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How to implement SDGs in business
A full house of online attendees logged in for the latest digital evening webinar from the Corporate and Alumni Relations and Positive Change departments at Rotterdam School of Management, Erasmus University (RSM) on 7 July. Professor Rob van Tulder gave a fast-moving presentation about how to implement the UN’s 17 Sustainable Development Goals (SDGs) in business. He argued that the SDGs present a $12 trillion investment opportunity – on top of their globally-recognised benefits for people and society – but the business opportunities they present require multi-layered business strategies. And he told participants not to wait for the government to introduce policies because time is short.
Rob van Tulder is a professor of International Business-Society Management at RSM and an expert in the field. He has published multiple books on the topic and consulted for international organisations, ministries, and NGOs. One of his books, Business & The SDGs - A Framework for effective corporate involvement, is published by RSM and is available as a free download.
Finding solutions to the grand challenges the world faces requires an understanding of the barriers to progress. The challenge is going from merely voicing support for the Sustainable Development Goals (SDGs) to taking action. Van Tulder acknowledged the tragedy of the commons (behaviour contrary to the common good in a shared resource system) and introduced Key Decision Indicators.
Van Tulder outlined a four-step plan in order for businesses not only to adopt the SDGs, but to be able to implement them and achieve results.
He described how already the early part of this century is characterised globally as being volatile, uncertain, complex, and ambiguous (often referred to as VUCA). A state of crisis is becoming the new normal; there have been hundreds in the last decade, affecting health, finance, society and politics.
The five interconnected principles
Introducing the webinar, RSM’s Director of Positive Change Eva Rood asked members of the audience to rate which of the five basic principles of the SDGs; people, planet, partnering up, peace, or prosperity, are most relevant or most important. A clear majority favoured people and planet, but Eva Rood observed that they are all interconnected. It’s simply not possible to focus on only one or the other. Prof Van Tulder went on to illustrate the connections in his presentation.
Barriers to progress
The main question, said Rob van Tulder, is why is progress so slow when companies are clearly able to embrace the SDGs? Businesses often find it difficult to engage and link the SDGs to their core business, he said. Numerous companies select only a few of the goals to focus on, and fail to understand the business case for implementing SDGs into business. Professor Van Tulder looks at society as a shared institutional environment in which each participant (civil society, government, companies) has to play its part in order to create a resilient and sustainable society. “If you operate from the market sphere, not profit maximisation per se, adding value to society is the main challenge. If companies want to really add value to society, they need to address four levels of business model design and implementation.” These levels include: the resilience and sustainability of their present business model (level 1), how they deal with negative externalities such as pollution (level 2), whether they are able and willing to contribute to positive externalities – new products for unserved markets (level 3) and how they deal with collective action problems that create systems failure and thus – if not tackled well – will seriously affect the operations of business (level 4).
Four levels of ‘CSR logic’
At every one of the four levels of logic for corporate social responsibility (CSR), there is a business case; in market value; in minimising negative externalities and limiting reputation damage; in creating positive externalities and seizing opportunities through innovation, and in collective action and seizing opportunities of partnerships.
In the SDG agenda, understanding and embracing a combination of the 169 sub-targets has become of key importance. To truly achieve transformative change, companies must look beyond merely repairing the current system, for example, lowering environmental burdens, creating more jobs, or making supply chains more circular.
Organisations must start with their value proposition – a clear and large collective goal – and then identify business models that also create positive outcomes rather than seek neutrality. Instead of defining sustainability as meeting the needs of the present without sacrificing the needs of future generations, organisations should actually contribute positively to future generations. This change, from reparative capitalism to regenerative capitalism, enables companies to achieve the triple bottom line of people, planet and profit.
The challenge lies in moving up from level to level in the CSR logic, from Level 1 market value to Level 2 minimising negative externalities. And then from there to Level 3 creating positive externalities, and finally to collective action at Level 4.
A good transformation of the current system through these steps of logic enables organisations and their partners to create a shared vision and collective action, which creates a shared sense of ownership, and in turn creates new opportunities. The opportunities in solving the SDGs are immense. The SDGs present a $12 trillion investment opportunity, but it requires multi-layered business strategies.
