Shownotes

A while ago I invited Samantha Ndiwalana, a Senior Researcher at World Benchmarking Alliance to talk about the pivotal role of the private sector in meeting the SDGs. The WBA maps 2000 of the worlds most influential companies. The influence is staggering, the companies have over $36.5 trillion in revenue and employ more than 97 million people across 85 countries. 

How are these companies identified? It starts with looking at the seven transformations needed to meet UN SDGs: Social, Food and Agriculture, Decarbonisation and Energy, Nature, Digital, Urban and Financial. The WBA then go on to identify the 2000 keystone companies within these industries based on 5 principles that goes beyond just size and also looks at impact and influence

It is a tall order to challenging the prevailing bias that leading companies are based only in Western countries or the global north to ensure that the right companies are included in that list. Samantha and I discussed this and more in our conversation

👉🏾 Why is there less representation from the global south? Is it because we equate size with influence

👉🏾 Engaging with the power and influence of state owned entities

👉🏾 We discussed a recent report that spoke about ‘emerging markets have longer runaway and steeper slope for SDG improvement’ (according to an American PE firm)?

👉🏾 The big emerging challenge: the sustainability information gap 

👉🏾 The reality that companies from developing markets generally receive limited funding to support SDG focused investments 

👉🏾 Are companies from developing countries less sustainable or is it a measurement issue?

We also discussed why achieving SDGs in emerging markets is set to become more important going forward - it is fairly straightforward actually………..

To listen to the episode head to the link in the comments 👇🏾👇🏾👇🏾

Episode Transcript: 

Sudha: Good morning Samantha. Thank you for being a guest on The Elephant in the room Podcast today. 

Samantha: Good morning, Sudha. It's great to be here. Thank you for having me. 

Sudha: Let's just get started with the questions. Give us a quick introduction to who you are and what you do at the WBA. 

Samantha: Yes, gladly.

Samantha: So I work as a senior researcher and company engagement lead at the WBA. My focuses are digital inclusion and that's looking at some of the world's most influential tech companies, how well, or maybe not so well they're doing in terms of making sure technology is ethical, fair, safe, sustainable for everyone.

My other focus is the SDG 2000, and we'll speak a bit about that today. And that is the universe of companies that we look at, at the WBA. So, managing that list, putting it together, and just making sure it's representative of an ever changing world. 

Sudha: How critical is the private sector to meeting the SDGs? We are now in the decade of reporting so to speak and there are not too many years before we get to 2030. How critical is the private sector to meeting the SDGs? 

Samantha: Oh, I would say they're quite pivotal. So if the central promise of 2030 Agenda for Sustainable Development, around which the Sustainable Development Goals are planned, if the central promise of that is to leave no one behind, then one of the ways we get there is by leaving no company behind.

Samantha: So companies are quite pivotal, and not just the companies that we might be used to everyday companies or products, but also companies that are quite big, quite influential whose name you might not know, or might not have heard of. Just because a company is always in the news or is popular doesn't mean that these are the only companies that are pivotal to meeting the SDGs.

Sudha: And how does the WBA define the list of 2000 most influential companies that are to be assessed? You've mentioned that it is important to make a choice, not to leave any of the big companies or any of the influential companies behind. Is there a bias towards companies based in the global north because we are more familiar with their reputation, their size, their products and what they do. 

Samantha: That is a really great point. So to answer the first part, how we go about finding these influential companies, what we call the world's most influential companies, is first we take a transformational approach. So we look at the world and we break it down into seven system transformations, such as social, nature, digital, financial and these transformations look at what we need to do to transform the world, to drive the world towards achieving the 2030 agenda and meeting the sustainable development goals.

Samantha: So once we have those transformations and we've looked at the industries that were pivotal to influencing those transformations, either in a positive or in a negative way. And then once we had that list of industries, we then dove deeper into the companies. And to do this, we had an approach which looks at whether companies dominate global production. We tried to have a look at their supply chain, their influence on global governance and institutions, these are just a few of the things we would look at. But something we found when we were looking at available information, because one of the big things about us is we're not trying to reinvent the wheel, we're quite happy to lean on existing knowledge and existing expertise. But one of the things we found was just by taking an approach where you look at the biggest companies if you would equate influence with revenue or number of employees, as pure markers of how big these companies are, then you would start to look at a majority of companies from the global north and from China.

