Why Sustainable Development Makes Good Business Sense

The Sustainable Development Goals (SDGs) are the fundamental cornerstone to secure future economic and business growth by eradicating poverty in an inclusive way, while protecting the environment.

It is not possible to have a strong, functioning business in a world of increasing inequality, poverty and climate change. Business has the unique opportunity to embrace the SDG agenda and recognize it as a driver of business strategies, innovation and investment decisions. Doing so makes business sense and will give them an edge over their competitors.

The SDGs offer the greatest economic opportunity of our lifetime. With an estimated investment of $2-3 trillion a year, the potential value that can be unlocked for society will be immense. In some sectors it is estimated to be worth hundreds of billions, and even more in others. This is a very high payout for this global agenda and markets are already starting to react.

We have seen this on climate action, which influence 13 of the 17 SDGs, where business that actively take into account this issue enjoy 18 percent higher returns on investment. The 2015 Paris Agreement sent a clear sign that the governments of this world are committed to decarbonize our economies and this is felt in banks, stock exchanges, and boardrooms. It is a sign that the private sector is starting to embrace the business case for a rapid transition to a low carbon world, which will be discussed this week at the Business & Climate Summit in London, but more needs to be done. This is the spirit we also need for the SDGs.

Unilever set out on that journey in 2010 with the Unilever Sustainable Living Plan, is our blueprint for sustainable growth whose goals mirror those of the SDGs. The USLP is proving that there is no trade-off between sustainability and profitable growth. We now see, for example, that our Sustainable Living brands are growing 30 percent faster than the rest of the company. These brands have integrated sustainability into both their purpose and products, and are thereby contributing to driving critical progress against the SDGs.

To give you one example — simply by developing innovative washing products that require less water, women in developing countries need to spend less time collecting water, and have more free time for education, jobs and child care. This is especially true in parts of Africa and Asia where they can walk up to six kilometers a day to the nearest water source.

The path to get where we stand today has not been easy. We had to convince our shareholders and investors that sustainability was the way forward and could generate real value for Unilever.

Part of this process meant doing away with quarterly annual reports. Why? Because the issues we are trying to confront with our business model and through partnerships — food security, sanitation, employment, climate change — cannot be solved by quarterly reporting. They require longer-term solutions and value creation, and not 90-day pressures.

Not everyone was happy with that approach at first, but 85 percent of our investors now see the USLP as a driver of long-term value creation and 70 percent of our investors have held shares for more than three years — at a time when global holding periods have become shorter and shorter. This was unthinkable a few years ago.

Purpose has always been part of Unilever’s DNA. Our founder William Lever built a business around the sale of Lifebuoy soap that was not only profitable and sustainable, but also helped transform the health of the poor in Victorian Britain. It was time to re-embed this to the heart of the company.

Fortunately, we are not alone. More and more businesses are seeing the potential of a more sustainable business model, driven both by the firm belief that business can be a force for good, and by the realization that the cost of inaction often exceeds the cost of action — notably when it comes to the growing threat of climate change and water scarcity.

Sustainability after all is no longer a niche issue. 54 percent of consumers want to buy more sustainably. Many already are. Consumers in both emerging and developed markets want it all — high-performing products, the right price and a purpose that they can connect with.

Regrettably, however, we are not yet seeing the scale and speed we need. There is still too much reluctance by business leaders and investors to fully embrace the change to this new type of business model. The focus still tends to be on occasional corporate social responsibility (CSR), rather than embedding sustainability at the core of their business. They need to realize that the potential gains from working sustainably are huge, and that this approach needs to be more than a simple CSR exercise.

That is why the role of the Business & Sustainable Development Commission is so important. The Business Commission will quantify the enormous rewards to business that take a lead in sustainable development in all major sectors. This will help drive action at scale and speed by business, accelerating the contribution the private sector can bring to a more equitable, sustainable and inclusive world.

This is a time, like no other in history, when business needs to show the courage to adopt strategies that create long-term value for their companies and for the societies they serve. This is the time to create a brighter future for all.

This blog piece was originally written for the Business & Sustainable Development Commission website, published on 29th June 2016.

Paul Polman is CEO of Unilever and Chairman of the World Business Council for Sustainable Development. You can follow Paul on Twitter @PaulPolman and on LinkedIn.

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