The path to sustainability1 October 2020
Urged on by the United Nations Global Compact (UNGC), the business world is focusing on sustainable business practices like never before. Jim Banks hears from Lise Kingo, UNGC CEO and executive director, about how the industry is progressing towards its sustainability goals and what more needs to be done.
Corporate social responsibility (CSR) is a useful shorthand for many things. It means focusing on business ethics, sustainability and a host of other factors that make companies good corporate citizens of the world. Thankfully, the United Nations Global Compact (UNGC) and other bodies are taking the broad meaning of CSR and turning it into specifics.
The UNGC is, after all, the world’s largest corporate sustainability programme. Launched in 2000, it is a special initiative of the UN secretary-general that works with companies to align their operations and strategies with 10 universal principles in the areas of human rights, labour, environment and anti-corruption.
The UNGC, which has more than 10,000 industry and 3,000 non-business signatories – based in more than 160 countries and 68 local networks – guides and supports the global business community in advancing UN goals and values through responsible corporate practices. It exists to further the UN’s 2030 agenda for sustainable development and to assist with the progress towards its 17 sustainable development goals (SDGs), also known as the global goals, which serve as a blueprint for a more ecological future.
Sustainable corporate practices inevitably incur costs; however, the UNGC makes it clear that its goals are designed not to inhibit businesses but to inspire and improve them.
“Responsible companies have a 7% higher return on equity than the more traditional companies, so I think the numbers speak for themselves,” states Lise Kingo, CEO and executive director of the UNGC. “There are also other arguments as to why companies should choose a responsible approach to doing business. One of them is employee engagement – being able to attract young people to come and work for them.
“Another is the reputation of the company. Reputation studies clearly show that the best way for companies to build trust and better reputations is to show that they are doing good in the world. The best way to do that is to have a solid approach to the environment, human rights, anti-corruption and labour issues.”
FAB goals but slow progress
Since 2014, companies in the food and agriculture sector have been invited by the UNGC to commit to their own set of principles and report on the progress through their annual communication on progress (COP). This reporting process demonstrates how an organisation has aligned policies and practices with the food and agriculture business (FAB) principles, and highlights its activities and achievements that contribute to its progress.
In its 2019 report, for example, the Kellogg’s company highlighted its 2018 launch of the European diversity and inclusion council as a part of its ongoing effort to showcase the advantages of a diverse workforce. These include lower recruiting and retention costs, better engagement leading to greater productivity and a boost in its efforts to innovate.
Kellogg’s CSR report for 2018–19 also showcased its next-generation Better Days global purpose platform, which is specifically targeted at the food insecurity faced by around 820 million people in the world. By the end of 2030, the company intends to nourish one billion people with its products; feed 375 million people in need through food donations and expanded child-feeding programmes; support one million farmers, especially women smallholders and workers; and advocate on behalf of hungry children.
In a similar vein, Nestlé Mexico’s COP, in late 2019, outlined the company’s ambition to help more than five million children to live healthier lives by 2025. The business plans to do this by innovating and renewing its product portfolio. It also plans to further fortify its food products with iron, zinc, vitamin A, vitamin D and other nutrients.
While these companies and many other UNGC signatories are taking tangible action, a report published in September 2019 – ‘The Accenture Strategy CEO Study on Sustainability’ – showed that, globally, much more needs to be done. Despite the opportunity of sustainability, it noted, CEOs believe business execution is not measuring up.
In 2016, 70% of CEOs believed that the global goals would provide a clear framework to structure their eco-friendly efforts. Step forward to 2019 and just 48% of CEOs are implementing sustainability into their operations. With the world warming at an exponential rate, increasing engagement with the initiative is now an urgent matter.
“The global goals aren’t just a nice thing to do – they are a path to a prosperous world,” said Alan Jope, CEO of Unilever, in Accenture’s report.
Always adapt to advance
A vital tool in encouraging businesses to turn commitment into action is to help them resolve the tension between profitability and CSR. “One good approach is to always look at the numbers and see how other companies that are integrating sustainability and responsibility into their business are faring,” says Kingo. “At the UNGC, I have a pretty good data set to speak from and when I look at the mix of multinationals and SMEs. It is clear that, compared with companies that are not taking a responsible business approach, our companies have higher margins, they have a higher market valuation and they have better credit-worthiness.”
The efforts of the UNGC are constantly adapting to the needs of the industry, in order to both challenge and support companies in integrating the SDGs into their core business. In recognition that the world is not delivering the SDGs at the pace and scale needed, UNGC launched its new SDG Ambition initiative at the start of 2020, which is intended to scale up business action at the national level.
The intent of SDG Ambition is to provide an outcome-oriented approach, which is aligned to the needs of companies that are aiming to become sustainable enterprises.
“The global business community is not currently moving at the speed or scale needed to deliver the sustainable development goals,” remarked Kingo at the launch at the World Economic Forum at Davos in January 2020. “The goals will not become a reality without greater ambition, as well as deeper integration within companies everywhere. We hope that SDG Ambition will establish a new normal for the global business community that is both bolder and more strategic to achieve the world we want.”
The new initiative, which is supported by SAP and Accenture, will provide organisations with a management framework to help them incorporate sustainability and SDGs into their business operations, and measure and manage their performance. SAP will help with the provision of technology, consisting of a suite of tools to accelerate progress towards the 2030 agenda for sustainable development, and put innovation and disruptive technology to work to address critical issues at speed and scale.
Through the UNGC’s local networks in more than 60 countries, participating companies will assess current performance, identify risk areas, discover new opportunities across business units and functions, and take ambitious business action towards achieving the SDGs.
“I think the new trend we’re seeing is companies integrating the 10 principles and their own set of goals into their business strategy,” concludes Kingo. “In my view, more and more investors are going to ask for this, because they need to rate the companies to find out if they can be put into their sustainable product offerings or not. So, their sustainability strategy becomes their business strategy, not the other way around.”
Percentage of CEOs in 2019 that are implementing sustainability into their offering, compared to the 70% in 2016 that believed global goals would provide a clear framework to structure their ecofriendly efforts.
UNGC’s 10 universal principles
- Businesses should support and respect the protection of internationally proclaimed human rights
- Make sure that they are not complicit in human rights abuses
- Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining
- The elimination of all forms of forced and compulsory labour
- The effective abolition of child labour
- The elimination of discrimination, in respect of employment and occupation
- Businesses should support a precautionary approach to environmental challenges
- Undertake initiatives to promote greater environmental responsibility
- Encourage the development and diffusion of environmentally friendly technologies
- Businesses should work against corruption in all its forms, including extortion and bribery.
Food and agriculture business principles
- Aim for food security, health and nutrition: businesses should support food and agriculture systems that optimise production and minimise waste, to provide nutrition and promote health for all people.
- Be environmentally responsible: businesses should support sustainable intensification of food systems to meet global needs by managing agriculture, livestock, fisheries and forestry responsibly. They should protect and enhance the environment.
- Ensure economic viability and share value: businesses should create, deliver, and share value across the entire food and agriculture chain, from farmers to consumers.
- Respect human rights, create decent work and help communities to thrive: businesses should respect the rights of farmers, workers and consumers. They should improve livelihoods, and promote and provide equal opportunities.
- Encourage good governance and accountability: businesses should behave legally and responsibly by respecting land and natural resource rights, avoiding corruption, being transparent about activities and recognising their impacts.
- Promote access and transfer of knowledge, skills and technology: businesses should promote access to information, knowledge and skills for more sustainable food and agricultural systems.