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Sustainable development & the private sector: Turning challenges into opportunities

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Sustainable development & the private sector: Turning challenges into opportunities

Progress towards the UN’s SDGs has been slow and ineffectual; however, active engagement of the private sector can give renewed impetus to sustainable development.

In 2015, the UN’s 193 members all agreed to a series of Sustainable Development Goals (SDGs) for universal peace, equality and prosperity. In this rare instance of unanimous agreement amongst nations, an ambitious promise was made which incorporated 17 overarching goals and 169 targets to be achieved by the year 2030 [1]. As we move forward in the second half of the set timeframe, much work still remains to be done, as overlapping crises – including a global pandemic – have severely disrupted progress in the last three years [2]. Given the comprehensive nature of the UN’s sustainable development agenda, dynamic engagement is required not just by governments globally, but also by businesses – corporate giants and local enterprises alike – in order to meet set targets. Crucially, the pursuit of sustainability offers new opportunities for businesses, particularly in developing countries, creating attracting incentives for the incorporation of the SDGs into business strategy. Cooperation and alignment between the public and the private sector in the pursuit of sustainability can therefore contribute towards the SDGs, whilst at the same time benefiting businesses and stimulating general economic growth.

Over the past few decades considerable advances have occurred with regard to sustainable development: between 1988 and 2008, ‘the poorest third of humanity saw their incomes rise by 40-70 percent, with those of the middle third rising by 80 percent’; additionally, both the proportion of people in extreme poverty and the number of children dying before the age of five declined by more than half between 1990 and 2015 [3]. Unfortunately, such advances could be reversed if key challenges, like climate change, are not addressed effectively: according to the World Bank, failure to halt climate change could result in 100 million people being pushed back into poverty by 2030 [3].

Hence the importance of the SDGs, which provide an all-encompassing approach to sustainable development, recognizing the multitude of cross-cutting risks that undermine long-term human security.

The task set in 2015 to achieve SDGs such as no poverty, zero hunger, and peace by 2030 certainly appears very ambitious – and increasingly so, given that at ‘the half-way point towards 2030 the SDGs are far off track’ [4]. According to the UN’s progress chart for 2023, out of the 138 targets for which sufficient data was available only 21 (15%) were evaluated as being on track; 66 (48%) were classified as showing fair progress but in need of acceleration; and 51 (37%) as showing either stagnation or regression [5].

Although the 2023 progress chart is far from satisfactory, it must be acknowledged that recent years came with tremendous challenges – not least, a global pandemic. The outbreak of covid-19 instantly reversed progress towards SDG-3 for good health and well-being, causing millions of deaths and disrupting essential health services. However, the effects of the pandemic extended far beyond health and well-being, annulling for instance previous successes in combatting poverty and hunger: in 2020, an estimated 119-124 million people were pushed back into poverty, and 83-132 million more people suffered from hunger – moving us away from SDG-1 for no poverty and SDG-2 for zero hunger respectively. The impact of the pandemic on education has been described as a ‘generational catastrophe’, curtailing progress towards SDG-4 for quality education. Moreover, the pandemic exposed persisting inequalities between developed and developing countries – against SDG-10 for reduced inequalities. For example, it is estimated that by mid-June 2021, in Europe and North America for every 100 people 68 vaccines were administered; in sub-Saharan Africa the equivalent number was less than 2. More generally, the disruption and financial cost associated with the pandemic interfered with developments like the energy transition and climate change mitigation policies, indirectly thus hindering progress towards additional SDGs such as SDG-7 and SDG-13 for affordable and clean energy and climate action respectively [6]. In short, as the Sustainable Development Goals Report for 2021 stated, the pandemic threatened ‘decades of development gains, further delaying the urgent transition to greener, more inclusive economies, and throwing progress on the SDGs even further off track’ [7].

The Human Development Index (HDI), calculated annually since 1990, is a useful indicator for assessing progress across three key dimensions pertinent to sustainable development. As specified by the UNDP, these include: (i) Long and healthy life; (ii) Knowledge; (iii) A decent standard of living [8]. In 2020 for the first time since the HDI has been calculated, a ‘steep and unprecedented decline’ was recorded [9]; in 2021 the global HDI fell further still [10].

Although progress towards the SDGs has been slow, active involvement of the private sector could help accelerate sustainable development. The UNDP has described the private sector as ‘an indispensable partner’ that ‘has a critical role to play in advancing the global development agenda’ [12]. Experts in sustainable development and the private sector have put forward a new model for businesses, which ‘turns poverty, inequality and lack of financial access into new market opportunities for smart, progressive, profit-oriented companies’, recognizing that the comprehensive challenges we face require ‘the full and combined attention of government, civil society and business’ [3]. If business strategy can be reshaped to align with the SDGs, there is a much higher chance of effective collaboration between the public and the private sector to achieve sustainable development.

