Embracing SDGs makes good business sense

by: Prof. Yeah Kim Leng, Director of Economic Studies Program at Jeffrey Cheah In­stitute on Southeast Asia

A year has passed since the momentous 2030 Agenda for Sustainable Development and Sustainable Development Goals (SDGs) was adopted by 193 countries including Malaysia under the auspices of the United Nations.

The SDGs picked up where the Millennium Development Goals (MDGs) ended last year, but with greater urgency and recognition that the ‘business-as-usual’ approach to world development is imperilling the planet, people and prosperity.

The SDGs define global priorities and aspirations to put the world on a sustainable development path by mobilising global efforts around an agreed set of 17 goals and 169 targets.

These goals and targets provide a common framework for governments, business and civil society worldwide to end poverty and provide decent life and opportunities for all, within the planet’s capacity and resources.

While the MDGs had been credited with reducing world poverty and hunger, the success had been largely attributed to governments, multilateral agencies and non-government organisations.

Achieving the SDGs over the next 15 years will have to involve businesses in a big way. Businesses have been enjoined by the United Nations to be development partners with the public sector and to apply their creativity and innovation to tackle the economic, social and environmental challenges confronting the global community.

Why are SDGs important?

For sustainable development to succeed, it must be pursued at local, national, regional and global levels. The SDGs through a common set of goals and aspirations provide all public and private stakeholders such as business, civil society, academic and research communities with unity of purpose. By agreeing on the “what?” the burden of “how?” is now the focus of stewards and stakeholders of this planet.

The SDGs are helpful not only in clarifying sustainable development but also in educating society about the complexity of the economic, social and environmental challenges facing the global community.

Another important aspect being promoted as part of the SDGs is the need for integrated thinking and approach. All goals need to be pursued jointly rather than singly or one at a time to achieve sustainable development.

Given the preoccupation of governments and businesses with short term actions and results, another benefit of SDGs is that they provide a long term development pathway. The SDGs help to better define responsibilities and foster accountability through data-driven measurement and monitoring systems.

With better data, civil society is empowered to question governments and the private sector on their roles and contribution to sustainable development as well as to inspire creative and innovative solutions to the SDG-related developmental challenges.

From a firm-level perspective, the sustainable economy challenges are multidimensional and varied such as raw material shortages, actions to tackle climate change, waste reduction and ecosystem pollution, reduction of wealth inequality, social conflict management and migration, human rights protection, workers’ education and reskilling, combating graft and ethical crises.

How should businesses respond?

Businesses especially in the developed economies are beginning to respond to global call for action on SDGs. The response will likely snowball in the coming years as indicated by several emerging trends.

First, businesses are increasingly engaged in impact measurement and sustainability reporting to capture their impact on SDGs.

Second, there is growing government interest in determining the business contribution to the SDGs.

Finally, there is increasing recognition that governments and the private sector need to work together to support the global sustainable development agenda.

In responding to these emerging trends, companies can consider forming partnerships to support measuring and reporting impact. Large clients can also act as gatekeepers in prioritizing SDG issue areas with businesses along their supply chains.

In their commitment to SDGs, governments are also expected to adopt policies and incentives that encourage greater monitoring and measurement of business impact to environmental, social and governance issues.

Although the monitoring of SDGs is still at an early stage in Malaysia, businesses need to understand the relevance of the SDGs and examine how they can be integrated into business strategy and operation. They also need to establish the business case for measuring impact and define business sustainability and SDG impact areas.

For companies that are more advanced in sustainability thinking, they can begin cultivating internal expertise to plan and implement environmental and social impact measurement and monitoring.

This is followed by reporting and communication on their performance on the social, economic, environmental and governance performance data linked to the SDGs and indicators.

Firms that have accumulated experience can share sustainability practices with peers with the aim of scaling up industry efforts and collaborating with national governments on the ways and means to account for private sector’s contribution to the global goals.

What’s next for businesses and the government?

The SDGs provide a pivotal tool for businesses to measure and report on their impact on sustainability – an existential issue that concerns the rich and the poor, the young and the old, and the developed and developing economies. In Malaysia’s public discourse on the new long term vision or T50 as termed in the 2017 Budget announcement, the SDGs provide a useful framework to anchor the country’s new vision for 2050.

For businesses, the SDGs will become an increasing important global initiative to be incorporated in their long term business plans and strategies. It therefore makes business sense to understand what the SDGs and targets stand for and incorporate into their impact measurement and sustainability reporting.

By Prof. Yeah Kim Leng | 1 Dec 2016

Professor Yeah Kim Leng is the Director of Economic Studies Program at Jeffrey Cheah In­stitute on Southeast Asia at Sunway University and Professor of Eco­nomics at Sunway University Business School. He is also an external member of Bank Negara Malaysia’s Monetary Policy Committee. The views expressed in this article are his own.

First appeared in the New Straits Times

Modified by Low Wai Sern