This brief is part of the Insights @ Center for Emerging Markets, a publication focused on cutting edge ideas and advice for global leaders about emerging markets.
By Ivan Montiel (The City University of New York), Alvaro Cuervo Cazurra (Northeastern University), Junghoon Park (The City University of New York), Raquel Antolin-Lopez (University of Almeria), and Bryan W. Husted (Tecnológico de Monterrey)
The Multinational Solution
Multinational corporations are increasingly expected to become part of the solution to the global social and environmental challenges of our time. Importantly, beyond creating positive societal impacts, multinationals can also improve their bottom line, increase competitiveness, motivate employees, appeal to customers, and establish themselves as industry leaders by addressing these issues.
The question is: how? How can multinationals make a meaningful difference for some of our society's most pressing issues?
Some multinationals have begun to embrace the United Nations' Sustainable Development Goals. These goals are the product of a complex multi-stakeholder effort to achieve global sustainable development by 2030.
Recent research suggests that to use the goals to inform company policy or action items, multinationals should follow these three steps:
- Evaluate the goals along six broad categories depending on whether they want to achieve them by developing positive impacts (through the generation of knowledge, wealth, and health) or by reducing negative ones (in a way that limits the use of natural resources, harm to social cohesion, or overconsumption), as outlined below.
- Choose goals that are related to their company's specific value-creation activities. For example, corporations that do not work with natural resources do not need to be as concerned with achieving goals related to reducing natural resource consumption.
- Procure appropriate internal and/or external investments and allocate them in a way that is conducive to achieving these goals.
Increasing Positive Impacts
Let's start with the good news. There are many ways for multinationals to address the United Nations' Sustainable Development Goals so that they strengthen their existing positive impacts.
Here are some ways in which multinationals can increase their positive impacts:
1. Education & Innovation
The United Nations' Sustainable Development Goals #4 (“Quality Education”) and #9 (“Industry, Innovation and Infrastructure”) can be addressed by investing into the capabilities of multinationals' subsidiaries and business partners. This can be done by providing scholarships, training, and development programs for employees, distributors, and suppliers.
2. Gender Equality & Opportunity
Goals #1 (“No Poverty”), #5 (“Gender Equality”) and #8 (“Decent Work and Economic Growth”) can be developed by generating new wealth through investments into women's entrepreneurship programs and improved working conditions.
3. Health & Wellness
Goals #2 (“Zero Hunger”) and #3 (“Good Health and Well-Being”) can be addressed by improving local health conditions. Nutritious food and health benefits can be provided to employees, suppliers, and distributors.
- Key Takeaway: Multinationals should evaluate their current opportunities and where they can invest to increase positive impacts.
Reducing Negative Impacts
After the good news, comes the bad. Multinationals are, unfortunately, major contributors to the global environmental crisis because of their consumption of natural resources. They can, however, mitigate the harm they cause, reduce overconsumption, and operate in a safe manner.
Here are some ways in which multinationals can reduce their negative impacts:
1. Energy, Climate & Sanitation
Goals #6 (“Clean Water and Sanitation”), #7 (“Affordable and Clean Energy”), #13 (“Climate Action”), and #15 (“Life on Land”) can be addressed by reducing the use of natural resources. Investing in renewable energy, reducing greenhouse emissions, effective waste management, and investing in recycling are all part of this solution.
2. Inequality, Justice & Institutions
Goals #10 (“Reduced Inequalities”), #11 (“Sustainable Cities and Communities”), #16 (“Peace, Justice and Strong Institutions”), and #17 (“Partnerships for the Goals”) can be addressed by strengthening social cohesion. This can be done by promoting inclusive business practices and implementing strong anti-corruption measures.
- Key Takeaway: Multinationals should evaluate their practices—perhaps through external consultation—to determine where there is opportunity to reduce and mitigate harm.
The Way Forward
The United Nations' Sustainable Development Goals provide exciting opportunities for multinationals to be part of the solution to the global societal challenges of our time. The available broad categories allow companies to take action to maximize their positive impacts by investing in education, equality, and health, and/or reduce their existing negative impacts on the environment and local communities where they operate.
Original Article
Montiel, I., Cuervo-Cazurra, A., Park, J., Antolín-López, R., & Husted, B. W. 2021. Implementing the united nations' sustainable development goals in international business. Journal of International Business Studies, 52(5): 999-1030.
Contact
If you are interested in learning more about this work, contact Professor Cuervo-Cazurra.
