May 01, 2017

Sustainable development is good for business

Jennifer Wills

Businesses are integrating sustainable development principles into their decisions and strategies to reduce risk, save money, increase innovation, and protect the planet. This article discusses two ways businesses are doing this: collaboration/partnerships and supply chain sustainability. For instance, collaboration can provide private-sector companies with tools to reevaluate particular operations (e.g., The Nature Conservancy helped Dow value ecosystem services) or to evaluate their supply chains (e.g., Bayer used a tool created by EcoVadis to assess suppliers to ensure sustainable procurement). Certain organizations, like the Business and Sustainable Development Commission, are focusing on helping businesses utilize sustainable practices and teaming up with businesses to achieve the U.N. Sustainable Development Goals (SDGs).

Understanding SDGs

The United Nations has been instrumental in shaping the concept of international sustainable development. At the 1972 Stockholm conference, the first major international environmental conference, the concept of the U.N. Environment Programme was born. Additional international environmental conferences, reports, and agreements followed, reaffirming the world’s commitment to sustainable development, of particular importance: Our Common Future (a.k.a. the “Bruntland Report”) published in 1987, the 1992 Rio Conference (a.k.a. the “Earth Summit”), and the 2012 Rio + 20 conference. In 2015, this commitment was further memorialized through the U.N.’s adoption of the 17 SDGs in its 2030 Agenda for Sustainable Development.

The SDGs are broad in scope covering issues such as eradicating poverty and hunger, ending violence of all kinds, and conserving the oceans and water. They can be grouped by the three pillars of sustainability: social development, economic development, and environmental protection. Implementation of the goals and targets will require international coordination and private and public sector collaboration to ensure appropriate financial resources, capacity building, and exchange of technologies.

Why sustainable development—the business case

Incorporating sustainable development principles into a business’s mission can improve its reputation and regain public trust, increase profit margins, open up new business opportunities, and reduce risks associated with less sustainable processes.

Businesses are influenced to incorporate sustainable development into supply chains by consumer demand and, in some cases, by investor pressure.

How to incorporate sustainable development—organizations working with businesses

Many organizations are helping businesses incorporate SDGs. Most recently, the Business and Sustainable Development Commission’s 2017 report, titled “Better Business, Better World,” sets out the business case for aligning business goals and strategies with the SDGs over the next 15 years. Citing a PwC report, the commission states that there are $12 trillion in available market opportunities under such an approach. Exhibit 2 of the report provides a summary of the ways businesses can profit by incorporating SDGs into their business practices.

Other organizations also help businesses incorporate sustainability into business decisions. Business for Social Responsibility, for example, does this through consulting, research, and collaboration. The World Business Council on Sustainable Development’s (World Business Council) mission is to make sustainable businesses more sustainable. In conjunction with the U.N. Global Compact and the Global Reporting Initiative (an independent sustainability organization), the World Business Council developed an “SDG Compass” to serve as a guide for businesses interested in exploring how to align business strategies with sustainable practices.

Importance of supply chains

A manufacturer can only be as sustainable as their supply chain.” To help supply chains be sustainable, data is essential. For example, Unilever uses data to evaluate results of its Sustainable Agriculture Code. To ensure sustainable sourcing, Unilever evaluates farmers that self-assess under the code. A review of the data showed positive results, such as decreased pesticide use on farms that use an Integrated Pest Management Plan.

Walmart set out to cut greenhouse gas emissions from its supply chain and exceeded its goal. The company set targets for its suppliers’ use of recycled materials and it established a Sustainability Index that provides information on each supplier’s sustainability.

Value in collaboration and partnerships

In the context of incorporating sustainable development, collaboration includes partnering with stakeholders, such as NGOs and companies, that have differing expertise than the business and using that expertise to incorporate sustainable development principles into business decisions. For example, in 2011, Dow and The Nature Conservancy collaborated on valuing ecosystem services. One result of the collaboration is a tool that collects ecological data and provides information on ecosystems services at a given site. The tool, Ecosystem Services Identity & Inventory, is available to the public for download through iTunes.

Another example of collaboration, examined in a case study developed by Business for Social Responsibility, is a partnership between Bayer and EcoVadis to help Bayer’s procurement teams access and evaluate “supplier sustainability data” in a timely manner. This partnership allowed the procurement teams to better assess the sustainability of suppliers when making buying decisions.

Collaboration can also be applied to community engagement in the extractives industry. Because extractives tend to have major local impacts, engaging the local community is key to ensuring sustainable community development.

Conclusion

Incorporating sustainable development into business strategies can maintain or improve a business’s reputation, reduce risk, and reduce costs. There are several ways businesses are doing this, including collaboration with a range of stakeholders and supply-chain management.

Jennifer Wills

Ms. Wills in an attorney in the U.S. Environmental Protection Agency’s Office of General Counsel and an adjunct faculty member with Virginia Tech’s Center for Leadership in Global Sustainability, teaching international environmental law and policy. She is co-chair of the Section’s Special Committee on Environmental Justice. The opinions expressed in this article are entirely her own and do not represent those of EPA or the U.S. government.