Samantha: And so we saw this happening and it became clear to us how important it is to make sure that the list is as broad, diverse and balanced as we can make it. Because while these companies and these regions the United States, China, Europe, while these regions, these countries are quite important, they aren't the only ones in the world.

Samantha: And if we want the list to look at the global influence of companies, so that we're leaving no one behind, we needed to take active steps to make sure that we're including companies, not just from the global North, also the global South and when we say global South, not just the big players like China.

Sudha: So you've answered a part of the question that I was going to ask next, which is, do we equate size with influence, and is that why there is less representation from the global south? 

Samantha: Yes. So often size is equated with influence, as I had just mentioned. But we find that influence can be thought of in other ways, not just the pure markers of size, like revenue or employees.

Samantha: And one of the ways you can start to see the influence of companies is the number of people they impact. If you start to look at their supply chains and see where those connections lead to. So a company could be based in one country, say South Africa or India. But their roots, if we could call them that, spread around the world.

Samantha: And that's one way of thinking of the influence of companies. 

Sudha: Yeah, that makes a lot of sense. I know from having lived and worked in India that state owned entities, as well as family businesses are some of the most influential businesses in that particular geography, but also I believe across other geographies also.

Sudha: So clearly from the SDG perspective, they are critical and they need to be engaged with. How do you ensure that you include them in the conversation? 

Samantha: That's a really important point. And as you say, it's not just in India, from my experience in South Africa, Uganda, and in other countries as well.

Samantha: We see the importance of family owned businesses, we see the importance of small to medium sized businesses, not just the big companies on influencing change within that country or within that region. Making sure that we're reaching out to these companies is quite important and is something we prioritise at the WBA.

Samantha: We do this via company engagement. So if companies are being assessed in the benchmarks, we have different events such as webinars, trainings to reach out to the companies to discuss the SDGs, the World Benchmarking Alliance, our approach with them. We also partner with governments, so any governments that are having events where these companies might be involved, that's one of the ways we're able to make connections with the companies to bring them along this journey.

Samantha: But one of the most important ways we do this is through our alliance. So at the World Benchmarking Alliance, we believe in a collaborative approach and the allies play a very important part in this. They're global, they are big organisations and institutions, such as GRI, that's quite big in the reporting space.

Samantha: But we also have a lot of more local focused organisations and NGOs, and we rely on them to make sure that we're taking into account different local perspectives and that we're connecting with these family owned businesses or more regional or country focused businesses that might not be at these big international events.

Sudha: Okay, that's very interesting to know. So you know I was doing some background reading before putting together the questions and I read this American PE firm report and other reports also and data that indicate that emerging markets have a longer runway and steeper slope for SDG improvement.

Sudha: Would you agree with that statement? 

Samantha: Yes, I would to a certain extent. So if we look at the findings from some of our benchmarks, we see that on average, companies from developed countries have stronger performance than those from developing countries and so that's one way of looking at it.

Samantha: But we also understand that there are a lot of things happening in the background. For example developing countries might have other focuses or priorities than developed countries just in the very nature of the issues that they are facing and the stage of development that they're at. So levels of poverty, poor health care outcomes, low levels of unemployment, those might be things that companies are focused on. And so they might have programs around these issues to try and help address these problems within their countries. And even though some of those might fall within social, the S of ESG, they might not necessarily think of them as ESG related projects.

Sudha: That's very true. Would you say that the sustainability information gap in emerging markets is a big challenge? There has been a lot of progress in the past decade but there is still much to be done. What are your thoughts? 

Samantha: Yes, definitely, it's a big challenge and it's starting to take off a bit if we keep thinking about the longer runway and the steeper slope.

Samantha: But as I said before, one of the things creating this longer runway and steeper slope is that the focus might be elsewhere. And in some cases, the laws, the policies, the regulations aren't in place. And we find that having these laws, policies, regulations in place goes a long way to influence company behaviour because the parameters, the guidelines are already there about what information you should share and the incentives are also there about what information you should share. If you don't have that guidance, it is still very possible to share information to counter that in sustainability information gap, but it does make it a bit more difficult. 

