Pathway 2: Break down barries, energise postive drivers

In 2030, corporate sustainability will come of age, permeating all levels of commerce. Effective corporate actions and performance are rewarded by fiscal and other incentives. The corporate operating environment has shifted towards penalising unsustainable business behaviour. Policy makers, regulators, investors and educators have adopted consistent and complementary positions on sustainability.

To achieve the vision of a sustainable and inclusive global economy, actors and
conditions in the corporate operating environment need to facilitate the dismantling
of old practices and the building of new by sending the right signals,
and by pooling competences and resources towards the right priorities. Strong
directional impetus is needed to close the gap between where we are today, and
where we need to be. Regulatory bodies, investors, educational institutions, civil
society and the UN should work with common purpose to legitimise, incentivise
and catalyse a systemic shift in the economy.


The 4 enablers in this pathway are:

  1. Better governance: Aligning regulation with sustainability priorities
  2. Add value to society: Mobilising capital to enable the transition
  3. Transformative collaboration: Scaling up new practices to achieve impact
  4. Awaken the consumer: Catalysing consumer action in partnership with
    business

ENABLER 1: BETTER GOVERNANCE:
ALIGNING REGULATION WITH SUSTAINABILITY PRIORITIES

For the transition towards a sustainable and inclusive economy to take hold,
sustainability must be adopted as a priority across all levels of governance. Any
policy, framework agreement, mandate, law, regulation or incentive that acts
against this priority needs to be amended. Smart and well-designed regulatory
frameworks must respond to immediate social and planetary needs whilst at
the same time lay the ground for long-term prosperity. The post-2015 agenda
requires: widespread adoption of the UN Sustainable Development Goals; a
strong global climate agreement from the COP 21 (Conference of the Parties
to the UNFCCC) negotiations; a new governance mechanism for global water,
food and energy supplies and regulation to protect our global commons such as
our air, oceans and fish stocks.


RECOMMENDATIONS

  1. Adopt new measures for growth and prosperity – Beyond GDP –that include
    social and environmental ‘capitals’ in national accounts.
  2. Create confidence and incentivise transformation by: setting sustainability
    targets, ensuring predictability and stability in policy frameworks, scaling
    up innovation incentives, introducing carbon pricing and ending harmful
    subsidies.
  3. Make information about public procurement public.
  4. Take robust steps to stamp out tax evasion. Crack down on tax havens, close
    tax loop-holes, require companies to provide transparent county-by-country
    accounts, enforce equitable tax laws to ensure that tax benefits society.
    5. Education policy should embed systems theory, environmental science,
    human rights and ethical conduct in all curricula.
  5. Conduct multi-stakeholder consultation to develop National Plans to deliver
    Sustainable Development Goals. Use these as a unique opportunity for business to influence and interact with policy and science.
  6. Urgently address governance gaps related to critical planetary boundaries
    and social deficits that threaten to destabilise and disrupt the planet and
    global society.


RECOMMENDATIONS FOR THE GLOBAL COMPACT

  1. Voice the voice of business: Mobilise leading companies to speak out on
    issues where there are regulatory gaps and call for better governance. Bring
    leading companies to the table in important international negotiations.
  2. Responsible lobbying: Develop guides for responsible lobbying and policy
    engagement in areas where governance gaps remain, in collaboration with
    leading companies and stakeholders.
  3. Public-private dialogue: Convene smaller leadership dialogues between public
    officials, leading companies and relevant trade and industry associations on
    critical sustainability issues (high-risk, high-impact approach), in collaboration with Local Networks where relevant (including on a new measure of growth beyond GDP).
  4. Guide for governments: In close collaboration with the Friends of the Global
    Compact government group, develop a guide to implement the Global
    Compact in government institutions, including public procurement to foster
    responsibility, accountability and sustainability in the public domain.
  5. Foster a new attitude on tax payment: Propose new aspirational principles
    promoting the fair payment of taxes in every jurisdiction to discredit tax
    avoidance and secretive tax strategies.
  6. Engagement at the national level: Mobilise Local Networks to use the new requirement to write National Plans to deliver on the Sustainable Development
    Goals as a unique opportunity for responsible business engagement with
    public policy.
  7. Innovation platforms: Support platforms addressing opportunities and barriers
    to leapfrog old solutions in emerging economies, to make new innovative
    models possible.

ENABLER 2: MOBILISING CAPITAL TO ENABLE THE TRANSITION

Finance has to catch up. Most capital today is invested in companies based on
short-term profit maximization with no consideration for non-financial risks
that may impact value in the longer term. The result is that financial markets
encourage unsustainable company behaviour. While an increasing volume of
assets are managed according to ESG criteria, there is a growing gap between
commitments, such as to the Principles for Responsible Investment, and proper
integration into analysis and investment decisions. At the same time, investments
in new, green, circular, sharing businesses and technologies have never
looked as attractive on a risk reward basis, and it is in the self-interest of capital
owners to allocate money towards sustainable investment.


RECOMMENDATIONS

  1. Mainstream the adoption of the Principles for Responsible Investment
  2. Future-proof investment decisions by integrating ESG risks into mainstream
    investment analysis and decision-making.
  3. Asset owners should actively engage with companies to further stewardship
    and responsible ownership.
  4. Require transparency and disclosure of corporate performance across a
    broader range of capitals. Contribute to development of standards for disclosure of material ESG issues by sector in order to create best-in-class reference.
  5. Incentivise corporate management based on long-term rather than shortterm
    objectives.
  6. Develop and encourage the use of financial instruments that advance sustainable business practices and positive sustainability outcomes, such as access to capital through green bonds.
  7. Develop a binding code of ethics for the financial sector.
  8. Transform financial education to train future financial analysts in sustainable
    investment practices.


