According to Marga Hoek, the former CEO of Netherlands-based sustainable business platform De Groene Zaak, the term ‘corporate sustainability’ has been diluted and all but lost its original meaning. The term is often understood to refer to ‘business that does no further harm to the world’, when it really should be‘business that improves the world’. Ms Hoek advocates the use of the 17 United Nations Sustainable Development Goals (SDGs) as a blueprint for developing and investing in new business models.
What are your objections to the term ‘corporate sustainability’?
‘I have discovered in recent years that many companies regard themselves as “sustainable” because they’re engaged in efforts to minimise their impact on the world’s natural resources and social and financial capital. While this is to be commended, it is simply not enough: true corporate sustainability involves making a net positive contribution to the world through your business.
This is something that Michael E. Porter, a professor at Harvard Business School, refers to as “shared value”: value creation for both the business and society at large. Another name for this concept might be “business for good.”
We need the growth and expansion of these types of business cases more than ever, given the massive economic, environmental and social problems the world is facing right now.’
You have proposed replacing the term ‘sustainable’ with ‘SDG-driven’.Could you explain what that means exactly?
‘Seventeen years ago the United Nations defined a set of Sustainable Development Goals (SDGs) – basically theseare types of global objectives to be achieved by 2050. Although these Sustainable Development Goals were originally drafted with governments in mind, they have proved to be an excellent compass for companies in developing sustainable business models. A recent report published by PricewaterhouseCoopers, called the SDG Engagement Survey,reveals that companies across virtually all industries regard climate action as one of the five most important SDGs to act on.
I would like to see the SDGs become a guideline for all segments of the business world as well as the government and scientific communities in focusing specifically on achieving all the seventeen stated objectives. To give you a specific example: Unilever has set itself the goal of becoming not only carbon-neutral (zero carbon) by 2030, but “carbon-positive”, which is to say that they would directly generate more renewable energy than the company consumes.
In this case, you can genuinely state that a company is making a positive impact.’
But Unilever is a multinational with huge financial strength. Would this goal also be feasible for other, smaller businesses with fewer resources?
‘I firmly believe that this is not only a viable strategy for any company, but an essential one if you don’t want to risk becoming obsolete. There are really a massive number of opportunities out there. In the report The Breakthrough Forecast, researcher John Elkington and his team identified which trends presented the most potential in which industries. They defined a total of 21 “breakthrough sweet spots” – ranging from 3D printing to sustainable air-conditioning and from drinking water management to genomics – with a multi-million-dollar market potential. The financial industry has also clearly become aware that the time for action is now. One sign of this is that Achim Steiner, the former director of the United Nations Environment Programme (UNEP), declared 2016 the “Year of Green Finance.”’
Sustainable investment has increased by 60% over the past two years, with Europe accounting for two-thirds of the growth. We are also seeing a growing number of stock exchanges around the world joining the Sustainable Stock Exchanges initiative, through which they commit to a set of best practices for promoting sustainable investment. A decade ago the term “Green Bond” hadn’t even been invented, and today 42 billion dollars worth of Green Bonds have been issued. There are plans to increase the market for these bonds worldwide, including the introduction of a new set of reporting and risk management tools. Combined with the unmistakable trend towards reducing investment in fossil fuels, we clearly find ourselves on the brink of a new age.’
If I understand correctly, you’re saying that we are aware in which areas we need to take action, the financial resources are being used for the greater good, and the potential economic revenues are immense. Can you think of any negatives at all?
‘I have found that companies that define their business as a “force for good” and invest in “shared value” have no choice but to embrace change themselves.
They need a different style of leadership, an alternative set of management principles, new forms of cooperation and a fundamentally different approach to innovation. Judging by the tens of thousands of sustainable start-ups worldwide, there is no lack of revolutionary ideas offering huge market potential. What does tend to be lacking, however, is the ability to develop these ideas on a larger scale and use them for concrete products and services that have genuine value to society.
And that happens to be exactly where my new company, Business for Good, comes in. What we essentially do is match sustainable innovators with the needs of specific countries and cities, and find private investors and multinationals, sometimes in the form of corporate venture capital funds. This enables these companies to increase production over a much shorter period of time, so that they can actually make a tangible SDG impact.”
Are the tools already available to measure this tangible impact? How do companies know what they are doing?
‘It’s true that “tangible SDG impact” can be somewhat difficult to determine or quantify. At Business for Good, we are therefore using a new method to measure the value creation – that is, the “true value” – of businesses and investments.
This includes both their positive and negative impacts. If, say, a softdrink companyhas adopted sustainable business practices, this does not alter the fact that its product is loaded with sugar and makes no positive contribution to any of the SDGs set. In fact, it most likely contributes to obesity and diabetes, and therefore makes a negative impact from an SDG perspective.
So despite their impeccably sustainable production processes, this softdrink company – measured based on a number of indicators with their own impressive set of charts, tables and data – automatically falls outside the scope in a Business for Good mapping and would not be considered as a partner or a potential investment resource. I would also add that finding the right match between sustainable innovators and financiers can be a complicated business, as you’re dealing with a wide range of asset classes, each of which comes with its own governance rules and methodologies. Business for Good aims to encourage companies in those different asset classes to invest on an SDG-driven basis. We regard the SDGs as a language, and it’s vital that the financial world, too, learns to speak that language.’
For more information, please visit businessforgood.world
Dat is ook precies de bestaansreden van mijn nieuwe onderneming, Business for Good. Dat is in essentie een matchmaker die enerzijds de behoeften in landen en steden identificeert, daar duurzame innovators bij zoekt om deze vervolgens te koppelen aan private investeerders en multinationals, al dan niet in de vorm van een Corporate Venture Capital fonds. Zo kun je veel sneller schaalgrootte creëren, zodat er ook daadwerkelijk sprake is van concrete SDG-impact.”
Is er al een instrumentarium om die concrete impact te meten? Hoe weten bedrijven wat ze doen?
“Het klopt dat ‘concrete SDG-impact’ helemaal niet zo eenvoudig vast te stellen of te meten is. Binnen Business for Good werken we daarom een nieuwe methodiek uit om de waardecreatie - de ‘true value’ - van ondernemingen en beleggingen te meten. Het gaat daarbij overigens niet alleen om positieve impact, maar ook om negatieve. Zo kan een frisdrankfabrikant nog zo duurzaam produceren, een frisdrank vol met suiker draagt niet positief bij aan welke SDG dan ook, sterker, hij draagt waarschijnlijk bij aan obesitas en diabetes en levert dus een ‘min’ op in SDG-termen.
Dus ondanks een reuze duurzaam proces, gemeten in tal van indicatoren met indrukwekkende charts en tabellen en cijfers, valt deze frisdrankfabrikant bij een Business for Good-mapping direct buiten de scope en komt niet in aanmerking om mee te werken of om in te beleggen. Daarnaast blijkt maken van de juiste match tussen duurzame innovators enerzijds en financiers anderzijds een vak apart. Je hebt te maken met allerlei verschillende asset classes met elk hun eigen governance en methodieken. Wat we vanuit Business for Good proberen te doen is om partijen binnen die verschillende asset classes aan te jagen om SDG-gestuurd te gaan investeren. We zien de SDG’s als een taal en het is heel belangrijk dat ook de financiële wereld die taal leert spreken.”
Meer informatie op: businessforgood.world
