How to align sustainable development goals with business opportunities

Sustainability has become part and parcel of business today as consumers’ demands have shifted towards sustainably produced goods and service. Euromonitor International’s Senior Consultant in Sustainability, Maria Coronado Robles, details how to align the United Nation’s Sustainable Development Goals with business opportunities.

The days that companies could be just focused on the bottom line are coming to an end. Today businesses must create shared value, contributing towards the Sustainable Development Goals (SDGs), launched by the United Nations in 2015. The SDG framework guides corporations and governments to pave the way for an economic growth that is mindful of the planet.

Under increasing public scrutiny and aware of the risks of being unsustainable, 193 countries, more than 10,000 companies and investors with more than USD4 trillion in assets have pledged their support since the launch of these goals. Putting the 2030 goals at the heart of business strategies is a win-win solution to improve reputation, while also getting ahead of legislation, future-proofing activities and capturing hidden opportunities.

The business case for sustainable development is more important than ever in the face of a global pandemic like COVID-19. The outbreak is showing the impact that purpose-driven companies can have on society. Businesses that put shared-value creation at the core of their strategy are taking this crisis as an opportunity to genuinely walk their sustainability talk, protecting people and the planet even if that means flatten corporate profits.

Turning environmental risks into opportunities through the SDGs

The corporate world is crucial in achieving the UN Sustainable Development Goals, with all companies playing a role on the global agenda. However, size matters with 41% of professionals working for global companies reporting being aware of their company’s commitment to the global goals, versus 30% of regional and local companies, according to the Voice of the Industry: Sustainability Survey 2019.

Environmental risk #1: Resource competition

Environmental degradation, where renewable natural resources cannot self-regulate any more, is a major threat to companies, as this is likely to further limit access to basic resources, disrupting global production and supply, causing commodity price volatility and international conflicts.

Competition for scarce resources is set to boost innovations that use them more efficiently, with longer-lasting products that can easily be repaired, remanufactured and reused and innovative business models that are based on the circular economy.

The circular economy is the new economic model for sustainable development, playing a key role in achieving the SDGs. In this model, nothing is wasted, everything lasts longer and is shared, reused, repaired or recycled. This model reduces pressure on natural resources and brings economic and social profits.

Recirculating resources is a clever way to increase business resilience in an era of environmental uncertainty, with climate change, water scarcity and pollution threatening vital resources. For instance, Ecover launched “Too Good to Waste”, a hand dishwashing liquid detergent made from beer waste.

Environmental risk #2: Climate change

Fundamental to the Sustainable Development Goals is the need to reduce global warming by 1.5°C to pre-industrial levels to avoid catastrophic consequences. This requires “urgent and unprecedented changes” to reduce carbon emissions by at least 55% by 2030, according to the Intergovernmental Panel on Climate Change.

As temperatures rise, consumers will expect brands to integrate climate mitigation in all products and services. Demand is expected to shift towards more energy-efficient and climate-friendly products with a lower carbon footprint. In July 2019, the agri-tech start-up, Perfect Day, launched a limited edition of climate-friendly ice creams made with lab-grown dairy proteins identical to those found in cow’s milk.

Businesses that invest in innovative climate positive products and technologies will be better positioned to boost brand reputation, secure long-term operations and capitalise on market opportunities responding to this new demand. According to Euromonitor’s Global Sustainability Survey, 51% of businesses are engaging with the SDG 13 “Climate Action” and 49% of companies plan to invest in green technology up till 2024.

Environmental risk #3: Water scarcity

Water shortages are increasingly occurring around the world, disrupting consumers’ and businesses’ access to regular water supply and threatening business activities. If you recall, California experienced severe droughts since 2012, Brazil declared a “public calamity” several times between 2014 and 2017 and Cape Town faced “day zero” in 2019.

As global concern over water scarcity rises, water resilience is becoming a key priority for businesses to navigate the water crisis. This presents big opportunities for ingredient manufacturers and consumer good companies to improve water quality and access along with opportunities to develop products with a lower water footprint.

New products are entering the market, from waterless formulations to products and technologies that require less water to be used or rinsed off. L’Oreal developed a shampoo that claims to use only 1.5 litres of water, compared to the standard eight litres, when used in combination with a water-efficient showerhead.

Environmental risk #4: Pollution

Rapid urbanisation is increasing air pollution, especially in coal-based emerging markets. Fossil fuel dependency is harming air pollution, with many cities around the world exceeding the World Health Organization’s safe air pollution limits, posing a risk to human health.

Rapid urbanisation is increasing air pollution, especially in coal-based emerging markets. Fossil fuel dependency is harming air pollution, with many cities around the world exceeding the World Health Organization’s safe air pollution limits, posing a risk to human health.

With air quality deteriorating in urban areas, governments are responding to this environmental threat with anti-pollution strategies, such as the UK ban on diesel and petrol cars by 2040, free public transport in some European cities or China’s fast-expanding electric car industry.

Businesses are launching new products that either help consumers to improve indoor air quality or protect them from pollution. With 38% of millennial consumers looking for antipollution benefits in skin care, the anti-pollution trend first appears in the beauty industry, with several brands launching products with environmental protection claims.

The trend recently spread, with anti-pollution claims moving into new product categories, such as home textiles and apparel designs. For instance, IKEA, known for its continuous innovation to meet consumers’ green demands, announced that it will launch a new anti-pollution curtain “Gunrid” in 2020.

Conclusion

Sustainability has a positive impact on brand value. Companies are trying to reduce reputational risks and meet consumers’ greener expectations by investing in environmentally considerate initiatives. However, sustainability should not become a mere marketing strategy but a genuine response to social and environmental pressures.

Consumers are increasingly expecting businesses to show bold sustainable leadership. “Business as usual”, is no longer an option. Companies need to redesign their business models by incorporating a shared value perspective. Pressure on businesses to innovate and offer new forms of value to society is higher than ever.

Businesses who stepped up to help fight the COVID-19 outbreak, put people first and reprioritised their own objectives and activities, are being rewarded by consumers looking for brands that care about them. This new sustainability leadership has the power of reshaping the relationship between the corporate world and society.

As more investors take sustainability seriously, businesses will have no alternative than to reconcile two areas traditionally seen as opposed: sustainability and profits. As a result, partnerships that were previously never considered are now driving sustainable innovation, with companies across multiple sectors collaborating closely to support collective action that enables a better future.

Brands that genuinely put people and planet over profit will be able to reduce future risks and create new business opportunities that respect the limits of the planet and the people living in it.

Image credit: Tobias Weinhold / Unsplash