Executive Summary Corporate Disruptors: How business is turning the world’s greatest challenges into opportunities This report is in collaboration with the World Economic Forum’s Young Global Leaders Community and an output of the YGL Sustainable Development Goals initiative. The Forum of Young Global Leaders is a unique, diverse, global community of the world’s most outstanding, next-generation leaders nominated under the age of 40, who commit a portion of their time to jointly shape a better future and thereby improve the state of the world. To achieve its mission, of shaping a positive future, the Forum of YGL acts as a platform for young leaders to be both a voice for the future in global thought processes and a catalyst for joint action when appropriate. Together, its community members form a powerful international force for the global common good. 2 Contents Introduction4 A new world for business 5 What doesInfant this have to do with business? Mortality Maternal Health Access to primary healthcare and changing demographics are driving the global greatest goals – The world’s health and well-being development agenda Deep Dive:43 From the MDGs tobirths SDGs deaths per 100,000 (Against SDG target of 25) 8 10 210 deaths per 100,000 births (Against SDG target of 70) Key enablers 14 From responsibility 89% to opportunity 16 Over 80% of 1.8 billion youth aged 10-24 of the world's aging population (over 60) Infographics:18 2015 2050 live in developing economies today will live in developing countries by 2050 Visual summary for the 17 sustainable development goals References35 What does this mean for the business? Enormous value creation potential by providing Quality healthcare at Affordable price in an easily Accessible manner. $34 bn Projected global telemedicine market by the end of 2020 Unilever’s Lifebuoy soap has an ambition to improve hand washing habit of 1 billion people, thereby reducing incidence of child death up to 44%. $87.7 bn 8.9 bn Low income Health Care Opportunity Potential access to skilled professionals across 107 countries Businesses need to invest in state of the art infrastructure, identify the right partners and develop innovative operating models to realize this value. Read our full report to find out how 3 Introduction Shifting patterns of global growth, especially in emerging economies, are making customers a moving target. Demographic changes are roiling both the consumer and labor markets, posing significant challenges for customer and talent acquisition and retention. Digitally empowered consumers have higher expectations than ever, and are taking companies to task that do not meet them. Enormous business potential exists in the data companies collect, but pressure is increasing to be much more vigilant in how that data is secured and used. Demand for goods is outstripping the supply of finite virgin resources, resulting in commodity price volatility and escalation, as well as severe negative environmental impacts. Do these sound familiar? They should, because that is the world in which global businesses operate today. As these five trends have converged to create a world characterized by volatility, uncertainty and complexity, companies understandably find themselves in a quandary: They are unsure of what it all means for their business—both now and in the long term. But perhaps even more important, there are no clear clues for how they should respond. Enter the global development agenda and the Sustainable Development Goals (SDGs). As companies grapple with how they need to change their organizations to thrive and grow in today’s evolving, often chaotic, world, the SDGs can serve as a guiding light. They are a framework that can help companies capitalize on the possibilities inherent in these macro trends by entering new markets, developing new solutions and services, and creating entirely new businesses. 4 A number of leading companies—corporate disruptors— have found a way to grow and increase competitiveness despite, and sometimes because of, the global challenges they face. They are already using the SDGs to help them replace the notion of Corporate Social Responsibility with something much more powerful: Corporate Social Opportunity. In the process, they are creating new value in new ways—whether it is by growing revenues, reducing costs, mitigating risks, improving brand value, or some combination of the four. In the following report, we describe how companies can move beyond a focus on overcoming the volatility, uncertainty and complexity of today’s marketplace. Instead, we look at how companies can use the SDGs to find opportunities to grow and “futureproof” their business—all while generating the significant societal and environmental benefits that their customers, as well as the global community, increasingly value. A new world for business The world is changing rapidly—the evidence is all around us. The next few decades will see significant shifts in consumer demand, buying power and expectations, driven by massive population migrations and widespread information availability. At the same time, an increasingly resource-constrained world will be forced to deal with decades of unfettered growth and unsustainable consumption of natural resources. The implications for businesses are significant: With these changes fundamentally redefining the rules of the game, companies increasingly recognize they must take a deeper look at what this new day dawning means for them and how they should respond. Five major trends, in particular, are forcing companies to find new and innovative ways to deliver value for their stakeholders. Shifts in global demand For the past two decades, the global balance of power has been slowly shifting from highly developed to emerging economies. Developing countries already hold around two-thirds of the world’s total foreign exchange reserves. And by 2020, the combined output of the three leading emerging economies—China, India, and Brazil—will surpass the aggregate production of the United States, Germany, United Kingdom, France, Italy and Canada.1 Accompanying the rise of emerging markets is an unprecedented wave of urbanization. In 1950, rural areas were home to a majority of the global population. Today, over half of the world’s population live in urban areas.2 And the trend shows no sign of stopping: Over two-thirds of the global population will likely be urban dwellers by 2050, driven predominantly by today’s emerging economies. Perhaps these figures should not be surprising, given emerging economies are projected to represent a major share of global population overall, with India, China and Nigeria alone accounting for approximately 3.5 billion people (out of the projected global population of around 9.7 billion) by 2050.3 Along with urbanization comes increasing affluence. According to estimates by Reuters, the global middle class is expected to more than double by 2030, reaching 4.9 billion.5 These population growth patterns will shift consumer growth and purchasing power from rural to urban areas and from developed to emerging economies. Businesses will need to realign their growth strategies and their suite of products and services to tap into these new markets and consumer pools. Figure 1: Top ten countries with highest forecasted urban populations (2050)4 Urban Population in 2050 (mn) China China 1,038 mn India 875 mn United States of America (USA) 365 mn Nigeria 218 mn Brazil 204 mn Pakistan 199 mn Indonesia 190 mn Mexico 113 mn Philippines 101 mn Russian Federation India 73% 54% Pakistan Indonesia 59% 66% USA 90% Mexico 88% Nigeria 75% Philippines 