Special Report on Shared Value: Private Sector Strategies Advancing the Sustainable Development Goals

The Sustainable Development Goals are an ambitious, bold, truly transformative set of goals that aspire to make the world a better place for all by combating poverty, hunger, illness, as well as social and environmental challenges.  Achieving the SDGs will require an unprecedented level of commitment by all stakeholders—governments, international organizations, private sector and academia—aimed at finding new sustainable solutions for a flourishing, abundant world. The Global Action Forum, co-hosted annually by the Diplomatic Courier, Global Action Platform, and the International Development Law Organization, explored how the private sector is contributing to the 2030 Agenda through shared value strategies. At the Forum, the participants presented on how the SDGs and international business goals align and how leading companies are using Shared Value to create scalable and sustainable SDG solutions. MEETING PARTICIPANTS

• Ana C. Rold, CEO and Founder, Diplomatic Courier Magazine
• Scott Massey, Chairman and CEO, Global Action Platform
• Judit Arenas, Director, External Relations, International Development Law Organization
• Myron Brilliant, Executive Vice President, US Chamber of Commerce
• Justin Bakule, President, Shared Value Initiative
• Trevor Davies, Global Head, Center for Excellence for International Development Assistance Services, KPMG
• Katherine Pickus, Vice President, Abbott Fund
• Mehmood Khan, Chief Scientific Officer, Pepsi Co.
• Moderator: Fareed Zakaria, Host, Fareed Zakaria GPS

THE SITUATION We are living in paradoxical times. Today, unparalleled advances in technology, society, and science are driving extraordinary change across the globe, spurring unprecedented amounts of prosperity and knowledge both at the individual and national level. Conversely, the modern world is also facing some of the biggest global challenges, including worldwide poverty, health crises, food shortages, and mass unemployment, all of which continue to worsen as the global population burgeons to an expected 9 billion by 2050. With the implementation of the United Nations’ Sustainable Development Goals, a roadmap to guide the creation of long-term solutions to end poverty and ensure peace and prosperity for every individual is currently underway. However, without the collaboration of actors from every sector—including the private and public sectors, governments, educational institutions, NGOs and communities from around the globe—the challenges we face today will continue to outgrow our ability to solve them. While the global challenges we face in today’s society may appear insurmountable, through partnerships, sustainable, long-term solutions can be created and the Sustainable Development Goals can be achieved. In order to create truly effective partnerships, however, the private sector must be allowed more involvement in the global conversation surrounding the SDGs, and tools such as shared value must be incorporated in order to create the most effective long-term, sustainable solutions possible. KEY QUESTIONS

1. What is the role of the private sector in the Sustainable Development Goals? How can it best contribute?
2. What are the issues driving the private sector? What are the challenges facing the private sector?
3. How do companies innovate in a way that secures their supply while also creating value?
4. How can we focus investments to best shape the future of these issues?
5. How can the private sector best help those at the bottom of the pyramid lift themselves up?
6. How can businesses convince consumers about their role in the SDGs?
7. How can businesses create the right narrative?

