Understanding how your business can best target the SDGs to effectively fix their root cause can lead to significantly more impact with the same amount of investment. An article by Melanie van de Velde, PhD - published in Impact Entrepreneur.
The answer to the question above in short is ‘yes’. Addressing certain SDGs leads to a return of $20 to $40 for every $1 spent, as opposed to less than $10 return compared to spending money equally across all SDGs (1). So how can business leaders effectively target SDGs for the best outcomes?
Over the last seven years, I have researched companies across our planet that aim to tackle some of our biggest challenges such as climate change, pollution, poverty, inequality, and social exclusion. But some achieve far better outcomes compared to others. Pursuing both commercial and impact aims can be very challenging. I discovered this first-hand running an enterprise to empower young women in the Kibera slum in Nairobi. This experience made me want to unravel ‘Why do some impact strategies lead to far better outcomes compared to others, regardless of their purpose, context, and commitment?’
Exploring this question, literally to the Nth degree, has been hugely insightful. My findings show that, first, those with the best outcomes tackle the root cause, as opposed to the symptoms. Many impact initiatives deal with symptoms. Think of air pollution purifiers (with 90 percent of citizens in cities breathing unsafe air, leading to 4.2 million deaths each year (2)), as opposed to preventing air pollution in the first place.
Or, take the ‘buy-one-give-one model’ that we see increasingly. Like TOMS Shoes, which donates a pair of shoes to a child in need, for each pair bought. Critics point out that TOMS does not address the root cause of poverty, namely the lack of access to fair-paying sustainable employment, but builds on poverty as an essential part of their marketing (3).
In certain contexts, charitable donations can be vital, such as in disaster relief. But in other contexts it can do more harm than good. When charity is used for the long term, this can lead to severe damage to local economies, unnecessary dependencies, and adverse psychological consequences (4). When second-hand clothing donations ramped up in Africa, over 50 percent of the workers in local textile industries lost their jobs as a result (5).
In certain contexts, charitable donations can be vital, such as in disaster relief. But in other contexts it can do more harm than good.
Dealing with the symptoms rarely fixes the problem. As SoleRebels Founder asks: “If you give a kid shoes, they wear out or they grow out of them, and then what do they have? If you give the kid’s parents a job, the whole family will always have shoes”. It is like ‘mopping up with the tap wide open’, as a saying goes in The Netherlands. We can keep throwing money at the symptoms, but the issues won’t go away until we ‘close the tap’, like SoleRebels does. Africa’s fastest growing footwear brand provides good employment opportunities, paying three times the industry average wage plus worker’s healthcare costs. This empowers parents to buy their children shoes themselves, or other things that are perhaps more urgently needed such as a school uniform or antibiotics for a child sick with pneumonia.
Grassroutes in India adopts a similar approach. They empower tribal farming communities such as Purushwadi with access to the travel market, adhering to strong ethical standards and community ownership. These communities live in stunning scenery, but face huge challenges. The villagers typically live on less than $0.62 per day6, and many work as labourers away from their children to make ends meet. The women spoke about their hardship when child labour posed problems, lacking access to medical care. Many young people move away to city slums in search of work.
Dealing with the symptoms rarely fixes the problem.
Gaining access to the travel market through Grassroutes has generated vital additional income, and a reduction in migration to city slums by 80 percent. Several people in these communities told me about the difference the project had made to their lives, not in the least being freed from a trap of having to work for almost nothing on other people’s lands.
Let’s look at this in relation to the UN Sustainable Development Goals. Empowering communities with fair economic opportunities doesn’t simply fix the root cause of poverty, but also creates positive knock-on effects on other SDGs such as ‘zero hunger’, ‘good health and wellbeing’, and ‘quality education’ by better enabling children to attend school. In addition, by improving their income communities can implement solutions for ‘clean water and sanitation’. This in turn contributes to ‘gender equality’ as girls tend to bear the brunt of water collecting duties.
The same concept applies in other contexts. By fixing the root cause of environmental issues, positive knock-on effects are created on related SDGs. We can increase recycling efforts to reduce waste. But with recycling being the most complex, expensive, and least effective option of circular design, we can create better outcomes by targeting the root cause. A good example is Schiphol Airport purchasing ‘light as a service’, as opposed to buying light products. Light products are notoriously designed for obsolescence. With the new agreement Schiphol leases light, while Philips is responsible for all fixtures, installations, and the electricity bill. This incentivises designers to fundamentally redesign more durable, energy-efficient products that are easier to replace in parts.
Understanding how your unique business can best target SDGs to effectively fix their root cause can lead to significantly more impact with the same amount of investment.
Each company has a different context. Understanding how your unique business can best target SDGs to effectively fix their root cause can lead to significantly more impact with the same amount of investment.
1 Lomborg, 2015 2 UN, 2015a 3 Cheeseman, 2012; Davenport, 2012; Herrera, 2013; Wydick et al., 2014 4 Frazer, 2008; Herrera, 2013; Rangan, Quelch, Herrero & Barton, 2007; Shikwati, 2005 5 Frazer, 2008 6 World Bank, 2020b