Marcos Neto: Keynote Speech on Global Trends in the SDGs Business and Potentials for Public-Private Partnerships, March 14, 2017 United Nations University, Tokyo, JapanMar 14, 2017
I am delighted to be here today with you all. My thanks go to Japan Innovation Network for co-organizing this event and my colleagues at the UNDP Japan office. I would also like to welcome Panasonic and Mizuho to this event and am delighted to have you share your perspectives on today’s topic of achieving the SDGs through business innovation.
INTRODUCTION: Sustainable Development Goals
In 2015, 193 Member States adopted Agenda 2030, a historical plan for people, planet and partnerships, with its key principle of “leaving no one behind”. 17 Sustainable Development Goals (SDGs) are universal (they apply to all countries in the world), integral, and mutually re-enforcing. With SDGs, the global community is committed to end poverty and achieve equality by 2030.
We live in an era of unprecedented transformation: from the Internet of Things to the sharing economy, accelerating urbanization to shifting consumer demand, this socio-economic transformation is profoundly impacting the way we coexist. In business, disruptive innovation from the likes of Uber, Netflix and Bitcoin have upended mainstream industries, pushed companies outside of their traditional silos and accelerated the need for resilience and differentiation.
In the development context, a combination of traditional aid and market-based solutions, in many instances led by the private sector, has contributed to lifting hundreds of millions of people from extreme poverty. Access to education has greatly increased for both girls and boys; the spread of information and communications technology is helping to accelerate human progress; and scientific and technological innovation is driving areas as diverse as medicine, environmental protection, and energy.
Yet, despite improvements in most countries, inequality remains a major challenge, putting at risk much of the progress made to date. In order to deliver the truly inclusive future, we need more and faster collective action.
The SDGs have provided us with a unique, once-in-a-generation opportunity to seize on the convergence of intent across sectors that can set the world on a path of global sustainability and inclusive growth.
Business and the SDGs: Why It Matters
Why should businesses be interested in the SDGs? While the SDGs were designed for and approved by the governments, they are also a roadmap for business opportunity. There are a number of reasons for businesses to pursue social impact and engage with the SDGs. The Global Goals indicate market gaps, development needs and investment priorities for different countries. They provide vision for sustainable, long-term growth for private companies that balance the economic as well as social and environmental returns. The SDGs will also be the bedrock for future regulations and policies that inform and channel investment into priority sectors and restrict businesses that have negative social or environmental returns.
Recently, a new report, by the Business and Sustainable Commission, identified 60 specific “hot spots” opportunities for businesses to integrated SDG in core strategies and operations. These “hot spots” combine to a $12 trillion dollars of economic opportunities, and could create 380 million jobs in the developing world.
So there are good reasons why the private sector should be interested in engaging with the SDGs. Indeed, a PWC study from 2015 showed that 92% of the business community knew about the SDGs. This awareness among the private sector is high compared to the general population, as only 33% of citizens were aware of the Global Goals.
However, translating intent to concrete engagement with the SDGs could be a challenge for many businesses. The levels of private sector investment in development still remain low
We need to understand that investing in SDGs is a win-win case. It is not only for ethical or ideological reasons the private sector is aligning their visions and practices with sustainable development, it is also profitable and there is a clear business case.
Business Call To Action
Many companies have committed to inclusive business models, by developing commercially viable products and services which improve the lives of people living on under USD8 per day – that’s half of the world’s population which can benefit from scaling up such initiatives. Since 2008, over 180 companies have made pledges through the Business Call to Action (BCtA) - a global alliance hosted by UNDP. They have undertaken to produce affordable goods and services, generate more jobs, and integrate low-income producers into their value chains as suppliers. These companies are taking on the challenge of creating social impact while pursuing financial returns – and we are seeing a global trend of more and more companies shifting away from traditional approach of Corporate Social Responsibility to taking an approach that involves their core business.
We are very happy to have leading companies from Japan in the BCtA platform. Shiseido, for example, is working towards empowering and promoting women in Asia through its initiative in Bangladesh, where the company is improving hygiene, nutrition and health of 40,000 BoP women and their local communities and improve skin condition of 2,000 women by offering appropriate skincare products at affordable prices.
We also have companies like MUJI, that has established sustainable sourcing of its soapstone products from Kenya and wool felt products from Kyrgyzstan. The company provides training seminars to promote capacity development of local producers in these countries which allow MUJI to further scale its sourcing from artisan communities from these regions.
And you will hear more from our colleagues from Panasonic, another BCtA member here today, about how they are improving access to energy in Africa and Asia.
Global Good Practice: Novartis
What lessons from our members can we draw to further build successful inclusive business models that contribute to the SDGs in Japan and beyond? I want to share a story of Novartis, a Swiss multinational pharmaceutical company, on its inclusive business journey in India.
- Novartis’s BCtA initiative called Aryogya Parivar provides health education to rural populations in India, and from 2010 to 2015, the company reached more than 24 million people with its health education, and provided direct health benefits to 2.5 million patients through diagnosis and treatment. All of this social impact was achieved while simultaneously returning a profit to the company.
- Novartis began this initiative with a strong intention to operate it as a sustainable business: thus to this day, its efforts are housed within the company’s core business units where it has its expertise. From the beginning, the company’s top leadership showed their commitments, and assigned a sponsor within Novartis to take charge of designing and running this new business model
- The company selected India as the country for its launch based on the volume. There are 830 million people who live in rural India and an estimated 65% of the total populations lacks access to healthcare. This provided opportunities for both demand for Novartis’s generic medicines, and also for a great social impact.
