalia Olynec: Working on issues related to sustainability is simply doing business more efficiently and effectively. Companies operating sustainably are able to reduce costs, build the value of their brand, attract and retain employees, manage risks better, and drive innovation.
Sustainability requires the agility to navigate the world’s biggest trends, risks, and challenges. Businesses cannot ignore trends such as evolving transparency and reporting requirements, climate change risks, and shifts in millennial expectations about the purpose of business.
By adopting a sustainability lens, organzations become more agile and identify previously unnoticed business opportunities that simultaneously benefit underserved communities as well as the business.
Brian Bolton: We need to do both – we need to understand the financial implications of sustainability-related investments and the social implications. Most of the investments we’re talking about – equity, environment, education – cost a lot of money today. It would be irresponsible to not look at the impact of those investments. That money is coming from somewhere. If we ignore the financial impact of those social and humanitarian investments, then we may be wasting taxpayer or stakeholder money.
The key is that we need to get better at measuring the social impact of these investments, of trying to make some connection between sustainable development goals and financial returns. There are tangible, real short-term financial costs to these investments, so we need to get better at telling the story about the long-term potential benefits.
Hurricane Florence that just hit the U.S. and Typhoon Mangkut that just hit the Philippines and China are perfect examples. These created enormous financial damage. Are there investments we can make today to lessen the risk of future natural disasters? If so, we want to understand what the benefits of those investments might be. If we can invest $1 million for a 10% chance of saving $100 million on rebuilding, then that’s a compelling story – for governments and businesses.
What new trends do you see in this space?
Natalia Olynec: One is the increased pressure for transparency and accountability on the part of corporations. Major investors such as Blackrock and Vanguard are requiring companies to demonstrate their impact and how they handle climate and social risks.
Another trend is the growth of a partnership approach among corporations, civil society, social entrepreneurs, and governments in an attempt to create systemic change through social innovation.
More and more we are also seeing ‘brands taking stands’ on global challenges. This is resulting in a new form of ‘CEO activism’ at companies such as Nike, Patagonia, Salesforce, and Unilever.
Brian Bolton: I see two trends noticeably more popular now: Stewardship and Activism.
Stewardship is the idea that managers, executives and directors have a responsibility focus on the short-term financial goals of the company and the long-term social impact on their communities. Society, citizens and stakeholders are demanding this dual focus now.
Activism – whether we call it CEO activism or corporate activism – is becoming more prominent. And it’s not always activism in the traditional sense – it’s making investments that support some values and benefit the business.
Jan van der Kaaij: The main trend seems to be the improved linkage between sustainability and strategy. Successful transformative companies are more purposeful in selecting their sustainability topics; a trend that we have dubbed “Vectoring” in our book “Winning Sustainability Strategies”. Vectoring prevents companies from taking inadequate directional bearings that lead to broad, sometimes misguided, and uncoordinated sustainability initiatives that usually bring unsatisfactory results. For SDGs this implies that companies are becoming more selective and more specific on their SDG undertakings.
How can management education make a difference in the SDGs?
Natalia Olynec: Our ability to prepare future leaders will influence how businesses are prepared to impact society. Here at IMD, we have the opportunity to contribute by developing reflective and proactive global business leaders with the agility to balance economic, social and environmental concerns. A holistic approach to management education focuses on the manager as both a powerful and responsible member of society.
Brian Bolton: We are in the business of creating knowledge and of sharing knowledge.
We take a perspective that others – businesses and even governments – won’t take because all we really care about is the work, not the result.
At IMD we have MBA students who will soon be starting or possibly continuing a business career. I like to tell my students that it’s not my job to tell you what to think, but it is my job to help you figure out how to think. But we do have a unique opportunity – and responsibility – to help guide their thinking.
The executives taking our programs often have intense jobs and busy lives, they may not take the time to step back and see the long-term implications and opportunities that exist. We can help them become more holistic leaders, using common frameworks from different perspectives.
Jan van der Kaaij: With less than half of all businesses actively engaged in sustainability-related partnerships, in our research for “Winning Sustainability Strategies” partnering has emerged as the largest underleveraged resource of sustainability programs. With SDG 17 exclusively dedicated to Partnerships for the Goals, business schools such as IMD could, and in my view should, play a big role in increasing the capabilities and tools for executives to develop successful coalitions and partnerships in the not-too-distant future.
Vanina Farber: Business schools can focus on developing a sustainability mindset where social and environmental problems are framed in terms of business solutions needed to address them. Getting out of the classroom and using more experiential learning tools builds engagement and excitement through active participation learning. SDGs become in practice a source of innovation of business models and a platform for multisector collaboration.
More about Global Goals Week:
Global Goals Week was launched in 2016 by founding partners Project Everyone, the United Nations Development Programme (UNDP), and the United Nations Foundation to offer an SDG-focused branding umbrella for key convenings both within and alongside the UN General Assembly (UNGA). It has grown each year and continues to recruit more partners in the build up to 2020, a key milestone for the Goals agenda.
Timed to coincide with the UN General Assembly, Global Goals Week will be held 22to 29September, with events taking place in New York and around the world. All activations will be connected through social media using the hashtag #GlobalGoals.
