Pathway 1: Sustainability is the 'business of business'

In a sustainable and inclusive global economy, business is principled and all externalities are being taken into account. Valuation considers a broad range of social, environmental and economic ‘capitals’. Resources are produced, consumed and returned into a recycling, circular economy. Governance interests are stakeholder inclusive; business is transparent and aims for a zero or positive footprint.

Sustainability is fully embedded in core business practices globally. This means
aligning the corporate vision and strategy with sustainability objectives and
setting business targets that drive broader values. Leading companies treat
sustainability both as a shared responsibility as well as an opportunity, accompanied
by proactive strategies that drive transformation through market-changing
ideas and products and by investing in technological innovation and new
business models.

The 3 enablers in this pathway:

  1. Mobilising the majority: Getting all companies on board
  2. A new motive: Adapting corporate visions and objectives
  3. Reboot corporate sustainability: Making sustainability a part of daily
    business

ENABLER 1: MOBILISE THE MAJORITY: GETTING ALL COMPANIES ON BOARD

Despite great progress, the vast majority of the world’s companies have not
started the journey towards sustainability. At present, Global Compact signatories
total 8500 companies. 25 per cent of the Fortune Global 500 participate and
two per cent of publicly listed companies. Of course, sustainability can be pursued
outside of the Global Compact. However, Global Compact participation is
a good proxy for the spread of sustainable business practices.
Most companies still need to be convinced that sustainability is not about
philanthropy and public relations, but simply about doing better business. The
greatest challenge in the next 15 years will be to penetrate all markets and sectors
and to mobilise the majority of companies.


RECOMMENDATIONS

  1.  Boards and chief executives should urgently plan their businesses transition
    towards a sustainable and inclusive mode of business. This means committing
    to the Global Compact.
  2. Large companies should encourage suppliers to join the Global Compact as
    the best way to drive uptake amongst smaller companies.
  3. Trade and industry associations should encourage their members to join the
    Global Compact.
  4. Governments should urge state-owned companies to commit to the Global
    Compact principles and make state-owned enterprises leaders in sustainability.


RECOMMENDATIONS FOR THE GLOBAL COMPACT

  1. Targeted recruiting: Develop a differentiated recruitment strategy, in collaboration with Local Networks, focusing on the “right” companies in terms of critical or high-risk planetary, social and governance issues and high-impact industries.
  2. Mobilise value chains: Call on large signatories to encourage participation of
    small and medium-sized enterprises throughout their value chains.
  3. Create a buzz: Launch a coordinated global mass-marketing campaign to
    promote sustainable business and to encourage partners and peers to sign on
    to the Global Compact (e.g. using corporate twitter accounts).
  4. Build local capacity: Strengthen the capacity of Local Networks to recruit,
    to reach out to local companies, and to drive change at a scale and speed
    through a joint campaign approach.
  5. CEO-to-CEO: Convene dialogues between leading top executives participating in the Global Compact and executives from companies that are not yet convinced of the sustainability agenda.

ENABLER 2: A NEW MOTIVE: ADAPTING CORPORATE VISIONS AND OBJECTIVES

The global economy cannot be based on business that builds on high material
consumption and impacts negatively on natural capital and societal health.
This is dawning on leaders in most sectors. Social deficits and environmental
constraints generate economic costs, reduce business productivity and hamper
competitiveness. A new generation of entrepreneurs see social and environmental
issues for what they really are: business opportunities to satisfy unmet
needs and address the challenges of the 21st century. Business is re-inventing
itself to produce shared value while optimising results for shareholders.


RECOMMENDATIONS

  1. Align corporate vision and strategy with the ten Global Compact principles,
    the Sustainable Development Goals (see box on page 23) and other relevant
    UN declarations.
  2. Map the synergy between business purposes and objectives and the Sustainable Development Goals. Assess how your company contributes to the
    Goals and respond in your strategy with goals aligned with science (e.g. the
    Planetary Boundaries framework).
  3. Understand organisational performance and value in terms of inputs from,
    and impacts on, a wider range of environmental and social ‘capitals’ in addition to financial.
  4. Formalise oversight and responsibility for performance with boards and top
    executives.
  5. Work proactively and swiftly to ensure a smooth transition from the old to
    the new practices, technologies and resource uses, and support and scale
    radical new business models.