Progress measured in value
There are established metrics for measuring all kinds of performance and attributes. However Key Performance Indicators (KPIs) are often the measurable ones, for example carbon emissions, said prof. Van Tulder, who explained that he finds Key Value Indicators (KVIs) a measure of non-financial benefits, as the most useful. Dutch multinationals Philips and DSM already intervene according to KVIs, he said.
Often, companies’ KPIs are illusions; they take action on the performance indicators they become aware of, but there’s no action in response to the things they are not aware of.
While there is still work to do on developing the right metrics, there is also much work for organisations to do in developing the right mentality about what to measure. Here, prof. Van Tulder argues for Key Decision Indicators (KDIs) based on the transformations that a company must undergo before it can externalise and work with others. Many company departments need to change first, before the transformation to sustainability can start.
Rob van Tulder and his fellow research students developed the Better Business Scan, a tool that helps organisations identify how successful they are in becoming sustainable, and what steps they can take to improve their sustainability.
Who are the frontrunners?
Asked for an example of success – or a business that displays best practice, prof. Van Tulder explained that he steers away from the term ‘best practices’.
Why? Because the strategy differs for every organisation; each of them has its own context is naturally different. Instead prof. Van Tulder focuses on frontrunners. Calling examples out as ‘best practices’ also gives the false idea that the progress or solution one company has found to work will be applicable to all, when that is not the case, he said.
Several Dutch organisations such as Philips, Rabobank, Unilever, and DSM have successfully incorporated the SDGs into their core business, and have taken steps to achieve impact. As a specific example, Rob van Tulder illustrated the partnership between Philips and the international non-profit organisation Amref. Here collective action has contributed to real achievements for sub-targets of SDG 3: Good health and well-being.
For smaller businesses, it may be more difficult to move quite so fast because of financial capabilities or concerns. However, smaller businesses can still make impact if they are more selective. Examples of existing enterprises include Kromkommer in the Netherlands, Ben & Jerry’s which started in the USA, and Beyond Meat. These enterprises started out small but were able to make a big impact – and some were eventually bought out by larger organisations.
Technology – the problem and the solution?
It’s inevitable that technology will always be a part of the solution. “I’ve been studying technology for 30 years. But I have also seen why so-called “techno-solutionism” often fails. You have to first find the problem and then figure out what appropriate technology could entail. Not the other way around. Ill-designed technologies often create bigger problems. We often see that less sophisticated technological solutions are better geared towards societal challenges than more advanced ones. But, certainly in the present era of rapid technological change, it has to be asserted that new technologies bear considerable promise in addressing part of our societal problems,” said Van Tulder
Don’t wait for policies
Of course, differing contexts and levels of wealth around the world make achieving progress more difficult. However, prof. Van Tulder ended on an encouraging note by pointing out that there is much to gain from business partnerships even though the focus may shift to a different principle depending on what is needed locally – for example in a war zone peace becomes a clear priority before other principles can be addressed.
Rob van Tulder gave a concluding message to participants in the webinar: “Do not wait for the government to introduce policies. That will take too long and is also not necessary. We found that the biggest problem lies with the ‘internal alignment’ of the SDG agenda in the strategies of companies; how to organise it better. Moreover, think of initiatives with other stakeholders and shareholders. Agents of change are often within organisations (social intrapreneurs). Be aware that ill-embraced business models can even make ‘frontrunner’ organisations into agents of stagnation! We have to be on the lookout for SDG washing.”
“At RSM, we want to support companies in adding value to society by implementing SDG resilient business models. I hope we can do that together.”
Rotterdam School of Management, Erasmus University (RSM) is one of Europe’s top-ranked business schools. RSM provides ground-breaking research and education furthering excellence in all aspects of management and is based in the international port city of Rotterdam – a vital nexus of business, logistics and trade. RSM’s primary focus is on developing business leaders with international careers who can become a force for positive change by carrying their innovative mindset into a sustainable future. Our first-class range of bachelor, master, MBA, PhD and executive programmes encourage them to become critical, creative, caring and collaborative thinkers and doers. Study information and activities for future students, executives and alumni are also organised from the RSM office in Chengdu, China. www.rsm.nl
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