Companies are increasingly engaging with the SDGs, but by engaging primarily with internally actionable and “avoiding harm” SDG targets, companies can remain relatively passive agents.
In order for the private sector to take a more active, broader role, companies must be drawn into action on both externally actionable SDGs, and those that seek to drive positive contributions.
Cross-sector partnerships can enable this shift in the level and quality of engagement.
The SDGs form an ambitious agenda that applies not only to the 193 governments that committed to them in 2015, but to all segments of society. The SDGs were established on the basis of an intense multi-stakeholder engagement process, with the participation of major firms, NGOs and knowledge institutes. Three years in, the UN has reported that the pace of progress is uneven and too slow (UN, 2018).
It has been clear from the start that the SDGs cannot be realized without major corporate engagement. But our recent research shows that corporate engagement with the SDGs faces limitations.
Two SDG traits are important for corporate engagement: their actionability, and the ethical duties they convey.
We have found that two SDG traits are important in explaining corporate engagement: their actionability, and the ethical duties that they convey. On actionability, some SDGs can be advanced within companies’ (value chain) operations, while others require that all societal sectors cooperate. Reducing corruption and bribery, for example, is an SDG target that can be implemented within a company’s operations (SDG target 16.5). However, “access to affordable and safe housing” requires companies to work with governments and communities (SDG target 11.1).
On the second trait, regarding ethical duties, there are SDG targets that seek to pre-empt negative impacts on society, which we call “avoiding harm” targets, while other targets actively seek to “do good” by intending to make additional contributions to the well-being of people and the planet. “Improving water quality by reducing pollution, eliminating dumping, and minimizing the release of hazardous chemicals” is a clear example of a target intended to avoid harm (SDG target 6.3). In contrast, to “double the agricultural productivity and incomes of small-scale food producers” exemplifies the “doing good” category (SDG target 2.3).
We asked the world’s largest companies to what extent they engage with 59 SDG targets. This 59-target “shortlist” represents a summary of the official list of 169 global SDG targets. We created the shortlist by aggregating highly similar targets and by removing targets that are exclusively focused on governmental action. The resulting 59 targets can be considered particularly relevant for corporate engagement.
The results show that companies engage more with SDG targets that are actionable within their (value chain) operations, compared to targets that are externally actionable. The findings further reveal that corporate engagement is higher for SDG targets that intend to “avoid harm” relative to targets that actively seek to “do good.” What do these findings imply for the role of companies in achieving the SDGs?
Companies are increasingly engaging with the SDGs, revealing themselves as supportive of this new and global sustainable development agenda. But by engaging primarily with internally actionable and “avoiding harm” SDG targets, companies can remain relatively passive agents. In order for the private sector to take a more active, broader role, companies must be drawn into action on both externally actionable SDGs, and those that seek to drive positive contributions. Cross-sector partnerships can enable this shift in the level and quality of engagement.
An example of such a partnership is Seeing is Believing. This partnership between Standard Chartered Bank and the International Agency for the Prevention of Blindness (IAPB) aims to combat avoidable blindness (most of which affects low- and middle-income countries) by mixing the Bank’s commercial skills with IAPB’s technical eye-health expertise. Fighting poor eye health in countries in which the Bank operates arguably adds to the company’s local legitimacy and its reputation, and enables it to contribute to an externally actionable challenge that also helps it to “do good.”
Companies are engaging in the SDGs, and progress is taking place. But the potential to go further and faster stands to be increased if the private sector steps out into SDG areas it may not have treaded before. In addition, if companies can realize commercial benefits from such partnerships, this will increase their longevity and their potential for making an impact on society and the environment. Reaping financial gains is not only a fantasy: the Business Commission for Sustainable Development estimated that the SDGs represent US$12 trillion in business opportunities annually. Seizing these opportunities can only be achieved on the same basis that led to the SDGs: working together.
UN (2018). The Sustainable Development Goals Report 2018. New York: United Nations.
This guest article is based on: Van Zanten, J.A., & Van Tulder (2018). Multinational enterprises and the Sustainable Development Goals: An institutional approach to corporate engagement. Journal of International Business Policy. https://doi.org/10.1057/s42214-018-0008-x
This guest article was authored by Jan Anton van Zanten and Rob van Tulder, Rotterdam School of Management, Erasmus University