Five New Paradigms for the Decade Ahead

January 29, 2020 7 minute read

Five New Paradigms for the Decade Ahead

It’s no small matter to end poverty, ensure peace and prosperity, and curb climate change. But in ten short years, the global community is preparing to do just that, by meeting the UN’s ambitious sustainable development goals (SDGs) by 2030. Companies will play a key role in achieving these goals, and are motivated to do so: sustainable business practices represent a massive business opportunity.

Many of the world’s most recognizable brands have already incorporated sustainability into sourcing, packaging, labor practices, and other core business operations. A growing number of companies are using circular economy principles to design products that can be fully recycled or regenerated. And at last week’s World Economic Forum, global business leaders announced major commitments to climate action.

The road to 2030 will require new tools and resources, as well as unprecedented collaboration, to ensure that these commitments are met and goals achieved. At Resonance, we see several stars aligning to help companies accelerate progress. Below, our experts weigh in on the ideas we think hold the highest potential to transform business, and change the world.

Innovation & Collaboration Will Drive Progress Toward SDGs

1. Sustainability will drive core business strategy.

“Companies that fail to adapt to the reality that sustainability and corporate strategy are inherently intertwined may not be around in 20 years.”

– James Bernard, Director, Sustainability

Sustainability as a business practice has changed substantially over the past ten years. It will continue to evolve as the world faces unprecedented socio-economic challenges: climate change, dramatic population growth, and the resulting strain on natural resources and urban areas. Corporate sustainability has moved beyond a focus on risk mitigation, and toward the integration of sustainable business principles into core strategy.

Socio-economic challenges will put increased pressure on multinational companies.

In 2017, shareholder motions to pressure companies to disclose their carbon footprint tripled. Blackrock has announced that it will publish the ESG ratings of companies it invests in. Companies are already being held to higher standards when it comes to climate change, and that trend will grow.

Companies will establish new ways of procuring goods.

This serves as a response to shareholder and consumer desire for transparency. These trends have already led to an 81% increase in sustainable procurement programs in the past six years.

Companies will find new revenue opportunities that help solve longstanding problems.

New innovations are taking hold: exploration of alternative energy as a means of leapfrogging traditional infrastructure in emerging markets; machine learning and artificial intelligence to make smarter sourcing decisions; and embracing circular business models to fuel competitive advantage. Leading edge companies are finding growth opportunities that not only overcome challenges, but also fuel their business.

2. Innovative finance mechanisms will scale impact.

“We all know there is not enough corporate funding to address the SDGs. Companies are beginning to leverage innovative mechanisms to finance their sustainability agendas and de-risk supply chains. In the coming years, we’ll see increased uptake, as financial organizations and institutions step up to address funding and impact gaps.”

– Elina Sarkisova, Senior Manager, Innovative Finance

Donors and governments recognize that they do not have sufficient capital to address the SDGs and are moving beyond traditional grants to crowd in private capital. Companies looking for partners to co-invest in joint sustainability projects are exploring new ways of financing their sustainability agendas and de-risk their supply chains. NGOs are under increasing pressure to explore innovative finance to amplify their impact and create more sustainable financing flows—and not rely on year-to-year handouts from donors. The next decade will see a wider set of actors move from one-off pilots to the integration of innovative finance into their overall impact strategies, and more capital flowing through such mechanisms at scale.

Development finance institutions will face increasing pressure to take on more risk and play a more catalytic role.

Traditionally focused on “safe” investments in middle-income countries, more DFIs will look to deploy capital in nascent markets and move beyond traditional debt and equity instruments. The USDFC, CDC, IFC, and others are channeling more investment to emerging and frontier markets, to invest in smaller enterprises that can improve overall economic conditions in the markets where their clients operate.

Foundations and family offices will activate more assets in new ways to achieve their missions.

While most foundations still rely on grants as their primary financing vehicle, an increasing number are using a portion of their charitable dollars to invest in mission-aligned activities that also generate a financial return. Over the next decade more foundations and family offices will be taking an impact-based approach where they deploy their assets to achieve their mission instead of trying to fit impact into their pre-determined giving and investment strategies.

Investors will become more serious about measurement and transparency.

Without more data and information, it is difficult to know whether assets deployed in the name of social impact are actually achieving their desired or promised results. This is particularly problematic in the case of blended finance deals, which use public or philanthropic dollars to de-risk private sector investment. More and more investors will look to adopt industry-accepted standards on impact measurement, taking impact investing to the next level.

3. Employees will demand more from their companies.

“Employees, and candidates, want company values to align with personal values. Employees will not only drive the need for this change, but also be part of the solution through employee engagement platforms and innovation programs.”

