Better Business, Better World
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BETTER BUSINESS BETTER WORLD The report of the Business & Sustainable Development Commission January 2017 Business and Sustainable Development Commission c/o Systemiq 1 Fore Street London ECY 5EJ [email protected] www.businesscommission.org and report.businesscommission.org Managing Partners http://www.systemiq.earth http://www.unfoundation.org Copyright Business and Sustainable Development Commission. This work is licensed under a Creative Commons License Attribution-NonCommercial 4.0 International (cc by-nc 4.0). January 2017 Cover photo credit: Ly Hoang Long THE BUSINESS AND SUSTAINABLE DEVELOPMENT COMMISSION The Business and Sustainable Development Commission was launched in Davos in January 2016. It brings together leaders from business, finance, civil society, labour, and international organisations, with the twin aims of mapping the economic prize that could be available to business if the UN Sustainable Development Goals are achieved, and describing how business can contribute to delivering these goals. The Better Business, Better World report was led by the commissioners, and supported by: the Australian Department of Foreign Affairs and Trade (DFAT), the Bill & Melinda Gates Foundation, the Global Green Growth Forum (3GF), the Swedish International Development Cooperation Agency (Sida), the Netherlands Ministry of Foreign Affairs (MoFA), the Norwegian Ministry of Climate and Environment, the Rockefeller Foundation, and the UK Department for International Development (DFID). The Business and Sustainable Development Commission has overseen this report with secretariat support provided by SYSTEMIQ and the UN Foundation. Chaired by Lord Mark Malloch-Brown, the Commission comprises business leaders from around the world. Members of the Business and Sustainable Development Commission endorse the general thrust of the arguments, findings, and recommendations made in this report, but should not be taken as agreeing with every word or number. They serve on the Commission in a personal capacity. The institutions with which they are affiliated have not been asked to formally endorse the report. Learn more at: http://businesscommission.org https://www.linkedin.com/company/business-commission https://www.facebook.com/businesscommission https://twitter.com/bizcommission 1 THE COMMISSIONERS Lord Mark Malloch-Brown, Mary Ellen Iskenderian, former Deputy Secretary-General, United Nations (Chair) CEO, Women’s World Banking Amr Al-Dabbagh, Dr. Amy Jadesimi, Chairman & CEO, The Al-Dabbagh Group Managing Director & CEO, Lagos Deep Offshore Logistics Base (LADOL) Laura Alfaro, Professor, Harvard Business School Donald Kaberuka, former President, African Development Bank Group Peter Bakker, President, The World Business Council on Sustainable Lise Kingo, Development (WBCSD) Executive Director of the United Nations Global Compact Sharan Burrow, Jack Ma, General Secretary, International Trade Union Confederation Founder and Executive Chairman, The Alibaba Group (ITUC) Andrew Michelmore, Ho Ching, CEO, MMG Ltd. CEO, Temasek Holdings Private Ltd. Sam Mostyn, Bob Collymore, President, Australian Council for International Development CEO, Safaricom Ltd. (ACFID) John Danilovich, Arif Naqvi, Secretary General, The International Chamber of Commerce Founder & Group CEO, The Abraaj Group (ICC) Mads Nipper, Begümhan Doğan Faralyalı, Group President & CEO, The Grundfos Group Chairwoman, Doğan Group Cherie Nursalim, Hendrik du Toit, Vice Chairman, GITI Group CEO, Investec Asset Management Ricken Patel, Richard Edelman, President & Executive Director, Avaaz President & CEO, Edelman Daniel Pinto, Hans Vestberg/Elaine Weidman Grunewald (acting), CEO, Corporate & Investment Bank, JP Morgan Chase & Co. CEO, Ericsson Paul Polman, John Fallon, CEO, Unilever CEO, Pearson plc Vineet Rai, Co-Founder & Chairman, Aavishkaar Intellecap Group Ken Frazier, Chairman & CEO, Merck & Co Inc. (2016) Grant Reid, CEO, Mars, Inc. Mats Granryd, Director General, The GSM Association (GSMA) Dinara Seijaparova, CFO, ‘Baiterek’ Helen Hai, CEO, The Made in Africa Initiative Sunny Verghese, CEO, Olam International Svein-Tore Holsether, President & CEO, Yara International ASA Gavin Wilson, CEO, IFC Asset Management Company LLC Mo Ibrahim, Founder, Celtel & The Mo Ibrahim Foundation Mark Wilson, CEO, Aviva plc 2 Photo credit: MD. Zakirul Mazed 3 CONTENTS The commissioners 2 The challenge 6 Executive summary 10 The business case for the Global Goals 12 Leading for sustainable development 15 Making the choice 17 1. Introduction: The Global Goals and why they 19 matter for business 1.1 The Global Goals for Sustainable Development 22 1.2 The Global Goals need business: business needs the Global Goals 23 2. Major market opportunities