RECOMMENDATIONS FOR THE GLOBAL COMPACT

  1. Invigorate motives: Inspire thinking about the broader purpose of business
    that meets the needs of the 21st century.
  2. Act as a bridge: Connect scientific research and business to align and translate
    scientific goals into practical business activities.
  3. Broaden the scope: Equip participants with knowledge and practice on the
    integration of non-financial capital and impacts in company decision-making
    and performance e.g. by liaising with the Natural Capital Coalition.
  4. Inspire leadership: Strengthen the focus of LEAD to explore and spread more
    radical business models of the future. Showcase innovative solutions and best
    practices.
  5. Mentor old with new: Use the convening power of the Global Compact to
    drive engagement between existing corporate giants, enabling institutions
    and new players to rapidly scale and deliver opportunities for growth.

ENABLER 3: REBOOT CORPORATE SUSTAINABILITY:
MAKING SUSTAINABILITY A PART OF DAILY BUSINESS

The urgency to ‘future proof ’ business against sustainability risks - pressures on
people, natural resources and profitability - is mounting. The objective must be
zero or positive footprint through systematic integration of the Ten Principles
and the Sustainable Development Goals into core business decisions, processes,
activities and culture. The flipside is opportunity. Evaluating current performance
through a more sophisticated, next generation-oriented, sustainability lens is a good starting point. Use this knowledge to drive operational efficiency, solutions and innovation. Organisations which are already doing this will have a distinct advantage.


“The purpose of the economy is not producing GDP,
it is increasing the welfare of citizens, and it is
increasing the welfare of most citizens”

JOSEPH STIEGLITZ

RECOMMENDATIONS

  1.  Embed oversight and accountability for sustainability performance within
    the highest governance body (i.e. the Board). Assign clear responsibility to all
    core business functions.
  2. Assess sustainability footprint across the entire value chain, determine material issues and factor them in when measuring and accounting for business performance and product cost.
  3. Systematically embed sustainability into goal setting, management systems
    and day-to-day operations. Monitor performance using agreed metrics and
    indicators.
  4. Develop transparent and integrated performance reporting.
  5. Lobby responsibly to ensure that public policy, marketing and  communications are aligned with sustainability priorities.
  6. Engage with Global Compact issue initiatives and principles relating to
    challenging issues such as water availability, gender equality, human rights,
    business ethics and biodiversity.


RECOMMENDATIONS FOR THE GLOBAL COMPACT

  1. Prioritize BIG issues: Match high-impact players with high-risk issues, geographical hotspots or countries, on critical planetary, social and governance issues to have the greatest impact.
  2. Support integration: Raise awareness of practical tools and guidance on how
    to embed the Global Compact objectives into business strategies and operations.
  3. From generic to specific: Stronger focus on sector and value chain specific
    information through targeted peer-to-peer learning, convening events and
    disseminating best practice.
  4. Race to the top: Re-energise and reward leadership. Expand engagement with
    leading companies.
  5. Improve reporting: Refresh the accountability model by strengthening the
    searchability of the Communication on Progress reports to facilitate use
    among stakeholders. Support development of standardised and sector-specific
    reporting metrics, and bring in investors and other stakeholders to the
    discussion.
  6. Strengthen local: Significantly build the capacity of Local Networks to realise
    their full potential, by providing the ‘basics’ for success: a common brand,
    empowered leadership, strengthened governance requirements, stable funding
    and improved communication.


Despite great progress, the vast majority of the world’s companies have not started the journey towards sustainability. At present, Global Compact signatories total 8500 companies. 25 % of the Fortune Global 500 participate and 2 % of publicly listed companies.