BUS604: Innovation and Sustainability

Companies can show their commitment to the Global Goals by respecting basic standards of behavior enshrined in both the UN Global Compact principles and the UN Guiding Principles on Business and Human Rights. Consistently observing these across their activities gives companies the foundation for genuine and successful sustainable development leadership.

Box 13: Mars develops communities and business through sticking to five principles

Mars, Incorporated has empowered people in the first mile of its value chain by adhering to the five principles that are the foundation of its culture – Quality, Responsibility, Mutuality, Efficiency, and Freedom. The principles act as a framework for developing target communities in low-income economies while simultaneously driving profits. Mars tracks a unique set of community development metrics: human capital measures such as worker capacity and satisfaction; social capital measures including trust, social cohesion, and community capability for collective action, and shared financial capital measures such as shared economic benefits. Over time, performance on these metrics has correlated consistently with sales performance. Using these development metrics, Mars' Kenya-based Maua programme has grown from seven micro-entrepreneurs at launch to include over 500 micro-entrepreneurs who generate more than US$7 million in retail sales, the equivalent of over 20 percent of Wrigley Kenya's annual revenue. 

Unilever promotes health and well-being on a massive scale

As part of the Unilever Sustainable Living Plan, Unilever has set itself the goal of helping more than 1 billion people take action to improve their health and wellbeing, through programmes on handwashing, safe drinking water, oral health, and self-esteem. A programme run by its Lifebuoy brand, the world's number one antibacterial soap sold in nearly 60 countries, aims to change the handwashing behavior of a billion people by 2020 across Asia, Africa, and Latin American. This is the world's largest hygiene promotion programme. Since 2010, around 337 million children, parents, and new mothers have been reached by its targeted ideas encouraging people to wash their hands. Lifebuoy has developed a special approach for primary schools to make handwashing fun and engaging, so millions of children in poor and rural communities get the benefits of better hygiene. Lifebuoy is one of Unilever's Sustainable Living Brands, which were together responsible for almost half Unilever's growth in 2015, when they grew 30 percent faster than the rest of the business. For more detail see report.businesscommision.org. 

Secondly, companies should pay their tax and disclose tax information transparently. As noted in Section 4, tax revenue is a crucial source of public finance for sustainable development, and one that many developing countries in particular need to increase substantially. More broadly, we recognise that tax represents the consideration in the social contract between a state and its citizens. 

We anticipate companies that avoid tax will face increasingly negative consequences in investment and consumer markets. MSCI, currently provider of the world's most widely used sustainable investment benchmarks, announced in late 2016 that it would significantly reduce the ESG ratings of companies that use aggressive tax avoidance policies from the beginning of 2017. The reason given for this change is that the public mood has shifted against companies that do not pay their tax bills.

Recent years have seen a major push by the OECD, G7, G20, and others on measures to make taxation more effective, including standardized country-by-country tax reporting by international companies and greater transparency of beneficial ownership. The Commission welcomes these moves, and would like to see debate about a fairer, more transparent global tax system continue to deepen and move forward.

Third, businesses can use their influence on policy in a responsible, transparent, and accountable way. The scale and reach of global businesses have given them a power and influence over governments that they do not always exercise responsibly. Much of the current mistrust in business derives from occasions when they have used their power to gain access to policymakers to lobby for their own narrow interests rather than aligning their agenda with the common good. Companies pursuing the Global Goals as a business strategy will, by definition:

• Be fully transparent about all their public affairs activity, including what policies or decisions they are arguing for and to whom;
• Avoid lobbying for policies that are contrary to achieving the Global Goals;
• Avoid "revolving door" appointments of public officials and political donations that serve purposes in conflict with the Global Goals;
• Support sound science and make use of the results in setting science-based targets in their sector roadmaps; and
• Make their opposition known whenever a trade association they belong to takes a position at odds with the company's sustainable development principles and basic standards of behavior, and say what action they are taking to oppose it.

The Commission believes it would be valuable to reflect companies' use of their influence in an independently compiled "Responsible Political Engagement Index". Companies would disclose their performance against the criteria above and an independent body, such as Transparency International, could compile rankings. The Commission will explore this idea further in its second year.