69% Brazil 94% Russia 83% 96 mn Percentage (%) reflects the urban population as a fraction of the total population 5 The dual demographic bulge The world isn’t just growing. It’s growing at opposite ends of the hourglass. At one end is the elder population. Today, the global population aged 60 or above is about 901 million, around 12 percent of the overall global population.6 By 2050, this is expected to jump to more than 2 billion, constituting almost 20 percent of the overall population.7 Developed economies are expected to contribute most significantly to this aging trend.8 In Europe, for example, around 24 percent of the population is currently aged 60 or above, the highest in the world.9 By 2050, with the exception of Africa, all major areas of the world are expected to have more than 25 percent of their population above 60 years.10 On the other side of the hourglass is the young population, generally centered in many developing economies. In Africa, for example, around 41 percent of the population is under the age of 15, and an additional 19 percent are between 15 and 24 years old.11 Similarly, over 40 percent of the population of Latin America and Asia is under the age of 24.12 Further illustrating the emerging-developed economy divide is this: The median age in the world’s least-developed countries today is 20, compared with 42 in Europe.13 By 2050, we will likely see the same schism, with the median age of the least-developed countries rising to 26 compared with 46 for Europe.14 As these dual trends play out, businesses will need to rethink their consumer and employee strategies. There are certainly new commercial opportunities in better targeting a young population (often with more disposable income) or an aging consumer base (often with greater brand loyalty). But there also are talent-related challenges as millions of people leave and enter the workforce at very different career stages. According to a recent Accenture survey of more than 1,000 senior executives, “attracting, retaining and developing skilled talent” is a primary concern for business, and that is not likely to change anytime soon.15 The rise of the informed consumer As the global population shifts, a different kind of consumer is emerging, one who is greatly enabled by the growth of digital technologies. This consumer is more connected and more informed than ever, and has higher expectations for both government and business. Recent research backs this up. In a recent study of around 30,000 consumers across 20 countries, almost 72 percent indicated businesses are failing to meet their expectations.16 That same study found today’s consumers expect more from their purchases than just the acquisition of products and services—and it is an expectation that companies currently fail to meet. For example, almost 81 percent of surveyed consumers said a product’s ability to enable healthy lifestyles is an important purchase criterion; however, only 42 percent believed companies are currently meeting this need.17 At the same time, consumers are becoming increasingly conscious of their purchases and expect businesses to be both open and ethical about their products and services—an area in which businesses are also falling short. For example, in a survey of 500 executives, almost 83 percent think the transparency of products’ supply chains affect consumers’ confidence in a brand and their buying behavior.19 Yet, in another survey, 67 percent of the 1,000-plus senior executives surveyed said businesses are not doing enough to tackle sustainability challenges.20 Perhaps the most severe criticism leveled by consumers is the one that emerged from a survey conducted by Edelman Trust in 2015.21 More than half of the people in that survey believe business innovation is driven by greed and money rather than an intent to benefit society, and that there isn’t sufficient government regulation for many industry sectors. Digital technologies are helping companies respond to consumers who demand more than just products and services from business. By 2030, Information and Communication Technology (ICT) will connect 2.5 billion extra people to the “knowledge economy.”22 This will provide 1.6 billion additional people access to healthcare and almost 500 million new consumers access to e-learning tools. And for businesses, the opportunities to monetize this new ICTenabled access are huge. An assessment of eight economic sectors—mobility and logistics, manufacturing, food, buildings, energy, work and business, and health and learning—found ICT could generate more than $11 trillion in economic benefits per year by 2030.23 Figure 2: Changing world order: Most populous countries from 1950 to 205018 1950 (Estimates) Total Population = 2.52 billion 2020 (Projections) Total Population = 7.76 billion 2050 (Projections) Total Population = 9.73 billion China 21.5% China 18.1% India 17.5% India 14.9% India 17.9% China 13.9% United States of America 6.2% United States of America 4.3% Nigeria 4.1% Russian Federation 4.1% Indonesia 3.5% United States of America 4.0% Japan 3.3% Brazil 2.8% Germany 2.8% Pakistan 2.7% Pakistan 3.2% Indonesia 2.8% Nigeria 2.7% Brazil 2.5% Brazil 2.1% Bangladesh 2.2% Bangladesh 2.1% United Kingdom 2.0% Russian Federation 1.8% Democratic Republic of the Congo 2.0% Italy 1.8% Mexico 1.7% Ethiopia 1.9% Indonesia Percentage (%) reflects the country’s population in the respective timeframe as a fraction of the global population 6 3.3% Expectations for digital responsibility The exponential growth of digitally enabled products and services will be a boon for businesses everywhere. For instance, by 2030 there will be more than 100 billion “connected devices” around the world.24 This surge in digital connectivity that will enable organizations to access increasingly large amounts of consumer data they can use to create stronger customer engagement and loyalty. However, while digital connectivity presents a huge opportunity to better target and serve customers, it also poses a risk with respect to ethical usage of consumer data—something consumers are clearly worried about. In a recent Accenture study, almost 44 percent of consumers indicated that they are wary about the information they share due to lack of confidence in the online security that protects their personal data.25 In another study, the TRUSTe Consumer Confidence Index, nine in 10 internet users in the United Kingdom and the United States said they would avoid doing business with companies that do not protect their privacy.26,27 The challenge for companies is how to leverage digital and the data those technologies generate to improve all dimensions of their business (and society) while ensuring they are responsible stewards of all the data they collect and use. Natural resource complexity and environmental constraints Beyond the price impact is the environmental one. Based on historical trends, for every 1 percent increase in global GDP, CO2e emissions have risen by approximately 0.5 percent and resource intensity by 0.4 percent.37 Under a “business as usual scenario,” the Intergovernmental Panel on Climate Change (IPCC) forecasts temperature increases of between 2.6 and 4.8°C by the end of the century, driven by continued growth in greenhouse gas emissions.38 Accenture’s recent research on the Circular Economy finds that, at the current rate of consumption, we will be over-utilizing the planet’s resources by a factor of three by 2050.28 The demand for constrained resources (such as biomass, metals, etc.) is expected to grow from around 50 billion tonnes in 2014 to around 130 billion tonnes by 2050.29 Even