In September 2015, the United Nations adopted the “2030 Agenda for Sustainable Development,” a set of ambitions targets for improving the world in areas such as poverty, education, gender equality, and the environment. Many businesses have since adopted the Sustainable Development Goals (SDGs) outlined in the agenda as part of their missions.
But what does it mean for a company to embrace SDGs? And what’s the best way to put these lofty ideals into practice?
The Role of SDGs in Business
One way to think of SDGs is as a framework for creating new markets. SDGs can help companies better identify their core competencies and competitive advantages, and from there create new value, both for society and for themselves. For that to happen, companies need to put the pursuit of SDGs at the core of their businesses, rather than treating it as a charitable sideline.
Many companies already practice corporate social responsibility (CSR). In Japan, CSR activities are generally seen as corporate good deeds unrelated to a company’s primary business. But a better approach to sustainability is closer to the Harvard Business School professor Michael Porter’s concept of Creating Shared Value, or CSV. In 2011, Porter defined CSV as “policies that increase a company’s own competitiveness while improving the local community and economic environment in which it operates.”
It’s a win-win approach to doing good that helps both society and the bottom line.
Now, in the SDG era, companies that take this approach use the 17 broad goals and 169 concrete targets laid out in the UN’s 2030 Agenda as a guide to maximizing the social value of business activities while minimizing risk through stronger corporate governance and more responsible procurement and supply chain management.
SDGs in Action: Hitachi’s Sustainability Initiatives
In Japan, Hitachi has long positioned itself as a sustainability leader. It began incorporating the SDGs into its management strategy in 2017. In May 2019, it introduced a “triple bottom line” to measure social, environmental, and financial value in five business domains: mobility, life sciences, industry, energy, and information technology.
Hitachi says SDGs are shaping its core infrastructure business. The company says its water, sewage, and desalination technologies, for instance, “provide safe water and toilets to the world” (SGD goal #6) for 70 million people a day. Hitachi has also set quantitative goals such as reducing CO2 emissions by 80% across its value chain and improving water and resource use efficiency by 50% by fiscal 2050.
For Hitachi and other businesses, SDGs are both a vision for humanity and an opportunity for business growth. They drive trends like the shift to renewable energy, increased use of digital technology, and the development of advanced mobility systems. At the same time, protecting the environment and fundamental human rights can double as a way of avoiding business risk. In that sense, SDGs can serve as a kind of corporate survival strategy.
How to Shoot for the Moon
Many SDGs are highly ambitious—“moonshots,” to borrow a term derived from the American Apollo rocket program that met President John F. Kennedy’s national goal of putting a man on the moon. They include eradicating HIV/AIDS, malaria, and tuberculosis by 2030 and achieving full employment and equal pay for equal work for all.
Moonshots are, by definition, difficult to reach. But three ways of thinking can increase the chances of success: backcasting, deductive innovation, and interconnectedness.
Backcasting means making the future you envision the starting point for strategic planning.
Backcasters don’t extrapolate from existing trends like traditional forecasters do. Instead, they begin with a desired destination, imaging the conditions and technologies needed to get there, and set to work accordingly.
Deductive innovation is a way of creating solutions that address the root causes of problems.
Want to address child hunger? A cafeteria that provides meals to poor children can make a marginal difference, but it is not a fundamental solution. Deductive innovation—sometimes called design thinking—points to the need to innovate in areas such as education for parents with unstable employment and support for single-parent households. Such initiatives are aimed at reducing underlying poverty.
The third key to SDG success is connecting various goals. There are a range of points that can be leveraged to realize multiple SDGs.
The United Nations World Food Programme (WFP) is implementing a school meals program to improve conditions in entire villages in developing countries. Providing school lunches has positive, compounding effects for communities: it brings more children to school, reduces hunger and malnutrition, expands employment opportunities, and stimulates the local economy. It even supports local farmers by sourcing ingredients from nearby farms.
SDGs and You
Businesses looking to embrace SDGs should think beyond meeting them one by one. The real impact will come from interconnectedness, so look for opportunities to create SDG domino effects. That will multiply the pay-off from your efforts.
Companies that place SDGs at the core of their businesses and use them as a guide to finding new markets will see great payoff in the years go come. And that payoff will be measured in increased corporate, as well as social, value.