Sustainable Business Models Can Lead To Economic Growth
Sustainable business models have a major role to play in economic growth. They could unlock economic opportunities worth up to $12 trillion and increase employment by up to 380 million jobs by 2030, as a report by the Business and Sustainable Development Commission (BSDC) reveals.
There are four areas where the economic opportunities can be unlocked: energy, cities, food and agriculture, and health and well being.The key is for the Sustainable Development Goals (SDG), 17 goals developed by the UN, to be the benchmark of global economic strategy. In January 2016, the SDGs came into effect, covering areas such as climate change, economic inequality, sustainable consumption, peace and justice.
For the SDGs to be a key part of global economic strategy, there must be fundamental changes in the business and investment community. The SDGs provide business with a growth strategy that can open new market opportunities. There are two conditions that have to met to build the new markets. Oneis innovative financing from private and public sources. The other is a new social contract between business, government and society.
“Our current model of development is deeply flawed,” declares the report. Signs of its failures include:
Natural disasters triggered by climate change have doubled since the 1980s.
Violence and armed conflict cost the equivalent of nine percent of GDP in 2014.
On average, women are paid 25 percent less than men for comparable work.
Median wages have been stagnant in developed countries since the 1980s.
There is an alternative: setting business strategy and transforming markets in ways that are in line with the SDGs. Business needs the SDGs as a “compelling growth strategy,” according to the report. And the SDGs need business because unless the private sector invests in market opportunities, all that those opportunities offer just can’t materialize.
The good news is that companies are already incorporating the SDGs into growth strategies. Members of the Commission who lead companies are already incorporating the SDGs into their growth strategies. John Fallon, CEO of Pearson plc., is a member of the Commission. Pearson proudly touts on its website that it is a company which aligns its sustainability strategy with the SDGs.
There is one area where more sustainable strategies can have a big payoff: the food and agriculture sector. Having a global food and agriculture system that lines up with the SDGs is key as it would provide nutritious, affordable food for a growing global population and generate higher incomes for some, such as the 1.5 billion small landholders in the world. It would also be beneficial to the environment and create new economic value of over $2 trillion by 2030.
There is a distrust of the business sector today, as the 2017 Edelman Trust Barometer found. In 13 of 28 countries, business is distrusted. However, there’s something else the Barometer found. Three out of four general population respondents think that a company can take actions to increase profits and improve the economic and social conditions in the community where it is located. As companies embed the SDGs into their sustainability strategy, that can be fulfilled.
Photo: Pearson plc.