in the best-case scenario, economies are not expected to produce more than 80 billion tonnes of these resources by 2050—a gap of more than 40 percent.30 The inescapable conclusion from this data is that the global economy must decouple economic growth from the use of finite virgin resources to avoid volatile prices as well as reduce the negative impacts on the environment. This will require businesses to adopt new business models that enable them to reduce (and eventually eliminate) their use of finite virgin resources in their value chains, products and services. With demand continuing to far outstrip supply, companies are bracing for the impact on commodity prices. In fact, it is already happening. During 1960 to 2000, every 1 percent of growth in GDP was accompanied by a 0.2 percent drop in the commodity price index.31,32,33 Since the start of the new millennium, we see price moving in concert with growth: For every 1 percent increase in GDP between 2000 and 2014, there has been a 1.5 percent increase in the commodity price index.34 Figure 3: Log plot of resource use and economic development (2010, 166 countries)35,36 Tons/Cap 100 the join 2013) o t vs. ers sum 100% n o c (+ new 2030 n o y i l bil ss b China 2.5 dle cla d i m Resource use 10 Australia Chile Sweden Brazil Germany Colombia Niger India Bangladesh 1 100 1,000 Economic development 10,000 100,000 GDP/Cap 7 The world’s greatest goals – What does this have to do with business? The preceding discussion lays bare the enormous challenges companies around the world face. The five macro trends are difficult enough to address in isolation. Taken together, they can almost seem insurmountable. The reality is, companies need to change—significantly—to be able to grow and thrive in the coming decades. The question is, how? The UN’s Sustainable Development Goals (SDGs) provide valuable guidance. Figure 4: Continuum of corporate social opportunity maturity Impact on business, community and environment Strategic Basic • Limited awareness of SDGs • May align a few CSR (Corporate Social Responsibility) initiatives to global goals • May sponsor internal campaigns or annual events; initiatives typically funded through CSR funds, usually without a particular expectation of RoI. • Diligent mapping of all CSR and EHS (Environment, Health and Safety) programs to the SDGs • SDGs prioritized based on organization’s core competencies • Progress is tracked and reported through chosen indicators Transformational Competitive • Leverage SDGs as a framework to grow business and gain competitive advantage • Typical ways of extending competitiveness include extending products and services to new markets, developing more resilient supply chains, investing in global workforce etc. Corporate Social Opportunity – Maturity Continuum 8 • Develop new businesses to respond to challenges / opportunities outlined in the SDGs • Actively engage diverse stakeholders (suppliers, partners, consumers, government, NGOs etc.) to shape innovative operating models In considering the SDGs, companies face a strategic choice: How deeply do they want to engage in the pursuit of the SDGs? In our research we found that the more strongly a company commits to the SDGs, the more significant the impact on its business, the community, and the environment. As illustrated on the maturity continuum in Figure 4, leading organizations view global goals as a framework to differentiate themselves by expanding their customer base, developing new products and services, developing more resilient supply chains, generating future talent for their workforce and deepening their relationships with their customers and partners. Grow Revenue (new products / services, serving new market segments etc.) Increase positive Figure 5: Business value creation levers and the global goals Short term Build Brand (positive image through responsible operations, digital responsibility etc.) Long term Reduce Costs Mitigate Risks (better resource efficiency, circular operating models, lower emissions etc.) (license to operate, compliance through better transparency, traceability etc.) Reduce negative In September 2015, 193 countries adopted the SDGs to guide global development in the next 15 years (see “Deep Dive: From MDGs to SDGs”). Through their ambitious and holistic targets—covering people, equitable growth and the environment—the SDGs can serve as a framework for tackling the challenges companies face. In fact, leading companies view the SDGs as a way to help them migrate from Corporate Social Responsibility to Corporate Social Opportunity, thereby becoming more competitive, resilient and “future-proof” in an increasingly volatile, uncertain, and complex world. Some companies are even seeing Corporate Social Responsibility as their reason for being, developing new business models to capitalize on the opportunities of the SDGs.. Those with the strongest commitment view implementation of SDGs through the lens of value creation—i.e. growing revenues, reducing costs, mitigating risks and improving brand value (Figure 5). These organizations are positioning themselves to drive profitable growth despite—and sometimes because of—the external challenges. In Figure 7, we highlight how some of the world’s most forward-looking organizations are creating value by aligning with the 17 SDGs. 9 Deep Dive: From the MDGs to SDGs The Millennium Development Goals The Sustainable Development Goals During the Millennium Summit in September 2000, the UN set out to establish its role in the 21st century by drafting the Millennium Development Goals (MDGs). These goals were aligned to the basic human rights and intended to reduce extreme poverty while promoting gender equality, education, and environmental sustainability. In the past 15 years, the MDG for extreme income poverty was cut by more than half and MDG-linked efforts have helped to reduce child mortality by 50 percent. However, despite these successes, not all MDGs were met and a need to expand the development agenda going forward remained. This paved the way for the development of the Sustainable Development Goals (SDGs). To build on the sound foundation laid by the MDGs, the SDGs were conceptualized at the UN Sustainable Development Conference in Rio de Janeiro in June 2012 and formally adopted by 193 member nations of the UN in September 2015. The SDGs, also referred to as The Global Goals, are a set of 17 goals that are expected to set the world’s development agenda for 2015–2030. The 17 goals are augmented with 169 underlying targets, seeking to ensure the measurability of progress. Figure 6: 17 Sustainable Development Goals 10 “The Millennium Development Goals have shown that we can make profound differences in people’s lives. The journey we started in the year 2000 has seen us build a solid foundation for further progress.”39 Ban Ki-moon (September 25, 2013) 11 Figure 7: Illustration of companies creating value through alignment with SDGs Organization Action/Initiative Daimler AG Daimler AG partnered with POEMA (local antipoverty program) in the poverty stricken north-east part of Brazil to construct a high-tech factory to manufacture headrests and seats out of coconut fibers from locally grown trees. The factory contributed to the local economic development by employing over 5,200 people and generating revenue by leveraging a locally sourced input.40 Impacted value levers: Revenue, Brand TNT TNT has partnered with the UN to combat hunger by leveraging TNT’s services of transport optimization, fleet and warehouse management to improve aid delivery mechanisms. This partnership has delivered close to 114 