What if the Global Goals are the new ace up your sleeve? Reflections on the synergy of business and sustainability

International business expert Tom Ruddy shares insights of his work, as part of the Sweden-funded SDG Accelerator Program, run by UNDP Moldova.

What connects you with Moldova and what have you personally learnt from your experience here?

I am American and my ex-wife is Moldovan. Our child visits grandparents here often, so Moldova is close to my heart in more ways than I can tell :)

I previously undertook professional assignments in Moldova for USAID, the European Commission and now - the UNDP/SDG Innovation Accelerator for Moldovan small and medium enterprises (SMEs).

What I admire most about Moldova is that although it has been through a lot since independence, the bond its citizens have remains strong, even “through the thick and through the thin times”.

You have been leading a group of companies to innovate their business models. Can you tell us more about this program?

It is a rare opportunity to work with successful entrepreneurs to undertake the fascinating journey of creating a new innovative product or service. Most of my career work has been with start-ups, but in Moldova I work with small and medium-sized enterprises (SMEs) because the country has been selected to pilot a business engineering process that has the UN’s Sustainable Development Goals (SDGs) at its core.

We are testing out new approaches to product and service design around the globally adopted SDGs as opposed to incorporate SDGs into existing products and services. With the pilot group of five screened companies we undergo a rigorous brain storming on various ideas in the first phase meetings, then the selected idea is subjected to an almost brutal dissection in a 1.5 day Business Modelling session. UNDP experts and the company management essentially deconstruct the idea and build it back up to ensure it’s solid and that it addresses specific SDG targets. Usually, during this session, we manage to integrate more SDG targets than originally conceived in the first brainstorm. During the next step, the companies will develop a full financial an implementation model using the established Business Case Canvas.

What is a sustainable business model?

Simply put, a sustainable business model is a profitable business model whether it is a non-profit of a profit-based enterprise since even non-profits must have recurring revenues to support fixed costs. A break-even scenario is one where you can pay your fixed expenses to keep operations going. In order to be sustainable however, one must reach above break-even to support new revenues streams through new product development and customer adoption, also market awareness.

These days, when consumers and customers are increasingly aware of and interested in supporting the SDGs and global sustainability, companies that meet those interests are by definition in a better position to achieve and maintain sustainability, since they can rely on sales resulting from satisfied buyers. That is why the UNDP SDG Innovation Accelerator is focused specifically on profitable new product/service development which requires very close engagement with partners and stakeholders as to further design the products and services together.

Can the SDG framework shift the business models to more sustainable ones? Can it be profitable for the companies?

It’s reasonable to say that the definition of a sustainable business model is a dynamic one, while the integration of SDG targets into business models is new and increasingly necessary to attract and to keep customers coming back to buy a company’s products and services.

As consumers become more aware of the globally adopted SDG targets, the companies need to trend in the direction of those desires and demands, but also ensure they have sustainable revenue streams and profits. It is possible that a product or service itself is break-even or could also be generating modest losses but that may be part of a larger portfolio of offerings to consumers (we call those loss leaders). But our starting point is of course to demonstrate and prove that new products and services which specifically address the SDG targets can be profitable, perhaps more profitable than presupposed since a large number of SDG-aware customers are willing to pay a premium for such initiatives.

Better Business, Better World report speaks about the big business opportunities the SDGs are opening. Is this valid for the businesses from Moldova? Can you give an example?

In many ways the SDG targets are of more relevance to emerging and transition economies such as Moldova, because I find their entrepreneurs are quite nimble and sensitive to social and environmental issues since they encounter daily challenges that those in developed markets do not face.

For example, healthcare data about oneself is not such an urgent issue in a country like Germany where health standards in society tend to be higher. Citizens in Moldova both desire and need more information about their living conditions, such as diets influenced heavily by spontaneous food and snack purchases during the working day. Traditional foods and foods from lower income nations are often higher in saturated fats and salts or sugars/carbohydrates which are cheaper ingredients and fillers to keep the sales price low.

But this creates an environment where health risks are much higher and critical conditions such as stroke are more prevalent in Moldova and occurring at much younger ages, and the healthcare system may not be readily able to address this efficiently.

So, having an app that can provide spontaneous feedback can have a beneficial impact on daily lives, whereas in developed markets the need is not so urgent. Making this efficacious and affordable is the ideal kind of challenge we are undertaking in the SDG Innovation Accelerator pilot.

Can any business align itself to the SDGs? Where should it start?

Nearly every business can contribute to SDG targets, but it starts with an awareness of what those targets are and how they may be relevant to the specific company. This very interview is a part of the UNDP initiative to spread awareness of the SDG “movement” and to make companies and citizens aware that they can contribute in their own to help achieve those targets. Only with collective global action will we be able to ensure sustainability of our lives, our economies and environment, and indeed our planet. So informing ourselves on the SDGs is the most important first step, then developing a life strategy incorporating those new practices and leading by example up to making SDG-aligned living viral is how we can change the planet.

What is the difference between the well-known CSR and the SDG aligned business? Is it time for companies to shift from CSR to SDGs?

They are both pro-sustainability at their core. I think you can say traditionally CSR has been treated as a charitable cause, whereby companies allocated some of their profits towards good community service and mostly these programs are uni-directionally beneficial, the company giving back to the community. It is even considered odd to talk about making a profit from CSR activities. Nowadays, however, we have taken CSR to the quantifiable level considering that companies adopting SDG targets are actually more profitable than those who do not pay close attention to such initiatives. Citizens and consumers are increasingly showing more concern about who they spend their money on, preferring those that do good for society. And while CSR clearly helps the society, those are often not packaged products and services for sale and profit, although in some cases, companies invest in education so that they can ensure a pool of qualified workers in the future, which is both a typical CSR activity and an SDG target, for example.

What is your advice for the companies from Moldova who want to grow and be profitable?

Targeting growth markets and growth product/service trends are essential to grow one’s business. The European market and SDG-oriented products and services from a low cost market such as Moldova actually provides a very compelling opportunity to make exceptional profits. We will be featuring the five companies from our SDG Innovation Accelerator at various times because each is taking a unique path towards new product development and profitability, while benefiting the society and the environment, so these case studies should present important examples of how local entrepreneurs can make profits and be sustainable at the same time. We are working on proving that it is possible also in Moldova, so stay tuned for upcoming pioneer journeys and success stories.

The SDG Business Accelerator for SMES was launched in 2019 by UNDP Moldova, in partnership with UNDP Denmark, with the financial support of the Sweden, and aims to support small and medium-sized enterprises in Moldova to harness business opportunities deriving from the 2030 Agenda and the 17 Sustainable Development Goals (SDGs).

The program follows the operation model of the Danish SDG Accelerator that has had supported over 35 SMEs in developing new SDG-related business products or services since 2018. More info here.