opened up by 26 delivering the Global Goals 2.1 The 60 fastest-growing sustainable market opportunities 27 2.2 Opportunities by economic system 30 2.3 Progress on all the Global Goals is needed to deliver all the benefits 34 2.4 Pricing of externalities would increase the value of market 35 opportunities 2.5 Geographic distribution of opportunities 38 2.6 The impact on jobs 40 3. Leading for better business and a better world 42 3.1 Sustainability is already good business 43 3.2 Innovative businesses are already capturing Global Goals 44 opportunities 3.3 Transforming the way business operates for better business and a 51 better world 3.4 Gaining commitment from CEOs and boards 51 4 3.5 Incorporating the Global Goals into business strategy 52 3.6 Accelerating sectoral shifts to sustainable competition by working 55 with peers 3.7 Shaping public policy 62 4. Sustainable finance 68 4.1 Simplifying reporting of environment, social and governance 69 (ESG) performance 4.2 Unlocking infrastructure investment 73 4.3 Aligning regulation with investment 79 5. Renewing the social contract 82 5.1 An uncertain outlook for employment 84 5.2 Providing decent work and more jobs 86 5.3 Providing training and skills 88 5.4 Forging a new social contract 90 5.5 Actions for business 92 5.6 Actions for governments 95 5.7 Actions for civil society 96 6. Conclusion 97 6.1 Actions for sustainable business leaders 97 6.2 Actions for the Commission 100 References 104 Acknowledgements 116 5 THE CHALLENGE © Image Source / Adobe Stock 2016 has unsettled business leaders everywhere. Whatever one's political views, uncertainty and the return to a much more nationalist politics in many countries have displaced the assumption of steady global integration. Many commentators have declared that globalisation has already peaked, despite its role in the past 30- year run of unprecedented successes worldwide in health, wealth, education and life expectancy. Certainly the contradictions of that success caught up with us in 2016. In the West, stagnant incomes among broad groups made them angry at elites who were bailed out after the global financial crisis. Frustrated voters have rejected more international integration. Elsewhere, too, those losing out either economically or environmentally, such as the citizens of smog-choked Asian cities, or socially, through the breakdown of traditional rural communities, are asking whether the costs of our global economy are greater than its benefits. These hard questions matter to business leaders everywhere. As members of the Business and Sustainable Development Commission, we argue that it is incumbent on all of us to make the case for business to be at the heart of an open global Better Business, Better World 6 economic system. But we cannot defend a lazy return to the old model that has been so widely rejected over the past year. "Business leaders need to strike out in new directions to embrace more sustainable and inclusive economic models." We must have the courage to strike out in new directions and embrace an economic model which is not only low-carbon and environmentally sustainable, but also turns poverty, inequality and lack of financial access into new market opportunities for smart, progressive, profit-oriented companies. These complex challenges need the full and combined attention of government, civil society and business. Otherwise, there is no chance of solving them. Solutions are urgently needed. We see the next 15 years as critical, with change starting now and accelerating over the period. Business as usual is not an option: choosing to “kick the can down the road” over the next four years will put impossible environmental and social strains on a stuttering global economy. But if enough leaders act now and collectively, we can forge a different path, one that eases the burden on finite resources and includes those currently left behind or excluded from the market, helping to address today's political grievances. In the pages of this report, some 35 business leaders and civil society representatives offer our prescription for a new, socially focused business model that reaches parts of the global economy previously left largely to public aid. It considers adopting the same approaches in developed markets to address similar pockets of need. Taking the UN's new Global Goals for Sustainable Development as the basis for our action plan, we lay out how pursuing these goals in partnership with government and civil society will lead to greater, more widely shared prosperity for all by 2030. We make the case that businesses adopting this plan will transform their own prospects and could outperform those stuck in yesterday’s economic game: this is about return on capital, not just responsibility. "Big business and finance need to regain