The SDGs will drive global economic growth

Over the long term, economic growth is the fundamental driver of the growth in corporate revenues and earnings, which in turn drive returns from equities and other assets. The SDGs aim to create a viable model for the future in which all economic growth is achieved without compromising our environment or placing unfair burdens on societies. Embracing the relationship with society, the environment and government creates a new strategic lens through which to view and judge business success.

Economic development often means using more resources and increasing carbon emissions: from 2000 to 2013 most countries increased both their GDP and their ecological footprints. However, there were 48 countries that managed to develop sustainably, increasing their GDP whilst also decreasing their ecological footprints.

The Business and Sustainable Development Commission (BSDC) – a collection of 36 leaders from business, finance, civil society, labour and international organisations exploring why and how business can contribute to delivering the SDGs – have outlined how incorporating the SDGs into core growth strategies, value chain operations and policy positions opens up new opportunities and big efficiency gains for companies, whilst also enhancing reputations.

The BSDC estimates that this could unlock economic opportunities worth at least US$12 trillion a year by 2030 (more than 10% of global GDP) and generate up to 380 million jobs (covering more than 10% of the forecast labour force in 2030), mostly in developing countries. But they estimate that the total economic prize from implementing the SDGs could be two to three times larger still, assuming that the benefits are captured across the whole economy and accompanied by much higher labour and resource productivity.

Further studies show great potential from focusing on social outcomes, such as gender equality. The McKinsey Global Institute estimate that achieving gender parity would add between US$12 trillion and US$28 trillion to global growth by 2025. Research from the Copenhagen Consensus identified a top set of 19 of the 169 SDG targets that will deliver more than US$15 of good for every US$1 spent benefitting people, planet and the economy.

“The Sustainable Development Goals and the 2030 Agenda are relevant to all businesses, all nations and all people. They are the foundation for us to be able to keep going in a healthy way. If all businesses understood how the SDGs truly affects them, there would be no businesses not working on them. It is important for investors to know, demand information and take into consideration the SDGs in their decision-making process.”

Sonia Favaretto, Managing Director of Media Relations, Sustainability, Communications and Social Investment, B3

The SDGs are shared institutionalised goals, coming at a time when the alignment between the financial economy and real economy has never been more vital for future development. The company contribution to the SDGs will either mitigate adverse impacts on development, or positively contribute to sustainable growth, meaning that most companies’ strategies will be aligned to these goals. Responsible investment not considering the SDGs will follow a logic that is not mainstream, so will necessarily remain niche.”

Erin Levey, Head of Research and Investor Strategy, eRevalue

The biggest opportunities from the BSDC research have been identified across four economic systems: food and agriculture; cities; energy and materials; health and wellbeing. In food and agriculture, for instance, a system in line with the SDGs would deliver nutritious, affordable food for a growing world population, generate higher incomes (particularly for the world’s 1.5 billion small-holder farmers), and help restore vital ecosystems such as the world’s oceans. This has the potential to create new economic value of more than US$2 trillion by 2030 and would be much more resilient to climate risk.

Conservative analysis shows potential for an additional US$8 trillion of value creation across the wider economy in areas such as information communication technologies, education and consumer goods, if companies embed the SDGs in their strategies. Factoring in the cost of externalities34 such as greenhouse gas emissions could increase the overall value of opportunities by almost another 40%.

Opportunities in four economic systems:
FOOD AND AGRICULTURE	ENERGY AND MATERIALS
Food waste in the value chain (US$155 billion to US$405 billion a year) Today 20%-30% of food is wasted, most of it in postharvest losses that are easy to prevent. Aligned to SDG 12 Forest ecosystem services (US$140 billion to US$365 billion a year) Deforestation and forest degradation account for 17% of global emissions (more than transport). There are major opportunities for business in sustainable forest services, such as climate change mitigation, watershed services and biodiversity conservation. Aligned to SDG 15 Low income food markets (US$155 billion to US$265 billion) Undernutrition and malnutrition are widespread in the world’s poorest populations. Business can address the challenge by investing in supply chains and food innovation to give those on very low incomes access to more nutritious food. Aligned to SDG 2	Circular models in the automotive sector (US$475 billion to US$810 billion) More efficient remanufacturing, replacement of weakest link components and refurbishment present opportunities not realised by scrapping cars. Aligned to SDG 12 Expansion of renewables (US$165 billion to US$605 billion) IRENA forecasts that renewablesf share of energy generation worldwide could increase to 45% by 2030 (from 23% in 2014) presenting opportunities for renewable energy generators and equipment manufacturers. Aligned to SDG 7 Circular models for the appliances and machinery sectors (US$305 billion to US$525 billion) Domestic appliances and industrial machinery in particular present significant remanufacturing opportunities. Aligned to SDG 12
CITIES	HEALTH AND WELL-BEING
Affordable housing (US$650 billion to US$1,080 billion) As well as construction spending to add capacity and replace inadequate housing, innovation is required to unlock new land and make better use of space for development. Aligned to SDG 11 Energy efficiency in buildings (US$555 billion to US$770 billion) Innovations such as retrofitting existing buildings with more efficient heating/cooling technologies and switching to efficient lighting/appliances could shrink energy demand. Aligned to SDG 7 and SDG 11	Risk pooling (US$350 billion to US$500 billion) Increasing the penetration of private, public-private and community insurance schemes could address disproportionately high health costs. Remote patient monitoring (US$300 billion to US$440 billion) Emerging technologies that enable remote monitoring of patients could reduce the cost of treating chronic diseases in health systems by 10%- 20% by 2025. Aligned to SDG 3 Telehealth (US$130 billion to US$320 billion) Mobile internet technologies could extend access for consultations and diagnosis to remote patients around the world. Aligned to SDG 3

“The SDGs have fundamentally changed the game. They are the closest thing the world has to a strategy”.

Dr Jake Reynolds, Cambridge Institute for Sustainability Leadership

“The SDGs offer the greatest economic opportunity of a lifetime”.

Paul Polman, CEO, Unilever

“The SDGs provide a very useful framework for how investors can contribute to the core global challenges through their investments and for the standardisation of impact investments and impact measurement.”

Marcel Jeucken, Managing Director, Responsible Investment, PGGM