Last year the United Nations reached an important milestone: It adopted the global agenda until 2030. In order to make these Sustainable Development Goals (SDG’s also known as “Global Goals”) a reality, new business models are required that will deliver more sustainable, inclusive and equitable growth.
Against the background of the Global Goals, Europe is in urgent need of a growth agenda. One point underpinning that assertion: foreign direct investment (FDI) in the EU declined by 72 percent since its peak in 2007. In addition, despite historic low interest rates, cheap energy and monetary stimulus, there is not enough confidence with people to invest. In the current European turbulent context of very low population growth, sluggish economic recovery and deflation, we need a new S-curve. However, in light of immediate immigration and security challenges, governments are clearly struggling to dedicate sufficient political time and investment to bring about Europe’s economic renaissance.
That is the more disappointing, as Europe is well-placed to actually make this happen: Europe still produces 25 percent of global GDP, with a highly skilled and creative workforce, a strong intellectual property regime and solid industrial basis. The 2015 World Economic Forum (WEF) Global Competitiveness Report ranks no less than six European countries in the top 10 of which five are EU member states.
It is no coincidence that Europe has been fertile ground for some of the leading brands in the world, ranging from iconic car, fashion, food, cosmetics brands, and many more. These brands are drivers of innovation par excellence, and they increasingly meet consumers’ desire for sustainability. We know that 72 percent of consumers in Germany and France are willing to switch to brands that have a stronger positioning on sustainability. Opportunity knocks.
Increasingly we thus see more and more smart businesses prioritize the sustainability agenda to stay ahead of the competition. Unilever is now operating on a new business model set out in its Sustainable Living Plan, thereby at the same time contributing to the Global Goals. Business results prove us right: brands that integrate sustainability grow twice as fast with 2 gross margin points higher profitabiltiy as other brands.
Moreover, Unilever brands that have led the way on sustainable living, i.e. Dove, Lifebuoy, Ben&Jerry’s and Comfort are achieving above-average growth. And the story doesn’t stop there: integrating eco-efficiency measures in our factories have already resulted in a cumulative cost saving of 400 million dollars.
These data teach us two things. Firstly, the business case for sustainability becomes increasingly compelling. Even more importantly, Europe has all the right fundamentals to become the sustainability powerhouse of the world, resulting in a better future for all. Business has an important role to play, by providing ideas, drive and of course entrepreneurial spirit.
In the Netherlands, the Dutch Sustainable Growth Coalition was established by several leading Dutch multinationals, including Philips, DSM, Heineken and also the Dutch employers representation VNO-NCW, to raise awareness and encourage action to promote sustainable growth.
What we need is a similar initiative at European level to drive a Growth Strategy around five key areas:
1. Water: Manage water (too much/too little and clean) water for all.
2. Food: sustainable supply to feed 9 billion people well.
3. Energy: Halve energy usage through energy efficient ecosystem.
4. Urbanization: building sustainable, happy, multicultural and smart cities.
5. Healthy ageing: Improve health for all and happy and healthy aging.
We need to do this with speed and at scale. Businesses have a role to play, but so do governments. They can incentivize investment by formulating (and implementing) ambitious policies with clear targets in the field of amongst others sustainable sourcing, renewable energy, waste recycling and by ensuring faster pre-market approval procedures for innovations. Moreover, government should “walk the talk” through green public procurement programs which will provide them to act as “launching customer” in many areas. In this way private capital investment looking for future growth opportunities will be attracted and unleashed.
In the remaining 100 days of its EU Presidency, there is ample opportunity for the Dutch government – which identified innovation and job creation as one of its key EU priorities – to create support for a new growth strategy. The objective: to kick start a European innovation and investment agenda with sustainable development at its core using the Global Goals as its inspiration. A values-led Europe can truly show the way: “Let’s move, and boost Europe’s economic potential by scaling up sustainability where it matters most.”
* Jan Zijderveld is Unilever's Europe president.