specialist aid delivery projects especially during natural calamities like the tsunami in Asia in 2004, earthquake in Pakistan in 2005 and earthquake in Haiti in 2010.41 Impacted value levers: Brand Unilever Unilever’s Lifebuoy soap brand has undertaken an initiative to improve the hand washing habits of 1 billion people, thereby reducing the incidence of child deaths by as much as 44 percent. To implement the initiative, the company has rolled out several pilots in Asia, Africa and Latin America.42 Impacted value levers: Revenue, Brand Dangote Academy Dangote Group (the largest manufacturing conglomerate in West Africa) invested close to $6.5 million in Dangote Academy in Nigeria to address the difficulty of finding employees with the right technical skills. The initiative is helping reduce talent sourcing costs while providing vocational training to local youth.43 Impacted value levers: Cost, Brand Care.com While care is not a women’s issue, caregiving responsibilities are overwhelmingly managed by women around the world. Care.com, through its unique model, aims to ensure that women can get the care they need to stay in the labor force and sustain their professional careers.44 Impacted value levers: Revenue SABMiller In South Africa, SABMiller faced operational risks related to water quality concerns. The company undertook a “beyond the breweries” approach and adopted a localized solution by involving local communities and other stakeholders. This has helped the company reduce close to 23 billion litres of water compared to the water usage in the breweries in 2008.45 Impacted value lever: Cost, Risk, Brand Total Total is undertaking initiatives to diversify its oil and gas business and grow its renewable capabilities. The company is investing $223 million to transform its unprofitable LeMede oil refinery into a bio-fuel plant. It is also planning to invest $500 million annually in developing renewable energy capabilities.46 Impacted value levers: Revenue, Risk, Brand Sun Edison Sun Edison is partnering with Rockefeller Foundation to set up more than 100 off-grid solar energy plants in rural India. The initiative is creating shared value by bringing economic opportunity to villagers through the use of clean electricity while creating a new customer base for the company.47 Impacted value levers: Revenue Google Google has recently launched an initiative (called Sidewalk Labs) that will leverage technology and innovation to improve urban life. The initiative seeks to improve city life by incubating urban technologies to address such issues as cost of living, energy usage and transportation.48 Impacted value levers: Brand, Revenue 12 SDG Aligned Organization Action/Initiative ITC Limited ITC, a leading Indian based diversified conglomerate launched its “e-Choupal” initiative, which provides internet access to rural farmers to help them make more informed business decisions. The effort allowed ITC to better manage its up-stream supply chain while improving farmers’ quality of life.49 SDG Aligned Impacted value levers: Revenue, Cost E.ON E.ON is creating an integrated energy infrastructure for a whole city district in Malmo, Sweden. As part of this collaboration, it will supply electricity exclusively by renewable sources. It is also helping lay communication channels looping all systems to minimize energy losses and meet high demands.50 Impacted value levers: Revenue Michelin Michelin has created an innovative business model to recycle tires close to the end of their useful life. By offering tires as an extended service, it is not only creating additional revenue but also promoting road safety (as customers are likely to return old or unsafe tires) and facilitating better resource usage.51 Impacted value levers: Revenue, Cost, Brand Tesla Motors Tesla Motors’ innovative electric car is designed for zero emissions. The electric car requires only 40amps for charging, which is equivalent to using an oven. The innovative product launch has helped the company build its brand image as well grow revenues, while ensuing positive climate impact.52 Impacted value levers: Revenue, Brand Tesco Tesco adopted a sustainable seafood policy based on recommendations from the Marine Stewardship Council. The company is also building a system to evaluate the sustainability quotient of its fisheries. In addition to improving its brand, these initiatives could help Tesco generate demand for new fish species farmed sustainably.53 Impacted value levers: Revenue, Brand Weyerhaeuser Weyerhaeuser has been actively pushing the sustainable forest management agenda with more than 198,000 acres of land subscribing to third-party sustainable forestry standards. The company is actively ensuring that all its forests and timberland have appropriate forest certification.54 Impacted value levers: Revenue, Brand Nestlé In Sri Lanka, the 30-year war ending in 2009, left a significantly underdeveloped dairy industry in the Northern and Eastern provinces. By accelerating its dairy development efforts in 2009 and increasing its fresh milk collection, Nestle-Lanka enabled the resettlement of war-displaced people and provided livelihood to 18,000 rural farmers.55 Impacted value levers: Revenue MasterCard MasterCard Aid Network, an end-to-end technology solution co-created with humanitarian organizations, can distribute aid swiftly and safely even in the absence of connectivity. The solution has helped 15,000 people in Yemen and 9,000 in Philippines receive aid through programs managed by World Vision.56 Impacted value levers for partners: Brand 13 Key enablers Given the 17 SDGs’ breadth of coverage and envisaged scale of implementation, a variety of critical enablers will be needed to help companies achieve their goals. The nature of enablers required may vary depending on the nature of the goal. For instance, capacity expansion and infrastructure investments may be needed to meet targets related to sustainable cities or clean energy. Or a goal related to eliminating poverty may require innovative partnership models (often with local NGOs), which are critical to scaling and reaching masses at the base of the pyramid. Through our in-depth analysis of the Global Goals we have identified five key implementation enablers (see Figure 8). Figure 8: Key enablers for Sustainable Development Goals implementation $ Implementation Enablers Physical Infrastructure Brief Overview Required to upgrade / expand capacity and add the appropriate infrastructure to support the needs of a growing population 14 Digital Infrastructure In today’s age of the “Internet of Things (IoT)”, a strong digital infrastructure is needed to build efficiency and eliminate redundancies in an increasingly complex technology ecosystem Financing and Investments The envisaged global scale of implementation will necessitate going beyond aid-flows to identify sustainable funding sources Partnership Models Data and Accountability For the SDGs to deliver inclusive, scalable and sustainable impact, innovative partnership models that leverage assets across multiple sectors and actors will be critical Data will be critical to providing timely information for decision-making and relevant inputs to measure progress and accountability $ Physical Infrastructure Financing and Investments Data and Accountability As highlighted earlier, at the current rate of increasing resource consumption, we will need three planets by 2050 to meet demand— which is clearly not possible. Thus, a massive drive is needed to expand the capacity and resiliency of our physical infrastructure. For example, as part of Goal 11 (Sustainable Cities and