The recent statement of Business Roundtable On the new corporate purpose led to a heated debate. The representative body of the managers of the largest US companies sowed the discord by changing the doctrine of “first shareholders” and favoring a broader responsibility towards customers, employees, suppliers and communities. Although both sides of the debate have spoken out, until now the opinion of a broader base of companies had to be known.
The survey HSBC Navigator 9,000 companies reveal the existence of a global business community that wants to address the current social challenges. 63% of companies in the world recognize their role in achieving the Sustainable Development Goals (SDG), the action plan of the United Nations (UN) for a sustainable future for all.
These results are significant and, for me, they are not unexpected. Significant because with just over a decade to meet the goals of the UN, we are not even close to progressing at the necessary rate And the time to act is now. Any hope of achieving these objectives will require companies to promulgate the principle of public-private partnerships included in the SDGs.
The results are not unexpected either because companies have always existed to create value, but the definition of “value” is constantly evolving. Today, it is increasingly recognized that business licenses are subject to an implicit contract with society. “Value” is now measured more holistically, including the financial, social and environmental impact of companies, from their supply, to their production and their disposal.
The desire to do more for the sustainability It’s a recurring conversation that I have with my clients. But the practical aspect of doing it on a large scale restrains them. It is clear that There is a long way to go, so it is necessary for companies, politicians and regulators to collaborate and coordinate their efforts to address two main challenges.
The first is the measurement. A broader definition of what constitutes “value” refers to how we measure it. The HSBC survey shows business frustration towards inconsistencies in environmental, social and governance criteria. There is a clear gap between the indicators that companies find relevant and those that measure. A common and standard framework would boost the action. Greater alignment in company reports on this issue would allow results to be compared with one another and the resulting competitive pressure would also be a driver of progress.
Greater transparency and improved measurements would also help the second challenge: finance. This is the biggest impediment to being more sustainable. To achieve the objectives of the UN would require an additional investment of about 2.5 billion dollars a year.
Most companies recognize their role in the process of reaching the SDGs, but what about the laggards? In the short term, these companies face risks as society, regulators and their competitors give increasing importance to these issues. In the long term, business opportunities could also be lost, since achieving the UN objectives could unlock 12,000 million dollars in new market value and create 380 million jobs.
The change is often gradual, and then sudden, as the commitment spreads rapidly from young activists around the world to the boardrooms of the world’s largest corporations. This seems one of those moments.
It will be those managers who know how to adjust their objectives to take into account the social impact of their distribution chains, which will generate long-term sustainable value for all.
Natalie Blyth is Global Director of Foreign Trade and Factoring at HSBC