Getting business on side: how business can engage with the SDGs

  • 8 May 2017
harvesting cotton in India ©RayWitlin-World Bank

The Sustainable Development Goals (SDGs) are ambitious, but in a world where 8 men have the same wealth as the poorest half of the world, nothing less would suffice. It is a good thing then, that many in the private sector have stepped up and embraced the goals, writes guest blogger Ruth Mhlanga of Oxfam as she revisits a talk she gave at a recent ETI breakfast briefing on the SDGs.

Despite some refreshing exceptions, the overwhelming focus of the private sector has been on potential business opportunities rather than responsible conduct and impact. If this approach continues, not only are we unlikely to meet the SDGs, but their attainment may be actively undermined.

Having business on side in this ambitious vision is a great starting point, but what are some of the ways business can engage better with the SDGs in practice? 

A key part of the SDG footprint of global companies happens through their supply chains. This is often where the poorest, most marginalised and most voiceless individuals are affected by corporate decisions. Therefore, addressing issues in supply chains has been a major focus for those working on the sustainability agenda.

Beginning with impact 

Nobody likes to talk about what they don't do well, but this is the depth of character required for the SDGs.

It's almost too obvious to state, but good business engagement with the SDGs is predicated on responsible business conduct, including increased efforts to implement the UN Guiding Principles on Business and Human Rights.

In supply chains, decisions often ignore the broader impacts – the externalities – of business activity. Materiality measures apply the lens of risk and are often skewed towards short-term profits.

And rarely do stakeholders such as workers, farmers and communities have a voice in the priorities set by companies for their supply-chain issues. Mapping and understanding these dynamics is crucial and understanding the overall impact must be a key starting point.

Beyond compliance

Awareness alone is not sufficient.

Where awareness of the responsibility of good business conduct has increased, so too has a recognition of the limitations of the conventional approach to tackling these issues – social compliance auditing.

As highlighted in a 2013 report by Shift, “despite the hundreds of thousands of social compliance audits conducted each year to ensure minimum workplace conditions in companies’ supply chains, there is little evidence that they alone have led to sustained improvements in many social performance issues, such as working hours, overtime, wage levels and freedom of association." 

There are numerous reasons for the inadequacy of audits.

Two issues highlighted in both the Shift report and a 2016 Oxfam report are that:

  • Conventional methods of corporate responsibility in supply chains cannot overcome wider systemic issues.
  • And sustainability approaches suffer from biases in a company’s structure, governance and priorities.

Avoid cherry picking 

Systemic challenges such as workplace health and safety, substandard wages and excessive working hours cannot be overcome, without an understanding of the wider context that causes them.

First, the driving forces behind these issues are beyond the ability of one company to fix. Secondly, even where a company can do more, unilateral action can create a competitive disadvantage.

For good labour standards to become universal operating conditions, companies need to spend more time analysing the wider system that keeps workers trapped in poverty, as well as auditing their suppliers. Embracing in full, the broad range of issues covered by the SDGs can help companies understand both the wider system and their own impact.

As such, companies should avoid cherry picking goals which maximise their profits while avoiding those which have a negative impact.

Take for instance, an energy company choosing to focus on Goal 7, Affordable and Clean Energy, but not Goal 13, Climate Action. This could result in the re-purposing of dirty energy under the guise of energy access and the undermining of both goals.

To date, much of the business conversation has focused on where business can aid the goals whilst increasing profits.

But win-win scenarios alone will not get us where we need to be. For example, in addressing economic inequality requires paying due tax, increasing prices paid to farmers and a living wage for workers. This soon impacts on the financial bottom line of a company.

Challenging conventional business forms

Different business models, ownership structures and governance systems have the ability to shift power and resources towards employees, supply chain workers and local communities and in doing so contribute to meeting the SDGs.

The success of alternative business forms, such as social enterprises, employee-owned companies or producer-owned cooperatives, is challenging the status quo and could form the foundation of a more human economy where shareholder primacy isn’t a barrier for companies to do more.

What about regulation?

Unfortunately, much still depends on the type of industry and thus how exposed companies feel they are and the associated risk, especially of reputational damage.

In many cases, there will be no substitute for government regulation to protect the rights and interests of workers, farmers, communities and the environment. Regulation creates an even playing field for business, where more progressive companies are not disadvantaged.

In this SDG era, where business has underwritten the importance of a sustainable future for people and the planet, the idea that regulation for the public good is anti-business seems increasingly anachronistic.

It flows then, that responsible business should actively support governance in pursuit of the SDGs. Sustainability leaders will be those who support government efforts to govern for the common good, and are willing to stand up to peers who undermine these collective efforts.   

A healthy planet where no-one is left behind

Instead of taking a narrow, short-term and profit-focused approach, companies should base their engagement on their own impacts, align their core business strategies with the SDGs and work with others towards a system-level change.

The ambition of the SDGs means that monitoring supply chains will require more than a few tweaks.

Companies must go much further and fundamentally re-write the business models and practices of their supply chains. This will ensure that more power and more of the value generated by companies’ products reach the producers and workers, contributing to a world where no one is left behind.

Download ETI's guidance on ethical trade and the SDGs

Ruth Mhlanga is the Private Sector Policy Advisor for Oxfam GB


ETI's blog covers issues at the intersection of business, news and ethical trade. We welcome a range of insights and opinions from our guest bloggers, though don't necessarily agree with everything they say.