RECOMMENDATIONS FOR THE GLOBAL COMPACT

  1. Foster commitment: Continue to advocate the Principles for Responsible
    Investment.
  2. From talk to walk: Work with the PRI to convene regular investor-company
    dialogues and collaboration to enhance skills and capabilities on critical sustainability issues (e.g. operating in conflict zones), to translate the language of sustainability into the language of finance.
  3. Standardisation: Contribute to initiatives and involve leading participants to
    develop standardised metrics for disclosure of sustainability performance by
    sector.
  4. The power of clients: Mobilise leading companies to influence their owners to
    move away from short-term perspectives to longer-term valuations.
  5. Engage regulators: Encourage work by national securities regulators to force
    detailed disclosure of ESG risks by all companies.

ENABLER 3: TRANSFORMATIVE COLLABORATION:
SCALING UP NEW PRACTICES TO ACHIEVE IMPACT

We live in an era of interconnected trans-border problems too large and complex
for any one actor or sector to solve alone. Embracing complexity means
recognising the need for cross-sector collaboration. Operating in silos has
proven costly and failed to adequately address challenges; however, realising
synergies from collaboration has been difficult. Aligning objectives, pooling
resources, knowledge, competence and insights from a range of stakeholders
– private and public – can deliver new solutions, bring new approaches and
opportunities into light and scale efforts to transform existing structures and
practices. However, for collaboration to work and be more effective, there is a
need for better collaboration models to be developed.


RECOMMENDATIONS

  1. Use and align the Sustainable Development Goals and the Global Compact
    principles as the basis of a common language of sustainability and sustainable
    business.
  2. Foster a culture of collaboration and inclusivity, recognising diversity but
    corralling opinion around common values.
  3. Actively engage in multi-stakeholder initiatives around critical issues where
    the organisation has expertise, impact or influence.
  4. Rebalance power bases by building capacity amongst the disenfranshised and
    empowering transition economies to make sustainable choices.


RECOMMENDATIONS FOR THE GLOBAL COMPACT

  1. Convene collaboration: Continue to act as a convener and facilitator of collaboration related to critical sustainability issues (but allow others to support at a more operational level).
  2. Transformative solutions: Use the convening power to bring in the ‘radicals’
    for dialogues on new, ground-breaking innovations and solutions. Facilitate
    conversation between ‘new’ businesses and the ‘old’ to share learning and
    enable transfer of information to smooth the transition.
  3. Assess impact: Improve and disseminate models and tools to improve the value and impact of partnerships, and call on companies and other stakeholders to use tools when designing, managing and reporting on partnership impact.
  4. Share practices: Collect and share good-news stories of the impacts partnerships are having on the ground.
  5. Foster transformative partnerships: To raise standards related to critical issues,
    form collective action groups of leaders to lead the way. Convene the 8-10
    biggest businesses in any sector and match with the 4-5 most relevant governments to agree on collective targets.

ENABLER 4: AWAKEN THE CONSUMER: CATALYSING
CONSUMER ACTION IN PARTNERSHIP WITH BUSINESS

The digital revolution is fundamentally changing access to information.
Whilst we still cannot assume everyone has access to telecommunications and
uncensored information, increasingly we are a global community with shared
resources and Generation Next will become digital natives. The challenge now
is how far we trust information, how reliable it is and how it can push consumer
intention into action. To change consumer habits and decisions, global citizens
can be aided and stimulated to assume greater personal responsibility for their
lifestyles and choices. This will enable them to hold business to account for their
offerings, which in turn will help business see the value in delivering sustainable
products and services.


RECOMMENDATIONS

  1. Strengthen laws and legal recourse for misleading advertising to increase
    scrutiny, and to ensure greater alignment with, sustainability objectives,
    prevent green-washing and recognise best practices.
  2. Enforce guidelines for product communication by supporting the expansion,
    standardisation and accessibility of product transparency disclosures to
    strengthen the ability of consumers to evaluate products and take action.
  3. Push the valuation and measurement of non-financial capitals and impacts
    allowing consumers to compare the sustainability performance – real cost
    and real value - of products and companies; and for sustainability to become
    a competitive advantage with increased transparency.
  4. Support consumer engagement and behavioural change campaigns.


RECOMMENDATIONS FOR THE GLOBAL COMPACT

This may be a less obvious area for the Global Compact to lead and place full
efforts, primarily because of the multitude of existing organisations in this field
and the fact that consumer initiatives are often very local. However, some points
can be raised:

  1. Share good practices: Collect good stories of how participants are working to
    raise consumer awareness and influence demand and behaviour and drive
    the ‘sustainable’ consumer.
  2. Convene platforms to explore new models: Support dialogue and awareness of
    new business models which empower consumers to make more sustainable
    choices, where relevant together with Local Networks.
  3. Open source: Support efforts to increase transparency, create open source
    environments so that solutions can be copied, adopted and tailored to various
    audiences.
  4. Local activities: As consumer initiatives often are local, link Global Compact
    Local Networks with most prominent players on the ground and support
    their efforts.
To change consumer habits and decisions, global citizens
can be aided and stimulated to assume greater personal responsibility for their
lifestyles and choices. This will enable them to hold business to account for their
offerings, which in turn will help business see the value in delivering sustainable
products and services.