The 2015 UN Sustainable Development Goals place expectations on businesses to play a role in making society more equal, more environmentally friendly and more sustainable for the long-term.
Could these goals act to make business more responsible, how can we use them to measure business activities?
To discuss these issues, the British Academy convened academics and business leaders at a briefing as part of the Future of the Corporation project.
“The theory is by growing the economy we deliver more and bigger for-profit firms, and by growing more and for-profit firms we create jobs, we promote prosperity…and we create the revenues that government’s need to collect”, explained Heerad Sabeti, co-founder and CEO of the Fourth Sector Group.
“The problem is the thing we are scaling creates social and environmental externalities.”
“There is no way we can continue to grow our way out of this problem…. What we need is a fundamental, systemic rethink”, he said.
Sabeti highlighted the rise of the ‘fourth sector’ of hybrid for-benefit companies: social enterprises, sustainable business, co-operatives, fed by the demand of investors as well as consumers, particularly millennials.
These companies already make up about 10% of GDP in the US and Europe.
“People are finding all sorts of hybrid ways to create new organisational models, to integrate social and environmental purposes with some sort of commercial entity”, he said.
“We need to think very intentionally about creating an ecosystem which supports this new model of enterprise, as well as how you transition existing businesses at the same time in that direction.”
Dr Steve Waygood spoke about his experience of leading Global Responsible Investments for Aviva. He highlighted that there is approximately $300 trillion invested in capital markets today.
If we want that capital to be directed to meeting the $7-12 trillion needed to deliver the SDGs – which are essentially market failures - governments have to change the incentives for investors.
Poor financial education and low awareness, he argued, means that there is little demand from consumers for more ethical investment products.
“I would love to use fintech and distributive leisure technology to enable clients to see what they actually own through their investments today, how those investments are performing financially, how is that portfolio performing on sustainable development issues”, he suggested.
Aviva are one of the founders of the World Benchmarking Alliance, to make this financial information publicly available and to rank companies according to their progress on the Sustainable Development Goals.
Professor Dame Henrietta Moore FBA, Director of the Institute for Global Prosperity and Chair in Philosophy, Culture and Design at University College London, stressed the importance of partnerships for making businesses more sustainable.
“We have lived for a very long time under the idea that it is our economy which gives us the kind of society that we live in. Actually, we need to turn that around and remember that it is the society that we live in and the choices we make that drive the economy.”
“We are actually well on the way to doing that”, she said.
Dame Henrietta highlighted examples of millennial entrepreneurs developing working on sustainable ideas, like bio-bean, a company which develops clean fuel from coffee grounds.
“This is only the first part of the transformation, because this is the transformation of the world we understand. The next stage of transformation is going to require businesses, society, government, consumers, all of us, to come together in a new form of partnership to drive things forward.”