Sudha: Okay. So you know linked to what we've been talking about not just the private sector,  but large state owned entities and family owned multinationals still require access to international capital markets to fuel the growth or innovation. However, companies from developing markets generally receive limited funding to support SDG focused investments, even though they have in depth knowledge of the situation in the countries in which they operate, you know, what is going to work on the ground. With the rising demand for ESG compliance, is this an opportunity where the investors and funding organisations start taking that into consideration? That they can be a good way to go about meeting our goals. 

Samantha: Yes, definitely. So I think that when new legislation comes into play, there are two ways of thinking about it or seeing it. So some companies might see that and understand that there are more requirements on how they might disclose or different levels that they need to meet and they might be a bit scared, intimidated, they might think that this is an extra burden or perhaps a waste of their time.

Samantha: So instead of thinking of it as a burden, if you think of it as an opportunity, this is an opportunity to align with international standards, international disclosure, such that they can make their efforts, all the work that they might already be doing around ESG more visible to investors, and that will help them generate investment and also make it more visible to other stakeholders who might want to support in other ways.

Sudha: Yeah, that is so true. So it's a bit about the journey, it is a bit about the information gap. It is about then being proactive and adopting some of the reporting requirements so that investors are more confident about investing or putting in their money in those markets.

Samantha: Yes, Exactly

Sudha: So I just want to clarify this that our companies from developing countries less sustainable or is it a measurement issue or is it where they are on their journey? 

Samantha: I would think it's more a measurement issue and where they are on their journey. So I guess it's quite common to see these images of factories in a developing country that are producing whatever sort of product or chemical and you see them shooting smog into the air, rivers are polluted, and it just goes on and on and on. And while that might take place, that's not necessarily the standard. That's not how all of it cities or all areas in developing countries look. I can speak from the South African perspective and say that there are companies that are green, that are sustainable, that are looking at things like solar energy.

Samantha: For example, and I'm sure from the Indian perspective you can name a lot of examples as well. So it's not that these companies or these areas are inherently less sustainable. I would say that part of it is a measurement issue because they are focused on different issues than some companies in developed countries, their programs or efforts towards sustainability might not be exactly the same.

Samantha: But if you are focused on health issues such as tuberculosis or the HIV AIDS pandemic, that is also social work that's also sustainable development work. It just might not fit into the standard ESG reporting disclosure approach. So these are the types of things we need to take into account.

Sudha: Yeah, I was just thinking about that. It's also perhaps what we measure them on and because, their parameters may be different from what the parameters for developed countries or companies in developed countries are slightly different. and you're still moving on the path, but what your priorities are different.

Sudha: And I think that understanding possibly, also needs to be made across the world, not just for developing country, but across the world on how we frame not just our measurement questions, but the narrative, like you said when you talk about developing countries and you have these images - smoke spewing out of a factory or a river that is like really dirty. And that becomes the narrative that is stuck. So we probably need to progress from there. We are on our last question. Why is achieving SDGs very, very critical for emerging markets as we progress towards 2030 and beyond. 

Samantha: Well, I guess first off, it's the idea that we don't want to leave anyone behind.

Samantha: So when we say we want a sustainable world, we want a safe world, we should also be thinking in terms of inclusivity an equal world. And that means that progress happening in developed countries exclusively isn't what we should be aiming for. We should also be considering that developing countries have progress to make, they have a role to play in driving the world towards a more sustainable future. And another reason why achieving the SDGs is quite important in emerging markets is the vulnerability, the unique vulnerability that these markets, these countries face in terms of the climate crisis, for example. We see that developing countries are particularly vulnerable to the negative effects of climate change, such as natural disasters, excessive heat, like we've seen over the past few months, the news coverage is focused on America, the U. S. and Europe, but high levels of heat were seen in Africa, were seen in Asia as well. And these might be areas where people can't just go to the shops and buy an air con and install it in their homes or buy extra water.

Samantha: There are unique challenges and vulnerabilities there that we need to understand, respect and take into account. 

Sudha: So I just want to ask an additional question. What is it that motivates you about this work that you do? It's not very easy, right? But what is it that motivates you and drives your interest?