‘Companies need to rethink their model for the future’
The growth paradigm is no longer the only one framework for companies. Multidimensional criteria enter the game to take into account all impacts companies create.
Nils Pedersen, the Executive Director of the UN Global Compact Network France, started his career as a consultant and then became the advisor to the Deputy Mayor of Paris in charge of culture. Afterwards, Nils worked for the EDF Corporate Foundation and then for the foundation La France s’engage. Finally, Nils joined the Global Compact in 2021 as Head of the French Local Network. For our newsletter BOTH, Nils agreed to give us some insights on how the SDGs can be used by companies.
- Today the SDGs are very present and used as a reference on impact issues in investment funds and companies. Can you remind us of the SDGs genesis, how and why they became a reference?
It is indeed important to go back to the genesis of the Goals. At first, the agenda was focusing on international development, known as the Millennium Development Goals (MDGs). The idea was to bring the South Countries towards the level of economic development of the North Countries in a benevolent, but also rather “paternalistic” approach that could not work in the long run. In 2015, the member states of the United Nations adopted a common agenda that goes beyond North/South issues by setting 17 Sustainable Development Goals (SDGs) including 169 targets and 212 sub-targets. By 2030, the signatory states, responsible for the proper implementation of the SDGs, have given themselves a path to follow for a better future while addressing issues of planet, populations, prosperity, peace and partnerships.
2. What is the UN Global Compact’s role?
The UN Global Compact is a voluntary initiative of the United Nations launched in 2000 by the Secretary-General of the United Nations at that time, Kofi Annan. At this point, the euphoria of globalization was in full swing and the purpose of the United Nations was questioned. For Kofi Annan, it was time to make companies responsible and to put them at the heart of the process, to fully involve them in the United Nations. In other words, it was a question of “giving to the global market a human face”.
The aim of the Global Compact is to translate the UN’s fundamental guiding principles into business language. Any company that joins the Global Compact agrees to apply the Ten principles based on human rights, labour, environnement and anti-corruption. Each year, the companies commit to submit a CoP, i.e. a Communication on Progress on the basis of the Ten Principles and the SDGs.
3. How do you implement a framework like the SDGs ? How can companies, and especially growing startups, concretely grasp the SDGs?
This framework is a source of positive transformation based on the principle of double materiality. In other words, it is not just about focusing on completing only one SDG and turning a blind eye to negative externalities. When responding to the SDG dedicated to inequality for instance, we must also take into consideration the consequences of our activities on marine life, even if this seems far from immediate concerns. For a company, it is essential to take into account all impacts — in the long run, margin and being able to afford a decent living is more important than growth. Above all, companies need to rethink their business model. A company can not claim to be responsible without having a clear understanding of its suppliers practices such as greenhouse gas emission or the implementation of Human rights for example. The SDGs are a compass to know how to rethink your value chain.
The French business model integrates this double materiality to a greater extent, whereas the Anglo-Saxon companies remain more hesitant to take into account elements that do not belong to their scope. The PACTE act, by placing CSR criteria at the core of corporate strategy, provides a regulatory framework that represents a step in the right direction.
4. How to make sure the SDGs are not misused? How can we go further with this framework? Can this framework also become a reference on impact measurement and serve as a basis for extra-financial reporting?
It happens that companies pick one SDG over another one, then people often talk about greenwashing, but it is not. It is more a matter of a lack of understanding and difficulties in articulating the issues of production and CSR. The right way to ensure that the SDG framework is not diverted from its objective is to measure its impact. This means measuring what we do, but also guarantee the alignment of all stakeholders on an equal vision of shared priorities. However, let’s be honest about the use of this framework by companies. As shown in the recent report of the French deputy Florence Provendier, the rate of appropriation of the SDGs in France remains low. The information shared by the Sustainable Development Solutions Network (SDSN) is clear on this point — with the Covid crisis, France went down from the 4th rank to the 7th one on health indicators included in the framework of the SDGs of the 2030 Agenda. If there is not a strong commitment, particularly from politicians and companies, we will not be able to achieve our goals. On the business side, we need to get out of posturing, explain why we are taking actions and opt for transparency. For example, if a company provides jobs, it must apply the minimum living wage in order to avoid precarious situations for its employees. Transparency must be accessible to consumers, even though the companies’ back room remains private.
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