Communities), we will have to accommodate 2.5 billion new urban dwellers by 2050.57 One of the fundamental ways in which SDGs differ from MDGs is that these new goals require sustainable funding sources to achieve the ambitious targets set for the 2015-2030 timeframe. The investments are needed to support all goals, including quality R&D for innovation, massive capital investments for infrastructure capacity and expansion, testing and scaling of proven solutions, and financing of new adaptation techniques. According to some estimates, as much as $4.5 trillion per annum is needed to meet these targets, which compared with current investment levels, leaves a gap of around $3.1 trillion to be filled.58 Data-driven decision making has been a hallmark of successful companies for decades. As near-real-time data and analytics tools become increasingly available, more business decisions—especially those that involve long-term or socially driven investments—will require reliable information with a clear return on investment. Digital Infrastructure A digital infrastructure is expected to play a key role in enabling responsible growth in the coming years and to realize targets laid out within the SDG framework. Furthermore, the effective use of digital solutions could significantly help decouple national growth—especially those in emerging and developing markets—from the use of finite and constrained natural resources. At the same time, data will be critical to measuring the success and progress of investments that provide both an economic and social or environmental return. Availability of quality, relevant and timely data—especially related to new consumer classes and emerging markets—will become increasingly important to leading companies looking to leverage the SDGs as a framework for growth. Partnership Models The SDGs are diverse and require action at scale across all countries. General consensus among experts is that the magnitude and scale of impact envisaged mandate a collaborative approach, one that extends beyond traditional development institutions and north-south, donor-recipient paradigms. The implementation of SDGs by 2030 requires a multi-stakeholder approach based on “mutual accountability.”59 Participants include government (both national and sub-national), civil society, private sector, social entrepreneurs, academic institutions, multilateral institutions, faithbased communities, and citizens (especially youth).60 Businesses are increasingly working with local partners in form of development organizations and NGOs to utilize their valuable local knowledge and expertise to deliver on the development goals. 15 From responsibility to opportunity The Sustainable Development Goals represent by far the greatest development agenda the international community has ever signed up for. The overarching objective behind the SDGs may have been to drive positive social and environmental impact. However, the SDGs can also serve as an important framework for businesses to grow and become more competitive, especially in an increasingly volatile, complex and uncertain world. Some companies will naturally align with one or two goals, maybe even a handful of them. Others may touch all 17, and still others may choose to leverage non-aligned goals (or their underlying business opportunities) to move into new markets or create new businesses. The key is that this is not an all-or-nothing scenario. Whether a company is inventing new widgets, producing goods, selling products or delivering services, the SDGs provide a universal framework for all businesses to both play their part as global actors, as well as create new opportunities for growth and competitiveness. By addressing the key challenges outlined by the SDGs, businesses can partner with governments to enable them to better structure their critical investments and implementation approach in order to drive future prosperity and development. 16 The examples above are just a handful of how leading companies are already leveraging the SDG goals to create business value in the form of revenue generation, cost reduction, risk mitigation, and brand enhancement. In the remainder of this report, we look at each of the 17 goals in more detail— highlighting key global trends impacting the goal, presenting some suggestions for translating challenges into opportunities, discussing key enablers, and showcasing examples of how businesses are leading today. The infographics that follow in the remainder of this executive summary provide additional detail on each of the 17 goals and examples of how leading companies are making their mark. The full report can be found at www.accenture.com/corporatedisruptors. 17 No poverty Poverty reduction requires efficient labor use, inclusive growth and access to equal rights EXTREME POVERTY IN THE WORLD 1in10 NEED FOR BALANCED GROWTH $ $ $ $ $ $ $ $ $ $ people live on less than $1.90 a day 8trn $ in infrastructure investment is required for inclusive growth in Asia from 2010 to 2020 WIDESPREAD DISPLACEMENT 42,000 people per day abandoned their homes due to conflict in 2014 What does this mean for businesses? Untapped customer base offers business potential in terms of demand and low-cost production UNTAPPED CUSTOMER BASE LOW-COST PRODUCTION 20% of the population in developing countries lives below poverty line Develop products and services customized for the poor through innovation Nestle has rolled out a Women Dairy Development Program in a village in India to provide livelihood for women, improve the economic scenario and secure its supply chain in a fragmented dairy market.61 18 50% of global vehicle production capacity will come from developing markets by 2050 Partner with industry players to develop and deliver the right kind of products Businesses need to focus on collaboratively designing manufacturing and processes to customize products to meet the needs of the poor Data and figures collected as part of secondary research conducted by Accenture Strategy All references and additional details can be found in the full report at www.accenture.com/corporatedisruptors Zero hunger Malnutrition and food security are the biggest challenges to meeting the goal of Zero Hunger UNDERNOURISHMENT AGRICULTURAL OUTPUT 795mn 70% people across the world are undernourished increase in output is required by 2050 to feed the world’s population $62.9 bn Potential market size of organic fruits and vegetables by 2020 24% up to 40% Food loss that can be avoided in developing countries through an adequate distribution network What does this mean for businesses? Develop and make accessible high-nutrition food items Unilever has ensured that more than 20% of its total food and beverage (sales by volume) products have a significant content per serving of the five key micronutrients implicated in undernutrition.62 Partner to set up a robust distribution channel Develop and roll out farming practices that improve productivity Businesses may need to focus on and invest in research and distribution infrastructure and develop global and local-level partnerships for scale and reach Data and figures collected as part of secondary research conducted by Accenture Strategy All references and additional details can be found in the full report at www.accenture.com/corporatedisruptors 19 Good health and well-being Access to primary healthcare and changing demographics are driving the global health and well-being development agenda GROWING YOUTH BULGE AGEING POPULATION 89% 80% of 1.8 bn youth aged 10 to 24 live in developing economies today of the world's aging population (over 60) will live in