Human (economic) activities are estimated to have caused approximately 1.0°C of global warming above pre-industrial levels, and at the current rate global warming is likely to reach 1.5°C between 2030 and 2052. Increased global warming, needless to emphasise, has and will continue to magnify risks to health, livelihoods, food security, water supply, human security, and economic growth.
Today, 400 million people globally lack access to essential health services, according to the WHO; 2.3 billion lack even a basic sanitation service, reports UN Water; 24.9 million are in forced labor, the Global Slavery Index finds; the ILO estimates that 2.3 million people die every year due to work-related accidents/diseases, and 212 million will be out of work by 2019. Meanwhile, the global economy loses $1.5 – 2 trillion due to corruption.
From environmental degradation to human rights violations, from declining labor standards to pervasive corruption, the traditional definition of corporate self-interest has caused unprecedented harm to the global society.
As businesses have contributed significantly to these global challenges, they have a huge responsibility to remedy the situation, and put the world on a more sustainable footing.
But beyond social responsibility, corporates have a fundamental self-interest in securing a sustainable future. Why? Because no business can succeed in a society, an environment, that is failing. Business as usual, it has become apparent, is no longer tenable.
Indeed, as business becomes increasingly global - or at least transnational - and as businesses confront difficult challenges of varying degrees and in multiple contexts - from extreme weather events to prevalent corruption - the corporate definition of self-interest must change to reflect today’s reality.
Sustainability, as codified in the Sustainable Development Goals (SDGs), must become a defining feature of contemporary business strategy and operations.
Not as a matter of good intentions, or altruism, or benevolence - but purely as a matter of self-interest.No business can be competitive in an ecosystem fueled and sustained by corruption: there’s an estimated 10% average increase in cost of doing business due to corruption. Upholding fundamental labour standards is the surest approach to attract and retain talented employees. Observing human rights ensures both product differentiation and customer loyalty – crucial components of any business. Adopting environment-friendly policies increases resource efficiency, lowers insurance costs and improves supply chain reliability.
And according to the Business and Sustainable Development Commission, sustainable business models could open economic opportunities worth up to $12 trillion and create 380 million jobs by 2030.
Put simply, sustainability is profitability. Profitability not just for shareholders, but also other stakeholders: employees, supply chains, governments, and the planet.
Consider, moreover, the rising investor, consumer, employee and policy-maker demand for responsible and sustainable businesses.
Investor demand has driven substantial growth in responsible investment by hedge funds, with a recent survey indicating that at least $59 billion has been allocated to responsible investment globally. “Specialists in responsible investing are hot property,” reports to the Financial Times.
Secondly, 66% of global consumers – out of 30,000 polled in 60 countries – said in a 2015 study that they’re willing to pay more for products and services provided by companies that are committed to positive social and environmental impact.
Additionally, a Society for Human Resources Management study found that employee morale was 55% better in companies with strong sustainability programs, and employee loyalty was 38% better.
Meanwhile, government policy makers – from Europe to Africa – are increasingly requiring both companies and investors to consider the environmental, social or governance (ESG) impact of their holdings.
The implication for corporates is clear: redefine your self-interest, or perish. ###
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