A new breed of business for the SDGs

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Copyright: Petrut Calinescu / Panos

Speed read

  • Companies must adapt sustainable practices to avoid scrapheap
  • Technology can boost tax take in developing countries
  • But governments must draw up more robust laws for firms to comply with

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Global leaders from business, civil society and universities meet in New York, United States, today for the UN Global Compact Leaders Summit. They will debate what the organisers call the “tremendous market opportunity for businesses … to invest, innovate and collaborate to create a more sustainable future for all”.
I can’t help balking at the Sustainable Development Goals (SDGs) being pitched as a business opportunity. Free market policies and privatisation appear to have made the world less sustainable and more unequal over the past few decades. Look no further than the structural adjustment programmes of the 1980s, and consequent underinvestment in state services, for an example of this in developing countries.
These days, the role of business in achieving the SDGs is a hot topic. The phrase public-private partnership is now ubiquitous, while campaigners criticise moves by government agencies to tie aid to free market reforms. Whatever one’s take, it is clear that all businesses must be encouraged to take social and environmental sustainability more seriously.
So I was interested to hear Mark Malloch Brown, chair of the new Business and Sustainable Development Commission, make the business case for the SDGs at a Danish conference earlier this month.
Malloch Brown himself is unequivocal. “Companies that are on the front foot and understand their environment are going to be the future winners,” he told a packed summit. “The companies that crouch back … [will be] consigned for the corporate scrapheap.”
He told me he believes three kinds of companies will thrive. One kind he calls “disruptors”: tech-based businesses that are “completely changing sections of the global economy, cutting out old jobs, creating new jobs”. Another is the “radical incumbents”: older, “corporate statesmen of global business” that are nonetheless innovating and forging new partnerships. And then there are the “local insurgents”: small and medium-sized enterprises (SMEs) that quickly exploit opportunities opening up in supply chains and distribution networks.
Malloch Brown cites energy as an example of this last category. In countries where the national grid is no longer (or has never been) the main way of distributing power, SMEs are learning how to sell local, sustainable, off-grid energy.
But don’t these smaller players also let governments off the hook over service provision, I ask him? “It’s a key issue,” Malloch Brown says. “And, in some ways, the role of the state will change. It will become more of a regulator and franchiser of some sets of [private sector] services than in the past.”
The tax base of developing countries is too weak, he says. With health, for example, Malloch Brown envisages countries providing “a basic primary health package for citizens, but as treatments go up the scale of cost and complexity, you’re going to see the introduction of much more health insurance-type schemes”.

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This seems an alarmingly stripped back model of state service provision. I ask if he thinks technology can help increase tax incomes in developing countries, given it’s now easier for watchdogs to monitor money flows, and harder for corrupt officials to move money out of countries.  
“Yes, I think it will,” he says. “I think we’re entering an era of much greater transparency.” From the Volkswagen emissions dodging scandal to the Panama Papers leak, there’s now “a virtuous cycle where corporates are finding if they have bad secrets, it’s harder and harder to permanently hide them”.
“This has got to be a private sector which is long-term, patient, transparent, pays its taxes in the countries where it operates, [and] meets local labour rules,” he adds.

“We’re not talking about the glib tricks of the past. We’re talking about a private sector which earns permission to operate.”
Still, compliance is only as good as the laws it must comply with — and this is where governments need to take a more robust stance towards ensuring regulatory frameworks are fit for purpose.
Imogen Mathers is producer/assistant editor at SciDev.Net. You can reach her on @ImogenMathers and [email protected]