THE URGENCY FOR SUSTAINABILITY IN SMALL BUSINESSES

Thursday 5 July 2018, marked yet another a historical day in Kenya’s corporate sector with KCB group, a leading bank Group in East Africa hosting it suppliers on the need for embedding Sustainable Development Goals(SDGs) in their operations. SDGs, also known as the 2030 Agenda or Global Goals comprise of 17 goals which will are aimed to guide business operations, policy, and funding for the next 15 years to 2030, beginning with a historic pledge to end Poverty. Everywhere. Permanently. 

The global goals recognize that ending poverty must go hand-in-hand with strategies that build economic growth and address a range of social needs including education, health, social protection, and job opportunities while tackling climate change and environmental protection. Business leaders need to realize that business will not remain the same if the world is in turmoil and poverty levels keep on rising. This snag needs to act as a motivator for the private sector to engage with the global goals to end world sustainability challenges. The global goals also present an opportunity for the private sector because embracing sustainability has proved to be good business. The global goals will serve as a platform for the private sector to provide goods and services that will address the needs of the current generation without necessarily putting at risk the needs of the future generations.

A recent survey indicated that 92% of the CEOs globally know the existence of the global goals and only 13% are embedding them in their business strategies. In Kenya, several companies including KCB group are in the forefront in embedding the global goals into their strategies. This means that these companies will provide services that will be in line with the relevant global goals that concerns their businesses. By embracing the specific goals, companies will in a way be addressing the rest of the goals since SDGs are very interrelated.

The goals are not for big corporates only but are also relevant for SMEs as well. Using the KCB group as an example, there is the need for the group to sensitize its suppliers on the benefits of immersing SDGs into their DNA. This should be an important consideration in their supply chain management systems because when supply chains are made sustainable, businesses are likely to succeed in many ways.

The first business case driver for SDGs, in big and small companies, is mainly related to the fact that by embracing the SDGs businesses increase the value for all stakeholders as they operate from the basis of shared value. This leads to increased competitiveness, higher revenues and better risk management which all have a direct impact on the returns for the shareholders. Implementing the global goals is a costly affair in the short run and hence business managers and their shareholders need to change their mindset from short-termism to long-termism as this is a necessary condition for SDGs to remain beneficial to the private sector.

The second driver of embracing global goals is innovation, which will in turn help big and small companies to provide solutions for global challenges. Innovativeness increases the product range offering and hence results in increased revenues and subsequently better value for all the stakeholders, especially shareholders. With innovation, businesses will be able to develop the high-impact solutions for challenges faced by mankind and at the same time secure long-term business growth.

The third driver for incorporation of the SDGs is that it will provide a platform for collaboration for the future business hence generating synergies. The collaborations will be from the private sector to the private sector as well as from the private sector to the public sector through the public-private partnership. The unlocking of these synergies will result in better business opportunity as well as the relationship between different parties by way of value creation.

It is therefore very clear that the time to engage with the SDGs is now as these goals present a first mover advantage as we have seen some businesses now placing themselves at vantage points as they implement the global goals.

Lack of knowledge and skills, as well as the tools to help the business to engage with the SDGs, are the biggest bottlenecks for companies. For instance, some quarters within the business communities are seeing the SDGs as philanthropy and only reserved for the multinationals and large corporates. This attitude will make the businesses especially the SMEs to miss on the opportunities presented by the global goals.

In regard to the tools, 87% of the CEOs globally had indicated that they lack the tools that will help them engage with the SDGs. Businesses need to engage the right experts to help them develop the tools as well as implementing the strategies that embedded SDGs. For instance, there are no standard tools for mapping SDGs to business activity. What is happening is that businesses are cherry picking SDGs mainly being driven by their public relation and communication agenda and hence not reaching the intended need for the goals as well as not being able to unlock the opportunities presented by the goals. Other tools missing are those to be used for measuring impact.

The success of the SDGs heavily relies on data and there are predictions that a data revolution will be required to meet the demand. The 17 goals have 169 indicators which will require a sea of data and hence the complexity that may put off many private sector players. Defining which indicators are relevant, how current business metrics align to them and potentially developing additional ones, and working out how to measure success against them, will be a significant time outlay for business as well as investment across business operations. This will result in a need for the relevant tools that will reduce the complexity.

For a business to gain the traction that is required to help in the achievement of the Agenda 2030, the government needs to create the right enabling environment for business to do what it does best, i.e., create economic growth and opportunity. At the same time, there is a need to have the right collaborative frameworks for business, government and civil society to work productively together to meet social needs when governments cannot meet them by themselves. This collaboration is well highlighted by SDG17 which calls for partnership for the implementation of the goals.

In summary, the sustainable development goals present a huge opportunity for the private sector and management of both large and small companies who need to re-look into their strategies and come up with a way forward on fully incorporating the global goals into their businesses. The benefit of this will be long-term and hence result in happier stakeholders, including the shareholders.

https://www.edwardmungai.com/node/108