developed countries by 2050 CHILD MORTALITY MATERNAL HEALTH 43 deaths per 1,000 births 210 deaths per 100,000 births (SDG target: 25) (SDG target: 70) What does this mean for businesses? Enormous value creation potential by providing quality, affordable and easily accessible healthcare. $34 bn $87.7 bn 8.9 mn Projected global telemedicine market by the end of 2020 Base-of-the-pyramid healthcare opportunity Potential access to skilled professionals across 107 countries GlaxoSmithKline is re-investing 20% of its profits in the Least Developed Countries (LDCs) to develop the healthcare infrastructure by training frontline health workers.63 20 Businesses may need to invest in state-of-the-art infrastructure, identify the right partners and develop innovative operating models to realize this value Data and figures collected as part of secondary research conducted by Accenture Strategy All references and additional details can be found in the full report at www.accenture.com/corporatedisruptors Quality education Access to education and financing is needed to bridge the skill and education gap ACCESS TO EDUCATION FINANCING GAP 57mn 38bn $ children of primary school age do not attend school financing gap for basic and lower education in Asia, Africa and Latin America SKILL GAP 63% CEOs are concerned about availability of key skills What does this mean for businesses? $70 bn 30% $7 bn The market size of mobile education by 2020 CEOs who feel that talent constrains them from pursuing market opportunities Global financing gap that can be addressed to meet financial literacy needs Econet Wireless Group has leveraged its competency in mobile technology (mEducation platforms) to make commercial investments in education through its Eco-school to improve access to educational content.64 Businesses can build human capital through sustained sourcing of an educated workforce and enhance brand image through education initiatives Data and figures collected as part of secondary research conducted by Accenture Strategy All references and additional details can be found in the full report at www.accenture.com/corporatedisruptors 21 Gender equality Increasing need to drive gender participation and contribution in education and workforce 42-48% 4.5years Participation rates for women in universities in India and China Women are likely to spend 4.5 more years in retirement than men ONLY 4.8 % CEOs of Global Fortune 500 companies are women What does this mean for businesses? Gender-diverse companies are likely to benefit through: MARKET SIZE MARKET SHARE 45% more likely to witness market share growth Develop financial products that suit women’s needs YES Bank’s LEAP program—which is aimed at providing financial services like credit, saving and micro insurance to women— has been in contact with about 40,000 Self Help Groups (SHGs) as of March 2014.65 22 70% more likely to successfully capture new markets Promote skill development and technology access for empowerment EQUITY Likely to achieve 53% higher returns on equity Create an employee value proposition to achieve diversity goals Businesses may need to develop an enabling ecosystem for women and provide them with technology access and skill development Data and figures collected as part of secondary research conducted by Accenture Strategy All references and additional details can be found in the full report at www.accenture.com/corporatedisruptors Clean water and sanitation Lack of clean water and sanitation facilities have a significant impact on global health ACCESS TO DRINKING WATER IMPACT ON CLEANLINESS 780mn 2.5bn lack access to clean drinking water people do not have access to adequate sanitation IMPACT ON HEALTH 6-8 mn people die annually from disasters and spread of water-related diseases What does this mean for businesses? Water protection measures can future-proof operations and generate attractive returns ECONOMIC VALUE ADDED SECURITY OF SUPPLY $1 spent on water and sanitation generates $4 in increased economic activity Develop new products and services for better access Coca-Cola's RAIN initiative aims to enhance water access to 2 million people in Africa. The company has committed $30 million over 6 years and provides clean drinking water access to more than 1 million people. 2 billion litres is replenished annually, thus reducing risk and building trust.66 Companies must address a potential 50% increase in water withdrawal in developing countries by 2025 Minimize seepage and replenish water through innovation in operations Increase productivity through reduced disease incidence and higher morale Businesses must focus on and invest in developing clean and efficient water and sanitation infrastructure leveraging digital technologies and the knowledge of NGOs and governments Data and figures collected as part of secondary research conducted by Accenture Strategy All references and additional details can be found in the full report at www.accenture.com/corporatedisruptors 23 Affordable and clean energy Growing pressure to curtail emissions is driving efforts in renewable energy development, energy efficiency and distributed power RENEWABLE ENERGY 7.7times increase in installed capacity in the past decade DISTRIBUTED POWER $150 bn in capital investments in decentralized power installations in 2012 What does this mean for businesses? Increased demand for clean energy provides new revenue and cost-saving opportunities RENEWABLE ENERGY DISTRIBUTED GENERATION Over $131 bn in investments in developing countries in 2014 Develop clean energy solutions such as renewables and mini grids China’s Longyuan Power has helped setup the country’s first micro grid with a total installed capacity of 13.4 megawatts (Solar PV). It will provide clean energy power to more than 7,000 households and 20,000 local residents.67 24 $ $206 bn in investments in decentralized power installations by 2020 Streamline processes and operations to improve efficiencies Invest in and partner to drive green growth Businesses need to develop partnerships and invest in setting up clean, decentralized energy solutions with the help of digital solutions to help scale these solutions Data and figures collected as part of secondary research conducted by Accenture Strategy All references and additional details can be found in the full report at www.accenture.com/corporatedisruptors Decent work and economic growth Infrastructure and technology can bridge the gap between the need for and availability of employment UNUSED SKILLSET TECHNOLOGY 2.6mn skilled people may potentially not have job opportunities every year till 2018 2.4 new jobs emerged for every job lost due to technology MICRO GRIDS FINANCIAL SERVICES $19.9 bn in revenue by 2.5 bn people are currently 2020 globally from micro grids financially excluded and can be targeted What does this mean for businesses? Some business opportunities can add revenue streams while driving socio-economic development Provide basic services, infrastructure and opportunities to the base of the pyramid to create a new customer base Barclays, CARE International UK and Plan UK have joined forces to tackle the issue of financial inclusion by taking a savings-led, rather than credit-led approach to microfinance through their initiative ‘Banking on Change.’68 Set up small businesses and a conducive environment near labor hubs to drive employment Businesses need to develop the physical and financial infrastructure and provide basic services in partnership with local stakeholders to set up business hubs to employ more people Data and figures collected as part of secondary research conducted by Accenture