Organizational Change
The Role of Business in Driving Sustainable Consumption, Production

Business is increasingly aligning its activities with the United Nation’s Sustainable Development Goals (SDGs). A recent report shows that 43 percent of the world’s largest 250 companies are now linking their sustainability reporting to the SDGs. Samsung, Ford, and General Electric (GE) are just three examples.

This is important: The SDGs cannot be achieved without actively engaging business. GE, for example, has annual revenues roughly equal to the GDP of Hungary. However, it is not always clear where business efforts on the SDGs are best directed.

Different companies focus more on some SDGs than others. This makes sense; the capability, capacity, and responsibility companies have to address the SDGs varies. However, there are also SDGs that require action from all companies. SDG 12, which focuses on responsible consumption and production, is one.

Sustainable business practices are at the centre of SDG 12. Key targets focus on sustainably managing natural resources, reducing waste generation, and raising awareness of sustainable lifestyles. Companies are also explicitly encouraged to adopt sustainable practices and report on their sustainability activities.

While some progress has been made on responsible consumption and production, it has been insufficient. In fact, SDG 12 has been flagged as one of the four SDGs that is most at risk of not being met by 2030. The spotlight on this SDG will be particularly bright this year since it will be a focus of July’s high-level political forum (HLPF) on sustainable development.

As planning for the HLPF accelerates, it is clear that business and government need to raise their ambition levels on responsible consumption and production. Here are three potential areas of focus:

1. Implement circular initiatives.

Circular initiatives are regenerative by design; they require a move away from the traditional economic model of “take-make-dispose”. A World Business Council for Sustainable Development (WBCSD) report released at last month’s World Economic Forum identifies three types of circular innovation: process, product, and business model. Meeting the targets in SDG 12 will require a greater emphasis on all three.

Many leading companies actively focus on process and product innovation. For example, Samsung has worked to reduce the adverse impacts in its supply chain, Ford is increasingly using a life cycle approach in its environmental management, and GE’s well-established Ecomagination program focuses on improving efficiency and reducing environmental impacts.

Attention is particularly needed on limiting consumption through business model innovation. SDG 12 cannot be met if business models continue to rely on increasing consumption. The World Resources Institute (WRI) has highlighted that “consumption is the new elephant in the corporate boardroom”. Examples of business model innovation are available in the WRI report and include collaborative consumption and selling services rather than products.

2. Employ science-based targets.

Science-based targets are “grounded in scientific knowledge of how human impacts affect vital resources”. They are particularly relevant in helping companies determine whether or not they are managing their impacts within ecological and social limits. SDG 12 is not explicitly tied to these limits, which means sustainable levels of production and consumption are unspecified.

There are a number of emerging initiatives that help companies set science-based targets. The Science Based Targets Initiative (SBTi) provides companies with extensive guidance on setting greenhouse gas (GHG) emission reduction targets in line with climate science. The CEO Water Mandate is focused on advancing science-based water stewardship. Initiatives such as these provide a tangible sense of the levels of production and consumption the planet can sustain.

Ford, for example, has used climate science to set GHG targets and is one of nearly 150 companies that have endorsed the CEO Water Mandate. However, there is a need for far greater uptake of science-based targets. Without them, companies cannot confidently determine how much production and consumption of their products is sustainable.

3. Engage in multi-stakeholder initiatives (MSIs).

The SDGs are not the sole responsibility of business; nor can they be achieved by business alone. Business must work with government, civil society, and other actors to promote responsible consumption and production. MSIs can help provide a shared basis for directing corporate behaviour in this area.

Many companies are already actively engaged in MSIs. For example, Ford, Samsung, and GE are members of the Responsible Minerals Initiative, which focuses on responsibly sourced minerals in supply chains. Other MSIs with relevance to sustainable production abound, such as the Better Cotton Initiative and the Partnership for Cleaner Textile (PaCT) in the apparel industry.

MSIs are now beginning to focus explicitly on achieving the SDGs. For example, the European Union’s multi-stakeholder platform on the SDGs held its first meeting last month. There is an opportunity, however, for MSIs targeted at meeting specific SDGs. SDG 12, for example, would benefit from MSIs to raise awareness, establish certifications, and develop monitoring mechanisms on sustainable consumption.

The rapid uptake of the SDGs by business is encouraging. Companies looking to engage further have many resources at their disposal, such as the SDG Compass, the WBCSD’s SDG business hub, and the Global Reporting Initiative’s reporting guidance on the SDGs. The business case for deeper engagement, including the potential of the SDGs to drive innovation, enhance reputation, and create new market opportunities, has been established.

To meet the targets laid out in SDG 12, however, companies will need to go much further than they have thus far. Business will play a leading role in the achievement, or failure, of this SDG. Fortunately, more and more companies are becoming mindful of how they impact, and are impacted by, the wider world.

The next steps are to move towards greater use of circular initiatives, science-based targets, and MSIs. These will help companies achieve truly sustainable production. They will also help companies confront the “elephant in the room” of consumption.