A recent study reveals that CEOs across the globe are concerned about the lack of progress towards the achievement of the Sustainable Development Goals. Ronald Wuijster, CEO of APG Asset Management, is slightly more optimistic, but does call on the public sector to contribute. “Government needs to set the boundaries and allow the private sector to work within those rules, so that the best solution comes forward.”
Halfway through the 15-year period between the adoption of the Sustainable Development Goals (SDGs) and their targeted realization, more CEOs than ever recognize sustainability as a top responsibility, but say they face headwinds from the geopolitical situation. Covid, Russia’s war in Ukraine, tensions between the west and China, inequality, and climate change are hampering progress. This is one of the main conclusions of the UN Global Compact-Accenture study entitled “Reimagining the Agenda. Unlocking the Global Pathways to Resilience, Growth, and Sustainability for 2030”. It collects the insights from over 2,600 CEOs across 18 industries and 128 countries.
Despite the challenging geopolitical landscape, 98% of CEOs interviewed feel responsible for making their businesses more sustainable, a 15% increase from a decade ago. Wuijster recognizes this development. “Over ten years ago, when I talked about the necessity to integrate sustainability risks into investment analysis, I often felt like the odd one out. It is encouraging to see how quickly asset managers have embraced sustainability, more often than not because their clients require it.”
Biodiversity lags behind
A topic that continues to lag behind on CEOs’ priority lists, however, is biodiversity. A mere 18% of CEOs prioritize the protection and restoration of biodiversity. They often don’t know where to start. “Biodiversity is much more complicated than climate because it has so many angles,” says Wuijster. As chairman of the World Economic Forum's Biodiversity Finance Steering Committee, he aims to mobilize investors and companies to jointly address the problem of biodiversity loss. “It’s too complex an issue to tackle each on our own. We need to develop standards together to assess the impact of our investments on biodiversity on the hand, and the dependence of our assets on ecosystem services such as water on the other.”
APG recently completed a baseline assessment of the biodiversity risks, dependencies and impact in the portfolios of its pension fund clients, Wuijster explains. “We use multiple tools and datasets to integrate location-specific biodiversity data into our investment processes. This allows us to assess companies and identify the ones we wish to engage with. We have already been engaging with several food companies on deforestation, for example.”
Data availability remains an issue, however. ‘We need much more location-specific data, including the location of companies and their supply chain. “There’s still a long way to go.”
Government action
Despite the setbacks, Wuijster, like 92% of the CEOs in the study, believes the SDGs can be reached by 2030, but this requires alignment from all stakeholders, he says. “I believe the market plays an important role that is often overlooked. Government needs to set the boundaries and allow the private sector to work within those rules, so that the best solution comes forward.”
This does not only mean removing barriers such as fossil fuel subsidies, but also creating incentives for sustainable innovations. Although the European Union is making great strides with it Taxonomy Regulation, Sustainable Finance Disclosure Regulation and other measures to meet its Green Deal objectives, public decision-making tends to take a long time. “In Europe, we often want to be more Catholic than the Pope, favoring perfection over speed. We cannot afford this any longer. Look at the Inflation Reduction Act in the United States. Biden’s €340 billion support package offers opportunities for nearly all industrial sectors in the US to become more sustainable. European companies see that the US market has become much more attractive. Meanwhile, the European Commission has come up with an emergency plan, but it has to speed up its execution or Europe will miss the opportunity to build a green industry.”
This year’s World Economic Forum was themed Cooperation in a Fragmented World. Spot on, as far as Wuijster is concerned. “With the challenges the world is facing, collaboration between the public and private sector is key. I continue to stress this when I talk to politicians, CEOs or Dutch cabinet members: we need to be willing to take a little bit more risk, set up public-private partnerships, be more entrepreneurial. If we want to achieve the SDGs by 2030, this is the way to go.”