Let’s talk about impact

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By Michael Green – Chief Executive Officer, Social Progress Imperative

 

 

We live in daunting times. The Covid-19 health crisis is grabbing the headlines as the virus bounces back after some respite over the summer. We also know that its secondary effects, on our societies and our economies, could be even worse. And, having had a taste of how our world can be turned upside down by non-economic risk, we know that worse is to come if we cannot tackle climate change.

The good news is that the world has a plan to address this nexus of problems, a comprehensive plan for our planet, agreed by all the countries of the world – the United Nations’ Sustainable Development Goals (SDGs). The bad news is that the plan is not working. The Social Progress Index, a comprehensive measure of countries’ progress towards the SDGs covering 163 countries and more than 95 per cent of the world’s population, shows us that the world is way off track on the SDGs. On current trends, the SDG targets for 2030 will not be achieved until 2082. Worse, if we factor in the potential impact of Covid-19 then that date slips even further to 2092.

This is bad news for people, bad news for the planet and, of course, bad news for business. The economy will not thrive if wider society is struggling and in crisis. If anyone doubted that once, the Covid-19 crisis is proof that ‘non-economic’ risks can manifest huge impacts on the economy. Indeed, with the gift of hindsight, even a multi-billion-dollar investment in global health systems would have been a bargain if it could have stopped or slowed this pandemic. Covid-19 has also held up a mirror to the inequalities in our societies that could and should have been addressed. After Covid-19 we cannot say that we have not been warned that social and environmental risks, unmitigated, will have financial consequences that go way beyond what it would have cost to prevent them.

Much of the public debate about Covid-19, however, repeats a false dichotomy of health versus the economy, as if we need to pick one or the other. How we reopen our economies and recover from this crisis will have huge distributional and environmental implications that cannot be ignored. Business needs to be a leader, not a follower, in shaping that agenda.

So, what do we need to do to make real progress against the SDGs and mitigate these risks?

The first thing to do is to throw away the old, binary thinking that there is a global north that is doing well and a global south that is struggling. Yes, a divide remains, and rich, socially conscious Norway tops the Social Progress Index rankings. But our data also shows that the fastest improving countries are emerging markets: Nepal, Ethiopia, The Gambia and Sierra Leone are among the countries that have posted the fastest social progress in the last decade. It is also emerging countries like Ghana and Costa Rica that are doing the best job at turning GDP into social progress. Costa Rica’s GDP, for example, is only modest middle income but its social progress is higher than some EU member states.

On the other hand, the only three countries that have gone backwards on social progress in the last decade are Hungary, Brazil and the United States. The US is notable in ranking only 28th in the world on social progress, the worst of the G7, despite its high level of GDP in absolute and per capita terms.

From this perspective the world looks rather different. Huge financing is still needed to deliver on basic services in sanitation, electricity supply, healthcare and education in developing countries if we are to hit the SDG targets. Yet, if this financing can show such positive returns in terms of human progress, as we see in those fast improvers, then economic benefits will surely flow in terms of the productive capacity of the population and reduced social and political risk. And, if those benefits flow to women and girls, the multiplier is even greater. On the other hand, rich markets where social progress is stagnating may be building up social and environmental liabilities that will be a drag on development in the future. Businesses ignore these opportunities and risks at their peril

The second way to understand the SDG challenge is to look at the issues and sectors where we are struggling. One area is obvious: the environment. Social Progress Index data shows that the world has made no net progress on protecting the environment over the last decade. We cannot go on like this. There is, at least, more lip service being paid to this issue these days but not yet enough sustained action, even though the risks of inaction are so clear.

Social Progress Index data points to another area of risk, however, that is less discussed and where the trends are even more worrying. In terms of personal rights and inclusiveness, the world has not just stagnated but has actually gone backwards over the last decade. The problem affects countries across the income spectrum. Should business be worried about this? Yes, for a number of reasons. Lack of rights means lack of rule of law, which is bad for business. Countries that don’t respect rights are, despite some faddish affection for authoritarian capitalism by some commentators, also less resilient. One of the striking findings of Social Progress Index analysis is that, once you control for GDP per capita, countries that are more open and inclusive seem to have managed the Covid-19 crisis better. And countries that are more inclusive are, by definition, doing a better job at maximising the potential of the whole population, which has clear benefits to the economy.

If businesses are going to support the sustainable development agenda more effectively, they need to resist the temptation of ‘SDG a la carte’. It is a temptation to which it is all too easy to succumb. Only the UN would try to inspire the world with 17 different goals and 169 separate targets. Can you really blame people for trying to cut through the complexity by picking a couple of the goals with PR potential on which to focus? But this misses the point that long-term success is only achievable if it is sustainable and inclusive – businesses cannot abdicate responsibility to the SDGs as a comprehensive programme. It is the whole package that matters.

A narrow approach to the SDGs also undersells the contributions that businesses make to the SDGs. Some businesses, by providing services like food, energy or telecoms are directly delivering on specific SDGs. But all businesses also contribute to the sustainable development agenda by adhering to and supporting the rule of law; by hiring, promoting and procuring without discrimination; and, by paying a fair share of taxes to support essential public services. These may seem obvious, perhaps boring, but they are a way that all businesses can make a direct contribution and lead.

We might be in a better place if businesses stopped thinking and talking about the SDGs as a moral agenda. Plain, simple, enlightened self-interest, recognising that sustainable and inclusive development is good risk management, might drive more serious and systematic engagement with this agenda.

 

About The Author:

Michael Green is Chief Executive Officer of the Social Progress Imperative. An economist by training, he is co-author (with Matthew Bishop) of Philanthrocapitalism: How Giving Can Save the World and The Road from Ruin: A New Capitalism for a Big Society. His TED Talks have been viewed more than four million times, and his 2014 Talk was chosen by the TED organization as one of the ‘most powerful ideas’ of 2014.