I don’t get musical theatre to be that on stage or the screen. I never have, and never really will. But musical theatre is a great medium for art and the story of tick, tick… boom! Is an interesting and important story for representation, and crucially it’s...
Since the launch of the Sustainable Development Goals (SDGs) by the United Nations (UN), the concern about global warming has become evermore present. Thus, there has been a greater understanding of the importance of climate action and the seriousness of solving the climate crisis. These proposals by the UN, especially the 13th one, indicate the future investment trend and could provide directions for entrepreneurs and investors.
Why is SDG 13 important to businesses?
Firms are the cornerstone of achieving all of the world’s sustainable goals because they have close connections with the climate. Many businesses have also suffered a number of irreversible impacts under climate change, largely affecting their financial performance. More specifically, one of the most severe consequences of rising atmospheric temperature is the dramatic increase in the frequency of extreme weather disasters. For instance, almost 3.5 million businesses and homes experienced power shortages in harsh weather conditions when temperatures plummeted to -13°C during the Uri Winter Storms that hit Texas in early 2021. As a consequence, nearly all of the United States’ firms suffered shortages of supplies and economic losses for a long period of time due to damaged supply chains and utilities. These kinds of incidents tend to pose operational risks and cause significant losses to local businesses and even the economy as a whole if people do not achieve a consensus on the SDGs and adopt the right approach to environmental issues.
How does the 13th SDG affect and guide entrepreneurs and investors?
Companies have the responsibility of keeping an eye on climate change and accounting for environmental protection. The detailed explanation of the UN’s 13th goal illustrates the mission that the company has to reach and implicitly tells the entrepreneurs which aspects are emphasized and which problems should be solved first. For example, the UN pointed out in the Sustainable Development Goals Report 2021, that as the world recovers from the epidemic, emissions are expected to rise further, unless key initiatives are taken to shift the economy towards carbon neutrality. This means that a post-pandemic carbon neutrality strategy is imminent. To reach this, firms within the carbon-intensive industries such as energy, agriculture and transportation, should seek alternatives and pave the way towards the green transformation of the company’s products in the coming years. They should continue to actively contribute to the environment by using green raw materials and focusing on the effective supply chain and distribution channels.
Sadly, only a few companies care about the practice of sustainable supply chains, however, research suggests that most companies’ environmental impact is largely attributable to their supply chain. This was proved by McKinsey in their report that shows that the impacts created by the supply chain account for more than 80% of greenhouse gas emissions and more than 90% of the impact on air, land, water, biodiversity, and geological resources. It is expected that in the future there will be more potential entrepreneurs who will establish social innovation firms that are actively finding solutions to environmental problems created by businesses since the SDGs have the ability to greatly motivate the employees and consumers into accepting sustainable methods of living. Moreover, sustainable firms could attract a larger amount of talent and increase their consumer base as there is evidence that suggests that ‘across the generations, employees are increasingly seeking opportunities to make an impact on the world around them through the work they do, as well as through their endeavours outside the office’. Additionally, consumers are increasingly inclined to purchase products that support a good cause. Facilitating the transformation of the company would not only benefit the environment but also bring in more customers and increase sales, thus multiplying the profits of the business. This is definitely a win-win situation.
Regarding investment in businesses, the introduction of the SDGs has led a vast majority of investors to re-examine their investment strategies and successfully change their previous ones. About 87% of Millennials believe that ‘the success of a business should be measured in terms of more than just its financial outcomes’ and 57% of the participants (23,950 interviewees in total) express a willingness to shift to fully sustainable portfolios assuming the same level of risk and diversification. This is a positive sign that more people are becoming aware of the importance of sustainable actions in the business process and are considering those activities as key investment opportunities. With more investors’ attention directed towards green companies, the industries or the companies which are heavily polluted would potentially not be considered by investors in the future.
The Sustainable Development Goals tell investors that they should integrate sustainability factors into their portfolios and understand how sustainability works behind each company and industry, while entrepreneurs ought to detect sustainable opportunities as one of the most important things they have to do in the near future.
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