At first glance, the United Nations' Sustainable Development Goals (SDGs) appear to be a rallying cry for businesses to transform and contribute to the betterment of society and the environment.
Authors
- Felix Arndt
John F. Wood Chair in Entrepreneurship, University of Guelph
- Christiaan Röell
Lecturer, UNSW Business School, UNSW Sydney
Launched in 2015, the 17 goals address the world's most pressing challenges, from climate action to the eradication of poverty. These goals are central pillars in global policy discussions and have become a buzzword for companies eager to demonstrate their commitment to social and environmental sustainability .
Yet, the reality for many businesses looks quite different: the SDGs are increasingly being used to reinforce existing practices, rather than genuinely addressing societal issues.
Purportedly, the SDGs are a global framework that aligns and commits central stakeholders to the achievement of shared social and environmental goals. Proponents of the SDGs for business argue that they represent a comprehensive social contract that brings attention to sustainable development, as well as provide a system that helps managers implement them.
However, businesses can freely use the SDG framework, logos and colours in their communications without any external validation. This means they can easily misuse them as a mere signal of good intention without needing to take them seriously .
Political playbook strategies
Our recent research article examines how businesses are using these goals to not only contribute to the advancement of the SDGs, but also to lobby governments for favourable treatment and shape the political decision-making processes and outcomes.
We did this by conducting a case study of four Western European multinational enterprises' subsidiaries in Indonesia where the government is decentralized and interferes frequently with the operations of private-sector firms, especially foreign multinational enterprises .
We observed that the reputation effects of the SDGs - to project integrity, responsibility and commitment - are strategic, rather than altruistic, for firms. Businesses use the SDGs to strengthen relationships with political decision-makers, influence policy discussions and advance their own interests under the camouflage of sustainability and the common good.
Instead of driving meaningful change, the SDGs risk being co-opted by corporations to enhance their public image while perpetuating the very practices they claim to address.
While the cosy relationship between business and politics is not new, our research shows that businesses use the SDGs not only to "do good," but also to gain political access and influence over government regulations.
Our study found that businesses employed strategies related to the SDGs to strengthen their ties with governments and shape policy agendas that ultimately benefited their bottom line. We identified three strategies in particular: cross-sector partnerships, conflict management and constituency building.
Cross-sector partnerships
The first strategy companies used to advance their political agendas using the SDGs was by developing cross-sector partnerships. Traditionally seen as the cornerstone of SDG implementation, cross-sector partnerships bring together governmental, industry and non-profit partners to achieve a common goal.
Such partnerships are often an invitation to a seat at the table for sustainability dialogue and related policy discussions. Due to the financial power of large corporations, these partnerships tend to shift toward advancing corporate interests.
By contributing to such partnerships, companies gain legitimacy through their apparent alignment with governments and non-profit actors and the common good. This, in turn, builds social capital that can be leveraged for further influence. A good example of this is the paradox that some of the biggest polluters often rank high in environmental, social and governance (ESG) rankings .
Constituency building
The second strategy companies used was constituency building, or creating support among local communities. This involves directly supporting government-prioritized constituents - such as farming communities - to help navigate tensions occurring between businesses and local governments.
It aims to generate a base of support for the companies. Through this community support, companies can gain access to and support from local politicians, who decide whether to grant or extend factory licences.
This strategy encourages the mobilization of stakeholders to advocate on firms' behalf. Constituency building can also play a big role in swaying the sentiment of decision-makers during conflicts like union strikes or disputes over employee rights. This strategy is often complementary to other strategies.
Conflict management
The third and last strategy companies used was conflict management, which focused on building the support needed to handle political disputes. The SDGs were used to streamline the efforts to find shared objectives across a range of stakeholders.
Building the social capital and credit for such situations was indispensably useful for companies. Meaningful social investments can improve public perceptions and provide businesses with bargaining power during conflicts, serving as a tool to ease tensions. This strategy is not unlike individuals who ease their conscience by purchasing carbon offsets for air travel .
All three strategies - cross-sector partnerships, conflict management and constituency building - helped businesses operating abroad reduce nationalist bias, face fewer bribe requests and improve their relations with host governments.
While investing in SDGs is a better alternative to paying bribes, our study warns that these strategies can also have negative effects by entrenching political actors. For instance, political figures may be able to maintain or consolidate their power because of increased business investments.
Beyond corporate reputation
The use of the SDGs by the private sector needs to be carefully scrutinized, as not all initiatives involving them may serve the common good. Our research, along with studies by others , have found that businesses invest in corporate social responsibility initiatives to improve their relationships with host governments.
Greenwashing - where companies exaggerate or falsify their environmental efforts - and the manipulation of sustainability rankings are both well-documented issues. So is the use of sustainability claims for political gain, as our research shows. These issues indicate that the SDGs risk becoming tools for maintaining the status quo instead of driving meaningful change.
Canada has fallen behind in global SDG progress rankings . To reverse this trend and accelerate progress toward achieving the SDGs, Canada needs better mechanisms to hold companies accountable, ensure adherence to the intended purpose of the SDGs and become serious - perhaps even altruistic - about tackling social and environmental challenges.
An important step in this direction would be for the private sector to embrace the SDGs not for corporate reputation, but as part of a genuine commitment to sustainability and social responsibility.
Felix Arndt receives funding from the SSHRC relating to this article.
Christiaan Roell receives funding from SSHRC.