– Kimberly Davies Lohman, Senior Manager, Sustainability

The current low employment rate makes hiring top talent a primary concern for CEOs. Millennials are choosing to work for companies that share their values, even when it means taking a pay cut. This mindset adds a new dimension to the business case for sustainability and the need for bold sustainability targets, while also inviting new perspectives for how companies can weave sustainability into all that they do. Employee engagement in sustainability initiatives will be on the rise, and this engagement could grow in several ways:

Employees will demand and monitor company transparency.

As access to data and information is at an all-time high, companies are forced to change. When companies aren’t doing enough, employees will speak out, individually and collectively, through the media and more coordinated efforts. We saw employees at several large tech companies stage recent walkouts over climate issues, and companies will need to take this threat of employee action seriously, allowing employee activism to help shape the future of sustainability goals, programs, and progress.

Employees will own and connect with sustainability goals through cross-department solutions.

Employees in all departments have a role in sustainability, from facilities management to product management to marketing, and everything in between. Companies will increasingly engage all these stakeholders in coordinated sustainability programs, rather than through fragmented initiatives.

Corporate social responsibility efforts will adapt to align with business strategy and ethos.

While engagement programs have been shown to improve retention, better integration may help employees connect programs to their daily work as well as causes they care about. For instance, an employee giving program could be targeted to not just meet employee interests, but also align with business objectives, such as investment in the communities that companies source from.

4. Technology will be an enabler, but it isn’t the solution.

“Technology is not a silver bullet that will solve the biggest problems in the world on its own. Technology ultimately it is an enabler for all of the people working on the SDGs to move faster, smarter, and approach problem solving in new ways.”

– Katelin Kennedy, Senior Manager, Sustainability

As technology becomes more widely available and more organizations working on the SDGs become familiar with the range of problems technology can address, we expect to see more and more organizations utilizing technology to aid in problem-solving. That said, technology is not a silver bullet that will solve the biggest problems in the world on its own.

Technology will play an important role in overcoming challenges.

These challenges are faced by companies, donors, foundations and NGOs working on complex global issues. Individuals are already using social media and the internet to share information and influence the actions of millions, but in recent years we have seen an explosion of interesting and creative uses of technology to further progress towards the SDGs. We anticipate this trend will continue well into the future.

Technology can help us move faster, smarter and approach problem solving in new ways.

A few of the ways technology is already helping move the needle on SDGs include Internet of Things (IoT) applications that help farmers gather real-time data on weather and climate change; artificial intelligence (AI) platforms that enable health professionals to combine massive datasets to more accurately predict the spread of disease or protect biodiversity; and blockchain applications can be used to provide refugees with digital identities or give consumers access to product information.

Ultimately, tech is simply the enabler for people to make progress on challenging issues.

As we look at the examples above, every form of technology mentioned is enabling better decision making, whether for a farmer gaining access to better soil data, a sourcing manager that better understands working conditions in their supply chains, or a worker that better understands their rights. Technology can play a critical role in helping to enable us to make better decisions, but ultimately it will be up to all of us to take action together if we want to see tangible progress made towards the SDGs.

5. Cross-sector partnerships will take center stage.

“As investors, customers, and employees increasingly push for change, sustainability will move to the core of corporate strategy in the 2020s. This evolution will force companies to adopt new strategies for collaborating with governments, communities, and NGOs to tackle sustainability issues inherent in their business models.”

– Steve Schmida, Founder and Chief Innovation Officer

Sustainability has moved from a ‘nice to have’ to an absolute necessity for corporate strategy, driven by changes in consumer sentiment, the growing need for employee engagement, the climate crisis, resource depletion, and the rise of frontier markets in the least developed parts of Africa and Asia. In industry after industry, corporate strategy is increasingly being shaped by sustainability factors.

The need for cross-sector collaboration will only increase.

Especially as sustainability moves to the center of corporate strategy. To make meaningful contributions to the SDGs, companies will need to collaborate more than ever with partners in civil society, government, academia and communities. SDG 17—Partnerships—will become increasingly seen as the critical tool for achieving the other 16 SDGs.

Companies and organizations have a lower chance of moving the needle on individual initiatives and goals.

Considering the link between global progress and sustainability is becoming more intertwined, and increasingly complex, partners are converging around new approaches that address root causes and solve several problems at once. For example, empowering women in rural areas can increase crop yields, and therefore income, and therefore access to food, medicine, education, and more.

Companies will need to develop the capabilities and skills to partner at scale. 

As partnerships proliferate, companies need to build the skills of their professionals to build and manage cross-sector collaborations. They also need to build processes and systems that make it easier for companies to partner with governments, NGOs, and communities.

Preparing For The Five Paradigms

Business leaders have generated some of the world’s greatest innovations, and moving forward business ingenuity will be critical to solving our global challenges. Companies are well-poised to flourish on the road to 2030, if they use sustainability to chart the course. But even the most committed companies can only do so much. At Resonance, we partner with companies, governments, foundations, and NGOs to scale the impact of individual and collective sustainability efforts. If we are to achieve the SDGs, we’ll need to do it together.

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