Strategy All references and additional details can be found in the full report at www.accenture.com/corporatedisruptors 25 Industry, innovation and infrastructure Resilient infrastructure and inclusive industrialization are needed to support rapid growth in urbanization NEED FOR RESILIENCE INCLUSIVE INDUSTRIALIZATION 3.3bn people will be living in urban areas in Asia by 2050 50-60% Small and medium enterprises account for 50% to 60% of total global employment TECHNOLOGY AS A CATALYST 80% of CEOs feel that innovation drives efficiency What does this mean for businesses? Technology can help companies capitalize on the market opportunity presented by the infrastructure sector INFRASTRUCTURE TECHNOLOGY $4 trn in infrastructure investment is needed globally as of 2014 Develop smart products for resilience and inclusive growth Gujarat International Finance Tec-City (GIFT) the first of its kind financial and IT services hub in India was developed in partnership with IL&FS, a leading infrastructure provider. This city will provide close to 500,000 direct and indirect jobs in India.69 26 15% performance improvement in buildings can be achieved through intelligent commissioning Use technology to drive innovation to connect infrastructure products Invest in products and services for inclusive and resilient growth Businesses need to develop resilient and sustainable products, integrate layers across products and services and collaborate with industry and cross-industry players to drive infrastructure improvements Data and figures collected as part of secondary research conducted by Accenture Strategy All references and additional details can be found in the full report at www.accenture.com/corporatedisruptors Reduced inequalities Income inequality and gender discrimination erodes the quality of life and impedes economic growth WEALTH GAP GENDER DISPARITY IN INCOME 85 of the wealthiest people own the equivalent of the bottom 50% of the global population 24% Globally women typically earn 24% less than men, with majority of jobs being informal or unprotected GROWTH OPPORTUNITY SIZE The microfinance market will grow Asia’s 2.86 bn 10-15% by 2016 BOP consumer base has an aggregate income of $3.47 trn What does this mean for businesses? Base of the pyramid (BOP) presents a huge market opportunity for existing and new products Develop programs and offer services to empower the poor through Self Help Groups (SHGs) Annapurna Microfinance, which was designed to form and promote self-help groups, seeks to empower 250,000 poor women and households by 2015 to enhance their economic security.70 Develop skills and promote technology access to improve BOP livelihood Enact a diversity agenda to build a productive and balanced workforce Businesses need to create an enabling environment for the underprivileged and leverage improved processes and higher productivity to develop products that suit their needs Data and figures collected as part of secondary research conducted by Accenture Strategy All references and additional details can be found in the full report at www.accenture.com/corporatedisruptors 27 Sustainable cities and communities Strong and rapid urbanization requires sustainable technology transfer through innovative financial instruments and mechanisms NEED FOR RESOURCE EFFICIENCY URBANIZATION WAVE 60% of the world’s population will be city dwellers by 2030 60% to 80% of the planet's resources are consumed by only 3% of Earth's area FINANCING GAP $174.4 bn global investment in technologies is required to support sustainable cities What does this mean for businesses? The need to sustainably support rapid urbanization is creating new market opportunities CONNECTED DEVICES ENERGY MANAGEMENT SYSTEMS 2.7 bn connected devices will be in use in smart cities by 2017 Market to grow from $7.7 bn in 2013 to $24.2 bn in 2020 Develop sustainable products and services Telefonica has assisted the city of Valencia in fulfilling its target of becoming a smart and sustainable city through a single connectivity platform with 350 sensors to provide real time data on traffic management and help in making prompt real time decision making.71 28 ELECTRIC VEHICLES Market will grow from $83.5 bn in 2012 to $271.7 bn in 2019 Leverage technology to trace resource use and enhance connectivity Businesses need to develop capabilities for clean energy and smart devices, as well as products that leverage the knowledge of cross-sector players Data and figures collected as part of secondary research conducted by Accenture Strategy All references and additional details can be found in the full report at www.accenture.com/corporatedisruptors Responsible consumption and production Increasing demand for resources is making extraction prices more volatile and putting unsustainable stress on natural ecosystems UNSUSTAINABLE DEMAND HIGH EXTRACTION PRICE Earth’s worth of resources are being consumed by the global population increase in commodity price index for 1% increase in GDP 1.6 times 1.5% STRESSED ECOSYSTEMS More than 60% of Earth’s ecosystems are seriously degraded What does this mean for businesses? Increasing relevance of resource efficiency is reducing costs and creating new revenue opportunities BIODEGRADABLE PLASTICS $2 bn to $3.4 bn growth in market value between 2015 and 2020 Leverage technology and investments to minimize waste and use of virgin material H&M partnered with I:Collect to setup a recovery and collection system for used clothes in 48 countries. Clothes are resold, transformed or recycled depending on quality.72 AUTOMOTIVE REMANUFACTURING CIRCULAR OPPORTUNITY IN TEXTILES $139.8 bn market size by 2020 $59.5 bn to $70.5 bn cost savings per year in apparel industry from shift to a circular economy Develop modular products and circular business models to reduce ownership costs Create partnerships and linkages to enable collection mechanisms and recovery Businesses need to develop processes and capabilities for reuse and recovery and establish supply chain traceability to identify waste-recovery opportunities Data and figures collected as part of secondary research conducted by Accenture Strategy All references and additional details can be found in the full report at www.accenture.com/corporatedisruptors 29 Climate action Global climate action must be scaled to mitigate the increasing frequency and impacts of climate-related events GLOBAL TEMPERATURE 2 degrees Agreement by 195 nations at COP21 to keep global temperature rise below 2 degrees Celsius IMPACT OF COLLABORATION 35% reduction in carbon emissions from 1990 levels through collective efforts What does this mean for businesses? Accelerated climate action presents an opportunity for clean energy solutions ELECTRIC VEHICLES 20 mn are estimated to be on the road by 2020 Reduce resource dependence and minimize emissions SaskPower has developed the world’s first and largest commercial-scale CCS project with capabilities to lower SO2 emissions by almost 100% and CO2 by 90%.73 30 RENEWABLE ENERGY 17% surge in investments by 2014 to $270 bn Launch new products and diversify revenue streams Businesses must focus on and invest in developing clean and efficient energy solutions in partnership with cross-industry players Data and figures collected as part of secondary research conducted by Accenture Strategy All references and additional details can be found in the full report at www.accenture.com/corporatedisruptors Life below water Increasing risk to marine ecosystems has made the need for sustainable fishing more urgent RISK OF DEPLETION MAJOR SOURCE OF FOOD 3bn people depend on fish as a source of protein 