At the same time, a steadfast commitment to sustainable development can be beneficial for the private sector itself. To begin with, positive contributions to the SDGs, especially by large corporations, can help restore eroding trust in the private sector by overcoming widespread suspicion towards industry giants and profit-oriented organizations [3]. Financial incentives inevitably remain highly relevant to the private sector, but if these align with the pursuit of the SDGs, businesses can continue to grow whilst making positive contributions towards environmental and human security, social justice, peace and prosperity. Indeed, notable financial incentives have been identified in the path to sustainability, as according to the Business and Sustainable Development Commission, at least US $12 trillion in business opportunities could arise in four key sustainable development sectors: (i) food and agriculture; (ii) cities; (iii) energy and materials (iv) health and well-being [3]. As illustrated below, the majority of these opportunities would be located in developing countries:

Additionally, it is estimated that the pursuit of the SDGs could create 380 million new jobs by 2030. More specifically, opportunities in affordable housing alone could create around 70 million jobs, with a regional distribution of 20 million jobs in China, 13 millions jobs across Africa, and 8 million jobs in India. In general, most (almost 90%) of the job opportunities created through the pursuit of the SDGs are expected to be located in developing countries, including about 220 million jobs in developing Asia and 85 million jobs in Africa [3].

The relationship between business and the SDGs is best described as one of mutual benefit: from the perspective of the private sector and business CEOs, the SDGs ‘offer a compelling growth strategy for individual businesses, for business generally and for the world economy’; at the same time, the SDGs require business engagement in order to become a reality because ‘unless private companies seize the market opportunities they open up and advance progress on the whole Global Goals package, the abundance they offer won’t materialise’ [3]. Although at present private investment in SDG-related sectors remains limited, especially in lower development countries (LDCs), more than 16,000 companies globally have signed up to the UN Global Compact’s 10 principles for sustainable business behavior [13] – a promising indicator that business strategy is beginning to align more closely with sustainable development. Companies are increasingly likely to incorporate sustainable development into their strategy, signalling a transition to a new business model based on active engagement with and positive contributions to Environmental, Social and Governance outcomes and the Sustainable Development Goals for increased resilience and lasting security globally.

11. References

[1] ‘Resolution adopted by the General Assembly on 25 September 2015. A/RES/70/1. Transforming our world: the 2030 Agenda for Sustainable Development’. United Nations | General Assembly, Oct. 21, 2015. [Online]. Available: https://sustainabledevelopment.un.org/post2015/transformingourworld/publication

[2] Independent Group of Scientists appointed by the Secretary-General, ‘Global Sustainable Development Report 2023: Times of crisis, times of change: Science for accelerating transformations to sustainable development’, UN | Department of Economic and Social Affairs, New York, 2023. [Online]. Available: https://sdgs.un.org/sites/default/files/2023-09/FINAL%20GSDR%202023-Digital%20-110923_1.pdf

[3] ‘Better Business, Better World’, Business and Sustainable Development Commission, Jan. 2017. [Online]. Available: https://sustainabledevelopment.un.org/content/documents/2399BetterBusinessBetterWorld.pdf

[4] ‘Global Sustainable Development Report 2023: Times of crisis, times of change: Science for accelerating transformations to sustainable development. Key Messages’, UN | Department of Economic and Social Affairs, New York. [Online]. Available: https://sdgs.un.org/documents/gsdr-2023-key-messages-53675

[5] ‘The Sustainable Development Goals Progress Chart 2023’, UN, 2023. [Online]. Available: https://unstats.un.org/sdgs/report/2023/progress-chart/?_gl=1*zqdgo6*_ga*MzY5NzczNjgyLjE2NTM1NTY4MjE.*_ga_TK9BQL5X7Z*MTY5NzA0MDQyMS4xMzQuMC4xNjk3MDQwNDIxLjAuMC4w

[6] United Nations Department of Economic and Social Affairs, ‘Sustainable development report shows devastating impact of COVID, ahead of “critical” new phase’, UN | Africa Renewal. [Online]. Available: https://www.un.org/africarenewal/news/sustainable-development-report-shows-devastating-impact-covid-ahead-%E2%80%98critical%E2%80%99-new-phase

[7] ‘The Sustainable Development Goals Report 2021’, UN | Department of Economic and Social Affairs, New York, Jul. 2021. [Online]. Available: https://unstats.un.org/sdgs/report/2021/

[8] ‘Human Development Index (HDI)’, UNDP | Human Development Reports. [Online]. Available: https://hdr.undp.org/data-center/human-development-index

[9] ‘2020 Human Development Perspectives: COVID-19 and Human Development: Assessing the Crisis, Envisioning the Recovery’, UNDP, New York, 2020. [Online]. Available: https://hdr.undp.org/system/files/documents/covid-19andhumandevelopmentpdf_1.pdf

[10] ‘Human Development Report 2021-22’, UNDP, New York, 2022. [Online]. Available: https://hdr.undp.org/system/files/documents/global-report-document/hdr2021-22pdf_1.pdf

[11] ‘All composite indices and components time series (1990-2021)’, Human Development Reports. UNDP | Human Development Reports. [Online]. Available: https://hdr.undp.org/sites/default/files/2021-22_HDR/HDR21-22_Composite_indices_complete_time_series.csv

[12] ‘Sustainable Development Goals: Business and the SDGs’, United Nations Development Programme (UNDP). [Online]. Available: https://www.undp.org/sdg-accelerator/business-and-sdgs

[13] ‘Choose principles’, United Nations Global Compact. [Online]. Available: https://unglobalcompact.org/participation/join/commitment

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