The Global Goals call on all businesses to demonstrate their contribution to an inclusive and sustainable future. But many companies fail to understand their most important impacts, writes Thomas Milburn.
On September 25th 2015, The UN member nations adopted a set of Global Goals to end poverty, protect the planet, and ensure prosperity for all. This marked the beginning of a new era for sustainable development and painted a clear picture of what needs to be done over the next fifteen years to make life on this planet sustainable.
The Goals embody a move away from an aid based approach to development, to one which is driven by trade, investment and job creation. In this regard, they call upon the private sector to play a vital role, as equal partners in the sustainable development agenda. However, few companies in Southeast Asia are talking about their contribution to sustainable development. As national governments focus their policies around the achievement of the Global Goals, this is a huge missed opportunity for business to align itself to societal interest and invest in the sustainability of their own markets and business models.
The sustainable development agenda calls for the need to create an inclusive, sustainable and resilient future for people and planet. Southeast Asia is no stranger to growth and development. The Association of Southeast Asian Nations (ASEAN) saw GDP double between 2007 and 2014. However, this development isn’t always inclusive or sustainable. For example, income inequality in Indonesia has increased sharply since 2000, with growth mainly benefiting the rich.
How can companies quantify their contribution to an inclusive and sustainable future? Environmental science is relatively well developed when it comes to measurement. However, the science and business community seems to find it harder measure social impacts. This presents a challenge for companies looking to understand how they can contribute to the achievement of the Global Goals.
Traditionally, companies in Southeast Asia have focused on doing “good” in society through philanthropy and corporate giving programmes. Yet, common sense would tell us that the greatest value companies create comes from their core business and value chain – by creating jobs where employment is needed, providing products and services to underserved parts of the market, and stimulating growth in the economy as a whole.
In a recent global study, Corporate Citizenship found that only one in five sustainability practitioners thought that external stakeholders had a “good understanding” of their company’s real impacts. What this tells us is that business isn’t doing a good job of communicating how they impact society. So why aren’t more companies talking about their mainstream business impacts?
In order to be able to talk credibly about how they contribute to the sustainable development of society, companies need to start by understanding what their touchpoints with society are right across their value chain. How are they creating real jobs? How are they developing skills and talent? How do they contribute to the growth of healthy industries? How are they bringing new products and services to underserved parts of the community? Committing resources to better understanding these questions, and importantly being able to quantify the answers in some way, enables companies to not only have more credible fact-based conversations with stakeholders, it also a vital first step to highlight potential gaps and potential opportunities in the market.
Several companies have begun to think more holistically about their impacts on society. I recently attended a briefing where AccorHotels presented their Planet 21 strategy. What stood out for me wasn’t so much the new strategy itself, but the lengths the company has gone to in order to understand and quantify its socio-economic impacts. This work fed development of the strategy, to ensure that it is built on a solid understanding of the company’s core business impacts.
A study, available on the company’s website, goes into a lot of detail as you’d expect, covering the companies direct, indirect and induced impacts. Two main impacts stand out though. The contribution AccorHotels makes to GDP and the number of jobs it supports in the countries where it operates. Personally, I would have liked to have seen more detail on the they type of jobs created, what the labour context is where these jobs are created, and the broader contribution the company is making to the development of skills in the labour force. Nevertheless, AccorHotels is making an effort to understand, quantify and communicate the contribution its core business activities make to society – a step that most companies are yet to take.
AccorHotels has done a similar environmental impact study. Based on both studies, the company’s strategy seems well grounded in the realities of its operating context and impacts. It is based on an understanding of who the company impacts in its value chain and how it impacts them. It focuses on improving these impacts.
AccorHotels is just one example. There are other companies who are at various points of this journey in understanding their impacts. In Southeast Asia the number of conversations on how companies contribute to sustainable development will only rise, driven by national governments increasingly basing their policy decisions on the sustainable development agenda. Competition within the ASEAN region will reward the companies that can clearly communicate the value they bring from an economic, social and environmental perspective. Companies must be able to articulate their future plans to improve their impacts and contribute to what the world has set as our priorities for sustainable development.
Thomas Milburn is a Senior Consultant at Corporate Citizenship.