100% Potential for stock of all fished species to collapse by 2048 SUSTAINABLE FISHING Eco-labeled fishery product increased 147% between 2010 and 2014 What does this mean for businesses? Depletion of ecosystems has created attractive business opportunities for sustainable fishing MARKET SIZE PROFITABILITY Potential for fishing sector to boost profits by $51 bn with sustainable fishery policies within 10 years Eco-labeled seafood currently is a $4.8 bn retail market Unlock potential revenue through labeling and charging premium prices Yooji has launched the first ever baby food to bear the Marine Stewardship Council (MSC) ecolabel. The new frozen protein are portions made of 100% MSC-certified flaked cod.74 Leverage technology to make sourcing sustainable Businesses may need to develop transparent and traceable supply chain as well as a sustainable sourcing infrastructure Data and figures collected as part of secondary research conducted by Accenture Strategy All references and additional details can be found in the full report at www.accenture.com/corporatedisruptors 31 Life on land Heightened stress on land ecosystems has increased the need for sustainable forest management STRESSED ECOSYSTEMS 1,000 times “At risk” species face extinction at 1,000 times the natural rate INCREASING DEMAND 13mn hectares of forest was lost worldwide between 2000 and 2010 to meet global growth demand FOREST MANAGEMENT Planted forest areas covers only 7% of the world's total forest area What does this mean for businesses? Forest management presents new product and market opportunities CERTIFIED WOOD BIOFUELS Certified wood products globally carry a 15% to 25% price premium Use innovation to minimize waste and maximize resource efficiency and reuse TetraPak has developed and sold the world’s first fully renewable high-performance food packaging carton that uses FSC-certified paperboard and plastic derived from natural sugarcane.75 32 Second-generation biofuels have a $23.9 bn global market value Set up monitoring and security mechanisms to minimize variability in the ecosystem's social and environmental value Businesses need to develop capabilities for maximizing output and recovering value from used products through cross-sector partnerships Data and figures collected as part of secondary research conducted by Accenture Strategy All references and additional details can be found in the full report at www.accenture.com/corporatedisruptors Peace, justice and strong institutions Rise in conflicts around the world is causing forced displacement and hampering socio-economic development ARMED CONFLICTS 3.2x The number of fatalities due to conflicts increased by a factor of 3.2 between 2008 and 2014 DISPLACEMENT 59.5 mn people have been forcibly displaced due to various conflicts in 2014 What does this mean for businesses? Help conflicted regions recuperate through infrastructure services and low-cost products Safaricom worked closely with various political parties and content service providers in Kenya in 2013 to set guidelines and a systematic process to ensure that inflammatory messages were not spread through bulk messaging services to help address election-related violence and riots.76 Employ digital vigilance and resilience to protect vulnerable customers Create partnerships for responsible and ethical sourcing Businesses need to focus on reinstating infrastructure in conflicted regions, leverage digital technologies to disseminate emergency and awareness information and develop partnerships for setting codes of ethics Data and figures collected as part of secondary research conducted by Accenture Strategy All references and additional details can be found in the full report at www.accenture.com/corporatedisruptors 33 Partnerships for the goals Business-centric, multi-stakeholder partnerships are needed to drive investments and technology transfer to meet Sustainable Development Goals GAP IN INVESTMENT FOR SDGS 3.1trn $ per year is current gap in investments identified to meet SDG targets BUSINESS-CENTRIC PARTNERSHIPS GeSI represents 30 companies in ICT collaborating to meet emissions, productivity and social development goals What does this mean for businesses? Innovative business models generate attractive returns while meeting social and environmental goals Enable low cost production and connectivity to remote areas to spur the growth of developing countries International Air Transport Association (IATA) Alternative Fuels Program is working with 260 member airlines to switch to sustainable alternative fuels and has tested 50% blend of sustainable bio-based jet fuel in over 1,700 passenger flights across 21 member airlines.77 34 Create partnerships to leverage public sector funds and drive alternative business models Businesses should set up local production facilities aligned to sustainable development, leveraging digital technologies in partnership with industry and civil bodies Data and figures collected as part of secondary research conducted by Accenture Strategy All references and additional details can be found in the full report at www.accenture.com/corporatedisruptors References 28 Peter Lacy, Justin Keeble and Robert McNamara, 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@AccentureStrat Contact the author Jessica Long [email protected] About Accenture Acknowledgements Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions—underpinned by the world’s largest delivery network—Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With approximately 373,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com. This report was developed in collaboration with the World Economic Forum’s Young Global Leaders (YGL) Community and an output of the YGL Sustainable Development Goals initiative. We would like to thank the core working group of the initiative, specifically Brendan Cox, Mariéme Jamme, John McArthur, Emily Ross, Bruno Sánchez-Andrade Nuño, Joanna Sparber and Lisa Witter. About Accenture Strategy Accenture Strategy operates at the intersection of business and technology. We bring together our capabilities in business, technology, operations and function strategy to help our clients envision and execute industry-specific strategies that support enterprise wide transformation. Our focus on issues related to digital disruption, competitiveness, global operating models, talent and leadership help drive both efficiencies and growth. For more information, follow @AccentureStrat or visit www.accenture.com/strategy. This document makes descriptive reference to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of such trademarks by Accenture and is not intended to represent or imply the existence of an association between Accenture and the lawful owners of such trademarks. Copyright © 2016 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. The team would like to thank those who contributed case studies, reviews and guidance, including Daniella Ballou-Aares, Jen Ace, Aneri Amin, Michael Argosh, Zubaida Bai, Analisa Balares, Brad Brekke, Charlotte Deal, Nishan Degnarain, John Dutton, Anna Easton, Jillian Fisher, Timothy Fort, Kate Garvey, Elizabeth Gore, Celine Herweijer, Catherine Howarth, Sony Kapoor, Justin Keeble, Peter Lacy, Sheila Marcelo, Rosy Mondardini, James Mwangi, Valeria Orozco, Avra Siegel, Shamina Singh, Natasha Sunderji, Renee-Maria Tremblay and Mark Vlasic. Several people were critical to the creation and publication of this report, including Graham Girling, Palak Kapoor, Sally Lavelle, Winsley Peter, Sundeep Singh, Abhishek Srivastava, Liz Steel and Bernie Thiel.
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