- When designing the program, Novartis deployed a team member to live in rural villages for six months to understand how the company could expand its business to the base of the pyramid. As a result, the company understood the biggest challenge facing the country was the lack of health-seeking behavior from people living in villages, and that there was a great need for health education.
- This insight was key for Novartis to understand that it needed to raise awareness and tackle wellness before offering medicines. This concept led to the launch of Arogya Parivar, which focuses on providing health education to inform communities about health, disease prevention and the benefits of seeking timely treatment. The company provides training to end-consumers through a training of trainer model by recruiting people (mostly women) from local villages as health educators, who in turn raise awareness in their local communities. This eventually led to a change in people’s behaviors, and created demand for the company’s medicines.
- This awareness raising was further coupled with Novartis’s efforts of product innovation that made its medicines simple to use by the locals, and ensuring distribution of its products through building strong linkages with local doctors and pharmacies.
- After seeing the success of its program, the company has now replicated this initiative in Kenya, Vietnam and Indonesia.
As you can understand from this company example, Novartis’s success lies in a combination of few factors:
- First is the company’s approach of ‘beginning with the end consumers.’ By investing in understanding the local market, Novartis was able to get the critical insight on consumer needs and their unique behaviors in India.
- Second was the innovation on product and service delivery through engaging with local villagers to recruit them as the company’s health educators, and by building strong relationships with local pharmacies and doctors for distribution of its medicines.
- Third was the emphasis on scale. The company designed the initiative with scale in mind from the outset to ensure the model to grow and be replicated in other countries to ensure financial returns and social impact.
- Setting up a business around the SDGs is an important step, but it is equally critical to measure and monitor businesses’ impact to make sure companies are on the right track of delivering their intended impact. At BCtA, we provide customized impact measurement support services to a select number of our members to help them articulate and measure their social impact using mobile based surveys.
- Through our support, we advised a housing loans provider in India to help them understand more about their low income customers, which allowed them to tailor their products based on their preferences. We have also helped a health service provider in Kenya to support their business expansion strategy in the slums of Nairobi. We are also working with the largest seeds company in Indonesia to collect customer feedback and to track farmers’ income and long-term sustainability.
- We also actively engage with national governments to promote business activities that support the SDGs. Together with GRI, a leader in sustainability reporting, BCtA launched the report Measuring Impact last year that looks at the current business practices of monitoring sustainability data and provides insights into how governments can use those data to account for the private sector’s contribution to the SDGs. As part of the research, we consulted officials from 19 governments for the publication, and indeed all of them mentioned that it is essential for the private sector to be involved in the SDGs. Many of these governments have also developed or are developing formal channels of communication to work with the private sector on the SDGs. Examples include the government of Finland that has a standing committee with business members on issues related to sustainable development; and the Dutch government who has issued an SDG Charter which was signed by around 80 multinational corporations
UNDP as a partner
While we see examples like this encouraging, we also acknowledge that companies alone cannot achieve the ambitious targets set by the SDGs, nor should they alone. For the private sector to succeed and companies to be supported in pursuing sustainability, national governments must play a crucial role in creating adequate policies and incentives and an enabling environment. That is why UNDP has been working with governments on the policy arena.
- Under the G20 Turkish Presidency’s leadership, UNDP and the World Bank have led the development of “Inclusive Business Framework”, to promote government support and creation of business activities that help the poor. The Framework has been endorsed by the G20 countries, together representing 80 percent of the world economy. A new global platform has been launched by G20 to support the strengthening of national policies and the capacity of policy makers.
There is reason to be optimistic about trends in inclusive and sustainable business, but much more needs to be done. At UNDP, we are focused on providing further private sector support around 3 “Cs”: Convening, Catalyzing and Capital:
- On Convening, UNDP has in-depth expertise in policy and programme development coupled with a strong convening capacity for multi-stakeholder partnerships. The aim of convening is to raise awareness of the SDGs, highlight the role different stakeholders can play in SDG implementation to facilitate alignment around common objectives, and promote collective action. UNDP can play a role in facilitating public, civil society and private sector fora that brings the private sector as valued stakeholders to help tailor the SDGs to national, subnational and local contexts; create horizontal and vertical policy coherence; support monitoring, reporting and accountability; co-create solutions; and assess and share risk, among others. SHIP, here in Japan could become an example of this.
- On Catalyzing, the private sector needs an enabling environment for it to operate and develop. Businesses face several barriers to enter and grow certain markets in developing countries. These barriers range from insufficient market information and lack of regulatory environment to red tape and political risks. UNDP can help unlock some of these barriers and facilitate investment from the private sector. UNDP can work with governments and companies to de-risk private sector investments in priority SDG sectors through policy instruments which reduce risk by removing the underlying barriers that create political, regulatory, social and environmental risks and can be implemented in parallel with financial de-risking instruments (e.g., guarantees) offered by multilateral or national development banks.
- On Capital, we will take action to tackle the challenge of identifying and realizing opportunities for investments that generate social, environmental and economic returns, including through new financial vehicles and incentives to drive a financing shift towards the Global Goals. UNDP will help align private capital with the SDGs by leveraging ODA through blended finance instruments and the de-risking of SDG-related investments.
What is development? It is a manifestation of hope. We all aim to have a better life, better education, better health and to enjoy the wonders of this planet. In so far as the SDGs are the global development agenda, they are a concrete manifestation of the hope we can offer to each other. The hope that every person can live in peace, security, and have the basic human rights. Every country has work to do in order to achieve the SDGs. Every business has a part to play.
 Uncharted Waters: “Inclusive Business in Practice” p.49-50, BCtA/Deloitte/UNDP
 This is in line with Mainstreaming the 2030 Agenda for Sustainable Development Interim Reference Guide to UN Country Teams.