Aligning business models with the course of sustainable development
The United Nations’ Sustainable Development Goals (SDGs) were adopted in 2015 to serve as a joint action plan to foster lasting peace and prosperity and protect our planet. In addition to guiding the 193 member states and their political decision-makers, the goals are clearly also directed at companies. Considering the crucial role of corporate responsibility, the SDGs offer practical ideas on how enterprises can design their goals and activities in light of a sustainable development. This might sound simple but it’s anything but that.
Milda Zilinskaite and Christof Miska count among WU’s sustainability experts and have also taught at the WU Executive Academy for many years. In this article, they will explain the challenges to tackle and propose four steps companies can take to integrate the SDGs into their business model in a way that is both meaningful and pragmatic.
Depending on the industry, business model, and region, companies face different risks but also varying business opportunities. The broad range of companies’ and investors’ global goals speak to the responsibilities these players strive to live up to across their value creation and supply chains as well as in their daily business practices.
As legal provisions to be met are tightening and a growing number of stakeholders proactively approach companies to demand that they do business in a sustainable way, one will be well advised to have a good grasp of the United Nations’ 17 global goals and their 169 targets.
So how can companies implement the SDGs as part of their business practices? How can they select the ones most suitable for their business? And how do managers get the ball rolling?
Milda Zilinskaite, Senior Scientist and Center Manager of WU’s Competence Center for Sustainability Transformation and Responsibility (STaR), and Christof Miska, Assistant Professor at WU’s Institute for International Business, will walk you through the entire process of implementing the SDGs in four steps:
The SDGs were defined as everyone was already talking about sustainability but there was still a lack of specific goals. Defining such specific goals, however, is anything but trivial. “The goals are primarily intended to serve as a framework for countries, not for companies, even though quite helpful guidelines and recommendations for enterprises have been developed by now,” Christof Miska explains. At the same time, there is often a lack of ideas and know-how on how these goals can be translated into daily business practice. What’s more, sustainable development is a complex matter requiring specialized knowledge.
Broaching this field will, however, pay off. If companies manage to meaningfully integrate the SDGs in their business model, they will very likely be better prepared for unexpected challenges and crises.
Luckily, companies are not on their own as networking and cooperation are considered necessary prerequisites for turning the SDGs into concrete measures. This might be realized in a public-private partnership or in a collaboration with NGOs. “Managers don’t need to shoulder these tasks alone,” Miska says. Very frequently, the respective expertise can already be found within an organization, for instance when it comes to digitalization projects. This expertise can then be applied to various other fields related to sustainable development. Managers also shouldn’t rule out the possibility of partnering up with companies from the same as well as from other industries. It’s not about lobbying but exchanging best practices, information and selecting suppliers in a targeted way. The latter is getting more important as closely scrutinizing all levels of the value creation chain is turning into a new standard.
The next item on the agenda is to check the status quo: Where do we stand regarding the sustainability goals? What are fields we are already active in? Are there fields we have been neglecting so far? Such an assessment can provide a first point of orientation. Next up is an analysis of the possibilities: Which resources does my company have? What are tasks for which I will need partners? How can I build up a knowledge base? Milda Zilinskaite explains that it’s not only about the size of a company, and points out that there are also differences among industries.
The finance sector already has to comply with more requirements. Companies should also take a closer look at the SDGs’ subtargets. These provide significantly more practical targets and orientation than the 17 major goals and a basis for analyzing a company’s sustainability records.
Now you are ready for implementation: which SDGs are most relevant for your company? This question should be the starting point for coming up with first ideas for projects to implement the goals; it’s not so much about excluding further goals, though. As time, resources, and also expertise are often in short supply, many companies tend to focus on fields they are already active in. But this is a short-sighted approach, Miska warns: “Sustainable development must be considered in a holistic way, meaning that you cannot cherry-pick your way through the SDGs.”
Particularly traditionally minded, profit-oriented companies often hesitate, or simply struggle, to take the next logical step, namely to tackle those sustainability areas they have hardly broached so far as well as those that don’t seem very relevant for them. Turning a blind eye to these fields might prove risky. In addition to environmental and climate matters, topics such as fighting poverty, access to education, and gender equality will get more attention in the years to come.
As will the interrelatedness of the various SDGs’ fields. The United Nations have proclaimed a “Decade of Action,” urging companies to intensify and speed up their efforts regarding solutions that will produce a palpable, positive impact. Adopting a broad approach to the topic will thus be important from the start. This is particularly the case as lawmakers and institutions will not wait much longer to tighten the screws, as Miska points out: “It’s always better to get a head start instead of struggling to catch up: set your own standards instead of trying to meet standards imposed on you. In other words: take the lead.” Particularly companies operating in controversial industries have learned to swiftly adapt to change this way, even though sustainable development was rarely the declared goal of such transformations.
In the ideal case, SDGs are integrated in a company’s business model in a targeted way and with a broad scope. Re-designing the business model is another option. “A CEO can also be the CSO, the Chief Sustainability Officer,” says Milda Zilinskaite. As a rule, the entire organization including all departments should be oriented towards the SDGs. This also means that all staff members must be actively involved. “Employees are increasingly looking for a purpose today. Many even require a job to give them purpose. The SDGs can be extremely valuable in providing a common goal and vision in this respect. It would be unwise for the top management to do something without involving staff members.”
It motivates and encourages employees to be able to make a personal contribution and participate in the change for good. What’s more: if companies implement the SDGs in an honest and authentic way, this will serve as a strong employer branding benefit in the fierce competition for the brightest minds.
You can read about how our alumni incorporate the Sustainable Development Goals into their everyday leadership in the Our Alumni SDG Leaders series.