Kathleen Enright writes about corporate accountability towards the SDGs, based on observations from the WEF annual meeting in Davos. What are the components of corporate accountability and how can companies strengthen their mechanisms to support implementation of the 2030 agenda?
- The economic discussions at the World Economic Forum’s main Congress were shockingly far removed from the need to address the climate crisis. The only way forward is a different type of growth that values nature, creates equality, and is built on circular and regenerative principles.
- The article suggests an embryonic transformation blueprint emerging from the WEF that offers reasons to be optimistic, including valuing biodiversity and nature, redirecting philanthropic giving towards enabling corporate progress against the SDGs, and powerful partnerships that deliver business resilience.
- To achieve progress towards the SDGs, we need a new model of leadership that puts long-term corporate survival above short-term financial gain and the planet’s priorities before those of shareholders. Leaders who are willing to take on traditional business silos are needed to create the holistic approach required to succeed.
Many will know that there isn’t one Davos, but many versions happening in parallel. Beyond Congress Davos, where political leaders convene, is peripheral Davos where the SDG skis are planted and the climate and business conversations take place.
In this fringe Davos, the vision of the future that was being shaped in the main Congress was one of realism at best and dystopian at worst – a world where people get poorer not richer, robots create mass unemployment and an addiction to fossil fuels leads to the inevitable extinction of the planet.
It felt shocking just how far removed the global economic discussions were from the need to address the climate crisis. The target of limiting the Earth’s average temperature to 1.5C above pre-industrial levels is slipping from our grasp and, having pushed the planet to the brink of catastrophe, far too little is still being done to pull it back from the edge. We must break the mindset that 1.5 degrees is a political target and accept that it is a physical limit. The only way forward then is built on a different type of growth – one that values nature, one that creates equality and one that is built on circular and regenerative principles. It can’t be the linear pursuit of profit of our current trajectory.
Given the amount of airspace the need to put planet before profit receives, the number of frameworks for doing better business we’ve created and the ESG policies being published by global corporations, shouldn’t we be doing better? The Sustainability Development Goals are right there, laying out a roadmap to a better future – and ultimately setting the goal post to be reached in order to stay in business. We’re well past the ‘nice to have’ – ambitious sustainability strategies are the only way that businesses will deliver on their growth ambitions.
Reasons to be (almost) cheerful
Despite the many disparate sessions at the forum, we did see an embryonic transformation blueprint emerging that offers reasons to be optimistic and will hopefully see most corporates fast moving to the ‘HOW do I do this?’ phase. The key elements of this, and what we are viewing as future catalysts for change, included:
1. Valuing biodiversity and nature as we should
The goal of “saving nature” has a greater emotional pull than “limiting climate change” and the carbon tunnel approach that struggles to deliver the necessary inspiration to action. This comes off the back of the commitments made at the UN Biodiversity Conference in Montréal, where 195 countries agreed to protect 30 percent of the planet’s land and oceans by 2030. We know the ‘what’. The challenge now is the ‘how’.
The ‘how’ will start with economic metrics for valuing nature, the development of tradeable credits and an accurate valuation of risk around the destruction of biodiversity. Lots of agreement but difficult to see where to start and who will take the first step. When this ‘alternative’ financial system emerges, it must be built on the painful lessons learned from the issues surrounding the carbon credit scheme; the limited availability of nature-based credits, long lag times between investment and sale of credits, and the proliferation of low-quality projects that fail to deliver the advertised benefits or have negative outcomes.
2. Forging a new kind of corporate philanthropy
WEF reports that $810bn was donated by philanthropic organisations in 2021, but just 2% went to projects that reduce carbon emissions. This represents a tremendous missed opportunity to leverage philanthropic giving for climate action. If a significant proportion of that money could be redirected towards enabling corporate progress against the SDGs, a new era of corporate transformation could arise.
While initially dismissive of the power of philanthropy to create real change, we left inspired by the untapped potential of corporate foundations to promote impact over revenue. This included the launch, supported by 45 philanthropic organisations, of Giving to Amplify Earth Action (GAEA) which aims to close the £3trn annual finance gap between current support for climate and environmental initiatives and that needed to meet international agreements.
3. Powerful partnerships deliver business resilience
Not enough is discussed on the topic of business adaptation and resilience. This will need adaptative business and sustainability strategies – active strategies that can respond to the fast pace of change.
Mobilising the power of different types of partnerships, between big business, government, academic institutions, entrepreneurs, and organisations on the ground, builds business resilience by increasing both foresight on the issues that are on the horizon and the ability to innovate solutions at speed and scale. The right partnerships will connect businesses into change-driving activities that link to their areas of expertise and influence. Business partnerships can draw developing nations into the net-zero economy, vital if the SDGs are to be reached. Innovators can bridge the gap between academics developing global solutions and corporations with the power to scale and normalise those solutions. If these partnerships are about promoting product then you’re missing the opportunity. Partnerships that build business resilience are the ones that are fundamentally challenging and uncomfortable – that should be the true measure of a successful partnership.
4. Updating leadership models
The conversations at Davos revealed that many CEOs still view sustainability and climate change as a risk rather than an opportunity – and even then, one that is too low on their risk list. This narrow, short-term view is restricting progress, and damping the possibility of creating true corporate accountability for the SDGs. What we need is a new model of leadership, espoused by a fresh generation of leaders who dare to think in new ways about value creation and the role of business in society. Leaders who have been raised to put long term corporate survival above short-term financial gain and the planet’s priorities before those of their shareholders. Leaders who are willing to take on traditional business silos in order to create the holistic approach that is needed to win in the face of an ecosystem challenge.
Connecting accountability to crises
While the topics addressed at Davos were too fragmented to produce concrete solutions, there was an acknowledgement that the ‘poly-crises’ facing us are all connected. Inequality, the eradication of which in its many forms underlies the SDGs, was recognised as a catalyst for the most pressing issues we need to address.
From a corporate perspective, questions arose around how to connect equity, climate change and nature’s needs within existing business structures. It was clear that only by creating new internal and external governance models can businesses unlock progress on the SDGs. But let’s not waste new governance models on old metrics – financially incentivising progress against sustainability targets only risks lowering the ambition level. A progressive mindset would dictate that calculated trial and error is rewarded in order to forge a new path forward.
Why should corporates be accountable for achieving the SDGs? Because if the goals aren’t met, if there isn’t a transformation to a safe and sustainable way of doing business, then there will be no more business to be done. We need to unite to accelerate change, both within the current economic system and in creating a new one. To stop wrangling about the details, about who is going to take the lead, to overcome the disconnect between true cost and fiscal pricing, and to be honest about the role we should, but are not yet, playing.
Forty percent of global CEOs think their organisation will no longer be economically viable in ten years’ time if it continues on its current course. That stark data point underscores a dual imperative facing 4,410 CEOs from 105 countries and territories who responded to PwC’s 26th Annual Global CEO Survey. Most of those CEOs feel it’s critically important for them to reinvent their businesses for the future.
That’s a brutal awakening. Let’s not miss the opportunity this provides to question whether in meeting your sustainability strategy you would meet your business strategy. Are you doing enough to stay in business?
About the Author
Kathleen Enright is the Global Managing Director of Salterbaxter, the creative consultancy pioneering business progress for the global agenda and Publicis Groupe’s global centre of excellence in sustainability.
- https://www.mckinsey.com/capabilities/sustainability our-insights/a-blueprint-for-scaling-voluntary-carbon-markets-to-meet-the-climate-challenge
- https://www.edie.net/davos-i vestors-and-planthropists-vow-collaboration-to-unlock-3trn-a-year-for-climate-and-nature/