BUS604: Innovation and Sustainability

The Commission has identified the following six actions you can take as a business leader to capture your share of this prize. All of them need real leadership from the top, to inspire purpose and commitment among everyone in your business and to transform the markets in which you all operate together.

1. Build support for the Global Goals as the right growth strategy in your companies and across the business community. The more business leaders who understand the business case for the Global Goals, the faster progress will be towards better business in a better world.
2. Incorporate the Global Goals into company strategy. That means applying a Global Goals lens to every aspect of strategy: appointing board members and senior executives to prioritize and drive execution; aiming strategic planning and innovation at sustainable solutions; marketing products and services that inspire consumers to make sustainable choices; and using the goals to guide leadership development, women's empowerment at every level, regulatory policy, and capital allocation. Achieving the Global Goals will create 380 million new jobs by 2030. You need to make sure your new jobs and any others you generate are decent jobs with a living wage, not only in your immediate operations but across your supply chains and distribution networks. And you need to help investors understand the scale of value that sustainable business can create.
3. Drive the transformation to sustainable markets with sector peers. Shifting whole sectors onto a sustainable footing in line with the Global Goals will unlock much bigger business opportunities. Consider food and agriculture. A global food and agriculture system in line with the Global Goals would deliver nutritious, affordable food for a growing world population, generate higher incomes – especially for the world's 1.5 billion smallholders – and help restore forests, freshwater resources, and vital ecosystems, including the world's oceans. It would create new economic value of more than US$2 trillion by 2030 and would be much more resilient to climate risk.
   "Business as usual" will not achieve this market transformation. Nor will disruptive innovation by a few sustainable pioneers be enough to drive the shift: the whole sector has to move. Forward-looking business leaders are working with sector peers and stakeholders to map their collective route to a sustainable competitive playing field, identifying tipping points, prioritizing the key technology and policy levers, developing new skill profiles and jobs, quantifying new financing requirements, and laying out the elements of a just transition. Over the next 15 years, driving system change in line with the Global Goals with sector peers will be an essential, differentiating skill for a world-class business leader. It means shaping new opportunities, pre-empting the risks of disruption, and renewing businesses' license to operate.
4. Work with policy-makers to pay the true cost of natural and humanresources. Sustainable competition depends on all the competitors facing prices that reflect the true costs of the way they do business – internalizing the externalities, to use the jargon. The idea of pricing pollution at its true environmental and social cost has been around for a long time. But the need for strong carbon pricing is becoming ever more urgent to tackle the risk of runaway climate change.
   Establishing prices for carbon as well as other environmental resources (especially water in many areas) and sticking to those prices fires the starting gun for a "race to the top". Businesses that choose to pay living wages and the full cost of their resources need to be certain that their competitors will do the same in the not too distant future if they are not to be at a cost disadvantage. Business leaders must therefore work openly with regulators, business, and civil society to shape fiscal and regulatory policies that create a level playing field more in line with the Global Goals. This could involve fiscal systems becoming more progressive through putting less tax on labor income and more on pollution and under-priced resources. 
5. Push for a financial system oriented towards longer-term sustainable investment. Achieving the Global Goals will likely require an estimated US$2.4 trillion a year of additional investment, especially for infrastructure and other projects with long payback periods. There is enough capital available. But in the world's uncertain circumstances, most investors are looking for liquidity and short-term gains. As soon as companies are paying "full" prices that reflect social and environmental externalities, then their financial performance will be the main signal that investors need to understand companies' relative performance on the Global Goals. But achieving full prices across the economy will take time. Until then – and to help bring that day closer – business leaders can strengthen the flow of capital into sustainable investments by pushing for three things: transparent, consistent league tables of sustainability performance linked to the Global Goals; wider and more efficient use of blended finance instruments to share risk and attract much more private finance into sustainable infrastructure; and alignment of regulatory reforms in the financial sector with long-term sustainable investment.
6. Rebuild the Social Contract. Trust in business has eroded so sharply since the global financial crisis, the social fabric is wearing thin. Many see business as reneging on its social contract. Business leaders can regain society's trust and secure their license to operate by working with governments, consumers, workers, and civil society to achieve the whole range of Global Goals, and adopting responsible, open policy advocacy.
   Rebuilding the social contract requires businesses to pay their taxes transparently like everyone else and to contribute positively to the communities in which they operate. In total, there are over 700 million workers employed directly and indirectly in global supply chains. Treating them with respect and paying them a decent wage would go a long way to building a more inclusive society and expanding consumer markets. Investing in their training, enabling men and women to fulfill their potential, would deliver further returns through higher labor productivity. And ensuring that the social contract extends from the formal into the informal sector, through full implementation of the UN Guiding Principles on Business and Human Rights, should be non-negotiable. There are still between 20-40 million people working in forms of modern slavery and over 150 million children working in the fields, mines, workshops, and rubbish dumps that underpin much of the global economy, unseen and unprotected.
   
   

1. "More than 150 million children are working unseen and unprotected".

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   This is an unacceptable feature of 21st century capitalism – one that boardrooms, investors, and consumers can no longer ignore.