CHALLENGES   While the private sector is arguably one of the most important actors needed to solve the challenges outlined by the SDGs, this sector currently faces many challenges that prevent its more meaningful involvement. For example, the private sector has been swept up in an eroding lack of trust on the part of consumers for decades, with some consumers viewing business as a creator of social problems rather than a potential problem solver. While many companies are beginning to take much more prominent roles in actively solving social problems, the hesitancy from consumers to embrace the private sector as an actor for social good has slowed down the private sector’s ability to tackle many of these issues. Therefore, it is essential for the private sector to start demonstrating to the general public that they are more than just in the business of making money and begin investing in socially conscious practices, such as shared value and CSR. Additionally, there are several other pressing challenges businesses currently face when it comes to their ability to engage in the social and environmental problems outlined in the SDGs, such as: Governance. Currently, economies at scale are often outweighed by the cost of governance and management. Consequently, it is important to remember that if the private sector is going to contribute more substantially to the SDGs, we have to recognize that market forces will inevitably play a huge role, including management costs. Competitive Pressures. The SDGs require substantial private investment, but investing in and improving a company’s impact on the environment and society only has a competitive advantage if valued by the customer and shareholders. Otherwise, the lowest bidder will win and bad practices will chase out good practices. Resource Constraints. The SDGs will also require responsible use of natural resources, meaning private companies will have to increase their operational efficiency in realms such as water, energy, scarcity, talent shortages, and natural disasters. Labor Constraints. Currently, access to qualified talent is one of the biggest challenges across all industries. Conversely, the pool of unemployable workers remains too large, leading to general social unrest. In addition to these two issues, automation is changing the nature of the workforce, leading to an unpredictable future. Social Functions. In today’s world, multinational companies are expected to put pressure on their supplier to be more efficient, green, socially responsible, non-corrupt, connected, cyber secure and gender progressive while maintaining flexibility, innovation, and financial resilience. This avalanche of demands often leaves smaller and younger companies that do not have government patronage and other funding excluded from the conversation. Integrity Challenges. Global expansion is increasingly putting businesses in close contact with markets and players who do not operate based on the same norms of integrity, such as law, cultural norms, and religious references. Therefore, businesses cannot insulate themselves from the markets they operate in, nor can they fully export their own norms and consequently, integrity becomes a challenge. Obviously, not all private sector industries are faced with the same challenges. In the food and beverage industry, for example, resource constraints and issues with large environmental footprints are inevitable. While steps have been taken to reduce the physical footprints companies often leave, one of the biggest challenges the food and beverage industry faces is the inconsistent regulatory structures found both within countries and across borders. In the United States, for example, the FDA and EPA have different definitions of clean water; similarly, US agricultural policy and food policy are almost reciprocal opposites. It is important, therefore, for policies to align better to help the private industry solve issues related to the environment and scarcity and reduce their physical footprint as best as possible. Similarly, in order to restore confidence in the private industry on behalf of the consumers, more focus needs to be put on consumers in an effort to address their needs. Therefore, data regarding the general population needs to be collected and analyzed on a massive scale—an effort that has not yet been undertaken. Only when the private sector begins to use data in a more people-centered way will public trust be restored. Ultimately, whether it is due to lack of information or lack of access, a majority of the public is not engaged in any conversations surrounding the SDGs. In the United States, for example, over 60 million people—one fifth of the population—is living on food stamps or subsidized food, and do not shop at organic stores, consume non-GMO foods, or have the ability to be involved in or solve related environmental issues. Additionally, by 2050, it is estimated that 7 of the 9 billion people around the world will be living in cities. It is crucial, therefore, to invite more people from specific populations—such as those living in poverty and those dwelling in cities—to discussions surrounding the SDGs in order to find real solutions for the very real problems of poverty, food shortage and urbanization that will inevitably affect the vast majority of people. OPPORTUNITIES Despite the challenges that face the SDGs and the private sector, there are many solutions underway to solve some of the world’s most pressing issues. Since the creation of the Global Action Platform, for example, over 400 leaders in prosperity, food, and health have convened to discuss the biggest issues facing the globe today. Through these dialogues, the Diplomatic Courier has recorded several key insights and opportunities in the realm of food, health, and prosperity: Food and Agriculture. First, we have found that in order to achieve a sustainable food and agriculture system, the private sector needs to bring in new models for food safety, distribution, and nutrition into their business plan. Second, in an effort to restore trust, the food science sector will need to create more effective collaborations with academics, farmers, and the public. And third, we have found that food is not just a commodity or calories for the body, but is also deeply connected to nutrition, health, tradition and wellbeing—and therefore, the business of food will need to better reconnect with the tradition of food in an effort to improve the relationship between big business, small-scale farmers, and consumers. Health and Wellness. Faced with tremendous healthcare expenses and poor health outcomes, one of the greatest challenges we face today is the move away from the traditional treatment system to a health system centered on wellness. While the traditional healthcare system has been centered on reactive disease-based treatment, there is a shift occurring with patients now having more discretionary influence on the system, and a new definition of what is considered a satisfactory patient experience has consequently been created. Despite these changes, there are still several healthcare crises occurring throughout the world such as a rapidly aging population, obesity epidemics in developed markets, and lack of access to basic healthcare in emerging markets. Prosperity. In order to eradicate poverty, regional, “glocal” economic strategies are key to creating universal prosperity that leverages the talent and assets of local knowledge, institutions, capital, and talent with international funding. Similarly, innovation and research is critical to driving the economy, but in order to do so, comprehensive collaboration platforms are needed. Lastly, it is important to note that the future of prosperity will be driven by the younger generation, and therefore impact investments and shared value will remain extremely important. Many institutions have begun to address the challenges faced by the SDGs. The International Development Law Organization, for example, is focused specifically on SDG 16—which outlines peace, justice, and strong institutions—in order to ensure justice when the rule of law is absent. Indeed, the international community cannot eradicate poverty, promote sustainability or create inclusive economies when human rights are ignored, justice and accountability systems fail and women and minorities suffer from discrimination, and businesses cannot operate effectively when there is a lack of respect for intellectual property and poor means of contract enforcement and regulatory compliance. It is therefore crucial to increase collaborations with the private sector in order to address human rights issues on multiple fronts, such as the International Development Law Organization often does. For the private sector in general, the biggest opportunity to shaping social change is the concept of shared value. Through shared value, companies can innovate current business models or create new ones in order to solve their community’s and the world’s social and environmental problems. This can be done through innovating around products and services, innovating around value chains, or investing in the competitive context or clusters around their business. Indeed, lists such as Fortune’s Change the World, are already being created to show how companies are currently using shared value to create solutions to social and environmental problems and which up-and-coming companies will be able to best innovate their business model to incorporate much-needed solutions to social and environmental problems. Even today, real companies are creating real change through shared value. Hilton, for example, has begun working with investors to develop hotels in areas that are currently undeveloped, creating large-scale opportunities in supply chains to increase employment for those who are young and unskilled in the area in an effort to specifically address SDG 1 (no poverty) and SDG 8 (decent work and economic growth). Similarly, other groups such as DG Asset Management have entered emerging markets in Myanmar in order to empower the local farmer economy through the introduction of micro credit through e-wallets and provide assistance to farmers on how to spend assets wisely and improve productivity. Similarly, institutions such as Veridium Labs are tackling environmental issues through the use of Ethereum, a currency that is backed by environmental mitigation credits in order to use the power of free markets to bring liquidity back into frozen natural capital markets and directly connect environmental mitigation credits to physical commodities. The best way for the private sector to create shared value and solve global challenges is through collaborations with other sectors. Singularity University in California, for example, is a platform designed to specifically take action against real issues by promoting a one-million-dollar prize—the X Prize—to teams composed of individuals from business, education, the government, and philanthropy whose goal is to create solutions for a specific, real-world problem. Through this competition, multiple teams can compete and create a multitude of possible solutions, creating a synergistic impact and increasing the likelihood of real change. Ultimately, companies have a host of tools—such as shared value, corporate philanthropy, CSR, and other resources such as capital and talent—to engage with society and solve the real challenges we face today. By embedding shared value practices into their core business models, the private sector can not only benefit themselves and reinstate trust from consumers, but also truly become the actors of change the world needs them to be.