New horizons for economic growth

The world is accelerating at an unprecedented pace. The rapid development of new technologies, increasing transparency, and the availability of data is providing a unique opportunity for government and the private sector to come together to drive sustainable development.

“Sustainable business models could open economic opportunities worth at least $12 trillion annually for the private sector and up to 380 million jobs by 2030.” That was one finding by more than 35 chief executive officers and civil society leaders of the Business & Sustainable Development Commission in a flagship report published in January 2016. The return on investment assumes global outlays of $4 trillion annually.

{mosads}This growing symbiosis between policymakers and the private sector has led to new thinking on the potential for the United Nations’ sustainable development goals to fuel new economic growth. Couple that consciousness with the latest technology and availability of environmental, social and governance data, and you rapidly gain momentum for action. We are at a new horizon where understanding that goals relating to gender, justice and climate are pivotal to drive economic success in the future.

Gender

The fifth sustainable development goal, which aims to achieve gender equality for all women and girls, is critical because the lack of gender equality in education and work opportunity deprives our communities, businesses and governments of the full range of talent and innovation available in the human family. “McKinsey Global Institute estimates that if women participate equally in the economy to men, this could create incremental annual GDP impact of $28 trillion in 2025 compared with a business-as-usual scenario,” the 2016 report says.

Companies are increasingly understanding this and focusing on recruiting and retaining female talent across all levels of their organizations and at the board level. More importantly for investors, they are also now making gender statistics public as transparency becomes an expectation. If we focus on gender parity, we unlock new economic potential. McKinsey measures this impact in trillions of dollars of added benefits with a compelling country by country breakdown of where the most upside is. It is an important and catalyzing study.

Climate

The thirteenth sustainable development goal shows not only the economic potential in addressing climate change but the broader uplifting effect on the other goals. In addition to the economic upside, climate threat is detrimental to business, and the financial risks associated with damages related to climate change will be a game changer over the next generation. The commission report summarizes that “based on a study by the United Nations Environment Programme (UNEP), the cost of biodiversity and ecosystem damage could reach 18 percent of global economic output by 2050, up from $2 trillion in 2008 (around 3.1 percent of global GDP).”

China recently included “green growth” as part of its latest five-year economic plan.  One recent report, “Reinventing Fire: China,” estimates that “China’s economy could grow six-fold by 2050 with renewable energy accounting for 69 [percent] of national electricity supply if it transforms its energy system and increases efficiency across the industrial, transport, construction and electricity sectors.” Alongside this potential benefit is the additional benefit of reduced adverse health effects from soot and particulates produced by coal and carbon intensive energy production, which the International Energy Agency estimates costs 4.5 million lives annually.

A broad and effective climate initiative carries with it a vast potential for wealth increase across the entire income spectrum of the global economy. On a percentage basis, this increase in earning potential would be most significant for the most poor of the world, with new sources of clean energy, infrastructure and economic growth.

Justice

The sixteenth sustainable development goal relates to the benefits when citizens and businesses have predictable, transparent, rules-based outcomes for disputes. The underlying assumption is that the more such a fabric exists and integrates basic principles of human rights, the more societies and economies can flourish, both financially and culturally. According to a World Bank study, in many developing countries the losses associated with corruption may exceed 100 percent of current GDP.

This rights-based fabric generally produces relatively stable social and economic conditions which are optimal for encouraging innovation, entrepreneurialism and risk-taking. Underpinning much of this goal is transparency around financial transactions and legal requirements. Craig Fagan, Head of Global Policy for Transparency International, calls this goal a “game changer” because of the increased transparency required for successful implementation. Fortunately, as a result of technology and the availability of data, it’s easier to uncover corruption and trafficking, something both government and corporates agree is a top priority for a sustainable future.

Window for success

By reviewing just three of the 17 goals in the context of the new economy, progress on each has the potential to reinforce the others. Similarly, failure of one can and will reduce the likelihood of success on the others. The good news is that given recent innovations; advancing technology, transparency and open data, we are in a better position than ever to make real progress on these fronts.

For economic reasons alone, it is mutually beneficial for the public and private sector to work together to progress the sustainable development goals. In so doing, we will help commerce and communities achieve necessary levels of prosperity, while promoting security and justice.

Timothy Nixon is head of Sustainability Thought Leadership and managing editor of the Sustainability publication at Thomson Reuters.

The views expressed by contributors are their own and are not the views of The Hill.